UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number811-23124
Franklin Templeton ETF Trust
(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:650312-2000
Date of fiscal year end:3/31
Date of reporting period:03/31/20
| Item 1. | Reports to Stockholders. |
ANNUAL REPORT
FRANKLIN TEMPLETON
ETF TRUST
March 31, 2020
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Equity ETF | |
Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ International Equity Hedged ETF |
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 to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visitfranklintempleton.com/investor/investments-and-solutions/investment-options/etfs/ for fund updates and documents.
| Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
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ANNUAL REPORT
Global developed and emerging market equities, as measured by the MSCI All Country World Index, declined significantly during the 12 months under review. Stocks generally rose during the period’s first nine months, but fell sharply in the first three months of 2020 as countries around the world imposed lockdowns andstay-at-home measures, which impacted many businesses, in an effort to slow the spread of the novel coronavirus(COVID-19). Concerns about global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash.
In the U.S., economic growth was relatively steady through February 2020, supported by a strong labor market and solid consumer spending growth. However,stay-at-home orders, which included business closures and restrictions, issued by many state and local governments in an effort to mitigate theCOVID-19 pandemic severely impacted the U.S. economy beginning in March 2020. The unemployment rate surged from a50-year low of 3.5% in February 2020 to 4.4% atperiod-end, as many businesses, particularly those involved in hospitality, retail and travel, began mass layoffs.1 Furthermore, consumer spending, a major economic growth engine through most of the reporting period, declined substantially in March. As a result, the economy contracted in the first quarter, following an expansion that lasted more than a decade.
The U.S. Federal Reserve (Fed) made efforts to support the U.S. economy both before and during the pandemic. The Fed cut the federal funds target rate three times in 2019, lowering it to a range of 1.50%–1.75%. In March 2020, as the pandemic began to severely impact the economy and financial markets, the Fed implemented two emergency rate cuts, lowering the federal funds target rate to a range of 0.00%–0.25%. In addition, the Fed announced an emergency plan to purchase government, government-backed and corporate bonds to help keep markets functioning during the economic downturn.
In the eurozone, economic growth had slowed considerably by the end of 2019, raising concerns that the region was on the verge of a recession. As the magnitude of the disruption caused by theCOVID-19 pandemic became apparent, some analysts forecasted a deep economic contraction in 2020’s first and second quarters. Several European countries were impacted substantially by the pandemic, particularly Italy and Spain. European developed market equities, as measured by the MSCI Europe Index, declined significantly for the period, as gains resulting from easing trade tensions and a Brexit agreement were more than offset by the market downturn in 2020’s first quarter.
Asian developed and emerging market equities, as measured by the MSCI All Country Asia Index, also declined significantly during the12-month period. Before the pandemic, Asian stocks advanced, aided by easing trade tensions and the eventual U.S.-China phase one trade agreement. However, following the onset of the pandemic, economic activity in Asia slowed dramatically as many businesses temporarily halted operations in heavily affected countries and manufacturing activity plummeted in the region’s major economies, notably China, South Korea and Japan. In addition, export-focused Asian economies were hurt by a contraction in demand from other parts of the world.
Emerging market stocks, as measured by the MSCI Emerging Markets Index, rose for the period’s first nine months, but declined substantially during the rest of the12-month period in the wake of theCOVID-19 pandemic. A sharp decline in prices for oil and other natural resources also hurt emerging market economies reliant on these exports.
The foregoing information reflects our analysis and opinions as of March 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: U.S. Bureau of Labor Statistics.
See www.franklintempletondatasources.com for additional data provider information.
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Franklin LibertyQ Emerging Markets ETF
This annual report for Franklin LibertyQ Emerging Markets ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Emerging Markets (EM) Index (the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index and in depositary receipts representing such securities. The Underlying Index includes stocks from emerging market countries that have favorable exposure to four investment-style factors: quality, value, momentum and low volatility, subject to a maximum 1% per company weighting. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the MSCI EM Index over the long term by selecting equity securities from the MSCI EM Index that have exposure to these investment-style factors.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-21.22% based on market price and-20.55% based on net asset value (NAV). In comparison, the LibertyQ EMIndex-NR posted a-20.29% total return for the same period, while the MSCI EMIndex-NR posted a-17.69% total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 86.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees
| Geographic Composition* |
| Based on Total Net Assets as of 3/31/20 |
 |
*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
and expenses, to the performance of the LibertyQ EM Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. The LibertyQ EM Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI EM Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EM Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of emerging markets.
2. Source: FactSet.
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. Net Returns (NR) include income net of tax withholding when dividends are paid.
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 32.
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FRANKLIN LIBERTYQ EMERGING MARKETS ETF
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Banks | 15.4% | |||
| Oil, Gas & Consumable Fuels | 12.2% | |||
| Wireless Telecommunication Services | 6.3% | |||
| Chemicals | 5.7% | |||
| Metals & Mining | 5.6% | |||
| Diversified Telecommunication Services | 4.6% | |||
| Semiconductors & Semiconductor Equipment | 4.0% | |||
| IT Services | 3.5% | |||
| Food & Staples Retailing | 3.2% | |||
| Construction Materials | 2.7% | |||
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
| Hindustan Unilever Ltd. Household Products, India | 1.3% | |||
| China Construction Bank Corp., H Banks, China | 1.3% | |||
| Agricultural Bank of China Ltd., A, H Banks, China | 1.2% | |||
| Anhui Conch Cement Co. Ltd., A, H Construction Materials, China | 1.3% | |||
| Industrial & Commercial Bank of China Ltd., H Banks, China | 1.2% | |||
| Chunghwa Telecom Co. Ltd. Diversified Telecommunication Services, Taiwan | 1.2% | |||
| SK Hynix Inc. Semiconductors & Semiconductor Equipment, South Korea | 1.2% | |||
| Bank of China Ltd., A, H Banks, China | 1.2% | |||
| China Mobile Ltd. Wireless Telecommunication Services, China | 1.2% | |||
| MMC Norilsk Nickel PJSC Metals & Mining, Russia | 1.2% | |||
| Top 10 Countries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| China | 23.6% | |||
| Taiwan | 14.0% | |||
| India | 11.2% | |||
| South Korea | 10.0% | |||
| Russia | 9.6% | |||
| Brazil | 6.5% | |||
| Thailand | 4.2% | |||
| South Africa | 2.8% | |||
| Saudi Arabia | 2.6% | |||
| Indonesia | 2.3% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, individual holdings that lifted the Fund’s absolute return included Longfor Group Holdings, MMC Norilsk Nickel and Hindustan Unilever. Individual holdings that hindered the Fund’s absolute return included ITC, Itau Unibanco Holding and Itausa.
The Fund’s research-based selection process focuses on four investment factors: quality, value, momentum and low volatility. Of the four target-style factors, low volatility significantly detracted from the Fund’s relative performance for the reporting period. Value also had a negative effect, while momentum had no significant impact. In contrast, the quality factor was a significant contributor to the Fund’s relative return.
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FRANKLIN LIBERTYQ EMERGING MARKETS ETF
Thank you for your participation in Franklin LibertyQ Emerging Markets ETF. We look forward to serving your future investment needs.
 |
Dina Ting, CFA
| |
 |
Louis Hsu, CFA
| |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
CFA® is a trademark owned by CFA Institute.
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FRANKLIN LIBERTYQ EMERGING MARKETS ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -20.55% | -21.22% | -20.55% | -21.22% | ||||||||||||
3-Year | -14.06% | -15.31% | -4.93% | -5.39% | ||||||||||||
Since Inception (6/1/16) | -1.56% | -2.49% | -0.41% | -0.66% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 8 for Performance Summary footnotes.
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FRANKLIN LIBERTYQ EMERGING MARKETS ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
6/1/16–3/31/20
See page 8 for Performance Summary footnotes.
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FRANKLIN LIBERTYQ EMERGING MARKETS ETF
PERFORMANCE SUMMARY
Distributions (4/1/19–3/31/20)
| Net Investment Income |
| $1.781471 |
Total Annual Operating Expenses6
| 0.45% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. The Fund is designed for the aggressive portion of a well-diversified portfolio. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s Rule12b-1 plan (if any); (ii) brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments); (iii) taxes; (iv) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges); (v) litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto); and (vi) othernon-routine or extraordinary expenses.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. The LibertyQ EM Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI EM Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EM Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of emerging markets. The NR or Net Dividends Index reflects the deduction of withholding taxes on reinvested dividends.
6. 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 provider information.
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FRANKLIN LIBERTYQ EMERGING MARKETS ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000 | $ | 805.70 | $ | 2.03 | $ | 1,022.75 | $ | 2.28 | 0.45 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
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Franklin LibertyQ Global Dividend ETF
This annual report for Franklin LibertyQ Global Dividend ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Dividend Index (the Underlying Index).1Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index and in depositary receipts representing such securities. The Underlying Index includes stocks from developed and emerging market countries with high and persistent dividend income that have favorable exposure to a quality investment-style factor, subject to a maximum 2% per company weighting. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the MSCI All Country World Index (ACWI) ex REITs Index over the long term by applying dividend persistence and yield screens and the quality factor selection process.
Performance Overview
For the12-month period, the Fund posted cumulative total returns of-14.24% based on market price and-14.34% based on net asset value (NAV). In comparison, the LibertyQ Global Dividend Index-NR posted a-14.39% total return for the same period, while the MSCI ACWI ex REITsIndex-NR posted a-11.11% total return for the same period.2 You can find more of the Fund’s 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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
| Geographic Composition* |
| Based on Total Net Assets as of 3/31/20 |
 |
*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Dividend Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. The LibertyQ Global Dividend Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI ex REITs Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI ex REITs Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding REIT securities.
2. Source: FactSet.
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. Net Returns (NR) include income net of tax withholding when dividends are paid.
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 42.
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FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Banks | 14.1% | |||
| Pharmaceuticals | 12.5% | |||
| Insurance | 6.5% | |||
| Semiconductors & Semiconductor Equipment | 6.4% | |||
| Hotels, Restaurants & Leisure | 5.3% | |||
| Household Products | 5.0% | |||
| Tobacco | 4.3% | |||
| Personal Products | 4.3% | |||
| Diversified Telecommunication Services | 4.2% | |||
| Capital Markets | 4.1% | |||
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
| NTT DOCOMO Inc. Wireless Telecommunication Services, Japan | 2.9% | |||
| Roche Holding AG Pharmaceuticals, Switzerland | 2.8% | |||
| Johnson & Johnson Pharmaceuticals, United States | 2.5% | |||
| Kimberly-Clark Corp. Household Products, United States | 2.5% | |||
| Intel Corp. Semiconductors & Semiconductor Equipment, United States | 2.4% | |||
| Novartis AG Pharmaceuticals, Switzerland | 2.3% | |||
| Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan | 2.3% | |||
| The Procter & Gamble Co. Household Products, United States | 2.3% | |||
| Merck & Co. Inc. Pharmaceuticals, United States | 2.3% | |||
| Cisco Systems Inc. Communications Equipment, United States | 2.2% | |||
| Top 10 Countries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| United States | 40.5% | |||
| United Kingdom | 9.8% | |||
| Switzerland | 7.5% | |||
| Australia | 6.8% | |||
| Canada | 5.9% | |||
| Japan | 4.7% | |||
| Finland | 3.6% | |||
| Taiwan | 2.9% | |||
| Germany | 2.6% | |||
| Qatar | 2.4% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, individual holdings that lifted the Fund’s absolute return included NTT Docomo, Zurich Insurance Group, and Taiwan Semiconductor Manufacturing Co. Individual holdings that hindered the Fund’s absolute return included Macquarie Group, Itau Unibanco Holding and Westpac Banking.
The Fund’s research-based selection process focuses on four investment factors: quality, value, momentum and low volatility. Of the four target-style factors, quality significantly benefited the Fund’s relative performance for the reporting period, while low volatility was a more modest contributor and momentum had no significant impact. In contrast, the value factor significantly detracted from the Fund’s relative return.
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FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF
Thank you for your participation in Franklin LibertyQ Global Dividend ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA
| |
|
Louis Hsu, CFA
| |
Hailey Harris
Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 12 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -14.34% | -14.24% | -14.34% | -14.24% | ||||||||||||
3-Year | -5.21% | -5.68% | -1.77% | -1.93% | ||||||||||||
Since Inception (6/1/16) | +4.08% | +4.11% | +1.05% | +1.06% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 15 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 13 | ||||
FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
6/1/16–3/31/20
See page 15 for Performance Summary footnotes.
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FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$1.020756 |
Total Annual Operating Expenses6
0.45% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. 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. Companies that have historically paid regular dividends to shareholders may decrease or eliminate dividend payments in the future. A decrease in dividend payments by an issuer may result in a decrease in the value of the issuer’s stock and less available income for the Fund. There can be no assurance that the Fund’s quality factor stock selection process and dividend screens of the Underlying Index will enhance performance. Exposure to investment factors and the use of dividend screens may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s Rule12b-1 plan (if any); (ii) brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments); (iii) taxes; (iv) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges); (v) litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto); and (vi) othernon-routine or extraordinary expenses.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. The LibertyQ Global Dividend Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI ex REITs Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI ex REITs Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding REIT securities. The NR or Net Dividends Index reflects the deduction of withholding taxes on reinvested dividends.
6. 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 provider information.
| franklintempleton.com | Annual Report | 15 | ||||
FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000 | $ | 813.10 | $ | 2.04 | $ | 1,022.75 | $ | 2.28 | 0.45 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| 16 | Annual Report | franklintempleton.com | ||
Franklin LibertyQ Global Equity ETF
This annual report for Franklin LibertyQ Global Equity ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Equity Index (the Underlying Index).1Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index and in depositary receipts representing such securities. The Underlying Index includes stocks from developed and emerging market countries that have favorable exposure to four investment-style factors: quality, value, momentum and low volatility, subject to a maximum 1% per company weighting. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the MSCI All Country World Index (ACWI) over the long term by selecting equity securities from the MSCI ACWI that have exposure to these investment-style factors.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-10.83% based on market price and-10.53% based on net asset value (NAV). In comparison, the LibertyQ Global EquityIndex-NR posted a-10.48% total return for the same period, while the MSCIACWI-NR posted a-11.26% total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 20.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
| Geographic Composition* |
| Based on Total Net Assets as of 3/31/20 |
 |
*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. The LibertyQ Global Equity Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets.
2. Source: FactSet.
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. Net Returns (NR) include income net of tax withholding when dividends are paid.
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 47.
| franklintempleton.com | Annual Report | 17 | ||||
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Pharmaceuticals | 10.0% | |||
| Semiconductors & Semiconductor Equipment | 6.6% | |||
| Biotechnology | 5.0% | |||
| Banks | 4.5% | |||
| IT Services | 4.2% | |||
| Specialty Retail | 4.2% | |||
| Diversified Telecommunication Services | 4.0% | |||
| Oil, Gas & Consumable Fuels | 3.6% | |||
| Metals & Mining | 3.5% | |||
| Tobacco | 3.0% | |||
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
| Eli Lilly & Co. Pharmaceuticals, United States | 1.3% | |||
| Roche Holding AG Pharmaceuticals, Switzerland | 1.3% | |||
| Microsoft Corp. Software, United States | 1.3% | |||
| Novo Nordisk AS, B Pharmaceuticals, Denmark | 1.3% | |||
| Johnson & Johnson Pharmaceuticals, United States | 1.2% | |||
| Nestle SA Food Products, Switzerland | 1.2% | |||
| Apple Inc. Technology Hardware, Storage & Peripherals, United States | 1.2% | |||
| Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan | 1.1% | |||
| Intel Corp. Semiconductors & Semiconductor Equipment, United States | 1.1% | |||
| Amgen Inc. Biotechnology, United States | 1.1% | |||
| Top 10 Countries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| United States | 53.5% | |||
| United Kingdom | 6.6% | |||
| Australia | 5.9% | |||
| Japan | 5.4% | |||
| China | 3.8% | |||
| Switzerland | 3.0% | |||
| Canada | 2.5% | |||
| South Korea | 2.4% | |||
| Taiwan | 2.4% | |||
| Russia | 1.8% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, individual holdings that lifted the Fund’s absolute returns included Microsoft, Apple and Roche Holding. Individual holdings that hindered the Fund’s absolute return included Simon Property Group, iShares MSCI India ETF and Royal Dutch Shell.
The Fund’s research-based selection process focuses on four investment factors: quality, value, momentum and low volatility. Of the four target-style factors, quality significantly benefited the Fund’s relative performance for the reporting period. Momentum and low volatility also contributed. In contrast, the value factor significantly detracted from the Fund’s relative return.
| 18 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
Thank you for your participation in Franklin LibertyQ Global Equity ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA
| |
|
Louis Hsu, CFA
| |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| franklintempleton.com | Annual Report | 19 | ||||
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -10.53% | -10.83% | -10.53% | -10.83% | ||||||||||||
3-Year | +7.45% | +6.54% | +2.42% | +2.13% | ||||||||||||
Since Inception (6/1/16) | +18.15% | +17.72% | +4.45% | +4.35% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 22 for Performance Summary footnotes.
| 20 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
6/1/16–3/31/20
See page 22 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 21 | ||||
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$1.030695 |
Total Annual Operating Expenses6
0.35% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. 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. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s Rule12b-1 plan (if any); (ii) brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments); (iii) taxes; (iv) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges); (v) litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto); and (vi) othernon-routine or extraordinary expenses.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. The LibertyQ Global Equity Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. The NR or Net Dividends Index reflects the deduction of withholding taxes on reinvested dividends.
6. 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 provider information.
| 22 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000 | $ | 862.80 | $ | 1.58 | $ | 1,023.30 | $ | 1.72 | 0.35 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| franklintempleton.com | Annual Report | 23 | ||||
Franklin LibertyQ International Equity Hedged ETF
This annual report for Franklin LibertyQ International Equity Hedged ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ International Equity Hedged Index (the Underlying Index).1Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index and in depositary receipts representing such securities. The Underlying Index includes stocks from developed market countries in Europe, Australasia and the Far East (EAFE) that have favorable exposure to four investment-style factors: quality, value, momentum and low volatility, subject to a maximum 2% per company weighting. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the MSCI EAFE Index over the long term by selecting equity securities from the MSCI EAFE Index that have exposure to these investment-style factors. The Underlying Index incorporates a hedge againstnon-U.S. currency fluctuations by reflecting the impact of rolling monthly currency forward contracts on the currencies represented in the Underlying Index. In order to replicate the hedge impact incorporated in the calculation of the Underlying Index, the Fund intends to enter into monthly foreign currency forward contracts designed to offset the Fund’s exposure to the component currencies of the Underlying Index.
What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-7.90% based on market price and-7.12% based on
| Geographic Composition* |
| Based on Total Net Assets as of 3/31/20 |
|
* Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
net asset value (NAV). In comparison, LibertyQ International Equity HedgedIndex-NR posted a-6.76% total return for the same period, while the MSCI EAFE 100% Hedged to USDIndex-NR posted a-10.28% total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 27.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ International Equity Hedged Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to
1. The LibertyQ International Equity Hedged Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI EAFE Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EAFE Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada.
2. Source: FactSet.
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. Net Returns (NR) include income net of tax withholding when dividends are paid.
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 63.
| 24 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
Pharmaceuticals | 12.0% | |||
Metals & Mining | 7.7% | |||
Banks | 7.2% | |||
Personal Products | 5.3% | |||
Wireless Telecommunication Services | 4.6% | |||
Diversified Telecommunication Services | 4.6% | |||
Electric Utilities | 4.3% | |||
Automobiles | 3.6% | |||
Health Care Equipment & Supplies | 2.9% | |||
Tobacco | 2.9% | |||
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
| Roche Holding AG Pharmaceuticals, Switzerland | 2.6% | |||
| Novo Nordisk AS, B Pharmaceuticals, Denmark | 2.6% | |||
| CSL Ltd. Biotechnology, Australia | 2.4% | |||
| Sanofi Pharmaceuticals, France | 2.4% | |||
| KDDI Corp. Wireless Telecommunication Services, Japan | 2.2% | |||
| Rio Tinto PLC Metals & Mining, Australia | 2.1% | |||
| GlaxoSmithKline PLC Pharmaceuticals, United Kingdom | 2.1% | |||
| Toyota Motor Corp. Automobiles, Japan | 2.1% | |||
| Unilever NV Personal Products, United Kingdom | 2.0% | |||
| Unilever PLC Personal Products, United Kingdom | 2.0% | |||
| Top 10 Countries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
Japan | 24.3% | |||
United Kingdom | 23.0% | |||
Australia | 19.4% | |||
France | 4.6% | |||
Switzerland | 4.6% | |||
Denmark | 3.9% | |||
Spain | 3.8% | |||
Italy | 3.2% | |||
Sweden | 1.7% | |||
Germany | 1.7% | |||
replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
Manager’s Discussion
For the fiscal year ended March 31, 2020, individual holdings that lifted the Fund’s absolute returns included NTT Docomo, KDDI and CSL. Individual holdings that hindered the Fund’s absolute returns included Westpac, Royal Dutch Shell and BHP.
The Fund’s research-based selection process focuses on four investment factors: quality, value, momentum and low volatility. Of the four target-style factors, quality significantly benefited the Fund’s relative performance during the period, while low volatility and momentum contributed more modestly. In contrast, the value factor detracted from the Fund’s relative return.
| franklintempleton.com | Annual Report | 25 | ||||
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
Thank you for your participation in Franklin LibertyQ International Equity Hedged ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA
| |
|
Louis Hsu, CFA
| |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 26 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -7.12% | -7.90% | -7.12% | -7.90% | ||||||||||||
3-Year | +3.37% | +2.19% | +1.11% | +0.72% | ||||||||||||
Since Inception (6/1/16) | +11.94% | +11.63% | +2.99% | +2.91% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 29 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 27 | ||||
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
6/1/16–3/31/20
See page 29 for Performance Summary footnotes.
| 28 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income | Long-Term Capital Gains | Total | ||
$0.191713 | $0.243700 | $0.435413 | ||
Total Annual Operating Expenses6
0.40% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. 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. The Fund will attempt to hedge the currency exposure ofnon-U.S. dollar denominated securities held in its portfolio by investing in foreign currency forward contracts. Foreign currency forward contracts do not eliminate movements in the value ofnon-U.S. currencies and securities but rather allow the Fund to establish a fixed rate of exchange for a future point in time. Investments in derivatives involve costs and create economic leverage, which may result in significant volatility and cause the Fund to participate in losses (as well as gains) that significantly exceed the Fund’s initial investment. Currency management strategies could result in losses to the Fund if currencies do not perform as the investment manager expects. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s Rule12b-1 plan (if any); (ii) brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments); (iii) taxes; (iv) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges); (v) litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto); and (vi) othernon-routine or extraordinary expenses.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. The LibertyQ International Equity Hedged Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI EAFE Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EAFE Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The NR or Net Dividends Index reflects the deduction of withholding taxes on reinvested dividends.
6. 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 provider information.
| franklintempleton.com | Annual Report | 29 | ||||
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000 | $ | 875.30 | $ | 1.88 | $ | 1,023.00 | $ | 2.02 | 0.40 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.
| 30 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Franklin LibertyQ Emerging Markets ETF
| Year Ended March 31, | ||||||||||||||||
| 2020 | 2019 | 2018 | 2017a | |||||||||||||
Per share operating performance (for a share outstanding throughout the year) | ||||||||||||||||
Net asset value, beginning of year | $ | 29.70 | $ | 33.41 | $ | 29.29 | $ | 25.66 | ||||||||
|
| |||||||||||||||
| Income from investment operationsb: | ||||||||||||||||
Net investment incomec | 1.24 | 1.14 | 0.83 | 0.47 | ||||||||||||
Net realized and unrealized gains (losses) | (6.96 | ) | (3.76 | ) | 4.15 | 3.25 | ||||||||||
|
| |||||||||||||||
Total from investment operations | (5.72 | ) | (2.62 | ) | 4.98 | 3.72 | ||||||||||
|
| |||||||||||||||
Less distributions from net investment income | (1.78 | ) | (1.09 | ) | (0.86 | ) | (0.09 | ) | ||||||||
|
| |||||||||||||||
Net asset value, end of year | $ | 22.20 | $ | 29.70 | $ | 33.41 | $ | 29.29 | ||||||||
|
| |||||||||||||||
Total returnd | (20.55)% | (7.70)% | 17.20% | 14.55% | ||||||||||||
| Ratios to average net assetse | ||||||||||||||||
Expenses before waiver and payments by affiliates | 0.49% | 0.55% | 0.69% | f | 0.75% | |||||||||||
Expenses net of waiver and payments by affiliates | 0.49% | 0.55% | 0.54% | f | 0.55% | |||||||||||
Net investment income | 4.26% | 3.75% | 2.61% | 2.09% | ||||||||||||
| Supplemental data | ||||||||||||||||
Net assets, end of year (000’s) | $57,711 | $344,484 | $400,908 | $328,086 | ||||||||||||
Portfolio turnover rateg | 44.11%h | 52.42% | 32.87% | 31.66% | ||||||||||||
aFor the period June 1, 2016 (commencement of operations) to March 31, 2017.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee. See Note 3(a).
gPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”)
hPortfolio turnover rate excluding cash creation for the year end March 31, 2020 was as follows: 41.78%
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 31 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin LibertyQ Emerging Markets ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks 95.8% | ||||||||||||||
| Argentina 0.1% | ||||||||||||||
Banco Macro SA, ADR | Banks | 1,841 | $ | 31,260 | ||||||||||
Grupo Financiero Galicia SA, ADR | Banks | 3,159 | 22,271 | |||||||||||
|
| |||||||||||||
| 53,531 | ||||||||||||||
|
| |||||||||||||
| Brazil 4.5% | ||||||||||||||
Ambev SA | Beverages | 146,900 | 337,610 | |||||||||||
BB Seguridade Participacoes SA | Insurance | 72,800 | 348,799 | |||||||||||
Cielo SA | IT Services | 93,600 | 80,126 | |||||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | Water Utilities | 23,400 | 176,450 | |||||||||||
Cosan SA | Oil, Gas & Consumable Fuels | 7,800 | 80,848 | |||||||||||
Engie Brasil Energia SA | Independent Power and Renewable Electricity Producers | 16,900 | 126,817 | |||||||||||
| a,b | Hapvida Participacoes e Investimentos SA, 144A, Reg S | Health Care Providers & Services | 7,800 | 63,764 | ||||||||||
Hypera SA | Pharmaceuticals | 19,500 | 107,490 | |||||||||||
IRB Brasil Resseguros SA | Insurance | 41,629 | 77,694 | |||||||||||
Lojas Renner SA | Multiline Retail | 38,760 | 250,797 | |||||||||||
Magazine Luiza SA | Multiline Retail | 22,069 | 165,903 | |||||||||||
Petrobras Distribuidora SA | Specialty Retail | 39,000 | 116,626 | |||||||||||
Porto Seguro SA | Insurance | 3,900 | 33,777 | |||||||||||
Tim Participacoes SA | Wireless Telecommunication Services | 44,200 | 106,013 | |||||||||||
Vale SA | Metals & Mining | 65,000 | 541,646 | |||||||||||
|
| |||||||||||||
| 2,614,360 | ||||||||||||||
|
| |||||||||||||
| Chile 0.8% | ||||||||||||||
Aguas Andinas SA, A | Water Utilities | 187,192 | 55,346 | |||||||||||
Colbun SA | Independent Power and Renewable Electricity Producers | 368,082 | 40,163 | |||||||||||
Compania Cervecerias Unidas SA | Beverages | 9,899 | 68,176 | |||||||||||
Enel Americas SA | Electric Utilities | 1,158,963 | 142,233 | |||||||||||
Enel Chile SA | Electric Utilities | 1,926,320 | 131,085 | |||||||||||
|
| |||||||||||||
| 437,003 | ||||||||||||||
|
| |||||||||||||
| China 23.6% | ||||||||||||||
Agricultural Bank of China Ltd., A | Banks | 137,300 | 65,278 | |||||||||||
Agricultural Bank of China Ltd., H | Banks | 1,638,000 | 657,237 | |||||||||||
Anhui Conch Cement Co. Ltd., A | Construction Materials | 13,000 | 101,055 | |||||||||||
Anhui Conch Cement Co. Ltd., H | Construction Materials | 89,150 | 619,377 | |||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 76,910 | 565,099 | |||||||||||
Autobio Diagnostics Co. Ltd., A | Health Care Equipment & Supplies | 682 | 11,208 | |||||||||||
Bank of Beijing Co. Ltd., A | Banks | 47,100 | 32,095 | |||||||||||
Bank of China Ltd., A | Banks | 39,000 | 19,147 | |||||||||||
Bank of China Ltd., H | Banks | 1,766,000 | 676,698 | |||||||||||
Bank of Communications Co. Ltd., A | Banks | 100,100 | 72,870 | |||||||||||
Bank of Communications Co. Ltd., H | Banks | 585,000 | 358,507 | |||||||||||
Bank of Hangzhou Co. Ltd. | Banks | 11,700 | 12,710 | |||||||||||
Bank of Nanjing Co. Ltd., A | Banks | 15,600 | 15,956 | |||||||||||
Baoshan Iron & Steel Co. Ltd., A | Metals & Mining | 44,800 | 30,780 | |||||||||||
China Cinda Asset Management Co. Ltd., H | Capital Markets | 523,000 | 99,190 | |||||||||||
China CITIC Bank Corp. Ltd., A | Banks | 14,900 | 10,889 | |||||||||||
China CITIC Bank Corp. Ltd., H | Banks | 715,000 | 353,307 | |||||||||||
China Conch Venture Holdings Ltd. | Machinery | 104,000 | 464,256 | |||||||||||
China Construction Bank Corp., H | Banks | 923,000 | 754,986 | |||||||||||
China Everbright Bank Co. Ltd., A | Banks | 90,600 | 46,142 | |||||||||||
China Everbright Bank Co. Ltd., H | Banks | 224,000 | 85,833 | |||||||||||
China Lesso Group Holdings Ltd. | Building Products | 39,000 | 51,424 | |||||||||||
China Medical System Holdings Ltd. | Pharmaceuticals | 91,000 | 98,503 | |||||||||||
China Minsheng Banking Corp. Ltd., A | Banks | 84,300 | 67,909 | |||||||||||
| 32 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Emerging Markets ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
China Minsheng Banking Corp. Ltd., H | Banks | 482,500 | $ | 358,565 | ||||||||||
China Mobile Ltd. | Wireless Telecommunication Services | 93,530 | 695,662 | |||||||||||
China Petroleum & Chemical Corp., A | Oil, Gas & Consumable Fuels | 52,000 | 32,499 | |||||||||||
China Petroleum & Chemical Corp., H | Oil, Gas & Consumable Fuels | 1,222,000 | 602,258 | |||||||||||
China Resources Cement Holdings Ltd. | Construction Materials | 145,000 | 173,044 | |||||||||||
China Shenhua Energy Co. Ltd., A | Oil, Gas & Consumable Fuels | 11,700 | 26,806 | |||||||||||
China Shenhua Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 259,106 | 493,414 | |||||||||||
China South Publishing & Media Group Co. Ltd., A | Media | 3,900 | 5,849 | |||||||||||
China Telecom Corp. Ltd., H | Diversified Telecommunication Services | 624,000 | 189,191 | |||||||||||
China Yangtze Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 49,700 | 121,231 | |||||||||||
China Zhongwang Holdings Ltd. | Metals & Mining | 72,800 | 19,161 | |||||||||||
Chinese Universe Publishing and Media Group Co. Ltd., A | Media | 3,900 | 6,625 | |||||||||||
Chongqing Brewery Co. Ltd., A | Beverages | 1,300 | 8,347 | |||||||||||
Chongqing Rural Commercial Bank Co. Ltd., H | Banks | 117,000 | 48,002 | |||||||||||
CNOOC Ltd. | Oil, Gas & Consumable Fuels | 478,260 | 501,652 | |||||||||||
Country Garden Services Holdings Co. Ltd. | Commercial Services & Supplies | 65,000 | 264,163 | |||||||||||
Dali Foods Group Co. Ltd. | Food Products | 151,000 | 105,201 | |||||||||||
Daqin Railway Co. Ltd., A | Road & Rail | 45,100 | 43,266 | |||||||||||
Dongfeng Motor Group Co. Ltd., H | Automobiles | 234,000 | 154,271 | |||||||||||
| c | Fangda Carbon New Material Co. Ltd. | Electrical Equipment | 6,520 | 8,269 | ||||||||||
Focus Media Information Technology Co. Ltd. | Media | 36,400 | 22,698 | |||||||||||
Foshan Haitian Flavouring & Food Co. Ltd. | Food Products | 6,500 | 114,783 | |||||||||||
Fujian Sunner Development Co. Ltd. | Food Products | 2,600 | 8,675 | |||||||||||
Fuyao Glass Industry Group Co. Ltd., A | Auto Components | 5,200 | 14,071 | |||||||||||
G-bits Network Technology Xiamen Co. Ltd., A | Entertainment | 194 | 11,232 | |||||||||||
Gree Electric Appliances Inc. of Zhuhai, A | Household Durables | 5,200 | 38,295 | |||||||||||
Guangdong Investment Ltd. | Water Utilities | 134,500 | 259,251 | |||||||||||
Guangzhou Automobile Group Co. Ltd., H | Automobiles | 223,000 | 224,125 | |||||||||||
Hangzhou Robam Appliances Co. Ltd., A | Household Durables | 2,600 | 10,432 | |||||||||||
Hefei Meiya Optoelectronic Technology, Inc. | Machinery | 1,300 | 6,918 | |||||||||||
Heilan Home Co. Ltd., A – SHSC | Specialty Retail | 5,800 | 5,180 | |||||||||||
Heilongjiang Agriculture Co. Ltd., A | Food Products | 3,900 | 9,491 | |||||||||||
Henan Shuanghui Investment & Development Co. Ltd. | Food Products | 9,100 | 50,454 | |||||||||||
Hualan Biological Engineering Inc. | Biotechnology | 2,600 | 17,577 | |||||||||||
Huaxin Cement Co. Ltd., A | Construction Materials | 3,900 | 12,803 | |||||||||||
Huayu Automotive Systems Co. Ltd. | Auto Components | 7,800 | 23,703 | |||||||||||
Hubei Jumpcan Pharmaceutical Co. Ltd., A | Pharmaceuticals | 1,300 | 4,020 | |||||||||||
Industrial & Commercial Bank of China Ltd., H | Banks | 1,027,000 | 703,579 | |||||||||||
| c | Inner Mongolia Junzheng Energy & Chemical Industry Group Co. Ltd., A | Chemicals | 15,600 | 5,414 | ||||||||||
Jafron Biomedical Co. Ltd., A | Health Care Equipment & Supplies | 1,300 | 17,363 | |||||||||||
Jiangsu Expressway Co. Ltd., H | Transportation Infrastructure | 91,000 | 101,556 | |||||||||||
Kweichow Moutai Co. Ltd., A | Beverages | 3,500 | 548,588 | |||||||||||
| franklintempleton.com | Annual Report | 33 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Emerging Markets ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Lee & Man Paper Manufacturing Ltd. | Paper & Forest Products | 104,000 | $ | 63,064 | ||||||||||
Lomon Billions Group Co. Ltd. | Chemicals | 3,900 | 8,215 | |||||||||||
| a,b | Longfor Group Holdings Ltd., 144A, Reg S | Real Estate Management & Development | 130,000 | 633,152 | ||||||||||
Luxi Chemical Group Co. Ltd. | Chemicals | 2,600 | 2,993 | |||||||||||
Luzhou Laojiao Co. Ltd., A | Beverages | 3,900 | 40,523 | |||||||||||
Maanshan Iron & Steel Co. Ltd., A | Metals & Mining | 20,800 | 7,395 | |||||||||||
Maanshan Iron & Steel Co. Ltd., H | Metals & Mining | 104,000 | 32,605 | |||||||||||
Nanjing Iron & Steel Co. Ltd., A | Metals & Mining | 11,700 | 5,183 | |||||||||||
Nexteer Automotive Group Ltd. | Auto Components | 39,000 | 19,573 | |||||||||||
Nine Dragons Paper Holdings Ltd. | Paper & Forest Products | 117,000 | 106,722 | |||||||||||
Ovctek China, Inc., A | Health Care Equipment & Supplies | 1,300 | 10,131 | |||||||||||
RiseSun Real Estate Development Co. Ltd. | Real Estate Management & Development | 10,400 | 11,371 | |||||||||||
SAIC Motor Corp. Ltd. | Automobiles | 15,600 | 45,117 | |||||||||||
Sansteel Minguang Co. Ltd. | Metals & Mining | 6,500 | 7,309 | |||||||||||
Sany Heavy Industry Co. Ltd., A | Machinery | 15,600 | 38,075 | |||||||||||
Shaanxi Coal Industry Co. Ltd. | Oil, Gas & Consumable Fuels | 23,400 | 24,693 | |||||||||||
Shandong Buchang Pharmaceuticals Co. Ltd., A | Pharmaceuticals | 2,600 | 7,384 | |||||||||||
Shandong Hualu Hengsheng Chemical Co. Ltd., A | Chemicals | 3,900 | 8,638 | |||||||||||
Shanghai International Airport Co. Ltd., A | Transportation Infrastructure | 2,600 | 22,306 | |||||||||||
Shanghai M&G Stationery, Inc., A | Commercial Services & Supplies | 1,300 | 8,492 | |||||||||||
| c | Shanying International Holding Co. Ltd., A | Paper & Forest Products | 9,100 | 3,928 | ||||||||||
Shenzhen Expressway Co. Ltd., H | Transportation Infrastructure | 26,000 | 26,500 | |||||||||||
Shenzhen Goodix Technology Co. Ltd., A | Semiconductors & Semiconductor Equipment | 900 | 33,112 | |||||||||||
Shenzhen MindrayBio-Medical Electronics Co. Ltd., A | Health Care Equipment & Supplies | 1,031 | 38,065 | |||||||||||
Shenzhen Salubris Pharmaceuticals Co. Ltd. | Pharmaceuticals | 2,600 | 6,507 | |||||||||||
Shenzhou International Group Holdings Ltd. | Textiles, Apparel & Luxury Goods | 46,800 | 497,532 | |||||||||||
Shui On Land Ltd. | Real Estate Management & Development | 133,000 | 22,307 | |||||||||||
Sichuan Chuantou Energy Co. Ltd., A | Independent Power and Renewable Electricity Producers | 7,800 | 10,124 | |||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., A | Chemicals | 15,600 | 8,561 | |||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., H | Chemicals | 286,000 | 70,846 | |||||||||||
Sinotrans Ltd., H | Air Freight & Logistics | 65,000 | 16,017 | |||||||||||
Toly Bread Co. Ltd., A | Food Products | 1,300 | 9,075 | |||||||||||
| c | Topchoice Medical Corp., A | Health Care Providers & Services | 820 | 12,469 | ||||||||||
Wanhua Chemical Group Co. Ltd., A | Chemicals | 6,500 | 37,827 | |||||||||||
Weichai Power Co. Ltd., A | Machinery | 13,300 | 22,441 | |||||||||||
Weifu High-Technology Group Co. Ltd., A | Auto Components | 2,600 | 6,969 | |||||||||||
Wuhu Sanqi Interactive Entertainment NetworkTechnology Group Co. Ltd. | Entertainment | 6,500 | 29,950 | |||||||||||
Wuliangye Yibin Co. Ltd. | Beverages | 6,500 | 105,640 | |||||||||||
Xinyu Iron & Steel Co. Ltd., A | Metals & Mining | 7,800 | 4,479 | |||||||||||
Yanzhou Coal Mining Co. Ltd., H | Oil, Gas & Consumable Fuels | 52,000 | 40,790 | |||||||||||
Yealink Network Technology Corp. Ltd. | Communications Equipment | 1,300 | 14,960 | |||||||||||
Yuexiu Property Co. Ltd. | Real Estate Management & Development | 234,000 | 42,266 | |||||||||||
Yunda Holding Co. Ltd. | Air Freight & Logistics | 2,600 | 11,301 | |||||||||||
| 34 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Emerging Markets ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Yuzhou Properties Co. Ltd. | Real Estate Management & Development | 78,000 | $ | 33,209 | ||||||||||
Zhejiang Juhua Co. Ltd., A | Chemicals | 5,200 | 4,974 | |||||||||||
Zhejiang NHU Co. Ltd. | Pharmaceuticals | 3,900 | 15,021 | |||||||||||
Zhejiang Semir Garment Co. Ltd. | Textiles, Apparel & Luxury Goods | 3,900 | 3,917 | |||||||||||
Zhejiang Supor Co. Ltd. | Household Durables | 1,300 | 12,679 | |||||||||||
Zhejiang Weixing New Building Materials Co. Ltd. | Building Products | 3,900 | 6,085 | |||||||||||
Zhejiang WolwoBio-Pharmaceutical Co. Ltd., A | Pharmaceuticals | 1,300 | 8,178 | |||||||||||
|
| |||||||||||||
| 13,596,810 | ||||||||||||||
|
| |||||||||||||
| Colombia 0.2% | ||||||||||||||
Ecopetrol SA | Oil, Gas & Consumable Fuels | 230,980 | 108,091 | |||||||||||
|
| |||||||||||||
| Czech Republic 0.1% | ||||||||||||||
Moneta Money Bank AS | Banks | 37,529 | 77,257 | |||||||||||
|
| |||||||||||||
| Egypt 0.6% | ||||||||||||||
Commercial International Bank Egypt SAE | Banks | 64,559 | 241,050 | |||||||||||
Eastern Co. SAE | Tobacco | 84,633 | 66,405 | |||||||||||
ElSewedy Electric Co. | Electrical Equipment | 63,537 | 31,648 | |||||||||||
|
| |||||||||||||
| 339,103 | ||||||||||||||
|
| |||||||||||||
| Greece 0.3% | ||||||||||||||
JUMBO SA | Specialty Retail | 4,941 | 66,793 | |||||||||||
Motor Oil (Hellas) Corinth Refineries SA | Oil, Gas & Consumable Fuels | 3,356 | 41,427 | |||||||||||
OPAP SA | Hotels, Restaurants & Leisure | 6,457 | 49,098 | |||||||||||
|
| |||||||||||||
| 157,318 | ||||||||||||||
|
| |||||||||||||
| Hong Kong 0.2% | ||||||||||||||
Kingboard Laminates Holdings Ltd. | Chemicals | 73,000 | 67,529 | |||||||||||
The Wharf Holdings Ltd. | Real Estate Management & Development | 39,000 | 69,135 | |||||||||||
|
| |||||||||||||
| 136,664 | ||||||||||||||
|
| |||||||||||||
| Hungary 0.3% | ||||||||||||||
MOL Hungarian Oil and Gas PLC | Oil, Gas & Consumable Fuels | 30,355 | 178,214 | |||||||||||
|
| |||||||||||||
| India 11.2% | ||||||||||||||
Asian Paints Ltd. | Chemicals | 8,783 | 193,478 | |||||||||||
| c | Avenue Supermarts Ltd. | Food & Staples Retailing | 3,727 | 107,768 | ||||||||||
Bajaj Auto Ltd. | Automobiles | 5,946 | 158,952 | |||||||||||
Berger Paints India Ltd. | Chemicals | 7,203 | 47,411 | |||||||||||
Bharat Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 51,987 | 217,771 | |||||||||||
Bharti Infratel Ltd. | Diversified Telecommunication Services | 19,418 | 41,069 | |||||||||||
Britannia Industries Ltd. | Food Products | 3,471 | 123,373 | |||||||||||
Coal India Ltd. | Oil, Gas & Consumable Fuels | 99,269 | 183,773 | |||||||||||
Colgate-Palmolive India Ltd. | Personal Products | 2,911 | 48,203 | |||||||||||
Dabur India Ltd. | Personal Products | 36,853 | 219,239 | |||||||||||
Eicher Motors Ltd. | Automobiles | 975 | 168,781 | |||||||||||
GAIL India Ltd. | Gas Utilities | 76,096 | 77,000 | |||||||||||
HCL Technologies Ltd. | IT Services | 81,029 | 467,422 | |||||||||||
HDFC Asset Management Co. Ltd. | Capital Markets | 1,894 | 52,896 | |||||||||||
| c | HDFC Life Insurance Co. Ltd. | Insurance | 16,224 | 94,651 | ||||||||||
Hero Motocorp Ltd. | Automobiles | 5,668 | 119,610 | |||||||||||
Hindustan Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 54,052 | 135,824 | |||||||||||
Hindustan Unilever Ltd. | Household Products | 25,427 | 772,545 | |||||||||||
| a,b | ICICI Lombard General Insurance Co. Ltd., 144A, Reg S | Insurance | 5,672 | 81,097 | ||||||||||
Indian Oil Corp. Ltd. | Oil, Gas & Consumable Fuels | 133,270 | 143,838 | |||||||||||
| franklintempleton.com | Annual Report | 35 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Emerging Markets ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| India (continued) | ||||||||||||||
Infosys Ltd. | IT Services | 74,529 | $ | 631,984 | ||||||||||
ITC Ltd. | Tobacco | 207,300 | 470,493 | |||||||||||
Marico Ltd. | Personal Products | 33,429 | 121,452 | |||||||||||
Nestle India Ltd. | Food Products | 1,820 | 392,156 | |||||||||||
Oil & Natural Gas Corp. Ltd. | Oil, Gas & Consumable Fuels | 135,858 | 122,656 | |||||||||||
Page Industries Ltd. | Textiles, Apparel & Luxury Goods | 351 | 78,706 | |||||||||||
Petronet LNG Ltd. | Oil, Gas & Consumable Fuels | 31,221 | 82,416 | |||||||||||
Pidilite Industries Ltd. | Chemicals | 7,730 | 138,596 | |||||||||||
REC Ltd. | Diversified Financial Services | 31,497 | 36,951 | |||||||||||
SBI Life Insurance Co. Ltd. | Insurance | 11,625 | 98,500 | |||||||||||
Tata Consultancy Services Ltd. | IT Services | 23,934 | 577,728 | |||||||||||
Tech Mahindra Ltd. | IT Services | 32,091 | 239,883 | |||||||||||
|
| |||||||||||||
| 6,446,222 | ||||||||||||||
|
| |||||||||||||
| Indonesia 2.3% | ||||||||||||||
Adaro Energy Tbk PT | Oil, Gas & Consumable Fuels | 1,004,700 | 60,984 | |||||||||||
Bukit Asam Tbk PT | Oil, Gas & Consumable Fuels | 278,200 | 37,184 | |||||||||||
Charoen Pokphand Indonesia Tbk PT | Food Products | 324,600 | 98,315 | |||||||||||
Gudang Garam Tbk PT | Tobacco | 23,400 | 58,966 | |||||||||||
Hanjaya Mandala Sampoerna Tbk PT | Tobacco | 911,900 | 79,673 | |||||||||||
Indofood CBP Sukses Makmur Tbk PT | Food Products | 116,000 | 72,722 | |||||||||||
Perusahaan Perseroan (Persero) PT TelekomunikasiIndonesia Tbk, B | Diversified Telecommunication Services | 2,541,800 | 492,464 | |||||||||||
Unilever Indonesia Tbk PT | Household Products | 697,300 | 309,959 | |||||||||||
United Tractors Tbk PT | Oil, Gas & Consumable Fuels | 130,000 | 134,703 | |||||||||||
|
| |||||||||||||
| 1,344,970 | ||||||||||||||
|
| |||||||||||||
| Malaysia 1.8% | ||||||||||||||
AirAsia Group Bhd | Airlines | 111,400 | 20,372 | |||||||||||
Digi.com Bhd. | Wireless Telecommunication Services | 269,100 | 270,969 | |||||||||||
Hartalega Holdings Bhd. | Health Care Equipment & Supplies | 98,100 | 156,233 | |||||||||||
Nestle (Malaysia) Bhd. | Food Products | 6,500 | 205,683 | |||||||||||
Petronas Chemicals Group Bhd. | Chemicals | 185,700 | 217,080 | |||||||||||
Petronas Gas Bhd. | Gas Utilities | 28,600 | 101,953 | |||||||||||
Westports Holdings Bhd. | Transportation Infrastructure | 64,300 | 50,309 | |||||||||||
|
| |||||||||||||
| 1,022,599 | ||||||||||||||
|
| |||||||||||||
| Mexico 2.0% | ||||||||||||||
Fibra Uno Administracion SA de CV | Equity Real Estate Investment Trusts (REITs | ) | 167,007 | 132,343 | ||||||||||
Grupo Aeroportuario del Pacifico SAB de CV | Transportation Infrastructure | 26,728 | 145,140 | |||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 111,631 | 170,926 | |||||||||||
Megacable Holdings SAB de CV | Media | 18,586 | 51,402 | |||||||||||
Promotora y Operadora de Infraestructura SAB de CV | Transportation Infrastructure | 10,493 | 71,204 | |||||||||||
Wal-Mart de Mexico SAB de CV, V | Food & Staples Retailing | 257,300 | 611,463 | |||||||||||
|
| |||||||||||||
| 1,182,478 | ||||||||||||||
|
| |||||||||||||
| Pakistan 0.1% | ||||||||||||||
MCB Bank Ltd. | Banks | 28,900 | 25,973 | |||||||||||
Oil & Gas Development Co. Ltd. | Oil, Gas & Consumable Fuels | 61,100 | 28,321 | |||||||||||
|
| |||||||||||||
| 54,294 | ||||||||||||||
|
| |||||||||||||
| Philippines 0.3% | ||||||||||||||
Globe Telecom Inc. | Wireless Telecommunication Services | 2,405 | 91,263 | |||||||||||
Manila Electric Co. | Electric Utilities | 16,900 | 74,764 | |||||||||||
|
| |||||||||||||
| 166,027 | ||||||||||||||
|
| |||||||||||||
| 36 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Emerging Markets ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Poland 0.4% | ||||||||||||||
Powszechny Zaklad Ubezpieczen SA | Insurance | 27,197 | $ | 205,148 | ||||||||||
|
| |||||||||||||
| Qatar 1.5% | ||||||||||||||
Barwa Real Estate Co. | Real Estate Management & Development | 109,239 | 90,007 | |||||||||||
Industries Qatar QSC | Industrial Conglomerates | 136,500 | 249,306 | |||||||||||
Masraf Al Rayan QSC | Banks | 159,750 | 160,584 | |||||||||||
Mesaieed Petrochemical Holding Co. | Chemicals | 222,981 | 89,413 | |||||||||||
Qatar Electricity & Water Co. QSC | Multi-Utilities | 35,909 | 134,425 | |||||||||||
Qatar Fuel QSC | Oil, Gas & Consumable Fuels | 25,795 | 115,975 | |||||||||||
Qatar International Islamic Bank QSC | Banks | 23,334 | 46,527 | |||||||||||
|
| |||||||||||||
| 886,237 | ||||||||||||||
|
| |||||||||||||
| Russia 9.0% | ||||||||||||||
Alrosa PJSC | Metals & Mining | 287,185 | 237,404 | |||||||||||
Gazprom PJSC | Oil, Gas & Consumable Fuels | 188,486 | 437,624 | |||||||||||
Inter RAO UES PJSC | Electric Utilities | 3,387,454 | 213,413 | |||||||||||
LUKOIL PJSC | Oil, Gas & Consumable Fuels | 7,704 | 464,900 | |||||||||||
Magnitogorsk Iron & Steel Works | Metals & Mining | 185,836 | 91,570 | |||||||||||
MMC Norilsk Nickel PJSC | Metals & Mining | 2,678 | 668,971 | |||||||||||
Mobile TeleSystems PJSC, ADR | Wireless Telecommunication Services | 46,555 | 353,818 | |||||||||||
Moscow Exchange MICEX | Capital Markets | 62,984 | 78,394 | |||||||||||
NLMK PJSC | Metals & Mining | 119,785 | 190,101 | |||||||||||
| a | Novatek PJSC, GDR, Reg S | Oil, Gas & Consumable Fuels | 3,534 | 407,470 | ||||||||||
| a | PhosAgro PJSC, GDR, Reg S | Chemicals | 7,240 | 74,717 | ||||||||||
Polymetal International PLC | Metals & Mining | 13,414 | 229,448 | |||||||||||
Polyus Gold OJSC | Metals & Mining | 2,122 | 288,899 | |||||||||||
Rosneft PJSC | Oil, Gas & Consumable Fuels | 88,111 | 354,491 | |||||||||||
Severstal PJSC | Metals & Mining | 24,758 | 274,597 | |||||||||||
Surgutneftegas PJSC | Oil, Gas & Consumable Fuels | 530,337 | 230,098 | |||||||||||
Tatneft PAO | Oil, Gas & Consumable Fuels | 60,469 | 427,666 | |||||||||||
| a | X5 Retail Group NV, GDR, Reg S | Food & Staples Retailing | 6,121 | 163,848 | ||||||||||
|
| |||||||||||||
| 5,187,429 | ||||||||||||||
|
| |||||||||||||
| Saudi Arabia 2.6% | ||||||||||||||
Advanced Petrochemical Co. | Chemicals | 4,878 | 57,778 | |||||||||||
Al-Rajhi Bank | Banks | 42,439 | 607,724 | |||||||||||
Bupa Arabia for Cooperative Insurance Co. | Insurance | 1,109 | 26,980 | |||||||||||
Jarir Marketing Co. | Specialty Retail | 3,159 | 107,458 | |||||||||||
Saudi Airlines Catering Co. | Hotels, Restaurants & Leisure | 2,106 | 42,322 | |||||||||||
Saudi Arabian Fertilizer Co. | Chemicals | 7,626 | 125,848 | |||||||||||
Saudi Cement Co. | Construction Materials | 2,957 | 38,566 | |||||||||||
Saudi Telecom Co. | Diversified Telecommunication Services | 16,795 | 391,153 | |||||||||||
Yanbu National Petrochemical Co. | Chemicals | 9,599 | 106,286 | |||||||||||
|
| |||||||||||||
| 1,504,115 | ||||||||||||||
|
| |||||||||||||
| South Africa 2.8% | ||||||||||||||
AngloGold Ashanti Ltd. | Metals & Mining | 13,054 | 233,240 | |||||||||||
Capitec Bank Holdings Ltd. | Banks | 2,177 | 107,265 | |||||||||||
Clicks Group Ltd. | Food & Staples Retailing | 17,108 | 246,850 | |||||||||||
Exxaro Resources Ltd. | Oil, Gas & Consumable Fuels | 22,070 | 122,324 | |||||||||||
Kumba Iron Ore Ltd. | Metals & Mining | 6,472 | 101,487 | |||||||||||
Mr. Price Group Ltd. | Specialty Retail | 22,801 | 145,640 | |||||||||||
Pick ‘N Pay Stores Ltd. | Food & Staples Retailing | 11,037 | 37,449 | |||||||||||
RMB Holdings Ltd. | Diversified Financial Services | 49,685 | 137,538 | |||||||||||
Telkom SA SOC Ltd. | Diversified Telecommunication Services | 20,654 | 23,742 | |||||||||||
Tiger Brands Ltd. | Food Products | 10,927 | 113,186 | |||||||||||
Vodacom Group Ltd. | Wireless Telecommunication Services | 47,628 | 312,035 | |||||||||||
Woolworths Holdings Ltd. | Multiline Retail | 29,636 | 45,798 | |||||||||||
|
| |||||||||||||
| 1,626,554 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 37 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Emerging Markets ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| South Korea 9.9% | ||||||||||||||
BGF Retail Co. Ltd. | Food & Staples Retailing | 390 | $ | 42,289 | ||||||||||
BNK Financial Group Inc. | Banks | 21,017 | 76,568 | |||||||||||
Coway Co. Ltd. | Household Durables | 4,472 | 212,331 | |||||||||||
Daelim Industrial Co. Ltd. | Construction & Engineering | 1,378 | 83,426 | |||||||||||
DB Insurance Co. Ltd. | Insurance | 2,166 | 61,830 | |||||||||||
Hana Financial Group Inc. | Banks | 23,670 | 449,154 | |||||||||||
Hanwha Life Insurance Co. Ltd. | Insurance | 19,364 | 22,110 | |||||||||||
Hyundai Marine & Fire Insurance Co. Ltd. | Insurance | 4,355 | 81,029 | |||||||||||
Industrial Bank of Korea | Banks | 21,293 | 131,185 | |||||||||||
Kangwon Land Inc. | Hotels, Restaurants & Leisure | 7,709 | 125,069 | |||||||||||
KB Financial Group Inc. | Banks | 19,576 | 555,593 | |||||||||||
Kia Motors Corp. | Automobiles | 11,539 | 246,448 | |||||||||||
Korea Zinc Co. Ltd. | Metals & Mining | 390 | 114,051 | |||||||||||
KT&G Corp. | Tobacco | 8,603 | 527,904 | |||||||||||
Kumho Petrochemical Co. Ltd. | Chemicals | 900 | 47,907 | |||||||||||
Lotte Chemical Corp. | Chemicals | 1,246 | 197,542 | |||||||||||
NCsoft Corp. | Entertainment | 910 | 487,387 | |||||||||||
| c | Pearl Abyss Corp. | Entertainment | 331 | 48,670 | ||||||||||
S-1 Corp. | Commercial Services & Supplies | 1,163 | 76,428 | |||||||||||
Samsung Card Co. Ltd. | Consumer Finance | 1,365 | 33,527 | |||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 14,105 | 553,262 | |||||||||||
Shinhan Financial Group Co. Ltd. | Banks | 20,638 | 484,862 | |||||||||||
SK Hynix Inc. | Semiconductors & Semiconductor Equipment | 10,247 | 701,175 | |||||||||||
SK Telecom Co. Ltd. | Wireless Telecommunication Services | 1,561 | 226,966 | |||||||||||
Woori Financial Group Inc. | Banks | 17,463 | 109,740 | |||||||||||
|
| |||||||||||||
| 5,696,453 | ||||||||||||||
|
| |||||||||||||
| Taiwan 14.0% | ||||||||||||||
Accton Technology Corp. | Communications Equipment | 13,000 | 70,069 | |||||||||||
Advantech Co. Ltd. | Technology Hardware, Storage & Peripherals | 16,920 | 139,594 | |||||||||||
Catcher Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 44,680 | 288,840 | |||||||||||
Chicony Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 43,760 | 109,684 | |||||||||||
Chunghwa Telecom Co. Ltd. | Diversified Telecommunication Services | 197,380 | 701,630 | |||||||||||
Eclat Textile Co. Ltd. | Textiles, Apparel & Luxury Goods | 9,320 | 74,119 | |||||||||||
Far EasTone Telecommunications Co. Ltd. | Wireless Telecommunication Services | 117,000 | 244,899 | |||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 27,270 | 117,226 | |||||||||||
Formosa Chemicals & Fibre Corp. | Chemicals | 221,000 | 489,625 | |||||||||||
Formosa Petrochemical Corp. | Oil, Gas & Consumable Fuels | 91,000 | 244,942 | |||||||||||
Formosa Plastics Corp. | Chemicals | 231,480 | 574,844 | |||||||||||
Globalwafers Co. Ltd. | Semiconductors & Semiconductor Equipment | 11,900 | 134,183 | |||||||||||
Highwealth Construction Corp. | Real Estate Management & Development | 39,000 | 52,230 | |||||||||||
Largan Precision Co. Ltd. | Electronic Equipment, Instruments & Components | 4,800 | 607,906 | |||||||||||
Lite-On Technology Corp. | Technology Hardware, Storage & Peripherals | 104,000 | 142,030 | |||||||||||
Nan Ya Plastics Corp. | Chemicals | 314,210 | 568,334 | |||||||||||
Nanya Technology Corp. | Semiconductors & Semiconductor Equipment | 107,740 | 191,315 | |||||||||||
Nien Made Enterprise Co. Ltd. | Household Durables | 13,000 | 77,592 | |||||||||||
Novatek Microelectronics Corp. Ltd. | Semiconductors & Semiconductor Equipment | 44,410 | 252,584 | |||||||||||
Phison Electronics Corp. | Semiconductors & Semiconductor Equipment | 11,430 | 93,733 | |||||||||||
Powertech Technology Inc. | Semiconductors & Semiconductor Equipment | 39,000 | 110,778 | |||||||||||
President Chain Store Corp. | Food & Staples Retailing | 42,440 | 397,154 | |||||||||||
Ruentex Development Co. Ltd. | Real Estate Management & Development | 13,000 | 16,421 | |||||||||||
Ruentex Industries Ltd. | Textiles, Apparel & Luxury Goods | 13,000 | 29,833 | |||||||||||
Standard Foods Corp. | Food Products | 26,000 | 52,445 | |||||||||||
Taiwan Business Bank | Banks | 221,000 | 70,813 | |||||||||||
Taiwan Cement Corp. | Construction Materials | 156,000 | 203,760 | |||||||||||
Taiwan Mobile Co. Ltd. | Wireless Telecommunication Services | 118,870 | 392,676 | |||||||||||
| 38 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Emerging Markets ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Taiwan (continued) | ||||||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 73,730 | $ | 668,023 | ||||||||||
The Shanghai Commercial & Savings Bank Ltd. | Banks | 142,999 | 186,069 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 65,000 | 127,457 | |||||||||||
Walsin Technology Corp. | Electronic Equipment, Instruments & Components | 20,980 | 111,694 | |||||||||||
Yageo Corp. | Electronic Equipment, Instruments & Components | 22,780 | 206,772 | |||||||||||
Yuanta Financial Holding Co. Ltd. | Diversified Financial Services | 442,000 | 227,274 | |||||||||||
Zhen Ding Technology Holding Ltd. | Electronic Equipment, Instruments & Components | 26,000 | 79,956 | |||||||||||
|
| |||||||||||||
| 8,056,504 | ||||||||||||||
|
| |||||||||||||
| Thailand 4.2% | ||||||||||||||
Advanced Info Service PCL | Wireless Telecommunication Services | 96,200 | 589,204 | |||||||||||
Airports of Thailand Public Co. Ltd., NVDR | Transportation Infrastructure | 128,700 | 199,026 | |||||||||||
Bumrungrad Hospital PCL | Health Care Providers & Services | 28,600 | 99,349 | |||||||||||
Electricity Generating PCL | Independent Power and Renewable Electricity Producers | 13,000 | 91,506 | |||||||||||
Home Product Center PCL, NVDR | Specialty Retail | 180,300 | 60,984 | |||||||||||
Intouch Holdings PCL | Wireless Telecommunication Services | 141,700 | 215,891 | |||||||||||
Land and Houses PCL, NVDR | Real Estate Management & Development | 340,600 | 69,537 | |||||||||||
Osotspa PCL, NVDR | Beverages | 26,000 | 28,323 | |||||||||||
PTT Global Chemical PCL, NVDR | Chemicals | 153,400 | 142,567 | |||||||||||
PTT PCL | Oil, Gas & Consumable Fuels | 494,500 | 463,347 | |||||||||||
Ratch Group PCL, NVDR | Independent Power and Renewable Electricity Producers | 35,400 | 61,485 | |||||||||||
The Siam Cement PCL | Construction Materials | 42,900 | 423,542 | |||||||||||
|
| |||||||||||||
| 2,444,761 | ||||||||||||||
|
| |||||||||||||
| Turkey 1.4% | ||||||||||||||
BIM Birlesik Magazalar AS | Food & Staples Retailing | 34,543 | 262,863 | |||||||||||
Eregli Demir ve Celik Fabrikalari AS | Metals & Mining | 136,608 | 155,673 | |||||||||||
Ford Otomotiv Sanayi AS | Automobiles | 6,546 | 48,949 | |||||||||||
TAV Havalimanlari Holding AS | Transportation Infrastructure | 14,889 | 37,413 | |||||||||||
| c | Tupras-Turkiye Petrol Rafinerileri AS | Oil, Gas & Consumable Fuels | 10,628 | 121,758 | ||||||||||
Turkcell Iletisim Hizmetleri AS | Wireless Telecommunication Services | 69,821 | 130,526 | |||||||||||
| c | Turkiye Is Bankasi AS, C | Banks | 108,107 | 77,427 | ||||||||||
|
| |||||||||||||
| 834,609 | ||||||||||||||
|
| |||||||||||||
| United Arab Emirates 1.6% | ||||||||||||||
Abu Dhabi Commercial Bank PJSC | Banks | 742 | 794 | |||||||||||
Abu Dhabi Commercial Bank PJSC | Banks | 120,640 | 152,067 | |||||||||||
Aldar Properties PJSC | Real Estate Management & Development | 264,414 | 110,858 | |||||||||||
Dubai Islamic Bank PJSC | Banks | 119,885 | 117,498 | |||||||||||
Emaar Malls Group PJSC | Real Estate Management & Development | 83,856 | 24,427 | |||||||||||
Emirates Telecommunications Group Co. PJSC | Diversified Telecommunication Services | 128,242 | 489,485 | |||||||||||
|
| |||||||||||||
| 895,129 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks | 55,251,880 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks 2.7% | ||||||||||||||
| Brazil 1.9% | ||||||||||||||
| d | Itau Unibanco Holding SA, 8.709%, pfd. | Banks | 86,700 | 385,976 | ||||||||||
| d | Itausa-Investimentos Itau SA, 9.918%, pfd. | Banks | 224,400 | 379,437 | ||||||||||
| d | Telefonica Brasil SA, 6.951%, pfd. | Diversified Telecommunication Services | 35,973 | 342,973 | ||||||||||
|
| |||||||||||||
| 1,108,386 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 39 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Emerging Markets ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Preferred Stocks (continued) | ||||||||||||||
| Colombia 0.0%† | ||||||||||||||
| d | Grupo Aval Acciones y Valores SA, 6.689%, pfd. | Banks | 116,236 | $ | 25,680 | |||||||||
|
| |||||||||||||
| Russia 0.6% | ||||||||||||||
| d | Surgutneftegas PJSC, 20.266%, pfd. | Oil, Gas & Consumable Fuels | 569,107 | 273,869 | ||||||||||
| d | Transneft PJSC, 7.246%, pfd. | Oil, Gas & Consumable Fuels | 39 | 73,749 | ||||||||||
|
| |||||||||||||
| 347,618 | ||||||||||||||
|
| |||||||||||||
| South Korea 0.2% | ||||||||||||||
| d | Samsung Electronics Co. Ltd., 2.651%, pfd. | Technology Hardware, Storage & Peripherals | 2,623 | 86,403 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $2,303,249) | 1,568,087 | |||||||||||||
|
| |||||||||||||
Total Investments | 56,819,967 | |||||||||||||
Other Assets, less Liabilities 1.5% | 890,761 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 57,710,728 | ||||||||||||
|
| |||||||||||||
†Rounds to less than 0.1% of net assets.
aSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $1,424,048, representing 2.5% of net assets.
bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $778,013, representing 1.3% of net assets.
cNon-income producing.
dVariable rate security. The rate shown represents the yield at period end.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Index Contracts | ||||||||||||||||||||
MSCI Emerging Markets Index | Long | 16 | $ | 674,320 | 6/19/20 | $ | 50,836 | |||||||||||||
*As of period end.
See Abbreviations on page 86.
| 40 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ Global Dividend ETF
| Year Ended March 31, | ||||||||||||||||
| 2020 | 2019 | 2018 | 2017a | |||||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||||||
Net asset value, beginning of year | $ | 28.20 | $ | 28.22 | $ | 27.31 | $ | 25.43 | ||||||||
|
| |||||||||||||||
| Income from investment operationsb: | ||||||||||||||||
Net investment incomec | 1.04 | 0.95 | 0.86 | 0.67 | ||||||||||||
Net realized and unrealized gains (losses) | (4.90 | ) | (0.02 | ) | 1.03 | 1.79 | ||||||||||
|
| |||||||||||||||
Total from investment operations | (3.86 | ) | 0.93 | 1.89 | 2.46 | |||||||||||
|
| |||||||||||||||
Less distributions from net investment income | (1.02 | ) | (0.95 | ) | (0.98 | ) | (0.58 | ) | ||||||||
|
| |||||||||||||||
Net asset value, end of year | $ | 23.32 | $ | 28.20 | $ | 28.22 | $ | 27.31 | ||||||||
|
| |||||||||||||||
Total returnd | (14.34)% | 3.51% | 6.91% | 9.79% | ||||||||||||
| Ratios to average net assetse | ||||||||||||||||
Expenses before waiver and payments by affiliates | 0.45% | 0.45% | 0.75% | f | 0.98% | |||||||||||
Expenses net of waiver and payments by affiliates | 0.45% | 0.45% | 0.45% | f | 0.45% | |||||||||||
Net investment income | 3.60% | 3.43% | 3.05% | 3.11% | ||||||||||||
| Supplemental data | ||||||||||||||||
Net assets, end of year (000’s) | $18,653 | $16,920 | $16,933 | $27,306 | ||||||||||||
Portfolio turnover rateg | 19.79%h | 25.75% | 43.32% | 13.38% | ||||||||||||
aFor the period June 1, 2016 (commencement of operations) to March 31, 2017.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee. See Note 3(a).
gPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”)
hPortfolio turnover rate excluding cash creation for the year end March 31, 2020 was as follows: 17.48%
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 41 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin LibertyQ Global Dividend ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks 98.1% | ||||||||||||||
| Australia 6.8% | ||||||||||||||
Australian Stock Exchange Ltd. | Capital Markets | 3,032 | $ | 143,059 | ||||||||||
Commonwealth Bank of Australia | Banks | 8,812 | 333,419 | |||||||||||
Macquarie Group Ltd. | Capital Markets | 5,136 | 269,554 | |||||||||||
National Australia Bank Ltd. | Banks | 25,292 | 258,206 | |||||||||||
Westpac Banking Corp. | Banks | 26,440 | 267,013 | |||||||||||
|
| |||||||||||||
| 1,271,251 | ||||||||||||||
|
| |||||||||||||
| Belgium 0.3% | ||||||||||||||
Proximus SADP | Diversified Telecommunication Services | 2,444 | 55,967 | |||||||||||
|
| |||||||||||||
| Canada 5.9% | ||||||||||||||
Bank of Nova Scotia | Banks | 8,276 | 334,157 | |||||||||||
Canadian Imperial Bank of Commerce | Banks | 5,480 | 315,706 | |||||||||||
IGM Financial Inc. | Capital Markets | 1,720 | 28,217 | |||||||||||
Royal Bank of Canada | Banks | 5,820 | 356,433 | |||||||||||
TELUS Corp. | Diversified Telecommunication Services | 4,536 | 70,907 | |||||||||||
|
| |||||||||||||
| 1,105,420 | ||||||||||||||
|
| |||||||||||||
| China 1.3% | ||||||||||||||
China Vanke Co. Ltd., A | Real Estate Management & Development | 6,000 | 21,712 | |||||||||||
China Vanke Co. Ltd., H | Real Estate Management & Development | 21,200 | 69,884 | |||||||||||
| a,b | Longfor Group Holdings Ltd., 144A, Reg S | Real Estate Management & Development | 30,000 | 146,112 | ||||||||||
|
| |||||||||||||
| 237,708 | ||||||||||||||
|
| |||||||||||||
| Denmark 0.4% | ||||||||||||||
Tryg AS | Insurance | 2,796 | 68,782 | |||||||||||
|
| |||||||||||||
| Finland 3.6% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 2,208 | 136,836 | |||||||||||
Kone OYJ, B | Machinery | 4,892 | 277,083 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 2,436 | 58,991 | |||||||||||
Orion OYJ | Pharmaceuticals | 1,480 | 60,540 | |||||||||||
Sampo OYJ, A | Insurance | 4,524 | 132,141 | |||||||||||
|
| |||||||||||||
| 665,591 | ||||||||||||||
|
| |||||||||||||
| Germany 2.6% | ||||||||||||||
Allianz SE | Insurance | 1,992 | 342,896 | |||||||||||
Hannover Rueck SE | Insurance | 1,012 | 145,465 | |||||||||||
|
| |||||||||||||
| 488,361 | ||||||||||||||
|
| |||||||||||||
| Indonesia 0.8% | ||||||||||||||
Perusahaan Perseroan (Persero) PT TelekomunikasiIndonesia Tbk, B | Diversified Telecommunication Services | 715,200 | 138,567 | |||||||||||
|
| |||||||||||||
| Japan 4.7% | ||||||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 1,800 | 167,820 | |||||||||||
Lawson Inc. | Food & Staples Retailing | 530 | 29,113 | |||||||||||
NTT DOCOMO Inc. | Wireless Telecommunication Services | 17,600 | 550,555 | |||||||||||
ORIX Corp. | Diversified Financial Services | 11,200 | 134,923 | |||||||||||
|
| |||||||||||||
| 882,411 | ||||||||||||||
|
| |||||||||||||
| Macau 1.1% | ||||||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 56,000 | 205,189 | |||||||||||
|
| |||||||||||||
| Malaysia 0.3% | ||||||||||||||
Nestle (Malaysia) Bhd. | Food Products | 1,600 | 50,630 | |||||||||||
|
| |||||||||||||
| Mexico 0.2% | ||||||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 22,608 | 34,617 | |||||||||||
|
| |||||||||||||
| 42 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Dividend ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| New Zealand 0.3% | ||||||||||||||
Spark New Zealand Ltd. | Diversified Telecommunication Services | 26,028 | $ | 63,034 | ||||||||||
|
| |||||||||||||
| Norway 0.7% | ||||||||||||||
Telenor ASA | Diversified Telecommunication Services | 8,296 | 120,004 | |||||||||||
|
| |||||||||||||
| Qatar 2.4% | ||||||||||||||
Masraf Al Rayan QSC | Banks | 26,984 | 27,125 | |||||||||||
Qatar Islamic Bank SAQ | Banks | 14,364 | 56,651 | |||||||||||
Qatar National Bank SAQ | Banks | 79,812 | 368,262 | |||||||||||
|
| |||||||||||||
| 452,038 | ||||||||||||||
|
| |||||||||||||
| Russia 0.8% | ||||||||||||||
NLMK PJSC | Metals & Mining | 14,800 | 23,488 | |||||||||||
Tatneft PAO | Oil, Gas & Consumable Fuels | 17,824 | 126,060 | |||||||||||
|
| |||||||||||||
| 149,548 | ||||||||||||||
|
| |||||||||||||
| Singapore 1.6% | ||||||||||||||
ComfortDelGro Corp. Ltd. | Road & Rail | 34,400 | 36,723 | |||||||||||
SATS Ltd. | Transportation Infrastructure | 12,000 | 26,632 | |||||||||||
Singapore Telecommunications Ltd. | Diversified Telecommunication Services | 113,600 | 202,650 | |||||||||||
Venture Corp. Ltd. | Electronic Equipment, Instruments & Components | 3,600 | 34,310 | |||||||||||
|
| |||||||||||||
| 300,315 | ||||||||||||||
|
| |||||||||||||
| South Africa 1.8% | ||||||||||||||
Absa Group Ltd. | Banks | 8,268 | 34,720 | |||||||||||
FirstRand Ltd. | Diversified Financial Services | 55,200 | 124,463 | |||||||||||
Mr. Price Group Ltd. | Specialty Retail | 5,036 | 32,167 | |||||||||||
Rand Merchant Investment Holdings Ltd. | Insurance | 13,264 | 16,368 | |||||||||||
RMB Holdings Ltd. | Diversified Financial Services | 17,964 | 49,728 | |||||||||||
Sanlam Ltd. | Insurance | 24,528 | 70,164 | |||||||||||
|
| |||||||||||||
| 327,610 | ||||||||||||||
|
| |||||||||||||
| South Korea 0.1% | ||||||||||||||
Coway Co. Ltd. | Household Durables | 372 | 17,663 | |||||||||||
|
| |||||||||||||
| Spain 0.6% | ||||||||||||||
Bankinter SA | Banks | 5,700 | 20,914 | |||||||||||
Red Electrica Corp. SA | Electric Utilities | 4,884 | 87,700 | |||||||||||
|
| |||||||||||||
| 108,614 | ||||||||||||||
|
| |||||||||||||
| Sweden 1.1% | ||||||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 16,240 | 209,808 | |||||||||||
|
| |||||||||||||
| Switzerland 7.5% | ||||||||||||||
Novartis AG | Pharmaceuticals | 5,336 | 440,369 | |||||||||||
Roche Holding AG | Pharmaceuticals | 1,600 | 519,332 | |||||||||||
SGS SA | Professional Services | 81 | 187,693 | |||||||||||
UBS Group AG | Capital Markets | 27,364 | 255,837 | |||||||||||
|
| |||||||||||||
| 1,403,231 | ||||||||||||||
|
| |||||||||||||
| Taiwan 2.9% | ||||||||||||||
Chailease Holding Co. Ltd. | Diversified Financial Services | 15,210 | 46,020 | |||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 5,860 | 25,190 | |||||||||||
Phison Electronics Corp. | Semiconductors & Semiconductor Equipment | 1,600 | 13,121 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 48,000 | 434,899 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 12,000 | 23,531 | |||||||||||
|
| |||||||||||||
| 542,761 | ||||||||||||||
|
| |||||||||||||
| Turkey 0.0%† | ||||||||||||||
Ford Otomotiv Sanayi AS | Automobiles | 517 | 3,866 | |||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 43 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Dividend ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| United Kingdom 9.8% | ||||||||||||||
Barratt Developments PLC | Household Durables | 7,104 | $ | 38,846 | ||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 21,768 | 408,809 | |||||||||||
Kingfisher PLC | Specialty Retail | 14,236 | 25,401 | |||||||||||
Legal & General Group PLC | Insurance | 78,376 | 188,388 | |||||||||||
Marks & Spencer Group PLC | Multiline Retail | 22,796 | 28,051 | |||||||||||
Next PLC | Multiline Retail | 2,792 | 140,970 | |||||||||||
Schroders PLC | Capital Markets | 924 | 28,460 | |||||||||||
Smiths Group PLC | Industrial Conglomerates | 4,660 | 70,840 | |||||||||||
St. James’s Place Capital PLC | Capital Markets | 3,824 | 36,017 | |||||||||||
Taylor Wimpey PLC | Household Durables | 41,996 | 61,186 | |||||||||||
Unilever NV | Personal Products | 8,064 | 396,445 | |||||||||||
Unilever PLC | Personal Products | 8,048 | 406,699 | |||||||||||
|
| |||||||||||||
| 1,830,112 | ||||||||||||||
|
| |||||||||||||
| United States 40.5% | ||||||||||||||
Altria Group Inc. | Tobacco | 10,208 | 394,743 | |||||||||||
Arthur J. Gallagher & Co. | Insurance | 3,036 | 247,464 | |||||||||||
Cisco Systems Inc. | Communications Equipment | 10,596 | 416,529 | |||||||||||
Cummins Inc. | Machinery | 1,100 | 148,852 | |||||||||||
Darden Restaurants Inc. | Hotels, Restaurants & Leisure | 2,292 | 124,822 | |||||||||||
Emerson Electric Co. | Electrical Equipment | 6,540 | 311,631 | |||||||||||
Garmin Ltd. | Household Durables | 2,508 | 188,000 | |||||||||||
Intel Corp. | Semiconductors & Semiconductor Equipment | 8,240 | 445,949 | |||||||||||
International Business Machines Corp. | IT Services | 3,552 | 394,023 | |||||||||||
Johnson & Johnson | Pharmaceuticals | 3,636 | 476,789 | |||||||||||
Kimberly-Clark Corp. | Household Products | 3,596 | 459,821 | |||||||||||
Kohl’s Corp. | Multiline Retail | 1,180 | 17,216 | |||||||||||
Las Vegas Sands Corp. | Hotels, Restaurants & Leisure | 5,972 | 253,631 | |||||||||||
Leggett & Platt Inc. | Household Durables | 1,808 | 48,237 | |||||||||||
Lockheed Martin Corp. | Aerospace & Defense | 1,220 | 413,519 | |||||||||||
LyondellBasell Industries NV, A | Chemicals | 4,964 | 246,363 | |||||||||||
Maxim Integrated Products Inc. | Semiconductors & Semiconductor Equipment | 5,612 | 272,799 | |||||||||||
McDonald’s Corp. | Hotels, Restaurants & Leisure | 2,456 | 406,100 | |||||||||||
Merck & Co. Inc. | Pharmaceuticals | 5,628 | 433,018 | |||||||||||
Paychex Inc. | IT Services | 5,632 | 354,365 | |||||||||||
Philip Morris International Inc. | Tobacco | 5,692 | 415,288 | |||||||||||
Seagate Technology PLC | Technology Hardware, Storage & Peripherals | 4,500 | 219,600 | |||||||||||
Tapestry Inc. | Textiles, Apparel & Luxury Goods | 4,304 | 55,737 | |||||||||||
The Gap Inc. | Specialty Retail | 3,416 | 24,049 | |||||||||||
The Procter & Gamble Co. | Household Products | 3,952 | 434,720 | |||||||||||
United Parcel Service Inc., B | Air Freight & Logistics | 3,832 | 357,986 | |||||||||||
|
| |||||||||||||
| 7,561,251 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks (Cost $23,744,088) | 18,294,349 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks (Cost $359,120) 1.3% | ||||||||||||||
| Brazil 1.3% | ||||||||||||||
| c | Itau Unibanco Holding SA, 8.709%, pfd. | Banks | 56,000 | 249,304 | ||||||||||
|
| |||||||||||||
Total Investments | 18,543,653 | |||||||||||||
Other Assets, less Liabilities 0.6% | 109,705 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 18,653,358 | ||||||||||||
|
| |||||||||||||
†Rounds to less than 0.1% of net assets.
aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the value of this security was $146,112, representing 0.8% of net assets.
| 44 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Dividend ETF(continued)
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $146,112, representing 0.8% of net assets.
cVariable rate security. The rate shown represents the yield at period end.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
MSCI All Country World Index | Long | 2 | $ | 45,090 | 6/19/20 | $ | 3,852 | |||||||||||||
*As of period end.
See Abbreviations on page 86.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 45 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ Global Equity ETF
| Year Ended March 31, | ||||||||||||||||
| 2020 | 2019 | 2018 | 2017a | |||||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||||||
Net asset value, beginning of year | $ | 30.90 | $ | 30.14 | $ | 27.18 | $ | 25.32 | ||||||||
|
| |||||||||||||||
| Income from investment operationsb: | ||||||||||||||||
Net investment incomec | 0.90 | 0.89 | 0.74 | 0.56 | ||||||||||||
Net realized and unrealized gains (losses) | (4.00 | ) | 0.67 | 3.01 | 1.92 | |||||||||||
|
| |||||||||||||||
Total from investment operations | (3.10 | ) | 1.56 | 3.75 | 2.48 | |||||||||||
|
| |||||||||||||||
Less distributions from net investment income | (1.03 | ) | (0.80 | ) | (0.79 | ) | (0.62 | ) | ||||||||
|
| |||||||||||||||
Net asset value, end of year | $ | 26.77 | $ | 30.90 | $ | 30.14 | $ | 27.18 | ||||||||
|
| |||||||||||||||
Total returnd | (10.53)% | 5.44% | 13.91% | 9.95% | ||||||||||||
| Ratios to average net assetse | ||||||||||||||||
Expenses before waiver and payments by affiliates | 0.35% | 0.35% | 0.90% | f | 1.04% | |||||||||||
Expenses net of waiver and payments by affiliates | 0.34% | 0.34% | 0.35% | f | 0.35% | |||||||||||
Net investment income | 2.86% | 2.99% | 2.53% | 2.60% | ||||||||||||
| Supplemental data | ||||||||||||||||
Net assets, end of year (000’s) | $16,059 | $24,721 | $18,082 | $21,744 | ||||||||||||
Portfolio turnover rateg | 27.85%h | 34.99% | 35.01% | 13.84% | ||||||||||||
aFor the period June 1, 2016 (commencement of operations) to March 31, 2017.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee. See Note 3(a).
gPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”)
hPortfolio turnover rate excluding cash creation for the year end March 31, 2020 was as follows: 25.34%
| 46 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin LibertyQ Global Equity ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests 97.8% | ||||||||||||||
| Argentina 0.0%† | ||||||||||||||
Banco Macro SA, ADR | Banks | 63 | $ | 1,070 | ||||||||||
Grupo Financiero Galicia SA, ADR | Banks | 81 | 571 | |||||||||||
|
| |||||||||||||
| 1,641 | ||||||||||||||
|
| |||||||||||||
| Australia 5.9% | ||||||||||||||
AGL Energy Ltd. | Multi-Utilities | 1,095 | 11,521 | |||||||||||
Alumina Ltd. | Metals & Mining | 5,697 | 5,091 | |||||||||||
Aristocrat Leisure Ltd. | Hotels, Restaurants & Leisure | 438 | 5,723 | |||||||||||
Aurizon Holdings Ltd. | Road & Rail | 3,675 | 9,514 | |||||||||||
Australia & New Zealand Banking Group Ltd. | Banks | 3,189 | 33,103 | |||||||||||
Australian Stock Exchange Ltd. | Capital Markets | 204 | 9,625 | |||||||||||
Bendigo and Adelaide Bank Ltd. | Banks | 660 | 2,533 | |||||||||||
BHP Group Ltd. | Metals & Mining | 5,454 | 96,739 | |||||||||||
Bluescope Steel Ltd. | Metals & Mining | 906 | 4,785 | |||||||||||
Boral Ltd. | Construction Materials | 849 | 1,065 | |||||||||||
Brambles Ltd. | Commercial Services & Supplies | 2,715 | 17,548 | |||||||||||
Cimic Group Ltd. | Construction & Engineering | 174 | 2,476 | |||||||||||
Coca-Cola Amatil Ltd. | Beverages | 951 | 5,145 | |||||||||||
Cochlear Ltd. | Health Care Equipment & Supplies | 132 | 15,144 | |||||||||||
Coles Group Ltd. | Food & Staples Retailing | 1,290 | 11,970 | |||||||||||
Commonwealth Bank of Australia | Banks | 2,058 | 77,868 | |||||||||||
Crown Resorts Ltd. | Hotels, Restaurants & Leisure | 696 | 3,238 | |||||||||||
CSL Ltd. | Biotechnology | 816 | 148,172 | |||||||||||
Dexus | Equity Real Estate Investment Trusts (REITs | ) | 1,908 | 10,615 | ||||||||||
Flight Centre Travel Group Ltd. | Hotels, Restaurants & Leisure | 108 | 655 | |||||||||||
Fortescue Metals Group Ltd. | Metals & Mining | 3,693 | 22,603 | |||||||||||
Goodman Group | Equity Real Estate Investment Trusts (REITs | ) | 2,397 | 17,752 | ||||||||||
GPT Group | Equity Real Estate Investment Trusts (REITs | ) | 3,477 | 7,725 | ||||||||||
Harvey Norman Holdings Ltd. | Multiline Retail | 1,401 | 2,530 | |||||||||||
Magellan Financial Group Ltd. | Capital Markets | 141 | 3,756 | |||||||||||
Medibank Private Ltd. | Insurance | 6,201 | 10,096 | |||||||||||
Mirvac Group | Equity Real Estate Investment Trusts (REITs | ) | 5,715 | 7,311 | ||||||||||
National Australia Bank Ltd. | Banks | 4,542 | 46,369 | |||||||||||
Newcrest Mining Ltd. | Metals & Mining | 672 | 9,480 | |||||||||||
Qantas Airways Ltd. | Airlines | 774 | 1,530 | |||||||||||
REA Group Ltd. | Interactive Media & Services | 105 | 4,948 | |||||||||||
Rio Tinto Ltd. | Metals & Mining | 840 | 43,479 | |||||||||||
Rio Tinto PLC | Metals & Mining | 2,232 | 102,912 | |||||||||||
Scentre Group | Equity Real Estate Investment Trusts (REITs | ) | 7,497 | 7,181 | ||||||||||
Sonic Healthcare Ltd. | Health Care Providers & Services | 687 | 10,230 | |||||||||||
South32 Ltd. | Metals & Mining | 8,010 | 8,653 | |||||||||||
Telstra Corp. Ltd. | Diversified Telecommunication Services | 8,157 | 15,327 | |||||||||||
Wesfarmers Ltd. | Multiline Retail | 2,280 | 47,823 | |||||||||||
Westpac Banking Corp. | Banks | 4,155 | 41,961 | |||||||||||
Woodside Petroleum Ltd. | Oil, Gas & Consumable Fuels | 1,431 | 15,949 | |||||||||||
Woolworths Group Ltd. | Food & Staples Retailing | 2,421 | 52,010 | |||||||||||
|
| |||||||||||||
| 952,155 | ||||||||||||||
|
| |||||||||||||
| Austria 0.0%† | ||||||||||||||
OMV AG | Oil, Gas & Consumable Fuels | 225 | 6,212 | |||||||||||
|
| |||||||||||||
| Belgium 0.1% | ||||||||||||||
Colruyt SA | Food & Staples Retailing | 120 | 6,487 | |||||||||||
Proximus SADP | Diversified Telecommunication Services | 315 | 7,214 | |||||||||||
|
| |||||||||||||
| 13,701 | ||||||||||||||
|
| |||||||||||||
| Brazil 0.5% | ||||||||||||||
Ambev SA | Beverages | 3,900 | 8,963 | |||||||||||
BB Seguridade Participacoes SA | Insurance | 1,800 | 8,624 | |||||||||||
| franklintempleton.com | Annual Report | 47 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Brazil (continued) | ||||||||||||||
Cielo SA | IT Services | 2,700 | $ | 2,311 | ||||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | Water Utilities | 600 | 4,524 | |||||||||||
Cosan SA | Oil, Gas & Consumable Fuels | 300 | 3,110 | |||||||||||
Engie Brasil Energia SA | Independent Power and Renewable Electricity Producers | 300 | 2,251 | |||||||||||
| a,b | Hapvida Participacoes e Investimentos SA, 144A, Reg S | Health Care Providers & Services | 300 | 2,453 | ||||||||||
Hypera SA | Pharmaceuticals | 900 | 4,961 | |||||||||||
IRB Brasil Resseguros SA | Insurance | 930 | 1,736 | |||||||||||
Localiza Rent a Car SA | Road & Rail | 315 | 1,597 | |||||||||||
Lojas Renner SA | Multiline Retail | 900 | 5,824 | |||||||||||
Petrobras Distribuidora SA | Specialty Retail | 1,200 | 3,589 | |||||||||||
Tim Participacoes SA | Wireless Telecommunication Services | 1,200 | 2,878 | |||||||||||
Vale SA | Metals & Mining | 2,400 | 19,999 | |||||||||||
|
| |||||||||||||
| 72,820 | ||||||||||||||
|
| |||||||||||||
| Canada 2.5% | ||||||||||||||
| c | Air Canada, B | Airlines | 93 | 1,029 | ||||||||||
Algonquin Power & Utilities Corp. | Multi-Utilities | 444 | 5,911 | |||||||||||
BCE Inc. | Diversified Telecommunication Services | 285 | 11,559 | |||||||||||
Canadian Apartment Properties REIT | Equity Real Estate Investment Trusts (REITs | ) | 72 | 2,154 | ||||||||||
Canadian Imperial Bank of Commerce | Banks | 666 | 38,369 | |||||||||||
Canadian National Railway Co. | Road & Rail | 1,137 | 87,894 | |||||||||||
| c | CGI Inc., A | IT Services | 324 | 17,343 | ||||||||||
CI Financial Corp. | Capital Markets | 438 | 4,299 | |||||||||||
Constellation Software Inc. | Software | 36 | 32,350 | |||||||||||
Empire Co. Ltd., A | Food & Staples Retailing | 222 | 4,294 | |||||||||||
First Capital Real Estate Investment Trust | Equity Real Estate Investment Trusts (REITs | ) | 294 | 2,815 | ||||||||||
Franco-Nevada Corp. | Metals & Mining | 168 | 16,596 | |||||||||||
Gildan Activewear Inc. | Textiles, Apparel & Luxury Goods | 357 | 4,500 | |||||||||||
Great-West Lifeco Inc. | Insurance | 282 | 4,816 | |||||||||||
H&R Real Estate Investment Trust | Equity Real Estate Investment Trusts (REITs | ) | 294 | 1,845 | ||||||||||
Husky Energy Inc. | Oil, Gas & Consumable Fuels | 363 | 903 | |||||||||||
Hydro One Ltd. | Electric Utilities | 399 | 7,103 | |||||||||||
IGM Financial Inc. | Capital Markets | 90 | 1,477 | |||||||||||
Inter Pipeline Ltd. | Oil, Gas & Consumable Fuels | 606 | 3,585 | |||||||||||
Keyera Corp. | Oil, Gas & Consumable Fuels | 180 | 1,654 | |||||||||||
Kirkland Lake Gold Ltd. | Metals & Mining | 360 | 10,484 | |||||||||||
Magna International Inc. | Auto Components | 639 | 20,162 | |||||||||||
Metro Inc., A | Food & Staples Retailing | 429 | 17,153 | |||||||||||
Pembina Pipeline Corp. | Oil, Gas & Consumable Fuels | 384 | 7,122 | |||||||||||
Power Corp. of Canada | Insurance | 741 | 11,787 | |||||||||||
Quebecor Inc., B | Media | 210 | 4,590 | |||||||||||
RioCan REIT | Equity Real Estate Investment Trusts (REITs | ) | 312 | 3,536 | ||||||||||
Rogers Communications Inc., B | Wireless Telecommunication Services | 567 | 23,399 | |||||||||||
Saputo Inc. | Food Products | 369 | 8,773 | |||||||||||
Shaw Communications Inc. | Media | 357 | 5,726 | |||||||||||
SmartCentres Real Estate Investment Trust | Equity Real Estate Investment Trusts (REITs | ) | 141 | 1,866 | ||||||||||
Teck Resources Ltd., B | Metals & Mining | 750 | 5,622 | |||||||||||
TELUS Corp. | Diversified Telecommunication Services | 672 | 10,505 | |||||||||||
Thomson Reuters Corp. | Professional Services | 219 | 14,752 | |||||||||||
West Fraser Timber Co. Ltd. | Paper & Forest Products | 87 | 1,641 | |||||||||||
Wheaton Precious Metals Corp. | Metals & Mining | 345 | 9,388 | |||||||||||
|
| |||||||||||||
| 407,002 | ||||||||||||||
|
| |||||||||||||
| Chile 0.1% | ||||||||||||||
Aguas Andinas SA, A | Water Utilities | 4,518 | 1,336 | |||||||||||
Colbun SA | Independent Power and Renewable Electricity Producers | 12,273 | 1,339 | |||||||||||
| 48 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Chile (continued) | ||||||||||||||
Compania Cervecerias Unidas SA | Beverages | 267 | $ | 1,839 | ||||||||||
Enel Americas SA | Electric Utilities | 31,047 | 3,810 | |||||||||||
Enel Chile SA | Electric Utilities | 49,335 | 3,357 | |||||||||||
|
| |||||||||||||
| 11,681 | ||||||||||||||
|
| |||||||||||||
| China 3.8% | ||||||||||||||
Agricultural Bank of China Ltd., A | Banks | 6,600 | 3,138 | |||||||||||
Agricultural Bank of China Ltd., H | Banks | 48,000 | 19,260 | |||||||||||
Anhui Conch Cement Co. Ltd., A | Construction Materials | 300 | 2,332 | |||||||||||
Anhui Conch Cement Co. Ltd., H | Construction Materials | 2,500 | 17,369 | |||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 2,000 | 14,695 | |||||||||||
Bank of China Ltd., A | Banks | 4,800 | 2,357 | |||||||||||
Bank of China Ltd., H | Banks | 147,000 | 56,328 | |||||||||||
Bank of Communications Co. Ltd., A | Banks | 3,000 | 2,184 | |||||||||||
Bank of Communications Co. Ltd., H | Banks | 15,000 | 9,192 | |||||||||||
Baoshan Iron & Steel Co. Ltd., A | Metals & Mining | 1,200 | 824 | |||||||||||
China Cinda Asset Management Co. Ltd., H | Capital Markets | 15,000 | 2,845 | |||||||||||
China CITIC Bank Corp. Ltd., H | Banks | 18,000 | 8,894 | |||||||||||
China Conch Venture Holdings Ltd. | Machinery | 3,000 | 13,392 | |||||||||||
China Construction Bank Corp., H | Banks | 114,000 | 93,248 | |||||||||||
China Everbright Bank Co. Ltd., A | Banks | 1,800 | 917 | |||||||||||
China Everbright Bank Co. Ltd., H | Banks | 6,000 | 2,299 | |||||||||||
China Medical System Holdings Ltd. | Pharmaceuticals | 3,000 | 3,247 | |||||||||||
China Minsheng Banking Corp. Ltd., A | Banks | 1,800 | 1,450 | |||||||||||
China Minsheng Banking Corp. Ltd., H | Banks | 12,000 | 8,918 | |||||||||||
China Mobile Ltd. | Wireless Telecommunication Services | 11,000 | 81,816 | |||||||||||
China Petroleum & Chemical Corp., A | Oil, Gas & Consumable Fuels | 4,200 | 2,625 | |||||||||||
China Petroleum & Chemical Corp., H | Oil, Gas & Consumable Fuels | 36,000 | 17,742 | |||||||||||
China Resources Cement Holdings Ltd. | Construction Materials | 4,000 | 4,774 | |||||||||||
China Shenhua Energy Co. Ltd., A | Oil, Gas & Consumable Fuels | 600 | 1,375 | |||||||||||
China Shenhua Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 7,500 | 14,282 | |||||||||||
China South Publishing & Media Group Co. Ltd., A | Media | 300 | 450 | |||||||||||
China Telecom Corp. Ltd., H | Diversified Telecommunication Services | 18,000 | 5,457 | |||||||||||
China Yangtze Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 1,800 | 4,391 | |||||||||||
China Zhongwang Holdings Ltd. | Metals & Mining | 2,400 | 632 | |||||||||||
Chongqing Rural Commercial Bank Co. Ltd., H | Banks | 3,000 | 1,231 | |||||||||||
CNOOC Ltd. | Oil, Gas & Consumable Fuels | 21,000 | 22,027 | |||||||||||
Country Garden Services Holdings Co. Ltd. | Commercial Services & Supplies | 3,000 | 12,192 | |||||||||||
Dali Foods Group Co. Ltd. | Food Products | 6,000 | 4,180 | |||||||||||
Daqin Railway Co. Ltd., A | Road & Rail | 1,800 | 1,727 | |||||||||||
Dongfeng Motor Group Co. Ltd., H | Automobiles | 6,000 | 3,956 | |||||||||||
Focus Media Information Technology Co. Ltd. | Media | 360 | 224 | |||||||||||
Foshan Haitian Flavouring & Food Co. Ltd. | Food Products | 300 | �� | 5,298 | ||||||||||
Fuyao Group Glass Industries Co. Ltd., H | Auto Components | 1,200 | 2,567 | |||||||||||
Guangdong Investment Ltd. | Water Utilities | 6,000 | 11,565 | |||||||||||
Guangzhou Automobile Group Co. Ltd., H | Automobiles | 6,000 | 6,030 | |||||||||||
Heilan Home Co. Ltd., A – SHSC | Specialty Retail | 600 | 536 | |||||||||||
Henan Shuanghui Investment & Development Co. Ltd. | Food Products | 600 | 3,327 | |||||||||||
Huayu Automotive Systems Co. Ltd. | Auto Components | 300 | 912 | |||||||||||
Hubei Jumpcan Pharmaceutical Co. Ltd., A | Pharmaceuticals | 300 | 928 | |||||||||||
Industrial and Commercial Bank of China Ltd., H | Banks | 75,000 | 51,381 | |||||||||||
Jiangsu Expressway Co. Ltd., H | Transportation Infrastructure | 2,000 | 2,232 | |||||||||||
Kingboard Holdings Ltd. | Electronic Equipment, Instruments & Components | 1,500 | 3,514 | |||||||||||
Kweichow Moutai Co. Ltd., A | Beverages | 100 | 15,674 | |||||||||||
Lee & Man Paper Manufacturing Ltd. | Paper & Forest Products | 3,000 | 1,819 | |||||||||||
| franklintempleton.com | Annual Report | 49 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
| a,b | Longfor Group Holdings Ltd., 144A, Reg S | Real Estate Management & Development | 3,000 | $ | 14,611 | |||||||||
Metallurgical Corp. of China Ltd. | Construction & Engineering | 3,000 | 526 | |||||||||||
Nexteer Automotive Group Ltd. | Auto Components | 1,000 | 502 | |||||||||||
Nine Dragons Paper Holdings Ltd. | Paper & Forest Products | 3,000 | 2,736 | |||||||||||
Postal Savings Bank of China Co. Ltd., H | Banks | 6,000 | 3,654 | |||||||||||
SAIC Motor Corp. Ltd. | Automobiles | 600 | 1,735 | |||||||||||
Shaanxi Coal Industry Co. Ltd. | Oil, Gas & Consumable Fuels | 600 | 633 | |||||||||||
Shenzhou International Group Holdings Ltd. | Textiles, Apparel & Luxury Goods | 1,200 | 12,757 | |||||||||||
Shui On Land Ltd. | Real Estate Management & Development | 1,500 | 252 | |||||||||||
Sichuan Chuantou Energy Co. Ltd., A | Independent Power and Renewable Electricity Producers | 600 | 779 | |||||||||||
Sino-Ocean Land Holdings Ltd. | Real Estate Management & Development | 6,000 | 1,525 | |||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., A | Chemicals | 1,800 | 988 | |||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., H | Chemicals | 12,000 | 2,973 | |||||||||||
Wanhua Chemical Group Co. Ltd., A | Chemicals | 300 | 1,746 | |||||||||||
Weichai Power Co. Ltd., A | Machinery | 300 | 506 | |||||||||||
Wens Foodstuffs Group Co. Ltd. | Food Products | 300 | 1,367 | |||||||||||
Wuhu Sanqi Interactive Entertainment NetworkTechnology Group Co. Ltd. | Entertainment | 300 | 1,382 | |||||||||||
Wuliangye Yibin Co. Ltd. | Beverages | 300 | 4,876 | |||||||||||
Yuexiu Property Co. Ltd. | Real Estate Management & Development | 6,000 | 1,084 | |||||||||||
Yuzhou Properties Co. Ltd. | Real Estate Management & Development | 6,000 | 2,555 | |||||||||||
Zhejiang Semir Garment Co. Ltd. | Textiles, Apparel & Luxury Goods | 300 | 301 | |||||||||||
|
| |||||||||||||
| 605,241 | ||||||||||||||
|
| |||||||||||||
| Colombia 0.0%† | ||||||||||||||
Ecopetrol SA | Oil, Gas & Consumable Fuels | 8,049 | 3,767 | |||||||||||
|
| |||||||||||||
| Czech Republic 0.0%† | ||||||||||||||
Moneta Money Bank AS | Banks | 546 | 1,124 | |||||||||||
|
| |||||||||||||
| Denmark 1.6% | ||||||||||||||
Coloplast AS, B | Health Care Equipment & Supplies | 267 | 38,734 | |||||||||||
Novo Nordisk AS, B | Pharmaceuticals | 3,381 | 203,408 | |||||||||||
Pandora AS | Textiles, Apparel & Luxury Goods | 267 | 8,672 | |||||||||||
Tryg AS | Insurance | 123 | 3,026 | |||||||||||
|
| |||||||||||||
| 253,840 | ||||||||||||||
|
| |||||||||||||
| Egypt 0.1% | ||||||||||||||
Commercial International Bank Egypt SAE | Banks | 1,689 | 6,306 | |||||||||||
Eastern Co. SAE | Tobacco | 2,439 | 1,914 | |||||||||||
ElSewedy Electric Co. | Electrical Equipment | 1,983 | 988 | |||||||||||
|
| |||||||||||||
| 9,208 | ||||||||||||||
|
| |||||||||||||
| Finland 0.2% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 267 | 16,547 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 234 | 5,667 | |||||||||||
Orion OYJ | Pharmaceuticals | 198 | 8,099 | |||||||||||
|
| |||||||||||||
| 30,313 | ||||||||||||||
|
| |||||||||||||
| France 0.7% | ||||||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 261 | 23,214 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 66 | 3,719 | ||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 60 | 41,397 | |||||||||||
Peugeot SA | Automobiles | 1,080 | 14,416 | |||||||||||
Renault SA | Automobiles | 243 | 4,721 | |||||||||||
Societe Generale SA | Banks | 1,128 | 18,996 | |||||||||||
|
| |||||||||||||
| 106,463 | ||||||||||||||
|
| |||||||||||||
| 50 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Germany 0.4% | ||||||||||||||
Adidas AG | Textiles, Apparel & Luxury Goods | 141 | $ | 31,855 | ||||||||||
Aroundtown SA | Real Estate Management & Development | 1,416 | 7,076 | |||||||||||
Covestro AG | Chemicals | 348 | 10,642 | |||||||||||
Deutsche Lufthansa AG | Airlines | 405 | 3,805 | |||||||||||
TUI AG | Hotels, Restaurants & Leisure | 714 | 3,212 | |||||||||||
|
| |||||||||||||
| 56,590 | ||||||||||||||
|
| |||||||||||||
| Greece 0.0%† | ||||||||||||||
JUMBO SA | Specialty Retail | 159 | 2,149 | |||||||||||
Motor Oil (Hellas) Corinth Refineries SA | Oil, Gas & Consumable Fuels | 102 | 1,259 | |||||||||||
OPAP SA | Hotels, Restaurants & Leisure | 195 | 1,483 | |||||||||||
|
| |||||||||||||
| 4,891 | ||||||||||||||
|
| |||||||||||||
| Hong Kong 0.3% | ||||||||||||||
HKT Trust and HKT Ltd. | Diversified Telecommunication Services | 6,000 | 8,174 | |||||||||||
Jardine Matheson Holdings Ltd. | Industrial Conglomerates | 300 | 15,000 | |||||||||||
Kerry Properties Ltd. | Real Estate Management & Development | 1,500 | 3,958 | |||||||||||
Kingboard Laminates Holdings Ltd. | Chemicals | 1,500 | 1,387 | |||||||||||
NWS Holdings Ltd. | Industrial Conglomerates | 3,000 | 3,085 | |||||||||||
Power Assets Holdings Ltd. | Electric Utilities | 1,500 | 8,970 | |||||||||||
Sino Land Co. Ltd. | Real Estate Management & Development | 2,000 | 2,539 | |||||||||||
Vitasoy International Holdings Ltd. | Food Products | 900 | 2,729 | |||||||||||
Yue Yuen Industrial Holdings Ltd. | Textiles, Apparel & Luxury Goods | 1,500 | 2,299 | |||||||||||
|
| |||||||||||||
| 48,141 | ||||||||||||||
|
| |||||||||||||
| Hungary 0.0%† | ||||||||||||||
MOL Hungarian Oil and Gas PLC | Oil, Gas & Consumable Fuels | 789 | 4,632 | |||||||||||
|
| |||||||||||||
| India 0.3% | ||||||||||||||
Infosys Ltd., ADR | IT Services | 5,469 | 44,900 | |||||||||||
|
| |||||||||||||
| Indonesia 0.3% | ||||||||||||||
Adaro Energy Tbk PT | Oil, Gas & Consumable Fuels | 24,600 | 1,493 | |||||||||||
Bukit Asam Tbk PT | Oil, Gas & Consumable Fuels | 6,600 | 882 | |||||||||||
Charoen Pokphand Indonesia Tbk PT | Food Products | 8,400 | 2,544 | |||||||||||
Gudang Garam Tbk PT | Tobacco | 600 | 1,512 | |||||||||||
Hanjaya Mandala Sampoerna Tbk PT | Tobacco | 24,900 | 2,176 | |||||||||||
Indofood CBP Sukses Makmur Tbk PT | Food Products | 4,200 | 2,633 | |||||||||||
Kalbe Farma Tbk PT | Pharmaceuticals | 18,000 | 1,324 | |||||||||||
Perusahaan Perseroan (Persero) PT TelekomunikasiIndonesia Tbk, B | Diversified Telecommunication Services | 93,300 | 18,077 | |||||||||||
Unilever Indonesia Tbk PT | Household Products | 18,000 | 8,001 | |||||||||||
United Tractors Tbk PT | Oil, Gas & Consumable Fuels | 3,600 | 3,730 | |||||||||||
|
| |||||||||||||
| 42,372 | ||||||||||||||
|
| |||||||||||||
| Ireland 0.0%† | ||||||||||||||
| c | AIB Group PLC | Banks | 1,074 | 1,204 | ||||||||||
|
| |||||||||||||
| Israel 0.2% | ||||||||||||||
Azrieli Group Ltd. | Real Estate Management & Development | 48 | 2,779 | |||||||||||
| c | Check Point Software Technologies Ltd. | Software | 216 | 21,717 | ||||||||||
Israel Chemicals Ltd. | Chemicals | 822 | 2,621 | |||||||||||
|
| |||||||||||||
| 27,117 | ||||||||||||||
|
| |||||||||||||
| Italy 1.1% | ||||||||||||||
Assicurazioni Generali SpA | Insurance | 1,239 | 16,871 | |||||||||||
Enel SpA | Electric Utilities | 10,344 | 71,947 | |||||||||||
Ferrari NV | Automobiles | 96 | 14,910 | |||||||||||
Intesa Sanpaolo SpA | Banks | 22,344 | 36,491 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 324 | 11,835 | |||||||||||
| franklintempleton.com | Annual Report | 51 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Italy (continued) | ||||||||||||||
| b | Poste Italiane SpA, Reg S | Insurance | 864 | $ | 7,319 | |||||||||
Recordati SpA | Pharmaceuticals | 144 | 6,090 | |||||||||||
Snam SpA | Gas Utilities | 2,544 | 11,735 | |||||||||||
|
| |||||||||||||
| 177,198 | ||||||||||||||
|
| |||||||||||||
| Japan 5.4% | ||||||||||||||
ABC-Mart Inc. | Specialty Retail | 75 | 3,759 | |||||||||||
Advantest Corp. | Semiconductors & Semiconductor Equipment | 300 | 12,061 | |||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 3,300 | 51,080 | |||||||||||
Bandai Namco Holdings Inc. | Leisure Equipment & Products | 300 | 14,564 | |||||||||||
Bridgestone Corp. | Auto Components | 1,000 | 30,781 | |||||||||||
CANON Inc. | Technology Hardware, Storage & Peripherals | 1,500 | 32,778 | |||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 150 | 13,985 | |||||||||||
Daiwa House Industry Co. Ltd. | Real Estate Management & Development | 600 | 14,881 | |||||||||||
Hoya Corp. | Health Care Equipment & Supplies | 700 | 59,654 | |||||||||||
Iida Group Holdings Co. Ltd. | Household Durables | 300 | 4,160 | |||||||||||
ITOCHU Corp. | Trading Companies & Distributors | 2,400 | 49,854 | |||||||||||
Japan Airlines Co. Ltd. | Airlines | 300 | 5,530 | |||||||||||
Japan Post Bank Co. Ltd. | Banks | 600 | 5,541 | |||||||||||
Japan Tobacco Inc. | Tobacco | 2,100 | 38,827 | |||||||||||
Kakaku.com Inc. | Interactive Media & Services | 300 | 5,516 | |||||||||||
KAO Corp. | Personal Products | 730 | 59,709 | |||||||||||
KDDI Corp. | Wireless Telecommunication Services | 3,600 | 106,378 | |||||||||||
Marubeni Corp. | Trading Companies & Distributors | 2,400 | 11,983 | |||||||||||
Mitsubishi Chemical Holdings Corp. | Chemicals | 1,800 | 10,718 | |||||||||||
Mitsubishi Gas Chemical Co. Inc. | Chemicals | 300 | 3,268 | |||||||||||
Nexon Co. Ltd. | Entertainment | 600 | 9,810 | |||||||||||
Nippon Building Fund Inc. | Equity Real Estate Investment Trusts (REITs | ) | 1 | 6,707 | ||||||||||
Nippon Telegraph & Telephone Corp. | Diversified Telecommunication Services | 2,400 | 57,257 | |||||||||||
NTT DOCOMO Inc. | Wireless Telecommunication Services | 3,000 | 93,845 | |||||||||||
Obayashi Corp. | Construction & Engineering | 600 | 5,147 | |||||||||||
Oracle Corp. Japan | Software | 75 | 6,558 | |||||||||||
Oriental Land Co. Ltd. | Hotels, Restaurants & Leisure | 150 | 19,202 | |||||||||||
Sekisui House Ltd. | Household Durables | 900 | 14,877 | |||||||||||
Shionogi & Co. Ltd. | Pharmaceuticals | 400 | 19,701 | |||||||||||
Showa Denko K.K. | Chemicals | 100 | 2,072 | |||||||||||
Softbank Corp. | Wireless Telecommunication Services | 1,500 | 19,098 | |||||||||||
Subaru Corp. | Automobiles | 1,200 | 23,048 | |||||||||||
Tokyo Electron Ltd. | Semiconductors & Semiconductor Equipment | 270 | 50,909 | |||||||||||
Tosoh Corp. | Chemicals | 600 | 6,836 | |||||||||||
Zozo Inc. | Internet & Direct Marketing Retail | 300 | 4,032 | |||||||||||
|
| |||||||||||||
| 874,126 | ||||||||||||||
|
| |||||||||||||
| Macau 0.2% | ||||||||||||||
Galaxy Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 3,000 | 16,005 | |||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 4,800 | 17,588 | |||||||||||
Wynn Macau Ltd. | Hotels, Restaurants & Leisure | 2,400 | 3,647 | |||||||||||
|
| |||||||||||||
| 37,240 | ||||||||||||||
|
| |||||||||||||
| Malaysia 0.2% | ||||||||||||||
AirAsia Group Bhd | Airlines | 3,300 | 604 | |||||||||||
Digi.com Bhd. | Wireless Telecommunication Services | 6,600 | 6,646 | |||||||||||
Fraser & Neave Holdings Bhd. | Beverages | 300 | 2,154 | |||||||||||
Hartalega Holdings Bhd. | Health Care Equipment & Supplies | 2,100 | 3,344 | |||||||||||
Nestle (Malaysia) Bhd. | Food Products | 200 | 6,329 | |||||||||||
Petronas Chemicals Group Bhd. | Chemicals | 4,500 | 5,260 | |||||||||||
Petronas Gas Bhd. | Gas Utilities | 1,200 | 4,278 | |||||||||||
Westports Holdings Bhd. | Transportation Infrastructure | 1,800 | 1,408 | |||||||||||
|
| |||||||||||||
| 30,023 | ||||||||||||||
|
| |||||||||||||
| 52 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Mexico 0.2% | ||||||||||||||
Fibra Uno Administracion SA de CV | Equity Real Estate Investment Trusts (REITs | ) | 5,598 | $ | 4,436 | |||||||||
Grupo Aeroportuario del Pacifico SAB de CV | Transportation Infrastructure | 654 | 3,551 | |||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 2,970 | 4,548 | |||||||||||
Megacable Holdings SAB de CV | Media | 435 | 1,203 | |||||||||||
Promotora y Operadora de Infraestructura SAB de CV | Transportation Infrastructure | 255 | 1,730 | |||||||||||
Wal-Mart de Mexico SAB de CV, V | Food & Staples Retailing | 9,261 | 22,009 | |||||||||||
|
| |||||||||||||
| 37,477 | ||||||||||||||
|
| |||||||||||||
| Netherlands 0.3% | ||||||||||||||
Koninklijke Ahold Delhaize NV | Food & Staples Retailing | 1,929 | 45,052 | |||||||||||
|
| |||||||||||||
| New Zealand 0.2% | ||||||||||||||
Fisher & Paykel Healthcare Corp. Ltd. | Health Care Equipment & Supplies | 1,077 | 19,398 | |||||||||||
Mercury NZ Ltd. | Electric Utilities | 576 | 1,441 | |||||||||||
Meridian Energy Ltd. | Independent Power and Renewable Electricity Producers | 1,476 | 3,535 | |||||||||||
Spark New Zealand Ltd. | Diversified Telecommunication Services | 4,293 | 10,397 | |||||||||||
|
| |||||||||||||
| 34,771 | ||||||||||||||
|
| |||||||||||||
| Norway 0.3% | ||||||||||||||
Equinor ASA | Oil, Gas & Consumable Fuels | 834 | 10,416 | |||||||||||
Mowi ASA | Food Products | 819 | 12,374 | |||||||||||
Orkla ASA | Food Products | 735 | 6,231 | |||||||||||
Telenor ASA | Diversified Telecommunication Services | 1,290 | 18,660 | |||||||||||
|
| |||||||||||||
| 47,681 | ||||||||||||||
|
| |||||||||||||
| Pakistan 0.0%† | ||||||||||||||
MCB Bank Ltd. | Banks | 900 | 809 | |||||||||||
Oil & Gas Development Co. Ltd. | Oil, Gas & Consumable Fuels | 2,100 | 973 | |||||||||||
|
| |||||||||||||
| 1,782 | ||||||||||||||
|
| |||||||||||||
| Philippines 0.0%† | ||||||||||||||
Globe Telecom Inc. | Wireless Telecommunication Services | 60 | 2,277 | |||||||||||
Manila Electric Co. | Electric Utilities | 540 | 2,389 | |||||||||||
|
| |||||||||||||
| 4,666 | ||||||||||||||
|
| |||||||||||||
| Poland 0.0%† | ||||||||||||||
Powszechny Zaklad Ubezpieczen SA | Insurance | 705 | 5,318 | |||||||||||
|
| |||||||||||||
| Portugal 0.1% | ||||||||||||||
Jeronimo Martins SGPS SA | Food & Staples Retailing | 426 | 7,684 | |||||||||||
|
| |||||||||||||
| Qatar 0.1% | ||||||||||||||
Barwa Real Estate Co. | Real Estate Management & Development | 3,402 | 2,803 | |||||||||||
Industries Qatar QSC | Industrial Conglomerates | 3,750 | 6,849 | |||||||||||
Masraf Al Rayan QSC | Banks | 3,249 | 3,266 | |||||||||||
Mesaieed Petrochemical Holding Co. | Chemicals | 5,895 | 2,364 | |||||||||||
Qatar Electricity & Water Co. QSC | Multi-Utilities | 942 | 3,526 | |||||||||||
Qatar Fuel QSC | Oil, Gas & Consumable Fuels | 741 | 3,332 | |||||||||||
Qatar International Islamic Bank QSC | Banks | 654 | 1,304 | |||||||||||
|
| |||||||||||||
| 23,444 | ||||||||||||||
|
| |||||||||||||
| Russia 1.7% | ||||||||||||||
Alrosa PJSC | Metals & Mining | 6,687 | 5,528 | |||||||||||
Evraz PLC | Metals & Mining | 1,101 | 3,162 | |||||||||||
Gazprom PJSC | Oil, Gas & Consumable Fuels | 24,540 | 56,977 | |||||||||||
Inter RAO UES PJSC | Electric Utilities | 82,320 | 5,186 | |||||||||||
LUKOIL PJSC | Oil, Gas & Consumable Fuels | 969 | 58,474 | |||||||||||
Magnitogorsk Iron & Steel Works | Metals & Mining | 4,797 | 2,364 | |||||||||||
MMC Norilsk Nickel PJSC | Metals & Mining | 168 | 41,967 | |||||||||||
| franklintempleton.com | Annual Report | 53 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Russia (continued) | ||||||||||||||
Mobile TeleSystems PJSC, ADR | Wireless Telecommunication Services | 1,086 | $ | 8,254 | ||||||||||
Moscow Exchange MICEX | Capital Markets | 828 | 1,030 | |||||||||||
NLMK PJSC | Metals & Mining | 2,964 | 4,704 | |||||||||||
| b | Novatek PJSC, GDR, Reg S | Oil, Gas & Consumable Fuels | 174 | 20,062 | ||||||||||
| b | PhosAgro PJSC, GDR, Reg S | Chemicals | 153 | 1,579 | ||||||||||
Polymetal International PLC | Metals & Mining | 321 | 5,491 | |||||||||||
Polyus Gold OJSC | Metals & Mining | 51 | 6,943 | |||||||||||
Rosneft PJSC | Oil, Gas & Consumable Fuels | 2,127 | 8,557 | |||||||||||
Severstal PJSC | Metals & Mining | 702 | 7,786 | |||||||||||
Surgutneftegas PJSC | Oil, Gas & Consumable Fuels | 15,975 | 6,931 | |||||||||||
Tatneft PAO | Oil, Gas & Consumable Fuels | 3,819 | 27,010 | |||||||||||
| b | X5 Retail Group NV, GDR, Reg S | Food & Staples Retailing | 147 | 3,935 | ||||||||||
|
| |||||||||||||
| 275,940 | ||||||||||||||
|
| |||||||||||||
| Saudi Arabia 0.3% | ||||||||||||||
Advanced Petrochemical Co. | Chemicals | 156 | 1,848 | |||||||||||
Al-Rajhi Bank | Banks | 1,062 | 15,208 | |||||||||||
Bupa Arabia for Cooperative Insurance Co. | Insurance | 33 | 803 | |||||||||||
| c | Dar Al Arkan Real Estate Development Co. | Real Estate Management & Development | 336 | 733 | ||||||||||
Jarir Marketing Co. | Specialty Retail | 99 | 3,368 | |||||||||||
Saudi Airlines Catering Co. | Hotels, Restaurants & Leisure | 90 | 1,809 | |||||||||||
Saudi Arabian Fertilizer Co. | Chemicals | 210 | 3,465 | |||||||||||
Saudi Cement Co. | Construction Materials | 84 | 1,095 | |||||||||||
Saudi Telecom Co. | Diversified Telecommunication Services | 447 | 10,410 | |||||||||||
Yanbu National Petrochemical Co. | Chemicals | 270 | 2,990 | |||||||||||
|
| |||||||||||||
| 41,729 | ||||||||||||||
|
| |||||||||||||
| Singapore 0.4% | ||||||||||||||
CapitaLand Mall Trust | Equity Real Estate Investment Trusts (REITs | ) | 3,900 | 4,903 | ||||||||||
ComfortDelGro Corp. Ltd. | Road & Rail | 3,900 | 4,164 | |||||||||||
Mapletree Commercial Trust | Equity Real Estate Investment Trusts (REITs | ) | 1,800 | 2,314 | ||||||||||
SATS Ltd. | Transportation Infrastructure | 1,200 | 2,663 | |||||||||||
Singapore Exchange Ltd. | Capital Markets | 2,100 | 13,554 | |||||||||||
Singapore Technologies Engineering Ltd. | Aerospace & Defense | 2,700 | 5,916 | |||||||||||
Singapore Telecommunications Ltd. | Diversified Telecommunication Services | 14,700 | 26,223 | |||||||||||
Venture Corp. Ltd. | Electronic Equipment, Instruments & Components | 300 | 2,859 | |||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | Machinery | 4,200 | 2,448 | |||||||||||
|
| |||||||||||||
| 65,044 | ||||||||||||||
|
| |||||||||||||
| South Africa 0.2% | ||||||||||||||
AngloGold Ashanti Ltd. | Metals & Mining | 357 | 6,379 | |||||||||||
Capitec Bank Holdings Ltd. | Banks | 57 | 2,808 | |||||||||||
Clicks Group Ltd. | Food & Staples Retailing | 393 | 5,671 | |||||||||||
Exxaro Resources Ltd. | Oil, Gas & Consumable Fuels | 552 | 3,059 | |||||||||||
Kumba Iron Ore Ltd. | Metals & Mining | 168 | 2,634 | |||||||||||
Mr. Price Group Ltd. | Specialty Retail | 543 | 3,468 | |||||||||||
RMB Holdings Ltd. | Diversified Financial Services | 1,182 | 3,272 | |||||||||||
Telkom SA SOC Ltd. | Diversified Telecommunication Services | 534 | 614 | |||||||||||
Tiger Brands Ltd. | Food Products | 267 | 2,766 | |||||||||||
Vodacom Group Ltd. | Wireless Telecommunication Services | 1,173 | 7,685 | |||||||||||
|
| |||||||||||||
| 38,356 | ||||||||||||||
|
| |||||||||||||
| South Korea 2.3% | ||||||||||||||
BGF Retail Co. Ltd. | Food & Staples Retailing | 12 | 1,301 | |||||||||||
BNK Financial Group Inc. | Banks | 360 | 1,312 | |||||||||||
Coway Co. Ltd. | Household Durables | 111 | 5,270 | |||||||||||
Daelim Industrial Co. Ltd. | Construction & Engineering | 36 | 2,179 | |||||||||||
DB Insurance Co. Ltd. | Insurance | 78 | 2,227 | |||||||||||
Hana Financial Group Inc. | Banks | 561 | 10,645 | |||||||||||
| 54 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| South Korea (continued) | ||||||||||||||
Hankook Tire & Technology Co. Ltd. | Auto Components | 117 | $ | 1,860 | ||||||||||
HDC Hyundai DevelopmentCo-Engineering & Construction | Construction & Engineering | 22 | 281 | |||||||||||
Hyundai Marine & Fire Insurance Co. Ltd. | Insurance | 102 | 1,898 | |||||||||||
Industrial Bank of Korea | Banks | 483 | 2,976 | |||||||||||
Kangwon Land Inc. | Hotels, Restaurants & Leisure | 204 | 3,310 | |||||||||||
KB Financial Group Inc. | Banks | 693 | 19,668 | |||||||||||
Kia Motors Corp. | Automobiles | 300 | 6,407 | |||||||||||
Korea Zinc Co. Ltd. | Metals & Mining | 15 | 4,387 | |||||||||||
KT&G Corp. | Tobacco | 234 | 14,359 | |||||||||||
Kumho Petrochemical Co. Ltd. | Chemicals | 30 | 1,597 | |||||||||||
LG Corp. | Industrial Conglomerates | 159 | 7,706 | |||||||||||
LG Uplus Corp. | Diversified Telecommunication Services | 153 | 1,357 | |||||||||||
Lotte Chemical Corp. | Chemicals | 30 | 4,756 | |||||||||||
NCsoft Corp. | Entertainment | 24 | 12,854 | |||||||||||
| c | Pearl Abyss Corp. | Entertainment | 9 | 1,323 | ||||||||||
S-1 Corp. | Commercial Services & Supplies | 45 | 2,957 | |||||||||||
Samsung Card Co. Ltd. | Consumer Finance | 30 | 737 | |||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 3,723 | 146,033 | |||||||||||
Shinhan Financial Group Co. Ltd. | Banks | 591 | 13,885 | |||||||||||
SK Hynix Inc. | Semiconductors & Semiconductor Equipment | 1,266 | 86,629 | |||||||||||
SK Telecom Co. Ltd. | Wireless Telecommunication Services | 42 | 6,107 | |||||||||||
Woori Financial Group Inc. | Banks | 432 | 2,715 | |||||||||||
|
| |||||||||||||
| 366,736 | ||||||||||||||
|
| |||||||||||||
| Spain 1.2% | ||||||||||||||
Aena SME SA | Transportation Infrastructure | 87 | 9,500 | |||||||||||
Banco de Sabadell SA | Banks | 7,829 | 4,029 | |||||||||||
Enagas SA | Gas Utilities | 339 | 6,731 | |||||||||||
Endesa SA | Electric Utilities | 624 | 13,331 | |||||||||||
Iberdrola SA | Electric Utilities | 7,376 | 72,710 | |||||||||||
Industria de Diseno Textil SA | Specialty Retail | 2,007 | 52,104 | |||||||||||
Red Electrica Corp. SA | Electric Utilities | 681 | 12,228 | |||||||||||
Repsol SA | Oil, Gas & Consumable Fuels | 2,151 | 19,665 | |||||||||||
|
| |||||||||||||
| 190,298 | ||||||||||||||
|
| |||||||||||||
| Sweden 0.3% | ||||||||||||||
Boliden AB | Metals & Mining | 432 | 7,905 | |||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 1,539 | 19,883 | |||||||||||
ICA Gruppen AB | Food & Staples Retailing | 66 | 2,784 | |||||||||||
| c | Skanska AB, B | Construction & Engineering | 234 | 3,577 | ||||||||||
Swedbank AB, A | Banks | 660 | 7,384 | |||||||||||
Telia Co. AB | Diversified Telecommunication Services | 3,822 | 13,771 | |||||||||||
|
| |||||||||||||
| 55,304 | ||||||||||||||
|
| |||||||||||||
| Switzerland 3.0% | ||||||||||||||
EMS-Chemie Holding AG | Chemicals | 18 | 11,321 | |||||||||||
Geberit AG | Building Products | 45 | 19,813 | |||||||||||
Nestle SA | Food Products | 1,845 | 189,639 | |||||||||||
Partners Group Holding AG | Capital Markets | 36 | 24,914 | |||||||||||
Roche Holding AG | Pharmaceuticals | 651 | 211,303 | |||||||||||
Swisscom AG | Diversified Telecommunication Services | 45 | 24,194 | |||||||||||
|
| |||||||||||||
| 481,184 | ||||||||||||||
|
| |||||||||||||
| Taiwan 2.4% | ||||||||||||||
Advantech Co. Ltd. | Technology Hardware, Storage & Peripherals | 500 | 4,125 | |||||||||||
Catcher Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 1,000 | 6,465 | |||||||||||
Chicony Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 2,015 | 5,051 | |||||||||||
| franklintempleton.com | Annual Report | 55 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Taiwan (continued) | ||||||||||||||
China Development Financial Holding Corp. | Insurance | 18,000 | $ | 4,416 | ||||||||||
Chunghwa Telecom Co. Ltd. | Diversified Telecommunication Services | 6,000 | 21,328 | |||||||||||
Far EasTone Telecommunications Co. Ltd. | Wireless Telecommunication Services | 3,000 | 6,279 | |||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 825 | 3,546 | |||||||||||
Formosa Chemicals & Fibre Corp. | Chemicals | 6,000 | 13,293 | |||||||||||
Formosa Petrochemical Corp. | Oil, Gas & Consumable Fuels | 3,000 | 8,075 | |||||||||||
Formosa Plastics Corp. | Chemicals | 6,000 | 14,900 | |||||||||||
Largan Precision Co. Ltd. | Electronic Equipment, Instruments & Components | 180 | 22,797 | |||||||||||
Lite-On Technology Corp. | Technology Hardware, Storage & Peripherals | 3,000 | 4,097 | |||||||||||
Nan Ya Plastics Corp. | Chemicals | 9,000 | 16,279 | |||||||||||
Nanya Technology Corp. | Semiconductors & Semiconductor Equipment | 3,000 | 5,327 | |||||||||||
Novatek Microelectronics Corp. Ltd. | Semiconductors & Semiconductor Equipment | 1,000 | 5,688 | |||||||||||
Powertech Technology Inc. | Semiconductors & Semiconductor Equipment | 1,000 | 2,841 | |||||||||||
President Chain Store Corp. | Food & Staples Retailing | 1,500 | 14,037 | |||||||||||
Taiwan Business Bank | Banks | 6,300 | 2,019 | |||||||||||
Taiwan Cement Corp. | Construction Materials | 3,000 | 3,918 | |||||||||||
Taiwan Mobile Co. Ltd. | Wireless Telecommunication Services | 3,000 | 9,910 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 20,000 | 181,208 | |||||||||||
The Shanghai Commercial & Savings Bank Ltd. | Banks | 3,243 | 4,220 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 3,000 | 5,883 | |||||||||||
WPG Holdings Ltd. | Electronic Equipment, Instruments & Components | 6,000 | 7,043 | |||||||||||
Yageo Corp. | Electronic Equipment, Instruments & Components | 600 | 5,446 | |||||||||||
Yuanta Financial Holding Co. Ltd. | Diversified Financial Services | 12,000 | 6,170 | |||||||||||
|
| |||||||||||||
| 384,361 | ||||||||||||||
|
| |||||||||||||
| Thailand 0.5% | ||||||||||||||
Advanced Info Service PCL | Wireless Telecommunication Services | 2,100 | 12,862 | |||||||||||
Airports of Thailand Public Co. Ltd., NVDR | Transportation Infrastructure | 6,600 | 10,207 | |||||||||||
Bumrungrad Hospital PCL | Health Care Providers & Services | 600 | 2,084 | |||||||||||
Electricity Generating PCL | Independent Power and Renewable Electricity Producers | 300 | 2,112 | |||||||||||
Home Product Center PCL, NVDR | Specialty Retail | 9,000 | 3,044 | |||||||||||
Intouch Holdings PCL | Wireless Telecommunication Services | 3,900 | 5,942 | |||||||||||
Land and Houses PCL, NVDR | Real Estate Management & Development | 9,300 | 1,899 | |||||||||||
Osotspa PCL, NVDR | Beverages | 900 | 980 | |||||||||||
PTT Exploration and Production PCL, NVDR | Oil, Gas & Consumable Fuels | 1,800 | 3,702 | |||||||||||
PTT Global Chemical PCL, NVDR | Chemicals | 3,600 | 3,346 | |||||||||||
PTT PCL | Oil, Gas & Consumable Fuels | 16,500 | 15,461 | |||||||||||
Ratch Group PCL, NVDR | Independent Power and Renewable Electricity Producers | 1,200 | 2,084 | |||||||||||
The Siam Cement PCL | Construction Materials | 1,200 | 11,847 | |||||||||||
|
| |||||||||||||
| 75,570 | ||||||||||||||
|
| |||||||||||||
| Turkey 0.2% | ||||||||||||||
BIM Birlesik Magazalar AS | Food & Staples Retailing | 858 | 6,529 | |||||||||||
Eregli Demir ve Celik Fabrikalari AS | Metals & Mining | 3,552 | 4,048 | |||||||||||
Ford Otomotiv Sanayi AS | Automobiles | 195 | 1,458 | |||||||||||
Haci Omer Sabanci Holding AS | Diversified Financial Services | 1,107 | 1,258 | |||||||||||
TAV Havalimanlari Holding AS | Transportation Infrastructure | 423 | 1,063 | |||||||||||
| c | Tupras-Turkiye Petrol Rafinerileri AS | Oil, Gas & Consumable Fuels | 267 | 3,059 | ||||||||||
Turkcell Iletisim Hizmetleri AS | Wireless Telecommunication Services | 1,935 | 3,617 | |||||||||||
| c | Turkiye Garanti Bankasi AS | Banks | 2,973 | 3,668 | ||||||||||
| c | Turkiye Is Bankasi AS, C | Banks | 1,893 | 1,356 | ||||||||||
|
| |||||||||||||
| 26,056 | ||||||||||||||
|
| |||||||||||||
| 56 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| United Arab Emirates 0.1% | ||||||||||||||
Abu Dhabi Commercial Bank PJSC | Banks | 2 | $ | 3 | ||||||||||
Abu Dhabi Commercial Bank PJSC | Banks | 3,420 | 4,311 | |||||||||||
Aldar Properties PJSC | Real Estate Management & Development | 6,603 | 2,768 | |||||||||||
Dubai Islamic Bank PJSC | Banks | 2,499 | 2,449 | |||||||||||
Emaar Malls Group PJSC | Real Estate Management & Development | 2,607 | 760 | |||||||||||
Emirates Telecommunications Group Co. PJSC | Diversified Telecommunication Services | 3,177 | 12,126 | |||||||||||
|
| |||||||||||||
| 22,417 | ||||||||||||||
|
| |||||||||||||
| United Kingdom 6.6% | ||||||||||||||
Admiral Group PLC | Insurance | 420 | 11,613 | |||||||||||
Anglo American PLC | Metals & Mining | 1,680 | 29,505 | |||||||||||
Auto Trader Group PLC | Interactive Media & Services | 1,521 | 8,281 | |||||||||||
Barratt Developments PLC | Household Durables | 2,250 | 12,303 | |||||||||||
BHP Group PLC | Metals & Mining | 3,300 | 51,230 | |||||||||||
British American Tobacco PLC | Tobacco | 1,860 | 63,631 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs | ) | 1,494 | 6,228 | ||||||||||
BT Group PLC | Diversified Telecommunication Services | 16,197 | 23,679 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 738 | 12,120 | |||||||||||
Centrica PLC | Multi-Utilities | 6,900 | 3,258 | |||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 2,697 | 42,270 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 2,664 | 9,774 | |||||||||||
easyJet PLC | Airlines | 192 | 1,359 | |||||||||||
Ferguson PLC | Trading Companies & Distributors | 174 | 10,908 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 8,856 | 166,318 | |||||||||||
Hargreaves Lansdown PLC | Capital Markets | 546 | 9,383 | |||||||||||
Imperial Brands PLC | Tobacco | 2,052 | 38,084 | |||||||||||
Intertek Group PLC | Professional Services | 243 | 14,240 | |||||||||||
ITV PLC | Media | 7,722 | 6,321 | |||||||||||
Kingfisher PLC | Specialty Retail | 3,210 | 5,728 | |||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 1,047 | 7,229 | ||||||||||
| c | M&G PLC | Diversified Financial Services | 2,130 | 2,974 | ||||||||||
Marks & Spencer Group PLC | Multiline Retail | 3,249 | 3,998 | |||||||||||
Micro Focus International PLC | Software | 309 | 1,533 | |||||||||||
Mondi PLC | Paper & Forest Products | 768 | 13,151 | |||||||||||
Next PLC | Multiline Retail | 306 | 15,450 | |||||||||||
Persimmon PLC | Household Durables | 816 | 19,391 | |||||||||||
RELX PLC | Professional Services | 3,570 | 76,669 | |||||||||||
Royal Dutch Shell PLC, A | Oil, Gas & Consumable Fuels | 3,561 | 62,656 | |||||||||||
Royal Dutch Shell PLC, B | Oil, Gas & Consumable Fuels | 3,051 | 51,443 | |||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 714 | 12,700 | |||||||||||
SSE PLC | Electric Utilities | 1,596 | 25,826 | |||||||||||
Taylor Wimpey PLC | Household Durables | 7,782 | 11,338 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 237 | 10,623 | |||||||||||
Unilever NV | Personal Products | 2,445 | 120,202 | |||||||||||
Unilever PLC | Personal Products | 1,908 | 96,419 | |||||||||||
|
| |||||||||||||
| 1,057,835 | ||||||||||||||
|
| |||||||||||||
| United States 53.5% | ||||||||||||||
AbbVie Inc. | Biotechnology | 1,830 | 139,428 | |||||||||||
Accenture PLC, A | IT Services | 996 | 162,607 | |||||||||||
Air Products and Chemicals Inc. | Chemicals | 264 | 52,697 | |||||||||||
Altria Group Inc. | Tobacco | 3,870 | 149,653 | |||||||||||
| c | Amcor PLC | Containers & Packaging | 2,478 | 20,121 | ||||||||||
American Electric Power Co. Inc. | Electric Utilities | 771 | 61,665 | |||||||||||
American Tower Corp. | Equity Real Estate Investment Trusts (REITs | ) | 546 | 118,891 | ||||||||||
Amgen Inc. | Biotechnology | 885 | 179,416 | |||||||||||
Apple Inc. | Technology Hardware, Storage & Peripherals | 732 | 186,140 | |||||||||||
Applied Materials Inc. | Semiconductors & Semiconductor Equipment | 1,677 | 76,840 | |||||||||||
| franklintempleton.com | Annual Report | 57 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| United States (continued) | ||||||||||||||
AT&T Inc. | Diversified Telecommunication Services | 4,935 | $ | 143,855 | ||||||||||
Best Buy Co. Inc. | Specialty Retail | 438 | 24,966 | |||||||||||
| c | Biogen Inc. | Biotechnology | 375 | 118,643 | ||||||||||
| c | Booking Holdings Inc. | Internet & Direct Marketing Retail | 36 | 48,432 | ||||||||||
BorgWarner Inc. | Auto Components | 204 | 4,971 | |||||||||||
Bristol-Myers Squibb Co. | Pharmaceuticals | 2,970 | 165,548 | |||||||||||
Broadcom Inc. | Semiconductors & Semiconductor Equipment | 468 | 110,963 | |||||||||||
Broadridge Financial Solutions Inc. | IT Services | 189 | 17,923 | |||||||||||
| c | Burlington Stores Inc. | Specialty Retail | 99 | 15,688 | ||||||||||
C.H. Robinson Worldwide Inc. | Air Freight & Logistics | 234 | 15,491 | |||||||||||
Cabot Oil & Gas Corp., A | Oil, Gas & Consumable Fuels | 567 | 9,747 | |||||||||||
| c | Cadence Design Systems Inc. | Software | 354 | 23,378 | ||||||||||
Campbell Soup Co. | Food Products | 288 | 13,294 | |||||||||||
| c | Capri Holdings Ltd. | Textiles, Apparel & Luxury Goods | 255 | 2,751 | ||||||||||
Carnival Corp. | Hotels, Restaurants & Leisure | 690 | 9,087 | |||||||||||
Celanese Corp. | Chemicals | 153 | 11,229 | |||||||||||
Church & Dwight Co. Inc. | Household Products | 285 | 18,291 | |||||||||||
Cisco Systems Inc. | Communications Equipment | 4,329 | 170,173 | |||||||||||
Citrix Systems Inc. | Software | 183 | 25,904 | |||||||||||
Clorox Co. | Household Products | 279 | 48,337 | |||||||||||
Cognizant Technology Solutions Corp., A | IT Services | 849 | 39,453 | |||||||||||
| c | Copart Inc. | Commercial Services & Supplies | 345 | 23,639 | ||||||||||
Cummins Inc. | Machinery | 267 | 36,130 | |||||||||||
D.R. Horton Inc. | Household Durables | 438 | 14,892 | |||||||||||
Darden Restaurants Inc. | Hotels, Restaurants & Leisure | 231 | 12,580 | |||||||||||
Delta Air Lines Inc. | Airlines | 285 | 8,131 | |||||||||||
Dollar General Corp. | Multiline Retail | 447 | 67,501 | |||||||||||
Dominion Energy Inc. | Multi-Utilities | 906 | 65,404 | |||||||||||
| c | Dow Inc. | Chemicals | 825 | 24,123 | ||||||||||
Eli Lilly & Co. | Pharmaceuticals | 1,557 | 215,987 | |||||||||||
Equity Lifestyle Properties Inc. | Equity Real Estate Investment Trusts (REITs | ) | 201 | 11,553 | ||||||||||
Erie Indemnity Co., A | Insurance | 33 | 4,892 | |||||||||||
Estee Lauder Companies Inc., A | Personal Products | 366 | 58,318 | |||||||||||
Expeditors International of Washington Inc. | Air Freight & Logistics | 294 | 19,616 | |||||||||||
Extra Space Storage Inc. | Equity Real Estate Investment Trusts (REITs | ) | 174 | 16,662 | ||||||||||
| c | F5 Networks Inc. | Communications Equipment | 117 | 12,476 | ||||||||||
| c | Facebook Inc., A | Interactive Media & Services | 990 | 165,132 | ||||||||||
FactSet Research Systems Inc. | Capital Markets | 48 | 12,513 | |||||||||||
Fastenal Co. | Trading Companies & Distributors | 1,041 | 32,531 | |||||||||||
Fox Corp., A | Media | 285 | 6,735 | |||||||||||
| c | Fox Corp., B | Media | 288 | 6,589 | ||||||||||
Garmin Ltd. | Household Durables | 249 | 18,665 | |||||||||||
General Mills Inc. | Food Products | 969 | 51,134 | |||||||||||
General Motors Co. | Automobiles | 2,274 | 47,254 | |||||||||||
Gilead Sciences Inc. | Biotechnology | 2,265 | 169,331 | |||||||||||
Hanesbrands Inc. | Textiles, Apparel & Luxury Goods | 552 | 4,344 | |||||||||||
Healthpeak Properties Inc. | Equity Real Estate Investment Trusts (REITs | ) | 561 | 13,380 | ||||||||||
HollyFrontier Corp. | Oil, Gas & Consumable Fuels | 270 | 6,618 | |||||||||||
Hormel Foods Corp. | Food Products | 540 | 25,186 | |||||||||||
| c | IDEXX Laboratories Inc. | Health Care Equipment & Supplies | 66 | 15,988 | ||||||||||
Illinois Tool Works Inc. | Machinery | 405 | 57,559 | |||||||||||
Ingredion Inc. | Food Products | 102 | 7,701 | |||||||||||
Intel Corp. | Semiconductors & Semiconductor Equipment | 3,345 | 181,031 | |||||||||||
International Business Machines Corp. | IT Services | 1,449 | 160,738 | |||||||||||
Intuit Inc. | Software | 498 | 114,540 | |||||||||||
Invesco Ltd. | Capital Markets | 243 | 2,206 | |||||||||||
J.B. Hunt Transport Services Inc. | Road & Rail | 138 | 12,728 | |||||||||||
Jack Henry & Associates Inc. | IT Services | 132 | 20,492 | |||||||||||
| 58 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| United States (continued) | ||||||||||||||
| c | Jazz Pharmaceuticals PLC | Pharmaceuticals | 57 | $ | 5,685 | |||||||||
Johnson & Johnson | Pharmaceuticals | 1,476 | 193,548 | |||||||||||
Kellogg Co. | Food Products | 339 | 20,337 | |||||||||||
Kimberly-Clark Corp. | Household Products | 591 | 75,571 | |||||||||||
Kimco Realty Corp. | Equity Real Estate Investment Trusts (REITs | ) | 537 | 5,193 | ||||||||||
KLA Corp. | Semiconductors & Semiconductor Equipment | 288 | 41,397 | |||||||||||
Kohl’s Corp. | Multiline Retail | 312 | 4,552 | |||||||||||
Lam Research Corp. | Semiconductors & Semiconductor Equipment | 243 | 58,320 | |||||||||||
Lamb Weston Holdings Inc. | Food Products | 132 | 7,537 | |||||||||||
Las Vegas Sands Corp. | Hotels, Restaurants & Leisure | 606 | 25,737 | |||||||||||
Lear Corp., | Auto Components | 108 | 8,775 | |||||||||||
Leggett & Platt Inc. | Household Durables | 204 | 5,443 | |||||||||||
Lockheed Martin Corp. | Aerospace & Defense | 459 | 155,578 | |||||||||||
Lowe’s Companies Inc. | Specialty Retail | 1,305 | 112,295 | |||||||||||
| c | Lululemon Athletica Inc. | Textiles, Apparel & Luxury Goods | 186 | 35,256 | ||||||||||
LyondellBasell Industries NV, A | Chemicals | 648 | 32,160 | |||||||||||
MarketAxess Holdings Inc. | Capital Markets | 54 | 17,959 | |||||||||||
Mastercard Inc., A | IT Services | 690 | 166,676 | |||||||||||
| c | Match Group Inc. | Interactive Media & Services | 42 | 2,774 | ||||||||||
Maxim Integrated Products Inc. | Semiconductors & Semiconductor Equipment | 471 | 22,895 | |||||||||||
Medical Properties Trust Inc. | Equity Real Estate Investment Trusts (REITs | ) | 423 | 7,314 | ||||||||||
Merck & Co. Inc. | Pharmaceuticals | 2,292 | 176,346 | |||||||||||
| c | Mettler-Toledo International Inc. | Life Sciences Tools & Services | 27 | 18,644 | ||||||||||
Microsoft Corp. | Software | 1,323 | 208,650 | |||||||||||
| c | Monster Beverage Corp. | Beverages | 486 | 27,342 | ||||||||||
Moody’s Corp. | Capital Markets | 222 | 46,953 | |||||||||||
NetApp Inc. | Technology Hardware, Storage & Peripherals | 288 | 12,007 | |||||||||||
NIKE Inc., B | Textiles, Apparel & Luxury Goods | 2,034 | 168,293 | |||||||||||
Nordstrom Inc. | Multiline Retail | 195 | 2,991 | |||||||||||
Nucor Corp. | Metals & Mining | 378 | 13,616 | |||||||||||
| c | NVR Inc. | Household Durables | 7 | 17,984 | ||||||||||
| c | O’Reilly Automotive Inc. | Specialty Retail | 147 | 44,254 | ||||||||||
Occidental Petroleum Corp. | Oil, Gas & Consumable Fuels | 936 | 10,839 | |||||||||||
OGE Energy Corp. | Electric Utilities | 237 | 7,283 | |||||||||||
Old Dominion Freight Line Inc. | Road & Rail | 165 | 21,658 | |||||||||||
Omnicom Group Inc. | Media | 351 | 19,270 | |||||||||||
PACCAR Inc. | Machinery | 435 | 26,592 | |||||||||||
Packaging Corp. of America | Containers & Packaging | 111 | 9,638 | |||||||||||
Paychex Inc. | IT Services | 600 | 37,752 | |||||||||||
PepsiCo Inc. | Beverages | 1,449 | 174,025 | |||||||||||
Pfizer Inc. | Pharmaceuticals | 5,292 | 172,731 | |||||||||||
Philip Morris International Inc. | Tobacco | 2,313 | 168,756 | |||||||||||
Phillips 66 | Oil, Gas & Consumable Fuels | 600 | 32,190 | |||||||||||
PPL Corp. | Electric Utilities | 825 | 20,361 | |||||||||||
Public Service Enterprise Group Inc. | Multi-Utilities | 753 | 33,817 | |||||||||||
Public Storage | Equity Real Estate Investment Trusts (REITs | ) | 342 | 67,925 | ||||||||||
PulteGroup Inc. | Household Durables | 432 | 9,642 | |||||||||||
Ralph Lauren Corp. | Textiles, Apparel & Luxury Goods | 75 | 5,012 | |||||||||||
| c | Regeneron Pharmaceuticals Inc. | Biotechnology | 99 | 48,341 | ||||||||||
Robert Half International Inc. | Professional Services | 243 | 9,173 | |||||||||||
Rockwell Automation Inc. | Electrical Equipment | 144 | 21,731 | |||||||||||
Rollins Inc. | Commercial Services & Supplies | 249 | 8,999 | |||||||||||
Ross Stores Inc. | Specialty Retail | 777 | 67,576 | |||||||||||
S&P Global Inc. | Capital Markets | 384 | 94,099 | |||||||||||
Seagate Technology PLC | Technology Hardware, Storage & Peripherals | 591 | 28,841 | |||||||||||
Simon Property Group Inc. | Equity Real Estate Investment Trusts (REITs | ) | 627 | 34,397 | ||||||||||
Skyworks Solutions Inc. | Semiconductors & Semiconductor Equipment | 348 | 31,104 | |||||||||||
Snap-on Inc. | Machinery | 84 | 9,141 | |||||||||||
| franklintempleton.com | Annual Report | 59 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| United States (continued) | ||||||||||||||
Southwest Airlines Co. | Airlines | 231 | $ | 8,226 | ||||||||||
Starbucks Corp. | Hotels, Restaurants & Leisure | 2,277 | 149,690 | |||||||||||
Steel Dynamics Inc. | Metals & Mining | 285 | 6,424 | |||||||||||
Sysco Corp. | Food & Staples Retailing | 804 | 36,687 | |||||||||||
T. Rowe Price Group Inc. | Capital Markets | 195 | 19,042 | |||||||||||
Tapestry Inc. | Textiles, Apparel & Luxury Goods | 486 | 6,294 | |||||||||||
Target Corp. | Multiline Retail | 885 | 82,278 | |||||||||||
TE Connectivity Ltd. | Electronic Equipment, Instruments & Components | 441 | 27,774 | |||||||||||
Texas Instruments Inc. | Semiconductors & Semiconductor Equipment | 1,650 | 164,884 | |||||||||||
The Gap Inc. | Specialty Retail | 528 | 3,717 | |||||||||||
The Hershey Co. | Food Products | 321 | 42,533 | |||||||||||
The Home Depot Inc. | Specialty Retail | 813 | 151,795 | |||||||||||
The Kroger Co. | Food & Staples Retailing | 1,248 | 37,590 | |||||||||||
The Procter & Gamble Co. | Household Products | 1,620 | 178,200 | |||||||||||
The TJX Cos. Inc. | Specialty Retail | 2,478 | 118,473 | |||||||||||
The Walt Disney Co. | Entertainment | 1,302 | 125,773 | |||||||||||
Tractor Supply Co. | Specialty Retail | 213 | 18,009 | |||||||||||
Tyson Foods Inc. | Food Products | 501 | 28,993 | |||||||||||
| c | Ulta Beauty Inc. | Specialty Retail | 102 | 17,921 | ||||||||||
United Parcel Service Inc., B | Air Freight & Logistics | 1,002 | 93,607 | |||||||||||
Valero Energy Corp. | Oil, Gas & Consumable Fuels | 657 | 29,802 | |||||||||||
Ventas Inc. | Equity Real Estate Investment Trusts (REITs | ) | 468 | 12,542 | ||||||||||
Verizon Communications Inc. | Diversified Telecommunication Services | 3,252 | 174,730 | |||||||||||
VF Corp. | Textiles, Apparel & Luxury Goods | 516 | 27,905 | |||||||||||
ViacomCBS Inc., B | Media | 744 | 10,423 | |||||||||||
W.W. Grainger Inc. | Trading Companies & Distributors | 81 | 20,129 | |||||||||||
Walgreens Boots Alliance Inc. | Food & Staples Retailing | 1,137 | 52,018 | |||||||||||
Waste Management Inc. | Commercial Services & Supplies | 468 | 43,318 | |||||||||||
| c | Waters Corp. | Life Sciences Tools & Services | 51 | 9,285 | ||||||||||
WEC Energy Group Inc. | Multi-Utilities | 504 | 44,418 | |||||||||||
Western Union Co. | IT Services | 438 | 7,941 | |||||||||||
Xilinx Inc. | Semiconductors & Semiconductor Equipment | 273 | 21,278 | |||||||||||
|
| |||||||||||||
| 8,594,555 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks and Other Equity Interests (Cost $17,922,943) | 15,706,862 | |||||||||||||
|
| |||||||||||||
| Management Investment Companies (Cost $234,568) 1.1% | ||||||||||||||
| India 1.1% | ||||||||||||||
iShares MSCI India ETF | Diversified Financial Services | 7,344 | 177,064 | |||||||||||
|
| |||||||||||||
| Preferred Stocks 0.6% | ||||||||||||||
| Brazil 0.3% | ||||||||||||||
| d | Itau Unibanco Holding SA, 8.709%, pfd. | Banks | 5,700 | 25,376 | ||||||||||
| d | Itausa-Investimentos Itau SA, 9.918%, pfd. | Banks | 9,300 | 15,725 | ||||||||||
| d | Telefonica Brasil SA, 6.951%, pfd. | Diversified Telecommunication Services | 900 | 8,581 | ||||||||||
|
| |||||||||||||
| 49,682 | ||||||||||||||
|
| |||||||||||||
| Colombia 0.0%† | ||||||||||||||
| d | Grupo Aval Acciones y Valores SA, 6.689%, pfd. | Banks | 1,515 | 335 | ||||||||||
|
| |||||||||||||
| Germany 0.1% | ||||||||||||||
| d | Porsche Automobil Holding SE, 5.714%, pfd. | Automobiles | 261 | 11,077 | ||||||||||
|
| |||||||||||||
| Russia 0.1% | ||||||||||||||
| d | Surgutneftegas PJSC, 20.266%, pfd. | Oil, Gas & Consumable Fuels | 17,616 | 8,477 | ||||||||||
| d | Transneft PJSC, 7.246%, pfd. | Oil, Gas & Consumable Fuels | 1 | 1,891 | ||||||||||
|
| |||||||||||||
| 10,368 | ||||||||||||||
|
| |||||||||||||
| 60 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ Global Equity ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Preferred Stocks (continued) | ||||||||||||||
| South Korea 0.1% | ||||||||||||||
| d | LG Household & Health Care Ltd., 1.727%, pfd. | Personal Products | 6 | $ | 3,154 | |||||||||
| d | Samsung Electronics Co. Ltd., 2.651%, pfd. | Technology Hardware, Storage & Peripherals | 711 | 23,421 | ||||||||||
|
| |||||||||||||
| 26,575 | ||||||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $130,117) | 98,037 | |||||||||||||
|
| |||||||||||||
Total Investments (Cost $18,287,628) 99.5% | 15,981,963 | |||||||||||||
Other Assets, less Liabilities 0.5% | 77,478 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 16,059,441 | ||||||||||||
|
| |||||||||||||
†Rounds to less than 0.1% of net assets.
aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $17,064, representing 0.1% of net assets.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $49,959, representing 0.3% of net assets.
cNon-income producing.
dVariable rate security. The rate shown represents the yield at period end.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Index Contracts | ||||||||||||||||||||
MSCI All Country World Index | Long | 2 | $ | 45,090 | 6/19/20 | $ | 3,852 | |||||||||||||
*As of period end.
See Abbreviations on page 86.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 61 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ International Equity Hedged ETF
| Year Ended March 31, | ||||||||||||||||
| 2020 | 2019 | 2018 | 2017a | |||||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||||||
Net asset value, beginning of year | $ | 24.70 | $ | 24.25 | $ | 24.70 | $ | 25.45 | ||||||||
|
| |||||||||||||||
| Income from investment operationsb: | ||||||||||||||||
Net investment incomec | 0.89 | 0.93 | 0.77 | 0.52 | ||||||||||||
Net realized and unrealized gains (losses) | (2.61 | ) | 0.79 | 0.10 | 1.45 | |||||||||||
|
| |||||||||||||||
Total from investment operations | (1.72 | ) | 1.72 | 0.87 | 1.97 | |||||||||||
|
| |||||||||||||||
| Less distributions from: | ||||||||||||||||
Net investment income and net foreign currency gains | (0.19 | ) | (0.30 | ) | (1.32 | ) | (2.72 | ) | ||||||||
Net realized gains | (0.24 | ) | (0.97 | ) | — | — | ||||||||||
|
| |||||||||||||||
Total distributions | (0.43 | ) | (1.27 | ) | (1.32 | ) | (2.72 | ) | ||||||||
|
| |||||||||||||||
Net asset value, end of year | $ | 22.55 | $ | 24.70 | $ | 24.25 | $ | 24.70 | ||||||||
|
| |||||||||||||||
Total returnd | (7.12)% | 7.53% | 3.47% | 8.30% | ||||||||||||
| Ratios to average net assetse | ||||||||||||||||
Expenses before waiver and payments by affiliates | 0.40% | 0.40% | 1.42% | f | 1.25% | |||||||||||
Expenses net of waiver and payments by affiliates | 0.40% | 0.40% | 0.40% | f | 0.40% | |||||||||||
Net investment income | 3.44% | 3.75% | 3.07% | 2.47% | ||||||||||||
| Supplemental data | ||||||||||||||||
Net assets, end of year (000’s) | $9,021 | $7,410 | $9,702 | $9,880 | ||||||||||||
Portfolio turnover rateg | 26.82%h | 39.24% | 32.55% | 19.09% | ||||||||||||
aFor the period June 1, 2016 (commencement of operations) to March 31, 2017.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee. See Note 3(a).
gPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”)
hPortfolio turnover rate excluding cash creation for the year end March 31, 2020 was as follows: 26.82%
| 62 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin LibertyQ International Equity Hedged ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests 98.6% | ||||||||||||||
| Australia 19.4% | ||||||||||||||
AGL Energy Ltd. | Multi-Utilities | 2,260 | $ | 23,778 | ||||||||||
Alumina Ltd. | Metals & Mining | 10,344 | 9,243 | |||||||||||
Aristocrat Leisure Ltd. | Hotels, Restaurants & Leisure | 1,824 | 23,835 | |||||||||||
Aurizon Holdings Ltd. | Road & Rail | 6,532 | 16,911 | |||||||||||
Australia & New Zealand Banking Group Ltd. | Banks | 5,976 | 62,033 | |||||||||||
Australian Stock Exchange Ltd. | Capital Markets | 548 | 25,856 | |||||||||||
Bendigo and Adelaide Bank Ltd. | Banks | 1,316 | 5,050 | |||||||||||
BHP Group Ltd. | Metals & Mining | 8,876 | 157,436 | |||||||||||
Bluescope Steel Ltd. | Metals & Mining | 1,624 | 8,578 | |||||||||||
Boral Ltd. | Construction Materials | 1,580 | 1,982 | |||||||||||
Brambles Ltd. | Commercial Services & Supplies | 5,352 | 34,591 | |||||||||||
Cimic Group Ltd. | Construction & Engineering | 312 | 4,440 | |||||||||||
Coca-Cola Amatil Ltd. | Beverages | 1,664 | 9,003 | |||||||||||
Cochlear Ltd. | Health Care Equipment & Supplies | 228 | 26,158 | |||||||||||
Coles Group Ltd. | Food & Staples Retailing | 2,316 | 21,489 | |||||||||||
Commonwealth Bank of Australia | Banks | 4,096 | 154,980 | |||||||||||
Crown Resorts Ltd. | Hotels, Restaurants & Leisure | 1,180 | 5,489 | |||||||||||
CSL Ltd. | Biotechnology | 1,204 | 218,626 | |||||||||||
Dexus | Equity Real Estate Investment Trusts (REITs | ) | 3,368 | 18,738 | ||||||||||
Flight Centre Travel Group Ltd. | Hotels, Restaurants & Leisure | 180 | 1,092 | |||||||||||
Fortescue Metals Group Ltd. | Metals & Mining | 6,788 | 41,546 | |||||||||||
Goodman Group | Equity Real Estate Investment Trusts (REITs | ) | 4,228 | 31,312 | ||||||||||
GPT Group | Equity Real Estate Investment Trusts (REITs | ) | 6,040 | 13,419 | ||||||||||
Harvey Norman Holdings Ltd. | Multiline Retail | 2,196 | 3,965 | |||||||||||
James Hardie Industries PLC, CDI | Construction Materials | 604 | 6,847 | |||||||||||
Magellan Financial Group Ltd. | Capital Markets | 240 | 6,393 | |||||||||||
Medibank Private Ltd. | Insurance | 10,516 | 17,121 | |||||||||||
Mirvac Group | Equity Real Estate Investment Trusts (REITs | ) | 11,076 | 14,168 | ||||||||||
National Australia Bank Ltd. | Banks | 8,388 | 85,633 | |||||||||||
Newcrest Mining Ltd. | Metals & Mining | 1,180 | 16,647 | |||||||||||
Qantas Airways Ltd. | Airlines | 1,400 | 2,768 | |||||||||||
REA Group Ltd. | Interactive Media & Services | 184 | 8,670 | |||||||||||
Rio Tinto Ltd. | Metals & Mining | 1,592 | 82,404 | |||||||||||
Rio Tinto PLC | Metals & Mining | 4,136 | 190,701 | |||||||||||
Scentre Group | Equity Real Estate Investment Trusts (REITs | ) | 13,724 | 13,146 | ||||||||||
Sonic Healthcare Ltd. | Health Care Providers & Services | 1,292 | 19,239 | |||||||||||
South32 Ltd. | Metals & Mining | 14,392 | 15,547 | |||||||||||
Telstra Corp. Ltd. | Diversified Telecommunication Services | 15,524 | 29,170 | |||||||||||
Wesfarmers Ltd. | Multiline Retail | 4,168 | 87,424 | |||||||||||
Westpac Banking Corp. | Banks | 10,656 | 107,613 | |||||||||||
Woodside Petroleum Ltd. | Oil, Gas & Consumable Fuels | 2,572 | 28,666 | |||||||||||
Woolworths Group Ltd. | Food & Staples Retailing | 4,384 | 94,181 | |||||||||||
|
| |||||||||||||
| 1,745,888 | ||||||||||||||
|
| |||||||||||||
| Austria 0.1% | ||||||||||||||
OMV AG | Oil, Gas & Consumable Fuels | 440 | 12,147 | |||||||||||
|
| |||||||||||||
| Belgium 0.3% | ||||||||||||||
Colruyt SA | Food & Staples Retailing | 180 | 9,731 | |||||||||||
Proximus SADP | Diversified Telecommunication Services | 548 | 12,549 | |||||||||||
|
| |||||||||||||
| 22,280 | ||||||||||||||
|
| |||||||||||||
| Denmark 3.9% | ||||||||||||||
Coloplast AS, B | Health Care Equipment & Supplies | 484 | 70,215 | |||||||||||
H. Lundbeck AS | Pharmaceuticals | 92 | 2,730 | |||||||||||
Novo Nordisk AS, B | Pharmaceuticals | 3,864 | 232,466 | |||||||||||
Novozymes AS | Chemicals | 560 | 25,469 | |||||||||||
| franklintempleton.com | Annual Report | 63 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ International Equity Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Denmark (continued) | ||||||||||||||
Pandora AS | Textiles, Apparel & Luxury Goods | 476 | $ | 15,461 | ||||||||||
Tryg AS | Insurance | 344 | 8,462 | |||||||||||
|
| |||||||||||||
| 354,803 | ||||||||||||||
|
| |||||||||||||
| Finland 1.6% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 508 | 31,482 | |||||||||||
Kone OYJ, B | Machinery | 956 | 54,148 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 424 | 10,268 | |||||||||||
Orion OYJ | Pharmaceuticals | 340 | 13,908 | |||||||||||
UPM-Kymmene OYJ | Paper & Forest Products | 1,376 | 37,881 | |||||||||||
|
| |||||||||||||
| 147,687 | ||||||||||||||
|
| |||||||||||||
| France 4.6% | ||||||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 492 | 43,760 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 120 | 6,761 | ||||||||||
Eutelsat Communications SA | Media | 412 | 4,307 | |||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 104 | 71,755 | |||||||||||
Peugeot SA | Automobiles | 2,020 | 26,963 | |||||||||||
Renault SA | Automobiles | 488 | 9,482 | |||||||||||
Sanofi | Pharmaceuticals | 2,452 | 215,613 | |||||||||||
Societe Generale SA | Banks | 2,112 | 35,567 | |||||||||||
|
| |||||||||||||
| 414,208 | ||||||||||||||
|
| |||||||||||||
| Germany 1.4% | ||||||||||||||
Adidas AG | Textiles, Apparel & Luxury Goods | 264 | 59,644 | |||||||||||
Aroundtown SA | Real Estate Management & Development | 2,436 | 12,172 | |||||||||||
Continental AG | Auto Components | 308 | 22,173 | |||||||||||
Covestro AG | Chemicals | 640 | 19,572 | |||||||||||
Deutsche Lufthansa AG | Airlines | 720 | 6,764 | |||||||||||
TUI AG | Hotels, Restaurants & Leisure | 1,308 | 5,884 | |||||||||||
|
| |||||||||||||
| 126,209 | ||||||||||||||
|
| |||||||||||||
| Hong Kong 1.1% | ||||||||||||||
CK Infrastructure Holdings Ltd. | Electric Utilities | 2,000 | 10,631 | |||||||||||
HKT Trust and HKT Ltd. | Diversified Telecommunication Services | 12,000 | 16,349 | |||||||||||
Jardine Matheson Holdings Ltd. | Industrial Conglomerates | 580 | 29,000 | |||||||||||
Kerry Properties Ltd. | Real Estate Management & Development | 2,500 | 6,596 | |||||||||||
NWS Holdings Ltd. | Industrial Conglomerates | 5,000 | 5,141 | |||||||||||
Power Assets Holdings Ltd. | Electric Utilities | 3,000 | 17,940 | |||||||||||
Sino Land Co. Ltd. | Real Estate Management & Development | 4,000 | 5,078 | |||||||||||
Vitasoy International Holdings Ltd. | Food Products | 1,600 | 4,851 | |||||||||||
Yue Yuen Industrial Holdings Ltd. | Textiles, Apparel & Luxury Goods | 2,000 | 3,066 | |||||||||||
|
| |||||||||||||
| 98,652 | ||||||||||||||
|
| |||||||||||||
| Ireland 0.0%† | ||||||||||||||
| a | AIB Group PLC | Banks | 1,756 | 1,969 | ||||||||||
|
| |||||||||||||
| Israel 0.7% | ||||||||||||||
Bank LeumiLe-Israel BM | Banks | 3,880 | 21,498 | |||||||||||
| a | Check Point Software Technologies Ltd. | Software | 372 | 37,401 | ||||||||||
Israel Chemicals Ltd. | Chemicals | 1,596 | 5,089 | |||||||||||
|
| |||||||||||||
| 63,988 | ||||||||||||||
|
| |||||||||||||
| Italy 3.2% | ||||||||||||||
Enel SpA | Electric Utilities | 18,920 | 131,598 | |||||||||||
Ferrari NV | Automobiles | 188 | 29,199 | |||||||||||
Intesa Sanpaolo SpA | Banks | 41,008 | 66,972 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 572 | 20,894 | |||||||||||
| b | Poste Italiane SpA, Reg S | Insurance | 1,548 | 13,113 | ||||||||||
| 64 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ International Equity Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Italy (continued) | ||||||||||||||
Recordati SpA | Pharmaceuticals | 248 | $ | 10,487 | ||||||||||
Snam SpA | Gas Utilities | 4,196 | 19,355 | |||||||||||
|
| |||||||||||||
| 291,618 | ||||||||||||||
|
| |||||||||||||
| Japan 24.3% | ||||||||||||||
ABC-Mart Inc. | Specialty Retail | 92 | 4,610 | |||||||||||
Advantest Corp. | Semiconductors & Semiconductor Equipment | 460 | 18,493 | |||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 6,200 | 95,968 | |||||||||||
Bandai Namco Holdings Inc. | Leisure Equipment & Products | 650 | 31,556 | |||||||||||
Bridgestone Corp. | Auto Components | 1,900 | 58,484 | |||||||||||
CANON Inc. | Technology Hardware, Storage & Peripherals | 2,700 | 59,000 | |||||||||||
Chugai Pharmaceutical Co. Ltd. | Pharmaceuticals | 300 | 34,737 | |||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 260 | 24,241 | |||||||||||
Daiwa House Industry Co. Ltd. | Real Estate Management & Development | 1,500 | 37,203 | |||||||||||
Hoya Corp. | Health Care Equipment & Supplies | 1,300 | 110,787 | |||||||||||
Iida Group Holdings Co. Ltd. | Household Durables | 400 | 5,547 | |||||||||||
Isuzu Motors Ltd. | Automobiles | 1,400 | 9,276 | |||||||||||
ITOCHU Corp. | Trading Companies & Distributors | 4,500 | 93,476 | |||||||||||
Japan Airlines Co. Ltd. | Airlines | 400 | 7,373 | |||||||||||
Japan Post Bank Co. Ltd. | Banks | 1,200 | 11,082 | |||||||||||
Japan Tobacco Inc. | Tobacco | 4,000 | 73,957 | |||||||||||
Kajima Corp. | Construction & Engineering | 1,200 | 12,327 | |||||||||||
Kakaku.com Inc. | Interactive Media & Services | 600 | 11,032 | |||||||||||
KAO Corp. | Personal Products | 1,400 | 114,511 | |||||||||||
KDDI Corp. | Wireless Telecommunication Services | 6,700 | 197,981 | |||||||||||
Koito Manufacturing Co. Ltd. | Auto Components | 260 | 8,803 | |||||||||||
Marubeni Corp. | Trading Companies & Distributors | 4,000 | 19,971 | |||||||||||
Mitsubishi Chemical Holdings Corp. | Chemicals | 4,000 | 23,817 | |||||||||||
Mitsubishi Gas Chemical Co. Inc. | Chemicals | 500 | 5,447 | |||||||||||
Mizuho Financial Group Inc. | Banks | 56,400 | 64,574 | |||||||||||
MS&AD Insurance Group Holdings Inc. | Insurance | 1,200 | 33,625 | |||||||||||
Nexon Co. Ltd. | Entertainment | 1,100 | 17,984 | |||||||||||
Nippon Building Fund Inc. | Equity Real Estate Investment Trusts (REITs | ) | 2 | 13,413 | ||||||||||
Nippon Telegraph & Telephone Corp. | Diversified Telecommunication Services | 4,600 | 109,743 | |||||||||||
NTT DOCOMO Inc. | Wireless Telecommunication Services | 5,300 | 165,792 | |||||||||||
Obayashi Corp. | Construction & Engineering | 1,800 | 15,440 | |||||||||||
Oracle Corp. Japan | Software | 133 | 11,630 | |||||||||||
Oriental Land Co. Ltd. | Hotels, Restaurants & Leisure | 290 | 37,125 | |||||||||||
ORIX Corp. | Diversified Financial Services | 3,300 | 39,754 | |||||||||||
Pigeon Corp. | Household Products | 300 | 11,519 | |||||||||||
Sekisui House Ltd. | Household Durables | 2,000 | 33,060 | |||||||||||
Shin-Etsu Chemical Co. Ltd. | Chemicals | 500 | 49,697 | |||||||||||
Shionogi & Co. Ltd. | Pharmaceuticals | 900 | 44,327 | |||||||||||
Showa Denko K.K. | Chemicals | 300 | 6,216 | |||||||||||
Softbank Corp. | Wireless Telecommunication Services | 4,000 | 50,929 | |||||||||||
Subaru Corp. | Automobiles | 2,000 | 38,414 | |||||||||||
Sumco Corp. | Semiconductors & Semiconductor Equipment | 500 | 6,452 | |||||||||||
Sumitomo Chemical Co. Ltd. | Chemicals | 3,600 | 10,704 | |||||||||||
Sumitomo Corp. | Trading Companies & Distributors | 1,600 | 18,363 | |||||||||||
Taisei Corp. | Construction & Engineering | 600 | 18,369 | |||||||||||
Teijin Ltd. | Chemicals | 500 | 8,476 | |||||||||||
Tokyo Electron Ltd. | Semiconductors & Semiconductor Equipment | 500 | 94,275 | |||||||||||
Tosoh Corp. | Chemicals | 800 | 9,115 | |||||||||||
Toyota Motor Corp. | Automobiles | 3,100 | 186,681 | |||||||||||
USS Co. Ltd. | Specialty Retail | 600 | 8,259 | |||||||||||
Yamaha Motor Co. Ltd. | Automobiles | 700 | 8,475 | |||||||||||
Zozo Inc. | Internet & Direct Marketing Retail | 500 | 6,720 | |||||||||||
|
| |||||||||||||
| 2,188,810 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 65 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ International Equity Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Macau 0.8% | ||||||||||||||
Galaxy Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 6,000 | $ | 32,009 | ||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 9,600 | 35,175 | |||||||||||
Wynn Macau Ltd. | Hotels, Restaurants & Leisure | 3,600 | 5,472 | |||||||||||
|
| |||||||||||||
| 72,656 | ||||||||||||||
|
| |||||||||||||
| Netherlands 0.9% | ||||||||||||||
Koninklijke Ahold Delhaize NV | Food & Staples Retailing | 3,532 | 82,490 | |||||||||||
|
| |||||||||||||
| New Zealand 0.6% | ||||||||||||||
Fisher & Paykel Healthcare Corp. Ltd. | Health Care Equipment & Supplies | 1,972 | 35,517 | |||||||||||
Mercury NZ Ltd. | Electric Utilities | 940 | 2,352 | |||||||||||
Spark New Zealand Ltd. | Diversified Telecommunication Services | 7,948 | 19,249 | |||||||||||
|
| |||||||||||||
| 57,118 | ||||||||||||||
|
| |||||||||||||
| Norway 1.0% | ||||||||||||||
Equinor ASA | Oil, Gas & Consumable Fuels | 1,496 | 18,684 | |||||||||||
Mowi ASA | Food Products | 1,500 | 22,662 | |||||||||||
Orkla ASA | Food Products | 1,908 | 16,175 | |||||||||||
Telenor ASA | Diversified Telecommunication Services | 2,404 | 34,774 | |||||||||||
|
| |||||||||||||
| 92,295 | ||||||||||||||
|
| |||||||||||||
| Portugal 0.1% | ||||||||||||||
Jeronimo Martins SGPS SA | Food & Staples Retailing | 720 | 12,988 | |||||||||||
|
| |||||||||||||
| Russia 0.1% | ||||||||||||||
Evraz PLC | Metals & Mining | 1,800 | 5,169 | |||||||||||
|
| |||||||||||||
| Singapore 1.4% | ||||||||||||||
CapitaLand Mall Trust | Equity Real Estate Investment Trusts (REITs | ) | 7,200 | 9,052 | ||||||||||
ComfortDelGro Corp. Ltd. | Road & Rail | 7,100 | 7,580 | |||||||||||
Jardine Cycle & Carriage Ltd. | Distributors | 300 | 4,144 | |||||||||||
Mapletree Commercial Trust | Equity Real Estate Investment Trusts (REITs | ) | 3,200 | 4,113 | ||||||||||
SATS Ltd. | Transportation Infrastructure | 2,400 | 5,326 | |||||||||||
Singapore Exchange Ltd. | Capital Markets | 3,700 | 23,881 | |||||||||||
Singapore Technologies Engineering Ltd. | Aerospace & Defense | 5,000 | 10,956 | |||||||||||
Singapore Telecommunications Ltd. | Diversified Telecommunication Services | 26,400 | 47,095 | |||||||||||
Venture Corp. Ltd. | Electronic Equipment, Instruments & Components | 700 | 6,671 | |||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | Machinery | 7,600 | 4,430 | |||||||||||
|
| |||||||||||||
| 123,248 | ||||||||||||||
|
| |||||||||||||
| Spain 3.8% | ||||||||||||||
Aena SME SA | Transportation Infrastructure | 96 | 10,483 | |||||||||||
Banco de Sabadell SA | Banks | 15,136 | 7,789 | |||||||||||
Enagas SA | Gas Utilities | 592 | 11,754 | |||||||||||
Endesa SA | Electric Utilities | 1,080 | 23,073 | |||||||||||
Iberdrola SA | Electric Utilities | 13,492 | 133,000 | |||||||||||
Industria de Diseno Textil SA | Specialty Retail | 3,728 | 96,782 | |||||||||||
Red Electrica Corp. SA | Electric Utilities | 1,364 | 24,493 | |||||||||||
Repsol SA | Oil, Gas & Consumable Fuels | 3,876 | 35,436 | |||||||||||
|
| |||||||||||||
| 342,810 | ||||||||||||||
|
| |||||||||||||
| Sweden 1.7% | ||||||||||||||
Atlas Copco AB | Machinery | 1,120 | 33,122 | |||||||||||
Boliden AB | Metals & Mining | 804 | 14,712 | |||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 2,864 | 37,001 | |||||||||||
ICA Gruppen AB | Food & Staples Retailing | 248 | 10,460 | |||||||||||
| a | Skanska AB, B | Construction & Engineering | 468 | 7,154 | ||||||||||
Swedbank AB, A | Banks | 2,236 | 25,017 | |||||||||||
Telia Co. AB | Diversified Telecommunication Services | 7,224 | 26,030 | |||||||||||
|
| |||||||||||||
| 153,496 | ||||||||||||||
|
| |||||||||||||
| 66 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ International Equity Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Switzerland 4.6% | ||||||||||||||
EMS-Chemie Holding AG | Chemicals | 26 | $ | 16,352 | ||||||||||
Geberit AG | Building Products | 116 | 51,073 | |||||||||||
Partners Group Holding AG | Capital Markets | 68 | 47,060 | |||||||||||
Roche Holding AG | Pharmaceuticals | 740 | 240,191 | |||||||||||
SGS SA | Professional Services | 7 | 16,220 | |||||||||||
Swisscom AG | Diversified Telecommunication Services | 80 | 43,012 | |||||||||||
|
| |||||||||||||
| 413,908 | ||||||||||||||
|
| |||||||||||||
| United Kingdom 23.0% | ||||||||||||||
3i Group PLC | Capital Markets | 2,656 | 26,089 | |||||||||||
Admiral Group PLC | Insurance | 780 | 21,568 | |||||||||||
Anglo American PLC | Metals & Mining | 3,112 | 54,655 | |||||||||||
Auto Trader Group PLC | Interactive Media & Services | 2,720 | 14,809 | |||||||||||
BAE Systems PLC | Aerospace & Defense | 9,036 | 58,463 | |||||||||||
Barratt Developments PLC | Household Durables | 4,132 | 22,594 | |||||||||||
BHP Group PLC | Metals & Mining | 6,036 | 93,704 | |||||||||||
British American Tobacco PLC | Tobacco | 3,388 | 115,904 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs | ) | 2,784 | 11,606 | ||||||||||
BT Group PLC | Diversified Telecommunication Services | 30,096 | 43,997 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 1,368 | 22,467 | |||||||||||
Centrica PLC | Multi-Utilities | 16,156 | 7,628 | |||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 5,144 | 80,622 | |||||||||||
Diageo PLC | Beverages | 5,484 | 175,879 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 4,520 | 16,584 | |||||||||||
easyJet PLC | Airlines | 476 | 3,370 | |||||||||||
Experian PLC | Professional Services | 2,576 | 71,899 | |||||||||||
Ferguson PLC | Trading Companies & Distributors | 328 | 20,563 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 10,068 | 189,080 | |||||||||||
Hargreaves Lansdown PLC | Capital Markets | 976 | 16,773 | |||||||||||
Imperial Brands PLC | Tobacco | 3,860 | 71,640 | |||||||||||
Intertek Group PLC | Professional Services | 476 | 27,894 | |||||||||||
ITV PLC | Media | 14,092 | 11,536 | |||||||||||
JD Sports Fashion PLC | Specialty Retail | 588 | 3,337 | |||||||||||
Kingfisher PLC | Specialty Retail | 6,124 | 10,927 | |||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 2,160 | 14,913 | ||||||||||
| a | M&G PLC | Diversified Financial Services | 4,280 | 5,976 | ||||||||||
Marks & Spencer Group PLC | Multiline Retail | 5,664 | 6,970 | |||||||||||
Micro Focus International PLC | Software | 532 | 2,639 | |||||||||||
Mondi PLC | Paper & Forest Products | 1,364 | 23,357 | |||||||||||
Next PLC | Multiline Retail | 568 | 28,679 | |||||||||||
Pearson PLC | Media | 1,948 | 13,348 | |||||||||||
Persimmon PLC | Household Durables | 1,500 | 35,645 | |||||||||||
RELX PLC | Professional Services | 6,612 | 141,999 | |||||||||||
Royal Dutch Shell PLC, A | Oil, Gas & Consumable Fuels | 4,376 | 76,995 | |||||||||||
Royal Dutch Shell PLC, B | Oil, Gas & Consumable Fuels | 3,140 | 52,943 | |||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 1,312 | 23,337 | |||||||||||
SSE PLC | Electric Utilities | 2,976 | 48,156 | |||||||||||
Taylor Wimpey PLC | Household Durables | 14,404 | 20,986 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 448 | 20,081 | |||||||||||
Unilever NV | Personal Products | 3,732 | 183,474 | |||||||||||
Unilever PLC | Personal Products | 3,556 | 179,699 | |||||||||||
|
| |||||||||||||
| 2,072,785 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks and Other Equity Interests (Cost $10,368,891) | 8,897,222 | |||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 67 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ International Equity Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Preferred Stocks 0.3% | ||||||||||||||
| Germany 0.3% | ||||||||||||||
| c | Fuchs Petrolub SE, 2.939%, pfd. | Chemicals | 172 | $ | 6,100 | |||||||||
| c | Porsche Automobil Holding SE, 5.714%, pfd. | Automobiles | 472 | 20,032 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $38,777) | 26,132 | |||||||||||||
|
| |||||||||||||
Total Investments (Cost $10,407,668) 98.9% | 8,923,354 | |||||||||||||
Other Assets, less Liabilities 1.1% | 97,984 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 9,021,338 | ||||||||||||
|
| |||||||||||||
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $13,113, representing 0.1% of net assets.
cVariable rate security. The rate shown represents the yield at period end.
At March 31, 2020 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
| Forward Exchange Contracts | ||||||||||||||||||||||||||||
| Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
| OTC Forward Exchange Contracts | ||||||||||||||||||||||||||||
Australian Dollar | BOFA | Buy | 3,184,700 | $ | 1,853,814 | 4/02/20 | $ | 95,382 | $ | — | ||||||||||||||||||
Australian Dollar | BOFA | Sell | 3,184,700 | 2,054,765 | 4/02/20 | 105,569 | — | |||||||||||||||||||||
Australian Dollar | DBAB | Buy | 3,184,700 | 1,949,196 | 4/02/20 | 1 | — | |||||||||||||||||||||
Australian Dollar | DBAB | Sell | 3,184,700 | 1,853,814 | 4/02/20 | — | (95,382 | ) | ||||||||||||||||||||
Danish Krone | BOFA | Buy | 2,422,600 | 356,228 | 4/02/20 | — | (5 | ) | ||||||||||||||||||||
Danish Krone | BOFA | Sell | 2,422,600 | 356,810 | 4/02/20 | 587 | — | |||||||||||||||||||||
Euro | BOFA | Buy | 1,773,700 | 1,946,221 | 4/02/20 | — | (28 | ) | ||||||||||||||||||||
Euro | BOFA | Sell | 1,773,700 | 1,951,985 | 4/02/20 | 5,792 | — | |||||||||||||||||||||
Great British Pound | HSBK | Buy | 654,915 | 812,068 | 4/02/20 | — | (6 | ) | ||||||||||||||||||||
Great British Pound | BOFA | Buy | 654,915 | 812,074 | 4/02/20 | — | (12 | ) | ||||||||||||||||||||
Great British Pound | UBS AG | Buy | 654,915 | 812,078 | 4/02/20 | — | (16 | ) | ||||||||||||||||||||
Great British Pound | HSBK | Sell | 654,915 | 837,211 | 4/02/20 | 25,149 | — | |||||||||||||||||||||
Great British Pound | UBS AG | Sell | 654,915 | 837,215 | 4/02/20 | 25,153 | — | |||||||||||||||||||||
Great British Pound | BOFA | Sell | 654,915 | 837,223 | 4/02/20 | 25,161 | — | |||||||||||||||||||||
Hong Kong Dollar | MSCO | Buy | 1,352,000 | 174,440 | 4/02/20 | — | (9 | ) | ||||||||||||||||||||
Hong Kong Dollar | MSCO | Sell | 1,352,000 | 173,499 | 4/02/20 | — | (932 | ) | ||||||||||||||||||||
Israeli Shekel | BOFA | Buy | 106,500 | 30,107 | 4/02/20 | — | (1 | ) | ||||||||||||||||||||
Israeli Shekel | BOFA | Sell | 106,500 | 30,548 | 4/02/20 | 442 | — | |||||||||||||||||||||
Japanese Yen | BOFA | Buy | 249,394,800 | 2,310,208 | 4/02/20 | — | (34 | ) | ||||||||||||||||||||
Japanese Yen | BOFA | Sell | 249,394,800 | 2,315,979 | 4/02/20 | 5,805 | — | |||||||||||||||||||||
New Zealand Dollar | BOFA | Buy | 90,400 | 53,593 | 4/02/20 | 1 | — | |||||||||||||||||||||
New Zealand Dollar | BOFA | Sell | 90,400 | 56,085 | 4/02/20 | 2,491 | — | |||||||||||||||||||||
Norwegian Krone | BOFA | Buy | 1,035,200 | 98,583 | 4/02/20 | — | (1 | ) | ||||||||||||||||||||
Norwegian Krone | BOFA | Sell | 1,035,200 | 109,309 | 4/02/20 | 10,727 | — | |||||||||||||||||||||
Singapore Dollar | BOFA | Buy | 207,800 | 145,945 | 4/02/20 | — | (3 | ) | ||||||||||||||||||||
Singapore Dollar | BOFA | Sell | 207,800 | 148,913 | 4/02/20 | 2,971 | — | |||||||||||||||||||||
Swedish Krona | BOFA | Buy | 1,803,800 | 182,063 | 4/02/20 | — | (3 | ) | ||||||||||||||||||||
Swedish Krona | BOFA | Sell | 1,803,800 | 186,322 | 4/02/20 | 4,261 | — | |||||||||||||||||||||
Swiss Franc | MSCO | Buy | 420,300 | 434,407 | 4/02/20 | — | (11 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 420,300 | 435,134 | 4/02/20 | 738 | — | |||||||||||||||||||||
Australian Dollar | DBAB | Sell | 2,656,500 | 1,626,150 | 5/04/20 | — | (80 | ) | ||||||||||||||||||||
Danish Krone | BOFA | Sell | 2,408,600 | 354,478 | 5/04/20 | — | (92 | ) | ||||||||||||||||||||
Great British Pound | BOFA | Sell | 553,632 | 686,918 | 5/04/20 | — | (23 | ) | ||||||||||||||||||||
Great British Pound | HSBK | Sell | 553,632 | 686,924 | 5/04/20 | — | (17 | ) | ||||||||||||||||||||
| 68 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ International Equity Hedged ETF(continued)
| Forward Exchange Contracts(continued) | ||||||||||||||||||||||||||||
| Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
| OTC Forward Exchange Contracts(continued) | ||||||||||||||||||||||||||||
Great British Pound | UBS AG | Sell | 553,632 | $ | 686,932 | 5/04/20 | $ | — | $ | (10 | ) | |||||||||||||||||
Israeli Shekel | BOFA | Sell | 91,400 | 25,853 | 5/04/20 | — | (13 | ) | ||||||||||||||||||||
New Zealand Dollar | BOFA | Sell | 97,700 | 57,899 | 5/04/20 | — | (7 | ) | ||||||||||||||||||||
Euro | BOFA | Sell | 1,510,200 | 1,659,069 | 5/05/20 | — | (101 | ) | ||||||||||||||||||||
Hong Kong Dollar | MSCO | Sell | 1,093,700 | 141,073 | 5/05/20 | — | (15 | ) | ||||||||||||||||||||
Norwegian Krone | BOFA | Sell | 958,300 | 91,259 | 5/05/20 | — | (16 | ) | ||||||||||||||||||||
Singapore Dollar | BOFA | Sell | 172,300 | 121,056 | 5/05/20 | — | (17 | ) | ||||||||||||||||||||
Swedish Krona | BOFA | Sell | 1,503,500 | 151,846 | 5/05/20 | — | (18 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 404,200 | 418,407 | 5/05/20 | — | (90 | ) | ||||||||||||||||||||
Japanese Yen | BOFA | Sell | 245,325,800 | 2,275,994 | 5/07/20 | — | (125 | ) | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total Forward Exchange Contracts |
| $ | 310,230 | $ | (97,067 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) |
| $ | 213,163 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
MSCI All Country World Index | Long | 2 | $ | 45,090 | 6/19/20 | $ | 3,852 | |||||||||||||
*As of period end.
See abbreviations on page 86.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 69 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statements of Assets and Liabilities
March 31, 2020
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 68,420,142 | $ | 24,103,208 | $ | 18,287,628 | $ | 10,407,668 | ||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers | $ | 56,819,967 | $ | 18,543,653 | $ | 15,981,963 | $ | 8,923,354 | ||||||||
Cash | — | — | — | 4,023 | ||||||||||||
Foreign currency, at value (cost $63,532, $25,300, 12,905 and $22,554) | 63,283 | 25,038 | 12,877 | 22,530 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 83 | — | — | — | ||||||||||||
Dividends and interest | 800,378 | 101,443 | 63,936 | 73,758 | ||||||||||||
Variation margin on futures contracts | 6,000 | 484 | 486 | 462 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | 88,000 | 8,285 | 8,285 | 8,285 | ||||||||||||
Unrealized appreciation on OTC forward exchange contracts | — | — | — | 310,230 | ||||||||||||
|
| |||||||||||||||
Total assets | 57,777,711 | 18,678,903 | 16,067,547 | 9,342,642 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Management fees | 27,170 | 7,610 | 4,760 | 3,085 | ||||||||||||
Investment securities purchased | — | — | — | 221,152 | ||||||||||||
Funds advanced by custodian | 39,813 | 17,935 | 3,346 | — | ||||||||||||
Unrealized depreciation on OTC forward exchange contracts | — | — | — | 97,067 | ||||||||||||
|
| |||||||||||||||
Total liabilities | 66,983 | 25,545 | 8,106 | 321,304 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 57,710,728 | $ | 18,653,358 | $ | 16,059,441 | $ | 9,021,338 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 97,678,961 | $ | 24,735,248 | $ | 18,706,462 | $ | 9,786,556 | ||||||||
Total distributable earnings (loss) | (39,968,233 | ) | (6,081,890 | ) | (2,647,021 | ) | (765,218 | ) | ||||||||
|
| |||||||||||||||
Net assets, at value | $ | 57,710,728 | $ | 18,653,358 | $ | 16,059,441 | $ | 9,021,338 | ||||||||
|
| |||||||||||||||
Shares outstanding | 2,600,000 | 800,000 | 600,000 | 400,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 22.20 | $ | 23.32 | $ | 26.77 | $ | 22.55 | ||||||||
|
| |||||||||||||||
| 70 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the year ended March 31, 2020
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 12,979,458 | $ | 806,557 | $ | 641,859 | $ | 349,973 | ||||||||
Interest from securities loaned: Note 1(d) | ||||||||||||||||
Unaffiliate issuers (net of fees and rebates): | 2,191 | — | (70 | ) | — | |||||||||||
Non-Controlled affiliates (Note 3c) | 4,287 | 2,676 | 2,056 | — | ||||||||||||
|
| |||||||||||||||
Total investment income | 12,985,936 | 809,233 | 643,845 | 349,973 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 1,344,658 | 89,893 | 70,337 | 36,434 | ||||||||||||
Other | 1,741 | 103 | 165 | 14 | ||||||||||||
|
| |||||||||||||||
Total expenses | 1,346,399 | 89,996 | 70,502 | 36,448 | ||||||||||||
Expenses waived/paid by affiliates (Note 3c) | (932 | ) | (24 | ) | (1,689 | ) | — | |||||||||
|
| |||||||||||||||
Net expenses | 1,345,467 | 89,972 | 68,813 | 36,448 | ||||||||||||
|
| |||||||||||||||
Net investment income | 11,640,469 | 719,261 | 575,032 | 313,525 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (14,244,683 | ) | (600,920 | ) | (439,631 | ) | (37,616 | ) | ||||||||
In-kind redemptions | 7,703,285 | 2,237,611 | 2,201,824 | — | ||||||||||||
Foreign currency transactions | (618,839 | ) | (1,299 | ) | (5,908 | ) | (61,048 | ) | ||||||||
Forward exchange contracts | — | (1,840 | ) | (98 | ) | 482,496 | ||||||||||
Futures contracts | (422,200 | ) | (10,861 | ) | (10,726 | ) | (9,569 | ) | ||||||||
|
| |||||||||||||||
Net realized gain (loss) | (7,582,437 | ) | 1,622,691 | 1,745,461 | 374,263 | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (22,739,670 | ) | (6,646,455 | ) | (4,249,796 | ) | (1,671,538 | ) | ||||||||
Translation of other assets and liabilities denominated in foreign currencies | (63,110 | ) | 415 | (798 | ) | (564 | ) | |||||||||
Futures contracts | 34,626 | 3,455 | 2,159 | 2,981 | ||||||||||||
Forward exchange contracts | — | — | — | 151,485 | ||||||||||||
Change in deferred taxes on unrealized appreciation | 652,818 | — | — | — | ||||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (22,115,336 | ) | (6,642,585 | ) | (4,248,435 | ) | (1,517,636 | ) | ||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (29,697,773 | ) | (5,019,894 | ) | (2,502,974 | ) | (1,143,373 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (18,057,304 | ) | $ | (4,300,633 | ) | $ | (1,927,942 | ) | $ | (829,848 | ) | ||||
|
| |||||||||||||||
aForeign taxes withheld on dividends | $ | 1,604,468 | $ | 50,494 | $ | 35,296 | $ | 25,050 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 71 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 11,640,469 | $ | 12,098,074 | $ | 719,261 | $ | 567,843 | ||||||||
Net realized gain (loss) | (7,582,437 | ) | 3,121,528 | 1,622,691 | (35,818 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) | (22,115,336 | ) | (48,192,220 | ) | (6,642,585 | ) | 24,564 | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (18,057,304 | ) | (32,972,618 | ) | (4,300,633 | ) | 556,589 | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (13,252,802 | ) | (11,215,046 | ) | (632,323 | ) | (569,521 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | (255,463,490 | ) | (12,217,518 | ) | 6,666,193 | — | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (286,773,596 | ) | (56,405,182 | ) | 1,733,237 | (12,932 | ) | |||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 344,484,324 | 400,889,506 | 16,920,121 | 16,933,053 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 57,710,728 | $ | 344,484,324 | $ | 18,653,358 | $ | 16,920,121 | ||||||||
|
| |||||||||||||||
| 72 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 575,032 | $ | 556,124 | $ | 313,525 | $ | 263,448 | ||||||||
Net realized gain (loss) | 1,745,461 | 1,079,731 | 374,263 | 968,490 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (4,248,435 | ) | (576,560 | ) | (1,517,636 | ) | (494,713 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (1,927,942 | ) | 1,059,295 | (829,848 | ) | 737,225 | ||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (618,417 | ) | (478,140 | ) | (155,010 | ) | (380,919 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | (6,115,499 | ) | 6,058,346 | 2,596,506 | (2,648,534 | ) | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (8,661,858 | ) | 6,639,501 | 1,611,648 | (2,292,228 | ) | ||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 24,721,299 | 18,081,798 | 7,409,690 | 9,701,918 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 16,059,441 | $ | 24,721,299 | $ | 9,021,338 | $ | 7,409,690 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 73 | ||||
FRANKLIN TEMPLETON ETF TRUST
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting offorty-two separate funds, four 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). Each of the Funds are an exchange traded fund (ETF) and seek to provide the investment results that closely correspond, before fees and expenses, to the performance of each Fund’s corresponding underlying index.
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 as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. 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, exchange traded funds 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. London 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 inopen-end mutual funds are valued at the closing NAV.
Certain derivative financial instruments are centrally cleared or trade in the OTC market. The Funds’ 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 Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
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. 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.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
When the last day of the reporting period is anon-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 significant 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.
When the last day of the reporting period is anon-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 lastÛusiness day and the last calendar day of the reporting period. Any significant security valuation changes due to an openßoreign market are adjusted and reflected by the Funds for financial reporting purposes.
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. Derivative Financial Instruments
Certain or all Funds 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 Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. 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, 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 Funds’ 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 counterpartynon-performance.
Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to equity price 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
| franklintempleton.com | Annual Report | 75 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
c. Derivative Financial Instruments(continued)
by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statements of Assets and Liabilities.
Certain or all Funds 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.
See Note 8 regarding other derivative information.
d. Securities Lending
Certain or all Funds participate in an agency based securities lending program to earn additional income. The Fund receives cash collateral 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. The collateral 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. 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 the 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. At March 31, 2020, the Funds had no securities on loan.
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 March 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 theex-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 theex-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. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense. These expenses are paid by the Funds or by the investment manager, as applicable, according to the terms of the unified management fee agreement.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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 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
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specified number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
| franklintempleton.com | Annual Report | 77 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest(continued)
At March 31, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| Franklin LibertyQ Emerging Markets ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 400,000 | $ | 12,375,393 | 4,000,000 | $ | 121,573,734 | ||||||||||||||
Shares redeemed | (9,400,000 | ) | (267,838,883 | ) | (4,400,000 | ) | (133,791,252 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (9,000,000 | ) | $ | (255,463,490 | ) | (400,000 | ) | $ | (12,217,518 | ) | ||||||||||
|
| |||||||||||||||||||
| Franklin LibertyQ Global Dividend ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 800,000 | $ | 23,907,607 | — | $ | — | ||||||||||||||
Shares redeemed | (600,000 | ) | (17,241,414 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 200,000 | $ | 6,666,193 | — | $ | — | ||||||||||||||
|
| |||||||||||||||||||
| Franklin LibertyQ Global Equity ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 6,595,214 | 400,000 | $ | 12,112,015 | ||||||||||||||
Shares redeemed | (400,000 | ) | (12,710,713 | ) | (200,000 | ) | (6,053,669 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (200,000 | ) | $ | (6,115,499 | ) | 200,000 | $ | 6,058,346 | ||||||||||||
|
| |||||||||||||||||||
| Franklin LibertyQ International Equity Hedged ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 100,000 | $ | 2,596,506 | 100,000 | $ | 2,422,854 | ||||||||||||||
Shares redeemed | — | — | (200,000 | ) | (5,071,388 | ) | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 100,000 | $ | 2,596,506 | (100,000 | ) | $ | (2,648,534 | ) | ||||||||||||
|
| |||||||||||||||||||
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 Funds are also officers and/or directors of the following subsidiaries:
| Subsidiary | Affiliation | |
Franklin Advisers, Inc (Advisers) | Investment manager | |
Franklin Advisory Services, LLC (FASL) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | |
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
a. Management Fees
The Funds pay a unified management fee to Advisors whereby Advisors has agreed to reimburse the Funds’ acquired fund fee and expenses (if any) and pay all of the ordinary operating expenses of the Funds, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding payments under the Funds’ Rule12b-1 plan (if any), brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments), taxes, interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto), and othernon-routine or extraordinary expenses. The fees are based on the daily net assets of each of the Funds as follows:
| Annualized Fee Rate | ||
Franklin LibertyQ Emerging Markets ETF | 0.45% | |
Franklin LibertyQ Global Dividend ETF | 0.45% | |
Franklin LibertyQ Global Equity ETF | 0.35% | |
Franklin LibertyQ International Equity Hedged ETF | 0.40% | |
Prior to August 1, 2019, the Franklin LibertyQ Emerging Markets ETF paid fees to Franklin Advisers, Inc. of 0.55% per year based on the average daily net assets of the Fund.
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. 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 year ended March 31, 2020, investments in affiliated management investment companies were as follows:
Value at of Year | Purchases | Sales | Realized Gain (Loss) | Net Change in Unrealized (Depreciation) | Value at End of Year | Number of Shares Held at End of Year | Investment Income | |||||||||||||||||||||||||
| Franklin LibertyQ Emerging Markets ETF | Income from Securities loaned | |||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | $ | 10,913,349 | $ | (10,913,349 | ) | $ | — | $ | — | $ | — | $ | — | $ | 4,287 | |||||||||||||||
|
| |||||||||||||||||||||||||||||||
| Franklin LibertyQ Global Dividend ETF | Income from Securities loaned | |||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2,676 | ||||||||||||||||
|
| |||||||||||||||||||||||||||||||
| Franklin LibertyQ Global Equity ETF | Income from Securities loaned | |||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | $ | 921,386 | $ | (921,386 | ) | $ | — | $ | — | $ | — | $ | — | $ | 1,986 | |||||||||||||||
|
| |||||||||||||||||||||||||||||||
| franklintempleton.com | Annual Report | 79 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
d. Other Affiliated Transactions
At March 31, 2020, the shares of the Funds were owned by the following entities:
| Funds | Shares | Percentage of Outstanding Sharesa | ||||||
| Franklin LibertyQ Emerging Markets ETF | ||||||||
Franklin 529 Portfolios | 1,149,477 | 44.2% | ||||||
|
| |||||||
| Franklin LibertyQ Global Equity ETF | ||||||||
Franklin Resources Inc. | 64,000 | 10.7% | ||||||
|
| |||||||
| Franklin LibertyQ International Equity Hedged ETF | ||||||||
Franklin Resources Inc. | 37,000 | 9.3% | ||||||
|
| |||||||
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2020, the capital loss carryforwards were as follows:
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||||||
Short term | $ | 14,909,865 | $ | 132,428 | $ | 274,474 | $ | — | ||||||||
Long term | 11,615,623 | 477,064 | 151,477 | — | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 26,525,488 | $ | 609,492 | $ | 425,951 | $ | — | ||||||||
|
| |||||||||||||||
The tax character of distributions paid during the years ended March 31, 2020 and 2019, were as follows:
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 13,252,802 | $ | 11,215,046 | $ | 632,323 | $ | 569,512 | ||||||||||||
|
| |||||||||||||||||||
| Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Distributions paid from: | ||||||||||||||||||||
Ordinary income | $ | 618,417 | $ | 478,140 | $ | 57,514 | $ | 80,011 | ||||||||||||
Long-term Capital Gain | $ | — | $ | — | $ | 97,496 | $ | 300,908 | ||||||||||||
|
| |||||||||||||||||||
| $ | 618,417 | $ | 478,140 | $ | 155,010 | $ | 380,919 | |||||||||||||
|
| |||||||||||||||||||
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
At March 31, 2020, the cost of investments, net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Cost of investments | $ | 70,239,551 | $ | 24,159,893 | $ | 18,335,290 | $ | 10,472,205 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 4,731,389 | $ | 201,282 | $ | 786,836 | $ | 692,987 | ||||||||
Unrealized depreciation | 18,150,972 | (5,817,522 | ) | (3,140,163 | ) | (2,241,838 | ) | |||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (13,419,583 | ) | $ | (5,616,240 | ) | $ | (2,353,327 | ) | $ | (1,548,851 | ) | ||||
|
| |||||||||||||||
Distributable earnings – undistributed ordinary income | $ | 55,446 | $ | 144,131 | $ | 133,596 | $ | 554,685 | ||||||||
|
| |||||||||||||||
Undistributed Long-term Capital Gain | — | — | — | $ | 229,869 | |||||||||||
|
| |||||||||||||||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of corporate actions, passive foreign investment company shares and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities andin-kind transactions, if any) for the year ended March 31, 2020, were as follows:
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Purchases | $ | 117,333,443 | $ | 5,142,877 | $ | 5,585,932 | $ | 3,209,576 | ||||||||
Sales | $ | 260,686,860 | $ | 3,904,571 | $ | 6,321,684 | $ | 2,408,543 | ||||||||
In-kind transactions associated with creation and redemptions for the year ended March 31, 2020, were as follows:
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Cost of Securities Received | $ | 5,569,479 | $ | 22,210,561 | $ | 6,005,359 | $ | 2,563,003 | ||||||||
Value of Securities Delivereda | $ | 119,051,278 | $ | 16,741,195 | $ | 11,337,067 | $ | — | ||||||||
aRealized gains and losses fromin-kind redemptions, as shown on the Statement of Operations, are not recognized by the Funds for tax purposes.
6. 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.
The United States and other nations have imposed and could impose additional sanctions on certain issuers in Russia due to regional conflicts. These sanctions could result in the devaluation of Russia’s currency, a downgrade in Russian issuers’ credit ratings, or a decline in the value and liquidity of Russian stocks or other securities. Such sanctions could also adversely affect Russia’s economy. Certain or all Funds may be prohibited from investing in securities issued by companies subject to such
| franklintempleton.com | Annual Report | 81 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
6. Concentration of Risk(continued)
sanctions. In addition, if the Fund holds the securities of an issuer that is subject to such sanctions, an immediate freeze of that issuer’s securities could result, impairing the ability of the Fund to buy, sell, receive or deliver those securities. There is also the risk that countermeasures could be taken by Russia’s government, which could involve the seizure of the Fund’s assets. These risks could affect the value of the Funds’ portfolio. While the Funds hold securities of certain issuers impacted by the sanctions, existing investments do not presently violate the applicable terms and conditions of the sanctions. The sanctions currently do not affect the Fund’s ability to sell these securities. At March 31, 2020, Franklin LibertyQ Emerging Markets ETF had 9.0% of its net assets invested in Russia. The remaining Funds in the Trust did not have significant investment in Russia.
7. Novel Coronavirus Pandemic
The global outbreak of the novel coronavirus disease, known asCOVID-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. Other Derivative Information
At March 31, 2020, the Funds’ investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
Asset Derivatives | Liability Derivatives | |||||||||||
| Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||
| Franklin LibertyQ Emerging Markets ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 50,836 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
| Franklin LibertyQ Global Equity ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 3,852 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
| Franklin LibertyQ Global Dividend ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 3,852 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
| Franklin LibertyQ International Equity Hedged ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 3,852 | a | Variation margin on futures contracts | $ | — | |||||
Foreign exchange contracts | Unrealized appreciation on OTC forward exchange contracts | 310,230 | Unrealized depreciation on OTC forward exchange contracts | 97,067 | ||||||||
|
|
|
| |||||||||
Totals | $ | 314,082 | $ | 97,067 | ||||||||
|
|
|
| |||||||||
aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
For the year ended March 31, 2020, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:
| Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
| Franklin LibertyQ Emerging Markets ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized |
| ||||||||||
Equity contract | Futures contracts | $ | (422,200 | ) | Futures contracts | $ | 34,626 | |||||
|
|
|
| |||||||||
| Franklin LibertyQ Global Dividend ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized | |||||||||||
Equity contract | Futures contracts | $ | (10,861 | ) | Futures contracts | $ | 3,455 | |||||
Foreign exchange contracts | Forward exchange contract | (1,840 | ) | Forward exchange contract | — | |||||||
|
|
|
| |||||||||
Totals | $ | (12,701 | ) | $ | 3,455 | |||||||
|
|
|
| |||||||||
| Franklin LibertyQ Global Equity ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized |
| ||||||||||
Equity contract | Futures contracts | $ | (10,726 | ) | Futures contracts | $ | 2,159 | |||||
Foreign exchange contracts | Forward exchange contract | (98 | ) | Forward exchange contract | — | |||||||
|
|
|
| |||||||||
Totals | $ | (10,824 | ) | $ | 2,159 | |||||||
|
|
|
| |||||||||
| Franklin LibertyQ International Equity Hedged ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized | |||||||||||
Equity contract | Futures contracts | $ | (9,569 | ) | Futures contracts | $ | 2,981 | |||||
Foreign exchange contracts | Forward exchange contract | 482,496 | Forward exchange contract | 151,485 | ||||||||
|
|
|
| |||||||||
Totals | $ | 472,927 | $ | 154,466 | ||||||||
|
|
|
| |||||||||
For the year ended March 31, 2020, the average month end notional amount of futures contracts and average month end contract value for forward exchange contracts were as follows:
| Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Futures contracts | $ | 1,461,357 | $ | 51,862 | $ | 73,277 | $ | 49,828 | ||||||||
Forward exchange contracts | $ | — | $ | — | $ | — | $ | 27,513,076 | ||||||||
| franklintempleton.com | Annual Report | 83 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. Other Derivative Information(continued)
At March 31, 2020, the Funds’ OTC derivative assets and liabilities are as follows:
| Gross and Net Amounts of Assets and Liabilities Presented in the Statements of Assets and Liabilities | ||||||||
| Assetsa | Liabilitiesa | |||||||
| Franklin LibertyQ International Equity Hedged ETF | ||||||||
Forward exchange contracts | $ | 310,230 | $ | 97,067 | ||||
aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.
At March 31, 2020, the Funds’ OTC derivative assets, which may be offset against the Funds’ OTC derivative liabilities and collateral received from the counterparty, are as follows:
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Gross and Net Amounts of Assets Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Receiveda | Cash Collateral Receiveda | Net Amount (Not less than zero) | ||||||||||||||||
Franklin LibertyQ International Equity | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
BOFA | $ | 259,189 | $ | (499 | ) | $ | — | $ | — | $ | 258,690 | |||||||||
DBAB | 1 | (1 | ) | — | — | — | ||||||||||||||
HSBK | 25,149 | (23 | ) | — | — | 25,126 | ||||||||||||||
MSCO | 738 | (738 | ) | — | — | — | ||||||||||||||
UBS AG | 25,153 | (26 | ) | — | — | 25,127 | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 310,230 | $ | (1,287 | ) | $ | — | $ | — | $ | 308,943 | |||||||||
|
| |||||||||||||||||||
At March 31, 2020, the Funds’ OTC derivative liabilities, which may be offset against the Funds’ OTC derivative assets and collateral pledged to the counterparty, are as follows:
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Gross and Net Amounts of Liabilities Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Pledgeda | Cash Collateral Pledgeda | Net Amount (Not less than zero) | ||||||||||||||||
Franklin LibertyQ International Equity | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
BOFA | $ | 499 | $ | (499 | ) | $ | — | $ | — | $ | — | |||||||||
DBAB | 95,462 | (1 | ) | — | — | 95,461 | ||||||||||||||
HSBK | 23 | (23 | ) | — | — | — | ||||||||||||||
MSCO | 1,057 | (738 | ) | — | — | 319 | ||||||||||||||
UBS AG | 26 | (26 | ) | — | — | — | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 97,067 | $ | (1,287 | ) | $ | — | $ | — | $ | 95,780 | |||||||||
|
| |||||||||||||||||||
See Note 1(c) regarding derivative financial instruments.
See abbreviations on page 86
| 84 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
9. 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) |
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 March 31, 2020, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin LibertyQ Emerging Markets ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 56,819,967 | $ | — | $ | — | $ | 56,819,967 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 50,836 | $ | — | $ | — | $ | 50,836 | ||||||||
|
| |||||||||||||||
| Franklin LibertyQ Global Dividend ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 18,543,653 | $ | — | $ | — | $ | 18,543,653 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 3,852 | $ | — | $ | — | $ | 3,852 | ||||||||
|
| |||||||||||||||
| Franklin LibertyQ Global Equity ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 15,981,308 | $ | 655 | $ | — | $ | 15,981,963 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 3,852 | $ | — | $ | — | $ | 3,852 | ||||||||
|
| |||||||||||||||
| Franklin LibertyQ International Equity Hedged ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 8,922,262 | $ | 1,092 | $ | — | $ | 8,923,354 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | — | 310,230 | — | 310,230 | ||||||||||||
Futures Contracts | 3,852 | — | — | 3,852 | ||||||||||||
|
| |||||||||||||||
Total Other Financial Instruments | $ | 3,852 | $ | 310,230 | $ | — | $ | 314,082 | ||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 97,067 | $ | — | $ | 97,067 | ||||||||
|
| |||||||||||||||
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common and preferred stocks.
| franklintempleton.com | Annual Report | 85 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
10. 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.
| Selected Portfolio | Counterparty | |||||
| ADR | American Depositary Receipt | BOFA | Bank of America Corp. | |||
| ETF | Exchange Traded Fund | HSBK | HSBC Bank PLC | |||
| GDR | Global Depositary Receipt | IDR | International Depository Receipt | |||
| IDR | International Depositary Receipt | MSCO | Morgan Stanley | |||
| NVDR | Non-Voting Depositary Receipt | UBSW | UBS AG | |||
| REIT | Real Estate Investment Trust | |||||
| 86 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Franklin Templeton ETF Trust and Shareholders of Franklin LibertyQ Emerging Markets ETF, Franklin LibertyQ Global Dividend ETF, Franklin LibertyQ Global Equity ETF, and Franklin LibertyQ International Equity Hedged ETF
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin LibertyQ Emerging Markets ETF, Franklin LibertyQ Global Dividend ETF, Franklin LibertyQ Global Equity ETF, and Franklin LibertyQ International Equity Hedged ETF (the “Funds”) as of March 31, 2020, the related statementsof operationsfor the year ended March 31, 2020, the statements of changes in net assets for each of the two years in the period ended March 31, 2020, including the related notes,and the financial highlights for each of the periods indicated therein(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended March 31, 2020 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditsof these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of March 31, 2020 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
San Francisco, California
May 19, 2020
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
| franklintempleton.com | Annual Report | 87 | ||||
FRANKLIN TEMPLETON ETF TRUST
Under Section 852(b)(3)(C) of the Internal Revenue Code, Franklin LibertyQ International Equity Hedged hereby reports the maximum amount allowable but no less than $97,496 as a long term capital gain dividend for the fiscal year ended March 31, 2020.
Under Section 854(b)(1)(A) of the Internal Revenue Code, the Funds hereby report the following percentage amounts of the ordinary income dividends as income qualifying for the dividends received deduction for the fiscal year ended March 31, 2020.
Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | |||||||||||||
| 31.32% | 43.95% | |||||||||||||
Under Section 854(b)(1)(B) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Internal Revenue Code for the fiscal year ended March 31, 2020.
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||
| $9,269,774 | $739,773 | $597,975 | $346,564 | |||||||||
Distributions, including qualified dividend income, paid during calendar year 2020 will be reported to shareholders on Form1099-DIV bymid-February 2021. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.
At March 31, 2020, more than 50% of the following Funds’ total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Funds on these investments. The Funds elect to treat foreign taxes paid as allowed under Section 853 of the Internal Revenue Code. This election will allow shareholders of record as of the June 2020 distribution, to treat their proportionate share of foreign taxes paid by the Funds as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.
Franklin LibertyQ Emerging Markets ETF
Franklin LibertyQ Global Dividend ETF
Franklin LibertyQ International Equity Hedged ETF
| 88 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Rohit Bhagat (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Lead Independent Trustee and Trustee | Since 2016 | 44 | Axis Bank (2013-present), AssetMark Financial Holdings, Inc. (investment solutions) (2018-present) and FlipKart Limited (2019-present) (eCommerce company);formerly, CapFloat Financial Services Pvt., Ltd.(non-banking finance company) (2018) and Zentific Investment Management (hedge fund) (2015-2018). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Managing Member, Mukt Capital, LLC (private investment firm) (2014-present); Advisor, Optimal Asset Management (investment technology and advisory services company) (2015-present); andformerly, Chairman, Asia Pacific, BlackRock (2009-2012); Global Chief Operating Officer, Barclays Global Investors (investment management) (2005-2009); and Senior Partner, The Boston Consulting Group (management consulting) (1992-2005). | ||||||||
| Deborah D. McWhinney (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since January 2020 | 44 | Fluor Corporation (construction and engineering) (2014-present), IHS Markit (information services)(2015-present), Borg Warner (automotive) (2018-present) and Focus Financial Partner, LLC (financial services) (2018-present). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Director of various companies; andformerly, Board Member, Lloyds Banking Group (2015-2018) (financial institution) and Fresenius Medical Group (2016-2018) (healthcare); Chief Executive Officer (2013-2014) and Chief Operating Officer (2011-2013), CitiGroup Global Enterprise Payments (financial services); and President, Citi’s Personal Banking and Wealth Management (2009-2011). | ||||||||
| Anantha K. Pradeep (1963) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since 2016 | 44 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, Smilable, Inc. (technology company) (2014-present); Chief Executive Officer, MachineVantage (technology company) (2018-present); Founder and Managing Partner, Consult Meridian, LLC (consulting company) (2009-present); andformerly, Founder, BoardVantage (board portal solutions provider delivering paperless process for boards and leadership) (2000-2002). | ||||||||
| franklintempleton.com | Annual Report | 89 | ||||
FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| **Jennifer M. Johnson (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee and Chairperson of the Board | Since 2016 | 49 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, President and Director, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of four of the investment companies in Franklin Templeton; andformerly, Chief Operating Officer and Executive Vice President, Franklin Resources, Inc. (1994-2015); Executive Vice President of Operations and Technology, Franklin Resources, Inc. (2005-2010); and Senior Vice President, Franklin Resources, Inc. (2003-2005). | ||||||||
| Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
Breda M. Beckerle (1958) 280 Park Avenue New York, NY 10017 | Interim Chief Compliance Officer | Since January 2020 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Compliance Officer, Fiduciary Investment Management International, Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | Chief Executive Officer – Finance and Administration | Since 2017 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017). | ||||||||
| Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President – AML Compliance | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| 90 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers(continued)
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Patrick O’Connor (1967) One Franklin Parkway San Mateo, CA 94403-1906 | President and Chief Executive Officer – Investment Management | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| President and Chief Investment Officer, Franklin Advisory Services, LLC; Senior Vice President, Franklin Advisers, Inc.; officer of two of the investment companies in Franklin Templeton; andformerly, Managing Director, Head of iShares Product Canada, BlackRock (1998-2014). | ||||||||
Vivek Pai (1970) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Treasurer, Chief Financial Officer and Chief Accounting Officer | Since May 2019 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Treasurer, U.S. Fund Administration & Reporting and officer of two of the investment companies in Franklin Templeton. | ||||||||
| Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President and Secretary | Since 2015 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
| Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Jennifer M. Johnson is considered to be an interested person of the Fund under the federal securities laws due to her position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated Rohit Bhagat as its audit committee financial expert. The Board believes that Mr. Bhagat qualifies as such an expert in view of his extensive business background and experience, including extensive experience in the asset management and financial services industries. Mr. Bhagat has been a Member and Chairman of the Fund’s Audit Committee since 2016. As a result of such background and experience, the Board believes that Mr. Bhagat has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Bhagat is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request.
Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
| franklintempleton.com | Annual Report | 91 | ||||
FRANKLIN TEMPLETON ETF TRUST
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 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 recent12-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 FormN-PORT. Shareholders may view the filed FormN-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.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Funds and the Funds’ net asset value may be found on the Funds’ website at franklintempleton.com.
| 92 | Annual Report | franklintempleton.com | ||
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.
 | Annual Report Franklin Templeton ETF Trust | |||||
| Investment Manager | Distributor | Investor Services | ||||
| Franklin Advisory Services, LLC | Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 franklintempleton.com | Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 | ||||
| © 2020 Franklin Templeton Investments. All rights reserved. | ETF A 05/20 | |||||
ANNUAL REPORT
FRANKLIN TEMPLETON
ETF TRUST
March 31, 2020
Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Core Bond ETF | |
Franklin Liberty U.S. Low Volatility ETF |
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 to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visitfranklintempleton.com/investor/investments-and-solutions/investment-options/etfs/for fund updates and documents.
| Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
| franklintempleton.com | Not part of the annual report | 1 | ||||
Franklin Liberty Investment Grade Corporate ETF
This annual report for Franklin Liberty Investment Grade Corporate ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks a high level of current income as is consistent with prudent investing, while seeking preservation of capital. Under normal market conditions, the Fund invests at least 80% of its net assets in investment-grade corporate debt securities and investments.
Performance Overview
During the 12-month period, the Fund posted cumulative total returns of +3.25% based on market price and +4.02% based on net asset value (NAV).1 In comparison, the Bloomberg Barclays U.S. Corporate Investment Grade Index posted a +4.98% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 5.
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 tofranklintempleton.com or call(800) 342-5236.
Economic and Market Overview
The U.S. bond market’s performance during the 12-month period, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, was defined by two phases: before and during the outbreak of the novel coronavirus (COVID-19) in the country. Until late February 2020, prices for most U.S. bonds rose, as low inflation, interest-rate cuts and strong demand for yield, which moves inversely to price, supported fixed-income markets. In late February, as more countries adopted social distancing and lockdown measures to slow the global pandemic, the U.S. bond market began pricing in the adverse impact on economic activity. Higher-quality, longer-term bonds rallied, while riskier, lower-rated corporate bonds declined sharply, reflecting a reversal in many investors’ risk appetite. Similarly, strong demand for cash and cash equivalents drove yields on certain U.S. Treasury bill
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
Banks | 14.9% | |||
Oil, Gas & Consumable Fuels | 10.1% | |||
Electric Utilities | 8.4% | |||
Health Care Providers & Services | 4.7% | |||
Capital Markets | 4.6% | |||
Diversified Telecommunication Services | 4.0% | |||
Insurance | 3.7% | |||
Real Estate Management & Development | 3.1% | |||
Energy Equipment & Services | 3.0% | |||
Food & Staples Retailing | 2.7% | |||
maturities to fall briefly below zero. Thereafter, bond prices fell then somewhat stabilized as the magnitude of the downturn led to constricted liquidity and subsequent intervention by the U.S. Federal Reserve (Fed).
After reducing the federal funds target rate three times in 2019 to a range of 1.50%–1.75%, the Fed enacted two emergency rate cuts in March 2020 in response to the COVID-19 pandemic, further lowering the federal funds target rate to a range of 0.00%–0.25%. In addition, the Fed announced a plan to purchase government, government-backed and corporate bonds to help keep markets functioning, significantly expanding its balance sheet.
U.S. Treasury bonds, as measured by the Bloomberg Barclays U.S. Treasury Index, rose significantly during the reporting period, despite high levels of Treasury issuance due to deficit spending and investor expectations for large increases in debt issuance for fiscal stimulus to alleviate the economic downturn. The yield on 10-year U.S. Treasury bonds declined to historic lows near period-end, driven by fears of a prolonged global economic disruption due to the COVID-19 pandemic. Mortgage-backed securities (MBS), as measured by the Bloomberg Barclays MBS Index, also posted positive returns, aided by the Fed’s announcement that it would make substantial MBS purchases.
1. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does 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 24.
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FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
U.S. corporate bond performance was hampered during the period’s last month by investor concerns about the pandemic-related economic disruption and the potential credit downgrades of many companies amid high levels of indebtedness. For the 12-month period, investment-grade corporate bonds, as represented by the Bloomberg Barclays U.S. Corporate Bond Index, posted positive returns, while high-yield corporate bonds, as represented by the Bloomberg Barclays U.S. Corporate High Yield Bond Index, posted negative returns due to investor concerns about a potential increase in credit defaults.
Investment Strategy
The Fund invests primarily in U.S. dollar-denominated corporate debt securities issued by U.S. and foreign companies. The Fund may invest in debt securities of any maturity or duration.
The Fund’s focus on the credit quality of its portfolio is intended to reduce credit risk and help to preserve the Fund’s capital. The Fund may also invest a portion of its assets in convertible securities, preferred securities and U.S. Treasury securities, and generally expects to invest a portion of its assets in cash, cash equivalents and high quality money market securities, including commercial paper, repurchase agreements and affiliated or unaffiliated money market funds. The Fund may invest up to 40% of its net assets in foreign securities, including those in developing markets, and up to 15% of its net assets in non-U.S. dollar-denominated securities. The Fund may enter into certain derivative transactions to seek to enhance Fund returns, increase liquidity, gain exposure to certain instruments or markets in a more efficient or less expensive way and/or hedge risks associated with its other portfolio investments.
In choosing investments, we select securities in various market sectors based on our assessment of changing economic, market, industry and issuer conditions. We use 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. The Fund’s portfolio is constructed by taking into account our desired duration and yield curve exposure, total return potential, as well as the appropriate diversification and risk profile at the issue, company and industry level. We may utilize quantitative models to identify investment opportunities in order to construct a portfolio of investments for the Fund. Quantitative trading models are proprietary systems that rely on mathematical computations to identify trading opportunities.
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Issue/Issuer Sector/Industry | % of Total Net Assets | |||
U.S. Treasury 30 Yr. Bond , 6/19/2020 | 3.3% | |||
CK Hutchison International 19 Ltd., senior note, 144A, senior note, 144A, 3.625%, 4/11/2029 | 1.9% | |||
Morgan Stanley, senior bond, 3.591% to 7/22/27, FRN thereafter, 3.591%, 7/22/2028 | 1.9% | |||
Enel Finance International NV, senior note, 144A, 3.625%, 5/25/2027 | 1.9% | |||
Bank of America Corp., sub. bond, 4.183%, 11/25/2027 | 1.9% | |||
Alibaba Group Holding Ltd., senior note, senior note, 3.40%, 12/06/2027 | 1.9% | |||
Capital One Financial Corp., senior bond, senior note, 3.20%, 1/30/2023 | 1.9% | |||
France Telecom SA, senior bond, 9.57%, 3/01/2031 | 1.8% | |||
Citigroup, Inc., senior bond, 3.668% to 7/23/27, FRN thereafter, senior note, 3.352% to 4/24/24, FRN thereafter, 3.352%, 4/24/2025 | 1.7% | |||
Glencore Funding LLC, senior note, 144A, senior note, 144A, senior note, 144A, 4.875%, 3/12/2029 | 1.7% | |||
Manager’s Discussion
The investment grade corporate bond market performed well during the period on a total return basis, but results were negatively impacted starting in early 2020 as markets reacted to the consequences of the COVID-19 pandemic. Corporate bond spreads moved beyond typical recession levels as investor uncertainty about the duration and severity of the economic shutdown caused a major pullback in investor risk appetite. Fiscal and monetary policy intervention by the U.S. government, including a plan for the Fed to purchase some investment grade corporate bonds, helped to stabilize the market.
Earlier in the period, mixed economic data, increasingly accommodative central banks and headlines about global trade disputes were the main market drivers. S&P 500 corporate earnings were weaker versus the prior year, but still generally supportive. Government bond yields fell during the period, with the 10-year U.S. Treasury yield declining from 2.41% to 0.70%.
Lower government bond yields globally helped demand for investment-grade corporate bonds, a higher yielding alternative. Corporate issuance levels were in line with recent trends until the final weeks of the period when issuance surged, as some higher quality companies sought to improve cash liquidity or pay down short-term borrowings.
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FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
The Fund underperformed its benchmark on a net basis for the period. Industry allocation was the largest negative performance driver, followed by quality allocation. Yield curve positioning was also a slight detractor, while security selection was the biggest positive performance driver.
Industry underperformance was driven by our overweighted position in energy bonds and an underweighted position in technology bonds. Contributors on an individual company basis included Valero Energy, CK Hutchison and Schlumberger. Detractors included Aflac, Devon Energy and Wells Fargo.
News stories about the COVID-19 pandemic, together with sharply lower oil prices, impacted much of the portfolio late in the period. For example, the Fund’s holdings in energy-related issuers saw significant price volatility. Even the highest quality and normally most liquid holdings were under some market stress during the most volatile days of March 2020, although prices normalized as the market stabilized.
The Fund’s overweight position in BBB rated bonds hurt performance. This position was based on our view that these bonds offered what we considered attractive yields based on current valuations and economic conditions, but that belief was put to the test by the unexpected economic slowdown caused by the pandemic. We kept the Fund’s duration positioning close to neutral relative to the benchmark for most of the period.
What is the yield curve?
The yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates. The most frequently reported yield curve compares three-month, two-year and 30-year U.S. Treasury debt.
What is duration?
Duration is a measure of a bond’s price sensitivity to interest-rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest-rate changes than a portfolio with a higher duration.
The Fund held primarily cash bonds during the period but used credit index derivatives to gain market exposure on a temporary, tactical basis. The Fund also used interest-rate futures contracts to manage duration exposure.
Thank you for your participation in Franklin Liberty Investment Grade Corporate ETF. We look forward to serving your future investment needs.
 |
Marc Kremer, CFA Co-Lead Manager |
 |
Shawn Lyons, CFA Co-Lead Manager |
Thomas Runkel, CFA Co-Lead Manager |
Pururav Thoutireddy, Ph.D. Co-Lead Manager |
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
CFA® is a trademark owned by CFA Institute.
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FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (10/5/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | +4.02% | +3.25% | +4.02% | +3.25% | ||||||||||||
3-Year | +11.24% | +10.41% | +3.61% | +3.36% | ||||||||||||
Since Inception (10/3/16) | +9.21% | +8.53% | +2.56% | +2.37% | ||||||||||||
| 30 Day Standardized Yield6 | ||||||||
| Distribution Rate5 | (with fee waiver) | (without fee waiver) | ||||||
3.75% | 3.39% | 3.15% | ||||||
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 tofranklintempleton.com or call(800) 342-5236.
See page 7 for Performance Summary footnotes.
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FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
10/13/16–3/31/20
See page 7 for Performance Summary footnotes.
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FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
Net Investment Income | Short-Term Capital Gain | Long-Term Capital Gain | Total | |||
$0.806589 | $0.05683 | $— | $0.05683 | |||
Total Annual Operating Expenses8
| With Fee Waiver | Without Fee Waiver | |||
0.35% | 1.07% | |||
All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Distributions to shareholders may decline when prevailing interest rates fall or when the Fund experiences defaults on debt securities it holds. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund’s investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. 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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.
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. Source: Morningstar. The Bloomberg Barclays U.S. Corporate Investment Grade Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes U.S. dollar-denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers.
8. 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.
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FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 964.20 | $ | 1.72 | $ | 1,023.25 | $ | 1.77 | 0.35 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
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Franklin Liberty U.S. Low Volatility ETF
This annual report for Franklin Liberty U.S. Low Volatility ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks capital appreciation with an emphasis on lower volatility. Under normal market conditions, the Fund invests at least 80% of its net assets in U.S. investments.
Performance Overview
During the 12-month period, the Fund posted cumulative total returns of -6.88% based on market price and -6.74% based on net asset value (NAV). In comparison, the Russell 1000® Index posted a -8.03% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 12.
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 tofranklintempleton.com or call(800) 342-5236.
Economic and Market Overview
U.S. equities, as measured by the Standard & Poor’s® 500 Index (S&P 500®), declined during the 12 months under review. Equities posted strong gains for most of the reporting period, aided by relatively steady economic growth, easing trade tensions and the U.S. Federal Reserve’s (Fed’s) supportive monetary policy. However, a sharp selloff began in late February 2020 amid investor fears of a global economic slowdown due to the novel coronavirus (COVID-19) pandemic. Concerns about global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash.
The Fed lowered the federal funds target rate three times in 2019 to a range of 1.50%–1.75%. The labor market remained
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Information Technology | 24.8% | |||
| Health Care | 15.0% | |||
| Financials | 11.5% | |||
| Consumer Discretionary | 10.3% | |||
| Communication Services | 9.8% | |||
| Industrials | 8.3% | |||
| Consumer Staples | 7.2% | |||
| Real Estate | 3.5% | |||
| Utilities | 3.3% | |||
| Energy | 2.8% | |||
strong through February 2020 and supported consumer spending, though some parts of the economy struggled as annual industrial production contracted and capital spending declined.
However, economic activity weakened considerably as the COVID-19 pandemic spread across the U.S. and many state and local governments issued stay-at-home orders, which included business closures and restrictions. Weekly unemployment claims surged near period-end, reflecting layoffs in many industries, particularly retail, restaurants and hospitality. As a result, the unemployment rate jumped from a50-year low of 3.5% in February 2020 to 4.4% at period-end, and the economy contracted in the first quarter, following an expansion that lasted more than a decade.2
Market volatility persisted at a heightened level throughout March 2020, as social distancing measures intended to mitigate the pandemic severely weakened the economy. In an effort to boost the U.S. economy and aid businesses and individuals directly impacted by the pandemic, the federal government passed an unprecedented $2 trillion stimulus package. Furthermore, the Fed cut the federal funds target rate to a range of 0.00%–0.25% and announced sweeping quantitative easing measures aimed at stimulating lending and credit availability. Many investors were encouraged by
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 index is unmanaged and includes reinvestment of any income or distributions. It does 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.
2. Source: Bureau of Labor Statistics.
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 31.
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FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
policymakers’ swift and decisive fiscal and monetary stimulus measures. U.S. stocks, as measured by the S&P 500, bounced from multi-year lows, but still finished the reporting period with negative returns.
Manager’s Discussion
The Fund fared better than its benchmark, the Russell 1000® Index, during the fiscal year. Leading contributors included the financials, industrials, materials and consumer staples sectors.
Stock selection proved positive for financials sector results, including a position in financial and analytics firm S&P Global. A position in aerospace and defense company Lockheed Martin and our avoidance of the poor-performing airline stocks aided relative returns in the industrials sector. Airline operators faced major challenges toward the end of the period due to COVID-19-related travel disruptions. Stock selection in the chemicals industry and the food and staples retailing industry contributed to relative performance in the materials and consumer staples sectors, respectively.
Several individual contributors helped advance the Fund’s results. While information technology was an overall detractor at the sector level, the Fund’s investments in electronic payments processor Total System Services and chipmaker Synopsys added to returns. Accelerating sales growth and improving profit margins was a boost for the shares of discount retailer Dollar General in the consumer discretionary sector. In the communication services sector, cable provider Charter Communications benefited from increasing penetration rates in broadband, which was a growth driver of revenue for the company.
In contrast, stock selection in the information technology sector detracted from relative performance. Within the sector, underweightings in Microsoft and Apple hindered relative returns as shares of both companies sharply appreciated over the period. In the consumer discretionary sector, an underweighting in Amazon.com was a drag on performance. The retail giant reached a market cap of $1 trillion and shares posted all-time highs over the period. Home improvement retailer Lowe’s struggled to pass along rising costs to consumers, which pressured the company’s profits and weighed on its stock. Elsewhere, investor concerns about a virus-induced economic decline and the impact on energy demand undermined the energy sector and our positions in Schlumberger and Occidental Petroleum.
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry | % of Total Net Assets | |||
Automatic Data Processing Inc. Information Technology | 1.7% | |||
Fiserv Inc. Information Technology | 1.6% | |||
Synopsys Inc. Information Technology | 1.6% | |||
International Business Machines Corp. Information Technology | 1.6% | |||
Microsoft Corp. Information Technology | 1.6% | |||
Global Payments Inc. Information Technology | 1.6% | |||
McCormick & Co. Inc. Consumer Staples | 1.6% | |||
Oracle Corp. Information Technology | 1.6% | |||
Intuit Inc. Information Technology | 1.6% | |||
Mastercard Inc., A Information Technology | 1.6% | |||
Thank you for your participation in Franklin Liberty U.S. Low Volatility ETF. We look forward to serving your future investment needs.
 |
Todd Brighton, CFA | |
| Portfolio Manager | ||
3. “U.S. companies” are those that (i) are organized under the laws of, or have a principal office in, or for whose securities the principal trading market is, the U.S.; (ii) derive 50% or more of their total revenue or profit from either goods or services produced, or sales made, in the U.S.; or (iii) have 50% or more of their assets in the U.S.
See www.franklintempletondatasources.com for additional data provider information.
| 10 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
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FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/22/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -6.74% | -6.88% | -6.74% | -6.88% | ||||||||||||
3-Year | +21.26% | +21.18% | +6.64% | +6.61% | ||||||||||||
Since Inception (9/20/16) | +31.45% | +31.45% | +8.06% | +8.06% | ||||||||||||
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 tofranklintempleton.com or call(800) 342-5236.
See page 14 for Performance Summary footnotes.
| 12 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
9/20/16–3/31/20
See page 14 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 13 | ||||
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
Net Investment Income |
$0.483101 |
Total Annual Operating Expenses6
| With Fee Waiver | Without Fee Waiver | |||
0.29% | 0.91% | |||
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. There can be no guarantee that the Fund’s volatility strategy will be successful, and achieving the Fund’s volatility strategy does not mean the Fund will achieve a positive or competitive return. The volatility strategy can also be expected to limit the Fund’s participation in market price appreciation when compared to similar funds that do not attempt this strategy. Smaller and midsize-company stocks have historically 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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Source: Morningstar. The Russell 1000 Index is market capitalization weighted and measures performance of the approximately 1,000 largest companies in the Russell 3000 Index, which represents the majority of the U.S. market’s total capitalization.
6. 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.
| 14 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 851.60 | $ | 1.34 | $ | 1,023.55 | $ | 1.47 | 0.29 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| franklintempleton.com | Annual Report | 15 | ||||
Franklin Liberty U.S. Core Bond ETF
This annual report for Franklin Liberty U.S. Core Bond ETF covers the period since the Fund’s inception on September 17, 2019 through March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks total return. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds of U.S. issuers.
Performance Overview
For the period since inception on September 17, 2019, through March 31, 2020, the Fund posted cumulative total returns of +3.12% based on market price and +3.12% based on net asset value (NAV). In comparison, the Bloomberg Barclays U.S. Aggregate Bond Index, which tracks the U.S. investment-grade, taxable bond market, posted a +4.21% total return.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 19.
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 tofranklintempleton.comor call(800) 342-5236.
Economic and Market Overview
The U.S. bond market’s performance for the period since the Fund’s inception on September 17, 2019, through March 31, 2020, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, was defined by two distinct phases: before and during the outbreak of the novel coronavirus(COVID-19). Until late February 2020, prices for most U.S. bonds rose, as low inflation, interest-rate cuts and strong demand for yield, which moves inversely to price, supported fixed income markets. In late February, as more countries adopted social distancing and lockdown measures to slow the global pandemic, the U.S. bond market began pricing in the adverse impact on economic activity. Higher-quality, longer-term bonds rallied, while riskier, lower-rated corporate bonds declined sharply, reflecting a reversal in many investors’ risk
| Portfolio Composition | ||||
| Based on Total Net Assets as of 3/31/20 | ||||
U.S. Government & Agency Securities | 35.9% | |||
Corporate Bonds & Notes | 25.2% | |||
Mortgage-Backed Securities | 24.4% | |||
Municipal Bonds | 4.5% | |||
Foreign Government and Agency Securities | 2.9% | |||
Asset-Backed Securities | 2.9% | |||
Long Futures | 1.3% | |||
Credit Default Swap Contracts | (0.1)% | |||
Short Futures | (0.2)% | |||
appetite. Similarly, strong demand for cash and cash equivalents drove yields on certain U.S. Treasury bill maturities briefly below zero. Thereafter, bond prices fell sharply then somewhat stabilized as the magnitude of the downturn led to constricted liquidity and subsequent intervention by the U.S. Federal Reserve (Fed).
After reducing the federal funds target rate to a range of 1.50%–1.75% in October 2019, the Fed enacted two emergency rate cuts in March 2020 in response to the COVID-19 pandemic, further lowering the federal funds target rate to a range of 0.00%–0.25%. In addition, the Fed announced a plan to purchase government, government-backed and corporate bonds to help keep markets functioning, significantly expanding its balance sheet.
U.S. Treasury bonds, as measured by the Bloomberg Barclays U.S. Treasury Index, rose significantly during the reporting period, despite high levels of Treasury issuance due to deficit spending and investor expectations for large increases in debt issuance for fiscal stimulus to alleviate the economic downturn. The yield on 10-year U.S. Treasury bonds declined to historic lows near period-end, driven by fears of a prolonged global economic disruption due to the COVID-19 pandemic. Mortgage-backed securities (MBS), as measured by the Bloomberg Barclays MBS Index, also posted positive returns, aided by the Fed’s announcement that it would make substantial MBS purchases.
1. Source: Factset.
The index is unmanaged and includes 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.
| 16 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY U.S. CORE BOND ETF
U.S. corporate bond performance was hampered during the period’s last month by investor concerns about the pandemic-related economic disruption and the potential credit downgrades of many companies amid high levels of indebtedness. For the period, U.S. investment-grade corporate bonds, as represented by the Bloomberg Barclays U.S. Corporate Bond Index, declined modestly, while high-yield corporate bonds, as represented by the Bloomberg Barclays U.S. Corporate High Yield Bond Index, declined significantly due to investor concerns about a potential increase in credit defaults.
Investment Strategy
The Fund invests predominantly in investment-grade bonds of U.S. issuers, including government, corporate-debt, mortgage-backed and asset-backed securities. The Fund’s investments in mortgage-backed securities include securities that are issued or guaranteed by the U.S. government, its agencies or instrumentalities, and private issuers, including commercial mortgage-backed securities. Under normal market conditions, the Fund is generally expected to have sector, credit and duration exposures comparable to its benchmark index. However, we make investment decisions based upon our own fundamental analysis, which affects the Fund’s sector, credit and duration exposures so that they may vary from the benchmark index.
In addition, the Fund may purchase or sell mortgage-backed securities on a delayed delivery or forward commitment basis through the to-be-announced (TBA) market. With TBA transactions, the particular securities to be delivered must meet specified terms and conditions.
For purposes of pursuing its investment goal, the Fund may enter into various interest-rate and credit-related derivatives, principally U.S. Treasury futures, interest-rate swaps and credit default swaps. The use of these derivative transactions may allow the Fund to obtain net long or short exposures to select interest rates, durations or credit risks. The Fund may enter into certain derivative transactions to seek to enhance Fund returns, increase liquidity, gain exposure to certain instruments or markets in a more efficient or less expensive way and/or hedge risks associated with its other portfolio investments.
In choosing investments, we select securities in various market sectors based on our assessment of changing economic, market, industry and issuer conditions. We use 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 may consider selling a security when we believe the security has become fully valued due to
| Top 10 Fund Holdings | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| U.S. Treasury Note , 2.75%, 9/15/2021 | 28.0% | |||
| Federal National Mortgage Association , 4.50%, 5/01/2048 | 23.1% | |||
| US DOLLAR | 11.3% | |||
| U.S. Treasury Bond , 2.75%, 11/15/2042 | 7.9% | |||
| Federal Home Loan Mortgage Corp. , 4.00%, 3/01/2049 | 1.3% | |||
| Capital One Multi-Asset Execution Trust, Series 2019-A1, Class A1, Series 2019-A2, Class A2, 1.72%, 8/15/2024 | 1.2% | |||
| Contra Costa Community College Dist., Refunding, 2.926%, 8/01/2038 | 1.2% | |||
| Metropolitan Transportation Auth., Refunding, Series B, 5.00%, 11/15/2052 | 1.0% | |||
| American Express Credit Account Master Trust, Series 2019-1, Class A, ABS, 2.87%, 10/15/2024 | 0.8% | |||
| CVS Health Corp., senior bond, senior note, senior note, 4.10%, 3/25/2025 | 0.8% | |||
either its price appreciation or changes in the issuer’s fundamentals, or when we believe another security is a more attractive investment opportunity.
Manager’s Discussion
During the period since the Fund’s inception on September 19, 2019, through March 31, 2020, the Fund posted a positive return on a gross basis, but underperformed the benchmark Bloomberg Barclays U.S. Aggregate Bond Index. In terms of drivers of relative return, sector allocation was the primary detractor from returns, particularly our allocations to sovereign emerging markets (EM) debt, municipal bonds, and asset-backed securities. This effect was partially offset by our underweighted allocation to investment-grade corporate credit (IG) and commercial mortgage-backed securities. Security selection also detracted from performance, particularly within the IG and sovereign developed sectors. In contrast, our security selection within the sovereign EM and taxable municipal bond sectors contributed to returns. The portfolio’s duration positioning remained relatively in line with the index over the period, although it had a marginally positive effect on returns due to a slightly overweighted position going into March.
In terms of derivatives, we utilized Treasury futures for duration management of the portfolio.
| franklintempleton.com | Annual Report | 17 | ||||
FRANKLIN LIBERTY U.S. CORE BOND ETF
Thank you for your participation in Franklin Liberty U.S. Core Bond ETF. We look forward to serving your future investment needs.
 |
David Yuen, CFA, FRM Co-Lead Manager |
 |
Amy Cooper, CFA Co-Lead Manager |
Patrick Klein, Ph.D. Co-Lead Portfolio Manager |
Tina Chou Co-Lead Portfolio Manager |
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
| 18 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY U.S. CORE BOND ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/19/19), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
Since Inception (9/17/19) | +3.12% | +3.12% | +3.12% | +3.12% | ||||||||||||
| 30 Day Standardized Yield6 | ||||||||
| Distribution Rate5 | (with fee waiver) | (without fee waiver) | ||||||
2.65% | 2.00% | 1.93% | ||||||
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 tofranklintempleton.com or call(800) 342-5236.
See page 21 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 19 | ||||
FRANKLIN LIBERTY U.S. CORE BOND ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
9/17/19–3/31/20
See page 21 for Performance Summary footnotes.
| 20 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY U.S. CORE BOND ETF
PERFORMANCE SUMMARY
Distributions(9/17/19–3/31/20)
Net Investment Income | Short-Term Capital Gain | Long-Term Capital Gain | Total | |||
$0.309911 | $0.026045 | $0.002156 | $0.028201 | |||
Total Annual Operating Expenses8
| With Fee Waiver | Without Fee Waiver | |||
0.15% | 0.19% | |||
All investments involve risks, including possible loss of principal. Interest rate movements, unscheduled mortgage prepayments and other risk factors will affect the Fund’s share price and yield. Bond prices, and thus a Fund’s share price, generally move in the opposite direction of interest rates. Therefore, as the 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. 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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/21. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.
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. Source: Morningstar. The Bloomberg Barclays U.S. Aggregate Bond Index tracks the U.S. investment-grade, taxable bond market.
8. 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.
| franklintempleton.com | Annual Report | 21 | ||||
FRANKLIN LIBERTY U.S. CORE BOND ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 1,023.70 | $ | 0.76 | $ | 1,024.25 | $ | 0.76 | 0.15 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 22 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty Investment Grade Corporate ETF
| Year Ended March 31, | ||||||||||||||||
| 2020 | 2019 | 2018 | 2017a | |||||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||||||
Net asset value, beginning of year | $ | 24.09 | $ | 23.97 | $ | 24.21 | $ | 25.00 | ||||||||
|
| |||||||||||||||
| Income from investment operationsb: | ||||||||||||||||
Net investment incomec | 0.73 | 0.82 | 0.80 | 0.32 | ||||||||||||
Net realized and unrealized gains (losses) | 0.27 | 0.21 | (0.22 | ) | (0.78 | ) | ||||||||||
|
| |||||||||||||||
Total from investment operations | 1.00 | 1.03 | 0.58 | (0.46 | ) | |||||||||||
|
| |||||||||||||||
| Less distributions from: | ||||||||||||||||
Net investment income | (0.81 | ) | (0.91 | ) | (0.82 | ) | (0.33 | ) | ||||||||
Net realized gains | (0.06 | ) | — | — | — | |||||||||||
|
| |||||||||||||||
Total distributions | (0.87 | ) | (0.91 | ) | (0.82 | ) | (0.33 | ) | ||||||||
|
| |||||||||||||||
Net asset value, end of year | $ | 24.22 | $ | 24.09 | $ | 23.97 | $ | 24.21 | ||||||||
|
| |||||||||||||||
Total returnd | 4.02% | 4.46% | 2.38% | (1.83)% | ||||||||||||
| Ratios to average net assetse | ||||||||||||||||
Expenses before waiver and payments by affiliates | 0.58% | 1.07% | 1.04% | 1.06% | ||||||||||||
Expenses net of waiver and payments by affiliates | 0.35% | 0.35% | 0.37% | 0.40% | ||||||||||||
Net investment income | 2.86% | 3.49% | 3.27% | 2.76% | ||||||||||||
| Supplemental data | ||||||||||||||||
Net assets, end of year (000’s) | $553,338 | $18,065 | $39,554 | $53,268 | ||||||||||||
Portfolio turnover ratef | 52.17% | g | 22.02% | 63.14% | 17.85% | |||||||||||
aFor the period October 3, 2016 (commencement of operations) to March 31, 2017.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 52.17%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 23 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty Investment Grade Corporate ETF
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes 96.5% | ||||||||||||||
| Aerospace & Defense 2.5% | ||||||||||||||
| a | L3Harris Technologies, Inc., senior note, 144A, 4.40%, 6/15/28 | United States | 4,300,000 | $ | 4,661,277 | |||||||||
Lockheed Martin Corp., senior note, 4.07%, 12/15/42 | United States | 4,100,000 | 4,812,055 | |||||||||||
United Technologies Corp., | United States | 2,100,000 | 2,343,494 | |||||||||||
senior bond, 4.50%, 6/01/42 | United States | 1,700,000 | 1,982,866 | |||||||||||
|
| |||||||||||||
| 13,799,692 | ||||||||||||||
|
| |||||||||||||
| Air Freight & Logistics 0.9% | ||||||||||||||
FedEx Corp., | United States | 2,500,000 | 2,613,644 | |||||||||||
senior bond, 4.75%, 11/15/45 | United States | 2,000,000 | 1,928,563 | |||||||||||
senior bond, 5.10%, 1/15/44 | United States | 500,000 | 498,557 | |||||||||||
|
| |||||||||||||
| 5,040,764 | ||||||||||||||
|
| |||||||||||||
| Banks 14.9% | ||||||||||||||
Bancolombia SA, senior note, 3.00%, 1/29/25 | Colombia | 6,200,000 | 5,578,512 | |||||||||||
Bank of America Corp., sub. bond, 4.183%, 11/25/27 | United States | 10,150,000 | 10,515,338 | |||||||||||
| a | BNP Paribas SA, senior note, 144A, 4.705% to 1/10/24, FRN thereafter, 1/10/25 | France | 6,900,000 | 7,200,902 | ||||||||||
| a | BPCE SA, senior note, 144A, 5.70%, 10/22/23 | France | 6,700,000 | 6,896,175 | ||||||||||
Citigroup, Inc., | United States | 3,600,000 | 3,737,490 | |||||||||||
senior note, 2.876% to 07/24/22, FRN thereafter, 7/24/23 | United States | 1,500,000 | 1,513,781 | |||||||||||
senior note, 3.352% to 4/24/24, FRN thereafter, 4/24/25 | United States | 5,700,000 | 5,878,146 | |||||||||||
Danske Bank A/S, senior note, 3.244% to 12/20/24, FRN thereafter, 12/20/25 | Denmark | 2,600,000 | 2,421,516 | |||||||||||
JPMorgan Chase & Co., | United States | 4,150,000 | 4,385,553 | |||||||||||
sub. bond, 4.25%, 10/01/27 | United States | 2,400,000 | 2,648,910 | |||||||||||
sub. note, 3.375%, 5/01/23 | United States | 2,025,000 | 2,115,927 | |||||||||||
Lloyds Banking Group PLC, senior note, 3.75%, 1/11/27 | United Kingdom | 5,400,000 | 5,468,910 | |||||||||||
| a | Santander UK PLC, sub. Note, 144A, 5.00%, 11/07/23 | United Kingdom | 1,055,000 | 1,064,695 | ||||||||||
| a | Truist Bank, sub. Note, 144A, 3.30%, 5/15/26 | United States | 6,800,000 | 6,991,312 | ||||||||||
Truist Financial Corp., sub. bond, 3.875%, 3/19/29 | United States | 9,300,000 | 9,454,278 | |||||||||||
Wachovia Corp., Subordinated, 5.50%, 8/01/35 | United States | 600,000 | 688,497 | |||||||||||
Wells Fargo & Co., sub. bond, 4.75%, 12/07/46 | United States | 5,185,000 | 6,012,771 | |||||||||||
|
| |||||||||||||
| 82,572,713 | ||||||||||||||
|
| |||||||||||||
| Beverages 0.4% | ||||||||||||||
Anheuser-Busch InBev Worldwide, Inc., senior bond, 5.80%, 1/23/59 | Belgium | 2,000,000 | 2,458,266 | |||||||||||
|
| |||||||||||||
| Biotechnology 2.6% | ||||||||||||||
AbbVie, Inc., | United States | 3,000,000 | 3,277,935 | |||||||||||
a senior note, 144A, 2.95%, 11/21/26 | United States | 5,200,000 | 5,310,506 | |||||||||||
Biogen, Inc., senior bond, 5.20%, 9/15/45 | United States | 2,585,000 | 3,360,029 | |||||||||||
Gilead Sciences, Inc., senior bond, 4.80%, 4/01/44 | United States | 1,800,000 | 2,324,945 | |||||||||||
|
| |||||||||||||
| 14,273,415 | ||||||||||||||
|
| |||||||||||||
| Building Products 1.4% | ||||||||||||||
| a | CRH America Finance, Inc., senior note, 144A, 3.95%, 4/04/28 | Ireland | 7,700,000 | 7,628,969 | ||||||||||
|
| |||||||||||||
| Capital Markets 4.6% | ||||||||||||||
Credit Suisse Group AG, | ||||||||||||||
a senior bond,144A, 3.869% to 1/12/28, FRN thereafter, 1/12/29 | Switzerland | 900,000 | 912,848 | |||||||||||
a senior note, 144A, 2.997% to 12/14/22, FRN therafter, 12/14/23 | Switzerland | 6,400,000 | 6,239,010 | |||||||||||
Morgan Stanley, senior bond, 3.591% to 7/22/27, FRN thereafter, 7/22/28 | United States | 10,280,000 | 10,795,048 | |||||||||||
| 24 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Investment Grade Corporate ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Capital Markets (continued) | ||||||||||||||
The Goldman Sachs Group, Inc., | United States | 2,500,000 | $ | 2,567,747 | ||||||||||
senior note, 2.908% to 6/05/22, FRN thereafter, 6/05/23 | United States | 3,200,000 | 3,211,434 | |||||||||||
sub. note, 4.25%, 10/21/25 | United States | 1,475,000 | 1,553,765 | |||||||||||
|
| |||||||||||||
| 25,279,852 | ||||||||||||||
|
| |||||||||||||
| Chemicals 1.3% | ||||||||||||||
LYB International Finance II B.V., senior note, 3.50%, 3/02/27 | United States | 7,300,000 | 7,155,314 | |||||||||||
|
| |||||||||||||
| Commercial Services & Supplies 0.3% | ||||||||||||||
| a | Ashtead Capital, Inc., senior note, second lien, 144A, 4.125%, 8/15/25 | United Kingdom | 1,770,000 | 1,628,400 | ||||||||||
|
| |||||||||||||
| Consumer Finance 1.9% | ||||||||||||||
Capital One Financial Corp., | United States | 7,500,000 | 7,429,909 | |||||||||||
senior note, 3.20%, 1/30/23 | United States | 2,900,000 | 2,870,095 | |||||||||||
|
| |||||||||||||
| 10,300,004 | ||||||||||||||
|
| |||||||||||||
| Containers & Packaging 0.9% | ||||||||||||||
WRKCo, Inc., | United States | 3,300,000 | 3,683,541 | |||||||||||
senior note, 3.90%, 6/01/28 | United States | 1,000,000 | 1,028,909 | |||||||||||
|
| |||||||||||||
| 4,712,450 | ||||||||||||||
|
| |||||||||||||
| Diversified Financial Services 1.1% | ||||||||||||||
Aircastle Ltd., senior note, 4.25%, 6/15/26 | United States | 1,500,000 | 1,288,855 | |||||||||||
GE Capital International Funding Co. Unlimited Co., senior bond, 4.418%, 11/15/35 | United States | 4,825,000 | 5,233,665 | |||||||||||
|
| |||||||||||||
| 6,522,520 | ||||||||||||||
|
| |||||||||||||
| Diversified Telecommunication Services 4.0% | ||||||||||||||
AT&T, Inc., senior note, 3.80%, 2/15/27 | United States | 8,800,000 | 9,164,586 | |||||||||||
France Telecom SA, senior bond, 9.57%, 3/01/31 | France | 6,600,000 | 10,035,213 | |||||||||||
Telefonica Emisiones SA, | Spain | 1,650,000 | 1,943,649 | |||||||||||
senior note, 4.103%, 3/08/27 | Spain | 1,000,000 | 1,039,619 | |||||||||||
|
| |||||||||||||
| 22,183,067 | ||||||||||||||
|
| |||||||||||||
| Electric Utilities 8.4% | ||||||||||||||
Commonwealth Edison Co., first mortgage, Secured, 4.00%, 3/01/48 | United States | 3,500,000 | 3,950,133 | |||||||||||
Duke Energy Corp., | United States | 1,200,000 | 1,184,699 | |||||||||||
senior bond, 4.80%, 12/15/45 | United States | 2,565,000 | 2,812,361 | |||||||||||
| a | Electricite de France SA, senior note, 144A, 4.50%, 9/21/28 | France | 2,200,000 | 2,429,597 | ||||||||||
| a | Enel Finance International NV, senior note, 144A, 3.625%, 5/25/27 | Italy | 10,500,000 | 10,685,868 | ||||||||||
Exelon Corp., senior bond, 4.05%, 4/15/30 | United States | 900,000 | 893,164 | |||||||||||
Georgia Power Co., | United States | 3,345,000 | 3,652,011 | |||||||||||
senior bond, 4.75%, 9/01/40 | United States | 1,950,000 | 1,925,205 | |||||||||||
PSEG Power LLC, senior note, 3.85%, 6/01/23 | United States | 4,100,000 | 4,175,854 | |||||||||||
| a | Saudi Electricity Global Sukuk Co. 2, senior bond, 144A, 5.06%, 4/08/43 | Saudi Arabia | 300,000 | 298,530 | ||||||||||
Virginia Electric & Power Co., senior note, 3.50%, 3/15/27 | United States | 7,200,000 | 7,554,803 | |||||||||||
| a | Vistra Operations Co. LLC, senior secured note, first lien, 144A, 3.55%, 7/15/24 | United States | 7,400,000 | 6,978,569 | ||||||||||
|
| |||||||||||||
| 46,540,794 | ||||||||||||||
|
| |||||||||||||
| Electronic Equipment, Instruments & Components 0.8% | ||||||||||||||
Jabil, Inc., senior note, 3.60%, 1/15/30 | United States | 5,000,000 | 4,474,003 | |||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 25 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Investment Grade Corporate ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Energy Equipment & Services 3.0% | ||||||||||||||
Baker Hughes a GE Co. LLC/Baker HughesCo-Obligor, Inc., senior bond, 4.08%, 12/15/47 | United States | 2,485,000 | $ | 2,051,139 | ||||||||||
Schlumberger Holdings Corp., | ||||||||||||||
a senior bond, 144A, 4.30%, 5/01/29 | United States | 6,500,000 | 6,331,019 | |||||||||||
a senior note, 144A, 3.75%, 5/01/24 | United States | 2,600,000 | 2,465,245 | |||||||||||
Total Capital International SA, senior note, 3.455%, 2/19/29 | France | 5,500,000 | 5,818,791 | |||||||||||
|
| |||||||||||||
| 16,666,194 | ||||||||||||||
|
| |||||||||||||
| Entertainment 0.3% | ||||||||||||||
The Walt Disney Co., senior bond, 6.20%, 12/15/34 | United States | 1,300,000 | 1,813,022 | |||||||||||
|
| |||||||||||||
| Food & Staples Retailing 2.7% | ||||||||||||||
CK Hutchison International 19 Ltd., | ||||||||||||||
a senior note, 144A, 3.25%, 4/11/24 | Hong Kong | 1,725,000 | 1,798,786 | |||||||||||
a senior note, 144A, 3.625%, 4/11/29 | Hong Kong | 8,400,000 | 9,023,575 | |||||||||||
The Kroger Co., | ||||||||||||||
senior bond, 3.50%, 2/01/26 | United States | 2,100,000 | 2,222,421 | |||||||||||
senior bond, 4.45%, 2/01/47 | United States | 1,400,000 | 1,546,802 | |||||||||||
Walgreens Boots Alliance, Inc., senior bond, 4.80%, 11/18/44 | United States | 500,000 | 493,634 | |||||||||||
|
| |||||||||||||
| 15,085,218 | ||||||||||||||
|
| |||||||||||||
| Food Products 1.7% | ||||||||||||||
Bunge Ltd. Finance Corp., senior note, 4.35%, 3/15/24 | United States | 1,700,000 | 1,764,235 | |||||||||||
Tyson Foods, Inc., | United States | 1,680,000 | 2,092,866 | |||||||||||
senior note, 4.00%, 3/01/26 | United States | 5,300,000 | 5,617,983 | |||||||||||
|
| |||||||||||||
| 9,475,084 | ||||||||||||||
|
| |||||||||||||
| Gas Utilities 0.5% | ||||||||||||||
Dominion Energy Gas Holdings LLC, senior bond, 3.90%, 11/15/49 | United States | 3,000,000 | 2,626,843 | |||||||||||
|
| |||||||||||||
| Health Care Equipment & Supplies 0.9% | ||||||||||||||
Abbott Laboratories, senior bond, 4.90%, 11/30/46 | United States | 3,600,000 | 4,939,827 | |||||||||||
|
| |||||||||||||
| Health Care Providers & Services 4.7% | ||||||||||||||
Anthem, Inc., | United States | 1,000,000 | 1,007,972 | |||||||||||
senior bond, 5.10%, 1/15/44 | United States | 570,000 | 678,931 | |||||||||||
senior note, 4.101%, 3/01/28 | United States | 3,785,000 | 4,082,914 | |||||||||||
Sr. Unsecured, 3.50%, 8/15/24 | United States | 4,000,000 | 4,111,845 | |||||||||||
Cigna Corp., | United States | 5,450,000 | 6,619,985 | |||||||||||
a senior note, 144A, 4.50%, 2/25/26 | United States | 1,500,000 | 1,622,904 | |||||||||||
CVS Health Corp., senior bond, 5.30%, 12/05/43 | United States | 2,300,000 | 2,725,815 | |||||||||||
HCA, Inc., senior secured bond, first lien, 4.50%, 2/15/27 | United States | 5,100,000 | 5,262,710 | |||||||||||
|
| |||||||||||||
| 26,113,076 | ||||||||||||||
|
| |||||||||||||
| Hotels, Restaurants & Leisure 0.8% | ||||||||||||||
Marriott International, Inc., senior bond, 3.125%, 6/15/26 | United States | 4,700,000 | 4,325,761 | |||||||||||
|
| |||||||||||||
| Industrial Conglomerates 0.5% | ||||||||||||||
General Electric Capital Corp., senior note, A, 6.15%, 8/07/37 | United States | 1,500,000 | 1,734,936 | |||||||||||
General Electric Co., senior bond, 3.10%, 1/09/23 | United States | 1,000,000 | 1,016,968 | |||||||||||
|
| |||||||||||||
| 2,751,904 | ||||||||||||||
|
| |||||||||||||
| Insurance 3.7% | ||||||||||||||
Aflac, Inc., senior bond, 4.75%, 1/15/49 | United States | 4,750,000 | 5,272,265 | |||||||||||
AXA SA, 8.60%, 12/15/30 | France | 4,500,000 | 5,994,482 | |||||||||||
MetLife, Inc., junior sub. bond, 6.40%, 12/15/66 | United States | 4,910,000 | 5,140,008 | |||||||||||
| a | Metropolitan Life Global Funding I, Sr. Unsecured, 144A, 3.00%, 1/10/23 | United States | 2,800,000 | 2,841,939 | ||||||||||
| 26 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Investment Grade Corporate ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Insurance (continued) | ||||||||||||||
| a | The Allstate Corp., senior bond, 144A, 4.20%, 12/15/46 | United States | 1,000,000 | $ | 1,113,853 | |||||||||
|
| |||||||||||||
| 20,362,547 | ||||||||||||||
|
| |||||||||||||
| Internet & Direct Marketing Retail 1.9% | ||||||||||||||
Alibaba Group Holding Ltd., | China | 5,800,000 | 5,878,988 | |||||||||||
senior note, 3.40%, 12/06/27 | China | 4,400,000 | 4,627,018 | |||||||||||
|
| |||||||||||||
| 10,506,006 | ||||||||||||||
|
| |||||||||||||
| IT Services 1.4% | ||||||||||||||
Fiserv, Inc., | United States | 6,600,000 | 7,024,549 | |||||||||||
senior bond, 4.40%, 7/01/49 | United States | 700,000 | 755,201 | |||||||||||
|
| |||||||||||||
| 7,779,750 | ||||||||||||||
|
| |||||||||||||
| Machinery 0.4% | ||||||||||||||
| a | Carrier Global Corp., senior note, 144A, 3.577%, 4/05/50 | United States | 2,500,000 | 2,258,428 | ||||||||||
|
| |||||||||||||
| Media 2.5% | ||||||||||||||
Charter Communications Operating LLC/Charter Communications Operating Capital, senior secured note, first lien, 4.50%, 2/01/24 | United States | 1,500,000 | 1,548,679 | |||||||||||
Comcast Corp., senior bond, 4.95%, 10/15/58 | United States | 5,900,000 | 8,181,019 | |||||||||||
FOX Corp., 5.476%, 1/25/39 | United States | 3,600,000 | 4,188,498 | |||||||||||
|
| |||||||||||||
| 13,918,196 | ||||||||||||||
|
| |||||||||||||
| Metals & Mining 1.7% | ||||||||||||||
Glencore Funding LLC, |
| |||||||||||||
a senior note, 144A, 4.125%, 5/30/23 | Switzerland | 4,825,000 | 4,451,343 | |||||||||||
a senior note, 144A, 4.625%, 4/29/24 | Switzerland | 1,800,000 | 1,651,827 | |||||||||||
a senior note, 144A, 4.875%, 3/12/29 | Switzerland | 3,600,000 | 3,479,261 | |||||||||||
|
| |||||||||||||
| 9,582,431 | ||||||||||||||
|
| |||||||||||||
| Multi-Utilities 0.9% | ||||||||||||||
Berkshire Hathaway Energy Co., | United States | 2,300,000 | 2,422,012 | |||||||||||
Sr. Unsecured, 5.15%, 11/15/43 | United States | 1,900,000 | 2,275,222 | |||||||||||
|
| |||||||||||||
| 4,697,234 | ||||||||||||||
|
| |||||||||||||
| Multiline Retail 1.1% | ||||||||||||||
Dollar Tree, Inc., | United States | 5,050,000 | 5,136,988 | |||||||||||
senior note, 4.00%, 5/15/25 | United States | 1,100,000 | 1,128,782 | |||||||||||
|
| |||||||||||||
| 6,265,770 | ||||||||||||||
|
| |||||||||||||
| Oil, Gas & Consumable Fuels 10.1% | ||||||||||||||
| a | Aker BP ASA, senior note, 144A, 3.75%, 1/15/30 | Norway | 5,000,000 | 3,764,107 | ||||||||||
Canadian Natural Resources Ltd., senior bond, 3.85%, 6/01/27 | Canada | 5,100,000 | 4,046,683 | |||||||||||
Cheniere Corpus Christi Holdings LLC, senior secured note, first lien, 5.875%, 3/31/25 | United States | 6,700,000 | 6,114,012 | |||||||||||
Devon Energy Corp., Sr. Unsecured, 4.75%, 5/15/42 | United States | 2,700,000 | 1,626,197 | |||||||||||
Energy Transfer Operating LP, | United States | 1,100,000 | 963,782 | |||||||||||
senior note, 4.50%, 4/15/24 | United States | 7,500,000 | 6,702,213 | |||||||||||
Enterprise Products Operating LLC, | United States | 1,400,000 | 1,423,370 | |||||||||||
senior bond, 5.10%, 2/15/45 | United States | 1,970,000 | 1,978,800 | |||||||||||
senior bond, 6.125%, 10/15/39 | United States | 900,000 | 925,982 | |||||||||||
Kinder Morgan, Inc., senior bond, 5.55%, 6/01/45 | United States | 2,100,000 | 2,164,709 | |||||||||||
| franklintempleton.com | Annual Report | 27 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Investment Grade Corporate ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Oil, Gas & Consumable Fuels (continued) | ||||||||||||||
MPLX LP, | United States | 1,775,000 | $ | 1,504,471 | ||||||||||
senior note, 4.875%, 12/01/24 | United States | 5,000,000 | 4,385,230 | |||||||||||
Sabine Pass Liquefaction LLC, senior secured note, first lien, | United States | 4,400,000 | 4,098,899 | |||||||||||
Shell International Finance B.V., senior note, 2.125%, 5/11/20 | Netherlands | 500,000 | 499,489 | |||||||||||
TC PipeLines LP, senior note, 3.90%, 5/25/27 | United States | 400,000 | 380,639 | |||||||||||
The Williams Cos. Inc., | United States | 1,900,000 | 1,781,420 | |||||||||||
senior note, 4.30%, 3/04/24 | United States | 2,200,000 | 2,002,525 | |||||||||||
TransCanada PipeLines Ltd., senior note, 6.10%, 6/01/40 | Canada | 3,400,000 | 3,643,600 | |||||||||||
Valero Energy Corp., senior note, 4.35%, 6/01/28 | United States | 8,000,000 | 7,795,141 | |||||||||||
|
| |||||||||||||
| 55,801,269 | ||||||||||||||
|
| |||||||||||||
| Pharmaceuticals 1.6% | ||||||||||||||
Allergan Funding SCS, senior bond, 4.85%, 6/15/44 | United States | 800,000 | 997,315 | |||||||||||
Bristol-Myers Squibb Co., | ||||||||||||||
a senior bond, 144A, 4.125%, 6/15/39 | United States | 2,700,000 | 3,271,249 | |||||||||||
a senior bond, 144A, 5.00%, 8/15/45 | United States | 1,000,000 | 1,346,805 | |||||||||||
Shire Acquisitions Investments Ireland DAC, senior note, | United States | 2,900,000 | 2,972,584 | |||||||||||
|
| |||||||||||||
| 8,587,953 | ||||||||||||||
|
| |||||||||||||
| Real Estate Management & Development 3.1% | ||||||||||||||
Brixmor Operating Partnership LP, Sr. Unsecured, 4.125%, 5/15/29 | United States | 3,200,000 | 3,287,994 | |||||||||||
ERP Operating LP, senior bond, 4.50%, 7/01/44 | United States | 3,500,000 | 3,825,603 | |||||||||||
Healthcare Trust of America Holdings LP, senior bond, 3.75%, 7/01/27 | United States | 1,300,000 | 1,202,521 | |||||||||||
Simon Property Group LP, senior note, 3.375%, 12/01/27 | United States | 9,000,000 | 8,939,548 | |||||||||||
|
| |||||||||||||
| 17,255,666 | ||||||||||||||
|
| |||||||||||||
| Road & Rail 1.6% | ||||||||||||||
Burlington Northern Santa Fe LLC, Sr. Unsecured, 5.75%, 5/01/40 | United States | 3,700,000 | 5,033,584 | |||||||||||
CSX Corp., | United States | 1,600,000 | 1,799,213 | |||||||||||
senior bond, 4.25%, 11/01/66 | United States | 1,800,000 | 1,805,984 | |||||||||||
|
| |||||||||||||
| 8,638,781 | ||||||||||||||
|
| |||||||||||||
| Semiconductors & Semiconductor Equipment 0.9% | ||||||||||||||
Maxim Integrated Products, Inc., senior note, 3.375%, 3/15/23 | United States | 2,900,000 | 2,962,819 | |||||||||||
Xilinx, Inc., senior note, 2.95%, 6/01/24 | United States | 2,100,000 | 2,097,262 | |||||||||||
|
| |||||||||||||
| 5,060,081 | ||||||||||||||
|
| |||||||||||||
| Software 1.1% | ||||||||||||||
Microsoft Corp., | United States | 2,600,000 | 3,330,674 | |||||||||||
senior note, 2.65%, 11/03/22 | United States | 2,500,000 | 2,624,923 | |||||||||||
|
| |||||||||||||
| 5,955,597 | ||||||||||||||
|
| |||||||||||||
| Specialty Retail 0.2% | ||||||||||||||
AutoZone, Inc., senior note, 3.75%, 4/18/29 | United States | 1,300,000 | 1,320,529 | |||||||||||
|
| |||||||||||||
| Tobacco 2.7% | ||||||||||||||
| a | BAT International Finance Plc, senior note , 144A, 3.95%, 6/15/25 | United Kingdom | 6,500,000 | 6,389,562 | ||||||||||
| a | Imperial Brands Finance Plc, senior note, 144A, 4.25%, 7/21/25 | United Kingdom | 7,165,000 | 6,984,511 | ||||||||||
Reynolds American, Inc., senior bond, 5.85%, 8/15/45 | United Kingdom | 1,305,000 | 1,409,936 | |||||||||||
|
| |||||||||||||
| 14,784,009 | ||||||||||||||
|
| |||||||||||||
| 28 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Investment Grade Corporate ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Wireless Telecommunication Services 0.5% | ||||||||||||||
| a | Sprint Spectrum Co. LLC / Sprint Spectrum Co. II LLC / Sprint Spectrum Co. III LLC, first lien, 144A, 3.36%, 3/20/23 | United States | 2,925,000 | $ | 2,921,344 | |||||||||
|
| |||||||||||||
Total Corporate Bonds & Notes (Cost $553,802,450) | 534,062,743 | |||||||||||||
|
| |||||||||||||
| U.S. Government & Agency Securities 1.3% | ||||||||||||||
U.S. Treasury Bond, | United States | 3,600,000 | 4,381,031 | |||||||||||
3.75%, 8/15/41 | United States | 1,800,000 | 2,674,547 | |||||||||||
|
| |||||||||||||
Total U.S. Government & Agency Securities | 7,055,578 | |||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 541,118,321 | |||||||||||||
|
| |||||||||||||
| Short Term Investments 0.0%† | ||||||||||||||
U.S. Government & Agency Securities | ||||||||||||||
| b | FHLB, 4/01/20 | United States | 265,000 | 265,000 | ||||||||||
|
| |||||||||||||
Total Investments (Cost $561,002,206) 97.8% | 541,383,321 | |||||||||||||
Other Assets, less Liabilities 2.2% | 11,954,394 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 553,337,715 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 56.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
†Rounds to less than 0.1% of net assets.
aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $133,920,351, representing 24.2% of net assets.
bThe security was issued on a discount basis with no stated coupon rate.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Index Contracts | ||||||||||||||||||||
U.S. Treasury 30 Yr. Bond | Long | 102 | $ | 18,264,375 | 6/19/20 | $ | 1,266,090 | |||||||||||||
CME Ultra Long Term U.S. Treasury Bond | Short | 15 | 3,328,125 | 6/19/20 | (234,861 | ) | ||||||||||||||
Ultra 10 Yr. U.S. Treasury Note | Short | 69 | 10,766,156 | 6/19/20 | (349,289 | ) | ||||||||||||||
U.S. Treasury 5 Yr. Note | Short | 129 | 16,171,359 | 6/30/20 | (299,484 | ) | ||||||||||||||
U.S. Treasury 10 Yr. Note | Short | 124 | 17,197,250 | 6/19/20 | (450,215 | ) | ||||||||||||||
|
| |||||||||||||||||||
Total Futures Contracts | $ | (67,759 | ) | |||||||||||||||||
|
| |||||||||||||||||||
*As of period end.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 29 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty U.S. Low Volatility ETF
| Year Ended March 31, | ||||||||||||||||
| 2020 | 2019 | 2018 | 2017a | |||||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||||||
Net asset value, beginning of year | $ | 33.61 | $ | 30.03 | $ | 26.97 | $ | 25.05 | ||||||||
|
| |||||||||||||||
| Income from investment operationsb: | ||||||||||||||||
Net investment incomec | 0.64 | 0.52 | 0.45 | 0.23 | ||||||||||||
Net realized and unrealized gains (losses) | (2.84 | ) | 3.88 | 3.06 | 1.87 | |||||||||||
|
| |||||||||||||||
Total from investment operations | (2.20 | ) | 4.40 | 3.51 | 2.10 | |||||||||||
|
| |||||||||||||||
Less distributions from net investment income | (0.48 | ) | (0.47 | ) | (0.45 | ) | (0.18 | ) | ||||||||
|
| |||||||||||||||
Net realized gains | — | (0.35 | ) | — | — | |||||||||||
|
| |||||||||||||||
Net asset value, end of year | $ | 30.93 | $ | 33.61 | $ | 30.03 | $ | 26.97 | ||||||||
|
| |||||||||||||||
Total returnd | (6.74)% | 14.98% | 13.08% | 8.40% | ||||||||||||
| Ratios to average net assetse | ||||||||||||||||
Expenses before waiver and payments by affiliates | 0.57% | 1.12% | 2.11% | 2.96% | ||||||||||||
Expenses net of waiver and payments by affiliates | 0.33% | 0.50% | 0.50% | 0.50% | ||||||||||||
Net investment income | 1.75% | 1.64% | 1.56% | 1.69% | ||||||||||||
| Supplemental data | ||||||||||||||||
Net assets, end of year (000’s) | $74,223 | $13,443 | $6,005 | $5,393 | ||||||||||||
Portfolio turnover ratef | 32.61% | g | 46.90% | 65.68% | 12.55% | |||||||||||
aFor the period September 20, 2016 (commencement of operations) to March 31, 2017.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 32.61%.
| 30 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty U.S. Low Volatility ETF
| Shares | Value | |||||||||||||
| Common Stocks 98.9% | ||||||||||||||
| Communication Services 9.8% | ||||||||||||||
| a | Alphabet Inc., A | 922 | $ | 1,071,318 | ||||||||||
AT&T Inc. | 33,038 | 963,058 | ||||||||||||
| a | Charter Communications Inc., A | 2,609 | 1,138,333 | |||||||||||
Comcast Corp., A | 28,540 | 981,205 | ||||||||||||
TELUS Corp. | 66,090 | 1,042,900 | ||||||||||||
The Walt Disney Co. | 10,805 | 1,043,763 | ||||||||||||
Verizon Communications Inc. | 19,129 | 1,027,801 | ||||||||||||
|
| |||||||||||||
| 7,268,378 | ||||||||||||||
|
| |||||||||||||
| Consumer Discretionary 10.3% | ||||||||||||||
| a | Amazon.com Inc. | 412 | 803,285 | |||||||||||
McDonald’s Corp. | 5,192 | 858,497 | ||||||||||||
NIKE Inc., B | 11,184 | 925,364 | ||||||||||||
| a | NVR Inc. | 286 | 734,765 | |||||||||||
| a | O’Reilly Automotive Inc. | 2,671 | 804,105 | |||||||||||
Ross Stores Inc. | 11,728 | 1,019,984 | ||||||||||||
Target Corp. | 7,723 | 718,007 | ||||||||||||
The Home Depot Inc. | 4,817 | 899,382 | ||||||||||||
Tractor Supply Co. | 10,161 | 859,113 | ||||||||||||
|
| |||||||||||||
| 7,622,502 | ||||||||||||||
|
| |||||||||||||
| Consumer Staples 7.2% | ||||||||||||||
McCormick & Co. Inc. | 8,219 | 1,160,605 | ||||||||||||
PepsiCo Inc. | 8,800 | 1,056,880 | ||||||||||||
The Coca-Cola Co. | 24,687 | 1,092,400 | ||||||||||||
The Procter & Gamble Co. | 9,317 | 1,024,870 | ||||||||||||
Walmart Inc. | 8,645 | 982,245 | ||||||||||||
|
| |||||||||||||
| 5,317,000 | ||||||||||||||
|
| |||||||||||||
| Energy 2.8% | ||||||||||||||
Chevron Corp. | 9,540 | 691,268 | ||||||||||||
Exxon Mobil Corp. | 15,902 | 603,799 | ||||||||||||
Royal Dutch Shell PLC, A, ADR | 22,775 | 794,620 | ||||||||||||
|
| |||||||||||||
| 2,089,687 | ||||||||||||||
|
| |||||||||||||
| Financials 11.5% | ||||||||||||||
Aflac Inc. | 26,021 | 890,959 | ||||||||||||
Arthur J. Gallagher & Co. | 10,211 | 832,299 | ||||||||||||
Chubb Ltd. | 7,203 | 804,503 | ||||||||||||
Intercontinental Exchange Inc. | 9,500 | 767,125 | ||||||||||||
JPMorgan Chase & Co. | 8,092 | 728,523 | ||||||||||||
S&P Global Inc. | 3,368 | 825,328 | ||||||||||||
The Progressive Corp. | 10,441 | 770,963 | ||||||||||||
The Travelers Cos. Inc. | 8,143 | 809,007 | ||||||||||||
Truist Financial Corp. | 23,125 | 713,175 | ||||||||||||
U.S. Bancorp | 18,542 | 638,772 | ||||||||||||
W.R. Berkley Corp. | 14,447 | 753,700 | ||||||||||||
|
| |||||||||||||
| 8,534,354 | ||||||||||||||
|
| |||||||||||||
| Health Care 15.0% | ||||||||||||||
Abbott Laboratories | 12,744 | 1,005,629 | ||||||||||||
AbbVie Inc. | 13,361 | 1,017,975 | ||||||||||||
Baxter International Inc. | 12,146 | 986,134 | ||||||||||||
Becton Dickinson and Co. | 4,247 | 975,833 | ||||||||||||
Danaher Corp. | 7,645 | 1,058,144 | ||||||||||||
Johnson & Johnson | 7,473 | 979,934 | ||||||||||||
| a | Laboratory Corp. of America Holdings | 8,291 | 1,047,900 | |||||||||||
Medtronic PLC | 11,985 | 1,080,807 | ||||||||||||
| franklintempleton.com | Annual Report | 31 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty U.S. Low Volatility ETF(continued)
| Shares | Value | |||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Health Care (continued) | ||||||||||||||
Merck & Co. Inc. | 13,424 | $ | 1,032,843 | |||||||||||
Pfizer Inc. | 31,212 | 1,018,760 | ||||||||||||
Quest Diagnostics Inc. | 11,971 | 961,271 | ||||||||||||
|
| |||||||||||||
| 11,165,230 | ||||||||||||||
|
| |||||||||||||
| Industrials 8.3% | ||||||||||||||
General Dynamics Corp. | 6,165 | 815,691 | ||||||||||||
Honeywell International Inc. | 6,117 | 818,394 | ||||||||||||
Lockheed Martin Corp. | 2,316 | 785,008 | ||||||||||||
Raytheon Co. | 5,997 | 786,507 | ||||||||||||
Republic Services Inc. | 9,833 | 738,065 | ||||||||||||
Roper Technologies Inc. | 2,425 | 756,139 | ||||||||||||
Trane Technologies PLC | 8,903 | 735,299 | ||||||||||||
Verisk Analytics Inc. | 5,332 | 743,174 | ||||||||||||
|
| |||||||||||||
| 6,178,277 | ||||||||||||||
|
| |||||||||||||
| Information Technology 24.8% | ||||||||||||||
Accenture PLC, A | 6,777 | 1,106,413 | ||||||||||||
Amphenol Corp., A | 15,623 | 1,138,604 | ||||||||||||
Analog Devices Inc. | 11,893 | 1,066,207 | ||||||||||||
Apple Inc. | 4,388 | 1,115,824 | ||||||||||||
Automatic Data Processing Inc. | 9,152 | 1,250,895 | ||||||||||||
Cisco Systems Inc. | 28,486 | 1,119,785 | ||||||||||||
| a | Fiserv Inc. | 12,718 | 1,208,083 | |||||||||||
Global Payments Inc. | 8,230 | 1,187,013 | ||||||||||||
International Business Machines Corp. | 10,706 | 1,187,617 | ||||||||||||
Intuit Inc. | 4,975 | 1,144,250 | ||||||||||||
Mastercard Inc., A | 4,729 | 1,142,337 | ||||||||||||
Microsoft Corp. | 7,527 | 1,187,083 | ||||||||||||
Oracle Corp. | 23,834 | 1,151,897 | ||||||||||||
| a | Synopsys Inc. | 9,344 | 1,203,414 | |||||||||||
Texas Instruments Inc. | 10,576 | 1,056,860 | ||||||||||||
Visa Inc., A | 7,055 | 1,136,702 | ||||||||||||
|
| |||||||||||||
| 18,402,984 | ||||||||||||||
|
| |||||||||||||
| Materials 2.4% | ||||||||||||||
Air Products and Chemicals Inc. | 3,011 | 601,026 | ||||||||||||
Ecolab Inc. | 3,604 | 561,611 | ||||||||||||
Linde PLC | 3,735 | 646,155 | ||||||||||||
|
| |||||||||||||
| 1,808,792 | ||||||||||||||
|
| |||||||||||||
| Real Estate 3.5% | ||||||||||||||
Alexandria Real Estate Equities Inc. | 4,672 | 640,344 | ||||||||||||
American Tower Corp. | 2,951 | 642,580 | ||||||||||||
Equity Residential | 10,176 | 627,961 | ||||||||||||
UDR Inc. | 18,248 | 666,782 | ||||||||||||
|
| |||||||||||||
| 2,577,667 | ||||||||||||||
|
| |||||||||||||
| Utilities 3.3% | ||||||||||||||
American Electric Power Co. Inc. | 7,289 | 582,974 | ||||||||||||
Dominion Energy Inc. | 8,199 | 591,886 | ||||||||||||
Duke Energy Corp. | 7,999 | 646,959 | ||||||||||||
Xcel Energy Inc. | 10,158 | 612,528 | ||||||||||||
|
| |||||||||||||
| 2,434,347 | ||||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 73,399,218 | |||||||||||||
|
| |||||||||||||
| 32 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty U.S. Low Volatility ETF(continued)
| Shares | Value | |||||||||||||
| Short Term Investments 0.1% | ||||||||||||||
U.S. Government & Agency Securities 0.1% | ||||||||||||||
| b | FHLB | United States | 100,000 | $ | 100,000 | |||||||||
|
| |||||||||||||
Total Short-Term Investments (Cost $100,000) | 100,000 | |||||||||||||
|
| |||||||||||||
Total Investments (Cost $82,755,598) 99.0% | 73,499,218 | |||||||||||||
Other Assets, less Liabilities 1.0% | 723,372 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 74,222,590 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 56.
aNon-income producing.
bThe security was issued on a discount basis with no stated coupon rate.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 33 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty U.S. Core Bond ETF
| Year Ended March 31, 2020a | ||||
| Per share operating performance (for a share outstanding throughout the year) | ||||
Net asset value, beginning of year | $ | 25.00 | ||
|
| |||
| Income from investment operationsb: | ||||
Net investment incomec | 0.29 | |||
Net realized and unrealized gains (losses) | 0.49 | |||
|
| |||
Total from investment operations | 0.78 | |||
|
| |||
| Less distributions from: | ||||
Net investment income | (0.31 | ) | ||
Net realized gains | (0.03 | ) | ||
|
| |||
Total distributions | (0.34 | ) | ||
|
| |||
Net asset value, end of year | $ | 25.44 | ||
|
| |||
Total returnd | 3.12% | |||
| Ratios to average net assetse | ||||
Expenses before waiver and payments by affiliates | 0.19% | |||
Expenses net of waiver and payments by affiliates | 0.15% | |||
Net investment income | 2.14% | |||
| Supplemental data | ||||
Net assets, end of year (000’s) | $853,532 | |||
Portfolio turnover ratef | 126.68% | g | ||
aFor the period September 17, 2019 (commencement of operations) to March 31, 2020.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 126.68%.
| 34 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty U.S. Core Bond ETF
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes 25.2% | ||||||||||||||
| Aerospace & Defense 0.4% | ||||||||||||||
Lockheed Martin Corp., senior bond, 4.09%, 9/15/52 | United States | 1,600,000 | $ | 1,949,295 | ||||||||||
United Technologies Corp., senior bond, 3.75%, 11/01/46 | United States | 1,800,000 | 1,895,996 | |||||||||||
|
| |||||||||||||
| 3,845,291 | ||||||||||||||
|
| |||||||||||||
| Air Freight & Logistics 0.1% | ||||||||||||||
FedEx Corp., senior bond, 4.05%, 2/15/48 | United States | 1,400,000 | 1,239,002 | |||||||||||
|
| |||||||||||||
| Banks 4.2% | ||||||||||||||
Bancolombia SA, senior note, 3.00%, 1/29/25 | Colombia | 1,100,000 | 989,736 | |||||||||||
Bank of America Corp., | United States | 1,000,000 | 1,004,739 | |||||||||||
senior note, FRN thereafter, 3.593%, 7/21/28 | United States | 700,000 | 717,813 | |||||||||||
| a | BNP Paribas SA, senior note, 144A, FRN thereafter, 4.705%, 1/10/25 | France | 5,150,000 | 5,374,586 | ||||||||||
| a | BPCE SA, sub. Note, 144A, 4.875%, 4/01/26 | France | 1,800,000 | 1,750,810 | ||||||||||
| b | China Construction Bank Corp., sub. note, Reg S, FRN thereafter, | China | 2,900,000 | 2,902,813 | ||||||||||
Citigroup Inc., | United States | 2,700,000 | 2,877,607 | |||||||||||
senior note, FRN thereafter, 2.876%, 7/24/23 | United States | 500,000 | 504,594 | |||||||||||
sub. bond, 4.45%, 9/29/27 | United States | 1,500,000 | 1,576,343 | |||||||||||
subordinated note, 3.875%, 3/26/25 | United States | 100,000 | 104,997 | |||||||||||
FOX Corp., senior unsecured, 5.576%, 1/25/49 | United States | 700,000 | 841,470 | |||||||||||
Industrial & Commercial Bank of China Ltd., senior note, 3.538%, 11/08/27 | China | 1,200,000 | 1,308,011 | |||||||||||
JPMorgan Chase & Co., | United States | 1,600,000 | 1,690,816 | |||||||||||
Sr Unsecured, FRN thereafter, 4.493%, 3/24/31 | United States | 1,700,000 | 1,974,785 | |||||||||||
sub. bond, 3.625%, 12/01/27 | United States | 2,100,000 | 2,231,367 | |||||||||||
sub. note, 3.875%, 9/10/24 | United States | 100,000 | 105,788 | |||||||||||
Lloyds Banking Group PLC, senior bond, FRN thereafter, | United Kingdom | 4,000,000 | 3,977,562 | |||||||||||
| a | Truist Bank, sub. Note, 144A, 3.625%, 9/16/25 | United States | 2,400,000 | 2,527,426 | ||||||||||
Wells Fargo & Co., senior bond, FRN thereafter, 2.879%, 10/30/30 | United States | 3,700,000 | 3,676,659 | |||||||||||
|
| |||||||||||||
| 36,137,922 | ||||||||||||||
|
| |||||||||||||
| Beverages 0.2% | ||||||||||||||
Anheuser-Busch InBev Worldwide Inc., senior bond, 5.55%, 1/23/49 | United States | 1,200,000 | 1,417,656 | |||||||||||
|
| |||||||||||||
| Biotechnology 1.1% | ||||||||||||||
| a | AbbVie Inc., senior note, 144A, 2.95%, 11/21/26 | United States | 5,300,000 | 5,412,631 | ||||||||||
Biogen Inc., senior note, 3.625%, 9/15/22 | United States | 2,050,000 | 2,107,645 | |||||||||||
Gilead Sciences Inc., senior bond, 4.15%, 3/01/47 | United States | 1,400,000 | 1,720,075 | |||||||||||
|
| |||||||||||||
| 9,240,351 | ||||||||||||||
|
| |||||||||||||
| Building Products 0.2% | ||||||||||||||
CRH America Finance Inc., senior note, 3.40%, 5/09/27 | Ireland | 1,850,000 | 1,845,179 | |||||||||||
|
| |||||||||||||
| Capital Markets 1.3% | ||||||||||||||
| a | Credit Suisse Group AG, senior note, 144A, FRN therafter, | Switzerland | 3,750,000 | 3,655,670 | ||||||||||
Morgan Stanley, | United States | 800,000 | 846,810 | |||||||||||
sub. bond, 3.95%, 4/23/27 | United States | 3,600,000 | 3,759,908 | |||||||||||
The Goldman Sachs Group Inc., senior bond, FRN thereafter, | United States | 2,500,000 | 2,573,970 | |||||||||||
|
| |||||||||||||
| 10,836,358 | ||||||||||||||
|
| |||||||||||||
| Chemicals 1.2% | ||||||||||||||
| a | Alpek SAB de CV, senior note, 144A, 4.25%, 9/18/29 | Mexico | 4,100,000 | 3,365,157 | ||||||||||
| franklintempleton.com | Annual Report | 35 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty U.S. Core Bond ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Chemicals (continued) | ||||||||||||||
| b | CNAC HK Finbridge Co. Ltd., senior note, Reg S, 4.875%, 3/14/25 | Hong Kong | 1,600,000 | $ | 1,683,532 | |||||||||
Sherwin-Williams Co., senior note, 2.95%, 8/15/29 | United States | 4,900,000 | 4,839,825 | |||||||||||
|
| |||||||||||||
| 9,888,514 | ||||||||||||||
|
| |||||||||||||
| Commercial Services & Supplies 0.5% | ||||||||||||||
Boardwalk Pipelines LP, senior note, 4.80%, 5/03/29 | United States | 3,950,000 | 2,985,232 | |||||||||||
Republic Services Inc., senior bond, 3.95%, 5/15/28 | United States | 1,500,000 | 1,626,568 | |||||||||||
|
| |||||||||||||
| 4,611,800 | ||||||||||||||
|
| |||||||||||||
| Consumer Finance 0.6% | ||||||||||||||
Capital One Financial Corp., senior note, 3.75%, 3/09/27 | United States | 4,850,000 | 4,759,190 | |||||||||||
|
| |||||||||||||
| Containers & Packaging 0.2% | ||||||||||||||
WRKCo Inc., Sr. Unsecured, 4.00%, 3/15/28 | United States | 1,100,000 | 1,163,428 | |||||||||||
WRKCo. Inc., senior note, 3.90%, 6/01/28 | United States | 700,000 | 720,236 | |||||||||||
|
| |||||||||||||
| 1,883,664 | ||||||||||||||
|
| |||||||||||||
| Diversified Telecommunication Services 0.5% | ||||||||||||||
Telefonica Emisiones SA, senior bond, 4.895%, 3/06/48 | Spain | 4,200,000 | 4,670,339 | |||||||||||
|
| |||||||||||||
| Electric Utilities 1.8% | ||||||||||||||
Baltimore Gas & Electric Co., senior bond, 3.50%, 8/15/46 | United States | 1,400,000 | 1,419,714 | |||||||||||
Duke Energy Carolinas LLC, secured bond, 3.70%, 12/01/47 | United States | 1,400,000 | 1,546,986 | |||||||||||
Duke Energy Corp., senior bond, 3.75%, 9/01/46 | United States | 400,000 | 385,343 | |||||||||||
Enel Finance International NV, | ||||||||||||||
a senior bond, 144A, 3.50%, 4/06/28 | Netherlands | 2,700,000 | 2,717,984 | |||||||||||
a senior note, 144A, 3.625%, 5/25/27 | Netherlands | 1,000,000 | 1,017,702 | |||||||||||
a senior note, 144A, 6.00%, 10/07/39 | Netherlands | 200,000 | 216,254 | |||||||||||
Exelon Corp., senior bond, 4.05%, 4/15/30 | United States | 300,000 | 297,721 | |||||||||||
Georgia Power Co., senior bond, 4.75%, 9/01/40 | United States | 1,400,000 | 1,382,199 | |||||||||||
MidAmerican Energy Co., secured bond, 3.65%, 8/01/48 | United States | 1,100,000 | 1,185,943 | |||||||||||
Public Service Electric & Gas Co., secured bond, 3.80%, 3/01/46 | United States | 1,100,000 | 1,172,984 | |||||||||||
| a | State Grid Overseas Investment 2016 Ltd., senior note, 144A, 3.50%, 5/04/27 | China | 2,300,000 | 2,464,661 | ||||||||||
Virginia Electric & Power Co., Sr. Unsecured, 3.80%, 9/15/47 | United States | 1,100,000 | 1,180,887 | |||||||||||
|
| |||||||||||||
| 14,988,378 | ||||||||||||||
|
| |||||||||||||
| Electronic Equipment, Instruments & Components 0.1% | ||||||||||||||
Keysight Technologies Inc., senior note, 4.60%, 4/06/27 | United States | 1,100,000 | 1,130,780 | |||||||||||
|
| |||||||||||||
| Energy Equipment & Services 0.8% | ||||||||||||||
Baker Hughes a GE Co. LLC/Baker HughesCo-obligator Inc., senior bond, 4.08%, 12/15/47 | United States | 1,400,000 | 1,155,571 | |||||||||||
| a | Schlumberger Holdings Corp., Sr. Unsecured, 144A, 3.90%, 5/17/28 | United States | 5,950,000 | 5,544,491 | ||||||||||
|
| |||||||||||||
| 6,700,062 | ||||||||||||||
|
| |||||||||||||
| Equity Real Estate Investment Trusts (REITs) 0.1% | ||||||||||||||
Kimco Realty Corp., Sr. Unsecured, 4.25%, 4/01/45 | United States | 750,000 | 682,674 | |||||||||||
|
| |||||||||||||
| Food & Staples Retailing 0.2% | ||||||||||||||
The Kroger Co., senior bond, 4.45%, 2/01/47 | United States | 1,350,000 | 1,491,559 | |||||||||||
Walgreens Boots Alliance Inc., senior bond, 4.80%, 11/18/44 | United States | 500,000 | 493,634 | |||||||||||
|
| |||||||||||||
| 1,985,193 | ||||||||||||||
|
| |||||||||||||
| Food Products 1.1% | ||||||||||||||
BAT Capital Corp., | United States | 750,000 | 688,034 | |||||||||||
senior note, 3.222%, 8/15/24 | United States | 1,500,000 | 1,509,552 | |||||||||||
Bunge Ltd. Finance Corp., senior note, 3.75%, 9/25/27 | United States | 1,450,000 | 1,327,625 | |||||||||||
| 36 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty U.S. Core Bond ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Food Products (continued) | ||||||||||||||
Kraft Heinz Foods Co., senior bond, 3.00%, 6/01/26 | United States | 4,100,000 | $ | 3,994,180 | ||||||||||
Tyson Foods Inc., senior bond, 5.10%, 9/28/48 | United States | 1,300,000 | 1,619,480 | |||||||||||
|
| |||||||||||||
| 9,138,871 | ||||||||||||||
|
| |||||||||||||
| Health Care Providers & Services 1.7% | ||||||||||||||
Anthem Inc., | United States | 700,000 | 705,581 | |||||||||||
senior bond, 4.375%, 12/01/47 | United States | 100,000 | 108,170 | |||||||||||
senior note, 4.101%, 3/01/28 | United States | 1,200,000 | 1,294,451 | |||||||||||
| a | Cigna Corp., senior note, 144A, 3.40%, 3/01/27 | United States | 4,900,000 | 4,981,688 | ||||||||||
CVS Health Corp., | United States | 1,400,000 | 1,597,567 | |||||||||||
senior note, 3.875%, 7/20/25 | United States | 500,000 | 517,568 | |||||||||||
senior note, 4.10%, 3/25/25 | United States | 4,100,000 | 4,322,451 | |||||||||||
HCA Inc., senior secured bond, first lien, 5.50%, 6/15/47 | United States | 900,000 | 986,533 | |||||||||||
|
| |||||||||||||
| 14,514,009 | ||||||||||||||
|
| |||||||||||||
| Independent Power Producers & Energy Traders 0.5% | ||||||||||||||
| a | Colbun SA, senior note, 144A, 3.95%, 10/11/27 | Chile | 4,050,000 | 3,903,694 | ||||||||||
|
| |||||||||||||
| Industrial Conglomerates 0.2% | ||||||||||||||
General Electric Co., | United States | 16,000 | 15,199 | |||||||||||
senior bond, 4.50%, 3/11/44 | United States | 700,000 | 692,375 | |||||||||||
senior note, 3.15%, 9/07/22 | United States | 900,000 | 910,374 | |||||||||||
|
| |||||||||||||
| 1,617,948 | ||||||||||||||
|
| |||||||||||||
| Insurance 0.8% | ||||||||||||||
Metlife Inc., | United States | 400,000 | 420,425 | |||||||||||
senior bond, 5.875%, 2/06/41 | United States | 1,100,000 | 1,410,504 | |||||||||||
Reinsurance Group of America Inc, Sr. Unsecured, 3.90%, 5/15/29 | United States | 2,250,000 | 2,201,818 | |||||||||||
| a | Swiss Re Treasury US Corp., senior bond, 144A, 4.25%, 12/06/42 | United States | 750,000 | 905,059 | ||||||||||
The Allstate Corp., senior bond, 5.55%, 5/09/35 | United States | 1,800,000 | 2,253,622 | |||||||||||
|
| |||||||||||||
| 7,191,428 | ||||||||||||||
|
| |||||||||||||
| Interactive Media & Services 0.2% | ||||||||||||||
| b | Tencent Holdings Ltd., senior note, Reg S, 3.28%, 4/11/24 | China | 1,250,000 | 1,298,220 | ||||||||||
|
| |||||||||||||
| Internet & Direct Marketing Retail 0.7% | ||||||||||||||
Alibaba Group Holding Ltd., | China | 200,000 | 227,091 | |||||||||||
senior bond, 4.40%, 12/06/57 | China | 700,000 | 935,150 | |||||||||||
senior note, 3.40%, 12/06/27 | China | 4,700,000 | 4,942,497 | |||||||||||
|
| |||||||||||||
| 6,104,738 | ||||||||||||||
|
| |||||||||||||
| IT Services 0.2% | ||||||||||||||
Fiserv Inc., senior bond, 4.40%, 7/01/49 | United States | 1,400,000 | 1,510,401 | |||||||||||
|
| |||||||||||||
| Machinery 0.3% | ||||||||||||||
| a | Carrier Global Corp., senior note, 144A, 3.577%, 4/05/50 | United States | 3,000,000 | 2,710,113 | ||||||||||
|
| |||||||||||||
| Media 0.5% | ||||||||||||||
Comcast Corp., | United States | 1,800,000 | 1,912,941 | |||||||||||
senior bond, 3.40%, 7/15/46 | United States | 800,000 | 870,229 | |||||||||||
senior note, 6.50%, 11/15/35 | United States | 200,000 | 292,742 | |||||||||||
NBCUniversal Media LLC, senior bond, 4.45%, 1/15/43 | United States | 1,100,000 | 1,402,017 | |||||||||||
|
| |||||||||||||
| 4,477,929 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 37 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty U.S. Core Bond ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Metals & Mining 0.5% | ||||||||||||||
Reliance Steel & Aluminum Co., senior note, 4.50%, 4/15/23 | United States | 3,000,000 | $ | 2,973,639 | ||||||||||
Southern Copper Corp., senior bond, 5.25%, 11/08/42 | Mexico | 1,300,000 | 1,347,964 | |||||||||||
|
| |||||||||||||
| 4,321,603 | ||||||||||||||
|
| |||||||||||||
| Multiline Retail 0.5% | ||||||||||||||
Dollar Tree Inc., senior bond, 4.20%, 5/15/28 | United States | 4,000,000 | 4,002,607 | |||||||||||
|
| |||||||||||||
| Oil, Gas & Consumable Fuels 2.4% | ||||||||||||||
Canadian Natural Resources Ltd., senior bond, 3.85%, 6/01/27 | Canada | 3,000,000 | 2,380,402 | |||||||||||
Ecopetrol SA, senior bond, 4.125%, 1/16/25 | Colombia | 4,000,000 | 3,761,020 | |||||||||||
Enable Midstream Partners LP, senior note, 3.90%, 5/15/24 | United States | 2,650,000 | 1,473,069 | |||||||||||
Energy Transfer Operating LP, senior bond, 5.15%, 3/15/45 | United States | 850,000 | 660,745 | |||||||||||
Enterprise Products Operating LLC, senior bond, 4.25%, 2/15/48 | United States | 1,150,000 | 1,079,146 | |||||||||||
MPLX LP, senior bond, 4.70%, 4/15/48 | United States | 1,250,000 | 972,330 | |||||||||||
Sabine Pass Liquefaction LLC, senior secured bond, first lien, | United States | 4,000,000 | 3,443,097 | |||||||||||
Sunoco Logistics Partner, senior bond, 5.40%, 10/01/47 | United States | 300,000 | 239,252 | |||||||||||
TC PipeLines LP, senior note, 3.90%, 5/25/27 | United States | 2,550,000 | 2,426,573 | |||||||||||
TransCanada PipeLines Ltd., senior bond, 4.875%, 5/15/48 | Canada | 1,200,000 | 1,310,546 | |||||||||||
Valero Energy Corp., | United States | 500,000 | 489,080 | |||||||||||
senior note, 4.35%, 6/01/28 | United States | 1,500,000 | 1,461,589 | |||||||||||
Williams Companies, Inc., senior bond, 5.10%, 9/15/45 | United States | 700,000 | 667,724 | |||||||||||
|
| |||||||||||||
| 20,364,573 | ||||||||||||||
|
| |||||||||||||
| Pharmaceuticals 0.3% | ||||||||||||||
Allergan Funding SCS, senior bond, 4.75%, 3/15/45 | Luxembourg | 1,400,000 | 1,517,508 | |||||||||||
AstraZeneca Plc, senior bond, 4.00%, 9/18/42 | United Kingdom | 1,300,000 | 1,470,382 | |||||||||||
|
| |||||||||||||
| 2,987,890 | ||||||||||||||
|
| |||||||||||||
| Real Estate Management & Development 0.6% | ||||||||||||||
| b | China Overseas Finance Cayman VI Ltd, senior note, Reg S, 5.95%, 5/08/24 | Cayman Islands | 3,700,000 | 4,182,280 | ||||||||||
Healthcare Trust of America Holdings LP, senior bond, 3.75%, 7/01/27 | United States | 650,000 | 601,261 | |||||||||||
|
| |||||||||||||
| 4,783,541 | ||||||||||||||
|
| |||||||||||||
| Road & Rail 0.3% | ||||||||||||||
Burlington Northern Santa Fe LLC, senior bond, 4.15%, 4/01/45 | United States | 1,700,000 | 1,998,627 | |||||||||||
CSX Corp., senior bond, 4.25%, 11/01/66 | United States | 750,000 | 752,493 | |||||||||||
|
| |||||||||||||
| 2,751,120 | ||||||||||||||
|
| |||||||||||||
| Semiconductors & Semiconductor Equipment 0.4% | ||||||||||||||
Maxim Integrated Products Inc., | United States | 800,000 | 817,329 | |||||||||||
senior note, 3.45%, 6/15/27 | United States | 2,450,000 | 2,515,513 | |||||||||||
|
| |||||||||||||
| 3,332,842 | ||||||||||||||
|
| |||||||||||||
| Tobacco 0.3% | ||||||||||||||
| a | BAT International Finance PLC, senior note , 144A, 3.95%, 6/15/25 | United Kingdom | 2,600,000 | 2,555,825 | ||||||||||
|
| |||||||||||||
| Trading Companies & Distributors 0.2% | ||||||||||||||
Aircastle Ltd., senior note, 4.25%, 6/15/26 | Bermuda | 2,250,000 | 1,933,282 | |||||||||||
|
| |||||||||||||
Total Corporate Bonds & Notes (Cost $226,924,867) | 215,362,987 | |||||||||||||
|
| |||||||||||||
| U.S. Government & Agency Securities 35.9% | ||||||||||||||
U.S. Treasury Bond, | United States | 27,460,000 | 33,063,556 | |||||||||||
2.25%, 8/15/49 | United States | 3,440,000 | 4,186,319 | |||||||||||
2.50%, 5/15/46 | United States | 1,225,000 | 1,541,442 | |||||||||||
| 38 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty U.S. Core Bond ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| U.S. Government & Agency Securities (continued) | ||||||||||||||
2.75%, 8/15/42 | United States | 4,740,000 | $ | 6,122,562 | ||||||||||
2.75%, 11/15/42 | United States | 17,050,000 | 22,031,131 | |||||||||||
U.S. Treasury Note, | United States | 87,600,000 | 90,765,273 | |||||||||||
1.50%, 3/31/23 | United States | 30,273,000 | 31,376,309 | |||||||||||
1.50%, 9/30/24 | United States | 14,050,000 | 14,766,769 | |||||||||||
1.50%, 10/31/24 | United States | 5,750,000 | 6,048,506 | |||||||||||
1.625%, 10/15/20 | United States | 29,700,000 | 29,939,572 | |||||||||||
1.875%, 9/30/22 | United States | 3,000,000 | 3,121,992 | |||||||||||
1.875%, 8/31/24 | United States | 5,150,000 | 5,490,383 | |||||||||||
1.875%, 6/30/26 | United States | 5,200,000 | 5,632,656 | |||||||||||
2.125%, 2/29/24 | United States | 11,740,000 | 12,566,845 | |||||||||||
2.125%, 3/31/24 | United States | 11,000,000 | 11,782,891 | |||||||||||
2.75%, 9/15/21 | United States | 27,000,000 | 27,992,461 | |||||||||||
|
| |||||||||||||
Total U.S. Government & Agency Securities | 306,428,667 | |||||||||||||
|
| |||||||||||||
| Municipal Bonds 4.5% | ||||||||||||||
| Alabama 0.6% | ||||||||||||||
Southeast Alabama Gas Supply Dist., Revenue, Libor-Project #2, | 5,000,000 | 4,962,850 | ||||||||||||
|
| |||||||||||||
| California 1.7% | ||||||||||||||
California State GO, Various Purpose, 3.00%, 10/01/37 | 4,500,000 | 4,667,445 | ||||||||||||
Contra Costa Community College Dist., Refunding, 2.926%, 8/01/38 | 10,000,000 | 10,077,000 | ||||||||||||
|
| |||||||||||||
| 14,744,445 | ||||||||||||||
|
| |||||||||||||
| New York 1.7% | ||||||||||||||
Metropolitan Transportation Auth., Refunding, Series B, 5.00%, 11/15/52 | 7,255,000 | 8,201,850 | ||||||||||||
Triborough Bridge & Tunnel Auth., MTA Bridges and Tunnels, Refunding, Series B, 3.427%, 11/15/44 | 6,000,000 | 6,037,980 | ||||||||||||
|
| |||||||||||||
| 14,239,830 | ||||||||||||||
|
| |||||||||||||
| Texas 0.5% | ||||||||||||||
Texas Water Dev. Board, State Water Implementation Fund, Master Trust, Series A, 4.00%, 10/15/44 | 3,750,000 | 4,361,812 | ||||||||||||
|
| |||||||||||||
Total Municipals (Cost $38,490,880) | 38,308,937 | |||||||||||||
|
| |||||||||||||
| Mortgage-Backed Securities 24.4% | ||||||||||||||
| Fannie Mae 1.3% | ||||||||||||||
Federal Home Loan Mortgage Corp., | United States | 920,065 | 954,545 | |||||||||||
2.50%, 6/01/49 | United States | 31,463 | 32,656 | |||||||||||
2.50%, 9/01/49 | United States | 156,180 | 162,152 | |||||||||||
2.50%, 11/01/49 | United States | 890,436 | 924,487 | |||||||||||
2.50%, 12/01/49 | United States | 397,001 | 412,183 | |||||||||||
3.00%, 5/01/49 | United States | 693,523 | 727,844 | |||||||||||
4.00%, 3/01/49 | United States | 7,038,262 | 7,579,448 | |||||||||||
|
| |||||||||||||
| 10,793,315 | ||||||||||||||
|
| |||||||||||||
| Freddie Mac 23.1% | ||||||||||||||
Federal National Mortgage Association, | United States | 12,658,024 | 13,162,902 | |||||||||||
2.50%, 8/01/49 | United States | 89,385 | 92,803 | |||||||||||
2.50%, 8/01/49 | United States | 455,268 | 472,341 | |||||||||||
2.50%, 12/01/49 | United States | 1,429,922 | 1,484,484 | |||||||||||
3.00%, 3/01/50 | United States | 52,820,968 | 55,502,243 | |||||||||||
3.00%, 4/01/50 | United States | 24,500,000 | 25,693,418 | |||||||||||
| franklintempleton.com | Annual Report | 39 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty U.S. Core Bond ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Mortgage-Backed Securities (continued) | ||||||||||||||
| Freddie Mac (continued) | ||||||||||||||
3.50%, 8/01/49 | United States | 26,883,870 | $ | 28,762,676 | ||||||||||
3.50%, 2/01/50 | United States | 29,693,403 | 31,434,747 | |||||||||||
4.00%, 2/01/50 | United States | 14,841,411 | 15,860,839 | |||||||||||
4.50%, 7/01/47 | United States | 14,549,336 | 15,894,881 | |||||||||||
4.50%, 5/01/48 | United States | 8,093,554 | 8,878,119 | |||||||||||
|
| |||||||||||||
| 197,239,453 | ||||||||||||||
|
| |||||||||||||
Total Mortgage-Backed Securities (Cost $203,523,414) | 208,032,768 | |||||||||||||
|
| |||||||||||||
| Foreign Government and Agency Securities 2.9% | ||||||||||||||
| Colombia 0.4% | ||||||||||||||
Government of Colombia, | 1,900,000 | 1,921,869 | ||||||||||||
senior bond, 5.00%, 6/15/45 | 1,850,000 | 1,914,750 | ||||||||||||
|
| |||||||||||||
| 3,836,619 | ||||||||||||||
|
| |||||||||||||
| Indonesia 0.5% | ||||||||||||||
| a | Government of Indonesia, senior bond, 144A | 1,750,000 | 1,817,662 | |||||||||||
| a | Indonesia Government International Bond, senior note, 144A | 2,100,000 | 2,167,155 | |||||||||||
|
| |||||||||||||
| 3,984,817 | ||||||||||||||
|
| |||||||||||||
| Mexico 0.5% | ||||||||||||||
Government of Mexico, | ||||||||||||||
senior bond, 3.60%, 1/30/25 | 1,200,000 | 1,223,700 | ||||||||||||
senior note, 4.15%, 3/28/27 | 2,700,000 | 2,771,550 | ||||||||||||
|
| |||||||||||||
| 3,995,250 | ||||||||||||||
|
| |||||||||||||
| Panama 0.5% | ||||||||||||||
| a | Panama Notas del Tesoro, senior note, 144A | 4,050,000 | 4,078,826 | |||||||||||
|
| |||||||||||||
| Supranational 0.5% | ||||||||||||||
| a | The African Export-Import Bank, senior bond, 144A | 4,500,000 | 4,254,390 | |||||||||||
|
| |||||||||||||
| Uruguay 0.5% | ||||||||||||||
Government of Uruguay, senior bond | 3,875,000 | 4,240,257 | ||||||||||||
|
| |||||||||||||
Total Foreign Government and Agency Securities | 24,390,159 | |||||||||||||
|
| |||||||||||||
| Asset-Backed Securities 2.9% | ||||||||||||||
American Express Credit Account Master Trust, Series2019-1, Class A, ABS, 2.87%, 10/15/24 | United States | 6,500,000 | 6,705,135 | |||||||||||
| a | BX Commercial Mortgage Trust, Series 2020-BXLP, Class A, 144A, FRN thereafter, 1.505%, 12/15/36 | United States | 3,090,000 | 2,919,882 | ||||||||||
Capital One Multi-Asset Execution Trust, | ||||||||||||||
Series2019-A1, Class A1, 2.84%, 12/15/24 | United States | 4,460,000 | 4,603,272 | |||||||||||
Series2019-A2, Class A2, 1.72%, 8/15/24 | United States | 5,510,000 | 5,589,263 | |||||||||||
Citibank Credit Card Issuance Trust, Series2017-A7 , Class A7, FRN thereafter, 1.375%, 8/08/24 | United States | 2,000,000 | 1,974,100 | |||||||||||
Discover Card Execution Note Trust, Series2019-A3, Class A, 1.89%, 10/15/24 | United States | 3,220,000 | 3,250,361 | |||||||||||
|
| |||||||||||||
Total Asset-Backed Securities (Cost $24,990,222) | 25,042,013 | |||||||||||||
|
| |||||||||||||
Total Investments (Cost $808,797,942) 95.8% | 817,565,531 | |||||||||||||
Other Assets, less Liabilities 4.2% | 35,966,240 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 853,531,771 | ||||||||||||
|
| |||||||||||||
| 40 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty U.S. Core Bond ETF(continued)
See Abbreviations on page 56.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $64,341,666, representing 7.5% of net assets.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $10,066,845, representing 1.2% of net assets.
At March 31, 2020, the Fund had the following credit default swap contracts outstanding. See Note 8.
| Credit Default Swap Contracts | ||||||||||||||||||||||||||||
| Description | Periodic Payment Rate Received (Paid) | Payment Frequency | Maturity Date | Notional Amount | Value | Unamortized Upfront Payments (Reciepts) | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||
| Contracts to Sell Protectiona | ||||||||||||||||||||||||||||
CDX.NA.IG.33 | 1 | % | Quarterly | 12/20/24 | 3,000,000 | (9,772 | ) | (32,522 | ) | 22,750 | ||||||||||||||||||
CDX.NA.IG.33 | 1 | % | Quarterly | 12/20/24 | 10,200,000 | (33,225 | ) | 162,061 | (195,286 | ) | ||||||||||||||||||
Italy Government International Bond | 1 | % | Quarterly | 12/20/29 | 9,000,000 | (840,709 | ) | (437,804 | ) | (402,905 | ) | |||||||||||||||||
|
| |||||||||||||||||||||||||||
Total | (575,441 | ) | ||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
aThe fund enters contracts to sell protection to create a long credit position.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Index Contracts | ||||||||||||||||||||
U.S. Treasury 5 Yr. Note | Long | 48 | $ | 6,017,250 | 6/30/20 | $ | 181,666 | |||||||||||||
U.S. Treasury 10 Yr. Note | Long | 40 | 5,547,500 | 6/19/20 | 210,767 | |||||||||||||||
Ultra 10 Yr. U.S. Treasury Note | Short | 11 | 1,716,344 | 6/19/20 | (4,828 | ) | ||||||||||||||
|
| |||||||||||||||||||
Total Futures Contracts | $ | 387,605 | ||||||||||||||||||
|
| |||||||||||||||||||
*As of period end.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 41 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
March 31, 2020
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | Franklin Liberty U.S. Core Bond ETF | ||||||||||
Assets: | ||||||||||||
Investments in securities: | ||||||||||||
Cost – Unaffiliated issuers | $ | 561,002,206 | $ | 82,755,598 | $ | 808,797,942 | ||||||
|
| |||||||||||
Value – Unaffiliated issuers | $ | 541,383,321 | $ | 73,499,218 | $ | 817,565,531 | ||||||
Cash | 5,192,580 | 679,143 | 95,819,153 | |||||||||
Receivables: | ||||||||||||
Investment securities sold | 3,700,795 | — | 9,911,030 | |||||||||
Dividend and Interest | 5,692,976 | 118,912 | 4,201,801 | |||||||||
Deposits with brokers for: | ||||||||||||
Futures contracts | 352,835 | — | 91,846 | |||||||||
Swap Contracts | — | — | 960,930 | |||||||||
Variation margin on centrally cleared swap contracts | — | — | 465,298 | |||||||||
|
| |||||||||||
Total assets | 556,322,507 | 74,297,273 | 929,015,589 | |||||||||
|
| |||||||||||
Liabilities: | ||||||||||||
Payables: | ||||||||||||
Investment securities purchased | 900,581 | — | 35,682,024 | |||||||||
Capital shares redeemed | — | — | 36,863,610 | |||||||||
Management fees | 120,897 | 1,455 | 58,498 | |||||||||
Transfer agent fees | 14,300 | 14,300 | 8,400 | |||||||||
Distributions to shareholders | 1,730,568 | — | 1,888,060 | |||||||||
Custodian fees | 18,823 | 1,155 | 4,500 | |||||||||
Professional fees | 45,990 | 36,008 | 26,902 | |||||||||
Reports to shareholders | 843 | 1,003 | 4,630 | |||||||||
Variation margin on futures contracts | 74,075 | — | 3,385 | |||||||||
Registration and filing fees | 71,311 | 15,876 | 98,100 | |||||||||
Unrealized depreciation on OTC swap contracts | — | — | 402,905 | |||||||||
OTC swap contracts premiums received | — | — | 437,804 | |||||||||
Accrued expenses and other liabilities | 7,404 | 4,886 | 5,000 | |||||||||
|
| |||||||||||
Total liabilities | 2,984,792 | 74,683 | 75,483,818 | |||||||||
|
| |||||||||||
Net assets, at value | $ | 553,337,715 | $ | 74,222,590 | $ | 853,531,771 | ||||||
|
| |||||||||||
Net assets consist of: | ||||||||||||
Paid-in capital | $ | 573,759,111 | $ | 86,424,495 | $ | 841,985,535 | ||||||
Total distributable earnings (loss) | (20,421,396 | ) | (12,201,905 | ) | 11,546,236 | |||||||
|
| |||||||||||
Net assets, at value | $ | 553,337,715 | $ | 74,222,590 | $ | 853,531,771 | ||||||
|
| |||||||||||
Shares outstanding | 22,850,000 | 2,400,000 | 33,550,000 | |||||||||
|
| |||||||||||
Net asset value per share | $ | 24.22 | $ | 30.93 | $ | 25.44 | ||||||
|
| |||||||||||
| 42 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the year ended March 31, 2020
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | Franklin Liberty U.S. Core Bond ETFb | ||||||||||
Investment income: | ||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||
Unaffiliated issuers | $ | — | $ | 902,509 | $ | — | ||||||
Interest: | ||||||||||||
Unaffiliated issuers | 10,940,416 | — | 10,461,465 | |||||||||
|
| |||||||||||
Total investment income | 10,940,416 | 902,509 | 10,461,465 | |||||||||
|
| |||||||||||
Expenses: | ||||||||||||
Management fees (Note 3a) | 1,759,381 | 143,655 | 684,435 | |||||||||
Transfer agent fees | 15,600 | 15,600 | 8,400 | |||||||||
Custodian fees | 20,493 | 1,391 | 4,500 | |||||||||
Reports to shareholders | 10,062 | 10,024 | 6,000 | |||||||||
Registration and filing fees | 71,481 | 16,520 | 100,369 | |||||||||
Professional fees | 65,176 | 54,672 | 28,940 | |||||||||
Trustees’ fees and expenses | 27,668 | 3,406 | 27,730 | |||||||||
Other | 2,307 | 1,211 | 8,971 | |||||||||
|
| |||||||||||
Total expenses | 1,972,168 | 246,479 | 869,345 | |||||||||
Expenses waived/paid by affiliates (Note 3c) | (780,871 | ) | (102,824 | ) | (184,910 | ) | ||||||
|
| |||||||||||
Net expenses | 1,191,297 | 143,655 | 684,435 | |||||||||
|
| |||||||||||
Net investment income | 9,749,119 | 758,854 | 9,777,030 | |||||||||
|
| |||||||||||
Realized and unrealized gains (losses): | ||||||||||||
Net realized gain (loss) from: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | 4,424,530 | (3,051,657 | ) | 5,577,000 | ||||||||
In-kind redemptions | — | 170,411 | — | |||||||||
Foreign currency transactions | 130 | 185 | — | |||||||||
Futures contracts | (1,144,168 | ) | — | 850,090 | ||||||||
Swap contracts | 10,471 | — | (1,297,249 | ) | ||||||||
|
| |||||||||||
Net realized gain (loss) | 3,290,963 | (2,881,061 | ) | 5,129,841 | ||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (19,780,326 | ) | (11,385,385 | ) | 8,767,589 | |||||||
Translation of other assets and liabilities denominated in foreign currencies | — | (392 | ) | — | ||||||||
Futures contracts | (67,759 | ) | — | 387,605 | ||||||||
Swap contracts | — | — | (575,441 | ) | ||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) | (19,848,085 | ) | (11,385,777 | ) | 8,579,753 | |||||||
|
| |||||||||||
Net realized and unrealized gain (loss) | (16,557,122 | ) | (14,266,838 | ) | 13,709,594 | |||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (6,808,003 | ) | $ | (13,507,984 | ) | $ | 23,486,624 | ||||
|
| |||||||||||
aForeign taxes withheld on dividends | $ | — | $ | 7,168 | $ | — | ||||||
bFor the period September 17, 2019 (commencement of operations) to March 31, 2020.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 43 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 9,749,119 | $ | 941,221 | $ | 758,854 | $ | 188,665 | ||||||||
Net realized gain (loss) | 3,290,963 | (722,823 | ) | (2,881,061 | ) | 251,076 | ||||||||||
Net change in unrealized appreciation (depreciation) | (19,848,085 | ) | 370,103 | (11,385,777 | ) | 1,276,600 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (6,808,003 | ) | 588,501 | (13,507,984 | ) | 1,716,341 | ||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1e) | (12,798,430 | ) | (1,010,692 | ) | (613,357 | ) | (321,023 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | �� | 554,879,195 | (21,066,405 | ) | 74,900,836 | 6,042,757 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 535,272,762 | (21,488,596 | ) | 60,779,495 | 7,438,075 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of year | 18,064,953 | 39,553,549 | 13,443,095 | 6,005,020 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1e) | $ | 553,337,715 | $ | 18,064,953 | $ | 74,222,590 | $ | 13,443,095 | ||||||||
|
| |||||||||||||||
| 44 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
| Franklin Liberty U.S. Core Bond ETF | ||||
| Year Ended March 31, 2020 | ||||
Increase (decrease) in net assets: | ||||
Operations: | ||||
Net investment income | $ | 9,777,030 | ||
Net realized gain (loss) | 5,129,841 | |||
Net change in unrealized appreciation (depreciation) | 8,579,753 | |||
|
| |||
Net increase (decrease) in net assets resulting from | 23,486,624 | |||
|
| |||
Distributions to shareholders (Note 1e) | (12,075,002 | ) | ||
|
| |||
Capital share transactions: (Note 2) | 842,120,149 | |||
|
| |||
Net increase (decrease) in net assets | 853,531,771 | |||
Net assets: | ||||
Beginning of year | — | |||
|
| |||
End of year (Note 1e) | $ | 853,531,771 | ||
|
| |||
aFor the period September 17, 2019 (commencement of operations) to March 31, 2020.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 45 | ||||
FRANKLIN TEMPLETON ETF TRUST
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting offorty-two 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). Each of the Funds are an exchange traded fund (ETF) and are actively managed, thus they are not designed to track an index. The Trust began offering shares of Franklin Liberty U.S. Core Bond ETF.
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 as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. 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 and exchange traded funds 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. London 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 theover-the-counter (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.
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. 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
| 46 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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 anon-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 significant 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. Derivative Financial Instruments
Certain or all Funds 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 Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. Certain or all Funds attempt to reduce their 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 Funds include failure of the Funds 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 thenon-defaulting party the right to net andclose-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement.
The Funds 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 theover-the-counter
| franklintempleton.com | Annual Report | 47 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
c. Derivative Financial Instruments(continued)
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. 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 Statements 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 Statements of Operations.
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. 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, 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 Funds’ 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 counterpartynon-performance.
Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to equity price 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 Statements of Assets and Liabilities.
See Note 8 regarding other derivative information.
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 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 March 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.
| 48 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
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. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and capital gain distributions are recorded on theex-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 theex-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.
For the year ended March 31, 2019, distributions to shareholders were as follows:
| Franklin Liberty International Opportunities ETF | Franklin Liberty | Franklin Liberty U.S. Low Volatility ETF | ||||||||||
Distributions to shareholders | $ | (168,938 | ) | $ | (1,010,692 | ) | $ | (321,023 | ) | |||
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. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense.
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.
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specific number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
| franklintempleton.com | Annual Report | 49 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest(continued)
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At March 31, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| Franklin Liberty Investment Grade Corporate ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 22,100,000 | $ | 554,879,195 | 50,000 | $ | 1,200,485 | ||||||||||||||
Shares redeemed | — | — | (950,000 | ) | (22,266,890 | ) | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 22,100,000 | $ | 554,879,195 | (900,000 | ) | $ | (21,066,405 | ) | ||||||||||||
|
| |||||||||||||||||||
| Franklin Liberty U.S. Low Volatility ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 2,050,000 | $ | 76,346,270 | 250,000 | $ | 7,630,864 | ||||||||||||||
Shares redeemed | (50,000 | ) | (1,445,434 | ) | (50,000 | ) | (1,588,107 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 2,000,000 | $ | 74,900,836 | 200,000 | $ | 6,042,757 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin Liberty U.S. Core Bond ETF | ||||||||||||||||||||
Year Ended March 31, 2020a | ||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||
Shares sold | 38,500,001 | $ | 968,931,821 | |||||||||||||||||
Shares redeemed | (4,950,001 | ) | (126,811,672 | ) | ||||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 33,550,000 | $ | 842,120,149 | |||||||||||||||||
|
| |||||||||||||||||||
aFor the period September 17, 2019 (commencement of operations) to March 31, 2020.
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 Funds are also officers and/or directors of the following subsidiaries:
| Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Institutional, LLC (FT Institutional) | Investment manager | |
Franklin Templeton Investimentos (Brasil) Ltda. (FTI Brasil) | Investment manager | |
Franklin Templeton Investment Management Limited (FTIML) | Investment manager | |
Franklin Templeton Investment Trust Management Co., Ltd. (FT Korea) | Investment manager | |
Franklin Templeton Investments (ME) Limited (FTIME) | Investment manager | |
| 50 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
| Subsidiary | Affiliation | |
Franklin Templeton Investments Corp. (FTIC) | Investment manager | |
Templeton Asset Management Ltd. (TAML) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | |
a. Management Fees
Franklin Liberty U.S. Low Volatility ETF and Franklin Liberty U.S. Core Bond ETF pay an investment management fee to Advisers of 0.290% and 0.150%, respectively, per year of the average daily net assets of each of the Funds.
Franklin Liberty Investment Grade Corporate ETF pays an investment management fee to Advisers based on the average daily net assets of the fund as follows:
| 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 | |
For the year ended March 31, 2020, the gross effective investment management fee rate was 0.625% of the Franklin Liberty Investment Grade Corporate ETF’s average daily net assets.
Effective October 1, 2019, the Franklin Liberty U.S. Low Volatility ETF’s investment management fee was reduced, as approved by the board of trustees. Prior to October 1, 2019, the Franklin Liberty U.S. Low Volatility ETF paid the investment manager a fee equal to an annual rate of 0.50% of the value of its average daily net assets. Effective October 1, 2019, the Franklin Liberty U.S. Low Volatility ETF pays the investment manager a fee equal to an annual rate of 0.29% of the value of its average daily net assets.
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. Waiver and Expense Reimbursements
Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by Franklin Liberty Investment Grade Corporate ETF, Franklin Liberty U.S. Low Volatility ETF, and Franklin Liberty U.S. Core Bond ETF so that the expenses (including acquired fund fees and expenses) of the Funds do not exceed 0.35%, 0.50%, and 0.15% respectively, based on the average net assets (other than certainnon-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until July 31, 2020. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.
| franklintempleton.com | Annual Report | 51 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
d. Other Affiliated Transactions
At March 31, 2020, the shares of the funds were owned by the following investment companies:
| Funds | Shares | Percentage of Outstanding Sharesa | ||||||
| Franklin Liberty Investment Grade Corporate ETF | ||||||||
Franklin Conservative Allocation Fund | 2,227,175 | 9.7% | ||||||
Franklin Total Return Fund | 18,335,000 | 80.2% | ||||||
|
| |||||||
| 20,562,175 | 89.9% | |||||||
|
| |||||||
| Franklin Liberty U.S. Low Volatility ETF | ||||||||
Franklin Managed Income Fund | 1,000,000 | 41.7% | ||||||
|
| |||||||
| Franklin Liberty U.S Core Bond ETF | ||||||||
Franklin Conservative Allocation Fund | 11,349,425 | 33.8% | ||||||
Franklin Moderate Allocation Fund | 12,685,848 | 37.8% | ||||||
Franklin Growth Allocation Fund | 3,693,100 | 11.0% | ||||||
Franklin LifeSmart™ 2020 – 2055 Retirement Target Funds | 2,062,703 | 6.1% | ||||||
|
| |||||||
| 29,791,076 | 88.7% | |||||||
|
| |||||||
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2020, the capital loss carryforwards were as follows:
Franklin Liberty Low Volatility ETF | ||||
| 2020 | ||||
| Capital loss carryforwards not subject to expiration: | ||||
Short-term | $ | 2,874,568 | ||
|
| |||
During the year ended March 31, 2020, FTLG utilized $909,692 as capital loss carryforward.
The tax character of distributions paid during the years ended March 31, 2020 and 2019, were as follows:
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S Low Volatility ETF | Franklin Liberty U.S Core Bond ETF | ||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||
| Distributions paid from: | ||||||||||||||||||||||||||||||||
Ordinary income | $ | 12,798,430 | $ | 1,010,692 | $ | 613,357 | $ | 186,923 | $ | 11,995,769 | $ | — | ||||||||||||||||||||
Long-term Capital Gain | — | — | — | 134,100 | 79,233 | — | ||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total | $ | 12,798,430 | $ | 1,010,692 | $ | 613,357 | $ | 321,023 | $ | 12,075,002 | $ | — | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
| 52 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
4. Income Taxes(continued)
At March 31, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | Franklin Liberty U.S. Core Bond ETF | ||||||||||
Cost of investments | $ | 562,805,193 | $ | 82,989,811 | $ | 809,755,909 | ||||||
|
| |||||||||||
Unrealized appreciation | $ | 8,286,678 | $ | 909,682 | $ | 25,553,059 | ||||||
Unrealized depreciation | (29,708,550 | ) | (10,400,275 | ) | (17,743,437 | ) | ||||||
|
| |||||||||||
Net unrealized appreciation (depreciation) | $ | (21,421,872 | ) | $ | (9,490,593 | ) | $ | 7,809,622 | ||||
|
| |||||||||||
Distributable earnings-undistributed ordinary income | $ | 2,731,044 | $ | 163,638 | $ | 5,406,620 | ||||||
|
| |||||||||||
Distributable earnings-undistributed Capital Gain | — | — | $ | 218,054 | ||||||||
|
| |||||||||||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of corporate actions, passive foreign investment company shares and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities andin-kind transactions, if any) for the year ended March 31, 2020, were as follows:
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | Franklin Liberty U.S. Core Bond ETF | ||||||||||
Purchases | $ | 713,327,814 | $ | 14,336,550 | $ | 1,301,458,703 | ||||||
Sales | $ | 172,478,725 | $ | 14,335,453 | $ | 1,031,520,252 | ||||||
In-kind transactions associated with creation and redemptions for the year ended March 31, 2020, were as follows:
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | Franklin Liberty U.S. Core Bond ETF | ||||||||||
Cost of Securities Received | $ | — | $ | 75,719,566 | $ | — | ||||||
Value of Securities Delivereda | $ | 156,250 | $ | 1,427,075 | $ | 8,521,827 | ||||||
aRealized gains and losses fromin-kind redemptions, as shown on the Statement of Operations, are not recognized by the Funds for tax purposes.
6. 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.
7. Novel Coronavirus Pandemic
The global outbreak of the novel coronavirus disease, known asCOVID-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.
| franklintempleton.com | Annual Report | 53 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. Other Derivative Information
For the year ended March 31, 2020, the Funds investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
Asset Derivatives | Liability Derivatives | |||||||||||
| Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||
| Franklin Liberty Investment Grade Corporate ETF | ||||||||||||
Interest Rate contracts | Variation margin on futures contracts | $ | 1,266,090 | a | Variation margin on futures contracts | $ | 1,333,849 | a | ||||
|
|
|
| |||||||||
| Franklin Liberty U.S. Core Bond ETF | ||||||||||||
Interest Rate contracts | Variation margin on futures contracts | $ | 392,433 | a | Variation margin on futures contracts | $ | 4,828 | a | ||||
Credit Default Contracts | Swap Contracts | 22,750 | Swap Contracts | 598,191 | ||||||||
|
|
|
| |||||||||
Totals | $ | 415,183 | $ | 603,019 | ||||||||
|
|
|
| |||||||||
aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.
For the year ended March 31, 2020, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:
| Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
| Franklin Liberty Investment Grade Corporate ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Interest Rate contracts | Futures contracts | $ | (1,144,168 | ) | Futures contracts | $ | (67,759 | ) | ||||
Credit Default Contracts | Swap contracts | 10,471 | Swap contracts | — | ||||||||
|
|
|
| |||||||||
Totals | $ | (1,133,697 | ) | $ | (67,759 | ) | ||||||
|
|
|
| |||||||||
| Franklin Liberty U.S. Core Bond ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Interest Rate contracts | Futures contracts | $ | 850,090 | Futures contracts | $ | 387,605 | ||||||
Credit Default Contracts | Swap contracts | (1,297,249 | ) | Swap contracts | (575,441 | ) | ||||||
|
|
|
| |||||||||
Totals | $ | (447,159 | ) | $ | (187,836 | ) | ||||||
|
|
|
| |||||||||
For the year ended March 31, 2020, the average month end notional amount of futures and swaps contracts were as follows:.
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | Franklin Liberty U.S. Core Bond ETF | ||||||||||
Futures contracts | $ | 40,184,588 | $ | — | $ | 18,138,381 | ||||||
Credit Default Contracts | $ | 553,846 | $ | — | $ | 7,028,571 | ||||||
See Note 1(c) regarding derivative financial instruments.
| 54 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
9. 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) |
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 March 31, 2020, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin Liberty Investment Grade Corporate ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Corporate Bonds & Notes | $ | — | $ | 534,062,743 | $ | — | $ | 534,062,743 | ||||||||
U.S. Government & Agency Securities | — | 7,055,578 | — | 7,055,578 | ||||||||||||
Short-Term Investments | — | 265,000 | — | 265,000 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | — | $ | 541,383,321 | $ | — | $ | 541,383,321 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 1,266,090 | $ | — | $ | — | $ | 1,266,090 | ||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 1,333,849 | $ | — | $ | — | $ | 1,333,849 | ||||||||
| Franklin Liberty U.S. Low Volatility ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 73,399,218 | $ | — | $ | — | $ | 73,399,218 | ||||||||
Short-Term Investments | — | 100,000 | — | 100,000 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 73,399,218 | $ | 100,000 | $ | — | $ | 73,499,218 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | Annual Report | 55 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
9. Fair Value Measurements(continued)
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin Liberty U.S. Core Bond ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Corporate Bonds & Notes | $ | — | $ | 215,362,987 | $ | — | $ | 215,362,987 | ||||||||
U.S. Government & Agency Securities | — | 306,428,667 | — | 306,428,667 | ||||||||||||
Municipal Bonds | — | 38,308,937 | — | 38,308,937 | ||||||||||||
Mortgage-Backed Securities | — | 208,032,768 | — | 208,032,768 | ||||||||||||
Foreign Government & Agency Securities | — | 24,390,159 | — | 24,390,159 | ||||||||||||
Asset-Backed Securities | — | 25,042,013 | — | 25,042,013 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | — | $ | 817,565,531 | $ | — | $ | 817,565,531 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 392,433 | $ | — | $ | — | $ | 392,433 | ||||||||
Swap Contracts | $ | — | $ | 22,750 | $ | — | $ | 22,750 | ||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 4,828 | $ | — | $ | — | $ | 4,828 | ||||||||
Swap Contracts | $ | — | $ | 598,191 | $ | — | $ | 598,191 | ||||||||
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common and preferred stocks.
10. New Accounting Pronouncement
In March 2020, the Financial Accounting Standards Board (FASB) 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 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 is currently evaluating the impact, if any, of applying this ASU.
11. 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 | ||
| FHLB | Federal Home Loan Bank | |
| FRN | Floating Rate Note | |
| REIT | Real Estate Investment Trust | |
| ADR | American Depositary Receipt+ | |
| GO | General Obligation | |
| MTA | Metropolitan Transit Authority | |
| REIT | Real Estate Investment Trust | |
| 56 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Franklin Templeton ETF Trust and Shareholders of Franklin Liberty Investment Grade Corporate ETF, Franklin Liberty U.S. Core Bond ETFandFranklin Liberty U.S. Low Volatility ETF
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the statements of investments ofFranklin Liberty Investment Grade Corporate ETF, Franklin Liberty U.S. Core Bond ETF, and Franklin Liberty U.S. Low Volatility ETF (the “Funds”) as of March 31, 2020, the related statements of operations, and of changes in net assets for each of the periods indicated in the table below, including the related notes, and each of the financial highlights for each of the periods indicated in the table below (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of March 31, 2020, and the results of each of their operations, the changes in each of their net assets, and each of the financial highlights for each of the periods indicated in the table below in conformity with accounting principles generally accepted in the United States of America.
| Franklin Templeton ETF Trust | Statements of Operations | Statement of changes in net assets | Financial Highlights | |||
Franklin Liberty Investment Grade Corporate ETF Franklin Liberty U.S. Low Volatility ETF | For the year ended March 31, 2020 | For each of the two years in the period ended March 31, 2020 | For each of the periods indicated therein | |||
Franklin Liberty U.S. Core Bond ETF | For the period September 17, 2019 (commencement of operations) through March 31, 2020 | |||||
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditsof these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of March 31, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
San Francisco, California
May 19, 2020
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
| franklintempleton.com | Annual Report | 57 | ||||
FRANKLIN TEMPLETON ETF TRUST
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as long term capital gain dividends for the fiscal year ended March 31, 2020:
| Franklin Liberty U.S. Core Bond ETF | ||||||||||
| $527,460 | ||||||||||
Under Section 871(k)(2)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as short term capital gain dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended March 31, 2020:
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Core Bond ETF | |||||||||
| $1,284,358 | $957,154 | |||||||||
Under Section 854(b)(1)(A) of the Internal Revenue Code, Franklin Liberty U.S. Low Volatility ETF hereby reports 94.52% of the ordinary income dividends as income qualifying for the dividends received deduction for the fiscal year ended March 31, 2020.
Under Section 854(b)(1)(B) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Internal Revenue Code for the fiscal year ended March 31,2020.
| Franklin Liberty U.S. Low Volatlity ETF | ||||||||||
| $833,135 | ||||||||||
Distributions, including qualified dividend income, paid during calendar year 2020 will be reported to shareholders onForm 1099-DIV bymid-February 2021. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.
Under Section 871(k)(1)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as interest related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended March 31, 2020:
| Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatlity ETF | Franklin Liberty U.S. Core Bond ETF | ||||||||
| $8,615,268 | $2,838 | $9,681,682 | ||||||||
| 58 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Rohit Bhagat (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Lead Independent Trustee and Trustee | Since 2016 | 44 | Axis Bank (2013-present), AssetMark Financial Holdings, Inc. (investment solutions) (2018-present) and FlipKart Limited (2019-present) (eCommerce company);formerly, CapFloat Financial Services Pvt., Ltd.(non-banking finance company) (2018) and Zentific Investment Management (hedge fund) (2015-2018). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Managing Member, Mukt Capital, LLC (private investment firm) (2014-present); Advisor, Optimal Asset Management (investment technology and advisory services company) (2015-present); andformerly, Chairman, Asia Pacific, BlackRock (2009-2012); Global Chief Operating Officer, Barclays Global Investors (investment management) (2005-2009); and Senior Partner, The Boston Consulting Group (management consulting) (1992-2005). | ||||||||
| Deborah D. McWhinney (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since January 2020 | 44 | Fluor Corporation (construction and engineering) (2014-present), IHS Markit (information services)(2015-present), Borg Warner (automotive) (2018-present) and Focus Financial Partner, LLC (financial services) (2018-present). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Director of various companies; andformerly, Board Member, Lloyds Banking Group (2015-2018) (financial institution) and Fresenius Medical Group (2016-2018) (healthcare); Chief Executive Officer (2013-2014) and Chief Operating Officer (2011-2013), CitiGroup Global Enterprise Payments (financial services); and President, Citi’s Personal Banking and Wealth Management (2009-2011). | ||||||||
| Anantha K. Pradeep (1963) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since 2016 | 44 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, Smilable, Inc. (technology company) (2014-present); Chief Executive Officer, MachineVantage (technology company) (2018-present); Founder and Managing Partner, Consult Meridian, LLC (consulting company) (2009-present); andformerly, Founder, BoardVantage (board portal solutions provider delivering paperless process for boards and leadership) (2000-2002). | ||||||||
| franklintempleton.com | Annual Report | 59 | ||||
FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| **Jennifer M. Johnson (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee and Chairperson of the Board | Since 2016 | 49 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, President and Director, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of four of the investment companies in Franklin Templeton; andformerly, Chief Operating Officer and Executive Vice President, Franklin Resources, Inc. (1994-2015); Executive Vice President of Operations and Technology, Franklin Resources, Inc. (2005-2010); and Senior Vice President, Franklin Resources, Inc. (2003-2005). | ||||||||
| Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
Breda M. Beckerle (1958) 280 Park Avenue New York, NY 10017 | Interim Chief Compliance Officer | Since January 2020 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Compliance Officer, Fiduciary Investment Management International, Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | Chief Executive Officer – Finance and Administration | Since 2017 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017). | ||||||||
| Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President – AML Compliance | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
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FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers (continued)
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Patrick O’Connor (1967) One Franklin Parkway San Mateo, CA 94403-1906 | President and Chief Executive Officer – Investment Management | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| President and Chief Investment Officer, Franklin Advisory Services, LLC; Senior Vice President, Franklin Advisers, Inc.; officer of two of the investment companies in Franklin Templeton; andformerly, Managing Director, Head of iShares Product Canada, BlackRock (1998-2014). | ||||||||
Vivek Pai (1970) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Treasurer, Chief Financial Officer and Chief Accounting Officer | Since May 2019 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Treasurer, U.S. Fund Administration & Reporting and officer of two of the investment companies in Franklin Templeton. | ||||||||
| Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President and Secretary | Since 2015 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
| Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Jennifer M. Johnson is considered to be an interested person of the Fund under the federal securities laws due to her position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated Rohit Bhagat as its audit committee financial expert. The Board believes that Mr. Bhagat qualifies as such an expert in view of his extensive business background and experience, including extensive experience in the asset management and financial services industries. Mr. Bhagat has been a Member and Chairman of the Fund’s Audit Committee since 2016. As a result of such background and experience, the Board believes that Mr. Bhagat has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Bhagat is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request.
Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
| franklintempleton.com | Annual Report | 61 | ||||
FRANKLIN TEMPLETON ETF TRUST
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 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 FormN-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.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at franklintempleton.com.
| 62 | Annual Report | franklintempleton.com | ||
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.
 | Annual Report Franklin Templeton ETF Trust | |||||
| Investment Manager | Distributor | Investor Services | ||||
| Franklin Advisers, Inc. | Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 franklintempleton.com | Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 | ||||
| © 2020 Franklin Templeton Investments. All rights reserved. | ETF2 A 05/20 | |||||
ANNUAL REPORT
FRANKLIN TEMPLETON
ETF TRUST
March 31, 2020
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | |
Franklin LibertyQ U.S. Mid Cap Equity ETF |
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 to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visitfranklintempleton.com/investor/investments-and-solutions/investment-options/etfs/ for fund
updates and documents.
| Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
| franklintempleton.com | Not part of the annual report | 1 | ||||
ANNUAL REPORT
U.S. equities, as measured by the Standard & Poor’s® 500 Index (S&P 500®), declined during the 12 months under review. Equities posted strong gains for most of the reporting period, aided by relatively steady economic growth, easing trade tensions and the U.S. Federal Reserve’s (Fed’s) supportive monetary policy. However, a sharp selloff began in late February 2020 amid investor fears of a global economic slowdown due to the novel coronavirus(COVID-19) pandemic. Concerns about global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash.
The Fed lowered the federal funds target rate three times in 2019 to a range of 1.50%–1.75%. The labor market remained strong through February 2020 and supported consumer spending, though some parts of the economy struggled as annual industrial production contracted and capital spending declined.
However, economic activity weakened considerably as theCOVID-19 pandemic spread across the U.S. and many state and local governments issuedstay-at-home orders, which included business closures and restrictions. Weekly unemployment claims surged nearperiod-end, reflecting layoffs in many industries, particularly retail, restaurants and hospitality.
As a result, the unemployment rate jumped from a50-year low of 3.5% in February 2020 to 4.4% at period-end, and the economy contracted in the first quarter, following an expansion that lasted more than a decade.1
Market volatility persisted at a heightened level throughout March 2020, as social distancing measures intended to mitigate the pandemic severely weakened the economy. In an effort to boost the U.S. economy and aid businesses and individuals directly impacted by the pandemic, the federal government passed an unprecedented $2 trillion stimulus package. Furthermore, the Fed cut the federal funds target rate to a range of 0.00%–0.25% and announced sweeping quantitative easing measures aimed at stimulating lending and credit availability. Many investors were encouraged by policymakers’ swift and decisive fiscal and monetary stimulus measures. U.S. stocks, as measured by the S&P 500, bounced from multi-year lows, but still finished the reporting period with negative returns.
The foregoing information reflects our analysis and opinions as of March 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.
| 2 | Annual Report | franklintempleton.com | ||
Franklin LibertyQ U.S. Equity ETF
This annual report for Franklin LibertyQ U.S. Equity ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ U.S. Large Cap Equity Index (the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the Russell 1000® Index over the long term by applying a multi-factor selection process, which is designed to select equity securities from the Russell 1000® Index that have favorable exposure to four investment style factors: quality, value, momentum and low volatility.
Performance Overview
For the 12 months under review, the Fund posted cumulative total returns of-10.27% based on market price and net asset value (NAV). In comparison, the LibertyQ U.S. Large Cap Equity Index posted a-10.12% total return for the same period, while the Russell 1000® Index posted a-8.03% total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 5.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Information Technology | 19.6% | |||
Consumer Staples | 16.6% | |||
Consumer Discretionary | 15.2% | |||
Industrials | 13.2% | |||
Health Care | 11.8% | |||
Utilities | 7.9% | |||
Communication Services | 4.7% | |||
Real Estate | 3.9% | |||
Financials | 2.6% | |||
Energy | 2.2% | |||
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ U.S. Large Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. 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 LibertyQ U.S. Large Cap Equity Index is a systematic, rules-based proprietary index maintained and calculated by FTSE Russell (Russell) based on the Russell 1000® Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell 1000® Index is market capitalization weighted and measures performance of the largest companies in the Russell 3000® Index, which represents the majority of the U.S. market’s total capitalization.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions (after the deduction of certain withholding taxes). They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 22.
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FRANKLIN LIBERTYQ U.S. EQUITY ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Company Sector/Industry | % of Total Net Assets | |||
| Gilead Sciences Inc. Health Care | 1.4% | |||
Biogen Inc. Health Care | 1.3% | |||
Microsoft Corp. Information Technology | 1.3% | |||
NextEra Energy Inc. Utilities | 1.3% | |||
Bristol-Myers Squibb Co. Health Care | 1.2% | |||
Apple Inc. Information Technology | 1.2% | |||
Johnson & Johnson Health Care | 1.2% | |||
Costco Wholesale Corp. Consumer Staples | 1.2% | |||
Walmart Inc. Consumer Staples | 1.2% | |||
Intel Corp. Information Technology | 1.2% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, individual holdings that lifted the Fund’s absolute return included Amedisys, Cirrus Logic and LHC Group. Individual holdings that hindered the Fund’s absolute return included Insperity, Essent Group and American Eagle Outfitters.
The Fund’s research-based selection process focuses on four investment factors: quality, value, momentum and low volatility. Of the four target-style factors, low volatility and quality significantly benefited the Fund’s relative performance for the reporting period. In contrast, the value factor significantly detracted from the Fund’s relative return, while momentum was a marginal detractor.
Thank you for your participation in Franklin LibertyQ U.S. Equity ETF. We look forward to serving your future investment needs.
 |
Dina Ting, CFA |
 |
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 4 | Annual Report | franklintempleton.com | ||
CFA® is a trademark owned by CFA Institute.
FRANKLIN LIBERTYQ U.S. EQUITY ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (4/28/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -10.27% | -10.27% | -10.27% | -10.27% | ||||||||||||
Since Inception (4/26/17) | +14.37% | +14.37% | +4.69% | +4.69% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 7 for Performance Summary footnotes.
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FRANKLIN LIBERTYQ U.S. EQUITY ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
4/26/17–3/31/20
See page 7 for Performance Summary footnotes.
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FRANKLIN LIBERTYQ U.S. EQUITY ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
Net Investment Income |
$0.674663 |
Total Annual Operating Expenses6
0.15% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. To the extent the Fund concentrates in a specific industry or group of industries, the Fund will carry much greater risks of adverse developments and price movements in such industries than a fund that invests in a wider variety of industries; there is also the risk that the Fund will perform poorly during a slump in demand for securities of companies in such industries. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transactions costs, expenses and other factors. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s Rule12b-1 plan (if any); (ii) brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments); (iii) taxes; (iv) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges); (v) litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto); and (vi) othernon-routine or extraordinary expenses.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. The LibertyQ U.S. Large Cap Equity Index is a systematic, rules-based proprietary index maintained and calculated by FTSE Russell (Russell) based on the Russell 1000 Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell 1000 Index is market capitalization weighted and measures performance of the largest companies in the Russell 3000 Index, which represents the majority of the U.S. market’s total capitalization.
6. 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.
| franklintempleton.com | Annual Report | 7 | ||||
FRANKLIN LIBERTYQ U.S. EQUITY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 846.20 | $ | 0.69 | $ | 1024.25 | $ | 0.76 | 0.15 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 8 | Annual Report | franklintempleton.com | ||
Franklin LibertyQ U.S. Mid Cap Equity ETF
This annual report for Franklin LibertyQ U.S. Mid Cap Equity ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ U.S. Mid Cap Equity Index (the Underlying Index).1Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the Russell Midcap® Index over the long term by applying a multi-factor selection process, which is designed to select equity securities from the Russell Midcap® Index that have favorable exposure to four investment style factors: quality, value, momentum and low volatility.
Performance Overview
For the 12 months under review, the Fund posted cumulative total returns of-16.72% based on market price and-16.50% based on net asset value (NAV). In comparison, the LibertyQ U.S. Mid Cap Equity Index posted a-16.31% total return for the same period, while the Russell Midcap® Index posted a-18.31% total return for the same period.2 You can find more of the Fund’s 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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Industrials | 19.5% | |||
Consumer Discretionary | 19.1% | |||
Information Technology | 15.6% | |||
Financials | 11.7% | |||
Consumer Staples | 9.9% | |||
Health Care | 9.0% | |||
Real Estate | 7.0% | |||
Utilities | 4.3% | |||
Materials | 2.1% | |||
Communication Services | 1.4% | |||
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ U.S. Mid Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. 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 LibertyQ U.S. Mid Cap Equity Index is a systematic, rules-based proprietary index that is maintained and calculated by FTSE Russell (Russell). It is based on the Russell Midcap® Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell Midcap® Index is market capitalization weighted and measures performance of the smallest companies in the Russell 1000® Index, which represents a modest amount of the Russell 1000® Index’s total market capitalization.
2. Source: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions (after the deduction of certain withholding taxes). They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 29.
| franklintempleton.com | Annual Report | 9 | ||||
FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Company Sector/Industry | % of Total Net Assets | |||
| Clorox Co. Consumer Staples | 1.5% | |||
The Kroger Co. Consumer Staples | 1.5% | |||
IDEXX Laboratories Inc. Health Care | 1.3% | |||
Mettler-Toledo International Inc. Health Care | 1.3% | |||
Dollar General Corp. Consumer Discretionary | 1.3% | |||
| Cadence Design Systems Inc. Information Technology | 1.2% | |||
| Synopsys Inc. Information Technology | 1.2% | |||
| MSCI Inc. Financials | 1.2% | |||
| Lam Research Corp. Information Technology | 1.2% | |||
| The Hershey Co. Consumer Staples | 1.2% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, individual holdings that lifted the Fund’s absolute return included Lam Research, KLA and Citrix Systems. Individual holdings that hindered the Fund’s absolute return included Ventas, Kohl’s and Synchrony Financial.
The Fund’s research-based selection process focuses on four investment factors: quality, value, momentum and low volatility. Of the four target-style factors, quality and low volatility significantly benefited the Fund’s relative performance for the reporting period, and momentum was a modest contributor. In contrast, the value factor detracted significantly from the Fund’s relative return.
Thank you for your participation in Franklin LibertyQ U.S. Mid Cap Equity ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 10 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (4/28/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -16.50% | -16.72% | -16.50% | -16.72% | ||||||||||||
Since Inception (4/26/17) | +1.96% | +1.78% | +0.67% | +0.60% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
| franklintempleton.com | Annual Report | 11 | ||||
FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
4/26/17–3/31/20
See page 13 for Performance Summary footnotes.
| 12 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
Net Investment Income |
$0.470967 |
Total Annual Operating Expenses6
0.30% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Historically,mid-size company securities have been more volatile in price than larger company securities, especially over the short term.Mid-size companies may be more susceptible to particular economic events or competitive factors than are larger, more broadly diversified companies. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transactions costs, expenses and other factors. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s Rule12b-1 plan (if any); (ii) brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments); (iii) taxes; (iv) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges); (v) litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto); and (vi) othernon-routine or extraordinary expenses.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. The LibertyQ U.S. Mid Cap Equity Index is a systematic, rules-based proprietary index maintained and calculated by FTSE Russell (Russell) based on the Russell Midcap Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell Midcap Index is market capitalization weighted and measures performance of the smallest companies in the Russell 1000 Index, which represents a modest amount of the Russell 1000 Index’s total market capitalization.
6. 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.
| franklintempleton.com | Annual Report | 13 | ||||
FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 799.60 | $ | 1.35 | $ | 1023.50 | $ | 1.52 | 0.30 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 14 | Annual Report | franklintempleton.com | ||
Franklin LibertyQ U.S. Small Cap Equity ETF
This annual report for Franklin LibertyQ U.S. Small Cap Equity ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ U.S. Small Cap Equity Index (the Underlying Index).1Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the Russell 2000® Index over the long term by applying a multi-factor selection process, which is designed to select equity securities from the Russell 2000® Index that have favorable exposure to four investment style factors: quality, value, momentum and low volatility.
Performance Overview
For the12-month period, the Fund posted cumulative total returns of-25.33% based on market price and-24.83% based on net asset value (NAV). In comparison, the LibertyQ U.S. Small Cap Equity Index posted a-24.65% total return for the same period, while the Russell 2000® Index posted a-23.99% total return.2 You can find more of the Fund’s 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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Industrials | 22.6% | |||
Consumer Discretionary | 18.5% | |||
Health Care | 12.4% | |||
Information Technology | 12.3% | |||
Financials | 8.0% | |||
Consumer Staples | 7.6% | |||
Utilities | 7.4% | |||
Real Estate | 6.2% | |||
Communication Services | 2.7% | |||
Materials | 1.6% | |||
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ U.S. Small Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. 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 LibertyQ U.S. Small Cap Equity Index is a systematic, rules-based proprietary index that is maintained and calculated by FTSE Russell (Russell). It is based on the Russell 2000® Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell 2000® Index is market capitalization weighted and measures performance of the approximately 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: FactSet.
The indexes are unmanaged and include reinvestment of any income or distributions (after the deduction of certain withholding taxes). They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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.
| franklintempleton.com | Annual Report | 15 | ||||
FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF
Manager’s Discussion
For the fiscal year ended March 31, 2020, individual holdings that lifted the Fund’s absolute return included Amedisys, Cirrus Logic and LHC Group. Individual holdings that hindered the Fund’s absolute return included Insperity, Essent Group and American Eagle Outfitters.
The Fund’s research-based selection process focuses on four investment factors: quality, value, momentum and low volatility. Of the four target-style factors, low volatility significantly benefited the Fund’s relative performance for the reporting period, while quality and value were marginal contributors. In contrast, the momentum factor significantly detracted from the Fund’s relative return.
Thank you for your participation in Franklin LibertyQ U.S. Small Cap Equity ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 16 | Annual Report | franklintempleton.com | ||
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Company Sector/Industry | % of Total Net Assets | |||
| Amedisys Inc. Health Care | 1.6% | |||
Haemonetics Corp. Health Care | 1.1% | |||
Exponent Inc. Industrials | 1.1% | |||
Trex Co. Inc. Industrials | 1.1% | |||
Generac Holdings Inc. Industrials | 1.1% | |||
| Deckers Outdoor Corp. Consumer Discretionary | 1.0% | |||
MSA Safety Inc. Industrials | 1.0% | |||
J2 Global Inc. Information Technology | 1.0% | |||
Boston Beer Co. Inc., A Consumer Staples | 1.0% | |||
First Industrial Realty Trust Inc. Real Estate | 0.9% | |||
FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (4/28/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -24.83% | -25.33% | -24.83% | -25.33% | ||||||||||||
Since Inception (4/26/17) | -16.04% | -16.53% | -5.79% | -5.98% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 19 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 17 | ||||
FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged indexes include reinvestment of any income or distributions. They differ from the Fund in composition and do not pay management fees or expenses. One cannot invest directly in an index.
4/26/17–3/31/20
See page 19 for Performance Summary footnotes.
| 18 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
Net Investment Income |
$0.416619 |
Total Annual Operating Expenses6
0.35% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Smaller,mid-sized 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. Smaller companies may be more susceptible to particular events or economic conditions, less certain growth prospects, lack of depth of management and funds for growth and development and limited or less developed product lines and markets. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transactions costs, expenses and other factors. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s Rule12b-1 plan (if any); (ii) brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments); (iii) taxes; (iv) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges); (v) litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto); and (vi) othernon-routine or extraordinary expenses.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. The LibertyQ U.S. Small Cap Equity Index is a systematic, rules-based proprietary index that is maintained and calculated by FTSE Russell (Russell) based on the Russell 2000 Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell 2000 Index is market capitalization weighted and measures performance of the approximately 2,000 smallest companies in the Russell 3000 Index, which represent a small amount of the total market capitalization of the Russell 3000 Index.
6. 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.
| franklintempleton.com | Annual Report | 19 | ||||
FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 743.70 | $ | 1.48 | $ | 1023.30 | $ | 1.72 | 0.34 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 20 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Franklin LibertyQ U.S. Equity ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 31.41 | $ | 28.51 | $ | 25.44 | ||||||
|
| |||||||||||
| Income from investment operationsb: | ||||||||||||
Net investment incomec | 0.76 | 0.66 | 0.53 | |||||||||
Net realized and unrealized gains (losses) | (3.89 | ) | 2.71 | 2.98 | ||||||||
|
| |||||||||||
Total from investment operations | (3.13 | ) | 3.37 | 3.51 | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.67 | ) | (0.47 | ) | (0.44 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 27.61 | $ | 31.41 | $ | 28.51 | ||||||
|
| |||||||||||
Total returnd | (10.27)% | 11.97% | 13.84% | |||||||||
| Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 0.18% | 0.25% | 0.32% | f | ||||||||
Expenses net of waiver and payments by affiliates | 0.18% | 0.25% | 0.25% | f | ||||||||
Net investment income | 2.32% | 2.20% | 2.10% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $1,311,583 | $1,008,255 | $108,326 | |||||||||
Portfolio turnover rateg | 19.44% | h | 18.04% | 20.80% | ||||||||
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee. See Note 3(a).
gPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
hPortfolio turnover rate excluding cash creation for the year end March 31, 2020 was as follows: 19.44%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 21 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin LibertyQ U.S. Equity ETF
| Shares | Value | |||||||||
| Common Stocks 99.5% | ||||||||||
| Communication Services 4.6% | ||||||||||
| a | AMC Networks Inc., A | 12,350 | $ | 300,229 | ||||||
AT&T Inc. | 433,200 | 12,627,780 | ||||||||
Cable One Inc. | 675 | 1,109,707 | ||||||||
Cinemark Holdings Inc. | 20,809 | 212,044 | ||||||||
Comcast Corp., A | 367,650 | 12,639,807 | ||||||||
| a | Facebook Inc., A | 80,750 | 13,469,100 | |||||||
| a,b | Match Group Inc. | 14,250 | 941,070 | |||||||
Omnicom Group Inc. | 70,300 | 3,859,470 | ||||||||
The Interpublic Group of Cos. Inc. | 88,350 | 1,430,386 | ||||||||
Verizon Communications Inc. | 268,850 | 14,445,310 | ||||||||
|
| |||||||||
| 61,034,903 | ||||||||||
|
| |||||||||
| Consumer Discretionary 15.2% | ||||||||||
| a | AutoZone Inc. | 6,164 | 5,214,744 | |||||||
Best Buy Co. Inc. | 83,600 | 4,765,200 | ||||||||
| a | Booking Holdings Inc. | 3,418 | 4,598,304 | |||||||
| a | Burlington Stores Inc. | 5,700 | 903,222 | |||||||
| a | Capri Holdings Ltd. | 50,350 | 543,277 | |||||||
Carnival Corp. | 117,800 | 1,551,426 | ||||||||
Carter’s Inc. | 15,200 | 999,096 | ||||||||
Choice Hotels International Inc. | 11,400 | 698,250 | ||||||||
D.R. Horton Inc. | 28,500 | 969,000 | ||||||||
Darden Restaurants Inc. | 45,600 | 2,483,376 | ||||||||
Dick’s Sporting Goods Inc. | 26,600 | 565,516 | ||||||||
Dollar General Corp. | 73,150 | 11,046,381 | ||||||||
Domino’s Pizza Inc. | 14,250 | 4,617,998 | ||||||||
Foot Locker Inc. | 46,550 | 1,026,428 | ||||||||
Garmin Ltd. | 46,550 | 3,489,388 | ||||||||
General Motors Co. | 201,309 | 4,183,201 | ||||||||
Gentex Corp. | 91,200 | 2,020,992 | ||||||||
Genuine Parts Co. | 47,500 | 3,198,175 | ||||||||
H&R Block Inc. | 78,850 | 1,110,208 | ||||||||
Hanesbrands Inc. | 55,100 | 433,637 | ||||||||
Hasbro Inc. | 37,909 | 2,712,389 | ||||||||
Kohl’s Corp. | 61,750 | 900,933 | ||||||||
L Brands Inc. | 83,600 | 966,416 | ||||||||
Las Vegas Sands Corp. | 94,050 | 3,994,304 | ||||||||
Lear Corp. | 20,809 | 1,690,731 | ||||||||
Leggett & Platt Inc. | 41,800 | 1,115,224 | ||||||||
| a | Lululemon Athletica Inc. | 38,000 | 7,202,900 | |||||||
| b | Macy’s Inc. | 105,450 | 517,760 | |||||||
McDonald’s Corp. | 83,600 | 13,823,260 | ||||||||
NIKE Inc., B | 172,900 | 14,305,746 | ||||||||
Nordstrom Inc. | 39,900 | 612,066 | ||||||||
| a | NVR Inc. | 995 | 2,556,264 | |||||||
| a | O’Reilly Automotive Inc. | 26,600 | 8,007,930 | |||||||
Penske Automotive Group Inc. | 8,550 | 239,400 | ||||||||
Pool Corp. | 12,350 | 2,430,110 | ||||||||
PulteGroup Inc. | 42,750 | 954,180 | ||||||||
Ross Stores Inc. | 139,650 | 12,145,360 | ||||||||
Six Flags Entertainment Corp. | 18,050 | 226,347 | ||||||||
Starbucks Corp. | 109,250 | 7,182,095 | ||||||||
Tapestry Inc. | 100,700 | 1,304,065 | ||||||||
Target Corp. | 129,200 | 12,011,724 | ||||||||
The Gap Inc. | 89,300 | 628,672 | ||||||||
The Home Depot Inc. | 73,150 | 13,657,836 | ||||||||
The TJX Cos. Inc. | 265,050 | 12,672,040 | ||||||||
Tractor Supply Co. | 41,800 | 3,534,190 | ||||||||
| 22 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Consumer Discretionary (continued) | ||||||||||
| a | Ulta Beauty Inc. | 19,950 | $ | 3,505,215 | ||||||
| a | Urban Outfitters Inc. | 25,650 | 365,256 | |||||||
VF Corp. | 103,550 | 5,599,984 | ||||||||
Whirlpool Corp. | 5,700 | 489,060 | ||||||||
Williams-Sonoma Inc. | 30,400 | 1,292,608 | ||||||||
Wyndham Destinations Inc. | 19,950 | 432,915 | ||||||||
Yum! Brands Inc. | 120,650 | 8,268,144 | ||||||||
|
| |||||||||
| 199,762,943 | ||||||||||
|
| |||||||||
| Consumer Staples 16.6% | ||||||||||
Altria Group Inc. | 325,850 | 12,600,619 | ||||||||
Brown-Forman Corp., A | 17,100 | 878,598 | ||||||||
Brown-Forman Corp., B | 15,200 | 843,752 | ||||||||
Casey’s General Stores Inc. | 10,450 | 1,384,521 | ||||||||
Church & Dwight Co. Inc. | 79,800 | 5,121,564 | ||||||||
Clorox Co. | 49,400 | 8,558,550 | ||||||||
Colgate-Palmolive Co. | 222,300 | 14,751,828 | ||||||||
Costco Wholesale Corp. | 54,150 | 15,439,789 | ||||||||
Estee Lauder Companies Inc., A | 76,000 | 12,109,840 | ||||||||
Flowers Foods Inc. | 58,900 | 1,208,628 | ||||||||
General Mills Inc. | 199,500 | 10,527,615 | ||||||||
Hormel Foods Corp. | 96,809 | 4,515,172 | ||||||||
Ingredion Inc. | 19,950 | 1,506,225 | ||||||||
Kellogg Co. | 47,500 | 2,849,525 | ||||||||
Kimberly-Clark Corp. | 77,900 | 9,961,073 | ||||||||
| a | Monster Beverage Corp. | 101,650 | 5,718,829 | |||||||
Nu Skin Enterprises Inc., A | 16,150 | 352,878 | ||||||||
PepsiCo Inc. | 119,609 | 14,365,041 | ||||||||
Philip Morris International Inc. | 195,700 | 14,278,272 | ||||||||
| a | Sprouts Farmers Market Inc. | 27,550 | 512,155 | |||||||
Sysco Corp. | 161,500 | 7,369,245 | ||||||||
The Coca-Cola Co. | 303,050 | 13,409,962 | ||||||||
The Hershey Co. | 57,950 | 7,678,375 | ||||||||
The J. M. Smucker Co. | 25,650 | 2,847,150 | ||||||||
The Kroger Co. | 164,350 | 4,950,222 | ||||||||
The Procter & Gamble Co. | 133,000 | 14,630,000 | ||||||||
Tyson Foods Inc. | 93,100 | 5,387,697 | ||||||||
Walgreens Boots Alliance Inc. | 192,850 | 8,822,887 | ||||||||
Walmart Inc. | 135,850 | 15,435,277 | ||||||||
|
| |||||||||
| 218,015,289 | ||||||||||
|
| |||||||||
| Energy 2.2% | ||||||||||
Cabot Oil & Gas Corp., A | 66,500 | 1,143,135 | ||||||||
Cimarex Energy Co. | 19,000 | 319,770 | ||||||||
ConocoPhillips | 167,200 | 5,149,760 | ||||||||
Exxon Mobil Corp. | 237,500 | 9,017,875 | ||||||||
HollyFrontier Corp. | 22,800 | 558,828 | ||||||||
ONEOK Inc. | 34,200 | 745,902 | ||||||||
Phillips 66 | 110,200 | 5,912,230 | ||||||||
Valero Energy Corp. | 127,300 | 5,774,328 | ||||||||
|
| |||||||||
| 28,621,828 | ||||||||||
|
| |||||||||
| Financials 2.6% | ||||||||||
American National Insurance Co. | 2,850 | 234,783 | ||||||||
Assured Guaranty Ltd. | 19,950 | 514,511 | ||||||||
FactSet Research Systems Inc. | 12,350 | 3,219,398 | ||||||||
Fidelity National Financial Inc. | 21,850 | 543,628 | ||||||||
Invesco Ltd. | 75,050 | 681,454 | ||||||||
| franklintempleton.com | Annual Report | 23 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Financials (continued) | ||||||||||
Lazard Ltd., A | 38,000 | $ | 895,280 | |||||||
MarketAxess Holdings Inc. | 12,350 | 4,107,239 | ||||||||
MFA Financial Inc. | 37,050 | 57,428 | ||||||||
Moody’s Corp. | 26,509 | 5,606,653 | ||||||||
Morningstar Inc. | 5,700 | 662,625 | ||||||||
MSCI Inc. | 26,600 | 7,686,336 | ||||||||
RenaissanceRe Holdings Ltd. | 6,650 | 992,978 | ||||||||
S&P Global Inc. | 22,800 | 5,587,140 | ||||||||
Santander Consumer USA Holdings Inc. | 34,200 | 475,722 | ||||||||
SEI Investments Co. | 32,300 | 1,496,782 | ||||||||
T. Rowe Price Group Inc. | 19,000 | 1,855,350 | ||||||||
|
| |||||||||
| 34,617,307 | ||||||||||
|
| |||||||||
| Health Care 11.8% | ||||||||||
AbbVie Inc. | 184,300 | 14,041,817 | ||||||||
Amgen Inc. | 69,350 | 14,059,325 | ||||||||
| a | Biogen Inc. | 54,150 | 17,131,977 | |||||||
Bristol-Myers Squibb Co. | 284,050 | 15,832,947 | ||||||||
Cerner Corp. | 83,600 | 5,265,964 | ||||||||
Chemed Corp. | 3,800 | 1,646,160 | ||||||||
| a | Exelixis Inc. | 80,750 | 1,390,515 | |||||||
Gilead Sciences Inc. | 241,300 | 18,039,588 | ||||||||
HCA Healthcare Inc. | 58,900 | 5,292,165 | ||||||||
| a | IDEXX Laboratories Inc. | 7,600 | 1,841,024 | |||||||
Johnson & Johnson | 117,800 | 15,447,114 | ||||||||
Merck & Co. Inc. | 186,200 | 14,326,228 | ||||||||
| a | Mettler-Toledo International Inc. | 7,960 | 5,496,460 | |||||||
Pfizer Inc. | 420,850 | 13,736,544 | ||||||||
| a | Premier Inc., A | 6,650 | 217,588 | |||||||
| a | Regeneron Pharmaceuticals Inc. | 6,650 | 3,247,129 | |||||||
ResMed Inc. | 43,700 | 6,436,573 | ||||||||
Universal Health Services Inc., B | 15,200 | 1,506,016 | ||||||||
|
| |||||||||
| 154,955,134 | ||||||||||
|
| |||||||||
| Industrials 13.2% | ||||||||||
3M Co. | 95,859 | 13,085,712 | ||||||||
Alaska Air Group Inc. | 40,850 | 1,163,000 | ||||||||
Allegion PLC | 7,600 | 699,352 | ||||||||
Allison Transmission Holdings Inc. | 23,750 | 774,488 | ||||||||
C.H. Robinson Worldwide Inc. | 48,450 | 3,207,390 | ||||||||
Cintas Corp. | 26,509 | 4,591,889 | ||||||||
| a | Copart Inc. | 65,550 | 4,491,486 | |||||||
Cummins Inc. | 49,400 | 6,684,808 | ||||||||
Delta Air Lines Inc. | 185,250 | 5,285,182 | ||||||||
Emerson Electric Co. | 194,750 | 9,279,837 | ||||||||
Expeditors International of Washington Inc. | 55,100 | 3,676,272 | ||||||||
Fastenal Co. | 201,400 | 6,293,750 | ||||||||
Graco Inc. | 52,250 | 2,546,143 | ||||||||
GrafTech International Ltd. | 8,550 | 69,426 | ||||||||
Honeywell International Inc. | 90,250 | 12,074,547 | ||||||||
Huntington Ingalls Industries Inc. | 13,300 | 2,423,393 | ||||||||
| a | IAA Inc. | 12,350 | 370,006 | |||||||
Illinois Tool Works Inc. | 52,159 | 7,412,837 | ||||||||
J.B. Hunt Transport Services Inc. | 29,450 | 2,716,173 | ||||||||
KAR Auction Services Inc. | 10,450 | 125,400 | ||||||||
Landstar System Inc. | 12,350 | 1,183,871 | ||||||||
Lennox International Inc. | 5,700 | 1,036,203 | ||||||||
Lockheed Martin Corp. | 41,800 | �� | 14,168,110 | |||||||
| 24 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Industrials (continued) | ||||||||||
Masco Corp. | 24,609 | $ | 850,733 | |||||||
MSC Industrial Direct Co. Inc., A | 13,300 | 731,101 | ||||||||
Northrop Grumman Corp. | 13,300 | 4,023,915 | ||||||||
Old Dominion Freight Line Inc. | 8,550 | 1,122,273 | ||||||||
PACCAR Inc. | 54,150 | 3,310,189 | ||||||||
Raytheon Co. | 74,959 | 9,830,873 | ||||||||
Robert Half International Inc. | 45,600 | 1,721,400 | ||||||||
Rockwell Automation Inc. | 39,900 | 6,021,309 | ||||||||
Rollins Inc. | 50,350 | 1,819,649 | ||||||||
Snap-on Inc. | 11,400 | 1,240,548 | ||||||||
Southwest Airlines Co. | 161,500 | 5,751,015 | ||||||||
Toro Co. | 38,950 | 2,535,256 | ||||||||
Union Pacific Corp. | 92,150 | 12,996,836 | ||||||||
United Parcel Service Inc., B | 117,709 | 10,996,375 | ||||||||
W.W. Grainger Inc. | 16,150 | 4,013,275 | ||||||||
| a | WABCO Holdings Inc. | 9,500 | 1,282,975 | |||||||
Watsco Inc. | 9,500 | 1,501,285 | ||||||||
|
| |||||||||
| 173,108,282 | ||||||||||
|
| |||||||||
| Information Technology 19.6% | ||||||||||
Accenture PLC, A | 80,750 | 13,183,245 | ||||||||
Amdocs Ltd. | 46,550 | 2,558,854 | ||||||||
Apple Inc. | 60,800 | 15,460,832 | ||||||||
Applied Materials Inc. | 280,250 | 12,841,055 | ||||||||
| a | Aspen Technology Inc. | 14,250 | 1,354,748 | |||||||
Automatic Data Processing Inc. | 95,000 | 12,984,600 | ||||||||
Booz Allen Hamilton Holding Corp. | 20,900 | 1,434,576 | ||||||||
Broadridge Financial Solutions Inc. | 39,900 | 3,783,717 | ||||||||
| a | Cadence Design Systems Inc. | 44,559 | 2,942,676 | |||||||
Cisco Systems Inc. | 357,200 | 14,041,532 | ||||||||
Citrix Systems Inc. | 20,900 | 2,958,395 | ||||||||
Cognizant Technology Solutions Corp., A | 128,250 | 5,959,777 | ||||||||
| a | F5 Networks Inc. | 21,850 | 2,329,866 | |||||||
HP Inc. | 545,300 | 9,466,408 | ||||||||
Intel Corp. | 279,300 | 15,115,716 | ||||||||
International Business Machines Corp. | 120,650 | 13,383,704 | ||||||||
Intuit Inc. | 62,700 | 14,421,000 | ||||||||
Jack Henry & Associates Inc. | 25,650 | 3,981,906 | ||||||||
KLA Corp. | 49,400 | 7,100,756 | ||||||||
Lam Research Corp. | 44,650 | 10,716,000 | ||||||||
Mastercard Inc., A | 55,959 | 13,517,456 | ||||||||
Maxim Integrated Products Inc. | 87,400 | 4,248,514 | ||||||||
Microsoft Corp. | 107,350 | 16,930,168 | ||||||||
Motorola Solutions Inc. | 49,400 | 6,566,248 | ||||||||
NetApp Inc. | 73,150 | 3,049,624 | ||||||||
Paychex Inc. | 117,800 | 7,411,976 | ||||||||
QUALCOMM Inc. | 110,200 | 7,455,030 | ||||||||
Skyworks Solutions Inc. | 65,550 | 5,858,859 | ||||||||
Texas Instruments Inc. | 134,900 | 13,480,557 | ||||||||
Ubiquiti Inc. | 3,800 | 538,004 | ||||||||
| a | VeriSign Inc. | 33,250 | 5,987,992 | |||||||
Xilinx Inc. | 82,650 | 6,441,741 | ||||||||
|
| |||||||||
| 257,505,532 | ||||||||||
|
| |||||||||
| Materials 1.9% | ||||||||||
Air Products and Chemicals Inc. | 35,150 | 7,016,291 | ||||||||
Celanese Corp. | 19,000 | 1,394,410 | ||||||||
Eastman Chemical Co. | 30,400 | 1,416,032 | ||||||||
| franklintempleton.com | Annual Report | 25 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Materials (continued) | ||||||||||
LyondellBasell Industries NV, A | 117,800 | $ | 5,846,414 | |||||||
NewMarket Corp. | 2,850 | 1,091,180 | ||||||||
Nucor Corp. | 46,550 | 1,676,731 | ||||||||
Packaging Corp. of America | 24,700 | 2,144,701 | ||||||||
Reliance Steel & Aluminum Co. | 5,700 | 499,263 | ||||||||
Royal Gold Inc. | 5,700 | 499,947 | ||||||||
Sonoco Products Co. | 32,300 | 1,497,105 | ||||||||
Steel Dynamics Inc. | 43,700 | 984,998 | ||||||||
Valvoline Inc. | 28,500 | 373,065 | ||||||||
|
| |||||||||
| 24,440,137 | ||||||||||
|
| |||||||||
| Real Estate 3.9% | ||||||||||
American Tower Corp. | 67,450 | 14,687,237 | ||||||||
EPR Properties | 23,750 | 575,225 | ||||||||
Gaming and Leisure Properties Inc. | 57,000 | 1,579,470 | ||||||||
Kimco Realty Corp. | 113,050 | 1,093,194 | ||||||||
National Retail Properties Inc. | 57,950 | 1,865,410 | ||||||||
OMEGA Healthcare Investors Inc. | 71,250 | 1,890,975 | ||||||||
Public Storage | 57,000 | 11,320,770 | ||||||||
Realty Income Corp. | 104,500 | 5,210,370 | ||||||||
Simon Property Group Inc. | 80,750 | 4,429,945 | ||||||||
Spirit Realty Capital Inc. | 33,250 | 869,488 | ||||||||
STORE Capital Corp. | 61,750 | 1,118,910 | ||||||||
Ventas Inc. | 68,400 | 1,833,120 | ||||||||
VEREIT Inc. | 327,750 | 1,602,697 | ||||||||
WP Carey Inc. | 42,659 | 2,477,635 | ||||||||
|
| |||||||||
| 50,554,446 | ||||||||||
|
| |||||||||
| Utilities 7.9% | ||||||||||
Alliant Energy Corp. | 69,350 | 3,348,912 | ||||||||
Ameren Corp. | 48,450 | 3,528,613 | ||||||||
American Electric Power Co. Inc. | 40,850 | 3,267,183 | ||||||||
Atmos Energy Corp. | 34,200 | 3,393,666 | ||||||||
Consolidated Edison Inc. | 95,950 | 7,484,100 | ||||||||
Dominion Energy Inc. | 122,550 | 8,846,884 | ||||||||
DTE Energy Co. | 58,900 | 5,593,733 | ||||||||
Evergy Inc. | 46,550 | 2,562,578 | ||||||||
Eversource Energy | 85,500 | 6,686,955 | ||||||||
Exelon Corp. | 284,050 | 10,455,880 | ||||||||
Hawaiian Electric Industries Inc. | 33,250 | 1,431,413 | ||||||||
NextEra Energy Inc. | 69,350 | 16,686,997 | ||||||||
OGE Energy Corp. | 59,850 | 1,839,191 | ||||||||
PPL Corp. | 150,100 | 3,704,468 | ||||||||
Public Service Enterprise Group Inc. | 171,000 | 7,679,610 | ||||||||
Sempra Energy | 22,800 | 2,576,172 | ||||||||
The Southern Co. | 215,650 | 11,675,291 | ||||||||
Xcel Energy Inc. | 43,700 | 2,635,110 | ||||||||
|
| |||||||||
| 103,396,756 | ||||||||||
|
| |||||||||
Total Investments before Short Term Investments | 1,306,012,557 | |||||||||
|
| |||||||||
| 26 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Equity ETF(continued)
| Shares | Value | |||||||||
| Short Term Investments (Cost $911,900) 0.1% | ||||||||||
Investments from Cash Collateral Received for Loaned Securities 0.1% | ||||||||||
| Money Market Funds 0.1% | ||||||||||
| c,d | Institutional Fiduciary Trust Portfolio, 0.32% | 911,900 | $ | 911,900 | ||||||
|
| |||||||||
Total Investments (Cost $1,524,551,363) 99.6% | 1,306,924,457 | |||||||||
Other Assets, less Liabilities 0.4% | 4,658,868 | |||||||||
|
| |||||||||
Net Assets 100.0% | $ | 1,311,583,325 | ||||||||
|
| |||||||||
aNon-income producing.
bA portion or all of the security is on loan at March 31, 2020. See Note 1(c).
cThe rate shown is the annualizedseven-day effective yield at period end.
dSee Note 3(c) regarding investments in affiliated management investment companies.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(b).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Index Contracts | ||||||||||||||||||||
S&P 500E-Mini | Long | 31 | $ | 3,983,035 | 6/19/20 | $ | (111,042 | ) | ||||||||||||
*As of period end.
See note 7 regarding other derivative information.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 27 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ U.S. Mid Cap Equity ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 30.32 | $ | 27.70 | $ | 25.51 | ||||||
|
| |||||||||||
| Income from investment operationsb: | ||||||||||||
Net investment incomec | 0.50 | 0.47 | 0.38 | |||||||||
Net realized and unrealized gains (losses) | (5.41 | ) | 2.53 | 2.18 | ||||||||
|
| |||||||||||
Total from investment operations | (4.91 | ) | 3.00 | 2.56 | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.47 | ) | (0.38 | ) | (0.37 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 24.94 | $ | 30.32 | $ | 27.70 | ||||||
|
| |||||||||||
Total returnd | (16.50)% | 10.92% | 10.09% | |||||||||
| Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 0.30% | 0.30% | 0.99% | f | ||||||||
Expenses net of waiver and payments by affiliates | 0.30% | 0.30% | 0.30% | f | ||||||||
Net investment income | 1.60% | 1.65% | 1.58% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $13,718 | $10,612 | $2,770 | |||||||||
Portfolio turnover rateg | 24.20% | h | 23.49% | 36.21% | ||||||||
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee. See Note 3(a).
gPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
hPortfolio turnover rate excluding cash creation for the year end March 31, 2020 was as follows: 24.20%.
| 28 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin LibertyQ U.S. Mid Cap Equity ETF
| Shares | Value | |||||||||
| Common Stocks 99.7% | ||||||||||
| Communication Services 1.4% | ||||||||||
| a | AMC Networks Inc., A | 484 | $ | 11,766 | ||||||
Cinemark Holdings Inc. | 1,078 | 10,985 | ||||||||
John Wiley & Sons Inc., A | 451 | 16,908 | ||||||||
| a,b | Match Group Inc. | 616 | 40,681 | |||||||
Omnicom Group Inc. | 2,090 | 114,741 | ||||||||
|
| |||||||||
| 195,081 | ||||||||||
|
| |||||||||
| Consumer Discretionary 19.1% | ||||||||||
| a | AutoNation Inc. | 407 | 11,420 | |||||||
| a | AutoZone Inc. | 154 | 130,284 | |||||||
Best Buy Co. Inc. | 2,255 | 128,535 | ||||||||
BorgWarner Inc. | 2,090 | 50,933 | ||||||||
| a | Burlington Stores Inc. | 803 | 127,243 | |||||||
| a | Capri Holdings Ltd. | 1,518 | 16,379 | |||||||
Carter’s Inc. | 506 | 33,259 | ||||||||
Columbia Sportswear Co. | 121 | 8,442 | ||||||||
Dick’s Sporting Goods Inc. | 803 | 17,072 | ||||||||
Dollar General Corp. | 1,155 | 174,417 | ||||||||
Expedia Group Inc. | 1,001 | 56,326 | ||||||||
| a | Five Below Inc. | 363 | 25,548 | |||||||
Foot Locker Inc. | 1,353 | 29,834 | ||||||||
Garmin Ltd. | 1,331 | 99,772 | ||||||||
Gentex Corp. | 1,771 | 39,245 | ||||||||
Genuine Parts Co. | 1,485 | 99,985 | ||||||||
H&R Block Inc. | 2,156 | 30,356 | ||||||||
Hanesbrands Inc. | 3,751 | 29,520 | ||||||||
Hasbro Inc. | 1,221 | 87,363 | ||||||||
Kohl’s Corp. | 1,958 | 28,567 | ||||||||
L Brands Inc. | 2,673 | 30,900 | ||||||||
| a | Lululemon Athletica Inc. | 803 | 152,209 | |||||||
| b | Macy’s Inc. | 3,993 | 19,606 | |||||||
Nordstrom Inc. | 1,474 | 22,611 | ||||||||
| a | NVR Inc. | 33 | 84,781 | |||||||
| a | O’Reilly Automotive Inc. | 407 | 122,527 | |||||||
| a | Ollie’s Bargain Outlet Holdings Inc. | 341 | 15,802 | |||||||
Penske Automotive Group Inc. | 363 | 10,164 | ||||||||
Pool Corp. | 528 | 103,895 | ||||||||
Ralph Lauren Corp. | 506 | 33,816 | ||||||||
Sirius XM Holdings Inc. | 5,874 | 29,018 | ||||||||
Six Flags Entertainment Corp. | 770 | 9,656 | ||||||||
| a | Skechers USA Inc., A | 1,309 | 31,076 | |||||||
Tapestry Inc. | 3,190 | 41,311 | ||||||||
| a | Tempur Sealy International Inc. | 407 | 17,790 | |||||||
The Gap Inc. | 2,915 | 20,522 | ||||||||
Tiffany & Co. | 1,177 | 152,421 | ||||||||
Tractor Supply Co. | 1,606 | 135,787 | ||||||||
| a | Ulta Beauty Inc. | 572 | 100,500 | |||||||
| a | Urban Outfitters Inc. | 814 | 11,591 | |||||||
Whirlpool Corp. | 297 | 25,483 | ||||||||
Williams-Sonoma Inc. | 979 | 41,627 | ||||||||
Wyndham Destinations Inc., | 1,056 | 22,915 | ||||||||
Yum China Holdings Inc. | 3,795 | 161,781 | ||||||||
|
| |||||||||
| 2,622,289 | ||||||||||
|
| |||||||||
| Consumer Staples 9.9% | ||||||||||
Brown-Forman Corp., A | 506 | 25,998 | ||||||||
Brown-Forman Corp., B | 2,035 | 112,963 | ||||||||
Campbell Soup Co. | 1,639 | 75,656 | ||||||||
| franklintempleton.com | Annual Report | 29 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Mid Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Consumer Staples (continued) | ||||||||||
Church & Dwight Co. Inc. | 2,255 | $ | 144,726 | |||||||
Clorox Co. | 1,221 | 211,538 | ||||||||
Flowers Foods Inc. | 2,519 | 51,690 | ||||||||
| a | Grocery Outlet Holding Corp. | 154 | 5,288 | |||||||
| a | Herbalife Ltd. | 1,078 | 31,435 | |||||||
Kellogg Co. | 2,453 | 147,156 | ||||||||
McCormick & Co. Inc. | 1,045 | 147,564 | ||||||||
Nu Skin Enterprises Inc., A | 649 | 14,181 | ||||||||
| a | Sprouts Farmers Market Inc. | 1,364 | 25,357 | |||||||
The Hershey Co. | 1,232 | 163,240 | ||||||||
The Kroger Co. | 6,644 | 200,117 | ||||||||
|
| |||||||||
| 1,356,909 | ||||||||||
|
| |||||||||
| Financials 11.7% | ||||||||||
Ally Financial Inc. | 3,410 | 49,206 | ||||||||
American National Insurance Co. | 88 | 7,249 | ||||||||
| a | Arch Capital Group Ltd. | 3,817 | 108,632 | |||||||
| a | Brighthouse Financial Inc. | 968 | 23,397 | |||||||
Brown & Brown Inc. | 2,024 | 73,309 | ||||||||
Cincinnati Financial Corp. | 1,617 | 122,003 | ||||||||
CNA Financial Corp. | 308 | 9,560 | ||||||||
| a | Credit Acceptance Corp. | 121 | 30,939 | |||||||
Discover Financial Services | 2,145 | 76,512 | ||||||||
Evercore Inc. | 330 | 15,200 | ||||||||
FactSet Research Systems Inc. | 363 | 94,627 | ||||||||
First American Financial Corp. | 1,056 | 44,785 | ||||||||
First Republic Bank | 1,166 | 95,938 | ||||||||
Globe Life Inc. | 957 | 68,875 | ||||||||
Janus Henderson Group PLC | 1,122 | 17,189 | ||||||||
Lazard Ltd., A | 1,045 | 24,620 | ||||||||
Legg Mason Inc. | 924 | 45,137 | ||||||||
MarketAxess Holdings Inc. | 385 | 128,039 | ||||||||
Mercury General Corp. | 264 | 10,750 | ||||||||
MSCI Inc. | 572 | 165,285 | ||||||||
Nasdaq Inc. | 1,276 | 121,156 | ||||||||
Navient Corp. | 1,881 | 14,258 | ||||||||
PacWest Bancorp | 517 | 9,265 | ||||||||
Prosperity Bancshares Inc. | 737 | 35,560 | ||||||||
Santander Consumer USA Holdings Inc. | 1,243 | 17,290 | ||||||||
SEI Investments Co. | 1,628 | 75,442 | ||||||||
Synchrony Financial | 4,719 | 75,929 | ||||||||
Umpqua Holdings Corp. | 1,694 | 18,465 | ||||||||
Unum Group | 2,156 | 32,362 | ||||||||
|
| |||||||||
| 1,610,979 | ||||||||||
|
| |||||||||
| Health Care 9.0% | ||||||||||
| a | Acadia Healthcare Co. Inc. | 825 | 15,139 | |||||||
| a | Align Technology Inc. | 649 | 112,894 | |||||||
Cerner Corp. | 2,541 | 160,058 | ||||||||
| a | Change Healthcare Inc. | 253 | 2,527 | |||||||
Chemed Corp. | 66 | 28,591 | ||||||||
Encompass Health Corp. | 1,111 | 71,137 | ||||||||
| a | Exelixis Inc. | 1,903 | 32,770 | |||||||
| a | Henry Schein Inc. | 1,452 | 73,355 | |||||||
| a | IDEXX Laboratories Inc. | 726 | 175,866 | |||||||
| a | Masimo Corp. | 429 | 75,985 | |||||||
| a | Mednax Inc. | 913 | 10,627 | |||||||
| a | Mettler-Toledo International Inc. | 253 | 174,699 | |||||||
| 30 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Mid Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Health Care (continued) | ||||||||||
| a | Molina Healthcare Inc. | 506 | $ | 70,693 | ||||||
| a | Premier Inc., A | 286 | 9,358 | |||||||
Universal Health Services Inc., B | 902 | 89,370 | ||||||||
| a | Waters Corp. | 737 | 134,171 | |||||||
|
| |||||||||
| 1,237,240 | ||||||||||
|
| |||||||||
| Industrials 19.5% | ||||||||||
Allegion PLC | 968 | 89,075 | ||||||||
Allison Transmission Holdings Inc. | 1,100 | 35,871 | ||||||||
| b | American Airlines Group Inc. | 3,652 | 44,518 | |||||||
BWX Technologies Inc. | 858 | 41,793 | ||||||||
C.H. Robinson Worldwide Inc. | 1,419 | 93,938 | ||||||||
Cintas Corp. | 704 | 121,947 | ||||||||
Copa Holdings SA | 286 | 12,953 | ||||||||
| a | Copart Inc. | 858 | 58,790 | |||||||
Cummins Inc. | 990 | 133,967 | ||||||||
Donaldson Co. Inc. | 1,265 | 48,867 | ||||||||
Expeditors International of Washington Inc. | 1,716 | 114,491 | ||||||||
Fastenal Co. | 5,104 | 159,500 | ||||||||
Graco Inc. | 1,892 | 92,197 | ||||||||
GrafTech International Ltd. | 517 | 4,198 | ||||||||
Hubbell Inc., B | 506 | 58,058 | ||||||||
| a | IAA Inc. | 1,210 | 36,252 | |||||||
IDEX Corp. | 539 | 74,441 | ||||||||
KAR Auction Services Inc. | 1,210 | 14,520 | ||||||||
Landstar System Inc. | 352 | 33,743 | ||||||||
Lennox International Inc. | 330 | 59,991 | ||||||||
Lincoln Electric Holdings Inc. | 418 | 28,842 | ||||||||
ManpowerGroup Inc. | 627 | 33,225 | ||||||||
MSC Industrial Direct Co. Inc., A | 473 | 26,001 | ||||||||
Nordson Corp. | 440 | 59,431 | ||||||||
Old Dominion Freight Line Inc. | 1,073 | 140,776 | ||||||||
Robert Half International Inc. | 1,551 | 58,550 | ||||||||
Rockwell Automation Inc. | 924 | 139,441 | ||||||||
Rollins Inc. | 1,749 | 63,209 | ||||||||
Schneider National Inc., B | 528 | 10,211 | ||||||||
Snap-on Inc. | 385 | 41,896 | ||||||||
| a | Teledyne Technologies Inc. | 242 | 71,939 | |||||||
Toro Co. | 1,166 | 75,895 | ||||||||
Trane Technologies PLC | 1,386 | 114,470 | ||||||||
| a | United Airlines Holdings Inc. | 1,958 | 61,775 | |||||||
| a | United Rentals Inc. | 572 | 58,859 | |||||||
W.W. Grainger Inc. | 495 | 123,007 | ||||||||
| a | WABCO Holdings Inc. | 429 | 57,936 | |||||||
Watsco Inc. | 385 | 60,842 | ||||||||
Xylem Inc. | 1,738 | 113,196 | ||||||||
|
| |||||||||
| 2,668,611 | ||||||||||
|
| |||||||||
| Information Technology 15.6% | ||||||||||
Amdocs Ltd. | 583 | 32,048 | ||||||||
| a | Aspen Technology Inc. | 660 | 62,746 | |||||||
Booz Allen Hamilton Holding Corp. | 1,749 | 120,051 | ||||||||
| a | CACI International Inc., A | 110 | 23,227 | |||||||
| a | Cadence Design Systems Inc. | 2,585 | 170,713 | |||||||
CDW Corp. | 1,342 | 125,168 | ||||||||
Citrix Systems Inc. | 968 | 137,020 | ||||||||
| a | F5 Networks Inc. | 737 | 78,586 | |||||||
| a | Fair Isaac Corp. | 275 | 84,615 | |||||||
| franklintempleton.com | Annual Report | 31 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Mid Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Information Technology (continued) | ||||||||||
Genpact Ltd. | 1,452 | $ | 42,398 | |||||||
Juniper Networks Inc. | 2,948 | 56,425 | ||||||||
KLA Corp. | 1,111 | 159,695 | ||||||||
Lam Research Corp. | 682 | 163,680 | ||||||||
| a | Manhattan Associates Inc. | 759 | 37,813 | |||||||
National Instruments Corp. | 1,408 | 46,577 | ||||||||
NetApp Inc. | 2,684 | 111,896 | ||||||||
Paychex Inc. | 2,101 | 132,195 | ||||||||
Pegasystems Inc. | 297 | 21,155 | ||||||||
| a | Synopsys Inc. | 1,287 | 165,753 | |||||||
Ubiquiti Inc. | 110 | 15,574 | ||||||||
| a | VeriSign Inc. | 660 | 118,859 | |||||||
Western Union Co. | 4,334 | 78,576 | ||||||||
Xilinx Inc. | 1,958 | 152,607 | ||||||||
|
| |||||||||
| 2,137,377 | ||||||||||
|
| |||||||||
| Materials 2.1% | ||||||||||
Ardagh Group SA | 154 | 1,826 | ||||||||
Avery Dennison Corp. | 836 | 85,163 | ||||||||
NewMarket Corp. | 33 | 12,635 | ||||||||
Reliance Steel & Aluminum Co. | 286 | 25,051 | ||||||||
RPM International Inc. | 1,254 | 74,613 | ||||||||
Sonoco Products Co. | 649 | 30,081 | ||||||||
Steel Dynamics Inc. | 1,298 | 29,257 | ||||||||
The Chemours Co. LLC | 1,441 | 12,782 | ||||||||
The ScottsMiracle-Gro Co., A | 187 | 19,149 | ||||||||
|
| |||||||||
| 290,557 | ||||||||||
|
| |||||||||
| Real Estate 7.0% | ||||||||||
Alexandria Real Estate Equities Inc. | 1,078 | 147,751 | ||||||||
Apple Hospitality REIT Inc. | 2,288 | 20,981 | ||||||||
Camden Property Trust | 693 | 54,913 | ||||||||
Coresite Realty Corp. | 330 | 38,247 | ||||||||
EPR Properties | 770 | 18,649 | ||||||||
Equity Lifestyle Properties Inc. | 1,562 | 89,784 | ||||||||
Federal Realty Investment Trust | 726 | 54,167 | ||||||||
Highwoods Properties Inc. | 957 | 33,897 | ||||||||
Host Hotels & Resorts Inc. | 6,820 | 75,293 | ||||||||
Lamar Advertising Co., A | 946 | 48,511 | ||||||||
National Retail Properties Inc. | 1,925 | 61,966 | ||||||||
Realty Income Corp. | 2,376 | 118,467 | ||||||||
Retail Properties of America Inc., A | 1,881 | 9,725 | ||||||||
Service Properties Trust | 1,903 | 10,276 | ||||||||
Ventas Inc. | 2,992 | 80,185 | ||||||||
Welltower Inc. | 2,145 | 98,198 | ||||||||
|
| |||||||||
| 961,010 | ||||||||||
|
| |||||||||
| Utilities 4.4% | ||||||||||
Ameren Corp. | 2,123 | 154,618 | ||||||||
Consolidated Edison Inc. | 2,090 | 163,020 | ||||||||
Entergy Corp. | 1,562 | 146,781 | ||||||||
PPL Corp. | 5,335 | 131,668 | ||||||||
|
| |||||||||
| 596,087 | ||||||||||
|
| |||||||||
Total Investments before Short Term Investments | 13,676,140 | |||||||||
|
| |||||||||
| 32 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Mid Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Short Term Investments (Cost $75,900) 0.5% | ||||||||||
Investments from Cash Collateral Received for Loaned Securities 0.5% | ||||||||||
| Money Market Funds 0.5% | ||||||||||
| c,d | Institutional Fiduciary Trust Portfolio, 0.32% | 75,900 | $ | 75,900 | ||||||
|
| |||||||||
Total Investments (Cost $16,582,550) 100.2% | 13,752,040 | |||||||||
Other Assets, less Liabilities (0.2)% | (33,844 | ) | ||||||||
|
| |||||||||
Net Assets 100.0% | $ | 13,718,196 | ||||||||
|
| |||||||||
aNon-income producing.
bA portion or all of the security is on loan at March 31, 2020. See Note 1(c).
cSee Note 3(c) regarding investments in affiliated management investment companies.
dThe rate shown is the annualizedseven-day effective yield at period end.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 33 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ U.S. Small Cap Equity ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 27.66 | $ | 26.66 | $ | 25.36 | ||||||
|
| |||||||||||
| Income from investment operationsb: | ||||||||||||
Net investment incomec | 0.39 | 0.47 | 0.33 | |||||||||
Net realized and unrealized gains (losses) | (7.15 | ) | 0.87 | 1.27 | ||||||||
|
| |||||||||||
Total from investment operations | (6.76 | ) | 1.34 | 1.60 | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.42 | ) | (0.34 | ) | (0.30 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 20.48 | $ | 27.66 | $ | 26.66 | ||||||
|
| |||||||||||
Total returnd | (24.83)% | 5.05% | 6.34% | |||||||||
| Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 0.35% | 0.35% | 1.15% | f | ||||||||
Expenses net of waiver and payments by affiliates | 0.35% | 0.35% | 0.35% | f | ||||||||
Net investment income | 1.41% | 1.69% | 1.40% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $13,310 | $17,979 | $2,666 | |||||||||
Portfolio turnover rateg | 23.83% | h | 22.17% | 23.99% | ||||||||
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee. See Note 3(a).
gPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
hPortfolio turnover rate excluding cash creation for the year end March 31, 2020 was as follows: 23.83%.
| 34 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin LibertyQ U.S. Small Cap Equity ETF
| Shares | Value | |||||||||
| Common Stocks 99.7% | ||||||||||
| Communication Services 2.7% | ||||||||||
| a | AMC Entertainment Holdings Inc., A | 1,638 | $ | 5,176 | ||||||
Cogent Communications Holdings Inc. | 1,365 | 111,889 | ||||||||
| b | Cumulus Media Inc., A | 325 | 1,762 | |||||||
Gannett Co. Inc. | 4,004 | 5,926 | ||||||||
| b | Lee Enterprises Inc. | 1,547 | 1,521 | |||||||
| b | Liberty Latin America Ltd. | 3,237 | 33,212 | |||||||
| b | Liberty Latin America Ltd., A | 1,287 | 13,539 | |||||||
Marcus Corp. | 650 | 8,008 | ||||||||
Meredith Corp. | 1,261 | 15,409 | ||||||||
National CineMedia Inc. | 2,171 | 7,077 | ||||||||
Scholastic Corp. | 1,014 | 25,847 | ||||||||
Spok Holdings Inc. | 533 | 5,698 | ||||||||
| b | TechTarget Inc. | 351 | 7,234 | |||||||
TEGNA Inc. | 4,485 | 48,707 | ||||||||
| b | The Meet Group Inc. | 1,625 | 9,539 | |||||||
| b | Travelzoo | 156 | 613 | |||||||
Tribune Publishing Co. | 260 | 2,109 | ||||||||
| b | TrueCar Inc. | 2,964 | 7,173 | |||||||
| b | WideOpenWest Inc. | 819 | 3,898 | |||||||
| b | Yelp Inc. | 2,444 | 44,065 | |||||||
|
| |||||||||
| 358,402 | ||||||||||
|
| |||||||||
| Consumer Discretionary 18.5% | ||||||||||
| b | 1-800-FLOWERS.Com Inc. | 897 | 11,867 | |||||||
Aaron’s Inc. | 1,924 | 43,829 | ||||||||
Abercrombie & Fitch Co., A | 2,704 | 24,579 | ||||||||
Acushnet Holdings Corp. | 1,196 | 30,761 | ||||||||
| b | America’sCar-Mart Inc. | 221 | 12,453 | |||||||
American Eagle Outfitters Inc. | 6,045 | 48,058 | ||||||||
| b | American Public Education Inc. | 455 | 10,888 | |||||||
| b | Asbury Automotive Group Inc. | 793 | 43,797 | |||||||
| b | At Home Group Inc. | 1,287 | 2,600 | |||||||
| b | Barnes & Noble Education Inc. | 1,183 | 1,609 | |||||||
Bassett Furniture Industries Inc. | 377 | 2,055 | ||||||||
| a | Bed Bath & Beyond Inc. | 4,225 | 17,787 | |||||||
Big Lots Inc. | 1,729 | 24,586 | ||||||||
BJ’s Restaurants Inc. | 650 | 9,029 | ||||||||
Bloomin’ Brands Inc. | 3,822 | 27,289 | ||||||||
Brinker International Inc. | 1,092 | 13,115 | ||||||||
| a | Buckle Inc. | 1,170 | 16,041 | |||||||
Caleres Inc. | 1,482 | 7,706 | ||||||||
Callaway Golf Co. | 2,626 | 26,838 | ||||||||
| b | Carrols Restaurant Group Inc. | 936 | 1,704 | |||||||
Chico’s FAS Inc. | 4,420 | 5,702 | ||||||||
| b | Chuy’s Holdings Inc. | 689 | 6,938 | |||||||
Citi Trends Inc. | 455 | 4,050 | ||||||||
Collectors Universe Inc. | 260 | 4,074 | ||||||||
Core-Mark Holding Co. Inc. | 1,053 | 30,084 | ||||||||
Cracker Barrel Old Country Store Inc. | 949 | 78,976 | ||||||||
| b | Crocs Inc. | 2,379 | 40,419 | |||||||
Dana Inc. | 4,459 | 34,825 | ||||||||
| a | Dave & Buster’s Entertainment Inc. | 1,326 | 17,344 | |||||||
| b | Deckers Outdoor Corp. | 1,027 | 137,618 | |||||||
| b | Del Taco Restaurants Inc. | 754 | 2,586 | |||||||
| b | Denny’s Corp. | 2,132 | 16,374 | |||||||
Designer Brands Inc., A | 2,340 | 11,653 | ||||||||
Dillard’s Inc., A | 351 | 12,969 | ||||||||
| b | Dorman Products Inc. | 910 | 50,296 | |||||||
| franklintempleton.com | Annual Report | 35 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Consumer Discretionary (continued) | ||||||||||
| b | Duluth Holdings Inc. | 377 | $ | 1,512 | ||||||
Escalade Inc. | 351 | 2,088 | ||||||||
Ethan Allen Interiors Inc. | 1,014 | 10,363 | ||||||||
| b | Fiesta Restaurant Group Inc. | 910 | 3,667 | |||||||
| b | Fossil Group Inc. | 1,105 | 3,635 | |||||||
| b | Genesco Inc. | 663 | 8,844 | |||||||
Group 1 Automotive Inc. | 689 | 30,495 | ||||||||
Guess? Inc. | 1,924 | 13,026 | ||||||||
Hamilton Beach Brands Holding Co., A | 234 | 2,225 | ||||||||
Haverty Furniture Cos. Inc. | 793 | 9,429 | ||||||||
| b | Helen of Troy Ltd. | 793 | 114,216 | |||||||
| b | Hibbett Sports Inc. | 611 | 6,681 | |||||||
Hooker Furniture Corp. | 338 | 5,276 | ||||||||
| b | Installed Building Products Inc. | 338 | 13,476 | |||||||
| a,b | iRobot Corp. | 819 | 33,497 | |||||||
| a,b | J. Jill Inc. | 663 | 366 | |||||||
Jack in the Box Inc. | 884 | 30,984 | ||||||||
Johnson Outdoors Inc., A | 169 | 10,596 | ||||||||
| b | K12 Inc. | 1,066 | 20,105 | |||||||
| b | Kontoor Brands Inc. | 1,118 | 21,432 | |||||||
La-Z-Boy Inc. | 1,560 | 32,058 | ||||||||
LCI Industries | 767 | 51,259 | ||||||||
| b | LGI Homes Inc. | 598 | 27,000 | |||||||
Lifetime Brands Inc. | 455 | 2,571 | ||||||||
| b | Lindblad Expeditions Holdings Inc. | 468 | 1,952 | |||||||
Lithia Motors Inc. | 806 | 65,923 | ||||||||
M.D.C. Holdings Inc. | 1,157 | 26,842 | ||||||||
| b | M/I Homes Inc. | 403 | 6,662 | |||||||
Marine Products Corp. | 273 | 2,206 | ||||||||
| b | Modine Manufacturing Co. | 1,131 | 3,676 | |||||||
| b | Monarch Casino & Resort Inc. | 299 | 8,393 | |||||||
Monro Inc. | 1,066 | 46,702 | ||||||||
Movado Group Inc. | 611 | 7,222 | ||||||||
| b | Murphy USA Inc. | 429 | 36,190 | |||||||
Office Depot Inc. | 18,603 | 30,509 | ||||||||
Oxford Industries Inc. | 689 | 24,983 | ||||||||
Papa John’s International Inc. | 689 | 36,772 | ||||||||
| b | Perdoceo Education Corp. | 2,405 | 25,950 | |||||||
PetMed Express Inc. | 754 | 21,700 | ||||||||
Rent-A-Center Inc. | 1,885 | 26,654 | ||||||||
Rocky Brands Inc. | 208 | 4,025 | ||||||||
| b | RTW RetailWinds Inc. | 767 | 161 | |||||||
Ruth’s Hospitality Group Inc. | 962 | 6,426 | ||||||||
| b | Sally Beauty Holdings Inc. | 4,134 | 33,403 | |||||||
Shoe Carnival Inc. | 390 | 8,100 | ||||||||
Shutterstock Inc. | 598 | 19,232 | ||||||||
Signet Jewelers Ltd. | 1,664 | 10,733 | ||||||||
| b | Sleep Number Corp. | 1,027 | 19,677 | |||||||
Sonic Automotive Inc. | 923 | 12,257 | ||||||||
| b | Sonos Inc. | 1,651 | 14,001 | |||||||
| b | Sportsman’s Warehouse Holdings Inc. | 1,612 | 9,930 | |||||||
| b | Stamps.com Inc. | 559 | 72,715 | |||||||
Standard Motor Products Inc. | 702 | 29,182 | ||||||||
Steven Madden Ltd. | 3,055 | 70,968 | ||||||||
| a,b | Stitch Fix Inc., A | 1,157 | 14,694 | |||||||
Strategic Education Inc. | 663 | 92,661 | ||||||||
Sturm Ruger & Co. Inc. | 520 | 26,473 | ||||||||
Superior Group of Cos. Inc. | 351 | 2,970 | ||||||||
| 36 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Consumer Discretionary (continued) | ||||||||||
| a | Tailored Brands Inc. | 1,937 | $ | 3,370 | ||||||
Tenneco Inc., A | 1,482 | 5,335 | ||||||||
Texas Roadhouse Inc., A | 2,717 | 112,212 | ||||||||
The Cato Corp., A | 845 | 9,016 | ||||||||
The Cheesecake Factory Inc. | 1,742 | 29,753 | ||||||||
| a | The Children’s Place Inc. | 585 | 11,443 | |||||||
| b | The Container Store Group Inc. | 637 | 1,503 | |||||||
| b | The Lovesac Co. | 182 | 1,061 | |||||||
| b | The Michaels Cos. Inc. | 2,262 | 3,664 | |||||||
| b | The RealReal Inc. | 312 | 2,187 | |||||||
Tilly’s Inc., A | 871 | 3,597 | ||||||||
Tupperware Brands Corp. | 1,885 | 3,054 | ||||||||
Twin River Worldwide Holdings Inc. | 507 | 6,596 | ||||||||
| b | Vera Bradley Inc. | 715 | 2,946 | |||||||
Weyco Group Inc. | 208 | 4,195 | ||||||||
Wingstop Inc. | 832 | 66,310 | ||||||||
Winmark Corp. | 78 | 9,939 | ||||||||
Wolverine World Wide Inc. | 3,003 | 45,646 | ||||||||
| b | WW International Inc. | 728 | 12,311 | |||||||
| b | YETI Holdings Inc. | 585 | 11,419 | |||||||
| b | Zumiez Inc. | 676 | 11,708 | |||||||
|
| |||||||||
| 2,462,509 | ||||||||||
|
| |||||||||
| Consumer Staples 7.6% | ||||||||||
B&G Foods Inc., A | 1,872 | 33,864 | ||||||||
| b | BellRing Brands Inc., A | 572 | 9,753 | |||||||
| b | Boston Beer Inc., A | 351 | 129,014 | |||||||
| b | Bridgford Foods Corp. | 52 | 1,200 | |||||||
| b | Central Garden & Pet Co. | 325 | 8,937 | |||||||
| b | Central Garden & Pet Co., A | 1,209 | 30,914 | |||||||
Coca-Cola Consolidated Inc. | 143 | 29,820 | ||||||||
| b | Freshpet Inc. | 780 | 49,819 | |||||||
Ingles Markets Inc., A | 520 | 18,803 | ||||||||
Inter Parfums Inc. | 585 | 27,115 | ||||||||
J & J Snack Foods Corp. | 546 | 66,066 | ||||||||
John B. Sanfilippo & Son Inc. | 299 | 26,731 | ||||||||
Lancaster Colony Corp. | 611 | 88,375 | ||||||||
| b | Lifevantage Corp. | 351 | 3,615 | |||||||
Medifast Inc. | 416 | 26,000 | ||||||||
| a,b | National Beverage Corp. | 403 | 17,188 | |||||||
Natural Grocers by Vitamin Cottage Inc. | 299 | 2,544 | ||||||||
| b | Natures Sunshine Products Inc. | 299 | 2,431 | |||||||
| b | Performance Food Group Co. | 3,458 | 85,482 | |||||||
PriceSmart Inc. | 845 | 44,405 | ||||||||
Sanderson Farms Inc. | 559 | 68,936 | ||||||||
SpartanNash Co. | 923 | 13,217 | ||||||||
| b | The Chefs’ Warehouse Inc. | 806 | 8,116 | |||||||
Tootsie Roll Industries Inc. | 455 | 16,373 | ||||||||
Turning Point Brands Inc. | 247 | 5,214 | ||||||||
Universal Corp. | 819 | 36,208 | ||||||||
Vector Group Ltd. | 3,536 | 33,309 | ||||||||
Village Super Market Inc., A | 351 | 8,628 | ||||||||
WD-40 Co. | 533 | 107,053 | ||||||||
Weis Markets Inc. | 377 | 15,706 | ||||||||
|
| |||||||||
| 1,014,836 | ||||||||||
|
| |||||||||
| Energy 0.3% | ||||||||||
Arch Coal Inc. | 364 | 10,519 | ||||||||
| franklintempleton.com | Annual Report | 37 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Energy (continued) | ||||||||||
Berry Corp. | 910 | $ | 2,193 | |||||||
| b | CONSOL Energy Inc. | 845 | 3,118 | |||||||
CVR Energy Inc. | 663 | 10,959 | ||||||||
Evolution Petroleum Corp. | 390 | 1,018 | ||||||||
Falcon Minerals Corp., A | 624 | 1,342 | ||||||||
Liberty Oilfield Services Inc., A | 1,300 | 3,497 | ||||||||
| b | Penn Virginia Corp. | 286 | 884 | |||||||
| b | SilverBow Resources Inc. | 208 | 514 | |||||||
Solaris Oilfield Infrastructure Inc. | 455 | 2,389 | ||||||||
|
| |||||||||
| 36,433 | ||||||||||
|
| |||||||||
| Financials 8.0% | ||||||||||
1st Source Corp. | 442 | 14,334 | ||||||||
Alerus Financial Corp. | 39 | 644 | ||||||||
| b | Amerant Bancorp Inc. | 286 | 4,402 | |||||||
Amerisafe Inc. | 468 | 30,172 | ||||||||
Ames National Corp. | 312 | 6,380 | ||||||||
Apollo Commercial Finance Inc. | 3,978 | 29,517 | ||||||||
Arrow Financial Corp. | 325 | 9,058 | ||||||||
Banco Latinoamericano de Comercio Exterior SA | 858 | 8,846 | ||||||||
Bank7 Corp. | 91 | 723 | ||||||||
Bankwell Financial Group Inc. | 143 | 2,182 | ||||||||
Bar Harbor Bankshares | 338 | 5,841 | ||||||||
Cadence Bancorp | 3,081 | 20,181 | ||||||||
Capstead Mortgage Corp. | 2,665 | 11,193 | ||||||||
Central Pacific Financial Corp. | 611 | 9,715 | ||||||||
Citizens & Northern Corp. | 377 | 7,540 | ||||||||
| a,b | Citizens Inc., A | 1,430 | 9,324 | |||||||
Codorus Valley Bancorp Inc. | 221 | 3,558 | ||||||||
Cohen & Steers Inc. | 754 | 34,269 | ||||||||
Colony Bankcorp Inc. | 182 | 2,275 | ||||||||
Donegal Group Inc. | 351 | 5,335 | ||||||||
Dynex Capital Inc. | 689 | 7,193 | ||||||||
ESSA Bancorp Inc. | 234 | 3,194 | ||||||||
Essent Group Ltd. | 3,445 | 90,741 | ||||||||
| b | EZCORP Inc., A | 1,560 | 6,505 | |||||||
Federated Hermes Inc., B | 3,107 | 59,188 | ||||||||
Financial Institutions Inc. | 507 | 9,197 | ||||||||
First Bancorp Inc. | 312 | 6,864 | ||||||||
First Bancorp Puerto Rico | 4,602 | 24,483 | ||||||||
First Citizens Bancorp | 416 | 6,223 | ||||||||
Franklin Financial Services Corp. | 91 | 2,498 | ||||||||
| b | Genworth Financial Inc., A | 14,170 | 47,044 | |||||||
Greene County Bancorp Inc. | 91 | 2,126 | ||||||||
Hawthorn Bancshares Inc. | 130 | 2,386 | ||||||||
Heritage Financial Corp. | 1,040 | 20,800 | ||||||||
Horace Mann Educators Corp. | 1,417 | 51,848 | ||||||||
International Bancshares Corp. | 1,365 | 36,691 | ||||||||
Invesco Mortgage Capital | 3,809 | 12,989 | ||||||||
James River Group Holdings Ltd. | 871 | 31,565 | ||||||||
LCNB Corp. | 377 | 4,750 | ||||||||
Midwestone Financial Group Inc. | 403 | 8,439 | ||||||||
| b | Mr Cooper Group Inc. | 1,820 | 13,341 | |||||||
National Western Life Group Inc., A | 91 | 15,652 | ||||||||
Nelnet Inc., A | 585 | 26,565 | ||||||||
Northfield Bancorp Inc. | 1,404 | 15,711 | ||||||||
Northwest Bancshares Inc. | 3,016 | 34,895 | ||||||||
Norwood Financial Corp. | 156 | 4,165 | ||||||||
| 38 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Financials (continued) | ||||||||||
| b | On Deck Capital Inc. | 1,690 | $ | 2,603 | ||||||
| b | Palomar Holdings Inc. | 247 | 14,366 | |||||||
Penns Woods Bancorp Inc. | 234 | 5,686 | ||||||||
Peoples Financial Services Corp. | 169 | 6,716 | ||||||||
Piper Sandler Cos. | 312 | 15,778 | ||||||||
Premier Financial Bancorp Inc. | 429 | 5,320 | ||||||||
Protective Insurance Corp., B | 286 | 3,932 | ||||||||
Provident Financial Services Inc. | 1,963 | 25,244 | ||||||||
Pzena Investment Management Inc., A | 559 | 2,493 | ||||||||
Red River Bancshares Inc. | 78 | 2,903 | ||||||||
| b | Regional Management Corp. | 364 | 4,972 | |||||||
Silvercrest Asset Management Group Inc., A | 325 | 3,075 | ||||||||
Southern Missouri Bancorp Inc. | 208 | 5,048 | ||||||||
Stewart Information Services Corp. | 650 | 17,335 | ||||||||
Territorial Bancorp Inc. | 286 | 7,021 | ||||||||
The Bank of Princeton | 78 | 1,814 | ||||||||
Tiptree Inc., A | 533 | 2,782 | ||||||||
Tompkins Financial Corp. | 468 | 33,602 | ||||||||
TrustCo Bank Corp. NY | 3,042 | 16,457 | ||||||||
United Bankshares Inc. | 2,197 | 50,707 | ||||||||
United Fire Group Inc. | 663 | 21,620 | ||||||||
United Security Bancshares | 299 | 1,914 | ||||||||
Universal Insurance Holdings Inc. | 884 | 15,841 | ||||||||
Value Line Inc. | 39 | 1,262 | ||||||||
Waddell & Reed Financial Inc., A | 1,794 | 20,416 | ||||||||
| b | Watford Holdings Ltd. | 442 | 6,475 | |||||||
West Bancorp | 481 | 7,864 | ||||||||
Westwood Holdings Group Inc. | 286 | 5,237 | ||||||||
|
| |||||||||
| 1,069,025 | ||||||||||
|
| |||||||||
| Health Care 12.4% | ||||||||||
| b | Addus Homecare Corp. | 364 | 24,606 | |||||||
| b | Amedisys Inc. | 1,157 | 212,356 | |||||||
| b | AMN Healthcare Services Inc. | 1,443 | 83,420 | |||||||
| b | Anika Therapeutics Inc. | 195 | 5,637 | |||||||
| b | AtriCure Inc. | 1,157 | 38,864 | |||||||
Atrion Corp. | 52 | 33,800 | ||||||||
| b | Biospecifics Technologies Corp. | 182 | 10,296 | |||||||
| b | Cardiovascular Systems Inc. | 1,209 | 42,569 | |||||||
| b | Community Health Systems Inc. | 2,639 | 8,814 | |||||||
CONMED Corp. | 871 | 49,882 | ||||||||
| b | Corcept Therapeutics Inc. | 3,289 | 39,106 | |||||||
| b | CorVel Corp. | 273 | 14,881 | |||||||
| b | Cross Country Healthcare Inc. | 988 | 6,659 | |||||||
| b | Eagle Pharmaceuticals Inc. | 260 | 11,960 | |||||||
| b | Enanta Pharmaceuticals Inc. | 559 | 28,749 | |||||||
| b | FibroGen Inc. | 1,118 | 38,851 | |||||||
| b | Glaukos Corp. | 897 | 27,681 | |||||||
| b | Globus Medical Inc., A | 2,782 | 118,319 | |||||||
| b | Haemonetics Corp. | 1,469 | 146,401 | |||||||
| b | Hanger Inc. | 897 | 13,975 | |||||||
| b | Inogen Inc. | 520 | 26,863 | |||||||
Invacare Corp. | 481 | 3,574 | ||||||||
| b | iRadimed Corp. | 117 | 2,498 | |||||||
| b | Lantheus Holdings Inc. | 806 | 10,285 | |||||||
LeMaitre Vascular Inc. | 559 | 13,930 | ||||||||
| b | LHC Group Inc. | 871 | 122,114 | |||||||
| b | Meridian Bioscience Inc. | 1,495 | 12,558 | |||||||
| franklintempleton.com | Annual Report | 39 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Health Care (continued) | ||||||||||
| b | Merit Medical Systems Inc. | 1,742 | $ | 54,438 | ||||||
Mesa Laboratories Inc. | 78 | 17,635 | ||||||||
| b | Misonix Inc. | 195 | 1,837 | |||||||
| b | Myriad Genetics Inc. | 2,119 | 30,323 | |||||||
National Healthcare Corp. | 455 | 32,637 | ||||||||
National Research Corp., A | 442 | 20,102 | ||||||||
| b | NextGen Healthcare Inc. | 1,898 | 19,815 | |||||||
| b | NuVasive Inc. | 1,521 | 77,054 | |||||||
| b | Orthofix International Nv | 637 | 17,842 | |||||||
| b | OrthoPediatrics Corp. | 208 | 8,245 | |||||||
| a,b | Palatin Technologies Inc. | 3,419 | 1,448 | |||||||
Patterson Cos. Inc. | 2,483 | 37,965 | ||||||||
Phibro Animal Health Corp. | 715 | 17,282 | ||||||||
| b | Phreesia Inc. | 182 | 3,827 | |||||||
| b | Prestige Consumer Healthcare Inc. | 1,508 | 55,313 | |||||||
Simulations Plus Inc. | 390 | 13,619 | ||||||||
| b | Supernus Pharmaceuticals Inc. | 1,716 | 30,871 | |||||||
| b | Tactile Systems Technology Inc. | 624 | 25,060 | |||||||
| b | The Joint Corp. | 325 | 3,526 | |||||||
| b | The Pennant Group Inc. | 455 | 6,443 | |||||||
Utah Medical Products Inc. | 117 | 11,004 | ||||||||
| b | Vocera Communications Inc. | 923 | 19,605 | |||||||
|
| |||||||||
| 1,654,539 | ||||||||||
|
| |||||||||
| Industrials 22.6% | ||||||||||
ABM Industries Inc. | 2,275 | 55,419 | ||||||||
Acco Brands Corp. | 2,314 | 11,686 | ||||||||
| b | Advanced Disposal Services Inc. | 2,236 | 73,341 | |||||||
| b | Aegion Corp. | 442 | 7,925 | |||||||
Alamo Group Inc. | 299 | 26,545 | ||||||||
Allegiant Travel Co. | 416 | 34,029 | ||||||||
Allied Motion Technologies Inc. | 221 | 5,238 | ||||||||
Altra Industrial Motion Corp. | 1,651 | 28,876 | ||||||||
Applied Industrial Technologies Inc. | 1,456 | 66,568 | ||||||||
| b | Atkore International Group Inc. | 715 | 15,065 | |||||||
| b | Axon Enterprise Inc. | 1,534 | 108,561 | |||||||
BG Staffing Inc. | 338 | 2,528 | ||||||||
| b | BMC Stock Holdings Inc. | 1,677 | 29,733 | |||||||
Brady Corp., A | 1,755 | 79,203 | ||||||||
| b | Builders FirstSource Inc. | 2,821 | 34,501 | |||||||
| b | Casella Waste Systems Inc., A | 949 | 37,068 | |||||||
| b | Cimpress PLC | 702 | 37,346 | |||||||
CompX International Inc. | 52 | 790 | ||||||||
Costamare Inc. | 754 | 3,408 | ||||||||
| b | Covenant Transportation Group Inc., A | 416 | 3,607 | |||||||
CRA International Inc. | 104 | 3,475 | ||||||||
CSW Industrials Inc. | 338 | 21,919 | ||||||||
Deluxe Corp. | 1,638 | 42,473 | ||||||||
Douglas Dynamics Inc. | 663 | 23,543 | ||||||||
Ennis Inc. | 858 | 16,113 | ||||||||
EnPro Industries Inc. | 585 | 23,154 | ||||||||
Exponent Inc. | 2,028 | 145,834 | ||||||||
| b | Forrester Research Inc. | 377 | 11,020 | |||||||
Forward Air Corp. | 1,053 | 53,334 | ||||||||
| b | Foundation Building Materials Inc. | 572 | 5,886 | |||||||
| b | Franklin Covey Co. | 325 | 5,051 | |||||||
Franklin Electric Co. Inc. | 663 | 31,247 | ||||||||
| b | FTI Consulting Inc. | 910 | 108,991 | |||||||
| 40 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Industrials (continued) | ||||||||||
| b | Generac Holdings Inc. | 1,495 | $ | 139,289 | ||||||
| b | GMS Inc. | 585 | 9,202 | |||||||
H&E Equipment Services Inc. | 702 | 10,305 | ||||||||
Hawaiian Holdings Inc. | 1,430 | 14,929 | ||||||||
Healthcare Services Group Inc. | 2,197 | 52,530 | ||||||||
Heartland Express Inc. | 1,352 | 25,107 | ||||||||
Heidrick & Struggles International Inc. | 689 | 15,503 | ||||||||
| b | Heritage-Crystal Clean Inc. | 598 | 9,712 | |||||||
Herman Miller Inc. | 2,106 | 46,753 | ||||||||
Hillenbrand Inc. | 2,067 | 39,500 | ||||||||
HNI Corp. | 1,560 | 39,296 | ||||||||
Hurco Cos. Inc. | 143 | 4,161 | ||||||||
Hyster-Yale Materials Handling Inc. | 299 | 11,987 | ||||||||
ICF International Inc. | 650 | 44,655 | ||||||||
Insperity Inc. | 1,261 | 47,035 | ||||||||
Interface Inc. | 1,677 | 12,678 | ||||||||
John Bean Technologies Corp. | 715 | 53,103 | ||||||||
Kadant Inc. | 377 | 28,143 | ||||||||
Kaman Corp., A | 871 | 33,507 | ||||||||
Kelly Services Inc., A | 1,066 | 13,528 | ||||||||
Kforce Inc. | 884 | 22,604 | ||||||||
Kimball International Inc., B | 1,287 | 15,328 | ||||||||
Knoll Inc. | 1,690 | 17,441 | ||||||||
Korn Ferry | 2,002 | 48,689 | ||||||||
| b | Lawson Products Inc. | 182 | 4,863 | |||||||
McGrath RentCorp | 767 | 40,175 | ||||||||
Miller Industries Inc. | 338 | 9,559 | ||||||||
Mobile Mini Inc. | 1,638 | 42,965 | ||||||||
Moog Inc., A | 1,027 | 51,894 | ||||||||
MSA Safety Inc. | 1,300 | 131,560 | ||||||||
National Presto Industries Inc. | 143 | 10,126 | ||||||||
Omega Flex Inc. | 117 | 9,875 | ||||||||
| b | P.A.M. Transportation Services Inc. | 65 | 1,999 | |||||||
Pitney Bowes Inc. | 2,431 | 4,959 | ||||||||
Preformed Line Products Co. | 91 | 4,535 | ||||||||
| b | Radiant Logistics Inc. | 936 | 3,622 | |||||||
Resources Connection Inc. | 1,183 | 12,978 | ||||||||
Rush Enterprises Inc., B | 130 | 3,966 | ||||||||
| b | SAIA Inc. | 962 | 70,746 | |||||||
Simpson Manufacturing Co. Inc. | 1,495 | 92,660 | ||||||||
| b | SiteOne Landscape Supply Inc. | 585 | 43,068 | |||||||
Standex International Corp. | 377 | 18,481 | ||||||||
Steelcase Inc., A | 3,146 | 31,051 | ||||||||
Systemax Inc. | 351 | 6,223 | ||||||||
Tennant Co. | 559 | 32,394 | ||||||||
Tetra Tech Inc. | 780 | 55,084 | ||||||||
| b | Transcat Inc. | 182 | 4,823 | |||||||
| b | Trex Co. Inc. | 1,794 | 143,771 | |||||||
UniFirst Corp. | 481 | 72,674 | ||||||||
Universal Forest Products Inc. | 897 | 33,359 | ||||||||
Universal Logistics Holdings Inc. | 247 | 3,236 | ||||||||
| b | US Xpress Enterprises Inc., A | 624 | 2,084 | |||||||
| b | Vicor Corp. | 481 | 21,424 | |||||||
Watts Water Technologies Inc., A | 819 | 69,328 | ||||||||
Werner Enterprises Inc. | 1,664 | 60,337 | ||||||||
| b | Willis Lease Fin Corp. | 65 | 1,729 | |||||||
|
| |||||||||
| 3,004,010 | ||||||||||
|
| |||||||||
| franklintempleton.com | Annual Report | 41 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Information Technology 12.3% | ||||||||||
| b | A10 Networks Inc. | 1,521 | $ | 9,445 | ||||||
| b | ACI Worldwide Inc. | 2,483 | 59,964 | |||||||
| b | Alarm.com Holdings Inc. | 1,040 | 40,466 | |||||||
| b | Altair Engineering Inc. | 1,079 | 28,593 | |||||||
American Software Inc., A | 910 | 12,931 | ||||||||
| b | Appfolio Inc. | 221 | 24,520 | |||||||
Astro-Med Inc. | 169 | 1,311 | ||||||||
| b | Avid Technology Inc. | 949 | 6,387 | |||||||
Badger Meter Inc. | 884 | 47,382 | ||||||||
| b | Cambium Networks Corp. | 91 | 510 | |||||||
| b | Casa Systems Inc. | 767 | 2,685 | |||||||
| b | CEVA Inc. | 650 | 16,204 | |||||||
| b | ChannelAdvisor Corp. | 754 | 5,474 | |||||||
| b | Cirrus Logic Inc. | 1,846 | 121,153 | |||||||
| b | Coda Octopus Group Inc. | 78 | 438 | |||||||
| b | CommVault Systems Inc. | 1,365 | 55,255 | |||||||
CSG Systems International Inc. | 1,209 | 50,597 | ||||||||
Daktronics Inc. | 1,092 | 5,384 | ||||||||
| b | Digi International Inc. | 390 | 3,721 | |||||||
| b | eGain Corp. | 585 | 4,288 | |||||||
| b | ePlus Inc. | 390 | 24,422 | |||||||
EVERTEC Inc. | 1,807 | 41,073 | ||||||||
Hackett Group Inc. | 845 | 10,748 | ||||||||
| b | Immersion Corp. | 975 | 5,226 | |||||||
| b | Information Services Group Inc. | 936 | 2,406 | |||||||
| b | Insight Enterprises Inc. | 1,209 | 50,935 | |||||||
| b | Intelligent Systems Corp. | 104 | 3,535 | |||||||
| b | Iteris Inc. | 1,053 | 3,370 | |||||||
J2 Global Inc. | 1,729 | 129,416 | ||||||||
| b | Majesco | 182 | 994 | |||||||
ManTech International Corp., A | 845 | 61,406 | ||||||||
MAXIMUS Inc. | 1,443 | 83,983 | ||||||||
| b | MicroStrategy Inc. | 260 | 30,706 | |||||||
| b | MobileIron Inc. | 2,145 | 8,151 | |||||||
| b | Napco Security Technologies Inc. | 377 | 5,719 | |||||||
NIC Inc. | 2,405 | 55,315 | ||||||||
| b | Novanta Inc. | 936 | 74,768 | |||||||
NVE Corp. | 156 | 8,117 | ||||||||
| b | OSI Systems Inc. | 364 | 25,087 | |||||||
| b | Paysign Inc. | 429 | 2,214 | |||||||
PC Connection Inc. | 364 | 15,000 | ||||||||
| b | Perficient Inc. | 455 | 12,326 | |||||||
| b | Priority Technology Holdings Inc. | 260 | 504 | |||||||
Progress Software Corp. | 988 | 31,616 | ||||||||
QAD Inc., A | 325 | 12,977 | ||||||||
| b | Qualys Inc. | 1,105 | 96,124 | |||||||
| b | Rosetta Stone Inc. | 624 | 8,748 | |||||||
| b | ScanSource Inc. | 741 | 15,850 | |||||||
| b | Semtech Corp. | 1,508 | 56,550 | |||||||
| b | Silicon Laboratories Inc. | 1,352 | 115,474 | |||||||
| b | Sonim Technologies Inc. | 260 | 182 | |||||||
| b | SPS Commerce Inc. | 1,105 | 51,394 | |||||||
| b | Sykes Enterprises Inc. | 585 | 15,865 | |||||||
Tessco Technologies Inc. | 169 | 826 | ||||||||
Vishay Intertechnology Inc. | 3,692 | 53,202 | ||||||||
Xperi Corp. | 1,053 | 14,647 | ||||||||
| b | Zix Corp. | 1,846 | 7,956 | |||||||
|
| |||||||||
| 1,633,540 | ||||||||||
|
| |||||||||
| 42 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Materials 1.7% | ||||||||||
Advanced Emissions Solutions Inc. | 520 | $ | 3,416 | |||||||
Greif Inc., A | 806 | 25,059 | ||||||||
Greif Inc., B | 182 | 7,291 | ||||||||
Myers Industries Inc. | 1,079 | 11,599 | ||||||||
Orion Engineered Carbons SA | 871 | 6,498 | ||||||||
PolyOne Corp. | 1,118 | 21,208 | ||||||||
Quaker Chemical Corp. | 325 | 41,041 | ||||||||
Schweitzer-Mauduit International Inc. | 1,014 | 28,210 | ||||||||
Sensient Technologies Corp. | 1,365 | 59,391 | ||||||||
Valhi Inc. | 806 | 830 | ||||||||
Warrior Met Coal Inc. | 1,365 | 14,496 | ||||||||
|
| |||||||||
| 219,039 | ||||||||||
|
| |||||||||
| Real Estate 6.2% | ||||||||||
Agree Realty Corp. | 1,144 | 70,814 | ||||||||
American Assets Trust Inc. | 1,131 | 28,275 | ||||||||
| a | CBL & Associates Properties Inc. | 2,392 | 479 | |||||||
Cedar Realty Trust Inc. | 2,665 | 2,487 | ||||||||
CoreCivic Inc. | 3,328 | 37,174 | ||||||||
DiamondRock Hospitality Co. | 4,901 | 24,897 | ||||||||
First Industrial Realty Trust Inc. | 3,718 | 123,549 | ||||||||
Franklin Street Properties Corp. | 3,146 | 18,026 | ||||||||
Lexington Realty Trust | 7,917 | 78,616 | ||||||||
LTC Properties Inc. | 1,170 | 36,153 | ||||||||
Monmouth Real Estate Investment Corp., A | 2,509 | 30,233 | ||||||||
National Health Investors Inc. | 1,391 | 68,882 | ||||||||
One Liberty Properties Inc. | 442 | 6,157 | ||||||||
Preferred Apartment Communities Inc., A | 1,560 | 11,201 | ||||||||
PS Business Parks Inc. | 728 | 98,658 | ||||||||
QTS Realty Trust Inc., A | 1,326 | 76,921 | ||||||||
RE/MAX Holdings Inc., A | 663 | 14,533 | ||||||||
Realogy Holdings Corp. | 2,899 | 8,726 | ||||||||
RPT Realty | 2,652 | 15,991 | ||||||||
Summit Hotel Properties Inc. | 2,444 | 10,314 | ||||||||
| a | Tanger Factory Outlet Centers Inc. | 2,262 | 11,310 | |||||||
Universal Health Realty Income Trust | 364 | 36,695 | ||||||||
Urstadt Biddle Properties, A | 936 | 13,198 | ||||||||
Whitestone REIT | 1,079 | 6,690 | ||||||||
|
| |||||||||
| 829,979 | ||||||||||
|
| |||||||||
| Utilities 7.4% | ||||||||||
American States Water Co. | 1,287 | 105,199 | ||||||||
Artesian Resources Corp., CL A | 221 | 8,261 | ||||||||
Avista Corp. | 2,015 | 85,617 | ||||||||
Black Hills Corp. | 1,755 | 112,373 | ||||||||
California Water Service Group | 1,638 | 82,424 | ||||||||
Clearway Energy Inc., A | 1,118 | 19,196 | ||||||||
Clearway Energy Inc., C | 2,210 | 41,548 | ||||||||
Consolidated Water Co. Ltd. | 208 | 3,411 | ||||||||
El Paso Electric Co. | 1,287 | 87,465 | ||||||||
Genie Energy Ltd., B | 338 | 2,427 | ||||||||
Global Water Resources Inc. | 338 | 3,444 | ||||||||
MGE Energy Inc. | 1,079 | 70,642 | ||||||||
NorthWestern Corp. | 1,352 | 80,890 | ||||||||
PNM Resources Inc. | 2,314 | 87,932 | ||||||||
SJW Group | 728 | 42,057 | ||||||||
Southwest Gas Holdings Inc. | 1,651 | 114,844 | ||||||||
Spark Energy Inc., A | 403 | 2,527 | ||||||||
| franklintempleton.com | Annual Report | 43 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin LibertyQ U.S. Small Cap Equity ETF(continued)
| Shares | Value | |||||||||
| Common Stocks (continued) | ||||||||||
| Utilities (continued) | ||||||||||
Unitil Corp. | 455 | $ | 23,806 | |||||||
York Water Co. | 351 | 15,254 | ||||||||
|
| |||||||||
| 989,317 | ||||||||||
|
| |||||||||
Total Investments before Short Term Investments | 13,271,629 | |||||||||
|
| |||||||||
| Short Term Investments (Cost $131,291) 1.0% | ||||||||||
Investments from Cash Collateral Received for Loaned Securities 1.0% | ||||||||||
| Money Market Funds 1.0% | ||||||||||
| c,d | Institutional Fiduciary Trust Portfolio, 0.32% | 131,291 | 131,291 | |||||||
|
| |||||||||
Total Investments (Cost $18,261,456) 100.7% | 13,402,920 | |||||||||
Other Assets, less Liabilities (0.7)% | (93,244 | ) | ||||||||
|
| |||||||||
Net Assets 100.0% | $ | 13,309,676 | ||||||||
|
| |||||||||
See Abbreviations on page 57.
aA portion or all of the security is on loan at March 31, 2020. See Note 1(c).
bNon-income producing.
cThe rate shown is the annualizedseven-day effective yield at period end.
dSee Note 3(c) regarding investments in affiliated management investment companies.
| 44 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
March 31, 2020
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Assets: | ||||||||||||
Investments in securities: | ||||||||||||
Cost – Unaffiliated issuers | $ | 1,523,639,463 | $ | 16,506,650 | $ | 18,130,165 | ||||||
Cost – Non-controlled affiliates (Note 3c) | 911,900 | 75,900 | 131,291 | |||||||||
|
| |||||||||||
Value – Unaffiliated issuers+ | $ | 1,306,012,557 | $ | 13,676,140 | $ | 13,271,629 | ||||||
Value – Non-controlled affiliates (Note 3c) | 911,900 | 75,900 | 131,291 | |||||||||
Cash | 3,265,305 | 22,086 | 22,965 | |||||||||
Receivables: | ||||||||||||
Capital shares sold | 2,788,812 | — | — | |||||||||
Dividends | 2,146,711 | 23,496 | 19,616 | |||||||||
Deposits with brokers for: | ||||||||||||
Futures contracts | 372,000 | — | — | |||||||||
|
| |||||||||||
Total assets | 1,315,497,285 | 13,797,622 | 13,445,501 | |||||||||
|
| |||||||||||
Liabilities: | ||||||||||||
Payables: | ||||||||||||
Investment securities purchased | 2,768,690 | — | — | |||||||||
Management fees | 169,037 | 3,526 | 4,534 | |||||||||
Variation margin on futures contracts | 64,333 | — | — | |||||||||
Payable upon return of securities loaned | 911,900 | 75,900 | 131,291 | |||||||||
|
| |||||||||||
Total liabilities | 3,913,960 | 79,426 | 135,825 | |||||||||
|
| |||||||||||
Net assets, at value | $ | 1,311,583,325 | $ | 13,718,196 | $ | 13,309,676 | ||||||
|
| |||||||||||
Net assets consist of: | ||||||||||||
Paid-in capital | $ | 1,544,754,784 | $ | 16,694,032 | $ | 19,180,821 | ||||||
Total distributable earnings (loss) | (233,171,459 | ) | (2,975,836 | ) | (5,871,145 | ) | ||||||
|
| |||||||||||
Net assets, at value | $ | 1,311,583,325 | $ | 13,718,196 | $ | 13,309,676 | ||||||
|
| |||||||||||
Shares outstanding | 47,500,000 | 550,000 | 650,000 | |||||||||
|
| |||||||||||
Net asset value per share | $ | 27.61 | $ | 24.94 | $ | 20.48 | ||||||
|
| |||||||||||
+Includes securities loaned | 890,893 | 74,242 | 124,409 | |||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 45 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the year ended March 31, 2020
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Investment income: | ||||||||||||
Dividends: | ||||||||||||
Unaffiliated issuers | $ | 31,642,478 | $ | 251,655 | $ | 357,380 | ||||||
Interest: | ||||||||||||
Unaffiliated issuers | — | 47 | 66 | |||||||||
Interest from securities loaned: | ||||||||||||
Unaffiliated issuers (net of fees and rebates) | (722 | ) | 334 | 1,199 | ||||||||
Non-Controlled affiliates (Note 3c) | 97,763 | 413 | 4,505 | |||||||||
|
| |||||||||||
Total investment income | 31,739,519 | 252,449 | 363,150 | |||||||||
|
| |||||||||||
Expenses: | ||||||||||||
Management fees (Note 3a) | 2,294,682 | 39,896 | 72,370 | |||||||||
Other | — | — | 59 | |||||||||
|
| |||||||||||
Total expenses | 2,294,682 | 39,896 | 72,429 | |||||||||
Expenses waived/paid by affiliates (Note 3c) | (3,247 | ) | (89 | ) | (1,012 | ) | ||||||
|
| |||||||||||
Net expenses | 2,291,435 | 39,807 | 71,417 | |||||||||
|
| |||||||||||
Net investment income | 29,448,084 | 212,642 | 291,733 | |||||||||
|
| |||||||||||
Realized and unrealized gains (losses): | ||||||||||||
Net realized gain (loss) from: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (14,494,521 | ) | (69,352 | ) | (714,560 | ) | ||||||
In-kind redemptions | 71,265,331 | 604,172 | 791,412 | |||||||||
Futures contracts | (77,484 | ) | — | — | ||||||||
|
| |||||||||||
Net realized gain (loss) | 56,693,326 | 534,820 | 76,852 | |||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (257,955,467 | ) | (3,745,164 | ) | (5,286,481 | ) | ||||||
Futures contracts | (216,502 | ) | — | — | ||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) | (258,171,969 | ) | (3,745,164 | ) | (5,286,481 | ) | ||||||
|
| |||||||||||
Net realized and unrealized gain (loss) | (201,478,643 | ) | (3,210,344 | ) | (5,209,629 | ) | ||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (172,030,559 | ) | $ | (2,997,702 | ) | $ | (4,917,896 | ) | |||
|
| |||||||||||
| 46 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 29,448,084 | $ | 7,322,781 | $ | 212,642 | $ | 121,894 | ||||||||
Net realized gain (loss) | 56,693,326 | 9,804,269 | 534,820 | 106,914 | ||||||||||||
Net change in unrealized appreciation (depreciation) | (258,171,969 | ) | 31,328,794 | (3,745,164 | ) | 734,943 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (172,030,559 | ) | 48,455,844 | (2,997,702 | ) | 963,751 | ||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1e) | (26,642,033 | ) | (6,162,655 | ) | (202,973 | ) | (106,377 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 502,001,368 | 857,635,782 | 6,306,864 | 6,984,672 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 303,328,776 | 899,928,971 | 3,106,189 | 7,842,046 | ||||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 1,008,254,549 | 108,325,578 | 10,612,007 | 2,769,961 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1e) | $ | 1,311,583,325 | $ | 1,008,254,549 | $ | 13,718,196 | $ | 10,612,007 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 47 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||
Increase (decrease) in net assets: |
| |||||||
Operations: |
| |||||||
Net investment income | $ | 291,733 | $ | 158,146 | ||||
Net realized gain (loss) | 76,852 | (169,234 | ) | |||||
Net change in unrealized appreciation (depreciation) | (5,286,481 | ) | 302,305 | |||||
|
| |||||||
Net increase (decrease) in net assets resulting from operations | (4,917,896 | ) | 291,217 | |||||
|
| |||||||
Distributions to shareholders (Note 1e) | (314,153 | ) | (121,259 | ) | ||||
|
| |||||||
Capital share transactions: (Note 2) | 562,588 | 15,142,986 | ||||||
|
| |||||||
Net increase (decrease) in net assets | (4,669,461 | ) | 15,312,944 | |||||
Net assets: |
| |||||||
Beginning of year | 17,979,137 | 2,666,193 | ||||||
|
| |||||||
End of year (Note 1e) | $ | 13,309,676 | $ | 17,979,137 | ||||
|
| |||||||
| 48 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting offorty-two 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). Each of the Funds are an exchange traded fund (ETF) and seek to provide the investment results that closely correspond, before fees and expenses, to the performance of each Fund’s corresponding underlying index.
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 as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. 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.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 inopen-end mutual funds are valued at the closing NAV.
Certain derivative financial instruments are centrally cleared or trade in the OTC market. The Funds’ 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 Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
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. 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 anon-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 significant security valuation changes due to
| franklintempleton.com | Annual Report | 49 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
a. Financial Instrument Valuation(continued)
an open foreign market are adjusted and reflected by the Funds for financial reporting purposes
b. Derivative Financial Instruments
Certain or all Funds 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 Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. Certain or all Funds attempt to reduce their 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 Funds include failure of the Funds 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 thenon-defaulting party the right to net andclose-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 Statements of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement.
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. 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, 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 Funds’ 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 counterpartynon-performance.
Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to equity price 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 Statements of Assets and Liabilities.
See Note 7 regarding other derivative information.
c. Securities Lending
Certain or all Funds participate in an agency based securities lending program to earn additional income. The Fund receives cash collateral 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. The collateral 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. 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
| 50 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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 the 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.
d. Income 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.
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 March 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. Estimated expenses are accrued daily. Dividend income is recorded on theex-dividend date. Distributions to shareholders are recorded on theex-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.
For the year ended March 31, 2019, distributions to shareholders were as follows:
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Distributions from net investment income | $ | (6,162,655 | ) | $ | (106,377 | ) | $ | (121,259 | ) | |||
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. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense. These expenses are paid by the Funds or by the investment manager, as applicable, according to the terms of the unified management fee agreement.
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.
| franklintempleton.com | Annual Report | 51 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specified number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
Authorized participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At March 31, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| Franklin LibertyQ U.S. Equity ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 25,800,000 | $ | 846,426,405 | 31,000,000 | $ | 938,802,146 | ||||||||||||||
Shares redeemed | (10,400,000 | ) | (344,425,037 | ) | (2,700,000 | ) | (81,166,364 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 15,400,000 | $ | 502,001,368 | 28,300,000 | $ | 857,635,782 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin LibertyQ U.S. Mid Cap Equity ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 300,000 | $ | 9,365,575 | 300,000 | $ | 8,425,958 | ||||||||||||||
Shares redeemed | (100,000 | ) | (3,058,711 | ) | (50,000 | ) | (1,441,286 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 200,000 | $ | 6,306,864 | 250,000 | $ | 6,984,672 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 250,000 | $ | 6,943,400 | 600,000 | $ | 16,620,824 | ||||||||||||||
Shares redeemed | (250,000 | ) | (6,380,812 | ) | (50,000 | ) | (1,477,838 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | 562,588 | 550,000 | $ | 15,142,986 | ||||||||||||||
|
| |||||||||||||||||||
| 52 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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 Funds are also officers and/or directors of the following subsidiaries:
| Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Advisory Services, LLC (FASL) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | |
a. Management Fees
The Funds pay a unified management fee to Advisers whereby Advisers has agreed to reimburse the Funds’ acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Funds, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding payments under the Funds’ Rule12b-1 plan (if any), brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments), taxes, interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto), and other non routine or extraordinary expenses. The fees are based on the average daily net assets of each of the Funds as follows:
| Annualized Fee Rate | ||
Franklin LibertyQ U.S. Equity ETF | 0.15% | |
Franklin LibertyQ U.S. Mid Cap Equity ETF | 0.30% | |
Franklin LibertyQ U.S. Small Cap Equity ETF | 0.35% | |
Prior to August 1, 2019, the Franklin LibertyQ U. S. Equity ETF paid fees to Franklin Advisers, Inc. of 0.25% per year based on the average daily net assets of the Fund.
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. 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 year ended March 31, 2020, investments in affiliated management investment companies were as follows:
Value at Beginning | Purchases | Sales | Realized Gain | Net (Depreciation) | Value at End of Year | Number of Shares Held at End | Investment Income | |||||||||||||||||||||||||
| Franklin LibertyQ U.S. Equity ETF | Income from Securities loaned | |||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | | $ | 20,580,058 | $ | (19,668,158 | ) | $ | — | $ | — | $ | 911,900 | 911,900 | $ | 97,763 | |||||||||||||||
|
| |||||||||||||||||||||||||||||||
| franklintempleton.com | Annual Report | 53 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
c. Investments in Affiliated Management Investment Companies(continued)
Value at Beginning | Purchases | Sales | Realized Gain | Net (Depreciation) | Value at End of Year | Number of Shares Held at End | Investment Income | |||||||||||||||||||||||||
Franklin LibertyQ U.S. Mid Cap Equity ETF | Income from Securities loaned | |||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | 27,777 | $ | 860,856 | $ | (812,733 | ) | $ | — | $ | — | $ | 75,900 | 75,900 | $ | 413 | ||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Franklin LibertyQ U.S. Small Cap Equity ETF | Income from Securities loaned | |||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | 102,580 | $ | 6,178,207 | $ | (6,149,496 | ) | $ | — | $ | — | $ | 131,291 | 131,291 | $ | 4,505 | ||||||||||||||||
|
| |||||||||||||||||||||||||||||||
d. Other Affiliated Transactions
At March 31, 2020, the shares of Franklin LibertyQ U.S. Equity ETF were owned by the following entities:
| Funds | Shares | Percentage of Outstanding Sharesa | ||||||
| Franklin LibertyQ U.S. Equity ETF | ||||||||
Franklin Conservative Allocation Fund | 3,261,745 | 6.9% | ||||||
Franklin Moderate Allocation Fund | 7,305,230 | 15.4% | ||||||
Franklin Growth Allocation Fund | 6,170,889 | 13.0% | ||||||
Franklin LifeSmart™ 2020 – 2055 Retirement Target Funds | 2,656,770 | 5.6% | ||||||
Franklin 529 Portfolios | 11,940,420 | 25.1% | ||||||
|
| |||||||
| 31,335,054 | 66.0% | |||||||
|
| |||||||
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2020, the capital loss carryforwards were as follows:
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||
Short term | $ | 11,114,119 | $ | 35,294 | $ | 518,055 | ||||||
Long term | 7,023,123 | 120,561 | 476,044 | |||||||||
|
| |||||||||||
Total capital loss carryforwards | $ | 18,137,242 | $ | 155,855 | $ | 994,099 | ||||||
|
| |||||||||||
| 54 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
4. Income Taxes(continued)
The tax character of distributions paid during the years ended March 31, 2020 and 2019, were as follows:
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||
Distributions paid from ordinary income | $ | 26,642,033 | $ | 6,162,655 | $ | 202,973 | $ | 106,377 | $ | 314,153 | $ | 121,259 | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
At March 31, 2020, the cost of investments and net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Cost of investments | $ | 1,526,055,297 | $ | 16,600,725 | $ | 18,312,863 | ||||||
|
| |||||||||||
Unrealized appreciation | $ | 27,768,931 | $ | 441,489 | $ | 513,553 | ||||||
Unrealized depreciation | (246,899,771 | ) | (3,290,174 | ) | (5,423,496 | ) | ||||||
|
| |||||||||||
Net unrealized appreciation (depreciation) | $ | (219,130,840 | ) | $ | (2,848,685 | ) | $ | (4,909,943 | ) | |||
|
| |||||||||||
Distributable earnings – undistributed ordinary income | $ | 4,096,623 | $ | 28,704 | $ | 32,897 | ||||||
|
| |||||||||||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of corporate actions, passive foreign investment company shares and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities andin-kind transactions, if any) for the year ended March 31, 2020, were as follows:
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Purchases | $ | 248,832,596 | $ | 3,196,952 | $ | 5,126,159 | ||||||
Sales | $ | 243,569,636 | $ | 3,153,321 | $ | 4,855,475 | ||||||
In-kind transactions associated with creation and redemptions for the year ended March 31, 2020, were as follows:
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Cost of Securities Received | $ | 831,555,142 | $ | — | $ | — | ||||||
Value of Securities Delivered | $ | 333,241,177 | $ | 67,166 | $ | — | ||||||
| franklintempleton.com | Annual Report | 55 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
5. Investment Transactions(continued)
At March 31, 2020, in connection with securities lending transactions, certain or all Funds loaned investments and received cash collateral as follows:
| Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
| Securities lending transactionsa: | ||||||||||||
Equity investmentsb | $ | 911,900 | $ | 75,900 | $ | 131,291 | ||||||
|
| |||||||||||
aThe agreements can be terminated at any time.
bThe gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statements of Assets and Liabilities.
6. Novel Coronavirus Pandemic
The global outbreak of the novel coronavirus disease, known asCOVID-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
7. Other Derivative Information
At March 31, 2020, the Funds’ investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
Asset Derivatives | Liability Derivatives | |||||||||||
| Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||
| Franklin LibertyQ U.S. Equity ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | — | Variation margin on futures contracts | $ | 111,042 | ||||||
|
|
|
| |||||||||
Totals | $ | — | $ | 111,042 | ||||||||
|
|
|
| |||||||||
For the year ended March 31, 2020, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:
| Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
| Franklin LibertyQ U.S. Equity ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized | |||||||||||
Equity Contracts | Future Contracts | $ | (77,484 | ) | Future Contracts | $ | (216,502 | ) | ||||
For the year ended March 31, 2020, the average month end notional amount of futures contracts was $2,070,290
See Note 1(b) regarding derivative financial instruments.
| 56 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. 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) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
At March 31, 2020, all of the Funds’ investments in financial instruments carried at fair value were valued using Level 1 inputs.
9. 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.
| Selected Portfolio | ||
| REIT | Real Estate Investment Trust | |
| franklintempleton.com | Annual Report | 57 | ||||
FRANKLIN TEMPLETON ETF TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Franklin Templeton ETF Trust and Shareholders of Franklin LibertyQ U.S. Equity ETF, Franklin LibertyQ U.S. Mid Cap Equity ETF, and Franklin LibertyQ U.S. Small Cap Equity ETF
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin LibertyQ U.S. Equity ETF, Franklin LibertyQ U.S. Mid Cap Equity ETF, and Franklin LibertyQ U.S. Small Cap Equity ETF (the “Funds”) as of March 31, 2020, the related statementsof operationsfor the year ended March 31, 2020, the statements of changes in net assets for each of the two years in the period ended March 31, 2020, including the related notes,and the financial highlights for each of the periods indicated therein(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended March 31, 2020 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditsof these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of March 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
San Francisco, California
May 19, 2020
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
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FRANKLIN TEMPLETON ETF TRUST
Under Section 854(b)(1)(A) of the Internal Revenue Code, the Funds hereby report the following percentage amounts of the ordinary income dividends as income qualifying for the dividends received deduction for the fiscal year ended March 31, 2020.
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||
| 94.42% | 94.83% | 87.94% | ||||||
Under Section 854(b)(1)(B) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Internal Revenue Code for the fiscal year ended March 31, 2020.
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||
| $29,006,938 | $207,191 | $282,742 | ||||||
Distributions, including qualified dividend income, paid during calendar year 2020 will be reported to shareholders on Form1099-DIV bymid-February 2021. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.
| franklintempleton.com | Annual Report | 59 | ||||
FRANKLIN TEMPLETON ETF TRUST
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Rohit Bhagat (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Lead Independent Trustee and Trustee | Since 2016 | 44 | Axis Bank (2013-present), AssetMark Financial Holdings, Inc. (investment solutions) (2018-present) and FlipKart Limited (2019-present) (eCommerce company);formerly, CapFloat Financial Services Pvt., Ltd.(non-banking finance company) (2018) and Zentific Investment Management (hedge fund) (2015-2018). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Managing Member, Mukt Capital, LLC (private investment firm) (2014-present); Advisor, Optimal Asset Management (investment technology and advisory services company) (2015-present); andformerly, Chairman, Asia Pacific, BlackRock (2009-2012); Global Chief Operating Officer, Barclays Global Investors (investment management) (2005-2009); and Senior Partner, The Boston Consulting Group (management consulting) (1992-2005). | ||||||||
| Deborah D. McWhinney (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since January 2020 | 44 | Fluor Corporation (construction and engineering) (2014-present), IHS Markit (information services)(2015-present), Borg Warner (automotive) (2018-present) and Focus Financial Partner, LLC (financial services) (2018-present). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Director of various companies; andformerly, Board Member, Lloyds Banking Group (2015-2018) (financial institution) and Fresenius Medical Group (2016-2018) (healthcare); Chief Executive Officer (2013-2014) and Chief Operating Officer (2011-2013), CitiGroup Global Enterprise Payments (financial services); and President, Citi’s Personal Banking and Wealth Management (2009-2011). | ||||||||
| Anantha K. Pradeep (1963) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since 2016 | 44 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, Smilable, Inc. (technology company) (2014-present); Chief Executive Officer, MachineVantage (technology company) (2018-present); Founder and Managing Partner, Consult Meridian, LLC (consulting company) (2009-present); andformerly, Founder, BoardVantage (board portal solutions provider delivering paperless process for boards and leadership) (2000-2002). | ||||||||
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FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| **Jennifer M. Johnson (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee and Chairperson of the Board | Since 2016 | 49 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, President and Director, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of four of the investment companies in Franklin Templeton; andformerly, Chief Operating Officer and Executive Vice President, Franklin Resources, Inc. (1994-2015); Executive Vice President of Operations and Technology, Franklin Resources, Inc. (2005-2010); and Senior Vice President, Franklin Resources, Inc. (2003-2005). | ||||||||
| Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
Breda M. Beckerle (1958) 280 Park Avenue New York, NY 10017 | Interim Chief Compliance Officer | Since January 2020 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Compliance Officer, Fiduciary Investment Management International, Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | Chief Executive Officer – Finance and Administration | Since 2017 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017). | ||||||||
| Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President – AML Compliance | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
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FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers(continued)
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Patrick O’Connor (1967) One Franklin Parkway San Mateo, CA 94403-1906 | President and Chief Executive Officer – Investment Management | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| President and Chief Investment Officer, Franklin Advisory Services, LLC; Senior Vice President, Franklin Advisers, Inc.; officer of two of the investment companies in Franklin Templeton; andformerly, Managing Director, Head of iShares Product Canada, BlackRock (1998-2014). | ||||||||
Vivek Pai (1970) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Treasurer, Chief Financial Officer and Chief Accounting Officer | Since May 2019 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Treasurer, U.S. Fund Administration & Reporting and officer of two of the investment companies in Franklin Templeton. | ||||||||
| Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President and Secretary | Since 2015 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
| Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Jennifer M. Johnson is considered to be an interested person of the Fund under the federal securities laws due to her position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated Rohit Bhagat as its audit committee financial expert. The Board believes that Mr. Bhagat qualifies as such an expert in view of his extensive business background and experience, including extensive experience in the asset management and financial services industries. Mr. Bhagat has been a Member and Chairman of the Fund’s Audit Committee since 2016. As a result of such background and experience, the Board believes that Mr. Bhagat has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Bhagat is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request.
Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
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FRANKLIN TEMPLETON ETF TRUST
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 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 recent12-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 FormN-PORT. Shareholders may view the filed FormN-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.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Funds and the Funds’ net asset value may be found on the Funds’ website at franklintempleton.com.
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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.
 | Annual Report Franklin Templeton ETF Trust | |||||
| Investment Manager | Distributor | Investor Services | ||||
| Franklin Advisory Services, LLC | Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 franklintempleton.com | Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 | ||||
| © 2020 Franklin Templeton Investments. All rights reserved. | ETF3 A 05/20 | |||||
ANNUAL REPORT
FRANKLIN TEMPLETON
ETF TRUST
March 31, 2020
Franklin Liberty Intermediate Municipal Opportunities ETF |
Franklin Liberty Municipal Bond ETF |
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 to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visitfranklintempleton.com/investor/investments-and-solutions/investment-options/etfs/for fund updates and documents.
| Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
| franklintempleton.com | Not part of the annual report | 1 | ||||
ANNUAL REPORT
Municipal Bond Market Overview
The12-month period ended March 31, 2020, was defined by two distinct phases: before and during the global outbreak of the novel coronavirus(COVID-19). In terms of U.S.-domiciled assets, equities, corporate bonds, U.S. Treasuries and municipal bonds all posted positive returns for the period’s first 10 and a half months. By the end of February,COVID-19 had spread globally and economies around the world took notice. Volatility in all asset types spiked during the period’s final five weeks. Risk assets, including municipal bonds, experienced selling pressure that resulted in negative total returns for the period, while U.S. Treasury prices rallied and drove yields, which move inversely to price, to reach historical lows.
To show the dramatic turn of events during March 2020, we are providing returns of certain major asset classes for the12-month andone-month periods ended March 31, 2020. Investment-grade municipal bonds, as measured by the Bloomberg Barclays Municipal Bond Index, posted total returns of +3.85% and-3.63% for the12-month andone-month periods, respectively, compared with-0.74% and-11.00% total returns for high-yield municipal bonds, as measured by the Bloomberg Barclays High Yield Municipal Bond Index.1 U.S. Treasuries, as measured by the Bloomberg Barclays U.S. Treasury Index, posted total returns of +13.23% and +2.89% for the12-month andone-month periods, respectively, compared with +4.98% and-7.09% total returns for investment-grade corporate bonds, as measured by the Bloomberg Barclays U.S. Corporate Bond Index.1 All four of these fixed income sectors outperformed U.S. stocks, as measured by the Standard & Poor’s® 500 Index, which posted total returns of-6.98% and-12.35% for the12-month andone-month periods, respectively.1
As one would expect during times of financial distress, investment-grade municipal bonds performed better than their high-yield counterparts as well as U.S. equities during the12-month andone-month periods. However, during both time periods, municipal bonds underperformed U.S. Treasuries and investment-grade corporate bonds, and U.S. Treasuries outperformed all these asset classes.
As volatility due to theCOVID-19 pandemic increased across financial markets in late February 2020 and into early March, the municipal bond market seemed relatively impervious. However, during the second week of March, the municipal bond market experienced one of its worstsingle-day price declines over the past decade.
Federal authorities quickly implemented monetary policy and fiscal stimulus packages to combat the economic and market impact of the global pandemic. Despite the federal responses, many investors expected an economic recession and fled to perceived safe-haven assets, most specifically U.S. Treasury securities. Although yields on U.S. Treasuries dropped toall-time lows as prices rose, municipal bonds sold off significantly as many investors priced in the potential effects of the economic slowdown on state and local governments, as well as related municipal bond sectors. Municipal bond yields moved abruptly and significantly higher inmid-March 2020, but the selloff abated after the U.S. Federal Reserve (Fed) stepped in to help stabilize short-dated municipal securities. Similarly, the phase 3 federal stimulus package, which gives the Fed the ability to buy municipal bonds, also served to somewhat calm the market.
In the U.S., the recent selloff in municipal bonds appeared similar to the global financial crisis more than a decade ago, with many investors seemingly believing U.S. Treasuries are the only safe-haven investments. Although uncertainty related to theCOVID-19 pandemic has been the main reason for municipal bond market volatility, we have seen a number of other contributing factors.
For example, the oil shock that began to impact corporate bond markets in late February 2020 gained steam and started to play a more meaningful role in the municipal bond market. Another key factor contributing to the recent declines is the municipal bond mutual fund market’s transition to net redemptions after experiencing record net inflows in 2019 and the first two months of 2020. The entire municipal market sold off towardperiod-end, which may be one reason why high-yield municipal bonds have been hit the hardest.
Although we believe certain credits and sectors are more likely to be negatively impacted by these factors than others, the recent selloff has been indiscriminate in nature, hitting broad swaths of the municipal bond market and potentially creating attractive opportunities for sometax-sensitive investors.
We entered this downturn coming off a relatively strong economy, and we think many state and local governments, as well as most municipal bond issuers, are fairly well positioned heading into this crisis. After the recent selloff, yields for even the highest-rated segment of the municipal bond market (AAA) far surpassed the yields for U.S. Treasuries across
1. Source: Morningstar. Treasuries, if held to maturity, offer a fixed rate of return and a fixed principal value; their interest payments and principal are guaranteed.
See www.franklintempletondatasources.com for additional data provider information.
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maturity terms, and short-term AAA municipal bond yields exceeded those of long-term U.S. Treasuries in some cases. Depending on an investor’s tax situation, we believe the higher yields provided by municipal bonds compared with U.S. Treasuries have become incrementally more compelling.
The Investment Company Institute (ICI) reported net outflows from municipal bond mutual funds in March, as investors pulled their money out of municipal bond mutual funds as markets generally sold off. This ended a run of 14 consecutive months of net inflows. According to the ICI, as of March 25, 2020, municipal bond mutual funds had approximately -$42 billion of net outflows during March 2020, the largest monthly net outflow on record, bringing the 2020year-to-date total net outflows to approximately -$21 billion.
The Fed has acted aggressively to stem the tide of negative economic repercussions. The central bank had already lowered the federal funds target rate three times in 2019 to a range of 1.50%–1.75%. In March 2020, however, the Fed implemented two emergency rate cuts, lowering the federal funds target rate to a range of 0.00%–0.25%. The Fed also implemented additional tools, with several specifically intended to support stability in the municipal bond market.
We believe our approach to municipal bond investing is particularly well-suited for the volatile market environment. Over the last several years, we have focused on purchasing high-quality bonds, as the yield spreads between high-quality and lower-quality bonds have been narrow. We have also maintained exposure topre-refunded bonds, the most liquid high-quality municipal bonds in the market. Our seasoned team of analysts and portfolio managers have navigated difficult times before, and we are using the team’s knowledge and experience to navigate through this crisis. Although we recognize that volatility will persist as long as the significant level of uncertainty weighs on financial markets, we are confident in our ability to provide relative downside protection fortax-sensitive, income-oriented investors.
Atperiod-end, we maintained our positive view of the municipal bond market. We believe municipal bonds continue to be an attractive asset class among fixed income securities, and we intend to follow our disciplined approach of investing to maximize income, while seeking value in the municipal bond market.
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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, state, industry, security or 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.
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Franklin Liberty Intermediate Municipal Opportunities ETF
This annual report for Franklin Liberty Intermediate Municipal Opportunities ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide a high level of current income that is exempt from federal income taxes, including the federal alternative minimum tax, by investing at least 80% of its net assets in municipal securities that pay interest free from such taxes.1 The Fund seeks to maintain a dollar-weighted average portfolio maturity (the time in which the debt must be repaid) of three to 10 years, and may invest in municipal securities in any rating category by U.S. nationally recognized rating services (or comparable unrated or short-term rated securities).
| Credit Quality Composition* | ||||
| 3/31/20 | ||||
| Ratings | % of Total Investments | |||
AAA | 8.16% | |||
AA | 24.61% | |||
A | 21.45% | |||
BBB | 23.98% | |||
Not Rated | 21.80% | |||
*Securities, except for those labeled Not Rated, are assigned ratings by one or more Nationally Recognized Statistical Credit Rating Organizations (NRSROs), such as Standard & Poor’s, Moody’s and Fitch, that can be considered by the investment manager as part of its independent securities analysis. When ratings from multiple agencies are available, the highest is used, consistent with the portfolio investment process. Ratings reflect an NRSRO’s opinion of an issuer’s creditworthiness and typically range from AAA (highest) to D (lowest). The Below Investment Grade category consists of bonds rated belowBBB-. The Refunded category generally consists of refunded bonds secured by US government or other high-quality securities and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
For the 12 months under review, the Fund posted cumulative total returns of +1.60% based on market price and +1.61% based on net asset value (NAV). In comparison, the Bloomberg Barclays Municipal1-15 Year Index posted a +3.31% total return for the same period.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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
We select securities that we believe will provide the best balance between risk and return within the Fund’s range of allowable investments and we typically use abuy-and-hold strategy. The Fund is an actively managed exchange-traded fund (ETF) that does not seek to replicate the performance of a specified index.
| Portfolio Composition | ||||
| 3/31/20 | ||||
| % of Total Investments* | ||||
General Obligation Bonds | 17.70% | |||
Hospital & Health Care | 23.51% | |||
Tax Supported Debt | 14.90% | |||
Utilities | 9.88% | |||
Higher Education | 8.40% | |||
Other Revenue Bonds | 7.11% | |||
Housing | 7.14% | |||
Subject to Government App | 4.08% | |||
Transportation | 6.22% | |||
Corporate-Backed | 1.06% | |||
*Does not include cash and cash equivalents.
Manager’s Discussion
During the reporting period, we found value in securities in the eight- to15-year maturity range. Given the Fund’s average maturity cannot exceed 10 years, this represented the longer end of our target universe. The municipal yield curve
1. Dividends are generally subject to state and local taxes, if any. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on FormW-9 andnon-U.S. investors on FormW-8BEN.
2. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does 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 17.
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FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
remains positively sloped and we believe focusing on longer maturities provides us with the best opportunities to achieve our objective of maximizingafter-tax income for investors. In addition, we were able to find attractive opportunities in the high-yield space; therefore, we selectively added higher-yielding securities to the portfolio while selling existing positions with lower yields.
The Fund is overweight in BBB rated and below investment-grade securities relative to the benchmark; this positioning was the primary driver of the Fund’s underperformance versus its benchmark index, due to the selloff in the high-yield market in the final month of the reporting period. Given the Fund’s mandate, we will continue to look for opportunities to add high-yielding securities with a focus on the seven- to15-year portion of the yield curve. The Fund does not use leverage or derivatives. We believe our consistent, disciplined strategy can help our investors achieve high,tax-free income over the long term.
Typically, in declining rate environments, our turnover declines as we maintain exposure to securities that are producing income that exceeds their replacement value in the market. However, when rates rise, our turnover increases as opportunities to purchase securities that have the potential to increase income in the portfolio become available.
Thank you for your participation in Franklin Liberty Intermediate Municipal Opportunities ETF. We look forward to serving your future investment needs.
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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, state, 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.
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FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/5/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | +1.61% | +1.60% | +1.61% | +1.61% | ||||||||||||
Since Inception (8/31/17) | +5.05% | +4.96% | +1.93% | +1.89% | ||||||||||||
| 30-Day Standardized Yield6 | Taxable Equivalent30-Day Standardized Yield7 | |||||||||||||||
| Distribution Rate5 | (with fee waiver) | (without fee waiver) | (with fee waiver) | (without fee waiver) | ||||||||||||
2.42% | 2.22% | 1.25% | 3.75% | 2.11% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 8 for Performance Summary footnotes.
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FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
8/31/17–3/31/20
See page 8 for Performance Summary footnotes.
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FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
Net Investment Income |
$0.661908 |
Total Annual Operating Expenses9
| With Waiver | Without Waiver | |||
0.30% | 2.15% | |||
All investments involve risks, including possible loss of principal. Because municipal bonds are sensitive to interest-rate movements, the Fund’s yield and share price will fluctuate with market conditions. 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. The Fund may invest in lower-rated bonds which include higher risk of default and loss of principal. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. The Fund may invest a significant part of its assets in municipal securities that finance similar types of projects, such as utilities, hospitals, higher education and transportation. A change that affects one project would likely affect all similar projects, thereby increasing market risk. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.
6. The Fund’s30-day standardized yield is calculated over a trailing30-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. Taxable equivalent yield assumes the 2020 maximum federal income tax rate of 37.00% plus 3.80% Medicare tax.
8. Source: Morningstar. Bloomberg Barclays1-15 Year Municipal Index measures the performance of municipal bonds with maturities from one to 17 years. It is a component of the Municipal Bond Index, which is a market value-weighted index engineered for the long-termtax-exempt bond market. To be included in the index, bonds must be fixed rate, have at least one year to final maturity and be rated investment grade(Baa3/BBB- or higher) by at least two of the following agencies: Moody’s, S&P and Fitch.
9. 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.
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FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6× $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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 978.80 | $ | 2.08 | $ | 1022.90 | $ | 2.12 | 0.42 | % | ||||||||||||
1. Expenses are equal to annualized expense ratio for the six-month period as indicated above—in the far right column—multipied by the simple average account value over the period indicated, and then multiplied by 183/366 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| franklintempleton.com | Annual Report | 9 | ||||
Franklin Liberty Municipal Bond ETF
This annual report for Franklin Liberty Municipal Bond ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide a high level of current income that is exempt from federal income taxes, including the federal alternative minimum tax, by investing at least 80% of its net assets in municipal securities that pay interest free from such taxes.1 The Fund seeks to maintain a dollar-weighted average portfolio maturity (the time in which the debt must be repaid) of five to 15 years, and only buys securities rated, at the time of purchase, in one of the top four ratings categories by one or more U.S. nationally recognized rating services (or comparable unrated or short-term rated securities).
| Credit Quality Composition* | ||||
| 3/31/20 | ||||
| Ratings | % of Total Investments | |||
AAA | 27.63% | |||
AA | 61.34% | |||
A | 9.07% | |||
Not Rated | 1.96% | |||
*Securities, except for those labeled Not Rated, are assigned ratings by one or more Nationally Recognized Statistical Credit Rating Organizations (NRSROs), such as Standard & Poor’s, Moody’s and Fitch, that can be considered by the investment manager as part of its independent securities analysis. When ratings from multiple agencies are available, the highest is used, consistent with the portfolio investment process. Ratings reflect an NRSRO’s opinion of an issuer’s creditworthiness and typically range from AAA (highest) to D (lowest). The Below Investment Grade category consists of bonds rated belowBBB-. The Refunded category generally consists of refunded bonds secured by US government or other high-quality securities and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
For the 12 months under review, the Fund posted cumulative total returns of +6.20% based on market price and +5.92% based on net asset value (NAV). In comparison, the Bloomberg Barclays Municipal Bond Index posted a +3.85% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 12.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
We select securities that we believe will provide the best balance between risk and return within the Fund’s range of allowable investments and we typically use abuy-and-hold strategy. The Fund is an actively managed exchange-traded fund (ETF) that does not seek to replicate the performance of a specified index.
| Portfolio Composition | ||||
| 3/31/20 | ||||
| % of Total Investments* | ||||
General Obligation Bonds | 28.22% | |||
Utilities | 26.02% | |||
Tax Supported Debt | 13.03% | |||
Higher Education | 9.82% | |||
Hospital & Health Care | 4.87% | |||
Transportation | 7.98% | |||
Housing | 4.38% | |||
Other Revenue Bonds | 4.23% | |||
Subject to Government App | 1.45% | |||
*Does not include cash and cash equivalents.
Manager’s Discussion
During the12-month reporting period, the Fund maintained its average maturity near 13.5 years, on the longer end of the target5- to15-year range. The municipal yield curve remains positively sloped and we believe focusing on longer maturities provides us with the best opportunities to achieve our objective of maximizingafter-tax income for investors. We selectively added high-quality names at attractive spreads as the Fund continued to grow over the12-month period. Security selection was a key contributor to the outperformance versus the Fund’s benchmark, while being overweight in bonds with maturities between 12 and 17 years
1. Dividends are generally subject to state and local taxes, if any. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on FormW-9 andnon-U.S. investors on FormW-8BEN.
2. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does 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 23.
| 10 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY MUNICIPAL BOND ETF
also contributed positively to relative performance. We will continue to look for opportunities to add high quality names at attractive prices with a focus on the12- to17-year portion of the yield curve. The Fund does not use leverage or derivatives. We believe our consistent, disciplined strategy can help our investors achieve high,tax-free income over the long term.
Typically, in declining rate environments, our turnover declines as we maintain exposure to securities that are producing income that exceeds their replacement value in the market. However, when rates rise, our turnover increases as opportunities to purchase securities that have the potential to increase income in the portfolio become available.
Thank you for your participation in Franklin Liberty Municipal Bond ETF. We look forward to serving your future investment needs.
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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, state, 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.
| franklintempleton.com | Annual Report | 11 | ||||
FRANKLIN LIBERTY MUNICIPAL BOND ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/5/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | +5.92% | +6.20% | +5.92% | +6.20% | ||||||||||||
Since Inception (8/31/17) | +11.04% | +11.37% | +4.14% | +4.26% | ||||||||||||
| 30-Day Standardized Yield6 | Taxable Equivalent 30-Day Standardized Yield7 | |||||||||||||||
| Distribution Rate5 | (with fee waiver) | (without fee waiver) | (with fee waiver) | (without fee waiver) | ||||||||||||
2.44% | 1.65% | 1.05% | 2.79% | 1.77% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 14 for Performance Summary footnotes.
| 12 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY MUNICIPAL BOND ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
8/31/17–3/31/20
See page 14 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 13 | ||||
FRANKLIN LIBERTY MUNICIPAL BOND ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
Net Investment Income |
$0.614911 |
Total Annual Operating Expenses9
| With Waiver | Without Waiver | |||
0.30% | 2.05% | |||
All investments involve risks, including possible loss of principal. Because municipal bonds are sensitive to interest-rate movements, the Fund’s yield and share price will fluctuate with market conditions. 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 credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. The Fund may invest a significant part of its assets in municipal securities that finance similar types of projects, such as utilities, hospitals, higher education and transportation. A change that affects one project would likely affect all similar projects, thereby increasing market risk. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.
6. The Fund’s30-day standardized yield is calculated over a trailing30-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. Taxable equivalent yield assumes the 2020 maximum federal income tax rate of 37.00% plus 3.80% Medicare tax.
8. Source: Morningstar. The Bloomberg Barclays Municipal Bond Index is a market value-weighted index engineered for the long-termtax-exempt bond market. To be included in the index, bonds must be fixed rate, have at least one year to final maturity and be rated investment grade(Baa3/BBB- or higher) by at least two of the following agencies: Moody’s, S&P and Fitch.
9. 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.
| 14 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY MUNICIPAL BOND ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/191 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 1010.90 | $ | 1.51 | $ | 1023.50 | $ | 1.52 | 0.30 | % | ||||||||||||
1. Expenses are equal to annualized expense ratio for the six-month period as indicated above—in the far right column—multipied by the simple average account value over the period indicated, and then multiplied by 183/366 to reflect the one-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| franklintempleton.com | Annual Report | 15 | ||||
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty Intermediate Municipal Opportunities ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||||||||||
Net asset value, beginning of year | $24.97 | $ | 24.40 | $ | 25.00 | |||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.58 | 0.63 | 0.22 | |||||||||
Net realized and unrealized gains (losses) | (0.17 | ) | 0.57 | (0.60 | ) | |||||||
|
| |||||||||||
Total from investment operations | 0.41 | 1.20 | (0.38 | ) | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.66 | ) | (0.63 | ) | (0.22 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $24.72 | $ | 24.97 | $ | 24.40 | |||||||
|
| |||||||||||
Total returnd | 1.61% | 4.99% | (1.53)% | |||||||||
| Ratios to average net assetse |
| |||||||||||
Expenses before waiver and payments by affiliates | 1.46% | 2.15% | 1.71% | |||||||||
Expenses net of waiver and payments by affiliates | 0.30% | 0.30% | 0.30% | |||||||||
Net investment income | 2.29% | 2.57% | 1.55% | |||||||||
| Supplemental data |
| |||||||||||
Net assets, end of year (000’s) | $ | 12,362 | $ | 7,490 | $ | 7,319 | ||||||
Portfolio turnover ratef | 35.28%g | 35.63% | 17.49% | |||||||||
aFor the period August 31, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”)
gPortfolio turnover rate excluding cash creations for the year end March 31, 2020 was as follows: 35.28%
| 16 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty Intermediate Municipal Opportunities ETF
| Principal Amount* | Value | |||||||||
| Municipal Bonds 83.6% | ||||||||||
| Alabama 0.9% | ||||||||||
Homewood Educational Building Authority Revenue, Educational Facilities, Samford University, Refunding, Series A, 4.00%, 12/01/33 | 100,000 | $ | 112,044 | |||||||
|
| |||||||||
| Alaska 2.3% | ||||||||||
ALASKA ST INDL DEV & EXPORT AUTH REVENUE, 4.00%, 4/01/32 | 100,000 | 114,146 | ||||||||
Matanuska-Susitna Borough Lease Revenue, Goose Creek Correctional Center Project, Refunding, 4.00%, 9/01/30 | 150,000 | 164,820 | ||||||||
|
| |||||||||
| 278,966 | ||||||||||
|
| |||||||||
| Arizona 2.8% | ||||||||||
La Paz County IDA Education Facility Lease Revenue, Chartere School Solutions-Harmony Public Schools Project, Series A, 5.00%, 2/15/28 | 100,000 | 110,556 | ||||||||
Phoenix Civic Improvement Corp. Wastewater System Revenue, junior lien, Series A, | 100,000 | 118,660 | ||||||||
Phoenix IDA Student Housing Revenue, Downtown Phoenix Student Housing II LLC, Arizona State University Project, Series A, 5.00%, 7/01/31 | 100,000 | 113,635 | ||||||||
|
| |||||||||
| 342,851 | ||||||||||
|
| |||||||||
| Arkansas 0.9% | ||||||||||
Arkansas Development Finance Authority Healthcare Revenue, Baptist Health, 4.00%, 12/01/34 | 100,000 | 114,843 | ||||||||
|
| |||||||||
| California 4.5% | ||||||||||
California School Finance Authority Charter School Revenue, Summit Public Schools-Obligated Group, 5.00%, 6/01/27 | 100,000 | 110,385 | ||||||||
California Statewide CDA Revenue, California Baptist University, Refunding, Series A, | 100,000 | 98,678 | ||||||||
California Statewide CDA Special Tax Revenue, CFDNo. 2015-01, Improvement Area No. 2, University District, 5.00%, 9/01/27 | 100,000 | 110,148 | ||||||||
Orange County CFDNo. 2017-1 Special Tax, Esencia Village Improvement Area No. 1, Series A, 5.00%, 8/15/28 | 100,000 | 118,825 | ||||||||
Perris Joint Powers Authority Local Agency Revenue, CFDNo. 2001-1, Improvement Area Nos. 4 and 5, CFDNo. 2005-1, Improvement Area 4, Refunding, Series B, 5.00%, 9/01/25 | 100,000 | 113,592 | ||||||||
|
| |||||||||
| 551,628 | ||||||||||
|
| |||||||||
| Colorado 3.4% | ||||||||||
Colorado State Health Facilities Authority Hospital Revenue, Christian Living Communities, Refunding and Improvement, 4.00%, 1/01/29 | 100,000 | 98,543 | ||||||||
Regional Transportation District Sales Tax Revenue, FasTracks Project, Refunding, Series A, 5.00%, 11/01/27 | 100,000 | 125,876 | ||||||||
Southglenn Metropolitan District Special Revenue, In the City of Centennial Colorado, Refunding, 5.00%, 12/01/30 | 100,000 | 102,330 | ||||||||
Southlands Metropolitan District No. 1 GO, Aurora, Arapahoe County, Refunding, SeriesA-1, 3.50%, 12/01/27 | 100,000 | 96,679 | ||||||||
|
| |||||||||
| 423,428 | ||||||||||
|
| |||||||||
| Connecticut 1.3% | ||||||||||
Connecticut State HFA Housing Mortgage Finance Program Revnue, Series A, SubseriesA-1, 2.875%, 11/15/30 | 150,000 | 156,567 | ||||||||
|
| |||||||||
| Delaware 0.8% | ||||||||||
Kent County Student Housing and Dining Facility Revenue,CHF-DoverLLC- Delaware State University Project, Series A, 5.00%, 7/01/29 | 100,000 | 102,444 | ||||||||
|
| |||||||||
| Florida 5.5% | ||||||||||
Alachua County Health Facilities Authority Health Facilities Revenue, Shands Teaching Hospital and Clinics Inc., Refunding, SeriesB-1, 5.00%, 12/01/32 | 100,000 | 122,347 | ||||||||
Jacksonville Health Care Facilities Revenue, Brooks Rehabilitation, Genesis Health Inc., Obligated Group, Refunding, 5.00%, 11/01/27 | 100,000 | 124,088 | ||||||||
Miami Health Facilities Authority Revenue, Miami Jewish Health Systems Inc. Project, Refunding, 5.00%, 7/01/28 | 150,000 | 137,139 | ||||||||
| franklintempleton.com | Annual Report | 17 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Intermediate Municipal Opportunities ETF(continued)
| Principal Amount* | Value | |||||||||
| Municipal Bonds (continued) | ||||||||||
| Florida (continued) | ||||||||||
Osceola County Transportation Revenue, CABS, Refunding, SeriesA-2, 10/01/32 | 150,000 | $ | 107,723 | |||||||
St. Lucie County PCR, Florida Power and Light Co. Project, Refunding, Daily VRDN and Put, 0.95%, 9/01/28 | 100,000 | 100,000 | ||||||||
Village CDD No. 13 Special Assessment Revenue, 3.00%, 5/01/29 | 100,000 | 94,910 | ||||||||
|
| |||||||||
| 686,207 | ||||||||||
|
| |||||||||
| Georgia 2.7% | ||||||||||
Athens-Clarke County Unified Government Development Authority Revenue, University of Georgia Athletic Assn. Project, Series B, Daily VRDN and Put, 0.78%, 7/01/35 | 100,000 | 100,000 | ||||||||
Georgia Municipal Electric Authority Revenue, Project One, Subordinated, Refunding, | 100,000 | 116,722 | ||||||||
Main Street Natural Gas Inc. Gas Supply Revenue, Series A, 5.00%, 5/15/29 | 100,000 | 111,563 | ||||||||
|
| |||||||||
| 328,285 | ||||||||||
|
| |||||||||
| Illinois 4.3% | ||||||||||
Hillside Tax Increment Revenue, Cook County, Refunding, 5.00%, 1/01/24 | 100,000 | 100,911 | ||||||||
Illinois State Finance Authority MFHR, | ||||||||||
Better Housing Foundation ERNST Portfolio Project, SeriesA-1, 4.375%, 12/01/28 | 100,000 | 27,500 | ||||||||
a Better Housing Foundation Blue Station Project, SeriesA-1, 4.25%, 12/01/28 | 100,000 | 60,000 | ||||||||
Railsplitter Tobacco Settlement Authority Revenue, 5.00%, 6/01/27 | 100,000 | 118,869 | ||||||||
Southwestern Illinois Development Authority Revenue, Capital Appreciation, Local Government Program, AGMC Insured, zero cpn., 12/01/24 | 245,000 | 222,854 | ||||||||
|
| |||||||||
| 530,134 | ||||||||||
|
| |||||||||
| Kentucky 1.7% | ||||||||||
County of Owen Water Facilities Revenue, Kentucky-American Water Co. Project, Refunding, Series A, 2.45%, 6/01/39 | 100,000 | 104,600 | ||||||||
Louisville/Jefferson County Metro Government Revenue, College, Bellarmine University Project, Refunding and Improvement, Series A, 4.00%, 5/01/29 | 100,000 | 99,730 | ||||||||
|
| |||||||||
| 204,330 | ||||||||||
|
| |||||||||
| Louisiana 0.9% | ||||||||||
Louisiana Local Government Environmental Facilities and CDA Revenue, Student Housing, Provident Group - ULM Properties LLC - University of Louisiana at Monroe Project, Series A, 5.00%, 7/01/29 | 100,000 | 106,046 | ||||||||
|
| |||||||||
| Maryland 2.6% | ||||||||||
Baltimore Special Obligation Revenue, Mayor and City Council of Baltimore, Harbor Point Project, Senior Lien, Refunding, Series A, 3.25%, 6/01/31 | 100,000 | 89,202 | ||||||||
Frederick County Tax Increment and Special Tax B, Limited Obligation, Oakdale-Lake Linganore Project, Refunding, 3.25%, 7/01/29 | 140,000 | 128,422 | ||||||||
Maryland EDC Revenue, Economic Development, Transportation Facilities Project, Refunding, Series A, 5.00%, 6/01/27 | 100,000 | 109,917 | ||||||||
|
| |||||||||
| 327,541 | ||||||||||
|
| |||||||||
| Massachusetts 0.9% | ||||||||||
Massachusetts State Development Finance Agency Revenue, Foxborough Regional Charter, Series B, 5.00%, 7/01/27 | 100,000 | 110,228 | ||||||||
|
| |||||||||
| Michigan 0.8% | ||||||||||
Grand Rapids EDC, EDR, Beacon Hill Eastgate Project, Refunding, Series A, 4.00%, 11/01/27 | 100,000 | 94,294 | ||||||||
|
| |||||||||
| Minnesota 4.0% | ||||||||||
Eagan GO, Series A, 4.00%, 2/01/26 | 100,000 | 114,759 | ||||||||
Mille Lacs County GO, Capital Improvement Plan, Series A, 3.00%, 2/01/24 | 135,000 | 143,219 | ||||||||
Northern Municipal Power Agency Electric System Revenue, Refunding, 5.00%, 1/01/36 | 100,000 | 118,280 | ||||||||
St. Louis Park Public Schools ISD No. 283 GO, School Building, Minnesota School District Credit Enhancement Program, Series A, 5.00%, 2/01/25 | 100,000 | 117,649 | ||||||||
|
| |||||||||
| 493,907 | ||||||||||
|
| |||||||||
| 18 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Intermediate Municipal Opportunities ETF(continued)
| Principal Amount* | Value | |||||||||
| Municipal Bonds (continued) | ||||||||||
| Missouri 0.8% | ||||||||||
St. Louis County IDA Senior Living Facilities Revenue, Friendship Village, St. Louis Obligated Group, Refunding, 5.00%, 9/01/27 | 100,000 | $ | 104,723 | |||||||
|
| |||||||||
| Montana 1.0% | ||||||||||
Cascade County High School District No. 1 Great Falls GO, School Building, 5.00%, 7/01/25 | 100,000 | 118,103 | ||||||||
|
| |||||||||
| Nevada 2.8% | ||||||||||
Carson City Hospital Revenue, Carson Tahoe Regional Healthcare Project, Refunding, Series A, 5.00%, 9/01/28 | 100,000 | 120,915 | ||||||||
Las Vegas Special ID No. 812 Special Assessment, Local Improvement, Summerlin Village 24, 4.00%, 12/01/22 | 100,000 | 100,312 | ||||||||
Washoe County School District GO, School Improvement, Series C, 5.00%, 10/01/26 | 100,000 | 121,231 | ||||||||
|
| |||||||||
| 342,458 | ||||||||||
|
| |||||||||
| New Hampshire 1.0% | ||||||||||
New Hampshire State Health and Education Facilities Authority Revenue, University System of New Hampshire Issue, Refunding, Series A, 5.00%, 7/01/27 | 100,000 | 124,809 | ||||||||
|
| |||||||||
| New Jersey 2.6% | ||||||||||
New Jersey EDA Water Facilities Revenue, American Water Co. Inc., Project, Refunding, Series A, 2.20%, 10/01/39 | 100,000 | 100,680 | ||||||||
New Jersey State Transportation Trust Fund Authority Revenue, Transportation System, Refunding, Series A, 5.00%, 12/15/28 | 100,000 | 110,858 | ||||||||
Pinelands Regional School District GO, Refunding, AGMC Insured, 3.00%, 8/01/27 | 100,000 | 108,045 | ||||||||
|
| |||||||||
| 319,583 | ||||||||||
|
| |||||||||
| New York 1.7% | ||||||||||
MTA Revenue, Transportation, Green Bonds, Climate Bond Certified, Refunding, | 100,000 | 111,428 | ||||||||
Nassau County NY IDA, Civic Facility Revenue, Cold Spring Harbor Labortory, 0.60%, 1/01/34 | 100,000 | 100,000 | ||||||||
|
| |||||||||
| 211,428 | ||||||||||
|
| |||||||||
| North Carolina 2.5% | ||||||||||
North Carolina State Medical Care Commission Retirement Facilities Revenue, The United Methodist Retirement Homes, first mortgage, Refunding, Series A, 5.00%, 10/01/27 | 100,000 | 106,287 | ||||||||
The Charlotte-Mecklenburg Hospital Authority Revenue, Carolinas HealthCare System, Refunding Series B, Daily VRDN and Put, 0.75%, 1/15/38 | 200,000 | 200,000 | ||||||||
|
| |||||||||
| 306,287 | ||||||||||
|
| |||||||||
| Ohio 3.6% | ||||||||||
Franklin County Convention Facilities Authority Hotel Project Revenue, GRTR Columbus Convention Center Hotel Expense Project, 5.00%, 12/01/30 | 100,000 | 94,811 | ||||||||
Franklin County Hospital Facilities Revenue, Nationwide Children’s Hospital Project, Refunding, Series A, 5.00%, 11/01/28 | 100,000 | 125,208 | ||||||||
Franklin County Revenue, Trinity Health Credit Group, Refunding, Series A, 5.00%, 12/01/31 | 100,000 | 125,814 | ||||||||
Ohio State Air Quality Development Authority Exempt Facilities Revenue, Pratt Paper LLC Project, 3.75%, 1/15/28 | 100,000 | 98,732 | ||||||||
|
| |||||||||
| 444,565 | ||||||||||
|
| |||||||||
| Pennsylvania 4.4% | ||||||||||
Allegheny County Higher Education Building Authority University Revenue, Robert Morris University, UPMC Events Center Project, 5.00%, 10/15/26 | 100,000 | 107,006 | ||||||||
Allentown Neighborhood Improvement Zone Development Authority Tax Revenue, City Center Project, 5.00%, 5/01/28 | 100,000 | 104,816 | ||||||||
Franklin County IDAR, Menno Haven Inc. Project, Refunding, 5.00%, 12/01/28 | 100,000 | 99,438 | ||||||||
Luzerne County IDA Revenue, Pennsylvania-American Water Co. Project, Refunding, | 100,000 | 105,620 | ||||||||
Pennsylvania State Economic Development Financing Authority Revenue, UPMC, Refunding, Series A, 3.375%, 11/15/33 | 125,000 | 130,496 | ||||||||
|
| |||||||||
| 547,376 | ||||||||||
|
| |||||||||
| franklintempleton.com | Annual Report | 19 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Intermediate Municipal Opportunities ETF(continued)
| Principal Amount* | Value | |||||||||
| Municipal Bonds (continued) | ||||||||||
| South Carolina 0.9% | ||||||||||
Patriots Energy Group Revenue, Gas System Improvement, Refunding, 4.00%, 6/01/33 | 100,000 | $ | 112,712 | |||||||
|
| |||||||||
| Tennessee 2.8% | ||||||||||
Lawrenceburg GO, Refunding, 2.50%, 6/01/27 | 100,000 | 102,964 | ||||||||
Metropolitan Government of Nashville and Davidson County GO, Improvement, Refunding, | 100,000 | 116,642 | ||||||||
Metropolitan Nashville Airport Authority Revenue, Subordinate, Series B, 5.00%, 7/01/30 | 100,000 | 123,557 | ||||||||
|
| |||||||||
| 343,163 | ||||||||||
|
| |||||||||
| Texas 5.4% | ||||||||||
Arlington Higher Education Finance Corp. Education Revenue, Riverwalk Education Foundation Inc., PSF Guarantee, 4.00%, 8/15/33 | 100,000 | 118,781 | ||||||||
Cedar Park GO, Williamson and Travis Counties, Refunding and Improvement, 5.00%, 2/15/24 | 100,000 | 113,821 | ||||||||
Garland GO, Dallas Collin and Rockwall Counties, Refunding, 5.00%, 2/15/27 | 100,000 | 123,160 | ||||||||
New Hope Cultural Education Facilities Finance Corp. Retirement Facility Revenue, Wesleyan Homes Inc. Project, Refunding, 4.00%, 1/01/29 | 100,000 | 90,205 | ||||||||
New Hope Cultural Education Facilities Finance Corp. Student Housing Revenue,CHF-Collegiate Housing Island Campus LLC, Series A, 5.00%, 4/01/29 | 100,000 | 99,570 | ||||||||
Port Freeport Revenue, Brazoria County, senior lien, Series A, 5.00%, 6/01/31 | 100,000 | 127,256 | ||||||||
|
| |||||||||
| 672,793 | ||||||||||
|
| |||||||||
| Utah 1.7% | ||||||||||
Provo GO, Refunding, 4.00%, 1/01/23 | 100,000 | 107,823 | ||||||||
Utah State Building Ownership Authority Lease Revenue, State Facilities Master Lease Program, 2.50%, 5/15/27 | 100,000 | 105,037 | ||||||||
|
| |||||||||
| 212,860 | ||||||||||
|
| |||||||||
| Vermont 0.9% | ||||||||||
Vermont State Public Power Supply Authority Revenue, Swanton Peaking Facility Project, Refunding, Series A, 5.00%, 7/01/28 | 100,000 | 117,503 | ||||||||
|
| |||||||||
| Virginia 0.8% | ||||||||||
Peninsula Town Center CDA Special Obligation Revenue, Refunding, 4.50%, 9/01/28 | 100,000 | 102,507 | ||||||||
|
| |||||||||
| Washington 4.7% | ||||||||||
Seattle Drainage and Wastewater System Revenue, Improvement and Refunding, | 100,000 | 117,949 | ||||||||
Skagit County Public Hospital District No. 1 Revenue, Improvement, Skagit Regional Health, Refunding, 5.00%, 12/01/29 | 100,000 | 116,332 | ||||||||
Spokane County School District No. 356 Central Valley GO, 5.00%, 12/01/26 | 100,000 | 123,629 | ||||||||
University of Washington Revenue, General, Refunding, Series A, 5.00%, 12/01/26 | 100,000 | 123,701 | ||||||||
Washington State Housing Finance Commission Revenue, Nonprofit Housing, Presbyterian Retirement Communities Northwest Project, Refunding, Series A, 5.00%, 1/01/34 | 100,000 | 101,771 | ||||||||
|
| |||||||||
| 583,382 | ||||||||||
|
| |||||||||
| Wisconsin 5.7% | ||||||||||
Brookfield GO, Waukesha County, Refunding, 3.00%, 12/01/25 | 115,000 | 124,121 | ||||||||
PFA Retirement Facilities Revenue, Whitestone Retirement Facilities, first mortgage, Refunding, 4.00%, 3/01/27 | 75,000 | 72,401 | ||||||||
PFAR, Retirement Facilities, Friends Homes, Refunding, 4.00%, 9/01/29 | 100,000 | 94,357 | ||||||||
PFAR, Ultimate Medical Academy Project, Refunding, Series A, 5.00%, 10/01/29 | 100,000 | 116,675 | ||||||||
The Economic Development Corporation of the Township of Green Lake, Michigan Variable Rate Demand Revenue and Revenue Refunding Bonds (Interlochen Center For The Arts Project), Series 2004, 0.75%, 6/01/34 | 200,000 | 200,000 | ||||||||
| 20 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Intermediate Municipal Opportunities ETF(continued)
| Principal Amount* | Value | |||||||||
| Municipal Bonds (continued) | ||||||||||
| Wisconsin (continued) | ||||||||||
Wisconsin Health and Educational Facilities Authority Revenue, St. Johns Communities Inc. Project, Series A, 4.00%, 9/15/27 | 100,000 | $ | 97,356 | |||||||
|
| |||||||||
| 704,910 | ||||||||||
|
| |||||||||
Total Investments (Cost $10,438,040) 83.6% | 10,332,905 | |||||||||
Other Assets, less Liabilities 16.4% | 2,029,412 | |||||||||
|
| |||||||||
Net Assets 100.0% | $ | 12,362,317 | ||||||||
|
| |||||||||
See Abbreviations on page 37.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aSee Note (7) regarding defaulted securities.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 21 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty Municipal Bond ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||||||||||
Net asset value, beginning of year | $25.20 | $ | 24.34 | $ | 25.00 | |||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.46 | 0.67 | 0.30 | |||||||||
Net realized and unrealized gains (losses) | 1.02 | 0.85 | (0.66 | ) | ||||||||
|
| |||||||||||
Total from investment operations | 1.48 | 1.52 | (0.36 | ) | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.61 | ) | (0.66 | ) | (0.30 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $26.07 | $ | 25.20 | $ | 24.34 | |||||||
|
| |||||||||||
Total returnd | 5.92% | 6.38% | (1.45)% | |||||||||
| Ratios to average net assetse |
| |||||||||||
Expenses before waiver and payments by affiliates | 1.00% | 2.05% | 1.71% | |||||||||
Expenses net of waiver and payments by affiliates | 0.30% | 0.30% | 0.30% | |||||||||
Net investment income | 1.77% | 2.74% | 2.11% | |||||||||
| Supplemental data |
| |||||||||||
Net assets, end of year (000’s) | $ | 28,674 | $ | 8,820 | $ | 7,302 | ||||||
Portfolio turnover ratef | 17.21%g | 21.21% | 5.00% | |||||||||
aFor the period August 31, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transaction that are executed as result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”)
gPortfolio turnover rate excluding cash creations for the year end March 31, 2020 was as follows: 17.21%
| 22 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty Municipal Bond ETF
| Principal Amount* | Value | |||||||||
| Municipal Bonds 98.9% | ||||||||||
| Alabama 1.1% | ||||||||||
Huntsville GO, wts., Series A, 5.00%, 5/01/37 | 250,000 | $ | 317,850 | |||||||
|
| |||||||||
| Alaska 0.6% | ||||||||||
Matanuska-Susitna Borough Lease Revenue, Goose Creek Correctional Center Project, Refunding, 4.00%, 9/01/30 | 150,000 | 164,820 | ||||||||
|
| |||||||||
| Arizona 1.7% | ||||||||||
Phoenix Civic Improvement Corp. Wastewater System Revenue, junior lien, Series A, | 100,000 | 118,660 | ||||||||
Salt River Project Agricultural Improvement and Power District Electric System Revenue, Salt River Project, Refunding, Series A, 5.00%, 1/01/39 | 190,000 | 233,347 | ||||||||
Scottsdale Municipal Property Corp. Excise Tax Revenue, Refunding, 5.00%, 7/01/34 | 100,000 | 137,025 | ||||||||
|
| |||||||||
| 489,032 | ||||||||||
|
| |||||||||
| California 6.8% | ||||||||||
Burbank RDA Successor Agency Tax Allocation Revenue, Los Angeles County, Refunding, | 100,000 | 108,214 | ||||||||
California State GO, Various Purpose, 3.00%, 10/01/37 | 700,000 | 726,047 | ||||||||
Clovis USD, GO, Capital Appreciation, Refunding, zero cpn., 8/01/35 | 200,000 | 125,956 | ||||||||
Konocti USD, GO, Capital Appreciation, Election of 2004, Series C, AGMC Insured, zero cpn., 8/01/28 | 150,000 | 123,312 | ||||||||
Los Angeles Department of Water and Power Revenue, Power System, Refunding, Series D, 5.00%, 7/01/31 | 400,000 | 506,860 | ||||||||
Perris Joint Powers Authority Local Agency Revenue, CFDNo. 2001-1, Improvement Area Nos. 4 and 5, CFDNo. 2005-1, Improvement Area 4, Refunding, Series B, 5.00%, 9/01/37 | 100,000 | 111,782 | ||||||||
South Tahoe Joint Powers Financing Authority Lease Revenue, Redevelopment Project Area No. 1, Series A, BAM Insured, 5.00%, 10/01/30 | 100,000 | 122,070 | ||||||||
University of California Revenue, Limited Project, Series M, 5.00%, 5/15/34 | 100,000 | 121,641 | ||||||||
|
| |||||||||
| 1,945,882 | ||||||||||
|
| |||||||||
| Colorado 2.7% | ||||||||||
Adams and Weld Counties School District No. 27J Brighton GO, The City and County of Broomfield, 5.00%, 12/01/42 | 100,000 | 121,791 | ||||||||
Cherry Creek School District No. 5 GO, Arapahoe County, Refunding, Series C, 5.00%, 12/15/35 | 100,000 | 124,304 | ||||||||
Colorado Springs Utilities System Revenue, Refunding, Series A, 4.00%, 11/15/33 | 100,000 | 115,739 | ||||||||
Colorado State Board of Governors University Enterprise System Revenue, Refunding, Series A, 4.00%, 3/01/35 | 100,000 | 114,220 | ||||||||
Colorado Water Resources and Power Development Authority State Revolving Fund Revenue, Series A, 4.00%, 9/01/31 | 150,000 | 180,996 | ||||||||
Greeley Water Revenue, Water Enterprise, 4.00%, 8/01/31 | 100,000 | 117,784 | ||||||||
|
| |||||||||
| 774,834 | ||||||||||
|
| |||||||||
| Connecticut 1.2% | ||||||||||
Connecticut State Health and Educational Facilities Authority Revenue, Yale New Haven Health Issue, Series B, 1.80%, 7/01/49 | 225,000 | 225,423 | ||||||||
Connecticut State Special Tax Obligation Revenue, Series A, 5.00%, 8/01/31 | 100,000 | 114,870 | ||||||||
|
| |||||||||
| 340,293 | ||||||||||
|
| |||||||||
| Delaware 1.1% | ||||||||||
University of Delaware Revenue, 5.00%, 11/01/37 | 250,000 | 317,198 | ||||||||
|
| |||||||||
| District of Columbia 2.3% | ||||||||||
District of Columbia Income Tax Secured Revenue, Series A, 5.00%, 3/01/33 | 500,000 | 647,330 | ||||||||
|
| |||||||||
| Florida 9.8% | ||||||||||
Florida State Turnpike Authority Revenue, Refunding, Series A, 3.00%, 7/01/36 | 650,000 | 694,239 | ||||||||
Fort Myers Utility System Revenue, Refunding, Series A, 4.00%, 10/01/34 | 500,000 | 584,105 | ||||||||
Gainesville Utilities System Revenue, Series A, 5.00%, 10/01/36 | 100,000 | 121,947 | ||||||||
Miami-Dade County Transit System Sales Surtax Revenue, Refunding, 4.00%, 7/01/36 | 600,000 | 692,496 | ||||||||
Pasco County GO, Fire-Rescue Projects Improvements, Series B, 5.00%, 10/01/36 | 455,000 | 579,251 | ||||||||
Sarasota County Utility System Revenue, Refunding, Series A, 5.00%, 10/01/34 | 100,000 | 127,410 | ||||||||
|
| |||||||||
| 2,799,448 | ||||||||||
|
| |||||||||
| franklintempleton.com | Annual Report | 23 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Municipal Bond ETF(continued)
| Principal Amount* | Value | |||||||||
| Municipal Bonds (continued) | ||||||||||
| Georgia 3.0% | ||||||||||
Atlanta Airport Revenue, General, Series A, 5.00%, 7/01/34 | 175,000 | $ | 216,134 | |||||||
Coweta County Water and Sewage Authority Revenue, Refunding, 4.00%, 6/01/35 | 100,000 | 117,089 | ||||||||
Main Street Natural Gas Inc. Gas Supply Revenue, | 100,000 | 103,082 | ||||||||
Sub-series B, Monthly VRDN and Put, 1.809%, 4/01/48 | 425,000 | 423,325 | ||||||||
|
| |||||||||
| 859,630 | ||||||||||
|
| |||||||||
| Hawaii 0.9% | ||||||||||
Hawaii State Highway Revenue, Refunding, Series B, 5.00%, 1/01/29 | 210,000 | 253,907 | ||||||||
|
| |||||||||
| Illinois 1.0% | ||||||||||
Illinois State Finance Authority Revenue, Field Museum of Natural History, Refunding, Mandatory Put 9/01/22, 1.575%, 11/01/34 | 295,000 | 293,516 | ||||||||
|
| |||||||||
| Indiana 1.0% | ||||||||||
East Allen Multi School Building Corp. Revenue, Allen County, Ad Valorem Property Tax, first mortgage, 5.00%, 1/15/38 | 250,000 | 300,758 | ||||||||
|
| |||||||||
| Kansas 0.4% | ||||||||||
Douglas County USD No. 497 GO, Series A, 3.50%, 9/01/32 | 100,000 | 109,439 | ||||||||
|
| |||||||||
| Louisiana 0.6% | ||||||||||
Louisiana GO, Series B, 4.00%, 10/01/34 | 155,000 | 174,970 | ||||||||
|
| |||||||||
| Maine 2.4% | ||||||||||
Maine Municipal Bond Bank Revenue, Series C, 5.00%, 11/01/31 | 100,000 | 124,505 | ||||||||
Maine State Housing Authority Mortgage Purchase Revenue, Series F, 3.85%, 11/15/33 | 500,000 | 555,855 | ||||||||
|
| |||||||||
| 680,360 | ||||||||||
|
| |||||||||
| Maryland 0.8% | ||||||||||
Maryland State GO, State and Local Facilities Loan, First Series, 5.00%, 3/15/32 | 100,000 | 129,484 | ||||||||
Prince George’s County GO, Consolidated Public Improvement, Series A, 3.00%, 9/15/32 | 100,000 | 107,331 | ||||||||
|
| |||||||||
| 236,815 | ||||||||||
|
| |||||||||
| Massachusetts 3.4% | ||||||||||
Braintree GO, municipal Purpose Loan of 2019, Refunding, 4.00%, 6/01/32 | 250,000 | 294,082 | ||||||||
Massachusetts Bay Transportation Authority Sales Tax Revenue, Sustainability Bonds, Subordinate, Series A, SubseriesA-1, 5.00%, 7/01/33 | 100,000 | 122,284 | ||||||||
Massachusetts State Development Finance Agency Revenue, Worcester Polytechnic Institute Issue, 4.00%, 9/01/44 | 400,000 | 430,892 | ||||||||
University of Massachusetts Building Authority Revenue, Refunding, Senior SeriesA-1, 5.00%, 5/01/31 | 100,000 | 127,731 | ||||||||
|
| |||||||||
| 974,989 | ||||||||||
|
| |||||||||
| Michigan 1.0% | ||||||||||
Lansing Board of Water and Light Utility System Revenue, Series A, 5.00%, 7/01/35 | 225,000 | 291,454 | ||||||||
|
| |||||||||
| Minnesota 3.3% | ||||||||||
Center City Health Care Facilities Revenue, Hazelden Betty Ford Foundation Project, Refunding, 4.00%, 11/01/34 | 125,000 | 139,248 | ||||||||
Minnesota State HFAR, State Appropriation Bonds, Housing Infrastructure, Series C, | 250,000 | 287,462 | ||||||||
Minnesota State Higher Education Facilities Authority Revenue, Macalester College, Refunding, 3.00%, 3/01/35 | 150,000 | 157,047 | ||||||||
Northern Municipal Power Agency Electric System Revenue, Refunding, 5.00%, 1/01/36 | 100,000 | 118,280 | ||||||||
Southern Minnesota Municipal Power Agency Power Supply System Revenue, Series A, | 100,000 | 123,223 | ||||||||
University of Minnesota GO, Series A, 5.00%, 9/01/42 | 100,000 | 121,163 | ||||||||
|
| |||||||||
| 946,423 | ||||||||||
|
| |||||||||
| 24 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Municipal Bond ETF(continued)
| Principal Amount* | Value | |||||||||
| Municipal Bonds (continued) | ||||||||||
| Missouri 2.5% | ||||||||||
Missouri State Health and Educational Facilities Authority Health Facilities Revenue, St. Luke’s Episcopal-Presbyterian Hospitals, 4.00%, 12/01/35 | 525,000 | $ | 599,398 | |||||||
Platte County School District Park Hill GO, Direct Deposit Program, 3.00%, 3/01/33 | 100,000 | 106,105 | ||||||||
|
| |||||||||
| 705,503 | ||||||||||
|
| |||||||||
| Montana 0.4% | ||||||||||
Cascade County High School District No. 1 Great Falls GO, School Building, 5.00%, 7/01/25 | 100,000 | 118,103 | ||||||||
|
| |||||||||
| Nevada 2.4% | ||||||||||
Clark County School District GO, Building, Refunding, Series A, 5.00%, 6/15/26 | 100,000 | 118,431 | ||||||||
Las Vegas GO, Limited Tax, Various Purpose, Refunding, Series C, 4.00%, 6/01/32 | 500,000 | 574,360 | ||||||||
|
| |||||||||
| 692,791 | ||||||||||
|
| |||||||||
| New Hampshire 0.4% | ||||||||||
New Hampshire State Health and Education Facilities Authority Revenue, University System of New Hampshire Issue, Refunding, Series A, 5.00%, 7/01/27 | 100,000 | 124,809 | ||||||||
|
| |||||||||
| New Jersey 2.7% | ||||||||||
New Jersey State Transportation Trust Fund Authority Revenue, Transportation System, Capital Appreciation, Series C, AGMC Insured, zero cpn., 0.01%, 12/15/29 | 870,000 | 665,550 | ||||||||
Pinelands Regional School District GO, Refunding, AGMC Insured, 3.00%, 8/01/27 | 100,000 | 108,045 | ||||||||
|
| |||||||||
| 773,595 | ||||||||||
|
| |||||||||
| New Mexico 0.4% | ||||||||||
Santa Fe Net Wastewater Utility System/ Environmental Services Gross Receipts Tax Improvement Revenue, Climate Bond Certified, Green Bonds, BAM Insured, 4.00%, 6/01/35 | 100,000 | 114,556 | ||||||||
|
| |||||||||
| New York 6.8% | ||||||||||
Long Island Power Authority Electric System Revenue, General, Series A, 5.00%, 9/01/28 | 300,000 | 372,642 | ||||||||
MTA Revenue, Transportation, Green Bonds, Climate Bond Certified, Refunding, Series B, | 100,000 | 111,428 | ||||||||
New York City GO, Fiscal 2018, Series B, SubseriesB-1, 4.00%, 10/01/36 | 100,000 | 112,738 | ||||||||
New York City Transitional Finance Authority Revenue, Future Tax Secured, Subordinate, Fiscal 2018, Series B, SubseriesB-1, 5.00%, 8/01/34 | 100,000 | 121,092 | ||||||||
New York State Dormitory Authority Revenues, Rochester Institute of Technology, Series A, | 300,000 | 373,083 | ||||||||
New York State Dormitory Authority Revenues,Non-State Supported Debt, School Districts, Financing Program, Refunding, Series G, BAM Insured, 3.00%, 10/01/33 | 100,000 | 103,770 | ||||||||
New York State Dormitory Authority Sales Tax Revenue, Series A, 5.00%, 3/15/33 | 600,000 | 747,972 | ||||||||
|
| |||||||||
| 1,942,725 | ||||||||||
|
| |||||||||
| North Carolina 0.8% | ||||||||||
University of North Carolina at Charlotte Revenue, General, Board of Governors, Refunding, | 100,000 | 113,700 | ||||||||
Winston-Salem City Water and Sewer System Revenue, 4.00%, 6/01/33 | 100,000 | 115,137 | ||||||||
|
| |||||||||
| 228,837 | ||||||||||
|
| |||||||||
| Ohio 6.4% | ||||||||||
Columbus GO, Series A, 3.00%, 4/01/28 | 100,000 | 110,233 | ||||||||
Franklin County Hospital Facilities Revenue, Nationwide Children’s Hospital Project, Refunding, Series A, 3.125%, 11/01/33 | 50,000 | 52,818 | ||||||||
Franklin County Sales Tax Revenue, Various Purpose, 5.00%, 6/01/43 | 450,000 | 554,661 | ||||||||
Hudson City School District GO, School Improvement, 4.00%, 12/01/31 | 100,000 | 113,200 | ||||||||
Licking Heights Local School District GO, School Facilities Construction and Improvement, Series B, 5.00%, 10/01/30 | 100,000 | 122,620 | ||||||||
Northeast Regional Sewer District Revenue, Wastewater Improvement, Refunding, | 500,000 | 542,380 | ||||||||
Northeast Regional Sewer District Revenue, Wastewater Improvement, Refunding, | 100,000 | 115,505 | ||||||||
| franklintempleton.com | Annual Report | 25 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Municipal Bond ETF(continued)
| Principal Amount* | Value | |||||||||
| Municipal Bonds (continued) | ||||||||||
| Ohio (continued) | ||||||||||
Ohio State GO, Highway Capital Improvements, Full Faith and Credit/Highway User Receipts, Series S, 5.00%, 5/01/23 | 100,000 | $ | 111,742 | |||||||
Ohio State Water Development Authority Revenue, Community Assistance, Refunding, 4.00%, 12/01/30 | 100,000 | 123,182 | ||||||||
|
| |||||||||
| 1,846,341 | ||||||||||
|
| |||||||||
| Oklahoma 2.0% | ||||||||||
Oklahoma City GO, 4.00%, 3/01/33 | 500,000 | 565,870 | ||||||||
|
| |||||||||
| Oregon 1.3% | ||||||||||
Oregon State Housing and Community Services Department Mortgage Revenue, Series D, | 95,000 | 100,127 | ||||||||
Portland Community College District GO, Multnomah Washington Yamhill Clackamas and Columbia Counties, Refunding, 5.00%, 6/15/25 | 100,000 | 119,070 | ||||||||
Washington County GO, Full Faith and Credit Obligations, Series B, 5.00%, 3/01/25 | 125,000 | 147,286 | ||||||||
|
| |||||||||
| 366,483 | ||||||||||
|
| |||||||||
| Pennsylvania 1.5% | ||||||||||
Pennsylvania State Economic Development Financing Authority Revenue, UPMC, Refunding, Series A, 3.375%, 11/15/33 | 125,000 | 130,496 | ||||||||
Pennsylvania State University Revenue, Series A, 5.00%, 9/01/38 | 250,000 | 313,890 | ||||||||
|
| |||||||||
| 444,386 | ||||||||||
|
| |||||||||
| Tennessee 3.9% | ||||||||||
Chattanooga Health Educational and Housing Facility Board Revenue, Commonspirit Health, Refunding, SeriesA-1, 5.00%, 8/01/25 | 250,000 | 284,870 | ||||||||
Kingsport GO, Series B, 3.00%, 3/01/35 | 130,000 | 134,437 | ||||||||
Lawrenceburg GO, Refunding, 2.50%, 6/01/27 | 100,000 | 102,964 | ||||||||
Metropolitan Government of Nashville and Davidson County GO, Improvement, Refunding, | 100,000 | 116,642 | ||||||||
Metropolitan Government of Nashville and Davidson County Water and Sewer Revenue, Green Bonds, Subordinate, Refunding, Series A, 5.00%, 7/01/36 | 100,000 | 121,253 | ||||||||
Tennessee HDA Residential Finance Program Revenue, Issue2019-2, Refunding, | 250,000 | 251,825 | ||||||||
Tennessee State School Bond Authority Revenue, Higher Educational Facilities Second Program, Series A, 5.00%, 11/01/37 | 100,000 | 122,414 | ||||||||
|
| |||||||||
| 1,134,405 | ||||||||||
|
| |||||||||
| Texas 7.8% | ||||||||||
El Paso Water and Sewer Revenue, Refunding and Improvement, 4.00%, 3/01/33 | 100,000 | 113,868 | ||||||||
Fort Worth Water and Sewer Revenue, System, 5.00%, 2/15/32 | 265,000 | 330,927 | ||||||||
| a | Lamar Consolidated ISD, GO, Fort Bend County, School House, PSF Guarantee, | 600,000 | 730,422 | |||||||
Pflugerville ISD, GO, Series A, PSF Guarantee, 5.00%, 2/15/29 | 100,000 | 126,764 | ||||||||
Round Rock Utility Revenue, Refunding, 2.75%, 8/01/29 | 100,000 | 105,565 | ||||||||
Texas A&M University System Board of Regents Revenue, Financing System, Refunding, Series C, 5.00%, 5/15/33 | 100,000 | 123,463 | ||||||||
Texas State Water Development Board Revenue, | 100,000 | 116,988 | ||||||||
Water Implementation Fund, Series A, 4.00%, 10/15/35 | 500,000 | 581,340 | ||||||||
|
| |||||||||
| 2,229,337 | ||||||||||
|
| |||||||||
| Utah 2.7% | ||||||||||
Provo GO, Refunding, 4.00%, 1/01/23 | 100,000 | 107,823 | ||||||||
South Jordan Sales Tax Revenue, Refunding, 5.00%, 8/15/38 | 250,000 | 316,332 | ||||||||
Utah State Building Ownership Authority Lease Revenue, State Facilities Master Lease Program, 2.50%, 5/15/27 | 100,000 | 105,037 | ||||||||
Utah State Water Finance Agency Revenue, Loan Financing Program, Series B, 5.00%, 3/01/38 | 200,000 | 251,010 | ||||||||
|
| |||||||||
| 780,202 | ||||||||||
|
| |||||||||
| 26 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Municipal Bond ETF(continued)
| Principal Amount* | Value | |||||||||
| Municipal Bonds (continued) | ||||||||||
| Virginia 3.6% | ||||||||||
Arlington County GO, Public Improvement, 4.00%, 6/15/35 | 500,000 | $ | 595,895 | |||||||
Henrico County Water and Sewer System Revenue, Refunding, 4.00%, 5/01/32 | 250,000 | 299,195 | ||||||||
Virginia College Building Authority Educational Facilities Revenue, Public Higher Education Financing Program, Series A, 5.00%, 9/01/32 | 100,000 | 127,500 | ||||||||
|
| |||||||||
| 1,022,590 | ||||||||||
|
| |||||||||
| Washington 7.8% | ||||||||||
Cascase Schol District No. 228 GO, Chelan County, 5.00%, 12/01/35 | 455,000 | 542,210 | ||||||||
King and Snohomish Counties School District No 417 Northshore GO, 5.00%, 12/01/31 | 100,000 | 126,336 | ||||||||
Seattle Drainage and Wastewater Revenue, Refunding, 4.00%, 4/01/31 | 125,000 | 141,788 | ||||||||
Seattle Municipal Light and Power Revenue, Improvement and Refunding, Series C, | 700,000 | 798,819 | ||||||||
Spokane County School District No. 356 Central Valley GO, | 310,000 | 391,418 | ||||||||
5.00%, 12/01/26 | 100,000 | 123,629 | ||||||||
Washington Health Care Facilities Authority Revenue, MultiCare Health System, Refunding, Series B, 5.00%, 8/15/29 | 100,000 | 122,337 | ||||||||
|
| |||||||||
| 2,246,537 | ||||||||||
|
| |||||||||
| Wisconsin 0.4% | ||||||||||
Brookfield GO, Waukesha County, Refunding, 3.00%, 12/01/25 | 100,000 | 107,931 | ||||||||
|
| |||||||||
Total Investments (Cost $27,529,730) 98.9% | 28,363,949 | |||||||||
Other Assets, less Liabilities 1.1% | 310,192 | |||||||||
|
| |||||||||
Net Assets 100.0% | $ | 28,674,141 | ||||||||
|
| |||||||||
See Abbreviations on page 37.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aSecurity purchased on a when-issued basis. See Note 1(b)
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 27 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
March 31, 2020
| Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Assets: |
| |||||||
Investments in securities: |
| |||||||
Cost – Unaffiliated issuers | $ | 10,438,040 | $ | 27,529,730 | ||||
|
| |||||||
Value – Unaffiliated issuers | $ | 10,332,905 | $ | 28,363,949 | ||||
Cash | 2,005,280 | 897,964 | ||||||
Receivables: |
| |||||||
Interest | 104,029 | 260,643 | ||||||
Affiliates | 3,234 | — | ||||||
|
| |||||||
Total assets | 12,445,448 | 29,522,556 | ||||||
|
| |||||||
Liabilities: |
| |||||||
Payables: |
| |||||||
Investment securities purchased | — | 729,647 | ||||||
Management fees | — | 257 | ||||||
Transfer agent fees | 14,300 | 14,300 | ||||||
Distributions to shareholders | 24,936 | 58,399 | ||||||
Custodian fees | 1,133 | 1,134 | ||||||
Professional fees | 28,417 | 28,815 | ||||||
Reports to shareholders | 531 | 395 | ||||||
Registration and filing fees | 7,933 | 9,584 | ||||||
Accrued expenses and other liabilities | 5,881 | 5,884 | ||||||
|
| |||||||
Total liabilities | 83,131 | 848,415 | ||||||
|
| |||||||
Net assets, at value | $ | 12,362,317 | $ | 28,674,141 | ||||
|
| |||||||
Net assets consist of: |
| |||||||
Paid-in capital | $ | 12,632,298 | $ | 28,260,188 | ||||
Total distributable earnings (loss) | (269,981 | ) | 413,953 | |||||
|
| |||||||
Net assets, at value | $ | 12,362,317 | $ | 28,674,141 | ||||
|
| |||||||
Shares outstanding | 500,000 | 1,100,000 | ||||||
|
| |||||||
Net asset value per share | $ | 24.72 | $ | 26.07 | ||||
|
| |||||||
| 28 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the year ended March 31, 2020
| Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Investment income: |
| |||||||
Interest: |
| |||||||
Unaffiliated issuers | $ | 238,204 | $ | 447,976 | ||||
|
| |||||||
Total investment income | 238,204 | 447,976 | ||||||
|
| |||||||
Expenses: |
| |||||||
Management fees (Note 3a) | 57,375 | 135,216 | ||||||
Transfer agent fees | 15,600 | 15,600 | ||||||
Custodian fees | 1,236 | 1,238 | ||||||
Reports to shareholders | 8,147 | 8,260 | ||||||
Registration and filing fees | 7,152 | 8,916 | ||||||
Professional fees | 40,281 | 41,070 | ||||||
Trustee fees (Note 3a) | 977 | 2,171 | ||||||
Other | 3,551 | 3,593 | ||||||
|
| |||||||
Total expenses | 134,319 | 216,064 | ||||||
Expenses waived/paid by affiliates (Note 3c) | (106,779 | ) | (151,161 | ) | ||||
|
| |||||||
Net expenses | 27,540 | 64,903 | ||||||
|
| |||||||
Net investment income | 210,664 | 383,073 | ||||||
|
| |||||||
Realized and unrealized gains (losses): |
| |||||||
Net realized gain (loss) from: |
| |||||||
Investments: |
| |||||||
Unaffiliated issuers | (14,462 | ) | (195,163 | ) | ||||
|
| |||||||
Net realized gain (loss) | (14,462 | ) | (195,163 | ) | ||||
|
| |||||||
Net change in unrealized appreciation (depreciation) on: |
| |||||||
Investments: |
| |||||||
Unaffiliated issuers | (215,491 | ) | 681,191 | |||||
|
| |||||||
Net change in unrealized appreciation (depreciation) | (215,491 | ) | 681,191 | |||||
|
| |||||||
Net realized and unrealized gain (loss) | (229,953 | ) | 486,028 | |||||
|
| |||||||
Net increase (decrease) in net assets resulting from operations | $ | (19,289 | ) | $ | 869,101 | |||
|
| |||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 29 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 210,664 | $ | 187,936 | $ | 383,073 | $ | 200,879 | ||||||||
Net realized gain (loss) | (14,462 | ) | (95,411 | ) | (195,163 | ) | (68,214 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (215,491 | ) | 266,104 | 681,191 | 339,144 | |||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (19,289 | ) | 358,629 | 869,101 | 471,809 | |||||||||||
|
| |||||||||||||||
Distributions to shareholders | (240,496 | ) | (187,559 | ) | (528,067 | ) | (200,714 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 5,132,298 | — | 19,513,471 | 1,246,717 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 4,872,513 | 171,070 | 19,854,505 | 1,517,812 | ||||||||||||
|
| |||||||||||||||
Net assets: | ||||||||||||||||
Beginning of year | 7,489,804 | 7,318,734 | 8,819,636 | 7,301,824 | ||||||||||||
|
| |||||||||||||||
End of year | $ | 12,362,317 | $ | 7,489,804 | $ | 28,674,141 | $ | 8,819,636 | ||||||||
|
| |||||||||||||||
| 30 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting offorty-two 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). Each of the Funds are an exchange traded fund (ETF) and are actively managed, thus they are not designed to track an index.
The following summarizes the Fund’s 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 as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. 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.
Debt securities generally trade in theover-the-counter (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.
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.
b. Securities Purchased on a When-Issued Basis
Certain or all Funds purchase securities on a when-issued 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 Funds will generally purchase these securities with the intention of holding the securities, they may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.
c. Income 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.
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 March 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.
d. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are
| franklintempleton.com | Annual Report | 31 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
d. Security Transactions, Investment Income, Expenses and Distributions(continued)
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. Distributions to shareholders are recorded on theex-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.
For the year ended March 31, 2019, distributions to shareholders were as follows:
| Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Distributions from net investment income | $ | (187,559 | ) | $ | (200,714 | ) | ||
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. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense.
e. Insurance
The scheduled payments of interest and principal for each insured municipal security in the Trust are insured by either a new issue insurance policy or a secondary insurance policy. Some municipal securities in the Funds are secured by collateral guaranteed by an agency of the U.S. government. Depending on the type of coverage, premiums for insurance are either added the cost basis of the security or paid by a third party.
Insurance companies typically insure municipal bonds that tend to be of very high quality, with the majority of underlying municipal bonds rated A or better. However, an event involving an insurer could have an adverse effect on the value of the securities insured by that insurance company. There can be no assurance the insurer will be able to fulfill its obligations under the terms of the policy.
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.
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specific number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in
| 32 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest(continued)
amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities). For the year ended March 31, 2020, all Creation Unit transactions were made in cash.
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At March 31, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| Franklin Liberty Intermediate Municipal Opportunities ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 250,000 | $ | 6,287,252 | 200,000 | $ | 4,872,980 | ||||||||||||||
Shares redeemed | (50,000 | ) | (1,154,954 | ) | (200,000 | ) | (4,872,980 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 200,000 | $ | 5,132,298 | — | $ | — | ||||||||||||||
|
| |||||||||||||||||||
| Franklin Liberty Municipal Bond ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 800,000 | $ | 20,827,910 | 50,000 | $ | 1,246,717 | ||||||||||||||
Shares redeemed | (50,000 | ) | (1,314,439 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 750,000 | $ | 19,513,471 | 50,000 | $ | 1,246,717 | ||||||||||||||
|
| |||||||||||||||||||
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 Funds are also officers. Any one to be used- and/or directors of the following subsidiaries:
| Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal Underwriter | |
| franklintempleton.com | Annual Report | 33 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
a. Management Fees
The Funds pay an investment management fee to Advisers based on the daily net assets of each of the Funds as follows:
| 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% | In excess of $20 billion | |
For the year ended March 31, 2020, each Fund’s gross effective investment management fee rate based on average daily net assets was as follows:
| Annualized Fee Rate | ||
Franklin Liberty Intermediate Municipal Opportunities ETF | 0.625% | |
Franklin Liberty Municipal Bond ETF | 0.625% |
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. Waiver and Expense Reimbursements
Advisers have contractually agreed in advance to waive or limit its fees and to assume as their own expense certain expenses otherwise payable by the Funds so that the expenses (including acquired fund fees and expenses) for each of the Funds does not exceed 0.30%, based on the average net assets (other than certainnon-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until July 31, 2020. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.
d. Other Affiliated Transactions
At March 31, 2020, the shares of the Funds were owned by the following entities:
| Fund | Shares | Percentage of Outstanding Sharesa | ||||||
| Franklin Liberty Municipal Bond ETF | ||||||||
Franklin Federal Limited-Term | 715,000 | 65.0% | ||||||
|
| |||||||
| Franklin Liberty Intermediate Municipal Opportunities ETF | ||||||||
Franklin High YieldTax-Free Income | 100,000 | 20.0% | ||||||
Franklin Templeton SMACS Series | 40,000 | 8.0% | ||||||
|
| |||||||
| 140,000 | 28.0% | |||||||
|
| |||||||
aInvestment activities of significant shareholders could have a material impact on the Funds.
| 34 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. At March 31, 2020, the capital loss carryforwards were as follows:
| Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
| Capital loss carryforwards not subject to expiration: | ||||||||
Short term | $ | 64,623 | $ | 217,482 | ||||
Long term | 71,840 | 65,114 | ||||||
|
| |||||||
Total capital loss carryforwards | $ | 136,463 | $ | 282,596 | ||||
|
| |||||||
The tax character of distributions paid during the year ended March 31, 2020 and 2019 were as follows:
| Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Distributions paid from: | ||||||||||||||||||||
Tax exempt income | $ | 240,496 | $ | 187,559 | $ | 528,067 | $ | 200,714 | ||||||||||||
Ordinary income | — | — | — | — | ||||||||||||||||
|
| |||||||||||||||||||
Distributions paid from ordinary income | $ | 240,496 | $ | 187,559 | $ | 528,067 | $ | 200,714 | ||||||||||||
|
| |||||||||||||||||||
At March 31, 2020, the cost of investments, net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:
Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Cost of investments | $ | 10,450,263 | $ | 27,654,365 | ||||
|
| |||||||
Unrealized appreciation | $ | 255,052 | $ | 831,207 | ||||
Unrealized depreciation | (372,410 | ) | (121,623 | ) | ||||
|
| |||||||
Net unrealized appreciation (depreciation) | $ | (117,358 | ) | $ | 709,584 | |||
|
| |||||||
Distributions earning- undistrbuted tax except income | $ | 8,776 | $ | 45,363 | ||||
|
| |||||||
5. Investment Transactions
Purchases and sales of investments (excluding short term securities andin-kind transactions, if any) for the year ended March 31, 2020, were as follows:
| Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Purchases | $ | 6,507,997 | $ | 23,050,171 | ||||
Sales | $ | 3,201,283 | $ | 3,611,139 | ||||
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
6. Novel Coronavirus Pandemic
The global outbreak of the novel coronavirus disease, known asCOVID-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
7. Credit Risk and Defaulted Securities
At March 31, 2020, Franklin Liberty Intermediate Municipal Opportunities ETF had 23.79% of its portfolio invested in high yield securities, 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 may purchase thepre-default or defaulted debt of distressed companies. Distressed companies are financially troubled and could be or are already involved in financial restructuring or bankruptcy. Risks associated with purchasing these securities include the possibility that the bankruptcy or other restructuring process takes longer than expected, or that distributions in restructuring are less than anticipated, either or both of which may result in unfavorable consequences to the Fund. If it becomes probable that the income on debt securities, including those distressed companies, will not be collected, the Fund discontinues accruing income and recognizes an adjustment for uncollectible interest. At March 31, 2020, the aggregate long value of distressed company securities for which interest recognition has been discontinued representing 0.71% of the Fund’s net assets. For information as to specific securities, see the accompanying Statement of Investments.
8. 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) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
At March 31, 2020, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 2 inputs.
9. New Accounting Pronouncement
In March 2020, the Financial Accounting Standards Board (FASB) 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 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 is currently evaluating the impact, if any, of applying this ASU.
10. 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.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
| Selected Portfolio | ||
| AGMC | Assured Guaranty Municipal Corp. | |
| BAM | Build America Mutual Assurance Co. | |
| CDA | Community Development Authority/Agency | |
| CFD | Community Facilities District | |
| EDC | Economic Development Corp. | |
| EDR | Economic Development Revenue | |
| GO | General Obligation | |
| ID | Improvement District | |
| IDA | Industrial Development Authority/Agency | |
| IDAR | Industrial Development Authority Revenue | |
| ISD | Independent School District | |
| MFHR | Multi-Family Housing Revenue | |
| MTA | Metropolitan Transit Authority | |
| PFA | Public Financing Authority | |
| PSF | Permanent School Fund | |
| RDA | Redevelopment Agency/Authority | |
| USD | Unified/Union School District | |
| franklintempleton.com | Annual Report | 37 | ||||
FRANKLIN TEMPLETON ETF TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Franklin Templeton ETF Trust and Shareholders of Franklin Liberty Intermediate Municipal Opportunities ETF and Franklin Liberty Municipal Bond ETF
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin Liberty Intermediate Municipal Opportunities ETF and Franklin Liberty Municipal Bond ETF (the “Funds”) as of March 31, 2020, the related statements of operations for the year ended March 31, 2020, the statements of changes in net assets for each of the two years in the period ended March 31, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2020, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended March 31, 2020 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of March 31, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
San Francisco, California
May 19, 2020
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
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FRANKLIN TEMPLETON ETF TRUST
Under Section 852(b)(5)(A) of the Internal Revenue Code, the Funds hereby report 100% of the distributions paid from net investment income as exempt-interest dividends for the fiscal year ended March 31, 2020. A portion of the Funds’ exempt-interest dividends may be subject to the federal alternative minimum tax. Bymid-February 2021, shareholders will be notified of amounts for use in preparing their 2020 income tax returns.
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FRANKLIN TEMPLETON ETF TRUST
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Rohit Bhagat (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Lead Independent Trustee and Trustee | Since 2016 | 44 | Axis Bank (2013-present), AssetMark Financial Holdings, Inc. (investment solutions) (2018-present) and FlipKart Limited (2019-present) (eCommerce company);formerly, CapFloat Financial Services Pvt., Ltd.(non-banking finance company) (2018) and Zentific Investment Management (hedge fund) (2015-2018). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Managing Member, Mukt Capital, LLC (private investment firm) (2014-present); Advisor, Optimal Asset Management (investment technology and advisory services company) (2015-present); andformerly, Chairman, Asia Pacific, BlackRock (2009-2012); Global Chief Operating Officer, Barclays Global Investors (investment management) (2005-2009); and Senior Partner, The Boston Consulting Group (management consulting) (1992-2005). | ||||||||
| Deborah D. McWhinney (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since January 2020 | 44 | Fluor Corporation (construction and engineering) (2014-present), IHS Markit (information services)(2015-present), Borg Warner (automotive) (2018-present) and Focus Financial Partner, LLC (financial services) (2018-present). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Director of various companies; andformerly, Board Member, Lloyds Banking Group (2015-2018) (financial institution) and Fresenius Medical Group (2016-2018) (healthcare); Chief Executive Officer (2013-2014) and Chief Operating Officer (2011-2013), CitiGroup Global Enterprise Payments (financial services); and President, Citi’s Personal Banking and Wealth Management (2009-2011). | ||||||||
| Anantha K. Pradeep (1963) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since 2016 | 44 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, Smilable, Inc. (technology company) (2014-present); Chief Executive Officer, MachineVantage (technology company) (2018-present); Founder and Managing Partner, Consult Meridian, LLC (consulting company) (2009-present); andformerly, Founder, BoardVantage (board portal solutions provider delivering paperless process for boards and leadership) (2000-2002). | ||||||||
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FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| **Jennifer M. Johnson (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee and Chairperson of the Board | Since 2016 | 49 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, President and Director, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of four of the investment companies in Franklin Templeton; andformerly, Chief Operating Officer and Executive Vice President, Franklin Resources, Inc. (1994-2015); Executive Vice President of Operations and Technology, Franklin Resources, Inc. (2005-2010); and Senior Vice President, Franklin Resources, Inc. (2003-2005). | ||||||||
| Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
Breda M. Beckerle (1958) 280 Park Avenue New York, NY 10017 | Interim Chief Compliance Officer | Since January 2020 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Compliance Officer, Fiduciary Investment Management International, Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | Chief Executive Officer – Finance and Administration | Since 2017 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017). | ||||||||
| Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President – AML Compliance | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
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FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers(continued)
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Patrick O’Connor (1967) One Franklin Parkway San Mateo, CA 94403-1906 | President and Chief Executive Officer – Investment Management | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| President and Chief Investment Officer, Franklin Advisory Services, LLC; Senior Vice President, Franklin Advisers, Inc.; officer of two of the investment companies in Franklin Templeton; andformerly, Managing Director, Head of iShares Product Canada, BlackRock (1998-2014). | ||||||||
Vivek Pai (1970) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Treasurer, Chief Financial Officer and Chief Accounting Officer | Since May 2019 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Treasurer, U.S. Fund Administration & Reporting and officer of two of the investment companies in Franklin Templeton. | ||||||||
| Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President and Secretary | Since 2015 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
| Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Jennifer M. Johnson is considered to be an interested person of the Fund under the federal securities laws due to her position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated Rohit Bhagat as its audit committee financial expert. The Board believes that Mr. Bhagat qualifies as such an expert in view of his extensive business background and experience, including extensive experience in the asset management and financial services industries. Mr. Bhagat has been a Member and Chairman of the Fund’s Audit Committee since 2016. As a result of such background and experience, the Board believes that Mr. Bhagat has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Bhagat is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request.
Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
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FRANKLIN TEMPLETON ETF TRUST
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 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 recent12-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 FormN-PORT. Shareholders may view the filed FormN-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.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at franklintempleton.com.
| franklintempleton.com | Annual Report | 43 | ||||
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.
 | Annual Report Franklin Templeton ETF Trust | |||||
| Investment Manager | Distributor | Investor Services | ||||
| Franklin Advisers, Inc. | Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 franklintempleton.com | Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 | ||||
| © 2020 Franklin Templeton Investments. All rights reserved. | ETF4 A 05/20 | |||||
ANNUAL REPORT
FRANKLIN TEMPLETON
ETF TRUST
March 31, 2020
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Japan ETF | |
Franklin FTSE Australia ETF | Franklin FTSE Japan Hedged ETF | |
Franklin FTSE Brazil ETF | Franklin FTSE Latin America ETF | |
Franklin FTSE Canada ETF | Franklin FTSE Mexico ETF | |
Franklin FTSE China ETF | Franklin FTSE Russia ETF | |
Franklin FTSE Europe ETF | Franklin FTSE Saudi Arabia ETF | |
Franklin FTSE Europe Hedged ETF | Franklin FTSE South Africa ETF | |
Franklin FTSE France ETF | Franklin FTSE South Korea ETF | |
Franklin FTSE Germany ETF | Franklin FTSE Switzerland ETF | |
Franklin FTSE Hong Kong ETF | Franklin FTSE Taiwan ETF | |
Franklin FTSE India ETF | Franklin FTSE United Kingdom ETF | |
Franklin FTSE Italy ETF |
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 to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visitfranklintempleton.com/investor/investments-and-solutions/investment-options/etfs/ for fund updates and documents.
| Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
| franklintempleton.com | Not part of the annual report | 1 | ||||
ANNUAL REPORT
Global developed and emerging market equities, as measured by the FTSEAll-World Index, declined significantly during the 12 months under review. Stocks generally rose during the period’s first nine months, but fell sharply in the first three months of 2020 as countries around the world imposed lockdowns andstay-at-home measures, which impacted many businesses, in an effort to slow the spread of the novel coronavirus(COVID-19). Concerns about global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash.
In the U.S., economic growth was relatively steady through February 2020, supported by a strong labor market and solid consumer spending growth. However,stay-at-home orders, which included business closures and restrictions, issued by many state and local governments in an effort to mitigate theCOVID-19 pandemic severely impacted the U.S. economy beginning in March 2020. The unemployment rate surged from a50-year low of 3.5% in February 2020 to 4.4% atperiod-end, as many businesses, particularly those involved in hospitality, retail and travel, began mass layoffs.1 Furthermore, consumer spending, a major economic growth engine through most of the reporting period, declined substantially in March. As a result, the economy contracted in the first quarter, following an expansion that lasted more than a decade.
The U.S. Federal Reserve (Fed) made efforts to support the U.S. economy both before and during the pandemic. The Fed cut the federal funds target rate three times in 2019, lowering it to a range of 1.50%–1.75%. In March 2020, as the pandemic began to severely impact the economy and financial markets, the Fed implemented two emergency rate cuts, lowering the federal funds target rate to a range of 0.00%–0.25%. In addition, the Fed announced an emergency plan to purchase government, government-backed and corporate bonds to help keep markets functioning during the economic downturn.
In the eurozone, economic growth had slowed considerably by the end of 2019, raising concerns that the region was on
the verge of a recession. As the magnitude of the disruption caused by theCOVID-19 pandemic became apparent, some analysts forecasted a deep economic contraction in 2020’s first and second quarters. Several European countries were impacted substantially by the pandemic, particularly Italy and Spain. European developed market equities, as measured by the FTSE Developed Europe Index, declined significantly for the period, as gains resulting from easing trade tensions and a Brexit agreement were more than offset by the market downturn in 2020’s first quarter.
Asia Pacific developed and emerging market equities, as measured by the FTSE Asia Pacific Index, also declined significantly during the12-month period. Before the pandemic, Asian stocks advanced, aided by easing trade tensions and the eventual U.S.-China phase one trade agreement. However, following the onset of the pandemic, economic activity in Asia slowed dramatically as many businesses temporarily halted operations in heavily affected countries and manufacturing activity plummeted in the region’s major economies, notably China, South Korea and Japan. In addition, export-focused Asia Pacific economies were hurt by a contraction in demand from other parts of the world.
Emerging market stocks, as measured by the FTSE Emerging Index, rose for the period’s first nine months, but declined substantially during the rest of the12-month period in the wake of theCOVID-19 pandemic. A sharp decline in prices for oil and other natural resources also hurt emerging market economies reliant on these exports.
The foregoing information reflects our analysis and opinions as of March 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: U.S. Bureau of Labor Statistics.
| 2 | Annual Report | franklintempleton.com | ||
Franklin FTSE Asia ex Japan ETF
This annual report for Franklin FTSE Asia ex Japan ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Asia ex Japan RIC Capped Index (the FTSE Asia ex Japan Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Asia ex Japan Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-14.85% based on market price and-13.88% based on net asset value. In comparison, the FTSE Asia ex Japan Capped Index posted a-13.87% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 5.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Asia ex Japan Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Banks | 12.2% | |||
| Internet & Direct Marketing Retail | 9.9% | |||
| Interactive Media & Services | 8.0% | |||
| Semiconductors & Semiconductor Equipment | 7.0% | |||
| Technology Hardware, Storage & Peripherals | 6.1% | |||
| Insurance | 5.9% | |||
| Real Estate Management & Development | 4.7% | |||
| Oil, Gas & Consumable Fuels | 3.4% | |||
| Electronic Equipment, Instruments & Components | 2.6% | |||
| Food Products | 2.2% | |||
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Asia ex Japan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Asia ex Japan Capped Index is based on the FTSE Asia ex Japan Index and is designed to measure the performance of large- andmid-capitalization stocks from developed and emerging Asian countries, excluding Japan. The Chinese constituents in the FTSE Asia ex Japan Capped Index are represented byH-shares,B-shares,N-shares, Red Chips,P-Chips andS-Chips.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 142.
| franklintempleton.com | Annual Report | 3 | ||||
FRANKLIN FTSE ASIA EX JAPAN ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Alibaba Group Holding Ltd., ADR Internet & Direct Marketing Retail, China | 7.8% | |||
| Tencent Holdings Ltd. Interactive Media & Services, China | 6.4% | |||
| Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan | 4.9% | |||
| Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea | 4.8% | |||
| AIA Group Ltd. Insurance, Hong Kong | 2.5% | |||
| China Construction Bank Corp., A, H Banks, China | 1.7% | |||
| Ping An Insurance (Group) Co. of China Ltd., H Insurance, China | 1.2% | |||
| Industrial & Commercial Bank of China Ltd., H Banks, China | 1.2% | |||
| Reliance Industries Ltd. Oil, Gas & Consumable Fuels, India | 1.0% | |||
| Meituan Dianping, B, Reg S Internet & Direct Marketing Retail, China | 1.0% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was information technology. Individual holdings that lifted the Fund’s absolute return included Taiwan Semiconductor Manufacturing, Alibaba Group Holding and Meituan Dianping.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, industrials and real estate. Individual holdings that hindered the Fund’s absolute return included Baidu, Axis Bank and Housing Development Finance.
Thank you for your participation in Franklin FTSE Asia ex Japan ETF. We look forward to serving your future investment needs.
| Top 10 Countries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| China | 43.6% | |||
| Taiwan | 13.3% | |||
| South Korea | 12.7% | |||
| Hong Kong | 9.3% | |||
| India | 9.0% | |||
| Singapore | 3.4% | |||
| Thailand | 2.6% | |||
| Malaysia | 2.4% | |||
| Indonesia | 1.6% | |||
| Philippines | 1.0% | |||
 |
Dina Ting, CFA |
 |
Louis Hsu, CFA |
Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
CFA® is a trademark owned by CFA Institute.
| 4 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE ASIA EX JAPAN ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/9/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -13.88% | -14.85% | -13.88% | -14.85% | ||||||||||||
Since Inception (2/6/18) | -18.52% | -19.11% | -9.11% | -9.41% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 7 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 5 | ||||
FRANKLIN FTSE ASIA EX JAPAN ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
2/6/18–3/31/20
See page 7 for Performance Summary footnotes.
| 6 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE ASIA EX JAPAN ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.504588 |
Total Annual Operating Expenses5
0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Asian issuers involve risks that are specific to Asia, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Asia ex Japan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Asia ex Japan Capped Index is based on the FTSE Asia ex Japan Index and is designed to measure the performance of large- andmid-capitalization stocks from developed and emerging Asian countries, excluding Japan. The Chinese constituents in the FTSE Asia ex Japan Capped Index are represented byH-shares,B-shares,N-shares, Red Chips,P-Chips andS-Chips.
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.
| franklintempleton.com | Annual Report | 7 | ||||
FRANKLIN FTSE ASIA EX JAPAN ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 907.20 | $ | 0.91 | $ | 1,024.05 | $ | 0.96 | 0.19 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 8 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Australia ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Australia RIC Capped Index (the FTSE Australia Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Australia Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-24.87% based on market price and-26.23% based on net asset value. In comparison, the FTSE Australia Capped Index posted a-26.24% total return for the same period.2 You can find more of the Fund’s 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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Australia Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Banks | 22.5% | |||
| Metals & Mining | 15.4% | |||
| Biotechnology | 11.1% | |||
| Equity Real Estate Investment Trusts (REITs) | 5.8% | |||
| Food & Staples Retailing | 5.4% | |||
| Capital Markets | 4.3% | |||
| Transportation Infrastructure | 3.9% | |||
| Oil, Gas & Consumable Fuels | 3.7% | |||
| Insurance | 3.7% | |||
| Multiline Retail | 3.4% | |||
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Australia Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Australia Capped Index is based on the FTSE Australia Index and is designed to measure the performance of Australian large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 174.
| franklintempleton.com | Annual Report | 9 | ||||
FRANKLIN FTSE AUSTRALIA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| CSL Ltd. Biotechnology, Australia | 11.1% | |||
| Commonwealth Bank of Australia Banks, Australia | 9.1% | |||
| BHP Group Ltd. Metals & Mining, Australia | 7.1% | |||
| Westpac Banking Corp. Banks, Australia | 4.9% | |||
| National Australia Bank Ltd. Banks, Australia | 4.1% | |||
| Australia & New Zealand Banking Group Ltd. Banks, Australia | 4.0% | |||
| Woolworths Group Ltd. Food & Staples Retailing, Australia | 3.7% | |||
| Wesfarmers Ltd. Multiline Retail, Australia | 3.2% | |||
| Transurban Group Transportation Infrastructure, Australia | 2.7% | |||
| Rio Tinto Ltd. Metals & Mining, Australia | 2.6% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was health care. Individual holdings that lifted the Fund’s absolute return included CSL, Fortescue Metals Group and ASX.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, materials and real estate. Individual holdings that hindered the Fund’s absolute return included Westpac Banking, Commonwealth Bank of Australia and Australia & New Zealand Banking Group.
Thank you for your participation in Franklin FTSE Australia ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 10 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE AUSTRALIA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -26.23% | -24,87% | -26.23% | -24.87% | ||||||||||||
Since Inception (11/2/17) | -24.85% | -23.13% | -11.18% | -10.35% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 13 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 11 | ||||
FRANKLIN FTSE AUSTRALIA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 13 for Performance Summary footnotes.
| 12 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE AUSTRALIA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$1.138785 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Australian issuers involve risks that are specific to Australia, including certain legal, regulatory, political and economic risks. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Australia Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Australia Capped Index is based on the FTSE Australia Index and is designed to measure the performance of Australian large- andmid-capitalization stocks
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.
| franklintempleton.com | Annual Report | 13 | ||||
FRANKLIN FTSE AUSTRALIA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 698.70 | $ | 0.38 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 14 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Brazil ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Brazil RIC Capped Index (the FTSE Brazil Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Brazil Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-40.94% based on market price and-41.69% based on net asset value. In comparison, the FTSE Brazil Capped Index posted a-41.54% total return for the same period.2 You can find more of the Fund’s 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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Brazil Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Banks | 22.3% | |||
| Metals & Mining | 12.8% | |||
| Oil, Gas & Consumable Fuels | 10.3% | |||
| Capital Markets | 5.9% | |||
| Electric Utilities | 5.9% | |||
| Multiline Retail | 5.1% | |||
| Beverages | 3.9% | |||
| Road & Rail | 3.1% | |||
| Food & Staples Retailing | 3.0% | |||
| Health Care Providers & Services | 3.0% | |||
Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Brazil Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Brazil Capped Index is based on the FTSE Brazil Index and is designed to measure the performance of Brazilian large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 177.
| franklintempleton.com | Annual Report | 15 | ||||
FRANKLIN FTSE BRAZIL ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
Vale SA Metals & Mining, Brazil | 11.1% | |||
Itau Unibanco Holding SA Banks, Brazil | 9.0% | |||
Petroleo Brasileiro SA Oil, Gas & Consumable Fuels, Brazil | 8.8% | |||
Banco Bradesco SA Banks, Brazil | 7.7% | |||
B3 SA – Brasil Bolsa Balcao Capital Markets, Brazil | 5.3% | |||
Ambev SA Beverages, Brazil | 3.9% | |||
| Itausa – Investimentos Itau SA Banks,Brazil | 2.9% | |||
Suzano SA Paper & Forest Products, Brazil | 2.1% | |||
Lojas Renner SA Multiline Retail, Brazil | 2.0% | |||
Magazine Luiza SA Multiline Retail, Brazil | 1.9% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, no sectors contributed to the Fund’s absolute performance. Individual holdings that lifted the Fund’s absolute return included GOL Linhas Aereas Inteligentes, TOTVS and Eneva.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, energy and materials. Individual holdings that hindered the Fund’s absolute return included Petrobras Brasileiro, Banco Bradesco and Itau Unibanco Holding.
Thank you for your participation in Franklin FTSE Brazil ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 16 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE BRAZIL ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/7/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -41.69% | -40.94% | -41.69% | -40.94% | ||||||||||||
Since Inception (11/3/17) | -35.69% | -35.59% | -16.77% | -16.71% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 19 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 17 | ||||
FRANKLIN FTSE BRAZIL ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/3/17–3/31/20
See page 19 for Performance Summary footnotes.
| 18 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE BRAZIL ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$1.000788 |
Total Annual Operating Expenses5
| 0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sector, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Brazilian issuers involve risks that are specific to Brazil, including certain legal, regulatory, political and economic risks. The Brazilian economy has experienced in the past, and may continue to experience, periods of high inflation rates and political unrest. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Brazil Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Brazil Capped Index is based on the FTSE Brazil Index and is designed to measure the performance of Brazilian large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 19 | ||||
FRANKLIN FTSE BRAZIL ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 567.90 | $ | 0.94 | $ | 1,023.80 | $ | 1.21 | 0.24 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 20 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Canada ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Canada RIC Capped Index (the FTSE Canada Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Canada Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-16.87% based on market price and-17.25% based on net asset value. In comparison, the FTSE Canada Capped Index posted a-17.45% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 23.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Canada Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Banks | 28.3% | |||
| Oil, Gas & Consumable Fuels | 15.5% | |||
| Road & Rail | 8.5% | |||
| Insurance | 7.7% | |||
| Metals & Mining | 7.5% | |||
| IT Services | 5.4% | |||
| Food & Staples Retailing | 4.3% | |||
| Capital Markets | 4.1% | |||
| Electric Utilities | 2.3% | |||
| Commercial Services & Supplies | 2.0% | |||
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Canada Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Canada Capped Index is based on the FTSE Canada Index and is designed to measure the performance of Canadian large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 181.
| franklintempleton.com | Annual Report | 21 | ||||
FRANKLIN FTSE CANADA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
Royal Bank of Canada Banks, Canada | 8.8% | |||
The Toronto-Dominion Bank Banks, Canada | 7.6% | |||
Enbridge, Inc. Oil, Gas & Consumable Fuels, Canada | 5.7% | |||
Canadian National Railway Co. Road & Rail, Canada | 5.5% | |||
Bank of Nova Scotia Banks, Canada | 4.9% | |||
Shopify, Inc., A IT Services, Canada | 4.1% | |||
TC Energy Corp. Oil, Gas & Consumable Fuels, Canada | 4.1% | |||
Brookfield Asset Management, Inc., A Capital Markets, Canada | 3.9% | |||
Barrick Gold Corp. Metals & Mining, Canada | 3.2% | |||
Bank of Montreal Banks, Canada | 3.2% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was information technology. Individual holdings that lifted the Fund’s absolute return included Shopify, Barrick Gold and Franco-Nevada.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, energy and consumer discretionary. Individual holdings that hindered the Fund’s absolute return included Suncor Energy, Royal Bank of Canada and Toronto Dominion Bank.
Thank you for your participation in Franklin FTSE Canada ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 22 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE CANADA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -17.25% | -16.87% | -17.25% | -16.87% | ||||||||||||
Since Inception (11/2/17) | -17.05% | -16.55% | -7.47% | -7.24% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 25 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 23 | ||||
FRANKLIN FTSE CANADA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 25 for Performance Summary footnotes.
| 24 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE CANADA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.604562 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Canadian issuers involve risks that are specific to Canada, including certain legal, regulatory, political and economic risks. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Canada Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Canada Capped Index is based on the FTSE Canada Index and is designed to measure the performance of Canadian large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 25 | ||||
FRANKLIN FTSE CANADA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 772.10 | $ | 0.40 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 26 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE China ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE China RIC Capped Index (the FTSE China Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE China Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-6.55% based on market price and-5.64% based on net asset value. In comparison, the FTSE China Capped Index posted a-5.42% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 29.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE China Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Internet & Direct Marketing Retail | 23.2% | |||
| Interactive Media & Services | 17.2% | |||
| Banks | 12.5% | |||
| Insurance | 5.3% | |||
| Real Estate Management & Development | 5.3% | |||
| Oil, Gas & Consumable Fuels | 2.6% | |||
| Wireless Telecommunication Services | 2.1% | |||
| Pharmaceuticals | 2.1% | |||
| Capital Markets | 2.0% | |||
| Diversified Consumer Services | 1.9% | |||
Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE China Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE China Capped Index is based on the FTSE China Index and is designed to measure the performance of Chinese large- andmid-capitalization stocks, as represented byH-shares,B-shares,N-shares, Red Chips,P-Chips andS-Chips.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 184.
| franklintempleton.com | Annual Report | 27 | ||||
FRANKLIN FTSE CHINA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
Alibaba Group Holding Ltd., ADR Internet & Direct Marketing Retail, China | 18.1% | |||
Tencent Holdings Ltd. Interactive Media & Services, China | 14.8% | |||
China Construction Bank Corp., A, H Banks, China | 4.0% | |||
Ping An Insurance (Group) Co. of China Ltd., H Insurance, China | 2.9% | |||
Industrial & Commercial Bank of China Ltd., H Banks, China | 2.8% | |||
Meituan Dianping, B, Reg S Internet & Direct Marketing Retail, China | 2.2% | |||
China Mobile Ltd. Wireless Telecommunication Services, China | 2.1% | |||
JD.com Inc., ADR Internet & Direct Marketing Retail, China | 1.7% | |||
Bank of China Ltd., A, H Banks, China | 1.7% | |||
Baidu Inc., ADR Interactive Media & Services, China | 1.5% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the sectors that contributed most to the Fund’s absolute performance were consumer discretionary, health care and consumer staples. Individual holdings that lifted the Fund’s absolute return included Alibaba Group Holding, Meituan Dianping and JD.com.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, communication services and energy. Individual holdings that hindered the Fund’s absolute return included Baidu, China Mobile and CNOOC.
Thank you for your participation in Franklin FTSE China ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 28 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE CHINA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -5.64% | -6.55% | -5.64% | -6.55% | ||||||||||||
Since Inception (11/2/17) | -7.54% | -7.71% | -3.20% | -3.28% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 31 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 29 | ||||
FRANKLIN FTSE CHINA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 31 for Performance Summary footnotes.
| 30 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE CHINA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.488601 |
Total Annual Operating Expenses5
0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Chinese issuers involve risks that are specific to China, including certain legal, regulatory, political and economic risks. China may be subject to considerable degrees of economic, political and social instability. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE China Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE China Capped Index is based on the FTSE China Index and is designed to measure the performance of Chinese large- andmid-capitalization stocks, as represented byH-shares,B-shares,N-shares, Red Chips,P-Chips andS-Chips.
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.
| franklintempleton.com | Annual Report | 31 | ||||
FRANKLIN FTSE CHINA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 1,032.20 | $ | 0.97 | $ | 1,024.05 | $ | 0.96 | 0.19 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 32 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Europe ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Developed Europe RIC Capped Index (the FTSE Developed Europe Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Developed Europe Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-15.34% based on market price and-15.44% based on net asset value. In comparison, the FTSE Developed Europe Capped Index posted a-15.61% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 35.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Developed Europe Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation.
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Pharmaceuticals | 12.5% | |||
| Banks | 6.8% | |||
| Food Products | 5.5% | |||
| Oil, Gas & Consumable Fuels | 5.5% | |||
| Insurance | 5.5% | |||
| Textiles, Apparel & Luxury Goods | 3.9% | |||
| Chemicals | 3.8% | |||
| Electric Utilities | 2.7% | |||
| Personal Products | 2.7% | |||
| Capital Markets | 2.6% | |||
Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Developed Europe Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Developed Europe Capped Index is based on the FTSE Developed Europe Index and is designed to measure the performance of large- andmid-capitalization stocks from developed European countries.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 202.
| franklintempleton.com | Annual Report | 33 | ||||
FRANKLIN FTSE EUROPE ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Nestle SA Food Products, Switzerland | 4.1% | |||
| Roche Holding AG Pharmaceuticals, Switzerland | 3.2% | |||
Novartis AG Pharmaceuticals, Switzerland | 2.4% | |||
Royal Dutch Shell PLC, A, B Oil, Gas & Consumable Fuels, United Kingdom | 1.9% | |||
| AstraZeneca PLC Pharmaceuticals, United Kingdom | 1.6% | |||
HSBC Holdings PLC Banks, United Kingdom | 1.6% | |||
| SAP SE Software, Germany | 1.5% | |||
| ASML Holding NV Semiconductors & Semiconductor Equipment, Netherlands | 1.5% | |||
| Novo Nordisk AS, B Pharmaceuticals, Denmark | 1.4% | |||
| Sanofi Pharmaceuticals, France | 1.3% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was health care. Individual holdings that lifted the Fund’s absolute return included Roche Holding, ASML Holding and Nestle.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, industrials and energy. Individual holdings that hindered the Fund’s absolute return included Royal Dutch Shell, Airbus and BP.
Thank you for your participation in Franklin FTSE Europe ETF. We look forward to serving your future investment needs.
| Top 10 Countries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| United Kingdom | 24.3% | |||
| Switzerland | 17.2% | |||
| France | 16.1% | |||
| Germany | 13.3% | |||
| Netherlands | 5.1% | |||
| Sweden | 4.5% | |||
| Spain | 4.1% | |||
| Italy | 3.6% | |||
| Denmark | 3.4% | |||
| Finland | 1.9% | |||
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 34 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE EUROPE ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -15.44% | -15.34% | -15.44% | -15.34% | ||||||||||||
Since Inception (11/2/17) | -18.77% | -18.60% | -8.27% | -8.19% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 37 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 35 | ||||
FRANKLIN FTSE EUROPE ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 37 for Performance Summary footnotes.
| 36 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE EUROPE ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.762795 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of European issuers involve risks that are specific to Europe, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Developed Europe Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Developed Europe Capped Index is based on the FTSE Developed Europe Index and is designed to measure the performance of large- andmid-capitalization stocks from developed European countries.
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.
| franklintempleton.com | Annual Report | 37 | ||||
FRANKLIN FTSE EUROPE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 823.90 | $ | 0.41 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 38 | Annual Report | franklintempleton.com | ||
Franklin FTSE Europe Hedged ETF
This annual report for Franklin FTSE Europe Hedged ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Developed Europe RIC Capped Hedged to USD Index (the FTSE Developed Europe Capped Hedged Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Developed Europe Capped Hedged Index and in depositary receipts representing such securities, including indirectly through Franklin FTSE Europe ETF (Underlying Fund).
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-11.43% based on market price and -10.67% based on net asset value. In comparison, the FTSE Developed Europe Capped Hedged Index posted a-10.81% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 41.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Developed Europe Capped Hedged Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Pharmaceuticals | 12.3% | |||
| Banks | 6.8% | |||
| Food Products | 5.5% | |||
| Oil, Gas & Consumable Fuels | 5.4% | |||
| Insurance | 5.4% | |||
| Textiles, Apparel & Luxury Goods | 3.8% | |||
| Chemicals | 3.7% | |||
| Electric Utilities | 2.7% | |||
| Personal Products | 2.6% | |||
| Capital Markets | 2.6% | |||
correlation. Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. We intend to enter into monthly foreign currency forward contracts and/or currency futures contracts designed to offset the Fund’s exposure to the component currencies, in order to replicate the hedge impact incorporated in the calculation of the Underlying Index. The Fund’s exposure to foreign currency forward contracts and currency futures contracts is based on the aggregate
1. The FTSE Developed Europe Capped Hedged Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Developed Europe Capped Hedged Index is based on the FTSE Developed Europe Hedged to USD Index and is designed to measure the performance of large- andmid-capitalization stocks from developed European countries. The FTSE Developed Europe Capped Hedged Index incorporates a hedge againstnon-U.S. currency fluctuations by reflecting the impact of rolling monthly currency forward contracts on the currencies represented in the FTSE Developed Europe Capped Hedged Index.
2. Source: FactSet. The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 216.
| franklintempleton.com | Annual Report | 39 | ||||
FRANKLIN FTSE EUROPE HEDGED ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Nestle SA Food Products, Switzerland | 4.0% | |||
| Roche Holding AG Pharmaceuticals, Switzerland | 3.1% | |||
| Novartis AG Pharmaceuticals, Switzerland | 2.4% | |||
Royal Dutch Shell PLC, A, B Oil, Gas & Consumable Fuels, United Kingdom | 1.8% | |||
| AstraZeneca PLC Pharmaceuticals, United Kingdom | 1.6% | |||
| HSBC Holdings PLC Banks, United Kingdom | 1.5% | |||
| SAP SE Software, Germany | 1.5% | |||
| ASML Holding NV Semiconductors & Semiconductor Equipment, Netherlands | 1.4% | |||
| Novo Nordisk AS, B Pharmaceuticals, Denmark | 1.3% | |||
| Sanofi Pharmaceuticals, France | 1.3% | |||
exposure of the Fund to the component currencies. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.
What is a futures contract?
A futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was health care. Individual holdings that lifted the Fund’s absolute return included Roche Holding, ASML Holding and Nestle. The Fund’s use of currency forward contracts—designed to offset the Fund’s exposure to the component currencies and to replicate the hedge impact incorporated in the calculation of the Underlying Index—also contributed to the Fund’s absolute performance. However, one cannot expect the same result in future periods.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, industrials and energy. Individual holdings that hindered the Fund’s absolute return included Royal Dutch Shell, BP and Airbus.
| Top 10 Countries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| United Kingdom | 24.0% | |||
| Switzerland | 17.0% | |||
| France | 15.9% | |||
| Germany | 13.2% | |||
| Netherlands | 5.1% | |||
| Sweden | 4.5% | |||
| Spain | 4.1% | |||
| Italy | 3.5% | |||
| Denmark | 3.4% | |||
| Finland | 1.9% | |||
Thank you for your participation in Franklin FTSE Europe Hedged ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 40 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE EUROPE HEDGED ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -10.67% | -11.43% | -10.67% | -11.43% | ||||||||||||
Since Inception (11/2/17) | -8.84% | -9.72% | -3.77% | -4.16% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 43 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 41 | ||||
FRANKLIN FTSE EUROPE HEDGED ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 43 for Performance Summary footnotes.
| 42 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE EUROPE HEDGED ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$1.471139 |
Total Annual Operating Expenses5
0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of European issuers involve risks that are specific to Europe, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the Fund to participate in losses on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. While the Fund’s use of foreign currency forward contracts and/or currency futures contracts is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate the Fund’s exposure to the component currencies. The return of these currency hedging instruments will not perfectly offset the actual fluctuations between the component currencies and the U.S. dollar. Currency hedges are sometimes subject to imperfect matching between the derivative instruments and the currencies that the derivative instruments intend to hedge, and there can be no assurance that the Fund’s hedging transactions will be effective. The Fund’s exposure to the component currencies may not be fully hedged at all times. Because the Fund’s currency hedge is generally reset on a monthly basis, currency risk can develop or increase intra-month. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Developed Europe Capped Hedged Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Developed Europe Capped Hedged Index is based on the FTSE Developed Europe Hedged to USD Index and is designed to measure the performance of large- andmid-capitalization stocks from developed European countries. The FTSE Developed Europe Capped Hedged Index incorporates a hedge againstnon-U.S. currency fluctuations by reflecting the impact of rolling monthly currency forward contracts on the currencies represented in the FTSE Developed Europe Capped Hedged Index.
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.
| franklintempleton.com | Annual Report | 43 | ||||
FRANKLIN FTSE EUROPE HEDGED ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 829.00 | $ | 0.41 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 44 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE France ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE France RIC Capped Index (the FTSE France Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE France Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-18.28% based on market price and-17.08% based on net asset value. In comparison, the FTSE France Capped Index posted a-17.46% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 47.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE France Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Textiles, Apparel & Luxury Goods | 15.4% | |||
| Pharmaceuticals | 8.1% | |||
| Oil, Gas & Consumable Fuels | 7.7% | |||
| Aerospace & Defense | 6.2% | |||
| Chemicals | 5.4% | |||
| Personal Products | 5.3% | |||
| Electrical Equipment | 5.2% | |||
| Banks | 4.5% | |||
| Construction & Engineering | 4.2% | |||
| Food Products | 3.2% | |||
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE France Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE France Capped Index is based on the FTSE France Index and is designed to measure the performance of French large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 230.
| franklintempleton.com | Annual Report | 45 | ||||
FRANKLIN FTSE FRANCE ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Sanofi Pharmaceuticals, France | 8.0% | |||
| Total SA Oil, Gas & Consumable Fuels, France | 7.7% | |||
| LVMH Moet Hennessy Louis Vuitton SE Textiles, Apparel & Luxury Goods, France | 7.7% | |||
| L’Oreal SA Personal Products, France | 5.3% | |||
Air Liquide SA Chemicals, France | 4.9% | |||
| Schneider Electric SE Electrical Equipment, France | 3.8% | |||
| Kering SA Textiles, Apparel & Luxury Goods, France | 3.2% | |||
Vinci SA Construction & Engineering, France | 3.2% | |||
| Danone SA Food Products, France | 3.2% | |||
| Airbus SE Aerospace & Defense, France | 3.0% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was materials. Individual holdings that lifted the Fund’s absolute return included Air Liquide, LVMH Moet Hennessy Louis Vuitton and STMicroelectronics.
For the same period, the sectors that detracted most from the Fund’s absolute performance were industrials, financials and energy. Individual holdings that hindered the Fund’s absolute return included Airbus, Total and BNP Paribas.
Thank you for your participation in Franklin FTSE France ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 46 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE FRANCE ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -17.08% | -18.28% | -17.08% | -18.28% | ||||||||||||
Since Inception (11/2/17) | -19.42% | -20.23% | -8.57% | -8.96% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 49 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 47 | ||||
FRANKLIN FTSE FRANCE ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 49 for Performance Summary footnotes.
| 48 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE FRANCE ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.574508 |
Total Annual Operating Expenses5
0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of French issuers involve risks that are specific to France, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE France Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE France Capped Index is based on the FTSE France Index and is designed to measure the performance of French large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 49 | ||||
FRANKLIN FTSE FRANCE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 785.80 | $ | 0.40 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 50 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Germany ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Germany RIC Capped Index (the FTSE Germany Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Germany Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-17.68% based on market price and-17.00% based on net asset value. In comparison, the FTSE Germany Capped Index posted a-17.22% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 53.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Germany Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Software | 11.7% | |||
| Insurance | 11.2% | |||
| Automobiles | 7.7% | |||
| Chemicals | 7.3% | |||
| Pharmaceuticals | 7.1% | |||
| Industrial Conglomerates | 6.8% | |||
| Real Estate Management & Development | 5.5% | |||
| Textiles, Apparel & Luxury Goods | 5.1% | |||
| Diversified Telecommunication Services | 4.7% | |||
| Capital Markets | 4.0% | |||
may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Germany Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Germany Capped Index is based on the FTSE Germany Index and is designed to measure the performance of German large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 233.
| franklintempleton.com | Annual Report | 51 | ||||
FRANKLIN FTSE GERMANY ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| SAP SE Software, Germany | 11.1% | |||
| Allianz SE Insurance, Germany | 7.2% | |||
Siemens AG Industrial Conglomerates, Germany | 6.5% | |||
| Bayer AG Pharmaceuticals, Germany | 5.8% | |||
| Adidas AG Textiles, Apparel & Luxury Goods, Germany | 4.4% | |||
| BASF SE Chemicals, Germany | 4.4% | |||
| Deutsche Telekom AG Diversified Telecommunication Services, Germany | 4.2% | |||
| Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen Insurance, Germany | 2.9% | |||
| Vonovia SE Real Estate Management & Development, Germany | 2.7% | |||
| Deutsche Post AG Air Freight & Logistics, Germany | 2.7% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, no sectors contributed to the Fund’s absolute performance. Individual holdings that lifted the Fund’s absolute return included Delivery Hero, Sartorius and Hapag-Lloyd.
For the same period, the sectors that detracted most from the Fund’s absolute performance were consumer discretionary, materials and financials. Individual holdings that hindered the Fund’s absolute return included Allianz, BASF and Daimler.
Thank you for your participation in Franklin FTSE Germany ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA | |
Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 52 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE GERMANY ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -17.00% | -17.68% | -17.00% | -17.68% | ||||||||||||
Since Inception (11/2/17) | -31.05% | -31.55% | -14.31% | -14.57% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 55 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 53 | ||||
FRANKLIN FTSE GERMANY ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 55 for Performance Summary footnotes.
| 54 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE GERMANY ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.574544 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of German issuers involve risks that are specific to Germany, including certain legal, regulatory, political and economic risks. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Germany Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Germany Capped Index is based on the FTSE Germany Index and is designed to measure the performance of German large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 55 | ||||
FRANKLIN FTSE GERMANY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 803.10 | $ | 0.41 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 56 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Hong Kong ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Hong Kong RIC Capped Index (the FTSE Hong Kong Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Hong Kong Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-21.56% based on market price and-20.90% based on net asset value. In comparison, the FTSE Hong Kong Capped Index posted a-20.92% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 59.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Hong Kong Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Insurance | 21.2% | |||
| Real Estate Management & Development | 17.4% | |||
| Capital Markets | 8.4% | |||
| Industrial Conglomerates | 7.5% | |||
| Hotels, Restaurants & Leisure | 6.3% | |||
| Food Products | 6.0% | |||
| Electric Utilities | 5.7% | |||
| Banks | 5.5% | |||
| Equity Real Estate Investment Trusts (REITs) | 4.0% | |||
| Gas Utilities | 3.6% | |||
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Hong Kong Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Hong Kong Capped Index is based on the FTSE Hong Kong Index and is designed to measure the performance of Hong Kong large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 236.
| franklintempleton.com | Annual Report | 57 | ||||
FRANKLIN FTSE HONG KONG ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
AIA Group Ltd. Insurance, Hong Kong | 21.2% | |||
Hong Kong Exchanges and Clearing Ltd. Capital Markets, Hong Kong | 8.2% | |||
Sun Hung Kai Properties Ltd. Real Estate Management & Development, Hong Kong | 4.1% | |||
| CK Hutchison Holdings Ltd. Industrial Conglomerates, Hong Kong | 3.9% | |||
Link REIT Equity Real Estate Investment Trusts (REITs), Hong Kong | 3.8% | |||
| Hong Kong and China Gas Co. Ltd. Gas Utilities, Hong Kong | 3.5% | |||
CLP Holdings Ltd. Electric Utilities, Hong Kong | 3.3% | |||
CK Asset Holdings Ltd. Real Estate Management & Development, Hong Kong | 3.2% | |||
| Hang Seng Bank Ltd. Banks, Hong Kong | 2.7% | |||
| Galaxy Entertainment Group Ltd. Hotels, Restaurants & Leisure, Macau | 2.5% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was energy. Individual holdings that lifted the Fund’s absolute return included Sun Art Retail Group, Semiconductor Manufacturing International and Xinyi Glass Holdings.
For the same period, the sectors that detracted most from the Fund’s absolute performance were real estate, financials and industrials. Individual holdings that hindered the Fund’s absolute return included CK Hutchison Holdings, AIA Group and CK Asset Holdings.
Thank you for your participation in Franklin FTSE Hong Kong ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 58 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE HONG KONG ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -20.90% | -21.56% | -20.90% | -21.56% | ||||||||||||
Since Inception (11/2/17) | -13.90% | -14.17% | -6.02% | -6.15% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 61 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 59 | ||||
FRANKLIN FTSE HONG KONG ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 61 for Performance Summary footnotes.
| 60 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE HONG KONG ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.758828 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Hong Kong issuers involve risks that are specific to Hong Kong, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Hong Kong Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Hong Kong Capped Index is based on the FTSE Hong Kong Index and is designed to measure the performance of Hong Kong large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 61 | ||||
FRANKLIN FTSE HONG KONG ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 885.00 | $ | 0.42 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 62 | �� | Annual Report | franklintempleton.com | |
This annual report for Franklin FTSE India ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE India RIC Capped Index (the FTSE India Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE India Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-31.92% based on market price and-30.98% based on net asset value. In comparison, the FTSE India Capped Index posted a-31.42% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 65.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE India Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| IT Services | 17.0% | |||
| Oil, Gas & Consumable Fuels | 15.3% | |||
| Thrifts & Mortgage Finance | 9.6% | |||
| Banks | 6.1% | |||
| Household Products | 5.4% | |||
| Pharmaceuticals | 4.6% | |||
| Automobiles | 4.4% | |||
| Chemicals | 3.4% | |||
| Insurance | 3.2% | |||
| Construction Materials | 2.8% | |||
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE India Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE India Capped Index is based on the FTSE India Index and is designed to measure the performance of Indian large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 240.
| franklintempleton.com | Annual Report | 63 | ||||
FRANKLIN FTSE INDIA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
Reliance Industries Ltd. Oil, Gas & Consumable Fuels, India | 11.5% | |||
Housing Development Finance Corp. Ltd. Thrifts & Mortgage Finance, India | 9.3% | |||
Infosys Ltd. IT Services, India | 7.9% | |||
Tata Consultancy Services Ltd. IT Services, India | 5.5% | |||
Hindustan Unilever Ltd. Household Products, India | 5.4% | |||
Bharti Airtel Ltd. Wireless Telecommunication Services, India | 2.5% | |||
Axis Bank Ltd. Banks, India | 2.5% | |||
Maruti Suzuki India Ltd. Automobiles, India | 1.7% | |||
ITC Ltd. Tobacco, India | 1.7% | |||
Asian Paints Ltd. Chemicals, India | 1.6% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, no sectors contributed to the Fund’s absolute performance. Individual holdings that lifted the Fund’s absolute return included Hindustan Unilever, Nestle India and Avenue Supermarts.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, consumer discretionary and energy. Individual holdings that hindered the Fund’s absolute return included Housing Development Finance, Axis Bank and Reliance Industries.
Thank you for your participation in Franklin FTSE India ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 64 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE INDIA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/9/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -30.98% | -31.92% | -30.98% | -31.92% | ||||||||||||
Since Inception (2/6/18) | -31.41% | -32.14% | -16.12% | -16.54% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 67 for Performance Summary footnotes.
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FRANKLIN FTSE INDIA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
2/6/18–3/31/20
See page 67 for Performance Summary footnotes.
| 66 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE INDIA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.207681 |
Total Annual Operating Expenses5
| 0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Indian issuers involve risks that are specific to India, including certain legal, regulatory, political and economic risks. There are special risks associated with investments in India, including exposure to currency fluctuations, less liquidity, expropriation, confiscatory taxation, and exchange control regulations (including currency blockage). Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE India Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE India Capped Index is based on the FTSE India Index and is designed to measure the performance of Indian large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 67 | ||||
FRANKLIN FTSE INDIA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 729.10 | $ | 0.82 | $ | 1,024.05 | $ | 0.96 | 0.19 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 68 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Italy ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Italy RIC Capped Index (the FTSE Italy Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Italy Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-21.32% based on market price and-20.84% based on net asset value. In comparison, the FTSE Italy Capped Index posted a-21.15% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 71.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Italy Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Electric Utilities | 22.1% | |||
| Banks | 20.4% | |||
| Oil, Gas & Consumable Fuels | 8.9 % | |||
| Insurance | 8.2% | |||
| Automobiles | 7.4% | |||
| Gas Utilities | 4.6% | |||
| Diversified Telecommunication Services | 3.6% | |||
| Textiles, Apparel & Luxury Goods | 3.1% | |||
| Diversified Financial Services | 2.7% | |||
| Transportation Infrastructure | 2.4% | |||
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Italy Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Italy Capped Index is based on the FTSE Italy Index and is designed to measure the performance of Italian large- andmid-capitalization stocks.
2. Source: FactSet. The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 245.
| franklintempleton.com | Annual Report | 69 | ||||
FRANKLIN FTSE ITALY ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
Enel SpA Electric Utilities, Italy | 18.8% | |||
Eni SpA Oil, Gas & Consumable Fuels, Italy | 8.9% | |||
Intesa Sanpaolo SpA Banks, Italy | 8.6% | |||
UniCredit SpA Banks, Italy | 6.2% | |||
Assicurazioni Generali SpA Insurance, Italy | 6.2% | |||
Ferrari NV Automobiles, Italy | 4.8% | |||
Snam SpA Gas Utilities, Italy | 3.6% | |||
Terna Rete Elettrica Nazionale SpA Electric Utilities, Italy | 3.3% | |||
Moncler SpA Textiles, Apparel & Luxury Goods, Italy | 2.8% | |||
Telecom Italia SpA/Milano, di Risp Diversified Telecommunication Services, Italy | 2.6% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sectors that contributed to the Fund’s absolute performance were utilities and health care. Individual holdings that lifted the Fund’s absolute return included Ferrari, Enel and DiaSorin.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, energy and industrials. Individual holdings that hindered the Fund’s absolute return included ENI, UniCredit and Intesa Sanpaolo.
Thank you for your participation in Franklin FTSE Italy ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 70 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE ITALY ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -20.84% | -21.32% | -20.84% | -21.32% | ||||||||||||
Since Inception (11/2/17) | -26.22% | -26.48% | -11.86% | -11.99% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 73 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 71 | ||||
FRANKLIN FTSE ITALY ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 73 for Performance Summary footnotes.
| 72 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE ITALY ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.895572 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Italian issuers involve risks that are specific to Italy, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Italy Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Italy Capped Index is based on the FTSE Italy Index and is designed to measure the performance of Italian large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 73 | ||||
FRANKLIN FTSE ITALY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 768.40 | $ | 0.40 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 74 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Japan ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Japan RIC Capped Index (the FTSE Japan Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Japan Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-8.19% based on market price and-7.15% based on net asset value. In comparison, the FTSE Japan Capped Index posted a-7.25% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 77.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Japan Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Pharmaceuticals | 7.2% | |||
| Automobiles | 6.9% | |||
| Electronic Equipment, Instruments & Components | 6.0% | |||
| Banks | 5.0% | |||
| Wireless Telecommunication Services | 5.0% | |||
| Machinery | 4.9% | |||
| Road & Rail | 4.5% | |||
| Chemicals | 4.3% | |||
| Household Durables | 3.7% | |||
| Trading Companies & Distributors | 3.4% | |||
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Japan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Japan Capped Index is based on the FTSE Japan Index and is designed to measure the performance of Japanese large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 247.
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FRANKLIN FTSE JAPAN ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
Toyota Motor Corp. Automobiles, Japan | 4.5% | |||
Sony Corp. Household Durables, Japan | 2.2% | |||
Keyence Corp. Electronic Equipment, Instruments & Components, Japan | 1.8% | |||
SoftBank Group Corp. Wireless Telecommunication Services, Japan | 1.7% | |||
KDDI Corp. Wireless Telecommunication Services, Japan | 1.5% | |||
Takeda Pharmaceutical Co. Ltd. Pharmaceuticals, Japan | 1.4% | |||
Mitsubishi UFJ Financial Group Inc. Banks, Japan | 1.4% | |||
Daiichi Sankyo Co. Ltd. Pharmaceuticals, Japan | 1.3% | |||
Nintendo Co. Ltd. Entertainment, Japan | 1.2% | |||
Shin-Etsu Chemical Co. Ltd. Chemicals, Japan | 1.2% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the sectors that contributed most to the Fund’s absolute performance were health care, communication services and information technology. Individual holdings that lifted the Fund’s absolute return included Sony, Daiichi Sankyo and KDDI.
For the same period, the sectors that detracted most from the Fund’s absolute performance were industrials, financials and consumer discretionary. Individual holdings that hindered the Fund’s absolute return included Softbank Group, Takeda Pharmaceutical and Mitsubishi UFJ Financial Group.
Thank you for your participation in Franklin FTSE Japan ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 76 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE JAPAN ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -7.15% | -8.19% | -7.15% | -8.19% | ||||||||||||
Since Inception (11/2/17) | -12.02% | -12.79% | -5.18% | -5.52% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 79 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 77 | ||||
FRANKLIN FTSE JAPAN ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 79 for Performance Summary footnotes.
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FRANKLIN FTSE JAPAN ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.591441 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Japanese issuers involve risks that are specific to Japan, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Japan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Japan Capped Index is based on the FTSE Japan Index and is designed to measure the performance of Japanese large- andmid-capitalization stocks.
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.
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FRANKLIN FTSE JAPAN ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 896.10 | $ | 0.43 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 80 | Annual Report | franklintempleton.com | ||
Franklin FTSE Japan Hedged ETF
This annual report for Franklin FTSE Japan Hedged ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Japan RIC Capped Hedged to USD Index (the FTSE Japan Capped Hedged Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Japan Capped Hedged Index and in depositary receipts representing such securities, including indirectly through Franklin FTSE Japan ETF (Underlying Fund).
Performance Overview
During thesix-month, the Fund posted cumulative total returns of-8.90% based on market price and-7.66% based on net asset value. In comparison, the FTSE Japan Capped Hedged Index posted a-7.49% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 83.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Japan Capped Hedged Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Pharmaceuticals | 7.1% | |||
| Automobiles | 6.9% | |||
| Electronic Equipment, Instruments & Components | 5.9% | |||
| Banks | 5.0% | |||
| Wireless Telecommunication Services | 5.0% | |||
| Machinery | 4.8% | |||
| Road & Rail | 4.5% | |||
| Chemicals | 4.3% | |||
| Household Durables | 3.7% | |||
| Trading Companies & Distributors | 3.4% | |||
the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. We intend to enter into monthly foreign currency forward contracts and/or currency futures contracts designed to offset the Fund’s exposure to the Japanese yen, in order to replicate the hedge impact incorporated in the calculation of the Underlying Index. The Fund’s exposure to foreign currency forward contracts and currency futures contracts is based on the aggregate exposure of the Fund to the Japanese yen. The Fund will concentrate its investments (i.e., hold 25% or
1. The FTSE Japan Capped Hedged Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Japan Capped Hedged Index is based on the FTSE Japan Hedged to USD Index and is designed to measure the performance of Japanese large- andmid-capitalization stocks. The FTSE Japan Capped Hedged Index incorporates a hedge against fluctuations of the Japanese yen by reflecting the impact of rolling monthly currency forward contracts on the Japanese yen.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 258.
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FRANKLIN FTSE JAPAN HEDGED ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
Toyota Motor Corp. Automobiles, Japan | 4.5% | |||
Sony Corp. Household Durables, Japan | 2.2% | |||
Keyence Corp. Electronic Equipment, Instruments & Components, Japan | 1.8% | |||
SoftBank Group Corp. Wireless Telecommunication Services, Japan | 1.7% | |||
KDDI Corp. Wireless Telecommunication Services, Japan | 1.5% | |||
Takeda Pharmaceutical Co. Ltd. Pharmaceuticals, Japan | 1.4% | |||
Mitsubishi UFJ Financial Group Inc. Banks, Japan | 1.4% | |||
Daiichi Sankyo Co. Ltd. Pharmaceuticals, Japan | 1.3% | |||
Nintendo Co. Ltd. Entertainment, Japan | 1.3% | |||
Shin-Etsu Chemical Co. Ltd. Chemicals, Japan | 1.2% | |||
more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.
What is a futures contract?
A futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sectors that contributed to the Fund’s absolute performance were health care and communication services. Individual holdings that lifted the Fund’s absolute return included Sony, Daiichi Sankyo and KDDI. The Fund’s use of currency forward
contracts—designed to offset the Fund’s exposure to the Japanese yen and to replicate the hedge impact incorporated in the calculation of the Underlying Index—also contributed to the Fund’s absolute performance. However, one cannot expect the same result in future periods.
For the same period, the sectors that detracted most from the Fund’s absolute performance were industrials, financials and consumer discretionary. Individual holdings that hindered the Fund’s absolute return included Softbank Group, Takeda Pharmaceutical and Mitsubishi UFJ Financial Group.
Thank you for your participation in Franklin FTSE Japan Hedged ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 82 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE JAPAN HEDGED ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -7.66% | -8.90% | -7.66% | -8.90% | ||||||||||||
Since Inception (11/2/17) | -12.78% | -13.86% | -5.52% | -6.01% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 85 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 83 | ||||
FRANKLIN FTSE JAPAN HEDGED ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 85 for Performance Summary footnotes.
| 84 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE JAPAN HEDGED ETF
PERFORMANCE SUMMARY
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Japanese issuers involve risks that are specific to Japan, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio, which may result in significant volatility and cause the Fund to participate in losses on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. While the Fund’s use of foreign currency forward contracts and/or currency futures contracts is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate the Fund’s exposure to the Japanese yen. The return of these currency hedging instruments will not perfectly offset the actual fluctuations between the Japanese yen and the U.S. dollar. Currency hedges are sometimes subject to imperfect matching between the derivative instruments and the currencies that the derivative instruments intend to hedge, and there can be no assurance that the Fund’s hedging transactions will be effective. The Fund’s exposure to the Japanese yen may not be fully hedged at all times. Because the Fund’s currency hedge is generally reset on a monthly basis, currency risk can develop or increase intra-month. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Japan Capped Hedged Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Japan Capped Hedged Index is based on the FTSE Japan Hedged to USD Index and is designed to measure the performance of Japanese large- andmid-capitalization stocks. The FTSE Japan Capped Hedged Index incorporates a hedge against fluctuations of the Japanese yen by reflecting the impact of rolling monthly currency forward contracts on the Japanese yen.
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.
| franklintempleton.com | Annual Report | 85 | ||||
FRANKLIN FTSE JAPAN HEDGED ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 903.90 | $ | 0.43 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 86 | Annual Report | franklintempleton.com | ||
Franklin FTSE Latin America ETF
This annual report for Franklin FTSE Latin America ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Latin America RIC Capped Index (the FTSE Latin America Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Latin America Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-40.01% based on market price and-40.49% based on net asset value. In comparison, the FTSE Latin America Capped Index posted a-40.45% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 89.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Latin America Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Banks | 21.3% | |||
| Metals & Mining | 10.4% | |||
| Oil, Gas & Consumable Fuels | 7.8% | |||
| Beverages | 7.1% | |||
| Electric Utilities | 5.9% | |||
| Food & Staples Retailing | 5.3% | |||
| Wireless Telecommunication Services | 4.7% | |||
| Capital Markets | 3.8% | |||
| Multiline Retail | 3.8% | |||
| Food Products | 3.0% | |||
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Latin America Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Latin America Capped Index is based on the FTSE Latin America Index and is designed to measure the performance of Latin American large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 269.
| franklintempleton.com | Annual Report | 87 | ||||
FRANKLIN FTSE LATIN AMERICA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
Vale SA Metals & Mining, Brazil | 7.1% | |||
Itau Unibanco Holding SA Banks, Brazil | 5.7% | |||
Petroleo Brasileiro SA Oil, Gas & Consumable Fuels, Brazil | 5.6% | |||
Banco Bradesco SA Banks, Brazil | 4.9% | |||
America Movil SAB de CV, L Wireless Telecommunication Services, Mexico | 4.1% | |||
B3 SA - Brasil Bolsa Balcao Capital Markets, Brazil | 3.4% | |||
Fomento Economico Mexicano SAB de CV Beverages, Mexico | 3.2% | |||
Wal-Mart de Mexico SAB de CV, V Food & Staples Retailing, Mexico | 3.0% | |||
Ambev SA Beverages, Brazil | 2.5% | |||
Grupo Financiero Banorte SAB de CV Banks, Mexico | 1.9% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, no sectors contributed to the Fund’s absolute performance. Individual holdings that lifted the Fund’s absolute return included B2W Companhia Digital Temp, TOTVS and GOL Linhas Aereas Inteligentes.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, energy and materials. Individual holdings that hindered the Fund’s absolute return included Petrobras Brasileiro, Banco Bradesco and Itau Unibanco Holding.
Thank you for your participation in Franklin FTSE Latin America ETF. We look forward to serving your future investment needs.
| Country Composition | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Brazil | 62.8% | |||
| Mexico | 24.0% | |||
| Chile | 7.8% | |||
| Colombia | 3.5% | |||
| United States | 1.0% | |||
| Peru | 0.4% | |||
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 88 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE LATIN AMERICA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (10/11/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -40.49% | -40.01% | -40.49% | -40.01% | ||||||||||||
Since Inception (10/9/18) | -39.65% | -39.30% | -29.01% | -28.73% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 91 for Performance Summary footnotes.
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FRANKLIN FTSE LATIN AMERICA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
10/9/18–3/31/20
See page 91 for Performance Summary footnotes.
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FRANKLIN FTSE LATIN AMERICA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.902643 |
Total Annual Operating Expenses5
| 0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Latin American issuers involve risks that are specific to Latin America, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Latin America Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Latin America Capped Index is based on the FTSE Latin America Index and is designed to measure the performance of Latin American large- andmid-capitalization stocks.
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.
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FRANKLIN FTSE LATIN AMERICA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 594.50 | $ | 0.88 | $ | 1,023.90 | $ | 1.11 | 0.22 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 92 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Mexico ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Mexico RIC Capped Index (the FTSE Mexico Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Mexico Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-33.23% based on market price and-33.13% based on net asset value. In comparison, the FTSE Mexico Capped Index posted a-33.16% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 95.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Mexico Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Beverages | 17.7% | |||
| Wireless Telecommunication Services | 15.9% | |||
| Banks | 15.3% | |||
| Food & Staples Retailing | 12.0% | |||
| Transportation Infrastructure | 7.1% | |||
| Food Products | 6.5% | |||
| Metals & Mining | 6.1% | |||
| Media | 3.9% | |||
| Construction Materials | 3.2% | |||
| Equity Real Estate Investment Trusts (REITs) | 2.7% | |||
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Mexico Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Mexico Capped Index is based on the FTSE Mexico Index and is designed to measure the performance of Mexican large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 274.
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FRANKLIN FTSE MEXICO ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| America Movil SAB de CV, L Wireless Telecommunication Services, Mexico | 15.9% | |||
| Fomento Economico Mexicano SAB de CV Beverages, Mexico | 12.5% | |||
| Wal-Mart de Mexico SAB de CV, V Food & Staples Retailing, Mexico | 12.0% | |||
| Grupo Financiero Banorte SAB de CV Banks, Mexico | 7.7% | |||
| Grupo Mexico SAB de CV, B Metals & Mining, Mexico | 5.0% | |||
| Grupo Bimbo SAB de CV, A Food Products, Mexico | 3.7% | |||
| Grupo Elektra SAB de CV Banks, Mexico | 3.7% | |||
| Cemex SAB de CV Construction Materials, Mexico | 3.2% | |||
| Grupo Televisa SA Media, Mexico | 2.9% | |||
| Coca-Cola FEMSA SA de CV Beverages, Mexico | 2.5% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, no sectors contributed to the Fund’s absolute performance. The only holding that lifted the Fund’s absolute return was Telesites.
For the same period, the sectors that detracted most from the Fund’s absolute performance were consumer staples, financials and industrials. Individual holdings that hindered the Fund’s absolute return included Grupo Financiero Banorte, Fomento Economico Mexicano and America Movil.
Thank you for your participation in Franklin FTSE Mexico ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 94 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE MEXICO ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/7/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -33.13% | -33.23% | -33.13% | -33.23% | ||||||||||||
Since Inception (11/3/17) | -38.96% | -39.43% | -18.55% | -18.81% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 97 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 95 | ||||
FRANKLIN FTSE MEXICO ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/3/17–3/31/20
See page 97 for Performance Summary footnotes.
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FRANKLIN FTSE MEXICO ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.670892 |
Total Annual Operating Expenses5
| 0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risk related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Mexican issuers involve risks that are specific to Mexico, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Mexico Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Mexico Capped Index is based on the FTSE Mexico Index and is designed to measure the performance of Mexican large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 97 | ||||
FRANKLIN FTSE MEXICO ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 671.80 | $ | 0.79 | $ | 1,024.05 | $ | 0.96 | 0.19 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 98 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Russia ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Russia RIC Capped Index (the FTSE Russia Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Russia Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-16.03% based on market price and-13.90% based on net asset value. In comparison, the FTSE Russia Capped Index posted a-13.89% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 101.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Russia Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Oil, Gas & Consumable Fuels | 49.3% | |||
| Banks | 17.5% | |||
| Metals & Mining | 15.5% | |||
| Electric Utilities | 5.3% | |||
| Wireless Telecommunication Services | 3.3% | |||
| Food & Staples Retailing | 2.8% | |||
| Capital Markets | 2.3% | |||
| Chemicals | 1.6% | |||
| Diversified Telecommunication Services | 1.4% | |||
| Airlines | 0.6% | |||
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Russia Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Russia Capped Index is based on the FTSE Russia Index and is designed to measure the performance of Russian large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 276.
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FRANKLIN FTSE RUSSIA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| LUKOIL PJSC Oil, Gas & Consumable Fuels, Russia | 15.5% | |||
| Sberbank of Russia PJSC Banks, Russia | 15.2% | |||
| Gazprom PJSC Oil, Gas & Consumable Fuels, Russia | 15.2% | |||
| NovaTek PJSC Oil, Gas & Consumable Fuels, Russia | 4.5% | |||
| MMC Norilsk Nickel PJSC Metals & Mining, Russia | 4.5% | |||
| Tatneft PAO Oil, Gas & Consumable Fuels, Russia | 4.1% | |||
| Surgutneftegas PJSC Oil, Gas & Consumable Fuels, Russia | 3.3% | |||
| Rosneft PJSC Oil, Gas & Consumable Fuels, Russia | 3.0% | |||
| Polyus Gold OJSC Metals & Mining, Russia | 2.9% | |||
| Magnit PJSC Food & Staples Retailing, Russia | 2.8% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, no sectors contributed to the Fund’s absolute performance. Individual holdings that lifted the Fund’s absolute return included Gazprom, Polyus Gold and MMC Norilsk Nickel.
For the same period, the sectors that detracted most from the Fund’s absolute performance were energy, financials and materials. Individual holdings that hindered the Fund’s absolute return included Lukoil Holdings, Sberbank of Russia and Tatneft.
Thank you for your participation in Franklin FTSE Russia ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 100 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE RUSSIA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/9/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -13.90% | -16.03% | -13.90% | -16.03% | ||||||||||||
Since Inception (2/6/18) | -13.22% | -15.12% | -6.40% | -7.36% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 103 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 101 | ||||
FRANKLIN FTSE RUSSIA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
2/6/18–3/31/20
See page 103 for Performance Summary footnotes.
| 102 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE RUSSIA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$1.750396 |
Total Annual Operating Expenses5
| 0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Russian issuers involve significant risks that are specific to Russia, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet: The FTSE Russia Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Russia Capped Index is based on the FTSE Russia Index and is designed to measure the performance of Russian large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 103 | ||||
FRANKLIN FTSE RUSSIA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 751.30 | $ | 0.83 | $ | 1,024.05 | $ | 0.96 | 0.19 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 104 | Annual Report | franklintempleton.com | ||
Franklin FTSE Saudi Arabia ETF
This annual report for Franklin FTSE Saudi Arabia ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Saudi Arabia RIC Capped Index (the FTSE Saudi Arabia Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Saudi Arabia Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-25.44% based on market price and-25.51% based on net asset value. In comparison, the FTSE Saudi Arabia Capped Index posted a-25.28% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 107.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Saudi Arabia Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Banks | 39.2% | |||
| Chemicals | 20.5% | |||
| Diversified Telecommunication Services | 9.6% | |||
| Oil, Gas & Consumable Fuels | 7.5% | |||
| Food Products | 4.2% | |||
| Metals & Mining | 2.7% | |||
| Electric Utilities | 2.5% | |||
| Construction Materials | 2.3% | |||
| Wireless Telecommunication Services | 2.2% | |||
| Real Estate Management & Development | 2.1% | |||
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Saudi Arabia Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Saudi Arabia Capped Index is based on the FTSE Saudi Arabia Index and is designed to measure the performance of Saudi Arabian large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 278.
| franklintempleton.com | Annual Report | 105 | ||||
FRANKLIN FTSE SAUDI ARABIA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Al-Rajhi Bank Banks, Saudi Arabia | 11.9% | |||
| Saudi Basic Industries Corp. Chemicals, Saudi Arabia | 11.4% | |||
| Saudi Telecom Co. Diversified Telecommunication Services, Saudi Arabia | 9.6% | |||
| National Commercial Bank Banks, Saudi Arabia | 8.6% | |||
| Saudi Aramco, 144A, Reg S Oil, Gas & Consumable Fuels, Saudi Arabia | 7.0% | |||
| Riyad Bank Banks, Saudi Arabia | 4.1% | |||
| Samba Financial Group Banks, Saudi Arabia | 3.8% | |||
| Alinma Bank Banks, Saudi Arabia | 3.0% | |||
| Banque Saudi Fransi Banks, Saudi Arabia | 3.0% | |||
| Saudi Arabian Mining Co. Metals & Mining, Saudi Arabia | 2.7% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was consumer staples. Individual holdings that lifted the Fund’s absolute return included Abdullah Al Othaim Markets, SavolaAl-Azizia United and Arab National Bank.
For the same period, the sectors that detracted most from the Fund’s absolute performance were materials, financials and energy. Individual holdings that hindered the Fund’s absolute return included Saudi Arabia Industries, National Commercial Bank and Samba Financial Group.
Thank you for your participation in Franklin FTSE Saudi Arabia ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 106 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE SAUDI ARABIA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (10/11/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -25.51% | -25.44% | -25.51% | -25.44% | ||||||||||||
Since Inception (10/9/18) | -15.92% | -14.49% | -11.10% | -10.08% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 109 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 107 | ||||
FRANKLIN FTSE SAUDI ARABIA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
10/9/18–3/31/20
See page 109 for Performance Summary footnotes.
| 108 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE SAUDI ARABIA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.828404 |
Total Annual Operating Expenses5
| 0.39% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Saudi Arabian issuers involve risks that are specific to Saudi Arabia, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Saudi Arabia Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Saudi Arabia Capped Index is based on the FTSE Saudi Arabia Index and is designed to measure the performance of Saudi Arabian large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 109 | ||||
FRANKLIN FTSE SAUDI ARABIA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 798.40 | $ | 1.75 | $ | 1,023.05 | $ | 1.97 | 0.39 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 110 | Annual Report | franklintempleton.com | ||
Franklin FTSE South Africa ETF
This annual report for Franklin FTSE South Africa ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE/JSE South Africa RIC Capped Index (the FTSE/JSE South Africa Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE/JSE South Africa Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-39.46% based on market price and-38.46% based on net asset value. In comparison, the FTSE/JSE South Africa Capped Index posted a-38.36% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 113.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE/JSE South Africa Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation.
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Internet & Direct Marketing Retail | 24.7% | |||
| Metals & Mining | 15.3% | |||
| Banks | 9.3% | |||
| Food & Staples Retailing | 9.2% | |||
| Diversified Financial Services | 8.8% | |||
| Insurance | 7.9% | |||
| Wireless Telecommunication Services | 5.5% | |||
| Equity Real Estate Investment Trusts (REITs) | 3.0% | |||
| Specialty Retail | 2.4% | |||
| Industrial Conglomerates | 2.0% | |||
Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE/JSE South Africa Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE/JSE South Africa Capped Index is based on the FTSE South Africa Index and is designed to measure the performance of South African large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 281.
| franklintempleton.com | Annual Report | 111 | ||||
FRANKLIN FTSE SOUTH AFRICA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Naspers Ltd., N Internet & Direct Marketing Retail, South Africa | 24.7% | |||
| AngloGold Ashanti Ltd. Metals & Mining, South Africa | 4.7% | |||
| Standard Bank Group Ltd. Banks, South Africa | 4.6% | |||
| FirstRand Ltd. Diversified Financial Services, South Africa | 4.5% | |||
| Sanlam Ltd. Insurance, South Africa | 3.1% | |||
| MTN Group Ltd. Wireless Telecommunication Services, South Africa | 3.1% | |||
| Gold Fields Ltd. Metals & Mining, South Africa | 2.6% | |||
| Bid Corp. Ltd. Food & Staples Retailing, South Africa | 2.5% | |||
| Vodacom Group Ltd. Wireless Telecommunication Services, South Africa | 2.5% | |||
| Remgro Ltd. Diversified Financial Services, South Africa | 2.2% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, no sectors contributed to the Fund’s absolute performance. Individual holdings that lifted the Fund’s absolute return included AngloGold Ashanti, Gold Fields and Clicks Group.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, materials and consumer discretionary. Individual holdings that hindered the Fund’s absolute return included Sasol, Standard Bank Group and FirstRand.
Thank you for your participation in Franklin FTSE South Africa ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 112 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE SOUTH AFRICA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (10/11/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -38.46% | -39.46% | -38.46% | -39.46% | ||||||||||||
Since Inception (10/10/18) | -32.76% | -33.60% | -23.64% | -24.30% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 115 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 113 | ||||
FRANKLIN FTSE SOUTH AFRICA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
10/10/18–3/31/20
See page 115 for Performance Summary footnotes.
| 114 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE SOUTH AFRICA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$2.695010 |
Total Annual Operating Expenses5
| 0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of South African issuers involve risks that are specific to South Africa, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE/JSE South Africa Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE/JSE South Africa Capped Index is based on the FTSE South Africa Index and is designed to measure the performance of South African large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 115 | ||||
FRANKLIN FTSE SOUTH AFRICA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 658.20 | $ | 0.79 | $ | 1,024.05 | $ | 0.96 | 0.19 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 116 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE South Korea ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE South Korea RIC Capped Index (the FTSE South Korea Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE South Korea Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-19.60% based on market price and-20.24% based on net asset value. In comparison, the FTSE South Korea Capped Index posted a-20.46% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 119.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE South Korea Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Technology Hardware, Storage & Peripherals | 18.9% | |||
| Semiconductors & Semiconductor Equipment | 8.0% | |||
| Banks | 7.8% | |||
| Interactive Media & Services | 5.7% | |||
| Biotechnology | 4.9% | |||
| Automobiles | 4.2% | |||
| Chemicals | 4.2% | |||
| Industrial Conglomerates | 3.9% | |||
| Electronic Equipment, Instruments & Components | 3.9% | |||
| Personal Products | 3.5% | |||
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE South Korea Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE South Korea Capped Index is based on the FTSE South Korea Index and is designed to measure the performance of South Korean large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 284.
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FRANKLIN FTSE SOUTH KOREA ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea | 18.9% | |||
| SK Hynix Inc. Semiconductors & Semiconductor Equipment, South Korea | 8.0% | |||
| Celltrion Inc. Biotechnology, South Korea | 4.4% | |||
| Naver Corp. Interactive Media & Services, South Korea | 4.2% | |||
| Hyundai Motor Co. Automobiles, South Korea | 2.9% | |||
| LG Chem Ltd. Chemicals, South Korea | 2.8% | |||
| Shinhan Financial Group Co. Ltd. Banks, South Korea | 2.5% | |||
| KB Financial Group Inc. Banks, South Korea | 2.5% | |||
| Samsung SDI Co. Ltd. Electronic Equipment, Instruments & Components, South Korea | 2.4% | |||
| LG Household & Health Care Ltd. Personal Products, South Korea | 2.1% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sectors that contributed to the Fund’s absolute performance were communication services and health care. Individual holdings that lifted the Fund’s absolute return included Celltrion, Naver and NCSoft.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, consumer discretionary and industrials. Individual holdings that hindered the Fund’s absolute return included Hyundai Motor, POSCO and Shinhan Financial Group.
Thank you for your participation in Franklin FTSE South Korea ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 118 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE SOUTH KOREA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -20.24 | % | -19.60 | % | -20.24 | % | -19.60 | % | ||||||||
Since Inception (11/2/17) | -32.44 | % | -32.38 | % | -15.03 | % | -14.99 | % | ||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 121 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 119 | ||||
FRANKLIN FTSE SOUTH KOREA ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 121 for Performance Summary footnotes.
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FRANKLIN FTSE SOUTH KOREA ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.453814 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of South Korean issuers involve risks that are specific to South Korea, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE South Korea Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE South Korea Capped Index is based on the FTSE South Korea Index and is designed to measure the performance of South Korean large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 121 | ||||
FRANKLIN FTSE SOUTH KOREA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 858.70 | $ | 0.42 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 122 | Annual Report | franklintempleton.com | ||
This annual report for Franklin FTSE Switzerland ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Switzerland RIC Capped Index (the FTSE Switzerland Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Switzerland Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of +3.06% based on market price and +3.70% based on net asset value. In comparison, the FTSE Switzerland Capped Index posted a +3.06% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 125.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Switzerland Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Pharmaceuticals | 28.8% | |||
| Food Products | 22.2% | |||
| Insurance | 8.9% | |||
| Capital Markets | 7.0% | |||
| Chemicals | 5.8% | |||
| Health Care Equipment & Supplies | 4.1% | |||
| Textiles, Apparel & Luxury Goods | 3.4% | |||
| Electrical Equipment | 3.0% | |||
| Life Sciences Tools & Services | 3.0% | |||
| Professional Services | 2.2% | |||
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Switzerland Capped Index is a free float-adjusted market-capitalization weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Switzerland Capped Index is based on the FTSE Switzerland Index and is designed to measure the performance of Swiss large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 288.
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FRANKLIN FTSE SWITZERLAND ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Nestle SA Food Products, Switzerland | 19.9% | |||
| Roche Holding AG Pharmaceuticals, Switzerland | 16.0% | |||
| Novartis AG Pharmaceuticals, Switzerland | 12.2% | |||
| Zurich Insurance Group AG Insurance, Switzerland | 4.8% | |||
| UBS Group AG Capital Markets, Switzerland | 3.1% | |||
| ABB Ltd. Electrical Equipment, Switzerland | 3.0% | |||
| Lonza Group AG Life Sciences Tools & Services, Switzerland | 3.0% | |||
| Givaudan AG Chemicals, Switzerland | 2.8% | |||
| Cie Financiere Richemont SA Textiles, Apparel & Luxury Goods, Switzerland | 2.7% | |||
| Alcon Inc. Health Care Equipment & Supplies, Switzerland | 2.3% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the sectors that contributed most to the Fund’s absolute performance were health care, consumer staples and materials. Individual holdings that lifted the Fund’s absolute return included Roche Holding, Nestle and Lonza Group.
For the same period, the only sectors that detracted from the Fund’s absolute performance were financials and consumer discretionary. Individual holdings that hindered the Fund’s absolute return included Cie Financiere Richemont, Credit Suisse Group and UBS Group.
Thank you for your participation in Franklin FTSE Switzerland ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 124 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE SWITZERLAND ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/9/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | +3.70% | +3.06% | +3.70% | +3.06% | ||||||||||||
Since Inception (2/6/18) | +7.95% | +7.47% | +3.63% | +3.41% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 127 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 125 | ||||
FRANKLIN FTSE SWITZERLAND ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
2/6/18–3/31/20
See page 127 for Performance Summary footnotes.
| 126 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE SWITZERLAND ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.320080 |
Total Annual Operating Expenses5
| 0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Swiss issuers involve risks that are specific to Switzerland, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Switzerland Capped Index is a free float-adjusted market-capitalization weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Switzerland Capped Index is based on the FTSE Switzerland Index and is designed to measure the performance of Swiss large- andmid-capitalization stocks.
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.
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FRANKLIN FTSE SWITZERLAND ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 953.80 | $ | 0.44 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
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This annual report for Franklin FTSE Taiwan ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Taiwan RIC Capped Index (the FTSE Taiwan Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Taiwan Capped Index and in depositary receipts representing such securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-3.48% based on market price and-3.29% based on net asset value. In comparison, the FTSE Taiwan Capped Index posted a-3.26% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 131.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Taiwan Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Semiconductors & Semiconductor Equipment | 29.3% | |||
| Electronic Equipment, Instruments & Components | 14.2% | |||
| Banks | 14.1% | |||
| Technology Hardware, Storage & Peripherals | 8.1% | |||
| Chemicals | 6.9% | |||
| Insurance | 5.8% | |||
| Diversified Telecommunication Services | 2.9% | |||
| Food Products | 2.2% | |||
| Diversified Financial Services | 2.0% | |||
| Construction Materials | 2.0% | |||
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Taiwan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Taiwan Capped Index is based on the FTSE Taiwan Index and is designed to measure the performance of Taiwanese large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 291.
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FRANKLIN FTSE TAIWAN ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan | 19.8% | |||
| Hon Hai Precision Industry Co. Ltd. Electronic Equipment, Instruments & Components, Taiwan | 5.9% | |||
| MediaTek Inc. Semiconductors & Semiconductor Equipment, Taiwan | 3.4% | |||
| Chunghwa Telecom Co. Ltd. Diversified Telecommunication Services, Taiwan | 2.9% | |||
| Largan Precision Co. Ltd. Electronic Equipment, Instruments & Components, Taiwan | 2.8% | |||
| Formosa Plastics Corp. Chemicals, Taiwan | 2.6% | |||
| CTBC Financial Holding Co. Ltd. Banks, Taiwan | 2.3% | |||
| Uni-President Enterprises Corp. Food Products, Taiwan | 2.3% | |||
| Mega Financial Holding Co. Ltd. Banks, Taiwan | 2.2% | |||
| Nan Ya Plastics Corp. Chemicals, Taiwan | 2.2% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the sectors that contributed to the Fund’s absolute performance were information technology and communication services. Individual holdings that lifted the Fund’s absolute return included Taiwan Semiconductor Manufacturing, MediaTek and Hotai Motor.
For the same period, the sectors that detracted most from the Fund’s absolute performance were materials, financials and consumer discretionary. Individual holdings that hindered the Fund’s absolute return included Formosa Plastics, Formosa Chemical & Fibre, and Nan Ya Plastics.
Thank you for your participation in Franklin FTSE Taiwan ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
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FRANKLIN FTSE TAIWAN ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -3.29% | -3.48% | -3.29% | -3.48% | ||||||||||||
Since Inception (11/2/17) | -5.58% | -5.73% | -2.36% | -2.42% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 133 for Performance Summary footnotes.
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FRANKLIN FTSE TAIWAN ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 133 for Performance Summary footnotes.
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FRANKLIN FTSE TAIWAN ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$0.867876 |
Total Annual Operating Expenses5
| 0.19% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Taiwanese issuers involve risks that are specific to Taiwan, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a Fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE Taiwan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Taiwan Capped Index is based on the FTSE Taiwan Index and is designed to measure the performance of Taiwanese large- andmid-capitalization stocks.
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.
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FRANKLIN FTSE TAIWAN ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201.2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 928.80 | $ | 0.92 | $ | 1,024.05 | $ | 0.96 | 0.19 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 134 | Annual Report | franklintempleton.com | ||
Franklin FTSE United Kingdom ETF
This annual report for Franklin FTSE United Kingdom ETF covers the fiscal year ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE UK RIC Capped Index (the FTSE UK Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE UK Capped Index and in depositary receipts representing such securities.
Performance Overview
For the12-month period, the Fund posted cumulative total returns of-23.55% based on market price and-22.42% based on net asset value. In comparison, the FTSE UK Capped Index posted a-22.37% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 137.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE UK Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Oil, Gas & Consumable Fuels | 11.9% | |||
| Pharmaceuticals | 11.5% | |||
| Banks | 9.9% | |||
| Metals & Mining | 7.3% | |||
| Tobacco | 5.2% | |||
| Insurance | 4.5% | |||
| Beverages | 4.2% | |||
| Professional Services | 4.1% | |||
| Capital Markets | 3.7% | |||
| Personal Products | 3.0% | |||
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE UK Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE UK Capped Index is based on the FTSE UK Index and is designed to measure the performance of U.K. large- andmid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
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 294.
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FRANKLIN FTSE UNITED KINGDOM ETF
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| Royal Dutch Shell PLC, A, B Oil, Gas & Consumable Fuels, United Kingdom | 7.3% | |||
| AstraZeneca PLC Pharmaceuticals, United Kingdom | 6.3% | |||
| HSBC Holdings PLC Banks, United Kingdom | 6.2% | |||
| GlaxoSmithKline PLC Pharmaceuticals, United Kingdom | 5.0% | |||
| BP PLC Oil, Gas & Consumable Fuels, United Kingdom | 4.6% | |||
| British American Tobacco PLC Tobacco, United Kingdom | 4.2% | |||
| Diageo PLC Beverages, United Kingdom | 4.0% | |||
| Unilever PLC Personal Products, United Kingdom | 3.0% | |||
| Rio Tinto PLC Metals & Mining, Australia | 2.7% | |||
| Reckitt Benckiser Group PLC Household Products, United Kingdom | 2.6% | |||
Manager’s Discussion
For the fiscal year ended March 31, 2020, the only sector that contributed to the Fund’s absolute performance was health care. Individual holdings that lifted the Fund’s absolute return included AstraZeneca, London Stock Exchange Group and Polymetal International.
For the same period, the sectors that detracted most from the Fund’s absolute performance were financials, energy and consumer staples. Individual holdings that hindered the Fund’s absolute return included Royal Dutch Shell, HSBC Holdings and BP.
Thank you for your participation in Franklin FTSE United Kingdom ETF. We look forward to serving your future investment needs.
|
Dina Ting, CFA |
|
Louis Hsu, CFA |
| Hailey Harris | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 31, 2020, the end of the reporting period. 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.
| 136 | Annual Report | franklintempleton.com | ||
FRANKLIN FTSE UNITED KINGDOM ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table and graph 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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/20
| Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
| Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
1-Year | -22.42% | -23.55% | -22.42% | -23.55% | ||||||||||||
Since Inception (11/2/17) | -21.42% | -22.44% | -9.52% | -10.01% | ||||||||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 139 for Performance Summary footnotes.
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FRANKLIN FTSE UNITED KINGDOM ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment
Total return represents the change in value of an investment over the period shown. It includes any applicable maximum sales charge, Fund expenses, account fees and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
11/2/17–3/31/20
See page 139 for Performance Summary footnotes.
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FRANKLIN FTSE UNITED KINGDOM ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$1.090866 |
Total Annual Operating Expenses5
0.09% |
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of issuers in U.K. countries involve risks that are specific to the U.K., including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Source: FactSet. The FTSE UK Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE UK Capped Index is based on the FTSE UK Index and is designed to measure the performance of U.K. large- andmid-capitalization stocks.
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.
| franklintempleton.com | Annual Report | 139 | ||||
FRANKLIN FTSE UNITED KINGDOM ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 785.50 | $ | 0.40 | $ | 1,024.55 | $ | 0.46 | 0.09 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
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FRANKLIN TEMPLETON ETF TRUST
Franklin FTSE Asia ex Japan ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 21.86 | $ | 23.63 | $ | 23.64 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.49 | 0.51 | 0.04 | |||||||||
Net realized and unrealized gains (losses) | (3.46 | ) | (1.82 | ) | (0.05 | ) | ||||||
|
| |||||||||||
Total from investment operations | (2.97 | ) | (1.31 | ) | (0.01 | ) | ||||||
|
| |||||||||||
Less distributions from net investment income | (0.50 | ) | (0.46 | ) | — | |||||||
|
| |||||||||||
Net asset value, end of year | $ | 18.39 | $ | 21.86 | $ | 23.63 | ||||||
|
| |||||||||||
Total returnd | (13.88)% | (5.34)% | (0.04)% | |||||||||
| Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 0.19% | 0.19% | 0.19% | |||||||||
Expenses net waiver and payments by affiliates | 0.19% | — | — | |||||||||
Net investment income | 2.32% | 2.34% | 1.06% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $14,712 | $17,488 | $9,451 | |||||||||
Portfolio turnover ratef | 11.42% | g | 7.11% | 0.96% | ||||||||
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 11.42%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 141 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Statement of Investments, March 31, 2020
Franklin FTSE Asia ex Japan ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests 98.8% | ||||||||||||||
| Cambodia 0.0%† | ||||||||||||||
NagaCorp Ltd. | Hotels, Restaurants & Leisure | 4,000 | $ | 4,082 | ||||||||||
|
| |||||||||||||
| China 43.6% | ||||||||||||||
360 Security Technology Inc., A | Software | 600 | 1,602 | |||||||||||
| a | 3SBio Inc. | Biotechnology | 4,000 | 4,165 | ||||||||||
| a | 51job Inc., ADR | Professional Services | 80 | 4,911 | ||||||||||
| a | 58.com Inc., ADR | Interactive Media & Services | 316 | 15,396 | ||||||||||
A-Living Services Co. Ltd., H | Commercial Services & Supplies | 1,500 | 7,296 | |||||||||||
AAC Technologies Holdings Inc. | Electronic Equipment, Instruments & Components | 2,000 | 10,373 | |||||||||||
AECC Aero-Engine Control Co. Ltd. | Aerospace & Defense | 200 | 337 | |||||||||||
Agile Group Holdings Ltd. | Real Estate Management & Development | 4,000 | 4,330 | |||||||||||
Agricultural Bank of China Ltd., A | Banks | 22,000 | 10,460 | |||||||||||
Agricultural Bank of China Ltd., H | Banks | 102,000 | 40,927 | |||||||||||
Aier Eye Hospital Group Co. Ltd. | Health Care Providers & Services | 600 | 3,333 | |||||||||||
Air China Ltd., A | Airlines | 800 | 735 | |||||||||||
Air China Ltd., H | Airlines | 4,000 | 2,580 | |||||||||||
| a | Alibaba Group Holding Ltd., ADR | Internet & Direct Marketing Retail | 5,852 | 1,138,097 | ||||||||||
| a | Alibaba Health Information Technology Ltd. | Health Care Technology | 12,000 | 20,065 | ||||||||||
| a | Alpha Group | Leisure Equipment & Products | 200 | 205 | ||||||||||
| a | Aluminum Corp. of China Ltd., A | Metals & Mining | 1,800 | 731 | ||||||||||
| a | Aluminum Corp. of China Ltd., H | Metals & Mining | 24,000 | 4,768 | ||||||||||
An Hui Wenergy Co. Ltd. | Independent Power and Renewable Electricity Producers | 600 | 327 | |||||||||||
Angang Steel Co. Ltd. | Metals & Mining | 1,000 | 379 | |||||||||||
Angang Steel Co. Ltd., H | Metals & Mining | 5,200 | 1,369 | |||||||||||
Angel Yeast Co. Ltd., A | Food Products | 200 | 993 | |||||||||||
Anhui Anke Biotechnology Group Co. Ltd. | Biotechnology | 200 | 389 | |||||||||||
Anhui Conch Cement Co. Ltd., A | Construction Materials | 800 | 6,219 | |||||||||||
Anhui Conch Cement Co. Ltd., H | Construction Materials | 4,000 | 27,790 | |||||||||||
Anhui Gujing Distillery Co. Ltd., B | Beverages | 600 | 4,737 | |||||||||||
| a | Anhui Jianghuai Automobile Group Corp. Ltd., A | Automobiles | 400 | 280 | ||||||||||
Anhui Xinhua Media Co. Ltd., A | Distributors | 200 | 134 | |||||||||||
Anhui Zhongding Sealing Parts Co. Ltd. | Auto Components | 200 | 262 | |||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 4,000 | 29,390 | |||||||||||
| a | Anxin Trust Co. Ltd. | Capital Markets | 800 | 282 | ||||||||||
| a | Autohome Inc., ADR | Interactive Media & Services | 194 | 13,778 | ||||||||||
Avary Holding Shenzhen Co. Ltd., A | Electronic Equipment, Instruments & Components | 200 | 896 | |||||||||||
AVIC Aircraft Co. Ltd. | Aerospace & Defense | 400 | 895 | |||||||||||
Avic Capital Co. Ltd., A | Diversified Financial Services | 1,200 | 665 | |||||||||||
AVIC Electromechanical Systems Co. Ltd. | Aerospace & Defense | 600 | 610 | |||||||||||
Avic Heavy Machinery Co. Ltd., A | Machinery | 200 | 250 | |||||||||||
AVIC Jonhon OptronicTechnology Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 965 | |||||||||||
| a | AVIC Shenyang Aircraft Co. Ltd., A | Aerospace & Defense | 200 | 808 | ||||||||||
AviChina Industry & Technology Co. Ltd., H | Aerospace & Defense | 12,000 | 4,629 | |||||||||||
BAIC Motor Corp. Ltd., H | Automobiles | 8,000 | 3,179 | |||||||||||
| a | Baidu Inc., ADR | Interactive Media & Services | 912 | 91,920 | ||||||||||
Bank of Beijing Co. Ltd., A | Banks | 3,200 | 2,181 | |||||||||||
Bank of Changsha Co. Ltd., A | Banks | 600 | 654 | |||||||||||
Bank of Chengdu Co. Ltd., A | Banks | 200 | 212 | |||||||||||
Bank of China Ltd., A | Banks | 13,000 | 6,382 | |||||||||||
Bank of China Ltd., H | Banks | 254,000 | 97,328 | |||||||||||
Bank of Communications Co. Ltd., A | Banks | 6,000 | 4,368 | |||||||||||
Bank of Communications Co. Ltd., H | Banks | 28,000 | 17,159 | |||||||||||
Bank of Guiyang Co. Ltd. | Banks | 400 | 432 | |||||||||||
Bank of Hangzhou Co. Ltd. | Banks | 400 | 435 | |||||||||||
Bank of Jiangsu Co. Ltd., A | Banks | 600 | 509 | |||||||||||
| 142 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Bank of Nanjing Co. Ltd., A | Banks | 1,400 | $ | 1,432 | ||||||||||
Bank of Ningbo Co. Ltd., A | Banks | 1,200 | 3,904 | |||||||||||
Bank of Qingdao Co. Ltd., A | Banks | 200 | 141 | |||||||||||
Bank of Shanghai Co. Ltd., A | Banks | 2,180 | 2,534 | |||||||||||
Bank of Zhengzhou Co. Ltd. | Banks | 400 | 221 | |||||||||||
Baoshan Iron & Steel Co. Ltd., A | Metals & Mining | 2,800 | 1,924 | |||||||||||
BBMG Corp., A | Construction Materials | 1,000 | 463 | |||||||||||
BBMG Corp., H | Construction Materials | 8,000 | 2,002 | |||||||||||
Beijing Capital Development Co. Ltd., A | Real Estate Management & Development | 400 | 373 | |||||||||||
Beijing Capital International Airport Co. Ltd. | Transportation Infrastructure | 4,000 | 2,549 | |||||||||||
Beijing Dabeinong Technology Group Co. Ltd. | Food Products | 600 | 732 | |||||||||||
Beijing Enlight Media Co. Ltd. | Entertainment | 400 | 503 | |||||||||||
Beijing Enterprises Holdings Ltd. | Gas Utilities | 2,000 | 7,341 | |||||||||||
Beijing Enterprises Water Group Ltd. | Water Utilities | 20,000 | 7,818 | |||||||||||
Beijing Jingneng Clean Energy Co. Ltd., H | Independent Power and Renewable Electricity Producers | 4,000 | 578 | |||||||||||
| a | Beijing Kunlun Tech Co. Ltd. | Entertainment | 600 | 1,507 | ||||||||||
| a | Beijing Lanxum Technology Co. Ltd. | IT Services | 200 | 435 | ||||||||||
Beijing New Building Materials PLC | Building Products | 200 | 666 | |||||||||||
Beijing North Star Co. Ltd., A | Real Estate Management & Development | 400 | 150 | |||||||||||
Beijing North Star Co. Ltd., H | Real Estate Management & Development | 4,000 | 929 | |||||||||||
Beijing Orient National Communication Science &Technology Co. Ltd. | Software | 200 | 402 | |||||||||||
Beijing Oriental Yuhong Waterproof Technology Co. Ltd. | Construction Materials | 600 | 2,881 | |||||||||||
Beijing Originwater Technology Co. Ltd. | Commercial Services & Supplies | 400 | 520 | |||||||||||
Beijing Sanju Environmental Protection and New Material Co. Ltd. | Chemicals | 200 | 128 | |||||||||||
Beijing Shunxin Agriculture Co. Ltd., A | Beverages | 200 | 1,732 | |||||||||||
Beijing SL Pharmaceutical Co. Ltd. | Biotechnology | 200 | 337 | |||||||||||
Beijing Tiantan Biological Products Corp. Ltd., A | Biotechnology | 200 | 1,026 | |||||||||||
Beijing Tongrentang Co. Ltd., A | Pharmaceuticals | 200 | 715 | |||||||||||
| a | Beijing Ultrapower Software Co. Ltd. | IT Services | 400 | 206 | ||||||||||
Beijing Yanjing Brewery Co. Ltd. | Beverages | 400 | 341 | |||||||||||
Beijing Zhong Ke San Huan High-Tech Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 265 | |||||||||||
Bengang Steel Plates Co. Ltd., B | Metals & Mining | 1,600 | 334 | |||||||||||
Better Life Commercial Chain Share Co. Ltd. | Food & Staples Retailing | 200 | 266 | |||||||||||
| a | Bilibili Inc., ADR | Entertainment | 186 | 4,356 | ||||||||||
Bluedon Information Security Technology Co. Ltd. | Software | 200 | 125 | |||||||||||
Bluefocus Intelligent Communications Group Co. Ltd. | Media | 400 | 320 | |||||||||||
Bluestar Adisseo Co., A | Chemicals | 200 | 330 | |||||||||||
BOE Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 2,800 | 993 | |||||||||||
BOE Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 5,200 | 2,722 | |||||||||||
Bosideng International Holdings Ltd. | Textiles, Apparel & Luxury Goods | 16,000 | 3,757 | |||||||||||
BoyaBio-pharmaceutical Group Co. Ltd. | Biotechnology | 400 | 1,777 | |||||||||||
Bright Dairy & Food Co. Ltd., A | Food Products | 200 | 327 | |||||||||||
Brilliance China Automotive Holdings Ltd. | Automobiles | 8,000 | 6,585 | |||||||||||
BTG Hotels Group Co. Ltd., A | Hotels, Restaurants & Leisure | 200 | 379 | |||||||||||
| a | Budweiser Brewing Co. APAC Ltd. | Beverages | 4,000 | 10,321 | ||||||||||
BYD Co. Ltd. | Automobiles | 400 | 3,384 | |||||||||||
BYD Co. Ltd., H | Automobiles | 2,000 | 10,450 | |||||||||||
BYD Electronic International Co. Ltd. | Communications Equipment | 3,000 | 5,008 | |||||||||||
Caitong Securities Co. Ltd., A | Capital Markets | 200 | 285 | |||||||||||
| franklintempleton.com | Annual Report | 143 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Camel Group Co. Ltd., A | Electrical Equipment | 200 | $ | 238 | ||||||||||
| a | CAR Inc. | Road & Rail | 2,000 | 1,117 | ||||||||||
CECEP Solar Energy Co. Ltd. | Independent Power and Renewable Electricity Producers | 800 | 365 | |||||||||||
CECEP Wind-Power Corp. | Independent Power and Renewable Electricity Producers | 400 | 121 | |||||||||||
Central China Securities Co. Ltd., A | Capital Markets | 600 | 414 | |||||||||||
Central China Securities Co. Ltd., H | Capital Markets | 2,000 | 328 | |||||||||||
| a | CGN Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 2,400 | 985 | ||||||||||
CGN Power Co. Ltd., H | Independent Power and Renewable Electricity Producers | 38,000 | 8,727 | |||||||||||
Changjiang Securities Co. Ltd. | Capital Markets | 600 | 541 | |||||||||||
Chaozhou Three-Circle Group Co. Ltd. | Electronic Equipment, Instruments & Components | 600 | 1,544 | |||||||||||
Chengdu Xingrong Environment Co. Ltd. | Water Utilities | 800 | 516 | |||||||||||
| a | China Aerospace Times Electronics Co. Ltd., A | Aerospace & Defense | 400 | 359 | ||||||||||
China Aoyuan Group Ltd. | Real Estate Management & Development | 4,000 | 4,686 | |||||||||||
China Avic Avionics Equipment Co. Ltd., A | Aerospace & Defense | 200 | 365 | |||||||||||
China Baoan Group Co. Ltd. | Industrial Conglomerates | 200 | 166 | |||||||||||
| a | China Biologic Products Holdings Inc. | Biotechnology | 90 | 9,714 | ||||||||||
China Cinda Asset Management Co. Ltd., H | Capital Markets | 32,000 | 6,069 | |||||||||||
China CITIC Bank Corp. Ltd., A | Banks | 2,200 | 1,608 | |||||||||||
China CITIC Bank Corp. Ltd., H | Banks | 30,000 | 14,824 | |||||||||||
China Coal Energy Co. Ltd., A | Oil, Gas & Consumable Fuels | 600 | 338 | |||||||||||
China Coal Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 8,000 | 2,219 | |||||||||||
China Communications Construction Co. Ltd., A | Construction & Engineering | 800 | 932 | |||||||||||
China Communications Construction Co. Ltd., H | Construction & Engineering | 16,000 | 11,147 | |||||||||||
China Communications Services Corp. Ltd. | Construction & Engineering | 8,000 | 5,821 | |||||||||||
China Conch Venture Holdings Ltd. | Machinery | 5,000 | 22,320 | |||||||||||
China Construction Bank Corp., A | Banks | 1,600 | 1,431 | |||||||||||
China Construction Bank Corp., H | Banks | 310,000 | 253,571 | |||||||||||
| a | China COSCO Holdings Co. Ltd., A | Marine | 800 | 464 | ||||||||||
China CYTS Tours Holding Co. Ltd., A | Hotels, Restaurants & Leisure | 200 | 273 | |||||||||||
| a,b,c | China East Education Holdings Ltd., 144A, Reg S | Diversified Consumer Services | 2,000 | 3,241 | ||||||||||
| a | China Eastern Airlines Corp. Ltd., A | Airlines | 1,200 | 699 | ||||||||||
| a | China Eastern Airlines Corp. Ltd., H | Airlines | 8,000 | 2,735 | ||||||||||
China Enterprise Co. Ltd., A | Real Estate Management & Development | 600 | 361 | |||||||||||
China Everbright Bank Co. Ltd., A | Banks | 6,200 | 3,158 | |||||||||||
China Everbright Bank Co. Ltd., H | Banks | 16,000 | 6,131 | |||||||||||
China Everbright International Ltd. | Commercial Services & Supplies | 11,703 | 6,719 | |||||||||||
China Everbright Ltd. | Capital Markets | 4,000 | 5,904 | |||||||||||
China Evergrande Group | Real Estate Management & Development | 6,000 | 9,955 | |||||||||||
China Film Co. Ltd., A | Entertainment | 200 | 333 | |||||||||||
China Foods Ltd. | Food Products | 4,000 | 1,466 | |||||||||||
China Fortune Land Development Co. Ltd., A | Real Estate Management & Development | 400 | 1,179 | |||||||||||
China Galaxy Securities Co. Ltd., A | Capital Markets | 400 | 536 | |||||||||||
China Galaxy Securities Co. Ltd., H | Capital Markets | 12,000 | 5,821 | |||||||||||
China Gas Holdings Ltd. | Gas Utilities | 6,400 | 22,294 | |||||||||||
China Gezhouba Group Co. Ltd., A | Construction & Engineering | 800 | 788 | |||||||||||
China Grand Automotive Services Group Co. Ltd., A | Specialty Retail | 600 | 345 | |||||||||||
China Great Wall Securities Co. Ltd., A | Capital Markets | 400 | 683 | |||||||||||
China Greatwall Technology Group Co. Ltd. | Technology Hardware, Storage & Peripherals | 400 | 674 | |||||||||||
China Hongqiao Group Ltd. | Metals & Mining | 9,000 | 3,832 | |||||||||||
| 144 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
China Huarong Asset Management Co. Ltd., H | Capital Markets | 36,000 | $ | 4,552 | ||||||||||
China International Capital Corp. Ltd., H | Capital Markets | 4,000 | 6,472 | |||||||||||
China International Marine Containers (Group) Co. Ltd., H | Machinery | 1,320 | 1,233 | |||||||||||
China International Marine Containers Group Co. Ltd. | Machinery | 600 | 653 | |||||||||||
China International Travel Service Corp. Ltd., A | Specialty Retail | 400 | 3,792 | |||||||||||
China Jinmao Holdings Group Ltd. | Real Estate Management & Development | 16,000 | 10,363 | |||||||||||
China Jushi Co. Ltd., A | Construction Materials | 600 | 669 | |||||||||||
China Lesso Group Holdings Ltd. | Building Products | 4,000 | 5,274 | |||||||||||
China Life Insurance Co. Ltd., A | Insurance | 1,000 | 3,716 | |||||||||||
China Life Insurance Co. Ltd., H | Insurance | 24,000 | 47,004 | |||||||||||
| a | China Literature Ltd. | Media | 800 | 3,179 | ||||||||||
China Lodging Group Ltd., ADR | Hotels, Restaurants & Leisure | 360 | 10,343 | |||||||||||
China Longyuan Power Group Corp. | Independent Power and Renewable Electricity Producers | 12,000 | 6,595 | |||||||||||
China Medical System Holdings Ltd. | Pharmaceuticals | 4,000 | 4,330 | |||||||||||
China Meheco Co. Ltd., A | Trading Companies & Distributors | 200 | 424 | |||||||||||
China Mengniu Dairy Co. Ltd. | Food Products | 8,000 | 27,816 | |||||||||||
China Merchants Bank Co. Ltd., A | Banks | 3,200 | 14,573 | |||||||||||
China Merchants Bank Co. Ltd., H | Banks | 12,000 | 54,187 | |||||||||||
China Merchants Energy Shipping Co. Ltd., A | Oil, Gas & Consumable Fuels | 600 | 541 | |||||||||||
China Merchants Expressway Network & Technology Holdings Co. Ltd. | Transportation Infrastructure | 200 | 196 | |||||||||||
China Merchants Port Holdings Co. Ltd. | Transportation Infrastructure | 4,000 | 4,572 | |||||||||||
China Merchants Securities Co. Ltd. | Capital Markets | 2,800 | 3,107 | |||||||||||
China Merchants Securities Co. Ltd., A | Capital Markets | 800 | 1,932 | |||||||||||
China Merchants Shekou Industrial Zone Holdings Co. Ltd., A | Real Estate Management & Development | 1,000 | 2,325 | |||||||||||
China Minsheng Banking Corp. Ltd., A | Banks | 6,400 | 5,156 | |||||||||||
China Minsheng Banking Corp. Ltd., H | Banks | 21,000 | 15,606 | |||||||||||
China Mobile Ltd. | Wireless Telecommunication Services | 18,000 | 133,881 | |||||||||||
China Molybdenum Co. Ltd., A | Metals & Mining | 1,000 | 490 | |||||||||||
China Molybdenum Co. Ltd., H | Metals & Mining | 12,000 | 3,360 | |||||||||||
China National Building Material Co. Ltd., H | Construction Materials | 12,000 | 13,113 | |||||||||||
China National Nuclear Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 1,600 | 993 | |||||||||||
China Nonferrous Metal Industry’s Foreign Engineeringand Construction Co. Ltd. | Metals & Mining | 400 | 252 | |||||||||||
China Northern Rare Earth Group High-Tech Co. Ltd., A | Metals & Mining | 600 | 761 | |||||||||||
China Oilfield Services Ltd., A | Energy Equipment & Services | 200 | 330 | |||||||||||
China Oilfield Services Ltd., H | Energy Equipment & Services | 4,000 | 3,091 | |||||||||||
China Orient Securities Co. Ltd., A | Capital Markets | 1,400 | 1,801 | |||||||||||
China Overseas Land & Investment Ltd. | Real Estate Management & Development | 12,000 | 37,234 | |||||||||||
China Pacific Insurance Group Co. Ltd., A | Insurance | 1,200 | 4,778 | |||||||||||
China Pacific Insurance Group Co. Ltd., H | Insurance | 8,800 | 26,624 | |||||||||||
China Petroleum & Chemical Corp., A | Oil, Gas & Consumable Fuels | 6,600 | 4,125 | |||||||||||
China Petroleum & Chemical Corp., H | Oil, Gas & Consumable Fuels | 80,000 | 39,428 | |||||||||||
China Power International Development Ltd. | Independent Power and Renewable Electricity Producers | 16,000 | 2,973 | |||||||||||
China Railway Construction Corp. Ltd., A | Construction & Engineering | 1,600 | 2,219 | |||||||||||
China Railway Construction Corp. Ltd., H | Construction & Engineering | 7,000 | 7,839 | |||||||||||
China Railway Group Ltd., H | Construction & Engineering | 14,000 | 7,460 | |||||||||||
China RailwayHi-tech Industry Co. Ltd., A | Construction & Engineering | 400 | 537 | |||||||||||
| b | China Railway Signal & Communication Corp. Ltd., H, Reg S | Electronic Equipment, Instruments & Components | 6,000 | 3,027 | ||||||||||
China Railway Tielong Container Logistics Co. Ltd., A | Road & Rail | 400 | 269 | |||||||||||
| franklintempleton.com | Annual Report | 145 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
China Reinsurance Group Corp., H | Insurance | 22,000 | $ | 2,555 | ||||||||||
China Resources Beer Holdings Co. Ltd. | Beverages | 6,000 | 27,403 | |||||||||||
China Resources Cement Holdings Ltd. | Construction Materials | 8,000 | 9,547 | |||||||||||
China Resources Double Crane Pharmaceutical Co. Ltd., A | Pharmaceuticals | 200 | 357 | |||||||||||
China Resources Gas Group Ltd. | Gas Utilities | 3,000 | 15,095 | |||||||||||
China Resources Land Ltd. | Real Estate Management & Development | 9,000 | 37,157 | |||||||||||
China Resources Pharmaceutical Group Ltd. | Pharmaceuticals | 6,000 | 3,600 | |||||||||||
China Resources Power Holdings Co. Ltd. | Independent Power and Renewable Electricity Producers | 7,000 | 7,713 | |||||||||||
China Resources Sanjiu Medical & Pharmaceutical Co. Ltd. | Pharmaceuticals | 200 | 786 | |||||||||||
China Shenhua Energy Co. Ltd., A | Oil, Gas & Consumable Fuels | 1,400 | 3,208 | |||||||||||
China Shenhua Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 12,000 | 22,852 | |||||||||||
China Shipbuilding Industry Co. Ltd., A | Machinery | 3,200 | 1,901 | |||||||||||
China Shipping Container Lines Co. Ltd., A | Marine | 600 | 172 | |||||||||||
China Shipping Development Co. Ltd., A | Oil, Gas & Consumable Fuels | 400 | 423 | |||||||||||
China South City Holdings Ltd. | Real Estate Management & Development | 8,000 | 774 | |||||||||||
China South Publishing & Media Group Co. Ltd., A | Media | 400 | 600 | |||||||||||
China Southern Airlines Co. Ltd., A | Airlines | 1,200 | 872 | |||||||||||
China Southern Airlines Co. Ltd., H | Airlines | 4,000 | 1,719 | |||||||||||
China Spacesat Co. Ltd., A | Aerospace & Defense | 200 | 824 | |||||||||||
China State Construction Engineering Corp. Ltd., A | Construction & Engineering | 7,200 | 5,353 | |||||||||||
China State Construction International Holdings Ltd. | Construction & Engineering | 4,000 | 2,962 | |||||||||||
China Taiping Insurance Holdings Co. Ltd. | Insurance | 5,600 | 9,176 | |||||||||||
China Telecom Corp. Ltd., H | Diversified Telecommunication Services | 48,000 | 14,553 | |||||||||||
| b,c | China Tower Corp. Ltd., H, 144A, Reg S | Diversified Telecommunication Services | 152,000 | 34,122 | ||||||||||
China Traditional Chinese Medicine Co. Ltd. | Pharmaceuticals | 12,000 | 5,465 | |||||||||||
China TransInfo Technology Co. Ltd. | IT Services | 600 | 1,727 | |||||||||||
China Travel International Investment Hong Kong Ltd. | Hotels, Restaurants & Leisure | 8,000 | 1,001 | |||||||||||
China Unicom (Hong Kong) Ltd. | Diversified Telecommunication Services | 16,000 | 9,227 | |||||||||||
China United Network Communications Ltd., A | Wireless Telecommunication Services | 5,200 | 3,829 | |||||||||||
China Vanke Co. Ltd., A | Real Estate Management & Development | 1,800 | 6,514 | |||||||||||
China Vanke Co. Ltd., H | Real Estate Management & Development | 5,200 | 17,141 | |||||||||||
China Yangtze Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 2,600 | 6,342 | |||||||||||
China Zhongwang Holdings Ltd. | Metals & Mining | 4,800 | 1,263 | |||||||||||
Chinese Universe Publishing and Media Group Co. Ltd., A | Media | 200 | 340 | |||||||||||
Chongqing Changan Automobile Co. Ltd. | Automobiles | 600 | 896 | |||||||||||
Chongqing Changan Automobile Co. Ltd., B | Automobiles | 2,600 | 1,265 | |||||||||||
Chongqing Dima Industry Co. Ltd., A | Real Estate Management &Development | 400 | 157 | |||||||||||
Chongqing Fuling Zhacai Group Co. Ltd., A | Food Products | 200 | 890 | |||||||||||
Chongqing Rural Commercial Bank Co. Ltd., H | Banks | 8,000 | 3,282 | |||||||||||
Chongqing Water Group Co. Ltd., A | Water Utilities | 200 | 147 | |||||||||||
Chongqing Zhifei Biological Products Co. Ltd. | Biotechnology | 400 | 3,803 | |||||||||||
CIFI Holdings Group Co. Ltd. | Real Estate Management & Development | 12,000 | 8,670 | |||||||||||
| 146 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Cinda Real Estate Co. Ltd., A | Real Estate Management & Development | 400 | $ | 197 | ||||||||||
| a | CITIC Guoan Information Industry Co. Ltd. | Media | 400 | 176 | ||||||||||
Citic Pacific Ltd. | Industrial Conglomerates | 18,000 | 18,834 | |||||||||||
Citic Pacific Special Steel Group Co. Ltd., A | Metals & Mining | 400 | 1,417 | |||||||||||
CITIC Securities Co. Ltd., A | Capital Markets | 1,800 | 5,627 | |||||||||||
CITIC Securities Co. Ltd., H | Capital Markets | 8,000 | 14,656 | |||||||||||
CMST Development Co. Ltd., A | Air Freight & Logistics | 200 | 128 | |||||||||||
CNOOC Ltd. | Oil, Gas & Consumable Fuels | 52,000 | 54,543 | |||||||||||
Contemporary Amperex Technology Co. Ltd. | Electrical Equipment | 200 | 3,397 | |||||||||||
COSCO SHIPPING Development Co. Ltd., H | Marine | 16,000 | 1,672 | |||||||||||
COSCO SHIPPING Energy Transportation Co. Ltd., H | Oil, Gas & Consumable Fuels | 4,000 | 2,152 | |||||||||||
| a | COSCO Shipping Holdings Co. Ltd. | Marine | 8,000 | 2,209 | ||||||||||
COSCO SHIPPING Ports Ltd. | Transportation Infrastructure | 8,183 | 3,948 | |||||||||||
Country Garden Holdings Co. Ltd. | Real Estate Management & Development | 26,000 | 31,465 | |||||||||||
Country Garden Services Holdings Co. Ltd. | Commercial Services & Supplies | 4,000 | 16,256 | |||||||||||
CRRC Corp. Ltd., A | Machinery | 3,600 | 3,332 | |||||||||||
CRRC Corp. Ltd., H | Machinery | 14,000 | 7,117 | |||||||||||
CSC Financial Co. Ltd., A | Capital Markets | 200 | 876 | |||||||||||
CSC Financial Co. Ltd., H | Capital Markets | 3,000 | 2,419 | |||||||||||
CSG Holding Co. Ltd. | Construction Materials | 3,101 | 856 | |||||||||||
CSG Holding Co. Ltd. | Construction Materials | 400 | 248 | |||||||||||
CSPC Pharmaceutical Group Ltd. | Pharmaceuticals | 14,000 | 28,033 | |||||||||||
| a | CSSC Offshore and Marine Engineering Group Co. Ltd. | Machinery | 2,000 | 1,195 | ||||||||||
| a | CSSC Offshore and Marine Engineering Group Co. Ltd., A | Machinery | 200 | 398 | ||||||||||
Da An Gene Co. Ltd. of SunYat-Sen University | Biotechnology | 200 | 489 | |||||||||||
Dali Foods Group Co. Ltd. | Food Products | 7,000 | 4,877 | |||||||||||
Dalian Port PDA Co. Ltd., A | Transportation Infrastructure | 1,400 | 342 | |||||||||||
Daqin Railway Co. Ltd., A | Road & Rail | 2,400 | 2,302 | |||||||||||
Datang International Power Generation Co. Ltd., H | Independent Power and Renewable Electricity Producers | 16,000 | 2,147 | |||||||||||
| a | Datong Coal Industry Co. Ltd., A | Oil, Gas & Consumable Fuels | 400 | 199 | ||||||||||
Dawning Information Industry Co. Ltd., A | Technology Hardware, Storage & Peripherals | 200 | 1,232 | |||||||||||
Dazhong Transportation (Group) Co. Ltd., B | Road & Rail | 2,400 | 859 | |||||||||||
Dazhong Transportation Group Co. Ltd., A | Road & Rail | 800 | 389 | |||||||||||
DHC Software Co. Ltd. | IT Services | 600 | 1,094 | |||||||||||
Digital China Information Service Co. Ltd. | IT Services | 200 | 423 | |||||||||||
Dong-E-E-Jiao Co. Ltd., A | Pharmaceuticals | 200 | 726 | |||||||||||
Dongfang Electric Corp. Ltd., A | Electrical Equipment | 400 | 476 | |||||||||||
Dongfang Electric Corp. Ltd., H | Electrical Equipment | 800 | 395 | |||||||||||
Dongfeng Motor Group Co. Ltd., H | Automobiles | 8,000 | 5,274 | |||||||||||
Dongxing Securities Co. Ltd., A | Capital Markets | 400 | 616 | |||||||||||
East Money Information Co. Ltd. | Capital Markets | 1,000 | 2,264 | |||||||||||
ENN Ecological Holdings Co. Ltd., A | Chemicals | 200 | 244 | |||||||||||
ENN Energy Holdings Ltd. | Gas Utilities | 2,400 | 23,239 | |||||||||||
Eternal Asia Supply Chain Management Ltd. | Commercial Services & Supplies | 200 | 109 | |||||||||||
| a | Eve Energy Co. Ltd. | Electrical Equipment | 200 | 1,640 | ||||||||||
Everbright Securities Co. Ltd., A | Capital Markets | 600 | 932 | |||||||||||
Everbright Securities Co. Ltd., H | Capital Markets | 400 | 255 | |||||||||||
| franklintempleton.com | Annual Report | 147 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
| a | Fangda Carbon New Material Co. Ltd. | Electrical Equipment | 400 | $ | 507 | |||||||||
Far East Horizon Ltd. | Diversified Financial Services | 8,000 | 6,451 | |||||||||||
FAW CAR Co. Ltd. | Automobiles | 200 | 246 | |||||||||||
| a | FIH Mobile Ltd. | Electronic Equipment, Instruments & Components | 10,000 | 1,122 | ||||||||||
Financial Street Holdings Co. Ltd. | Real Estate Management & Development | 600 | 554 | |||||||||||
First Capital Securities Co. Ltd. | Capital Markets | 200 | 195 | |||||||||||
Focus Media Information Technology Co. Ltd. | Media | 2,000 | 1,247 | |||||||||||
Foshan Haitian Flavouring & Food Co. Ltd. | Food Products | 200 | 3,532 | |||||||||||
Fosun International Ltd. | Industrial Conglomerates | 8,000 | 9,248 | |||||||||||
Founder Securities Co. Ltd., A | Capital Markets | 1,200 | 1,216 | |||||||||||
Foxconn Industrial Internet Co. Ltd., A | Electronic Equipment, Instruments & Components | 600 | 1,118 | |||||||||||
Fujian Funeng Co. Ltd., A | Independent Power and Renewable Electricity Producers | 200 | 232 | |||||||||||
Fujian Longking Co. Ltd., A | Machinery | 200 | 255 | |||||||||||
Fujian Sunner Development Co. Ltd. | Food Products | 200 | 667 | |||||||||||
Fuyao Group Glass Industries Co. Ltd., H | Auto Components | 2,400 | 5,134 | |||||||||||
Ganfeng Lithium Co. Ltd. | Metals & Mining | 200 | 1,136 | |||||||||||
Ganfeng Lithium Co. Ltd., H | Metals & Mining | 400 | 1,282 | |||||||||||
| a | GCL System Integration Technology Co. Ltd. | Semiconductors & Semiconductor Equipment | 800 | 342 | ||||||||||
GD Power Development Co. Ltd., A | Independent Power and Renewable Electricity Producers | 3,800 | 1,088 | |||||||||||
| a | GDS Holdings Ltd., ADR | IT Services | 182 | 10,551 | ||||||||||
Geely Automobile Holdings Ltd. | Automobiles | 16,000 | 23,615 | |||||||||||
GEM Co. Ltd. | Metals & Mining | 800 | 525 | |||||||||||
Gemdale Corp., A | Real Estate Management & Development | 600 | 1,193 | |||||||||||
| a | Genscript Biotech Corp. | Life Sciences Tools & Services | 4,000 | 6,482 | ||||||||||
GF Securities Co. Ltd. | Capital Markets | 800 | 1,544 | |||||||||||
GF Securities Co. Ltd., H | Capital Markets | 5,200 | 5,575 | |||||||||||
Global TopE-Commerce Co. Ltd. | Internet & Direct Marketing Retail | 200 | 164 | |||||||||||
Glodon Co. Ltd. | Software | 200 | 1,204 | |||||||||||
GoerTek Inc. | Electronic Equipment, Instruments & Components | 1,000 | 2,315 | |||||||||||
| a | GOME Retail Holdings Ltd. | Specialty Retail | 30,000 | 2,787 | ||||||||||
Gosuncn Technology Group Co. Ltd. | Communications Equipment | 200 | 183 | |||||||||||
Grandjoy Holdings Group Co. Ltd., A | Real Estate Management & Development | 400 | 304 | |||||||||||
Great Wall Motor Co. Ltd., A | Automobiles | 400 | 502 | |||||||||||
Great Wall Motor Co. Ltd., H | Automobiles | 11,000 | 7,053 | |||||||||||
Greattown Holdings Ltd., A | Real Estate Management & Development | 200 | 198 | |||||||||||
Gree Electric Appliances Inc. of Zhuhai, A | Household Durables | 1,000 | 7,364 | |||||||||||
Greendland Holdings Corp. Ltd., A | Real Estate Management & Development | 600 | 458 | |||||||||||
Greentown China Holdings Ltd. | Real Estate Management & Development | 3,000 | 2,729 | |||||||||||
GRG Banking Equipment Co. Ltd. | Technology Hardware, Storage & Peripherals | 400 | 487 | |||||||||||
| a | GSX Techedu Inc., ADR | Diversified Consumer Services | 152 | 6,439 | ||||||||||
Guangdong Baolihua New Energy Stock Co. Ltd. | Independent Power and Renewable Electricity Producers | 600 | 440 | |||||||||||
Guangdong Electric Power Development Co. Ltd., B | Independent Power and Renewable Electricity Producers | 4,000 | 1,073 | |||||||||||
Guangdong Ellington Electronics Technology Co. Ltd., A | Electronic Equipment, Instruments & Components | 200 | 291 | |||||||||||
| a | Guangdong Golden Dragon Development Inc. | Capital Markets | 200 | 358 | ||||||||||
Guangdong Haid Group Co. Ltd. | Food Products | 200 | 1,134 | |||||||||||
Guangdong HEC Technology Holding Co. Ltd., A | Metals & Mining | 400 | 394 | |||||||||||
Guangdong Investment Ltd. | Water Utilities | 8,000 | 15,420 | |||||||||||
| a | Guangdong LY Intelligent Manufacturing Co. Ltd. | Electronic Equipment, Instruments & Components | 1,600 | 1,855 | ||||||||||
Guanghui Energy Co. Ltd., A | Oil, Gas & Consumable Fuels | 1,200 | 437 | |||||||||||
Guangshen Railway Co. Ltd., H | Road & Rail | 12,000 | 2,555 | |||||||||||
Guangxi Guiguan Electric Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 600 | 387 | |||||||||||
| 148 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Guangxi Liugong Machinery Co. Ltd. | Machinery | 800 | $ | 707 | ||||||||||
Guangxi Wuzhou Zhongheng Group Co. Ltd., A | Pharmaceuticals | 1,000 | 453 | |||||||||||
Guangzhou Automobile Group Co. Ltd., A | Automobiles | 200 | 298 | |||||||||||
Guangzhou Automobile Group Co. Ltd., H | Automobiles | 12,000 | 12,061 | |||||||||||
Guangzhou Baiyun International Airport Co. Ltd., A | Transportation Infrastructure | 200 | 354 | |||||||||||
Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd. | Pharmaceuticals | 600 | 1,618 | |||||||||||
Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., A | Pharmaceuticals | 200 | 888 | |||||||||||
Guangzhou Haige Communications Group Inc. Co. | Communications Equipment | 400 | 637 | |||||||||||
Guangzhou R&F Properties Co. Ltd., H | Real Estate Management & Development | 3,200 | 4,178 | |||||||||||
Guangzhou Zhujiang Brewery Co. Ltd. | Beverages | 200 | 196 | |||||||||||
Guizhou Panjiang Refined Coal Co. Ltd., A | Oil, Gas & Consumable Fuels | 800 | 602 | |||||||||||
| a | Guizhou Xinbang Pharmaceutical Co. Ltd. | Pharmaceuticals | 200 | 131 | ||||||||||
Guosen Securities Co. Ltd. | Capital Markets | 600 | 940 | |||||||||||
| a | Guosheng Financial Holding Inc. | Electrical Equipment | 200 | 275 | ||||||||||
Guotai Junan Securities Co. Ltd. | Capital Markets | 3,200 | 4,764 | |||||||||||
Guotai Junan Securities Co. Ltd., A | Capital Markets | 1,000 | 2,297 | |||||||||||
Guoxuan High-Tech Co. Ltd. | Electrical Equipment | 200 | 493 | |||||||||||
Guoyuan Securities Co. Ltd. | Capital Markets | 400 | 470 | |||||||||||
| b,c | Haidilao International Holding Ltd., 144A, Reg S | Hotels, Restaurants & Leisure | 2,000 | 7,793 | ||||||||||
Haier Electronics Group Co. Ltd. | Household Durables | 4,000 | 10,657 | |||||||||||
Haier Smart Home Co. Ltd., A | Household Durables | 1,400 | 2,844 | |||||||||||
Haitian International Holdings Ltd. | Machinery | 2,000 | 3,716 | |||||||||||
Haitong Securities Co. Ltd., A | Capital Markets | 1,800 | 3,261 | |||||||||||
Haitong Securities Co. Ltd., H | Capital Markets | 12,800 | 11,709 | |||||||||||
Han’s Laser Technology Industry Group Co. Ltd., A | Machinery | 200 | 795 | |||||||||||
Hang Zhou Great Star Industrial Co. Ltd. | Household Durables | 200 | 264 | |||||||||||
Hangzhou Binjiang Real Estate Group Co. Ltd. | Real Estate Management & Development | 400 | 235 | |||||||||||
Hangzhou Century Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 319 | |||||||||||
Hangzhou Hikvision Digital Technology Co. Ltd., A | Electronic Equipment, Instruments & Components | 1,800 | 7,085 | |||||||||||
Hangzhou Oxygen Plant Group Co. Ltd. | Machinery | 200 | 332 | |||||||||||
Hangzhou Robam Appliances Co. Ltd., A | Household Durables | 200 | 802 | |||||||||||
| a | Hangzhou Shunwang Technology Co. Ltd. | Entertainment | 200 | 606 | ||||||||||
Hangzhou Tigermed Consulting Co. Ltd. | Life Sciences Tools & Services | 200 | 1,807 | |||||||||||
| a | Hansoh Pharmaceutical Group Co. Ltd. | Pharmaceuticals | 2,000 | 6,786 | ||||||||||
| a | Harbin Pharmaceutical Group Co. Ltd., A | Pharmaceuticals | 400 | 227 | ||||||||||
Health & Happiness H&H International Holdings Ltd. | Food Products | 1,000 | 3,696 | |||||||||||
Heilan Home Co. Ltd., A—SHSC | Specialty Retail | 600 | 536 | |||||||||||
Heilongjiang Agriculture Co. Ltd., A | Food Products | 400 | 973 | |||||||||||
Henan Senyuan Electric Co. Ltd. | Electrical Equipment | 200 | 167 | |||||||||||
Henan Shuanghui Investment & Development Co. Ltd. | Food Products | 800 | 4,436 | |||||||||||
Henan Zhongyuan Expressway Co. Ltd., A | Transportation Infrastructure | 400 | 213 | |||||||||||
Hengan International Group Co. Ltd. | Personal Products | 2,000 | 15,056 | |||||||||||
Hengdian Group DMEGC Magnetics Co. Ltd. | Electronic Equipment, Instruments & Components | 400 | 564 | |||||||||||
Hengli Petrochemical Co. Ltd., A | Chemicals | 960 | 1,690 | |||||||||||
| a | HengTen Networks Group Ltd. | Internet & Direct Marketing Retail | 48,000 | 452 | ||||||||||
Hesteel Co. Ltd. | Metals & Mining | 1,400 | 421 | |||||||||||
Holitech Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 400 | 314 | |||||||||||
| a | Hongta Securities Co. Ltd., A | Capital Markets | 400 | 1,131 | ||||||||||
Hopson Development Holdings Ltd. | Real Estate Management & Development | 4,000 | 3,571 | |||||||||||
Huaan Securities Co. Ltd., A | Capital Markets | 400 | 436 | |||||||||||
| franklintempleton.com | Annual Report | 149 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Huabao Flavours & Fragrances Co. Ltd. | Chemicals | 200 | $ | 890 | ||||||||||
Huadian Fuxin Energy Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 16,000 | 2,642 | |||||||||||
Huadian Power International Corp. Ltd., A | Independent Power and Renewable Electricity Producers | 600 | 292 | |||||||||||
Huadian Power International Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 8,000 | 2,384 | |||||||||||
Huadong Medicine Co. Ltd., A | Health Care Providers & Services | 200 | 492 | |||||||||||
Huafa Industrial Co. Ltd. Zhuhai, A | Real Estate Management & Development | 400 | 363 | |||||||||||
Huagong Tech Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 557 | |||||||||||
Hualan Biological Engineering Inc. | Biotechnology | 400 | 2,704 | |||||||||||
Huaneng Power International Inc., A | Independent Power and Renewable Electricity Producers | 800 | 529 | |||||||||||
Huaneng Power International Inc., H | Independent Power and Renewable Electricity Producers | 16,000 | 6,007 | |||||||||||
Huapont Life Sciences Co. Ltd. | Chemicals | 600 | 412 | |||||||||||
Huatai Securities Co. Ltd., A | Capital Markets | 1,400 | 3,403 | |||||||||||
Huatai Securities Co. Ltd., H | Capital Markets | 6,000 | 8,918 | |||||||||||
Huaxi Securities Co. Ltd. | Capital Markets | 400 | 594 | |||||||||||
Huaxia Bank Co. Ltd., A | Banks | 2,000 | 1,826 | |||||||||||
Huaxin Cement Co. Ltd., A | Construction Materials | 200 | 657 | |||||||||||
Huaxin Cement Co. Ltd., B | Construction Materials | 1,000 | 1,532 | |||||||||||
Huayu Automotive Systems Co. Ltd. | Auto Components | 800 | 2,431 | |||||||||||
Hubei Biocause Pharmaceutical Co. Ltd. | Insurance | 1,400 | 1,169 | |||||||||||
Hubei Energy Group Co. Ltd. | Independent Power and Renewable Electricity Producers | 800 | 400 | |||||||||||
Hubei Xinyangfeng Fertilizer Co. Ltd. | Chemicals | 400 | 458 | |||||||||||
Hunan Gold Corp. Ltd. | Metals & Mining | 200 | 222 | |||||||||||
| a | Hunan Valin Steel Co. Ltd. | Metals & Mining | 600 | 333 | ||||||||||
Hundsun Technologies Inc., A | Software | 200 | 2,480 | |||||||||||
Huolinhe Opencut Coal Industry Corp. Ltd. of Inner Mongolia | Oil, Gas & Consumable Fuels | 200 | 207 | |||||||||||
Hytera Communications Corp. Ltd., A | Communications Equipment | 200 | 164 | |||||||||||
HyUnion Holding Co. Ltd. | Auto Components | 200 | 139 | |||||||||||
Iflytek Co. Ltd. | Software | 400 | 1,945 | |||||||||||
Industrial and Commercial Bank of China Ltd. | Banks | 13,200 | 9,591 | |||||||||||
Industrial and Commercial Bank of China Ltd., H | Banks | 258,000 | 176,751 | |||||||||||
Industrial Bank Co. Ltd., A | Banks | 3,600 | 8,080 | |||||||||||
Industrial Securities Co. Ltd., A | Capital Markets | 800 | 705 | |||||||||||
Inner Mongolia BaoTou Steel Union Co. Ltd., A | Metals & Mining | 4,200 | 681 | |||||||||||
Inner Mongolia First Machinery Group Co. Ltd., A | Machinery | 200 | 257 | |||||||||||
Inner Mongolia MengDian HuaNeng Thermal Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 1,200 | 437 | |||||||||||
Inner Mongolia Yili Industrial Group Co. Ltd., A | Food Products | 1,200 | 5,055 | |||||||||||
Inner Mongolia Yitai Coal Co. Ltd., B | Oil, Gas & Consumable Fuels | 2,400 | 1,567 | |||||||||||
| a | Innovent Biologics Inc. | Biotechnology | 3,000 | 12,657 | ||||||||||
Inspur Electronic Information Industry Co. Ltd. | Technology Hardware, Storage & Peripherals | 424 | 2,320 | |||||||||||
| a,d | Iqiyi Inc., ADR | Entertainment | 714 | 12,709 | ||||||||||
| a | JD.com Inc., ADR | Internet & Direct Marketing Retail | 2,648 | 107,244 | ||||||||||
Jiangsu Expressway Co. Ltd., A | Transportation Infrastructure | 200 | 277 | |||||||||||
Jiangsu Expressway Co. Ltd., H | Transportation Infrastructure | 4,000 | 4,464 | |||||||||||
Jiangsu Hengrui Medicine Co. Ltd., A | Pharmaceuticals | 800 | 10,387 | |||||||||||
Jiangsu King’s Luck Brewery JSC Ltd. | Beverages | 200 | 794 | |||||||||||
Jiangsu Linyang Energy Co. Ltd., A | Electrical Equipment | 200 | 146 | |||||||||||
Jiangsu Yanghe Brewery JST Co. Ltd., A | Beverages | 200 | 2,366 | |||||||||||
Jiangsu Yuyue Medical Equipment & Supply Co. Ltd. | Health Care Equipment & Supplies | 200 | 1,024 | |||||||||||
| 150 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Jiangsu Zhangjiagang Rural Commercial Bank Co. Ltd. | Banks | 200 | $ | 155 | ||||||||||
Jiangsu Zhongnan Construction Group Co. Ltd. | Real Estate Management & Development | 400 | 437 | |||||||||||
Jiangsu Zhongtian Technology Co. Ltd., A | Electrical Equipment | 400 | 542 | |||||||||||
Jiangsu Zijin Rural Commercial Bank Co. Ltd., A | Banks | �� | 200 | 119 | ||||||||||
Jiangxi Bank Co. Ltd., H | Banks | 3,000 | 1,583 | |||||||||||
Jiangxi Copper Co. Ltd., A | Metals & Mining | 400 | 713 | |||||||||||
Jiangxi Copper Co. Ltd., H | Metals & Mining | 4,000 | 3,695 | |||||||||||
| a | Jiangxi Special Electric Motor Co. Ltd. | Electrical Equipment | 200 | 61 | ||||||||||
Jiangxi Zhengbang Technology Co. Ltd., A | Food Products | 400 | 1,076 | |||||||||||
Jiayuan International Group Ltd. | Real Estate Management & Development | 4,000 | 1,626 | |||||||||||
Jilin Aodong Pharmaceutical Group Co. Ltd. | Pharmaceuticals | 400 | 890 | |||||||||||
Jinduicheng Molybdenum Co. Ltd., A | Metals & Mining | 600 | 512 | |||||||||||
Jinke Properties Group Co. Ltd. | Real Estate Management & Development | 800 | 898 | |||||||||||
| a,b,c | Jinxin Fertility Group Ltd., 144A, Reg S | Health Care Providers & Services | 4,000 | 4,438 | ||||||||||
JinyuBio-Technology Co. Ltd., A | Biotechnology | 600 | 1,805 | |||||||||||
Jiuzhitang Co. Ltd. | Pharmaceuticals | 200 | 223 | |||||||||||
Jizhong Energy Resources Co. Ltd. | Oil, Gas & Consumable Fuels | 1,000 | 426 | |||||||||||
JoInc. Pharmaceutical Group Industry Co. Ltd., A | Pharmaceuticals | 400 | 647 | |||||||||||
Jointo Energy Investment Co. Ltd. | Independent Power and Renewable Electricity Producers | 200 | 123 | |||||||||||
Jointown Pharmaceutical Group Co. Ltd., A | Health Care Providers & Services | 200 | 480 | |||||||||||
JonjeeHi-Tech Industrial And Commercial Holding Co. Ltd., A | Food Products | 200 | 1,349 | |||||||||||
Joyoung Co. Ltd. | Household Durables | 200 | 794 | |||||||||||
| a | JOYY Inc., ADR | Interactive Media & Services | 166 | 8,841 | ||||||||||
Kerry Logistics Network Ltd. | Air Freight & Logistics | 2,000 | 2,480 | |||||||||||
Kingboard Holdings Ltd. | Electronic Equipment, Instruments & Components | 3,000 | 7,029 | |||||||||||
Kingdee International Software Group Co. Ltd. | Software | 8,000 | 10,672 | |||||||||||
| a | Kingsoft Corp. Ltd. | Software | 2,000 | 6,528 | ||||||||||
| a | Kuang-Chi Technologies Co. Ltd. | Auto Components | 200 | 207 | ||||||||||
Kunlun Energy Co. Ltd. | Gas Utilities | 8,000 | 4,676 | |||||||||||
Kweichow Moutai Co. Ltd., A | Beverages | 200 | 31,348 | |||||||||||
KWG Group Holdings Ltd. | Real Estate Management & Development | 6,000 | 8,531 | |||||||||||
Lao Feng Xiang Co. Ltd., B | Textiles, Apparel & Luxury Goods | 600 | 1,649 | |||||||||||
Lee & Man Paper Manufacturing Ltd. | Paper & Forest Products | 6,000 | 3,638 | |||||||||||
Legend Holdings Corp., H | Technology Hardware, Storage & Peripherals | 1,800 | 2,222 | |||||||||||
| e | Legend Holdings Corp., rts., 2/20/49 | Technology Hardware, Storage & Peripherals | 123 | — | ||||||||||
Lenovo Group Ltd. | Technology Hardware, Storage & Peripherals | 24,000 | 12,881 | |||||||||||
Lens Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 411 | |||||||||||
| a | Leo Group Co. Ltd. | Media | 1,200 | 623 | ||||||||||
Lepu Medical Technology Beijing Co. Ltd. | Health Care Equipment & Supplies | 200 | 1,022 | |||||||||||
Leyard Optoelectronic Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 177 | |||||||||||
Li Ning Co. Ltd. | Textiles, Apparel & Luxury Goods | 6,000 | 17,533 | |||||||||||
| a | Liaoning Cheng Da Co. Ltd., A | Distributors | 200 | 512 | ||||||||||
Liuzhou Iron & Steel Co. Ltd., A | Metals & Mining | 200 | 139 | |||||||||||
Livzon Pharmaceutical Group Inc., H | Pharmaceuticals | 780 | 2,873 | |||||||||||
Logan Property Holdings Co. Ltd. | Real Estate Management & Development | 4,000 | 6,172 | |||||||||||
Lomon Billions Group Co. Ltd. | Chemicals | 200 | 421 | |||||||||||
| a | Loncin Motor Co. Ltd., A | Automobiles | 400 | 188 | ||||||||||
| b,c | Longfor Group Holdings Ltd., 144A, Reg S | Real Estate Management & Development | 5,000 | 24,352 | ||||||||||
LONGi Green Energy Technology Co. Ltd., A | Semiconductors & Semiconductor Equipment | 600 | 2,103 | |||||||||||
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STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Luolai Lifestyle Technology Co. Ltd. | Textiles, Apparel & Luxury Goods | 200 | $ | 251 | ||||||||||
Luxi Chemical Group Co. Ltd. | Chemicals | 400 | 460 | |||||||||||
Luxshare Precision Industry Co. Ltd. | Electronic Equipment, Instruments & Components | 920 | 4,953 | |||||||||||
Luye Pharma Group Ltd. | Pharmaceuticals | 6,000 | 2,926 | |||||||||||
Luzhou Laojiao Co. Ltd., A | Beverages | 200 | 2,078 | |||||||||||
Maanshan Iron & Steel Co. Ltd., A | Metals & Mining | 800 | 284 | |||||||||||
Maanshan Iron & Steel Co. Ltd., H | Metals & Mining | 4,000 | 1,254 | |||||||||||
| a | Mango Excellent Media Co. Ltd. | Entertainment | 340 | 2,091 | ||||||||||
Meinian Onehealth Healthcare Holdings Co. Ltd. | Health Care Providers & Services | 520 | 866 | |||||||||||
| a,b,c | Meitu Inc., 144A, Reg S | Technology Hardware, Storage & Peripherals | 7,000 | 1,337 | ||||||||||
| a,b | Meituan Dianping, B, Reg S | Internet & Direct Marketing Retail | 11,400 | 137,740 | ||||||||||
Metallurgical Corp. of China Ltd. | Construction & Engineering | 10,000 | 1,755 | |||||||||||
Metallurgical Corp. of China Ltd., A | Construction & Engineering | 2,800 | 1,035 | |||||||||||
Minth Group Ltd. | Auto Components | 2,000 | 4,289 | |||||||||||
| a | MMG Ltd. | Metals & Mining | 8,000 | 1,146 | ||||||||||
Momo Inc., ADR | Interactive Media & Services | 356 | 7,722 | |||||||||||
| a | Montnets Rongxin Technology Group Co. Ltd. | Software | 200 | 379 | ||||||||||
Muyuan Foodstuff Co. Ltd. | Food Products | 200 | 3,448 | |||||||||||
MYS Group Co. Ltd. | Containers & Packaging | 200 | 139 | |||||||||||
| a | NanJiE-Commerce Co. Ltd. | Media | 400 | 655 | ||||||||||
Nanjing Iron & Steel Co. Ltd., A | Metals & Mining | 600 | 266 | |||||||||||
Nanjing Securities Co. Ltd., A | Capital Markets | 200 | 439 | |||||||||||
Nari Technology Development Co. Ltd., A | Electrical Equipment | 1,000 | 2,786 | |||||||||||
NavInfo Co. Ltd. | Household Durables | 200 | 397 | |||||||||||
NetEase Inc., ADR | Entertainment | 236 | 75,747 | |||||||||||
New China Life Insurance Co. Ltd., A | Insurance | 400 | 2,246 | |||||||||||
New China Life Insurance Co. Ltd., H | Insurance | 3,000 | 9,347 | |||||||||||
New Hope Liuhe Co. Ltd. | Food Products | 1,000 | 4,434 | |||||||||||
| a | New Oriental Education & Technology Group Inc., ADR | Diversified Consumer Services | 452 | 48,924 | ||||||||||
Newland Digital Technology Co. Ltd. | Software | 200 | 446 | |||||||||||
Nexteer Automotive Group Ltd. | Auto Components | 6,000 | 3,011 | |||||||||||
Nine Dragons Paper Holdings Ltd. | Paper & Forest Products | 6,000 | 5,473 | |||||||||||
Ninestar Corp. | Technology Hardware, Storage & Peripherals | 400 | 1,514 | |||||||||||
| a | Ningbo Joyson Electronic Corp. | Auto Components | 600 | 1,591 | ||||||||||
Ningbo Sanxing Medical Electric Co. Ltd., A | Electrical Equipment | 200 | 208 | |||||||||||
Ningbo Zhoushan Port Co. Ltd., A | Transportation Infrastructure | 600 | 300 | |||||||||||
| a,d | NIO Inc., ADR | Automobiles | 2,428 | 6,750 | ||||||||||
North Huajin Chemical Industries Co. Ltd. | Chemicals | 800 | 635 | |||||||||||
Northeast Securities Co. Ltd. | Capital Markets | 400 | 468 | |||||||||||
NSFOCUS Information Technology Co. Ltd. | Software | 200 | 531 | |||||||||||
Oceanwide Holdings Co. Ltd. | Real Estate Management & Development | 400 | 223 | |||||||||||
Offshore Oil Engineering Co. Ltd., A | Energy Equipment & Services | 1,000 | 690 | |||||||||||
| a | OFILM Group Co. Ltd. | Electronic Equipment, Instruments & Components | 400 | 770 | ||||||||||
ORG Technology Co. Ltd. | Containers & Packaging | 400 | 227 | |||||||||||
Orient Securities Co. Ltd. of China, H | Capital Markets | 3,200 | 1,680 | |||||||||||
Oriental Pearl Group Co. Ltd., A | Media | 400 | 494 | |||||||||||
| a | Ourpalm Co. Ltd. | Entertainment | 800 | 585 | ||||||||||
| a | Pangang Group Vanadium Titanium & Resources Co. Ltd., A | Metals & Mining | 1,400 | 438 | ||||||||||
People’s Insurance Co. Group of China Ltd., H | Insurance | 28,000 | 9,248 | |||||||||||
Perfect World Co. Ltd. | Entertainment | 200 | 1,342 | |||||||||||
PetroChina Co. Ltd., H | Oil, Gas & Consumable Fuels | 72,000 | 26,381 | |||||||||||
PICC Property and Casualty Co. Ltd., H | Insurance | 20,000 | 19,353 | |||||||||||
| a | Pinduoduo Inc., ADR | Internet & Direct Marketing Retail | 368 | 13,259 | ||||||||||
Ping An Bank Co. Ltd., A | Banks | 3,000 | 5,417 | |||||||||||
| 152 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
| a,b | Ping An Healthcare and Technology Co. Ltd., Reg S | Health Care Technology | 1,200 | $ | 11,194 | |||||||||
Ping An Insurance (Group) Co. of China Ltd., H | Insurance | 18,000 | 176,844 | |||||||||||
Ping An Insurance Group Co. of China Ltd., A | Insurance | 1,800 | 17,565 | |||||||||||
| a | Pingdingshan Tianan Coal Mining Co. Ltd., A | Oil, Gas & Consumable Fuels | 600 | 352 | ||||||||||
Poly Developments and Holdings Group Co. Ltd., A | Real Estate Management & Development | 2,400 | 5,035 | |||||||||||
Poly Property Group Co. Ltd. | Real Estate Management & Development | 4,000 | 1,357 | |||||||||||
Postal Savings Bank of China Co. Ltd., H | Banks | 32,000 | 19,487 | |||||||||||
Power Construction Corp. of China Ltd. | Construction & Engineering | 2,600 | 1,445 | |||||||||||
Qingdao Port International Co. Ltd., A | Transportation Infrastructure | 200 | 164 | |||||||||||
| b | Qingdao Port International Co. Ltd., H, Reg S | Transportation Infrastructure | 4,000 | 2,188 | ||||||||||
Qingdao TGOOD Electric Co. Ltd. | Electrical Equipment | 200 | 551 | |||||||||||
Rainbow Department Store Co. Ltd. | Multiline Retail | 200 | 251 | |||||||||||
Realcan Pharmaceutical Group Co. Ltd. | Health Care Providers & Services | 200 | 153 | |||||||||||
Red Star Macalline Group Corp. Ltd. | Real Estate Management & Development | 2,000 | 1,275 | |||||||||||
Red Star Macalline Group Corp. Ltd., A | Real Estate Management & Development | 200 | 263 | |||||||||||
RiseSun Real Estate Development Co. Ltd. | Real Estate Management & Development | 600 | 656 | |||||||||||
Rongsheng Petro Chemical Co. Ltd. | Chemicals | 200 | 309 | |||||||||||
SAIC Motor Corp. Ltd. | Automobiles | 1,800 | 5,206 | |||||||||||
Sanan Optoelectronics Co. Ltd., A | Semiconductors & Semiconductor Equipment | 1,000 | 2,702 | |||||||||||
Sansteel Minguang Co. Ltd. | Metals & Mining | 400 | 450 | |||||||||||
Sany Heavy Industry Co. Ltd., A | Machinery | 1,800 | 4,393 | |||||||||||
SDIC Capital Co. Ltd., A | Capital Markets | 400 | 691 | |||||||||||
SDIC Power Holdings Co. Ltd., A | Independent Power and Renewable Electricity Producers | 1,000 | 1,120 | |||||||||||
Sealand Securities Co. Ltd. | Capital Markets | 780 | 482 | |||||||||||
Seazen Group Ltd. | Real Estate Management & Development | 8,000 | 7,225 | |||||||||||
Seazen Holdings Co. Ltd., A | Real Estate Management & Development | 400 | 1,765 | |||||||||||
| a | Semiconductor Manufacturing International Corp. | Semiconductors & Semiconductor Equipment | 10,000 | 15,740 | ||||||||||
SF Holding Co. Ltd. | Air Freight & Logistics | 600 | 3,999 | |||||||||||
Shaan Xi Provincial Natural Gas Co. Ltd. | Gas Utilities | 400 | 327 | |||||||||||
Shaanxi Coal Industry Co. Ltd. | Oil, Gas & Consumable Fuels | 1,000 | 1,055 | |||||||||||
Shaanxi International Trust Co. Ltd. | Capital Markets | 400 | 199 | |||||||||||
Shandong Chenming Paper Holdings Ltd. | Paper & Forest Products | 1,000 | 674 | |||||||||||
Shandong Chenming Paper Holdings Ltd., B | Paper & Forest Products | 2,800 | 1,011 | |||||||||||
Shandong Chenming Paper Holdings Ltd., H | Paper & Forest Products | 1,000 | 359 | |||||||||||
| b,c | Shandong Gold Mining Co. Ltd., 144A, Reg S | Metals & Mining | 1,500 | 3,603 | ||||||||||
Shandong Gold Mining Co. Ltd., A | Metals & Mining | 400 | 1,938 | |||||||||||
ShandongHi-speed Co. Ltd., A | Transportation Infrastructure | 600 | 351 | |||||||||||
Shandong Hualu Hengsheng Chemical Co. Ltd., A | Chemicals | 200 | 443 | |||||||||||
| a | Shandong Humon Smelting Co. Ltd. | Metals & Mining | 200 | 359 | ||||||||||
Shandong Linglong Tyre Co. Ltd., A | Auto Components | 200 | 558 | |||||||||||
Shandong Nanshan Aluminum Co. Ltd., A | Metals & Mining | 2,800 | 814 | |||||||||||
Shandong Publishing & Media Co. Ltd., A | Media | 400 | 365 | |||||||||||
Shandong Sun Paper Industry JSC Ltd. | Paper & Forest Products | 400 | 495 | |||||||||||
Shandong Weigao Group Medical Polymer Co. Ltd., H | Health Care Equipment & Supplies | 8,000 | 10,115 | |||||||||||
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
| a | Shandong Xinchao Energy Corp. Ltd., A | Oil, Gas & Consumable Fuels | 400 | $ | 99 | |||||||||
Shanghai 2345 Network Holding Group Co. Ltd. | Software | 600 | 235 | |||||||||||
Shanghai AJ Group Co. Ltd., A | Diversified Financial Services | 200 | 224 | |||||||||||
Shanghai Baosight Software Co. Ltd., A | Software | 200 | 1,122 | |||||||||||
Shanghai Baosight Software Co. Ltd., B | Software | 1,100 | 2,227 | |||||||||||
Shanghai Chlor-Alkali Chemical Co. Ltd., B | Chemicals | 1,800 | 900 | |||||||||||
Shanghai Construction Group Co. Ltd., A | Construction & Engineering | 1,400 | 634 | |||||||||||
Shanghai Dazhong Public Utilities Group Co. Ltd., A | Gas Utilities | 400 | 228 | |||||||||||
Shanghai Electric Group Co. Ltd., A | Electrical Equipment | 1,000 | 649 | |||||||||||
Shanghai Electric Group Co. Ltd., H | Electrical Equipment | 16,000 | 4,232 | |||||||||||
Shanghai Electric Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 200 | 198 | |||||||||||
Shanghai Environment Group Co. Ltd., A | Commercial Services & Supplies | 200 | 331 | |||||||||||
Shanghai Fosun Pharmaceutical Group Co. Ltd., A | Pharmaceuticals | 400 | 1,854 | |||||||||||
Shanghai Fosun Pharmaceutical Group Co. Ltd., H | Pharmaceuticals | 2,000 | 6,580 | |||||||||||
Shanghai Huayi Group Co. Ltd., B | Chemicals | 1,200 | 584 | |||||||||||
Shanghai Industrial Development Co. Ltd., A | Real Estate Management & Development | 200 | 144 | |||||||||||
Shanghai Industrial Holdings Ltd. | Industrial Conglomerates | 2,000 | 3,024 | |||||||||||
Shanghai International Airport Co. Ltd., A | Transportation Infrastructure | 400 | 3,432 | |||||||||||
Shanghai International Port Group Co. Ltd., A | Transportation Infrastructure | 1,400 | 885 | |||||||||||
Shanghai Jinjiang International Hotels Co. Ltd. | Hotels, Restaurants & Leisure | 600 | 851 | |||||||||||
Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., B | Real Estate Management & Development | 4,280 | 3,450 | |||||||||||
Shanghai Mechanical and Electrical Industry Co. Ltd., A | Machinery | 200 | 383 | |||||||||||
Shanghai Pharmaceuticals Holding Co. Ltd., H | Health Care Providers & Services | 3,000 | 5,101 | |||||||||||
Shanghai Pudong Development Bank Co. Ltd., A | Banks | 4,800 | 6,873 | |||||||||||
Shanghai Putailai New Energy Technology Co. Ltd., A | Chemicals | 200 | 1,693 | |||||||||||
| a | Shanghai RAAS Blood Products Co. Ltd., A | Biotechnology | 1,000 | 1,098 | ||||||||||
Shanghai ShibeiHi-Tech Co. Ltd., B | Real Estate Management & Development | 1,800 | 601 | |||||||||||
Shanghai Shimao Co. Ltd., A | Real Estate Management & Development | 800 | 460 | |||||||||||
Shanghai Tunnel Engineering Co. Ltd., A | Construction & Engineering | 800 | 624 | |||||||||||
Shanghai Waigaoqiao Free Trade Zone Group Co. Ltd. | Trading Companies & Distributors | 800 | 751 | |||||||||||
Shanghai Yuyuan Tourist Mart Group Co. Ltd., A | Specialty Retail | 600 | 619 | |||||||||||
Shanghai Zhangjiang High-Tech Park Development Co. Ltd., A | Real Estate Management & Development | 200 | 342 | |||||||||||
Shanghai Zhenhua Port Machinery Co. Ltd., B | Machinery | 4,080 | 1,179 | |||||||||||
Shanxi LanhuaSci-Tech Venture Co. Ltd., A | Oil, Gas & Consumable Fuels | 600 | 442 | |||||||||||
Shanxi Lu’an Environmental Energy Development Co. Ltd., A | Oil, Gas & Consumable Fuels | 400 | 329 | |||||||||||
Shanxi Securities Co. Ltd. | Capital Markets | 400 | 396 | |||||||||||
Shanxi Xinghuacun Fen Wine Factory Co. Ltd., A | Beverages | 200 | 2,545 | |||||||||||
| 154 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Shanxi Xishan Coal & Electricity Power Co. Ltd. | Oil, Gas & Consumable Fuels | 600 | $ | 411 | ||||||||||
| a | Shanying International Holding Co. Ltd., A | Paper & Forest Products | 600 | 259 | ||||||||||
Shenghe Resources Holding Co. Ltd., A | Metals & Mining | 200 | 195 | |||||||||||
Shengyi Technology Co. Ltd., A | Electronic Equipment, Instruments & Components | 400 | 1,494 | |||||||||||
Shenwan Hongyuan Group Co. Ltd. | Capital Markets | 4,400 | 2,738 | |||||||||||
| a,b,c | Shenwan Hongyuan Group Co. Ltd., 144A, Reg S | Capital Markets | 9,600 | 2,254 | ||||||||||
Shenzhen Accord Pharmaceutical Co. Ltd., B | Health Care Providers & Services | 800 | 2,056 | |||||||||||
Shenzhen Agricultural Products Group Co. Ltd. | Food & Staples Retailing | 200 | 204 | |||||||||||
Shenzhen Airport Co. Ltd. | Transportation Infrastructure | 400 | 431 | |||||||||||
Shenzhen Aisidi Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 163 | |||||||||||
Shenzhen Energy Group Co. Ltd. | Independent Power and Renewable Electricity Producers | 400 | 304 | |||||||||||
Shenzhen Everwin Precision Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 600 | 1,596 | |||||||||||
Shenzhen Expressway Co. Ltd., H | Transportation Infrastructure | 4,000 | 4,077 | |||||||||||
Shenzhen Gas Corporation Ltd., A | Gas Utilities | 600 | 623 | |||||||||||
Shenzhen Grandland Group Co. Ltd. | Construction & Engineering | 400 | 208 | |||||||||||
Shenzhen Huaqiang Industry Co. Ltd. | Real Estate Management & Development | 200 | 337 | |||||||||||
Shenzhen Inovance Technology Co. Ltd. | Machinery | 200 | 729 | |||||||||||
Shenzhen International Holdings Ltd. | Transportation Infrastructure | 4,000 | 7,328 | |||||||||||
Shenzhen Investment Ltd. | Real Estate Management & Development | 12,000 | 3,747 | |||||||||||
Shenzhen Jinjia Group Co. Ltd. | Containers & Packaging | 200 | 260 | |||||||||||
Shenzhen Kaifa Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 200 | 485 | |||||||||||
| a | Shenzhen KingdomSci-Tech Co. Ltd., A | Software | 200 | 474 | ||||||||||
Shenzhen MindrayBio-Medical Electronics Co. Ltd., A | Health Care Equipment & Supplies | 200 | 7,384 | |||||||||||
| a | Shenzhen MTC Co. Ltd. | Household Durables | 400 | 232 | ||||||||||
Shenzhen Overseas Chinese Town Co. Ltd. | Hotels, Restaurants & Leisure | 1,400 | 1,262 | |||||||||||
Shenzhen Salubris Pharmaceuticals Co. Ltd. | Pharmaceuticals | 200 | 501 | |||||||||||
| a | Shenzhen Sunway Communication Co. Ltd. | Communications Equipment | 200 | 968 | ||||||||||
Shenzhen Yan Tian Port Holding Co. Ltd. | Transportation Infrastructure | 200 | 125 | |||||||||||
Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd. | Metals & Mining | 600 | 301 | |||||||||||
Shenzhou International Group Holdings Ltd. | Textiles, Apparel & Luxury Goods | 2,400 | 25,514 | |||||||||||
| a | Shijiazhuang Changshan BeiMing Technology Co. Ltd. | Textiles, Apparel & Luxury Goods | 200 | 245 | ||||||||||
Shijiazhuang Yiling Pharmaceutical Co. Ltd. | Pharmaceuticals | 200 | 633 | |||||||||||
Shimao Property Holdings Ltd. | Real Estate Management & Development | 4,000 | 14,089 | |||||||||||
Shougang Fushan Resources Group Ltd. | Metals & Mining | 12,000 | 2,183 | |||||||||||
Shui On Land Ltd. | Real Estate Management & Development | 13,000 | 2,180 | |||||||||||
| a | Siasun Robot & Automation Co. Ltd. | Machinery | 200 | 385 | ||||||||||
| a | Sichuan Hebang Biotechnology Co. Ltd., A | Chemicals | 1,200 | 245 | ||||||||||
Sichuan Kelun Pharmaceutical Co. Ltd. | Pharmaceuticals | 600 | 1,751 | |||||||||||
Sichuan Languang Development Co. Ltd., A | Real Estate Management & Development | 200 | 170 | |||||||||||
Sichuan Road & Bridge Co. Ltd., A | Construction & Engineering | 1,000 | 543 | |||||||||||
Sieyuan Electric Co. Ltd. | Electrical Equipment | 200 | 508 | |||||||||||
| franklintempleton.com | Annual Report | 155 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Sihuan Pharmaceutical Holdings Group Ltd. | Pharmaceuticals | 14,000 | $ | 1,409 | ||||||||||
| a | SINA Corp. | Interactive Media & Services | 214 | 6,814 | ||||||||||
Sino-Ocean Land Holdings Ltd. | Real Estate Management & Development | 10,000 | 2,542 | |||||||||||
Sinochem International Corp., A | Trading Companies & Distributors | 600 | 433 | |||||||||||
Sinolink Securities Co. Ltd., A | Capital Markets | 400 | 516 | |||||||||||
Sinoma International Engineering Co. | Construction & Engineering | 600 | 511 | |||||||||||
Sinoma Science & Technology Co. Ltd. | Chemicals | 200 | 321 | |||||||||||
Sinopec Engineering Group Co. Ltd. | Construction & Engineering | 5,000 | 2,103 | |||||||||||
| a | Sinopec Oilfield Service Corp. | Energy Equipment & Services | 8,000 | 609 | ||||||||||
| a | Sinopec Oilfield Service Corp., A | Energy Equipment & Services | 600 | 175 | ||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., A | Chemicals | 600 | 329 | |||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., H | Chemicals | 12,000 | 2,973 | |||||||||||
Sinopharm Group Co. Ltd., H | Health Care Providers & Services | 4,000 | 9,000 | |||||||||||
Sinotrans Ltd., A | Air Freight & Logistics | 800 | 395 | |||||||||||
Sinotrans Ltd., H | Air Freight & Logistics | 6,000 | 1,479 | |||||||||||
Sinotruk Hong Kong Ltd. | Machinery | 2,000 | 3,329 | |||||||||||
SITC International Holdings Co. Ltd. | Marine | 2,000 | 1,871 | |||||||||||
Soho China Ltd. | Real Estate Management & Development | 7,000 | 3,612 | |||||||||||
Songcheng Performance Development Co. Ltd. | Hotels, Restaurants & Leisure | 200 | 705 | |||||||||||
SooChow Securities Co. Ltd., A | Capital Markets | 520 | 581 | |||||||||||
Southwest Securities Co. Ltd., A | Capital Markets | 800 | 510 | |||||||||||
STO Express Co. Ltd. | Air Freight & Logistics | 200 | 493 | |||||||||||
Sunac China Holdings Ltd. | Real Estate Management & Development | 8,000 | 37,054 | |||||||||||
Sungrow Power Supply Co. Ltd. | Electrical Equipment | 200 | 268 | |||||||||||
Suning Universal Co. Ltd. | Real Estate Management & Development | 1,000 | 429 | |||||||||||
Suning.com Co. Ltd. | Specialty Retail | 1,200 | 1,529 | |||||||||||
Sunny Optical Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 2,000 | 26,939 | |||||||||||
Sunwoda Electronic Co. Ltd., A | Electrical Equipment | 200 | 399 | |||||||||||
Suofeiya Home Collection Co. Ltd. | Household Durables | 200 | 507 | |||||||||||
Suzhou Gold Mantis Construction Decoration Co. Ltd. | Construction & Engineering | 400 | 463 | |||||||||||
Tahoe Group Co. Ltd. | Real Estate Management & Development | 200 | 146 | |||||||||||
| a | TAL Education Group, ADR | Diversified Consumer Services | 1,130 | 60,184 | ||||||||||
Tangshan Jidong Cement Co. Ltd. | Construction Materials | 200 | 553 | |||||||||||
TangShan Port Group Co. Ltd., A | Transportation Infrastructure | 800 | 255 | |||||||||||
Tangshan Sanyou Chemical Industries Co. Ltd., A | Chemicals | 400 | 283 | |||||||||||
Tasly Pharmaceutical Group Co. Ltd., A | Pharmaceuticals | 200 | 390 | |||||||||||
TCL Corp. | Household Durables | 2,000 | 1,168 | |||||||||||
Tencent Holdings Ltd. | Interactive Media & Services | 19,000 | 931,995 | |||||||||||
| a | Tencent Music Entertainment Group, ADR | Entertainment | 384 | 3,863 | ||||||||||
| a | The China Pacific Securities Co. Ltd., A | Capital Markets | 1,000 | 468 | ||||||||||
Tian Di Science & Technology Co. Ltd., A | Machinery | 800 | 339 | |||||||||||
Tianfeng Securities Co. Ltd., A | Capital Markets | 1,040 | 751 | |||||||||||
Tianjin Capital Environmental Protection Group Co. Ltd., A | Commercial Services & Supplies | 200 | 202 | |||||||||||
Tianjin Chase Sun Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,000 | 694 | |||||||||||
Tianjin Zhonghuan Semiconductor Co. Ltd. | Semiconductors & Semiconductor Equipment | 400 | 806 | |||||||||||
Tianma Microelectronics Co. Ltd. | Electronic Equipment, Instruments & Components | 800 | 1,504 | |||||||||||
Tianqi Lithium Corp. | Chemicals | 260 | 677 | |||||||||||
Times China Holdings Ltd. | Real Estate Management & Development | 2,000 | 3,349 | |||||||||||
| a | Times Neighborhood Holdings Ltd. | Commercial Services & Supplies | 585 | 468 | ||||||||||
Tingyi Cayman Islands Holding Corp. | Food Products | 4,000 | 6,544 | |||||||||||
| a,b | Tongcheng-Elong Holdings Ltd., Reg S | Internet & Direct Marketing Retail | 2,400 | 3,375 | ||||||||||
Tongding Interconnection Information Co. Ltd. | Communications Equipment | 200 | 162 | |||||||||||
Tonghua Dongbao Pharmaceutical Co. Ltd. | Pharmaceuticals | 400 | 599 | |||||||||||
Tongkun Group Co. Ltd., A | Chemicals | 200 | 331 | |||||||||||
| 156 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Tongling Nonferrous Metals Group Co. Ltd. | Metals & Mining | 1,400 | $ | 393 | ||||||||||
Tongwei Co. Ltd., A | Food Products | 800 | 1,310 | |||||||||||
Towngas China Co. Ltd. | Gas Utilities | 4,000 | 1,982 | |||||||||||
TravelSky Technology Ltd., H | IT Services | 4,000 | 7,060 | |||||||||||
| a | Trip.com Group Ltd., ADR | Internet & Direct Marketing Retail | 1,498 | 35,128 | ||||||||||
Tsingtao Brewery Co. Ltd., A | Beverages | 200 | 1,290 | |||||||||||
Tsingtao Brewery Co. Ltd., H | Beverages | 1,400 | 7,144 | |||||||||||
Tunghsu Optoelectronic Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 600 | 254 | |||||||||||
Tus-Sound Environmental Resources Co. Ltd. | Commercial Services & Supplies | 200 | 228 | |||||||||||
Uni-President China Holdings Ltd. | Food Products | 4,000 | 3,881 | |||||||||||
Unisplendour Corp. Ltd. | Electronic Equipment, Instruments & Components | 400 | 1,993 | |||||||||||
Universal Scientific Industrial Shanghai Co. Ltd., A | Electronic Equipment, Instruments & Components | 600 | 1,344 | |||||||||||
Venustech Group Inc. | Software | 200 | 1,044 | |||||||||||
| a | Vipshop Holdings Ltd., ADR | Internet & Direct Marketing Retail | 1,450 | 22,591 | ||||||||||
Walvax Biotechnology Co. Ltd. | Biotechnology | 600 | 2,680 | |||||||||||
| a | Wanda Film Holding Co. Ltd., A | Entertainment | 600 | 1,333 | ||||||||||
Wangfujing Group Co. Ltd., A | Multiline Retail | 200 | 343 | |||||||||||
Wangsu Science & Technology Co. Ltd. | IT Services | 400 | 440 | |||||||||||
Wanhua Chemical Group Co. Ltd., A | Chemicals | 600 | 3,492 | |||||||||||
Want Want China Holdings Ltd. | Food Products | 18,000 | 13,051 | |||||||||||
Wanxiang Qianchao Co. Ltd. | Auto Components | 200 | 144 | |||||||||||
| a | Weibo Corp., ADR | Interactive Media & Services | 182 | 6,026 | ||||||||||
Weichai Power Co. Ltd., A | Machinery | 1,000 | 1,687 | |||||||||||
Weichai Power Co. Ltd., H | Machinery | 6,000 | 9,661 | |||||||||||
Weifu High-Technology Co. Ltd.,, B | Auto Components | 600 | 928 | |||||||||||
Wens Foodstuffs Group Co. Ltd. | Food Products | 600 | 2,734 | |||||||||||
Western Securities Co. Ltd. | Capital Markets | 600 | 700 | |||||||||||
Westone Information Industry Inc. | Electronic Equipment, Instruments & Components | 200 | 634 | |||||||||||
| a | Wingtech Technology Co. Ltd., A | Electronic Equipment, Instruments & Components | 200 | 2,864 | ||||||||||
Winning Health Technology Group Co. Ltd. | Health Care Technology | 600 | 1,775 | |||||||||||
Wolong Electric Group Co. Ltd., A | Electrical Equipment | 200 | 291 | |||||||||||
Wonders Information Co. Ltd. | IT Services | 200 | 562 | |||||||||||
Wuchan Zhongda Group Co. Ltd., A | Distributors | 600 | 406 | |||||||||||
Wuhan Guide Infrared Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 952 | |||||||||||
Wuhu Sanqi Interactive Entertainment NetworkTechnology Group Co. Ltd. | Entertainment | 200 | 922 | |||||||||||
Wuliangye Yibin Co. Ltd. | Beverages | 600 | 9,751 | |||||||||||
WUS Printed Circuit Kunshan Co. Ltd. | Electronic Equipment, Instruments & Components | 600 | 2,004 | |||||||||||
WuXi AppTec Co. Ltd., H | Life Sciences Tools & Services | 600 | 7,385 | |||||||||||
| a | Wuxi Biologics Cayman Inc. | Life Sciences Tools & Services | 2,500 | 32,416 | ||||||||||
Wuxi Lead Intelligent Equipment Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 1,057 | |||||||||||
XCMG Construction Machinery Co. Ltd. | Machinery | 1,400 | 997 | |||||||||||
Xiamen C & D Inc., A | Trading Companies & Distributors | 600 | 648 | |||||||||||
Xiamen ITG Group Corp. Ltd., A | Trading Companies & Distributors | 400 | 362 | |||||||||||
Xiamen Meiya Pico Information Co. Ltd. | Electronic Equipment, Instruments & Components | 200 | 574 | |||||||||||
Xiamen Tungsten Co. Ltd., A | Metals & Mining | 200 | 320 | |||||||||||
| a | Xiaomi Corp., B | Technology Hardware, Storage & Peripherals | 35,600 | 47,951 | ||||||||||
Xinhu Zhongbao Co. Ltd., A | Real Estate Management & Development | 1,200 | 511 | |||||||||||
Xinhua Winshare Publishing and Media Co. Ltd., H | Distributors | 2,000 | 1,288 | |||||||||||
Xinjiang Goldwind Science & Technology Co. Ltd. | Electrical Equipment | 600 | 804 | |||||||||||
Xinjiang Goldwind Science & Technology Co. Ltd., H | Electrical Equipment | 2,000 | 1,742 | |||||||||||
Xinjiang Zhongtai Chemical Co. Ltd. | Chemicals | 200 | 138 | |||||||||||
Xinyi Solar Holdings Ltd. | Semiconductors & Semiconductor Equipment | 12,000 | 6,797 | |||||||||||
Yang Quan Coal Industry Group Co. Ltd., A | Oil, Gas & Consumable Fuels | 600 | 389 | |||||||||||
| franklintempleton.com | Annual Report | 157 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Yango Group Co. Ltd. | Real Estate Management & Development | 400 | $ | 394 | ||||||||||
| b | Yangtze Optical Fibre and Cable Joint Stock Ltd. Co., H, Reg S | Communications Equipment | 1,000 | 1,814 | ||||||||||
Yantai Changyu Pioneer Wine Co. Ltd., B | Beverages | 800 | 1,266 | |||||||||||
Yantai Jereh Oilfield Services Group Co. Ltd. | Energy Equipment & Services | 200 | 624 | |||||||||||
Yanzhou Coal Mining Co. Ltd., A | Oil, Gas & Consumable Fuels | 200 | 244 | |||||||||||
Yanzhou Coal Mining Co. Ltd., H | Oil, Gas & Consumable Fuels | 8,000 | 6,275 | |||||||||||
Yifan Pharmaceutical Co. Ltd. | Pharmaceuticals | 200 | 460 | |||||||||||
Yihai International Holding Ltd. | Food Products | 2,000 | 15,147 | |||||||||||
Yintai Gold Co. Ltd. | Metals & Mining | 200 | 407 | |||||||||||
Yonghui Superstores Co. Ltd., A | Food & Staples Retailing | 2,000 | 2,889 | |||||||||||
Yonyou Network Technology Co. Ltd., A | Software | 600 | 3,425 | |||||||||||
Yotrio Group Co. Ltd. | Leisure Equipment & Products | 400 | 197 | |||||||||||
Yuan Longping High-tech Agriculture Co. Ltd. | Food Products | 200 | 511 | |||||||||||
Yuexiu Property Co. Ltd. | Real Estate Management & Development | 24,000 | 4,335 | |||||||||||
| a | Yunnan Aluminium Co. Ltd. | Metals & Mining | 600 | 328 | ||||||||||
Yunnan Baiyao Group Co. Ltd. | Pharmaceuticals | 200 | 2,414 | |||||||||||
| a | Yunnan Copper Co. Ltd. | Metals & Mining | 200 | 275 | ||||||||||
Yunnan Energy New Material Co. Ltd. | Containers & Packaging | 200 | 1,199 | |||||||||||
| a | Yunnan Tin Co. Ltd. | Metals & Mining | 200 | 233 | ||||||||||
Zhangzhou Pientzehuang Pharmaceutical Co. Ltd., A | Pharmaceuticals | 100 | 1,754 | |||||||||||
Zhaojin Mining Industry Co. Ltd., H | Metals & Mining | 3,000 | 3,011 | |||||||||||
Zhefu Holding Group Co. Ltd. | Electrical Equipment | 400 | 204 | |||||||||||
Zhejiang Chint Electrics Co. Ltd., A | Electrical Equipment | 200 | 667 | |||||||||||
Zhejiang Conba Pharmaceutical Co. Ltd., A | Pharmaceuticals | 400 | 291 | |||||||||||
Zhejiang Crystal-Optech Co. Ltd. | Electronic Equipment, Instruments & Components | 180 | 338 | |||||||||||
Zhejiang Dahua Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 400 | 912 | |||||||||||
Zhejiang Expressway Co. Ltd., H | Transportation Infrastructure | 4,000 | 2,787 | |||||||||||
Zhejiang Hailiang Co. Ltd. | Metals & Mining | 200 | 255 | |||||||||||
Zhejiang Hisoar Pharmaceutical Co. Ltd. | Pharmaceuticals | 200 | 174 | |||||||||||
Zhejiang Huace Film & TV Co. Ltd., A | Entertainment | 200 | 188 | |||||||||||
| a | Zhejiang Huahai Pharmaceutical Co. Ltd., A | Pharmaceuticals | 600 | 2,175 | ||||||||||
Zhejiang Huayou Cobalt Co. Ltd., A | Metals & Mining | 200 | 830 | |||||||||||
Zhejiang Juhua Co. Ltd., A | Chemicals | 400 | 383 | |||||||||||
Zhejiang Longsheng Group Co. Ltd., A | Chemicals | 400 | 672 | |||||||||||
Zhejiang Medicine Co. Ltd., A | Pharmaceuticals | 200 | 529 | |||||||||||
Zhejiang NHU Co. Ltd. | Pharmaceuticals | 800 | 3,081 | |||||||||||
Zhejiang Runtu Co. Ltd. | Chemicals | 200 | 271 | |||||||||||
Zhejiang Sanhua Intelligent Controls Co. Ltd. | Machinery | 800 | 1,814 | |||||||||||
Zhejiang Semir Garment Co. Ltd. | Textiles, Apparel & Luxury Goods | 200 | 201 | |||||||||||
Zhejiang Wanfeng Auto Wheel Co. Ltd. | Auto Components | 200 | 186 | |||||||||||
Zhejiang Wanliyang Co. Ltd. | Machinery | 200 | 228 | |||||||||||
Zhejiang Weixing New Building Materials Co. Ltd. | Building Products | 200 | 312 | |||||||||||
Zhejiang Yasha Decoration Co. Ltd. | Diversified Consumer Services | 600 | 587 | |||||||||||
Zhengzhou Coal Mining Machinery Group Co. Ltd., A | Machinery | 200 | 156 | |||||||||||
Zhengzhou Yutong Bus Co. Ltd., A | Machinery | 400 | 773 | |||||||||||
Zheshang Securities Co. Ltd., A | Capital Markets | 200 | 282 | |||||||||||
| a,b | ZhongAn Online P&C Insurance Co. Ltd., Reg S | Insurance | 1,200 | 3,963 | ||||||||||
Zhongjin Gold Corp. Ltd., A | Metals & Mining | 400 | 455 | |||||||||||
Zhongshan Public Utilities Group Co. Ltd. | Water Utilities | 400 | 425 | |||||||||||
Zhongsheng Group Holdings Ltd. | Specialty Retail | 2,000 | 6,993 | |||||||||||
Zhuzhou CRRC Times Electric Co. Ltd., H | Electrical Equipment | 1,400 | 4,145 | |||||||||||
Zijin Mining Group Co. Ltd., A | Metals & Mining | 4,600 | 2,395 | |||||||||||
Zijin Mining Group Co. Ltd., H | Metals & Mining | 16,000 | 6,028 | |||||||||||
| 158 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Zoomlion Heavy Industry Science and Technology Co. Ltd. | Machinery | 1,200 | $ | 963 | ||||||||||
Zoomlion Heavy Industry Science and Technology Co. Ltd.,, H | Machinery | 4,400 | 3,202 | |||||||||||
| a | ZTE Corp. | Communications Equipment | 600 | 3,623 | ||||||||||
| a | ZTE Corp., H | Communications Equipment | 2,400 | 7,447 | ||||||||||
| a | ZTO Express Cayman Inc., ADR | Air Freight & Logistics | 1,290 | 34,159 | ||||||||||
|
| |||||||||||||
| 6,413,494 | ||||||||||||||
|
| |||||||||||||
| Hong Kong 9.3% | ||||||||||||||
AIA Group Ltd. | Insurance | 40,000 | 362,022 | |||||||||||
| a | Alibaba Pictures Group Ltd. | Entertainment | 40,000 | 5,161 | ||||||||||
ASM Pacific Technology Ltd. | Semiconductors & Semiconductor Equipment | 1,200 | 11,240 | |||||||||||
BOC Hong Kong (Holdings) Ltd. | Banks | 12,000 | 33,209 | |||||||||||
Cathay Pacific Airways Ltd. | Airlines | 2,000 | 2,142 | |||||||||||
Champion REIT | Equity Real Estate Investment Trusts (REITs | ) | 8,000 | 4,830 | ||||||||||
Chow Tai Fook Jewellery Co. Ltd. | Specialty Retail | 3,600 | 2,550 | |||||||||||
CK Asset Holdings Ltd. | Real Estate Management & Development | 9,000 | 49,291 | |||||||||||
CK Hutchison Holdings Ltd. | Industrial Conglomerates | 9,000 | 60,728 | |||||||||||
CK Infrastructure Holdings Ltd. | Electric Utilities | 2,000 | 10,631 | |||||||||||
CLP Holdings Ltd. | Electric Utilities | 5,600 | 51,659 | |||||||||||
Dah Sing Banking Group Ltd. | Banks | 3,200 | 2,787 | |||||||||||
Dah Sing Financial Group | Banks | 800 | 2,276 | |||||||||||
Dairy Farm International Holdings Ltd. | Food & Staples Retailing | 1,000 | 4,600 | |||||||||||
Guotai Junan International holdings Ltd. | Capital Markets | 10,000 | 1,316 | |||||||||||
Haitong International Securities Group Ltd. | Capital Markets | 12,000 | 3,065 | |||||||||||
Hang Lung Group Ltd. | Real Estate Management & Development | 4,000 | 8,433 | |||||||||||
Hang Lung Properties Ltd. | Real Estate Management & Development | 6,000 | 12,184 | |||||||||||
Hang Seng Bank Ltd. | Banks | 2,400 | 41,028 | |||||||||||
Henderson Land Development Co. Ltd. | Real Estate Management & Development | 4,840 | 18,452 | |||||||||||
Hong Kong and China Gas Co. Ltd. | Gas Utilities | 32,320 | 53,291 | |||||||||||
Hong Kong Exchanges and Clearing Ltd. | Capital Markets | 4,200 | 126,690 | |||||||||||
Hongkong Land Holdings Ltd. | Real Estate Management & Development | 3,600 | 13,500 | |||||||||||
Hysan Development Co. Ltd. | Real Estate Management & Development | 2,000 | 6,502 | |||||||||||
Jardine Matheson Holdings Ltd. | Industrial Conglomerates | 740 | 37,000 | |||||||||||
Jardine Strategic Holdings Ltd. | Industrial Conglomerates | 600 | 13,320 | |||||||||||
Johnson Electric Holdings Ltd. | Electrical Equipment | 1,000 | 1,574 | |||||||||||
Kerry Properties Ltd. | Real Estate Management & Development | 2,000 | 5,277 | |||||||||||
Kingboard Laminates Holdings Ltd. | Chemicals | 4,000 | 3,700 | |||||||||||
Li & Fung Ltd. | Textiles, Apparel & Luxury Goods | 20,000 | 2,632 | |||||||||||
Lifestyle International Holdings Ltd. | Multiline Retail | 2,000 | 1,680 | |||||||||||
Link REIT | Equity Real Estate Investment Trusts (REITs | ) | 6,800 | 57,640 | ||||||||||
Melco International Development Ltd. | Hotels, Restaurants & Leisure | 2,000 | 2,900 | |||||||||||
MTR Corp. Ltd. | Road & Rail | 5,000 | 25,836 | |||||||||||
New World Development Co. Ltd. | Real Estate Management & Development | 18,000 | 19,368 | |||||||||||
NWS Holdings Ltd. | Industrial Conglomerates | 4,000 | 4,113 | |||||||||||
PCCW Ltd. | Diversified Telecommunication Services | 14,000 | 7,713 | |||||||||||
Power Assets Holdings Ltd. | Electric Utilities | 4,500 | 26,910 | |||||||||||
Sa Sa International Holdings Ltd. | Specialty Retail | 16,153 | 2,417 | |||||||||||
Samsonite International SA | Textiles, Apparel & Luxury Goods | 4,200 | 3,999 | |||||||||||
Shangri-La Asia Ltd. | Hotels, Restaurants & Leisure | 4,000 | 2,709 | |||||||||||
Shun Tak Holdings Ltd. | Industrial Conglomerates | 4,000 | 1,368 | |||||||||||
Sino Biopharmaceutical Ltd. | Pharmaceuticals | 20,000 | 26,371 | |||||||||||
Sino Land Co. Ltd. | Real Estate Management & Development | 12,000 | 15,234 | |||||||||||
Sun Art Retail Group Ltd. | Food & Staples Retailing | 7,000 | 10,386 | |||||||||||
Sun Hung Kai Properties Ltd. | Real Estate Management & Development | 4,500 | 59,335 | |||||||||||
| franklintempleton.com | Annual Report | 159 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Hong Kong (continued) | ||||||||||||||
Swire Pacific Ltd., A | Real Estate Management & Development | 2,000 | $ | 12,889 | ||||||||||
Swire Pacific Ltd., B | Real Estate Management & Development | 2,500 | 2,558 | |||||||||||
Swire Properties Ltd. | Real Estate Management & Development | 3,600 | 10,125 | |||||||||||
Techtronic Industries Co. Ltd. | Machinery | 4,000 | 25,958 | |||||||||||
Television Broadcasts Ltd. | Media | 1,200 | 1,494 | |||||||||||
The Bank of East Asia Ltd. | Banks | 3,600 | 7,747 | |||||||||||
The Wharf Holdings Ltd. | Real Estate Management & Development | 2,000 | 3,545 | |||||||||||
United Energy Group Ltd. | Oil, Gas & Consumable Fuels | 28,000 | 5,419 | |||||||||||
Vitasoy International Holdings Ltd. | Food Products | 2,000 | 6,064 | |||||||||||
VTech Holdings Ltd. | Communications Equipment | 600 | 4,339 | |||||||||||
| b | WH Group Ltd., Reg S | Food Products | 27,000 | 25,255 | ||||||||||
Wharf Real Estate Investment Co. Ltd. | Real Estate Management & Development | 4,000 | 16,463 | |||||||||||
Wheelock and Co. Ltd. | Real Estate Management & Development | 2,000 | 13,650 | |||||||||||
Xinyi Glass Holdings Ltd. | Auto Components | 8,000 | 9,186 | |||||||||||
Yue Yuen Industrial Holdings Ltd. | Textiles, Apparel & Luxury Goods | 3,000 | 4,598 | |||||||||||
|
| |||||||||||||
| 1,368,359 | ||||||||||||||
|
| |||||||||||||
| India 9.0% | ||||||||||||||
| a | 3M India Ltd. | Industrial Conglomerates | 6 | 1,493 | ||||||||||
ABB India Ltd. | Electrical Equipment | 170 | 2,102 | |||||||||||
| a | ABB Power Products & Systems India Ltd. | Electrical Equipment | 34 | 337 | ||||||||||
ACC Ltd. | Construction Materials | 144 | 1,844 | |||||||||||
Adani Enterprises Ltd. | Trading Companies & Distributors | 1,018 | 1,852 | |||||||||||
Adani Ports And Special Economic Zone Ltd. | Transportation Infrastructure | 2,378 | 7,899 | |||||||||||
| a | Adani Power Ltd. | Independent Power and Renewable Electricity Producers | 3,204 | 1,175 | ||||||||||
| a | Aditya Birla Capital Ltd. | Diversified Financial Services | 1,764 | 983 | ||||||||||
Alkem Laboratories Ltd. | Pharmaceuticals | 160 | 4,919 | |||||||||||
Ambuja Cements Ltd. | Construction Materials | 2,584 | 5,318 | |||||||||||
Ashok Leyland Ltd. | Machinery | 4,202 | 2,391 | |||||||||||
Asian Paints Ltd. | Chemicals | 936 | 20,619 | |||||||||||
AU Small Finance Bank Ltd. | Banks | 470 | 3,140 | |||||||||||
Aurobindo Pharma Ltd. | Pharmaceuticals | 926 | 5,057 | |||||||||||
| a | Avenue Supermarts Ltd. | Food & Staples Retailing | 398 | 11,508 | ||||||||||
Axis Bank Ltd. | Banks | 6,338 | 31,752 | |||||||||||
Bajaj Auto Ltd. | Automobiles | 302 | 8,073 | |||||||||||
Bajaj Finance Ltd. | Consumer Finance | 602 | 17,632 | |||||||||||
Bajaj Finserv Ltd. | Insurance | 132 | 8,011 | |||||||||||
Bajaj Holdings & Investment Ltd. | Diversified Financial Services | 90 | 2,140 | |||||||||||
Bandhan Bank Ltd | Banks | 1,966 | 5,295 | |||||||||||
| a | Bank of Baroda | Banks | 2,666 | 1,887 | ||||||||||
| a | Bank of India | Banks | 972 | 414 | ||||||||||
Bata India Ltd. | Textiles, Apparel & Luxury Goods | 64 | 1,042 | |||||||||||
Berger Paints India Ltd. | Chemicals | 830 | 5,463 | |||||||||||
Bharat Electronics Ltd. | Aerospace & Defense | 2,016 | 1,984 | |||||||||||
Bharat Forge Ltd. | Auto Components | 668 | 2,075 | |||||||||||
Bharat Heavy Electricals Ltd. | Electrical Equipment | 2,868 | 789 | |||||||||||
Bharat Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 3,238 | 13,564 | |||||||||||
| a | Bharti Airtel Ltd. | Wireless Telecommunication Services | 5,802 | 33,814 | ||||||||||
Bharti Infratel Ltd. | Diversified Telecommunication Services | 3,012 | 6,370 | |||||||||||
Biocon Ltd. | Biotechnology | 984 | 3,519 | |||||||||||
Bosch Ltd. | Auto Components | 24 | 2,981 | |||||||||||
Britannia Industries Ltd. | Food Products | 202 | 7,180 | |||||||||||
Cadila Healthcare Ltd. | Pharmaceuticals | 816 | 2,883 | |||||||||||
| a | Canara Bank Ltd. | Banks | 546 | 653 | ||||||||||
Castrol India Ltd. | Chemicals | 1,746 | 2,295 | |||||||||||
| 160 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| India (continued) | ||||||||||||||
Cholamandalam Investment and Finance Co. Ltd. | Consumer Finance | 652 | $ | 1,317 | ||||||||||
Cipla Ltd. | Pharmaceuticals | 1,130 | 6,316 | |||||||||||
Coal India Ltd. | Oil, Gas & Consumable Fuels | 4,968 | 9,197 | |||||||||||
Colgate-Palmolive India Ltd. | Personal Products | 242 | 4,007 | |||||||||||
Container Corp. of India Ltd. | Road & Rail | 734 | 3,218 | |||||||||||
Cummins India Ltd. | Machinery | 256 | 1,106 | |||||||||||
Dabur India Ltd. | Personal Products | 1,662 | 9,887 | |||||||||||
| a | Dalmia Bharat Ltd. | Construction Materials | 142 | 921 | ||||||||||
Divi’s Laboratories Ltd. | Life Sciences Tools & Services | 282 | 7,414 | |||||||||||
DLF Ltd. | Real Estate Management & Development | 2,114 | 3,841 | |||||||||||
Dr Reddy’s Laboratories Ltd. | Pharmaceuticals | 266 | 10,973 | |||||||||||
Eicher Motors Ltd. | Automobiles | 46 | 7,963 | |||||||||||
Emami Ltd. | Personal Products | 420 | 944 | |||||||||||
| a | Embassy Office Parks REIT | Equity Real Estate Investment Trusts (REITs | ) | 400 | 1,855 | |||||||||
Exide Industries Ltd. | Auto Components | 786 | 1,367 | |||||||||||
Federal Bank Ltd. | Banks | 4,584 | 2,487 | |||||||||||
| a | Future Retail Ltd. | Multiline Retail | 696 | 720 | ||||||||||
GAIL India Ltd. | Gas Utilities | 3,600 | 3,643 | |||||||||||
Gillette India Ltd. | Personal Products | 28 | 2,025 | |||||||||||
GlaxoSmithKline Consumer Healthcare Ltd. | Food Products | 34 | �� | 4,483 | ||||||||||
Glenmark Pharmaceuticals Ltd. | Pharmaceuticals | 474 | 1,290 | |||||||||||
| a | GMR Infrastructure Ltd. | Transportation Infrastructure | 5,980 | 1,292 | ||||||||||
Godrej Consumer Products Ltd. | Personal Products | 1,284 | 8,840 | |||||||||||
Godrej Industries Ltd. | Industrial Conglomerates | 230 | 861 | |||||||||||
| a | Godrej Properties Ltd. | Real Estate Management & Development | 208 | 1,659 | ||||||||||
Grasim Industries Ltd. | Construction Materials | 1,106 | 6,960 | |||||||||||
Havell’s India Ltd. | Electrical Equipment | 642 | 4,077 | |||||||||||
HCL Technologies Ltd. | IT Services | 3,648 | 21,044 | |||||||||||
HDFC Asset Management Co. Ltd. | Capital Markets | 134 | 3,742 | |||||||||||
| a | HDFC Life Insurance Co. Ltd. | Insurance | 1,926 | 11,236 | ||||||||||
| a,e | Hemisphere Properties India Ltd. | Real Estate Management & Development | 262 | 578 | ||||||||||
Hero Motocorp Ltd. | Automobiles | 342 | 7,217 | |||||||||||
Hindalco Industries Ltd. | Metals & Mining | 3,164 | 4,003 | |||||||||||
Hindustan Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 2,108 | 5,297 | |||||||||||
Hindustan Unilever Ltd. | Household Products | 2,346 | 71,278 | |||||||||||
| a | Hindustan Zinc Ltd. | Metals & Mining | 690 | 1,417 | ||||||||||
Housing Development Finance Corp. Ltd. | Thrifts & Mortgage Finance | 5,680 | 122,615 | |||||||||||
ICICI Bank Ltd. | Banks | 2,000 | 8,559 | |||||||||||
| b,c | ICICI Lombard General Insurance Co. Ltd., 144A, Reg S | Insurance | 618 | 8,836 | ||||||||||
| b | ICICI Prudential Life Insurance Co. Ltd., Reg S | Insurance | 1,046 | 4,918 | ||||||||||
| a | IDFC First Bank Ltd. | Banks | 7,850 | 2,189 | ||||||||||
Indiabulls Housing Finance Ltd. | Thrifts & Mortgage Finance | 1,154 | 1,476 | |||||||||||
Indian Oil Corp. Ltd. | Oil, Gas & Consumable Fuels | 6,880 | 7,426 | |||||||||||
Info Edge India Ltd. | Interactive Media & Services | 214 | 5,757 | |||||||||||
Infosys Ltd. | IT Services | 12,238 | 103,775 | |||||||||||
| b | InterGlobe Aviation Ltd., Reg S | Airlines | 326 | 4,594 | ||||||||||
ITC Ltd. | Tobacco | 9,706 | 22,029 | |||||||||||
| a | Jindal Steel & Power Ltd. | Metals & Mining | 1,410 | 1,532 | ||||||||||
JSW Energy Ltd. | Independent Power and Renewable Electricity Producers | 1,352 | 763 | |||||||||||
JSW Steel Ltd. | Metals & Mining | 4,052 | 7,833 | |||||||||||
Jubilant Foodworks Ltd. | Hotels, Restaurants & Leisure | 206 | 4,007 | |||||||||||
Kansai Nerolac Paints Ltd. | Chemicals | 428 | 2,192 | |||||||||||
| franklintempleton.com | Annual Report | 161 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| India (continued) | ||||||||||||||
L&T Finance Holdings Ltd. | Diversified Financial Services | 1,686 | $ | 1,143 | ||||||||||
| b | Larsen & Toubro Infotech Ltd., Reg S | IT Services | 114 | 2,153 | ||||||||||
Larsen & Toubro Ltd. | Construction & Engineering | 1,122 | 11,991 | |||||||||||
LIC Housing Finance Ltd. | Thrifts & Mortgage Finance | 886 | 2,756 | |||||||||||
Lupin Ltd. | Pharmaceuticals | 772 | 6,017 | |||||||||||
Mahindra & Mahindra Financial Services Ltd. | Consumer Finance | 1,052 | 2,047 | |||||||||||
Mahindra & Mahindra Ltd. | Automobiles | 1,678 | 6,320 | |||||||||||
Mangalore Refinery and Petrochemicals Ltd. | Oil, Gas & Consumable Fuels | 446 | 136 | |||||||||||
Marico Ltd. | Personal Products | 1,620 | 5,886 | |||||||||||
Maruti Suzuki India Ltd. | Automobiles | 386 | 21,880 | |||||||||||
Motherson Sumi Systems Ltd. | Auto Components | 3,296 | 2,660 | |||||||||||
Mphasis Ltd. | IT Services | 275 | 2,415 | |||||||||||
MRF Ltd. | Auto Components | 4 | 3,075 | |||||||||||
Muthoot Finance Ltd. | Consumer Finance | 354 | 2,869 | |||||||||||
Nestle India Ltd. | Food Products | 80 | 17,238 | |||||||||||
NHPC Ltd. | Independent Power and Renewable Electricity Producers | 4,608 | 1,215 | |||||||||||
Nippon Life India Asset Management Ltd. | Capital Markets | 414 | 1,364 | |||||||||||
NMDC Ltd. | Metals & Mining | 2,567 | 2,715 | |||||||||||
NTPC Ltd. | Independent Power and Renewable Electricity Producers | 7,484 | 8,330 | |||||||||||
Oberoi Realty Ltd. | Real Estate Management & Development | 290 | 1,272 | |||||||||||
Oil & Natural Gas Corp. Ltd. | Oil, Gas & Consumable Fuels | 9,702 | 8,759 | |||||||||||
Oil India Ltd. | Oil, Gas & Consumable Fuels | 1,078 | 1,178 | |||||||||||
| a | Oracle Financial Services Software Ltd. | Software | 76 | 2,033 | ||||||||||
Page Industries Ltd. | Textiles, Apparel & Luxury Goods | 12 | 2,691 | |||||||||||
Petronet LNG Ltd. | Oil, Gas & Consumable Fuels | 1,380 | 3,643 | |||||||||||
Pidilite Industries Ltd. | Chemicals | 426 | 7,638 | |||||||||||
Piramal Enterprises Ltd. | Pharmaceuticals | 366 | 4,545 | |||||||||||
Power Finance Corp., Ltd. | Diversified Financial Services | 2,200 | 2,674 | |||||||||||
Power Grid Corp. of India Ltd. | Electric Utilities | 5,464 | 11,491 | |||||||||||
| a | Punjab National Bank Ltd. | Banks | 3,206 | 1,371 | ||||||||||
Rajesh Exports Ltd. | Textiles, Apparel & Luxury Goods | 478 | 3,460 | |||||||||||
| b | RBL Bank Ltd., Reg S | Banks | 1,086 | 1,945 | ||||||||||
REC Ltd. | Diversified Financial Services | 2,626 | 3,081 | |||||||||||
Reliance Industries Ltd. | Oil, Gas & Consumable Fuels | 10,288 | 151,462 | |||||||||||
SBI Life Insurance Co. Ltd. | Insurance | 1,240 | 10,507 | |||||||||||
Shree Cement Ltd. | Construction Materials | 34 | 7,886 | |||||||||||
Shriram Transport Finance Co. Ltd. | Consumer Finance | 584 | 5,100 | |||||||||||
Siemens Ltd. | Industrial Conglomerates | 294 | 4,327 | |||||||||||
| a | State Bank of India | Banks | 5,990 | 15,586 | ||||||||||
Steel Authority of India Ltd. | Metals & Mining | 3,318 | 1,011 | |||||||||||
Sun Pharmaceutical Industries Ltd. | Pharmaceuticals | 3,484 | 16,225 | |||||||||||
Sun TV Network Ltd. | Media | 194 | 733 | |||||||||||
Tata Communications Ltd. | Diversified Telecommunication Services | 50 | 154 | |||||||||||
Tata Consultancy Services Ltd. | IT Services | 2,970 | 71,691 | |||||||||||
| a | Tata Motors Ltd. | Automobiles | 3,508 | 3,295 | ||||||||||
| a | Tata Motors Ltd., A | Automobiles | 1,030 | 421 | ||||||||||
Tata Power Co. Ltd. | Electric Utilities | 3,270 | 1,420 | |||||||||||
Tata Steel Ltd. | Metals & Mining | 946 | 3,371 | |||||||||||
Tech Mahindra Ltd. | IT Services | 1,576 | 11,781 | |||||||||||
Titan Co. Ltd. | Textiles, Apparel & Luxury Goods | 1,040 | 12,836 | |||||||||||
Torrent Pharmaceuticals Ltd. | Pharmaceuticals | 144 | 3,753 | |||||||||||
Torrent Power Ltd. | Electric Utilities | 444 | 1,638 | |||||||||||
TVS Motor Co. Ltd. | Automobiles | 390 | 1,534 | |||||||||||
UltraTech Cement Ltd. | Construction Materials | 356 | 15,270 | |||||||||||
| 162 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| India (continued) | ||||||||||||||
| a | Union Bank of India Ltd. | Banks | 1,284 | $ | 487 | |||||||||
United Breweries Ltd. | Beverages | 234 | 2,842 | |||||||||||
| a | United Spirits Ltd. | Beverages | 1,032 | 6,611 | ||||||||||
UPL Ltd. | Chemicals | 1,854 | 8,002 | |||||||||||
Vedanta Ltd. | Metals & Mining | 5,832 | 4,988 | |||||||||||
| a | Vodafone Idea Ltd. | Wireless Telecommunication Services | 30,442 | 1,247 | ||||||||||
Voltas Ltd. | Construction & Engineering | 384 | 2,421 | |||||||||||
Whirlpool of India Ltd. | Household Durables | 102 | 2,452 | |||||||||||
Wipro Ltd. | IT Services | 4,706 | 12,236 | |||||||||||
Yes Bank Ltd. | Banks | 4,442 | 1,318 | |||||||||||
Zee Entertainment Enterprises Ltd. | Media | 2,886 | 4,729 | |||||||||||
|
| |||||||||||||
| 1,318,754 | ||||||||||||||
|
| |||||||||||||
| Indonesia 1.6% | ||||||||||||||
Adaro Energy Tbk PT | Oil, Gas & Consumable Fuels | 44,600 | 2,707 | |||||||||||
Astra Agro Lestari Tbk PT | Food Products | 1,400 | 463 | |||||||||||
Astra International Tbk PT | Automobiles | 67,600 | 16,164 | |||||||||||
Bank Central Asia Tbk PT | Banks | 32,200 | 54,539 | |||||||||||
| e | Bank Danamon Indonesia Tbk PT | Banks | 2,400 | 307 | ||||||||||
Bank Mandiri Persero Tbk PT | Banks | 60,800 | 17,446 | |||||||||||
Bank Negara Indonesia Persero Tbk PT | Banks | 24,000 | 5,621 | |||||||||||
Bank Rakyat Indonesia Persero Tbk PT | Banks | 176,400 | 32,663 | |||||||||||
Bukit Asam Tbk PT | Oil, Gas & Consumable Fuels | 15,600 | 2,085 | |||||||||||
| a | Bumi Serpong Damai Tbk PT | Real Estate Management & Development | 25,200 | 1,035 | ||||||||||
Charoen Pokphand Indonesia Tbk PT | Food Products | 25,200 | 7,633 | |||||||||||
First Pacific Co. Ltd. | Diversified Financial Services | 8,000 | 1,486 | |||||||||||
Gudang Garam Tbk PT | Tobacco | 1,600 | 4,032 | |||||||||||
Hanjaya Mandala Sampoerna Tbk PT | Tobacco | 28,400 | 2,481 | |||||||||||
Indah Kiat Pulp & Paper Corp Tbk PT | Paper & Forest Products | 9,000 | 2,213 | |||||||||||
Indocement Tunggal Prakarsa Tbk PT | Construction Materials | 4,400 | 3,372 | |||||||||||
Indofood CBP Sukses Makmur Tbk PT | Food Products | 7,800 | 4,890 | |||||||||||
Indofood Sukses Makmur Tbk PT | Food Products | 15,200 | 5,918 | |||||||||||
Jasa Marga Persero Tbk PT | Transportation Infrastructure | 8,000 | 1,246 | |||||||||||
Kalbe Farma Tbk PT | Pharmaceuticals | 64,600 | 4,753 | |||||||||||
Matahari Department Store Tbk PT | Multiline Retail | 8,600 | 704 | |||||||||||
Media Nusantara Citra Tbk PT | Media | 19,000 | 1,054 | |||||||||||
Perusahaan Gas Negara (Persero) Tbk PT | Gas Utilities | 37,600 | 1,787 | |||||||||||
Perusahaan Perseroan (Persero) PT TelekomunikasiIndonesia Tbk, B | Diversified Telecommunication Services | 155,600 | 30,147 | |||||||||||
| a | PT Barito Pacific Tbk | Chemicals | 63,800 | 2,836 | ||||||||||
| a | PT XL Axiata Tbk | Wireless Telecommunication Services | 12,800 | 1,570 | ||||||||||
Semen Indonesia (Persero) Tbk PT | Construction Materials | 10,000 | 4,675 | |||||||||||
| a | Smartfren Telecom Tbk PT | Wireless Telecommunication Services | 130,200 | 495 | ||||||||||
Surya Citra Media Tbk PT | Media | 22,000 | 1,045 | |||||||||||
Tower Bersama Infrastructure Tbk PT | Diversified Telecommunication Services | 36,000 | 1,998 | |||||||||||
Unilever Indonesia Tbk PT | Household Products | 19,000 | 8,446 | |||||||||||
United Tractors Tbk PT | Oil, Gas & Consumable Fuels | 5,200 | 5,388 | |||||||||||
| a | Vale Indonesia Tbk PT | Metals & Mining | 7,000 | 927 | ||||||||||
|
| |||||||||||||
| 232,126 | ||||||||||||||
|
| |||||||||||||
| Italy 0.1% | ||||||||||||||
PRADA SpA | Textiles, Apparel & Luxury Goods | 1,800 | 5,272 | |||||||||||
|
| |||||||||||||
| Luxembourg 0.0%† | ||||||||||||||
L’Occitane International SA | Personal Products | 1,500 | 2,187 | |||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 163 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Macau 0.6% | ||||||||||||||
Galaxy Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 7,000 | $ | 37,344 | ||||||||||
| a | Macau Legend Development Ltd. | Hotels, Restaurants & Leisure | 4,000 | 454 | ||||||||||
MGM China Holdings Ltd. | Hotels, Restaurants & Leisure | 4,000 | 4,092 | |||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 7,200 | 26,382 | |||||||||||
SJM Holdings Ltd. | Hotels, Restaurants & Leisure | 8,000 | 6,761 | |||||||||||
Wynn Macau Ltd. | Hotels, Restaurants & Leisure | 4,800 | 7,295 | |||||||||||
|
| |||||||||||||
| 82,328 | ||||||||||||||
|
| |||||||||||||
| Malaysia 2.4% | ||||||||||||||
AirAsia Group Bhd | Airlines | 5,800 | 1,061 | |||||||||||
Alliance Bank Malaysia Bhd. | Banks | 2,800 | 1,231 | |||||||||||
AMMB Holdings Bhd. | Banks | 6,000 | 4,167 | |||||||||||
Astro Malaysia Holdings Bhd. | Media | 5,400 | 1,062 | |||||||||||
Axiata Group Bhd. | Wireless Telecommunication Services | 15,400 | 11,693 | |||||||||||
British American Tobacco Malaysia Bhd. | Tobacco | 400 | 954 | |||||||||||
CIMB Group Holdings Bhd. | Banks | 23,200 | 19,333 | |||||||||||
Dialog Group Bhd. | Energy Equipment & Services | 15,400 | 10,837 | |||||||||||
Digi.com Bhd. | Wireless Telecommunication Services | 12,800 | 12,889 | |||||||||||
| a | FGV Holdings Bhd. | Food Products | 7,200 | 1,425 | ||||||||||
Fraser & Neave Holdings Bhd. | Beverages | 200 | 1,436 | |||||||||||
Gamuda Bhd. | Construction & Engineering | 7,600 | 4,979 | |||||||||||
Genting Bhd. | Hotels, Restaurants & Leisure | 7,400 | 6,424 | |||||||||||
Genting Malaysia Bhd. | Hotels, Restaurants & Leisure | 9,800 | 4,560 | |||||||||||
HAP Seng Consolidated Bhd. | Industrial Conglomerates | 2,400 | 4,233 | |||||||||||
Hartalega Holdings Bhd. | Health Care Equipment & Supplies | 4,400 | 7,007 | |||||||||||
Hong Leong Bank Bhd. | Banks | 1,800 | 5,608 | |||||||||||
Hong Leong Financial Group Bhd. | Banks | 800 | 2,533 | |||||||||||
IHH Healthcare Bhd. | Health Care Providers & Services | 10,000 | 11,944 | |||||||||||
IJM Corp. Bhd. | Construction & Engineering | 10,600 | 3,901 | |||||||||||
IOI Corp. Bhd. | Food Products | 9,600 | 8,889 | |||||||||||
IOI Properties Group Bhd. | Real Estate Management & Development | 6,600 | 1,459 | |||||||||||
Kuala Lumpur Kepong Bhd. | Food Products | 1,600 | 7,689 | |||||||||||
Malayan Banking Bhd. | Banks | 19,838 | 34,211 | |||||||||||
Malaysia Airports Holdings Bhd. | Transportation Infrastructure | 3,200 | 3,200 | |||||||||||
Maxis Bhd. | Wireless Telecommunication Services | 9,200 | 11,394 | |||||||||||
MISC Bhd. | Marine | 4,800 | 8,267 | |||||||||||
Nestle (Malaysia) Bhd. | Food Products | 200 | 6,329 | |||||||||||
Petronas Chemicals Group Bhd. | Chemicals | 9,600 | 11,222 | |||||||||||
Petronas Dagangan Bhd. | Oil, Gas & Consumable Fuels | 1,000 | 4,898 | |||||||||||
Petronas Gas Bhd. | Gas Utilities | 2,200 | 7,843 | |||||||||||
PPB Group Bhd. | Food Products | 1,840 | 6,994 | |||||||||||
Press Metal Aluminium Holdings Bhd. | Metals & Mining | 6,600 | 5,026 | |||||||||||
Public Bank Bhd. | Banks | 10,200 | 37,542 | |||||||||||
QL Resources Bhd. | Food Products | 2,600 | 4,454 | |||||||||||
RHB Bank Bhd | Banks | 5,000 | 5,428 | |||||||||||
Sime Darby Bhd. | Industrial Conglomerates | 12,400 | 4,851 | |||||||||||
Sime Darby Plantation Bhd. | Food Products | 12,000 | 13,722 | |||||||||||
Sime Darby Property Bhd. | Real Estate Management & Development | 13,600 | 1,716 | |||||||||||
Telekom Malaysia Bhd. | Diversified Telecommunication Services | 3,800 | 3,299 | |||||||||||
Tenaga Nasional Bhd. | Electric Utilities | 12,800 | 35,615 | |||||||||||
Top Glove Corp. Bhd. | Health Care Equipment & Supplies | 5,400 | 8,062 | |||||||||||
Westports Holdings Bhd. | Transportation Infrastructure | 3,800 | 2,973 | |||||||||||
Wing Tai Holdings Ltd. | Real Estate Management & Development | 3,000 | 3,266 | |||||||||||
YTL Corp. Bhd. | Multi-Utilities | 15,400 | 2,584 | |||||||||||
|
| |||||||||||||
| 358,210 | ||||||||||||||
|
| |||||||||||||
| 164 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Pakistan 0.0%† | ||||||||||||||
Fauji Fertilizer Co. Ltd. | Chemicals | 2,000 | $ | 1,120 | ||||||||||
Habib Bank Ltd. | Banks | 2,000 | 1,243 | |||||||||||
Oil & Gas Development Co. Ltd. | Oil, Gas & Consumable Fuels | 2,000 | 927 | |||||||||||
Pakistan Petroleum Ltd. | Oil, Gas & Consumable Fuels | 2,004 | 866 | |||||||||||
|
| |||||||||||||
| 4,156 | ||||||||||||||
|
| |||||||||||||
| Philippines 1.0% | ||||||||||||||
Aboitiz Power Corp. | Independent Power and Renewable Electricity Producers | 5,200 | 2,689 | |||||||||||
| a | Alliance Global Group Inc. | Industrial Conglomerates | 15,000 | 2,059 | ||||||||||
Ayala Corp. | Industrial Conglomerates | 805 | 7,398 | |||||||||||
Ayala Land Inc. | Real Estate Management & Development | 23,200 | 13,776 | |||||||||||
Bank of the Philippine Islands | Banks | 6,124 | 7,441 | |||||||||||
BDO Unibank Inc. | Banks | 6,720 | 13,675 | |||||||||||
Bloomberry Resorts Corp. | Hotels, Restaurants & Leisure | 11,800 | 1,392 | |||||||||||
DMCI Holdings Inc. | Industrial Conglomerates | 14,200 | 1,052 | |||||||||||
Globe Telecom Inc. | Wireless Telecommunication Services | 100 | 3,795 | |||||||||||
GT Capital Holdings Inc. | Industrial Conglomerates | 337 | 2,697 | |||||||||||
International Container Terminal Services Inc. | Transportation Infrastructure | 3,700 | 5,434 | |||||||||||
JG Summit Holdings Inc. | Industrial Conglomerates | 9,680 | 9,954 | |||||||||||
Jollibee Foods Corp. | Hotels, Restaurants & Leisure | 1,420 | 2,971 | |||||||||||
LT Group Inc. | Industrial Conglomerates | 9,000 | 1,469 | |||||||||||
Manila Electric Co. | Electric Utilities | 920 | 4,070 | |||||||||||
Megaworld Corp. | Real Estate Management & Development | 41,000 | 2,015 | |||||||||||
Metro Pacific Investments Corp. | Diversified Financial Services | 50,000 | 2,379 | |||||||||||
Metropolitan Bank & Trust Co. | Banks | 6,266 | 4,928 | |||||||||||
PLDT Inc. | Wireless Telecommunication Services | 400 | 8,879 | |||||||||||
San Miguel Corp. | Industrial Conglomerates | 1,240 | 2,231 | |||||||||||
San Miguel Pure Foods Co. Inc. | Food Products | 2,200 | 2,163 | |||||||||||
Semirara Mining and Power Corp. | Oil, Gas & Consumable Fuels | 4,000 | 865 | |||||||||||
SM Investments Corp. | Industrial Conglomerates | 1,620 | 26,055 | |||||||||||
SM Prime Holdings Inc. | Real Estate Management & Development | 27,600 | 15,412 | |||||||||||
Universal Robina Corp. | Food Products | 3,020 | 6,175 | |||||||||||
|
| |||||||||||||
| 150,974 | ||||||||||||||
|
| |||||||||||||
| Singapore 3.4% | ||||||||||||||
Ascendas REIT | Equity Real Estate Investment Trusts (REITs | ) | 9,440 | 18,763 | ||||||||||
Ascott Residence Trust | Equity Real Estate Investment Trusts (REITs | ) | 5,200 | 2,885 | ||||||||||
BOC Aviation Ltd. | Trading Companies & Distributors | 400 | 2,560 | |||||||||||
CapitaLand Commercial Trust | Equity Real Estate Investment Trusts (REITs | ) | 8,800 | 9,456 | ||||||||||
CapitaLand Ltd. | Real Estate Management & Development | 8,600 | 17,214 | |||||||||||
CapitaLand Mall Trust | Equity Real Estate Investment Trusts (REITs | ) | 7,600 | 9,554 | ||||||||||
City Developments Ltd. | Real Estate Management & Development | 1,600 | 8,136 | |||||||||||
ComfortDelGro Corp. Ltd. | Road & Rail | 7,200 | 7,686 | |||||||||||
DBS Group Holdings Ltd. | Banks | 5,800 | 75,644 | |||||||||||
Frasers Property Ltd. | Real Estate Management & Development | 600 | 468 | |||||||||||
Genting Singapore Ltd. | Hotels, Restaurants & Leisure | 15,800 | 7,657 | |||||||||||
Golden Agri-Resources Ltd. | Food Products | 21,200 | 2,099 | |||||||||||
Hutchison Port Holdings Trust | Transportation Infrastructure | 18,800 | 1,936 | |||||||||||
Jardine Cycle & Carriage Ltd. | Distributors | 400 | 5,526 | |||||||||||
Keppel Corp. Ltd. | Industrial Conglomerates | 4,400 | 16,347 | |||||||||||
Keppel REIT | Equity Real Estate Investment Trusts (REITs | ) | 7,200 | 4,804 | ||||||||||
Mapletree Commercial Trust | Equity Real Estate Investment Trusts (REITs | ) | 7,068 | 9,084 | ||||||||||
| b | Mapletree Greater China Commercial Trust, Reg S | Equity Real Estate Investment Trusts (REITs | ) | 7,800 | 4,410 | |||||||||
Mapletree Industrial Trust | Equity Real Estate Investment Trusts (REITs | ) | 5,200 | 8,875 | ||||||||||
Mapletree Logistics Trust | Equity Real Estate Investment Trusts (REITs | ) | 8,600 | 9,543 | ||||||||||
| franklintempleton.com | Annual Report | 165 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Singapore (continued) | ||||||||||||||
Olam International Ltd. | Food & Staples Retailing | 1,800 | $ | 1,808 | ||||||||||
Oversea-Chinese Banking Corp. Ltd. | Banks | 11,400 | 69,176 | |||||||||||
SATS Ltd. | Transportation Infrastructure | 2,200 | 4,883 | |||||||||||
SembCorp Industries Ltd. | Industrial Conglomerates | 3,200 | 3,483 | |||||||||||
| a | SembCorp Marine Ltd. | Machinery | 3,000 | 1,433 | ||||||||||
SIA Engineering Co. Ltd. | Transportation Infrastructure | 800 | 961 | |||||||||||
Singapore Airlines Ltd. | Airlines | 1,800 | 7,256 | |||||||||||
Singapore Exchange Ltd. | Capital Markets | 2,600 | 16,781 | |||||||||||
Singapore Post Ltd. | Air Freight & Logistics | 5,200 | 2,356 | |||||||||||
Singapore Press Holdings Ltd. | Media | 5,400 | 6,940 | |||||||||||
Singapore Technologies Engineering Ltd. | Aerospace & Defense | 5,200 | 11,394 | |||||||||||
Singapore Telecommunications Ltd. | Diversified Telecommunication Services | 24,600 | 43,884 | |||||||||||
StarHub Ltd. | Wireless Telecommunication Services | 2,200 | 2,055 | |||||||||||
Suntec REIT | Equity Real Estate Investment Trusts (REITs | ) | 6,800 | 5,970 | ||||||||||
United Overseas Bank Ltd. | Banks | 4,200 | 57,373 | |||||||||||
UOL Group Ltd. | Real Estate Management & Development | 2,200 | 10,151 | |||||||||||
Venture Corp. Ltd. | Electronic Equipment, Instruments & Components | 800 | 7,624 | |||||||||||
Wilmar International Ltd. | Food Products | 6,600 | 14,972 | |||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | Machinery | 7,200 | 4,197 | |||||||||||
Yanlord Land Group Ltd. | Real Estate Management & Development | 2,200 | 1,522 | |||||||||||
|
| |||||||||||||
| 496,866 | ||||||||||||||
|
| |||||||||||||
| South Korea 11.9% | ||||||||||||||
Amorepacific Corp. | Personal Products | 100 | 13,842 | |||||||||||
AmorePacific Group | Personal Products | 96 | 4,369 | |||||||||||
BGF Retail Co. Ltd. | Food & Staples Retailing | 20 | 2,169 | |||||||||||
BNK Financial Group Inc. | Banks | 1,120 | 4,080 | |||||||||||
| a | Celltrion Healthcare Co. Ltd. | Health Care Providers & Services | 227 | 16,726 | ||||||||||
| a | Celltrion Inc. | Biotechnology | 338 | 63,582 | ||||||||||
Cheil Worldwide Inc. | Media | 246 | 3,203 | |||||||||||
CJ CheilJedang Corp. | Food Products | 28 | 4,968 | |||||||||||
| e | CJ Corp. | Industrial Conglomerates | 40 | 2,119 | ||||||||||
CJ ENM Co. Ltd. | Internet & Direct Marketing Retail | 34 | 2,907 | |||||||||||
| a | CJ Logistics Corp. | Road & Rail | 24 | 2,681 | ||||||||||
Coway Co. Ltd. | Household Durables | 192 | 9,116 | |||||||||||
Daelim Industrial Co. Ltd. | Construction & Engineering | 92 | 5,570 | |||||||||||
| a | Daewoo Engineering & Construction Co. Ltd. | Construction & Engineering | 558 | 1,348 | ||||||||||
| a | Daewoo Shipbuilding & Marine Engineering Co. Ltd. | Machinery | 166 | 1,834 | ||||||||||
DB Insurance Co. Ltd. | Insurance | 160 | 4,567 | |||||||||||
DGB Financial Group Inc. | Banks | 530 | 1,998 | |||||||||||
Dongsuh Cos. Inc. | Food & Staples Retailing | 118 | 1,527 | |||||||||||
Doosan Bobcat Inc. | Machinery | 86 | 1,268 | |||||||||||
| e | Doosan Co. Ltd. | Industrial Conglomerates | 19 | 521 | ||||||||||
| a | Doosan Fuel Cell Co. Ltd. | Electrical Equipment | 66 | 283 | ||||||||||
| a | Doosan Heavy Industries and Construction Co. Ltd. | Electrical Equipment | 415 | 1,164 | ||||||||||
| a | Doosan Infracore Co. Ltd. | Machinery | 290 | 749 | ||||||||||
| a | Doosan Solus Co. Ltd. | Electronic Equipment, Instruments & Components | 36 | 546 | ||||||||||
E-MART Inc. | Food & Staples Retailing | 62 | 5,424 | |||||||||||
Fila Korea Ltd. | Textiles, Apparel & Luxury Goods | 180 | 4,295 | |||||||||||
GS Engineering & Construction Corp. | Construction & Engineering | 202 | 3,402 | |||||||||||
GS Holdings Corp. | Oil, Gas & Consumable Fuels | 154 | 4,655 | |||||||||||
GS Retail Co. Ltd. | Food & Staples Retailing | 88 | 2,234 | |||||||||||
Hana Financial Group Inc. | Banks | 884 | 16,775 | |||||||||||
Hankook Tire & Technology Co. Ltd. | Auto Components | 254 | 4,037 | |||||||||||
Hanmi Pharm Co. Ltd. | Pharmaceuticals | 24 | 5,155 | |||||||||||
| 166 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| South Korea (continued) | ||||||||||||||
Hanmi Science Co. Ltd. | Pharmaceuticals | 53 | $ | 1,173 | ||||||||||
Hanon Systems | Auto Components | 548 | 3,993 | |||||||||||
Hanssem Co. Ltd. | Household Durables | 30 | 1,240 | |||||||||||
| a | Hanwha Aerospace Co. Ltd. | Aerospace & Defense | 118 | 1,992 | ||||||||||
Hanwha Corp. | Industrial Conglomerates | 120 | 1,508 | |||||||||||
Hanwha Corp. | Industrial Conglomerates | 80 | 610 | |||||||||||
Hanwha Life Insurance Co. Ltd. | Insurance | 940 | 1,073 | |||||||||||
Hanwha Solutions Corp. | Chemicals | 266 | 2,928 | |||||||||||
HDC Hyundai DevelopmentCo-Engineering & Construction | Construction & Engineering | 153 | 1,954 | |||||||||||
| a | Helixmith Co. Ltd. | Biotechnology | 63 | 3,555 | ||||||||||
Hite Jinro Co. Ltd. | Beverages | 116 | 2,559 | |||||||||||
| a | HLB Inc. | Leisure Equipment & Products | 116 | 8,576 | ||||||||||
Hotel Shilla Co. Ltd. | Specialty Retail | 108 | 6,255 | |||||||||||
Hyundai Department Store Co. Ltd. | Multiline Retail | 40 | 1,932 | |||||||||||
Hyundai Engineering & Construction Co. Ltd. | Construction & Engineering | 252 | 5,682 | |||||||||||
Hyundai Glovis Co. Ltd. | Air Freight & Logistics | 62 | 4,614 | |||||||||||
Hyundai Heavy Industries Holdings Co. Ltd. | Machinery | 36 | 5,841 | |||||||||||
Hyundai Marine & Fire Insurance Co. Ltd. | Insurance | 206 | 3,833 | |||||||||||
Hyundai Mipo Dockyard Co. Ltd. | Machinery | 76 | 1,692 | |||||||||||
Hyundai Mobis Co. Ltd. | Auto Components | 220 | 30,632 | |||||||||||
Hyundai Motor Co. | Automobiles | 458 | 33,371 | |||||||||||
Hyundai Steel Co. | Metals & Mining | 250 | 3,686 | |||||||||||
Hyundai Wia Corp. | Auto Components | 54 | 1,189 | |||||||||||
Industrial Bank of Korea | Banks | 834 | 5,138 | |||||||||||
Kakao Corp. | Interactive Media & Services | 172 | 21,971 | |||||||||||
Kangwon Land Inc. | Hotels, Restaurants & Leisure | 376 | 6,100 | |||||||||||
KB Financial Group Inc. | Banks | 1,300 | 36,896 | |||||||||||
KCC Corp. | Chemicals | 16 | 1,702 | |||||||||||
| a | KCC Glass Corp. | Building Products | 15 | 226 | ||||||||||
KEPCO Plant Service and Engineering Co. Ltd. | Commercial Services & Supplies | 82 | 1,957 | |||||||||||
Kia Motors Corp. | Automobiles | 804 | 17,172 | |||||||||||
Korea Aerospace Industries Ltd. | Aerospace & Defense | 220 | 3,786 | |||||||||||
| a | Korea Electric Power Corp. | Electric Utilities | 872 | 13,789 | ||||||||||
Korea Gas Corp. | Gas Utilities | 76 | 1,342 | |||||||||||
Korea Investment Holdings Co. Ltd. | Capital Markets | 132 | 5,395 | |||||||||||
| a | Korea Shipbuilding & Offshore Engineering Co. Ltd. | Machinery | 148 | 9,556 | ||||||||||
Korea Zinc Co. Ltd. | Metals & Mining | 30 | 8,773 | |||||||||||
| a | Korean Air Lines Co. Ltd. | Airlines | 174 | 2,673 | ||||||||||
KT&G Corp. | Tobacco | 356 | 21,845 | |||||||||||
Kumho Petrochemical Co. Ltd. | Chemicals | 60 | 3,194 | |||||||||||
LG Chem Ltd. | Chemicals | 146 | 36,579 | |||||||||||
LG Corp. | Industrial Conglomerates | 298 | 14,443 | |||||||||||
| a | LG Display Co. Ltd. | Electronic Equipment, Instruments & Components | 770 | 7,021 | ||||||||||
LG Electronics Inc. | Household Durables | 358 | 14,175 | |||||||||||
LG Household & Health Care Ltd. | Personal Products | 30 | 27,601 | |||||||||||
LG Uplus Corp. | Diversified Telecommunication Services | 672 | 5,962 | |||||||||||
Lotte Chemical Corp. | Chemicals | 50 | 7,927 | |||||||||||
Lotte Chilsung Beverage Co. Ltd. | Beverages | 12 | 838 | |||||||||||
Lotte Corp. | Industrial Conglomerates | 76 | 1,498 | |||||||||||
LOTTE Fine Chemical Co. Ltd. | Chemicals | 68 | 1,734 | |||||||||||
Lotte Shopping Co. Ltd. | Multiline Retail | 30 | 1,848 | |||||||||||
LS Corp. | Electrical Equipment | 44 | 1,045 | |||||||||||
Mando Corp. | Auto Components | 114 | 1,938 | |||||||||||
Medy-tox Inc. | Biotechnology | 14 | 2,269 | |||||||||||
| franklintempleton.com | Annual Report | 167 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
��
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| South Korea (continued) | ||||||||||||||
Mirae Asset Daewoo Co. Ltd. | Capital Markets | 202 | $ | 483 | ||||||||||
Mirae Asset Daewoo Co. Ltd. | Capital Markets | 1,486 | 6,433 | |||||||||||
Naver Corp. | Interactive Media & Services | 438 | 61,166 | |||||||||||
NCsoft Corp. | Entertainment | 52 | 27,851 | |||||||||||
| a | Netmarble Corp. | Entertainment | 58 | 4,440 | ||||||||||
NH Investment & Securities Co. Ltd. | Capital Markets | 388 | 2,865 | |||||||||||
| a | NHN Corp. | Entertainment | 38 | 2,138 | ||||||||||
Nongshim Co. Ltd. | Food Products | 10 | 2,370 | |||||||||||
| a | OCI Co. Ltd. | Chemicals | 66 | 1,887 | ||||||||||
Orion Corp. | Food Products | 74 | 6,991 | |||||||||||
Ottogi Corp. | Food Products | 4 | 1,562 | |||||||||||
Paradise Co. Ltd. | Hotels, Restaurants & Leisure | 174 | 1,851 | |||||||||||
POSCO | Metals & Mining | 216 | 28,567 | |||||||||||
POSCO Chemical Co. Ltd. | Construction Materials | 76 | 2,734 | |||||||||||
Posco International Corp. | Trading Companies & Distributors | 168 | 1,566 | |||||||||||
S-1 Corp. | Commercial Services & Supplies | 64 | 4,206 | |||||||||||
S-Oil Corp. | Oil, Gas & Consumable Fuels | 140 | 6,567 | |||||||||||
| a | Samsung Biologics Co. Ltd. | Life Sciences Tools & Services | 42 | 16,630 | ||||||||||
Samsung C&T Corp. | Industrial Conglomerates | 282 | 20,756 | |||||||||||
Samsung Card Co. Ltd. | Consumer Finance | 106 | 2,604 | |||||||||||
Samsung Electro-Mechanics Co. Ltd. | Electronic Equipment, Instruments & Components | 186 | 14,928 | |||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 15,672 | 614,727 | |||||||||||
| a | Samsung Engineering Co. Ltd. | Construction & Engineering | 546 | 4,552 | ||||||||||
Samsung Fire & Marine Insurance Co. Ltd. | Insurance | 110 | 13,916 | |||||||||||
| a | Samsung Heavy Industries Co. Ltd. | Machinery | 1,520 | 4,870 | ||||||||||
Samsung Life Insurance Co. Ltd. | Insurance | 218 | 7,700 | |||||||||||
Samsung SDI Co. Ltd. | Electronic Equipment, Instruments & Components | 176 | 34,771 | |||||||||||
Samsung SDS Co. Ltd. | IT Services | 110 | 13,509 | |||||||||||
Samsung Securities Co. Ltd. | Capital Markets | 200 | 4,822 | |||||||||||
Shinhan Financial Group Co. Ltd. | Banks | 1,562 | 36,697 | |||||||||||
Shinsegae Co. Ltd. | Multiline Retail | 24 | 4,288 | |||||||||||
| a | SillaJen Inc. | Biotechnology | 196 | 2,133 | ||||||||||
SK Holdings Co. Ltd. | Industrial Conglomerates | 112 | 15,411 | |||||||||||
SK Hynix Inc. | Semiconductors & Semiconductor Equipment | 1,704 | 116,600 | |||||||||||
SK Innovation Co. Ltd. | Oil, Gas & Consumable Fuels | 190 | 13,579 | |||||||||||
SK Networks Co. Ltd. | Trading Companies & Distributors | 538 | 2,011 | |||||||||||
SK Telecom Co. Ltd. | Wireless Telecommunication Services | 74 | 10,759 | |||||||||||
SKC Co. Ltd. | Chemicals | 72 | 2,200 | |||||||||||
Ssangyong Cement Industrial Co. Ltd. | Construction Materials | 372 | 1,378 | |||||||||||
Woori Financial Group Inc. | Banks | 1,836 | 11,538 | |||||||||||
Yuhan Corp. | Pharmaceuticals | 32 | 6,020 | |||||||||||
|
| |||||||||||||
| 1,753,471 | ||||||||||||||
|
| |||||||||||||
| Taiwan 13.3% | ||||||||||||||
Accton Technology Corp. | Communications Equipment | 2,000 | 10,780 | |||||||||||
Acer Inc. | Technology Hardware, Storage & Peripherals | 10,000 | 5,159 | |||||||||||
Advantech Co. Ltd. | Technology Hardware, Storage & Peripherals | 1,000 | 8,250 | |||||||||||
ASE Industrial Holding Co. Ltd. | Semiconductors & Semiconductor Equipment | 11,500 | 22,284 | |||||||||||
Asia Cement Corp. | Construction Materials | 6,000 | 7,817 | |||||||||||
Asustek Computer Inc. | Technology Hardware, Storage & Peripherals | 2,000 | 13,525 | |||||||||||
AU Optronics Corp. | Electronic Equipment, Instruments & Components | 30,000 | 6,289 | |||||||||||
Capital Securities Corp. | Capital Markets | 2,840 | 881 | |||||||||||
Catcher Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 2,480 | 16,032 | |||||||||||
Cathay Financial Holding Co. Ltd. | Insurance | 26,962 | 31,472 | |||||||||||
Chailease Holding Co. Ltd. | Diversified Financial Services | 4,120 | 12,466 | |||||||||||
Chang Hwa Commercial Bank Ltd. | Banks | 21,337 | 13,441 | |||||||||||
| 168 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Taiwan (continued) | ||||||||||||||
Cheng Shin Rubber Industry Co. Ltd. | Auto Components | 6,000 | $ | 6,111 | ||||||||||
Chicony Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 2,010 | 5,038 | |||||||||||
China Airlines Ltd. | Airlines | 8,000 | 1,749 | |||||||||||
China Development Financial Holding Corp. | Insurance | 44,000 | 10,796 | |||||||||||
| a | China Life Insurance Co. Ltd. | Insurance | 11,550 | 6,435 | ||||||||||
| e | China Motor Corp. | Automobiles | 800 | 659 | ||||||||||
China Steel Corp. | Metals & Mining | 42,000 | 26,318 | |||||||||||
Chunghwa Telecom Co. Ltd. | Diversified Telecommunication Services | 12,000 | 42,657 | |||||||||||
Compal Electronics Inc. | Technology Hardware, Storage & Peripherals | 12,000 | 6,865 | |||||||||||
CTBC Financial Holding Co. Ltd. | Banks | 62,000 | 36,698 | |||||||||||
Delta Electronics Inc. | Electronic Equipment, Instruments & Components | 7,000 | 27,892 | |||||||||||
E.Sun Financial Holding Co. Ltd. | Banks | 35,052 | 28,107 | |||||||||||
Eclat Textile Co. Ltd. | Textiles, Apparel & Luxury Goods | 700 | 5,567 | |||||||||||
Epistar Corp. | Semiconductors & Semiconductor Equipment | 2,000 | 1,706 | |||||||||||
Eternal Materials Co. Ltd. | Chemicals | 2,000 | 1,491 | |||||||||||
EVA Airways Corp. | Airlines | 7,124 | 2,094 | |||||||||||
| a | Evergreen Marine Corp. Taiwan Ltd. | Marine | 11,243 | 3,439 | ||||||||||
Far Eastern International Bank | Banks | 8,212 | 2,729 | |||||||||||
Far Eastern New Century Corp. | Industrial Conglomerates | 12,000 | 8,948 | |||||||||||
Far EasTone Telecommunications Co. Ltd. | Wireless Telecommunication Services | 6,000 | 12,559 | |||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 1,100 | 4,729 | |||||||||||
First Financial Holding Co. Ltd. | Banks | 34,743 | 22,575 | |||||||||||
FIT Hon Teng Ltd. | Electronic Equipment, Instruments & Components | 2,000 | 428 | |||||||||||
Formosa Chemicals & Fibre Corp. | Chemicals | 12,000 | 26,586 | |||||||||||
Formosa Petrochemical Corp. | Oil, Gas & Consumable Fuels | 6,000 | 16,150 | |||||||||||
Formosa Plastics Corp. | Chemicals | 16,000 | 39,734 | |||||||||||
Formosa Taffeta Co. Ltd. | Textiles, Apparel & Luxury Goods | 2,000 | 2,037 | |||||||||||
Foxconn Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 4,000 | 6,547 | |||||||||||
Fubon Financial Holding Co. Ltd. | Insurance | 26,000 | 32,283 | |||||||||||
Giant Manufacturing Co. Ltd. | Leisure Equipment & Products | 1,000 | 4,431 | |||||||||||
Globalwafers Co. Ltd. | Semiconductors & Semiconductor Equipment | 700 | 7,893 | |||||||||||
Hon Hai Precision Industry Co. Ltd. | Electronic Equipment, Instruments & Components | 38,800 | 89,682 | |||||||||||
Hotai Motor Co. Ltd. | Specialty Retail | 1,000 | 16,236 | |||||||||||
HTC Corp. | Technology Hardware, Storage & Peripherals | 4,000 | 3,756 | |||||||||||
Hua Nan Financial Holdings Co. Ltd. | Banks | 31,153 | 18,594 | |||||||||||
Innolux Corp. | Electronic Equipment, Instruments & Components | 30,000 | 5,188 | |||||||||||
Inventec Corp. | Technology Hardware, Storage & Peripherals | 10,000 | 7,705 | |||||||||||
Largan Precision Co. Ltd. | Electronic Equipment, Instruments & Components | 350 | 44,327 | |||||||||||
Lite-On Technology Corp. | Technology Hardware, Storage & Peripherals | 6,000 | 8,194 | |||||||||||
MediaTek Inc. | Semiconductors & Semiconductor Equipment | 5,000 | 54,147 | |||||||||||
Mega Financial Holding Co. Ltd. | Banks | 38,000 | 35,749 | |||||||||||
Nan Ya Plastics Corp. | Chemicals | 18,000 | 32,558 | |||||||||||
Nanya Technology Corp. | Semiconductors & Semiconductor Equipment | 2,000 | 3,551 | |||||||||||
Novatek Microelectronics Corp. Ltd. | Semiconductors & Semiconductor Equipment | 2,000 | 11,375 | |||||||||||
Oriental Union Chemical Corp. | Chemicals | 2,000 | 942 | |||||||||||
Pegatron Corp. | Technology Hardware, Storage & Peripherals | 6,000 | 11,507 | |||||||||||
Pou Chen Corp. | Textiles, Apparel & Luxury Goods | 10,000 | 8,482 | |||||||||||
President Chain Store Corp. | Food & Staples Retailing | 2,000 | 18,716 | |||||||||||
Quanta Computer Inc. | Technology Hardware, Storage & Peripherals | 10,000 | 19,906 | |||||||||||
Realtek Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 2,000 | 14,450 | |||||||||||
Shin Kong Financial Holding Co. Ltd. | Insurance | 39,275 | 9,909 | |||||||||||
SinoPac Financial Holdings Co. Ltd. | Banks | 36,800 | 13,446 | |||||||||||
Synnex Technology International Corp. | Electronic Equipment, Instruments & Components | 4,000 | 4,914 | |||||||||||
Taishin Financial Holding Co. Ltd. | Banks | 35,357 | 13,679 | |||||||||||
Taiwan Business Bank | Banks | 21,372 | 6,848 | |||||||||||
Taiwan Cement Corp. | Construction Materials | 16,479 | 21,524 | |||||||||||
| franklintempleton.com | Annual Report | 169 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Taiwan (continued) | ||||||||||||||
Taiwan Cooperative Financial Holding Co. Ltd. | Banks | 32,010 | $ | 19,423 | ||||||||||
Taiwan Fertilizer Co. Ltd. | Chemicals | 4,000 | 5,529 | |||||||||||
Taiwan Glass Industry Corp. | Building Products | 4,000 | 977 | |||||||||||
Taiwan High Speed Rail Corp. | Transportation Infrastructure | 8,000 | 7,605 | |||||||||||
Taiwan Mobile Co. Ltd. | Wireless Telecommunication Services | 6,000 | 19,820 | |||||||||||
Taiwan Secom Co. Ltd. | Commercial Services & Supplies | 1,000 | 2,708 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 80,000 | 724,832 | |||||||||||
Teco Electric & Machinery Co. Ltd. | Electrical Equipment | 6,000 | 4,782 | |||||||||||
The Shanghai Commercial & Savings Bank Ltd. | Banks | 10,000 | 13,012 | |||||||||||
| a | TPK Holding Co. Ltd. | Electronic Equipment, Instruments & Components | 2,000 | 2,292 | ||||||||||
U-Ming Marine Transport Corp. | Marine | 2,000 | 1,720 | |||||||||||
Uni-President Enterprises Corp. | Food Products | 16,000 | 34,707 | |||||||||||
Unimicron Technology Corp. | Electronic Equipment, Instruments & Components | 6,000 | 6,349 | |||||||||||
United Microelectronics Corp. | Semiconductors & Semiconductor Equipment | 34,000 | 15,347 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 2,000 | 3,922 | |||||||||||
Walsin Lihwa Corp. | Electrical Equipment | 8,000 | 2,910 | |||||||||||
Walsin Technology Corp. | Electronic Equipment, Instruments & Components | 2,000 | 10,648 | |||||||||||
Wan Hai Lines Ltd. | Marine | 2,000 | 909 | |||||||||||
Win Semiconductors Corp. | Semiconductors & Semiconductor Equipment | 1,000 | 8,713 | |||||||||||
Wistron Corp. | Technology Hardware, Storage & Peripherals | 10,293 | 8,339 | |||||||||||
Wiwynn Corp. | Technology Hardware, Storage & Peripherals | 300 | 6,964 | |||||||||||
Yageo Corp. | Electronic Equipment, Instruments & Components | 1,000 | 9,077 | |||||||||||
Yuanta Financial Holding Co. Ltd. | Diversified Financial Services | 36,000 | 18,511 | |||||||||||
Yulon Motor Co. Ltd. | Automobiles | 2,000 | 972 | |||||||||||
Zhen Ding Technology Holding Ltd. | Electronic Equipment, Instruments & Components | 2,000 | 6,151 | |||||||||||
|
| |||||||||||||
| 1,961,251 | ||||||||||||||
|
| |||||||||||||
| Thailand 2.6% | ||||||||||||||
Advanced Info Service PCL | Wireless Telecommunication Services | 3,800 | 23,274 | |||||||||||
Airports of Thailand Public Co. Ltd., NVDR | Transportation Infrastructure | 14,800 | 22,887 | |||||||||||
| a | Asset World Corp. PCL | Hotels, Restaurants & Leisure | 24,000 | 2,384 | ||||||||||
B Grimm Power PCL, NVDR | Independent Power and Renewable Electricity Producers | 2,389 | 2,894 | |||||||||||
Bangkok Bank PCL, fgn. | Banks | 1,600 | 4,973 | |||||||||||
Bangkok Dusit Medical Services PCL | Health Care Providers & Services | 30,400 | 17,508 | |||||||||||
Bangkok Expressway and Metro PCL, NVDR | Transportation Infrastructure | 25,800 | 6,093 | |||||||||||
Bangkok Life Assurance PCL, NVDR | Insurance | 1,400 | 508 | |||||||||||
Banpu PCL, NVDR | Oil, Gas & Consumable Fuels | 15,200 | 2,455 | |||||||||||
Berli Jucker PCL, NVDR | Food & Staples Retailing | 3,400 | 4,196 | |||||||||||
BTS Group Holdings PCL, NVDR | Road & Rail | 27,600 | 7,653 | |||||||||||
Bumrungrad Hospital PCL | Health Care Providers & Services | 1,200 | 4,168 | |||||||||||
Central Pattana PCL | Real Estate Management & Development | 8,600 | 11,203 | |||||||||||
Charoen Pokphand Foods PCL, NVDR | Food Products | 12,400 | 9,182 | |||||||||||
CP ALL PCL | Food & Staples Retailing | 17,600 | 32,714 | |||||||||||
Delta Electronics Thailand PCL | Electronic Equipment, Instruments & Components | 1,400 | 1,450 | |||||||||||
Digital Telecommunications Infrastructure Fund, fgn. | Diversified Financial Services | 13,400 | 6,125 | |||||||||||
Electricity Generating PCL | Independent Power and Renewable Electricity Producers | 1,000 | 7,039 | |||||||||||
Energy Absolute PCL, NVDR | Independent Power and Renewable Electricity Producers | 5,600 | 5,759 | |||||||||||
Global Power Synergy PCL | Independent Power and Renewable Electricity Producers | 2,434 | 4,228 | |||||||||||
Gulf Energy Development PCL, NVDR | Independent Power and Renewable Electricity Producers | 2,600 | 11,884 | |||||||||||
Home Product Center PCL, NVDR | Specialty Retail | 20,000 | 6,765 | |||||||||||
| 170 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Thailand (continued) | ||||||||||||||
Indorama Ventures PCL, NVDR | Chemicals | 6,400 | $ | 4,173 | ||||||||||
Intouch Holdings PCL | Wireless Telecommunication Services | 7,200 | 10,970 | |||||||||||
IRPC PCL | Oil, Gas & Consumable Fuels | 36,400 | 2,374 | |||||||||||
Kasikornbank PCL, fgn. | Banks | 4,000 | 11,092 | |||||||||||
Kasikornbank PCL, NVDR | Banks | 2,800 | 7,807 | |||||||||||
Krung Thai Bank PCL | Banks | 18,000 | 6,253 | |||||||||||
Krungthai Card PCL, NVDR | Consumer Finance | 4,644 | 3,856 | |||||||||||
Land and Houses PCL, NVDR | Real Estate Management & Development | 22,000 | 4,491 | |||||||||||
Minor International PCL | Hotels, Restaurants & Leisure | 12,600 | 6,450 | |||||||||||
Muangthai Capital PCL | Consumer Finance | 2,400 | 2,560 | |||||||||||
Osotspa PCL, NVDR | Beverages | 4,200 | 4,575 | |||||||||||
PTT Exploration and Production PCL, NVDR | Oil, Gas & Consumable Fuels | 4,800 | 9,873 | |||||||||||
PTT Global Chemical PCL, NVDR | Chemicals | 6,800 | 6,320 | |||||||||||
PTT PCL | Oil, Gas & Consumable Fuels | 48,600 | 45,538 | |||||||||||
Ratch Group PCL, NVDR | Independent Power and Renewable Electricity Producers | 2,800 | 4,863 | |||||||||||
Siam City Cement PCL, NVDR | Construction Materials | 200 | 725 | |||||||||||
Siam Commercial Bank PCL | Banks | 7,600 | 16,037 | |||||||||||
Siam Makro Public Company Ltd. | Food & Staples Retailing | 800 | 804 | |||||||||||
Thai Oil PCL | Oil, Gas & Consumable Fuels | 3,600 | 3,373 | |||||||||||
Thai Union Group PCL | Food Products | 10,000 | 4,205 | |||||||||||
The Siam Cement PCL | Construction Materials | 2,600 | 25,669 | |||||||||||
TMB Bank PCL, B544N7906 | Banks | 128,951 | 3,458 | |||||||||||
Total Access Communication PCL | Wireless Telecommunication Services | 2,400 | 2,980 | |||||||||||
True Corporation PCL, NVDR | Diversified Telecommunication Services | 36,600 | 3,502 | |||||||||||
|
| |||||||||||||
| 387,290 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks and Other Equity Interests (Cost $18,068,411) | 14,538,820 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks 0.8% | ||||||||||||||
| South Korea 0.8% | ||||||||||||||
| f | Amorepacific Corp., 1.686%, pfd. | Personal Products | 30 | 1,469 | ||||||||||
| f | CJ CheilJedang Corp., 4.011%, pfd. | Food Products | 4 | 291 | ||||||||||
| f | Hyundai Motor Co., 7.849%, pfd. | Automobiles | 76 | 3,221 | ||||||||||
| f | Hyundai Motor Co., 7.206%, pfd., 2 | Automobiles | 124 | 5,796 | ||||||||||
| f | LG Chem Ltd., 1.385%, pfd. | Chemicals | 24 | 2,918 | ||||||||||
| f | LG Electronics Inc., 4.482%, pfd. | Household Durables | 66 | 968 | ||||||||||
| f | LG Household & Health Care Ltd., 1.727%, pfd. | Personal Products | 10 | 5,257 | ||||||||||
| f | Samsung Electronics Co. Ltd., 2.651%, pfd. | Technology Hardware, Storage & Peripherals | 2,752 | 90,652 | ||||||||||
| f | Samsung Fire & Marine Insurance Co. Ltd., 7.594%, pfd. | Insurance | 8 | 736 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks | 111,308 | |||||||||||||
|
| |||||||||||||
| Warrants (Cost $—) 0.0%† | ||||||||||||||
| Thailand 0.0%† | ||||||||||||||
| a | BTS Group Holdings PCL, wts., 2/16/2021 | Road & Rail | 2,760 | 49 | ||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 14,650,177 | |||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 171 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Asia ex Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Short Term Investments 0.0%† | ||||||||||||||
Investments from Cash Collateral Received for Loaned Securities 0.0%† | ||||||||||||||
| United States 0.0%† | ||||||||||||||
| g,h | Institutional Fiduciary Trust Portfolio, 0.32% | Money Market Funds | 5,040 | $ | 5,040 | |||||||||
|
| |||||||||||||
Total Investments (Cost $18,210,738) 99.6% | 14,655,217 | |||||||||||||
Other Assets, less Liabilities 0.4% | 56,819 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 14,712,036 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $296,552, representing 2.0% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $89,976, representing 0.6% of net assets.
dA portion or all of the security is on loan at March 31, 2020. See Note 1(d).
eFair valued using significant unobservable inputs. See Note 9 regarding fair value measurements.
fVariable rate security. The rate shown represents the yield at period end.
gSee Note 3(c) regarding investments in affiliated management investment companies.
hThe rate shown is the annualizedseven-day effective yield at period end.
| 172 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Australia ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 24.63 | $ | 24.67 | $ | 25.23 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 1.07 | 1.29 | 0.52 | |||||||||
Net realized and unrealized gains (losses) | (7.18 | ) | (0.37 | ) | (1.03 | ) | ||||||
|
| |||||||||||
Total from investment operations | (6.11 | ) | 0.92 | (0.51 | ) | |||||||
|
| |||||||||||
Less distributions from net investment income | (1.14 | ) | (0.96 | ) | (0.05 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 17.38 | $ | 24.63 | $ | 24.67 | ||||||
|
| |||||||||||
Total returnd | (26.23)% | 4.00% | (2.05)% | |||||||||
| Ratios to average net assetse | ||||||||||||
Total expenses | 0.09% | 0.09% | 0.09% | |||||||||
Net investment income | 4.28% | 5.30% | 4.96% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $7,820 | $7,389 | $2,467 | |||||||||
Portfolio turnover ratef | 8.16% | g | 4.56% | 1.63% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 8.16%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 173 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.9% | ||||||||||||||
| Australia 97.6% | ||||||||||||||
Adelaide Brighton Ltd. | Construction Materials | 4,833 | $ | 6,123 | ||||||||||
| a | Afterpay Ltd. | IT Services | 2,304 | 26,511 | ||||||||||
AGL Energy Ltd. | Multi-Utilities | 6,768 | 71,207 | |||||||||||
ALS Ltd. | Professional Services | 5,112 | 17,396 | |||||||||||
Altium Ltd. | Software | 1,152 | 20,158 | |||||||||||
Alumina Ltd. | Metals & Mining | 26,910 | 24,047 | |||||||||||
| a | AMP Ltd. | Diversified Financial Services | 36,873 | 30,128 | ||||||||||
Ansell Ltd. | Health Care Equipment & Supplies | 1,386 | 23,065 | |||||||||||
Apa Group | Gas Utilities | 12,519 | 78,615 | |||||||||||
Aristocrat Leisure Ltd. | Hotels, Restaurants & Leisure | 6,768 | 88,439 | |||||||||||
Atlas Arteria Ltd. | Transportation Infrastructure | 9,405 | 31,717 | |||||||||||
Aurizon Holdings Ltd. | Road & Rail | 19,971 | 51,704 | |||||||||||
AusNet Services | Electric Utilities | 19,152 | 20,045 | |||||||||||
Australia & New Zealand Banking Group Ltd. | Banks | 30,051 | 311,941 | |||||||||||
Australian Stock Exchange Ltd. | Capital Markets | 2,061 | 97,244 | |||||||||||
Bank of Queensland Ltd. | Banks | 4,824 | 14,763 | |||||||||||
Beach Energy Ltd. | Oil, Gas & Consumable Fuels | 18,648 | 13,126 | |||||||||||
Bendigo and Adelaide Bank Ltd. | Banks | 5,184 | 19,894 | |||||||||||
BHP Group Ltd. | Metals & Mining | 31,248 | 554,253 | |||||||||||
Bluescope Steel Ltd. | Metals & Mining | 5,445 | 28,760 | |||||||||||
Boral Ltd. | Construction Materials | 12,537 | 15,730 | |||||||||||
Brambles Ltd. | Commercial Services & Supplies | 16,389 | 105,926 | |||||||||||
Caltex Australia Ltd. | Oil, Gas & Consumable Fuels | 2,646 | 36,147 | |||||||||||
Challenger Ltd. | Diversified Financial Services | 6,138 | 15,027 | |||||||||||
Charter Hall Group | Equity Real Estate Investment Trusts (REITs | ) | 4,914 | 20,632 | ||||||||||
Cimic Group Ltd. | Construction & Engineering | 1,026 | 14,600 | |||||||||||
Cleanaway Waste Management Ltd. | Commercial Services & Supplies | 14,301 | 14,836 | |||||||||||
Coca-Cola Amatil Ltd. | Beverages | 5,427 | 29,363 | |||||||||||
Cochlear Ltd. | Health Care Equipment & Supplies | 657 | 75,377 | |||||||||||
Coles Group Ltd. | Food & Staples Retailing | 12,717 | 117,997 | |||||||||||
Commonwealth Bank of Australia | Banks | 18,783 | 710,691 | |||||||||||
Computershare Ltd. | IT Services | 5,130 | 30,488 | |||||||||||
Crown Resorts Ltd. | Hotels, Restaurants & Leisure | 3,771 | 17,541 | |||||||||||
CSL Ltd. | Biotechnology | 4,797 | 871,054 | |||||||||||
CSR Ltd. | Construction Materials | 5,202 | 10,093 | |||||||||||
Dexus | Equity Real Estate Investment Trusts (REITs | ) | 11,583 | 64,442 | ||||||||||
Domain Holdings Australia Ltd. | Interactive Media & Services | 2,439 | 3,015 | |||||||||||
Domino’s Pizza Enterprises Ltd. | Hotels, Restaurants & Leisure | 639 | 19,985 | |||||||||||
Downer EDI Ltd. | Commercial Services & Supplies | 6,291 | 11,474 | |||||||||||
Evolution Mining Ltd. | Metals & Mining | 11,151 | 26,071 | |||||||||||
Flight Centre Travel Group Ltd. | Hotels, Restaurants & Leisure | 594 | 3,603 | |||||||||||
Fortescue Metals Group Ltd. | Metals & Mining | 16,866 | 103,228 | |||||||||||
Goodman Group | Equity Real Estate Investment Trusts (REITs | ) | 18,882 | 139,836 | ||||||||||
GPT Group | Equity Real Estate Investment Trusts (REITs | ) | 20,547 | 45,650 | ||||||||||
Harvey Norman Holdings Ltd. | Multiline Retail | 6,282 | 11,342 | |||||||||||
IDP Education Ltd. | Diversified Consumer Services | 1,350 | 9,552 | |||||||||||
Iluka Resources Ltd. | Metals & Mining | 4,437 | 18,955 | |||||||||||
Incitec Pivot Ltd. | Chemicals | 17,271 | 21,353 | |||||||||||
Insurance Australia Group Ltd. | Insurance | 24,507 | 92,997 | |||||||||||
IOOF Holdings Ltd. | Capital Markets | 3,636 | 8,145 | |||||||||||
James Hardie Industries PLC, CDI | Construction Materials | 4,689 | 53,151 | |||||||||||
JBHi-Fi Ltd. | Specialty Retail | 1,197 | 20,514 | |||||||||||
LendLease Group | Real Estate Management & Development | 5,994 | 37,787 | |||||||||||
Macquarie Group Ltd. | Capital Markets | 3,402 | 178,548 | |||||||||||
Magellan Financial Group Ltd. | Capital Markets | 1,449 | 38,596 | |||||||||||
Medibank Private Ltd. | Insurance | 29,232 | 47,591 | |||||||||||
Metcash Ltd. | Food & Staples Retailing | 9,594 | 18,497 | |||||||||||
Mirvac Group | Equity Real Estate Investment Trusts (REITs | ) | 41,454 | 53,027 | ||||||||||
| 174 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Australia ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Australia (continued) | ||||||||||||||
National Australia Bank Ltd. | Banks | 31,248 | $ | 319,011 | ||||||||||
Newcrest Mining Ltd. | Metals & Mining | 8,154 | 115,035 | |||||||||||
Northern Star Resources Ltd. | Metals & Mining | 7,533 | 48,549 | |||||||||||
| a | Nufarm Ltd. | Chemicals | 3,375 | 10,535 | ||||||||||
Oil Search Ltd. | Oil, Gas & Consumable Fuels | 14,202 | 20,688 | |||||||||||
Orica Ltd. | Chemicals | 4,275 | 40,164 | |||||||||||
Origin Energy Ltd. | Oil, Gas & Consumable Fuels | 18,630 | 49,943 | |||||||||||
Orora Ltd. | Containers & Packaging | 12,780 | 18,929 | |||||||||||
OZ Minerals Ltd. | Metals & Mining | 3,357 | 15,102 | |||||||||||
Perpetual Ltd. | Capital Markets | 468 | 7,227 | |||||||||||
Platinum Asset Management Ltd. | Capital Markets | 3,177 | 6,475 | |||||||||||
Qantas Airways Ltd. | Airlines | 6,156 | 12,170 | |||||||||||
QBE Insurance Group Ltd. | Insurance | 13,887 | 73,096 | |||||||||||
Qube Logistics Holdings Ltd. | Transportation Infrastructure | 13,257 | 17,445 | |||||||||||
Ramsay Health Care Ltd. | Health Care Providers & Services | 1,647 | 57,741 | |||||||||||
REA Group Ltd. | Interactive Media & Services | 531 | 25,022 | |||||||||||
Rio Tinto Ltd. | Metals & Mining | 3,942 | 204,042 | |||||||||||
Santos Ltd. | Oil, Gas & Consumable Fuels | 18,891 | 39,543 | |||||||||||
Scentre Group | Equity Real Estate Investment Trusts (REITs | ) | 55,701 | 53,354 | ||||||||||
Seek Ltd. | Professional Services | 3,708 | 33,656 | |||||||||||
Seven Group Holdings Ltd. | Trading Companies & Distributors | 1,395 | 9,597 | |||||||||||
Shopping Centres Australasia Property Group | Equity Real Estate Investment Trusts (REITs | ) | 9,801 | 13,617 | ||||||||||
Sonic Healthcare Ltd. | Health Care Providers & Services | 5,022 | 74,784 | |||||||||||
South32 Ltd. | Metals & Mining | 52,443 | 56,653 | |||||||||||
Stockland | Equity Real Estate Investment Trusts (REITs | ) | 25,308 | 39,189 | ||||||||||
Suncorp-Metway Ltd. | Insurance | 13,367 | 74,695 | |||||||||||
Sydney Airport | Transportation Infrastructure | 11,745 | 40,184 | |||||||||||
Tabcorp Holdings Ltd. | Hotels, Restaurants & Leisure | 20,061 | 31,064 | |||||||||||
Telstra Corp. Ltd. | Diversified Telecommunication Services | 44,172 | 82,999 | |||||||||||
The Star Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 8,739 | 11,500 | |||||||||||
TPG Telecom Ltd. | Diversified Telecommunication Services | 3,834 | 16,168 | |||||||||||
Transurban Group | Transportation Infrastructure | 28,737 | 211,765 | |||||||||||
Treasury Wine Estates Ltd. | Beverages | 7,641 | 46,907 | |||||||||||
Vicinity Centres | Equity Real Estate Investment Trusts (REITs | ) | 33,498 | 21,220 | ||||||||||
| a | Vocus Group Ltd. | Diversified Telecommunication Services | 6,327 | 9,604 | ||||||||||
Washington H. Soul Pattinson & Co. Ltd. | Oil, Gas & Consumable Fuels | 963 | 10,002 | |||||||||||
Wesfarmers Ltd. | Multiline Retail | 12,006 | 251,825 | |||||||||||
Westpac Banking Corp. | Banks | 38,304 | 386,826 | |||||||||||
Whitehaven Coal Ltd. | Oil, Gas & Consumable Fuels | 9,081 | 10,699 | |||||||||||
Wisetech Global Ltd. | Software | 873 | 9,137 | |||||||||||
Woodside Petroleum Ltd. | Oil, Gas & Consumable Fuels | 9,909 | 110,440 | |||||||||||
Woolworths Group Ltd. | Food & Staples Retailing | 13,347 | 286,733 | |||||||||||
Worley Ltd. | Energy Equipment & Services | 3,402 | 12,806 | |||||||||||
|
| |||||||||||||
| 7,628,138 | ||||||||||||||
|
| |||||||||||||
| New Zealand 0.5% | ||||||||||||||
| a | Xero Ltd. | Software | 990 | 41,149 | ||||||||||
|
| |||||||||||||
| United States 1.8% | ||||||||||||||
Amcor PLC, IDR | Containers & Packaging | 16,974 | 135,472 | |||||||||||
Sims Ltd. | Metals & Mining | 1,773 | 6,630 | |||||||||||
|
| |||||||||||||
| 142,102 | ||||||||||||||
|
| |||||||||||||
Total Investments | 7,811,389 | |||||||||||||
Other Assets, less Liabilities 0.1% | 8,887 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 7,820,276 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 175 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Brazil ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 25.72 | $ | 27.87 | $ | 24.37 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 1.07 | 0.80 | 0.50 | |||||||||
Net realized and unrealized gains (losses) | (11.33 | ) | (2.07 | ) | 3.11 | |||||||
|
| |||||||||||
Total from investment operations | (10.26 | ) | (1.27 | ) | 3.61 | |||||||
|
| |||||||||||
Less distributions from net investment income | (1.00 | ) | (0.88 | ) | (0.11 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 14.46 | $ | 25.72 | $ | 27.87 | ||||||
|
| |||||||||||
Total returnd | (41.69)% | (3.98)% | 14.86% | |||||||||
| Ratios to average net assetse | ||||||||||||
Total expenses | 0.23% | 0.19% | 0.19% | |||||||||
Net investment income | 4.26% | 3.37% | 4.53% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $102,700 | $20,579 | $44,593 | |||||||||
Portfolio turnover ratef | 36.07% | g | 39.76% | 4.79% | ||||||||
aFor the period November 3, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year, except fornon-recurring expenses, if any.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 17.47%.
| 176 | Annual Report | The accompanying notes are an integral part of these financial statements. | �� | franklintempleton.com | |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 70.4% | ||||||||||||||
| Brazil 68.9% | ||||||||||||||
| a | Aliansce Sonae Shopping Centers SA | Real Estate Management & Development | 49,700 | $ | 254,891 | |||||||||
Ambev SA | Beverages | 1,725,320 | 3,965,182 | |||||||||||
Atacadao Distribuicao Comercio e Industria Ltd. | Food & Staples Retailing | 134,900 | 536,573 | |||||||||||
| a | B2W Cia Digital | Internet & Direct Marketing Retail | 76,100 | 704,276 | ||||||||||
B3 SA – Brasil Bolsa Balcao | Capital Markets | 788,100 | 5,454,978 | |||||||||||
Banco Bradesco SA | Banks | 411,800 | 1,493,456 | |||||||||||
Banco BTG Pactual SA | Capital Markets | 99,400 | 637,037 | |||||||||||
Banco do Brasil SA | Banks | 341,104 | 1,834,225 | |||||||||||
Banco Santander Brasil SA | Banks | 163,300 | 839,704 | |||||||||||
BB Seguridade Participacoes SA | Insurance | 269,800 | 1,292,664 | |||||||||||
BR Malls Paricipacoes SA | Real Estate Management & Development | 298,200 | 573,793 | |||||||||||
| a | BRF SA | Food Products | 227,200 | 661,020 | ||||||||||
CCR SA | Transportation Infrastructure | 447,300 | 1,011,612 | |||||||||||
Centrais Eletricas Brasileiras SA | Electric Utilities | 184,600 | 849,218 | |||||||||||
Cia Brasileira de Distribuicao | Food & Staples Retailing | 63,977 | 818,308 | |||||||||||
Cia de Saneamento do Parana | Water Utilities | 78,000 | 358,674 | |||||||||||
Cia Siderurgica Nacional SA | Metals & Mining | 241,400 | 324,870 | |||||||||||
Cielo SA | IT Services | 440,200 | 376,834 | |||||||||||
Cogna Educacao | Diversified Consumer Services | 667,400 | 514,711 | |||||||||||
Companhia de Locacao das Americas | Road & Rail | 85,200 | 172,319 | |||||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | Water Utilities | 134,900 | 1,017,225 | |||||||||||
Companhia Energetica de Minas Gerais | Electric Utilities | 28,400 | 49,555 | |||||||||||
Companhia Paranaense de Energia-Copel | Electric Utilities | 7,100 | 79,917 | |||||||||||
| a | Cosan Logistica SA | Road & Rail | 49,700 | 160,218 | ||||||||||
Cosan SA | Oil, Gas & Consumable Fuels | 63,900 | 662,335 | |||||||||||
CPFL Energia SA | Electric Utilities | 78,100 | 404,609 | |||||||||||
CVC Brasil Operadora e Agencia de Viagens SA | Hotels, Restaurants & Leisure | 49,700 | 106,365 | |||||||||||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | Household Durables | 99,400 | 270,798 | |||||||||||
Duratex SA | Paper & Forest Products | 106,500 | 191,990 | |||||||||||
EDP-Energias do Brasil SA | Electric Utilities | 120,700 | 378,860 | |||||||||||
| a | Embraer SA | Aerospace & Defense | 291,100 | 535,436 | ||||||||||
Energisa SA | Electric Utilities | 75,180 | 547,913 | |||||||||||
| a | Eneva SA | Independent Power and Renewable Electricity Producers | 28,400 | 190,279 | ||||||||||
Engie Brasil Energia SA | Independent Power and Renewable Electricity Producers | 71,000 | 532,781 | |||||||||||
Equatorial Energia SA | Electric Utilities | 340,800 | 1,156,457 | |||||||||||
Fleury SA | Health Care Providers & Services | 85,200 | 332,481 | |||||||||||
Grendene SA | Textiles, Apparel & Luxury Goods | 99,400 | 144,311 | |||||||||||
Guararapes Confeccoes SA | Textiles, Apparel & Luxury Goods | 28,400 | 59,739 | |||||||||||
| b,c | Hapvida Participacoes e Investimentos SA, 144A, Reg S | Health Care Providers & Services | 56,800 | 464,335 | ||||||||||
Hypera SA | Pharmaceuticals | 156,200 | 861,018 | |||||||||||
IRB Brasil Resseguros SA | Insurance | 326,689 | 609,715 | |||||||||||
Itau Unibanco Holding SA | Banks | 205,900 | 876,542 | |||||||||||
Klabin SA | Containers & Packaging | 227,200 | 700,445 | |||||||||||
Localiza Rent a Car SA | Road & Rail | 227,240 | 1,152,279 | |||||||||||
Lojas Americanas SA | Multiline Retail | 85,281 | 237,595 | |||||||||||
Lojas Renner SA | Multiline Retail | 312,420 | 2,021,520 | |||||||||||
M Dias Branco SA | Food Products | 35,500 | 199,177 | |||||||||||
Magazine Luiza SA | Multiline Retail | 255,600 | 1,921,460 | |||||||||||
Multiplan Empreendimentos Imobiliarios SA | Real Estate Management & Development | 106,500 | 391,783 | |||||||||||
Natura & Co Holding SA | Personal Products | 262,700 | 1,303,725 | |||||||||||
Neoenergia SA | Electric Utilities | 85,200 | 282,379 | |||||||||||
| franklintempleton.com | Annual Report | 177 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Brazil ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Brazil (continued) | ||||||||||||||
Notre Dame Intermedica Participacoes SA | Health Care Providers & Services | 177,500 | $ | 1,538,657 | ||||||||||
Odontoprev SA | Health Care Providers & Services | 106,500 | 297,328 | |||||||||||
Petrobras Distribuidora SA | Specialty Retail | 269,800 | 806,809 | |||||||||||
Petroleo Brasileiro SA | Oil, Gas & Consumable Fuels | 1,462,640 | 3,987,531 | |||||||||||
Porto Seguro SA | Insurance | 35,500 | 307,458 | |||||||||||
Qualicorp Consultoria E Corretora de Seguros SA | Health Care Providers & Services | 92,300 | 419,982 | |||||||||||
Raia Drogasil SA | Food & Staples Retailing | 89,873 | 1,764,849 | |||||||||||
| a | Rumo SA | Road & Rail | 440,260 | 1,667,973 | ||||||||||
Sao Martinho SA | Food Products | 63,900 | 182,093 | |||||||||||
Sul America SA | Insurance | 85,200 | 555,231 | |||||||||||
Suzano SA | Paper & Forest Products | 319,572 | 2,205,198 | |||||||||||
Telefonica Brasil SA | Diversified Telecommunication Services | 14,200 | 138,534 | |||||||||||
Tim Participacoes SA | Wireless Telecommunication Services | 312,400 | 749,288 | |||||||||||
Totvs SA | Software | 63,900 | 575,107 | |||||||||||
Transmissora Alianca de Energia Eletrica SA | Electric Utilities | 85,200 | 424,308 | |||||||||||
Ultrapar Participacoes SA | Oil, Gas & Consumable Fuels | 340,800 | 823,319 | |||||||||||
Vale SA | Metals & Mining | 1,363,200 | 11,359,562 | |||||||||||
| a | Via Varejo SA | Specialty Retail | 149,100 | 151,785 | ||||||||||
Weg SA | Electrical Equipment | 291,100 | 1,884,130 | |||||||||||
| a | YDUQS PART | Diversified Consumer Services | 99,400 | 424,883 | ||||||||||
|
| |||||||||||||
| 70,781,612 | ||||||||||||||
|
| |||||||||||||
| United States 1.5% | ||||||||||||||
JBS SA | Food Products | 383,400 | 1,503,559 | |||||||||||
|
| |||||||||||||
Total Common Stocks | 72,285,171 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks 29.3% | ||||||||||||||
| Brazil 29.3% | ||||||||||||||
| d | Alpargatas SA, 0.237%, pfd. | Textiles, Apparel & Luxury Goods | 78,100 | 348,744 | ||||||||||
| a | Azul SA, pdf. | Airlines | 78,100 | 264,269 | ||||||||||
| d | Banco Bradesco SA, 10.010%, pfd. | Banks | 1,597,580 | 6,397,589 | ||||||||||
| d | Banco do Estado do Rio Grande do Sul SA, 9.883%, pfd., B | Banks | 78,100 | 179,642 | ||||||||||
| d | Bradespar SA, 4.781%, pfd. | Metals & Mining | 92,300 | 518,927 | ||||||||||
| d | Braskem SA, 4.872%, pfd., A | Chemicals | 78,100 | 259,299 | ||||||||||
| d | Centrais Eletricas Brasileiras SA, 5.651%, pfd., B | Electric Utilities | 106,500 | 534,492 | ||||||||||
| d | Cia de Transmissao de Energia Eletrica Paulista, 7.965%, pfd. | Electric Utilities | 71,000 | 259,683 | ||||||||||
| d | Cia Energetica de Sao Paulo, 3.300%, pfd., B | Independent Power and Renewable Electricity Producers | 71,000 | 367,964 | ||||||||||
| d | Companhia Energetica de Minas Gerais, 8.137%, pfd. | Electric Utilities | 369,200 | 634,244 | ||||||||||
| d | Companhia Paranaense de Energia, 5.320%, pfd., B | Electric Utilities | 42,600 | 439,421 | ||||||||||
| d | Gerdau SA, 2.090%, pfd. | Metals & Mining | 411,800 | 797,939 | ||||||||||
| a | Gol Linhas Aereas Inteligentes SA, pfd. | Airlines | 42,600 | 93,387 | ||||||||||
| d | Itau Unibanco Holding SA, 8.709%, pfd. | Banks | 1,874,400 | 8,344,560 | ||||||||||
| d | Itausa-Investimentos Itau SA, 9.918%, pfd. | Banks | 1,732,460 | 2,929,409 | ||||||||||
| d | Lojas Americanas SA, 1.011%, pfd. | Multiline Retail | 298,269 | 1,035,137 | ||||||||||
| d | Petroleo Brasileiro SA, 6.665%, pfd. | Oil, Gas & Consumable Fuels | 1,874,440 | 5,055,994 | ||||||||||
| d | Telefonica Brasil SA, 6.951%, pfd. | Diversified Telecommunication Services | 163,300 | 1,556,932 | ||||||||||
| 178 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Brazil ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Preferred Stocks (continued) | ||||||||||||||
| Brazil (continued) | ||||||||||||||
| d | Usinas Siderurgicas de Minas Gerais SA Usiminas, 1.626%, pfd., A | Metals & Mining | 142,000 | $ | 134,701 | |||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $63,850,427) | 30,152,333 | |||||||||||||
|
| |||||||||||||
Total Investments | 102,437,504 | |||||||||||||
Other Assets, less Liabilities 0.3% | 262,040 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 102,699,544 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $464,335, representing 0.5% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the value of this security was $464,335, representing 0.5% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
Mini Bovespa Index | Long | 80 | $ | 224,528 | 4/15/20 | $ | (9,433 | ) | ||||||||||||
*As of period end.
See Note 8 regarding other derivative information.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 179 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Canada ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 24.13 | $ | 23.77 | $ | 24.80 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.69 | 0.67 | 0.24 | |||||||||
Net realized and unrealized gains (losses) | (4.72 | ) | 0.33 | (1.25 | ) | |||||||
|
| |||||||||||
Total from investment operations | (4.03 | ) | 1.00 | (1.01 | ) | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.60 | ) | (0.64 | ) | (0.02 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 19.50 | $ | 24.13 | $ | 23.77 | ||||||
|
| |||||||||||
Total returnd | (17.25)% | 4.48% | (4.06)% | |||||||||
| Ratios to average net assetse | ||||||||||||
Total expenses | 0.09% | 0.09% | 0.09% | |||||||||
Net investment income | 2.73% | 2.79% | 2.39% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $4,876 | $4,827 | $2,377 | |||||||||
Portfolio turnover ratef | 4.57% | g | 6.95% | 1.26% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 4.57%.
| 180 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.7% | ||||||||||||||
| Canada 97.2% | ||||||||||||||
Agnico Eagle Mines Ltd. | Metals & Mining | 1,155 | $ | 45,588 | ||||||||||
Alimentation Couche-Tard Inc., B | Food & Staples Retailing | 4,135 | 96,305 | |||||||||||
Bank of Montreal | Banks | 3,100 | 154,766 | |||||||||||
Bank of Nova Scotia | Banks | 5,915 | 238,827 | |||||||||||
Barrick Gold Corp. | Metals & Mining | 8,545 | 155,249 | |||||||||||
BCE Inc. | Diversified Telecommunication Services | 1,455 | 59,014 | |||||||||||
Brookfield Asset Management Inc., A | Capital Markets | 4,375 | 191,740 | |||||||||||
Canadian Imperial Bank of Commerce | Banks | 2,155 | 124,151 | |||||||||||
Canadian National Railway Co. | Road & Rail | 3,460 | 267,470 | |||||||||||
Canadian Natural Resources Ltd. | Oil, Gas & Consumable Fuels | 5,630 | 76,143 | |||||||||||
Canadian Pacific Railway Ltd. | Road & Rail | 665 | 145,091 | |||||||||||
Canadian Tire Corp. Ltd., A | Multiline Retail | 280 | 16,709 | |||||||||||
Canadian Utilities Ltd., A | Multi-Utilities | 585 | 13,826 | |||||||||||
| a | Canopy Growth Corp. | Pharmaceuticals | 875 | 12,578 | ||||||||||
Cenovus Energy Inc. | Oil, Gas & Consumable Fuels | 4,940 | 9,857 | |||||||||||
| a | CGI Inc., A | IT Services | 1,150 | 61,558 | ||||||||||
Constellation Software Inc. | Software | 97 | 87,164 | |||||||||||
Dollarama Inc. | Multiline Retail | 1,485 | 40,731 | |||||||||||
Enbridge Inc. | Oil, Gas & Consumable Fuels | 9,610 | 276,684 | |||||||||||
Fairfax Financial Holdings Ltd. | Insurance | 130 | 39,404 | |||||||||||
Fortis Inc. | Electric Utilities | 2,235 | 85,217 | |||||||||||
Franco-Nevada Corp. | Metals & Mining | 900 | 88,909 | |||||||||||
George Weston Ltd. | Food & Staples Retailing | 345 | 24,391 | |||||||||||
Great-West Lifeco Inc. | Insurance | 1,265 | 21,605 | |||||||||||
Husky Energy Inc. | Oil, Gas & Consumable Fuels | 1,475 | 3,668 | |||||||||||
Hydro One Ltd. | Electric Utilities | 1,520 | 27,061 | |||||||||||
IGM Financial Inc. | Capital Markets | 410 | 6,726 | |||||||||||
Imperial Oil Ltd. | Oil, Gas & Consumable Fuels | 1,115 | 12,463 | |||||||||||
Intact Financial Corp. | Insurance | 690 | 58,963 | |||||||||||
Inter Pipeline Ltd. | Oil, Gas & Consumable Fuels | 2,035 | 12,038 | |||||||||||
Loblaw Cos. Ltd. | Food & Staples Retailing | 870 | 44,345 | |||||||||||
Magna International Inc. | Auto Components | 1,415 | 44,647 | |||||||||||
Manulife Financial Corp. | Insurance | 9,420 | 116,943 | |||||||||||
Metro Inc., A | Food & Staples Retailing | 1,150 | 45,981 | |||||||||||
National Bank of Canada | Banks | 1,625 | 62,096 | |||||||||||
Nutrien Ltd. | Chemicals | 2,780 | 93,965 | |||||||||||
Pembina Pipeline Corp. | Oil, Gas & Consumable Fuels | 2,650 | 49,152 | |||||||||||
Power Corp. of Canada | Insurance | 2,850 | 45,332 | |||||||||||
Restaurant Brands International Inc. | Hotels, Restaurants & Leisure | 1,355 | 53,987 | |||||||||||
RioCan REIT | Equity Real Estate Investment Trusts (REITs | ) | 1,525 | 17,282 | ||||||||||
Rogers Communications Inc., B | Wireless Telecommunication Services | 1,700 | 70,157 | |||||||||||
Royal Bank of Canada | Banks | 7,010 | 429,312 | |||||||||||
Saputo Inc. | Food Products | 1,115 | 26,509 | |||||||||||
Shaw Communications Inc. | Media | 2,180 | 34,966 | |||||||||||
| a | Shopify Inc., A | IT Services | 485 | 200,910 | ||||||||||
Sun Life Financial Inc. | Insurance | 2,885 | 91,758 | |||||||||||
Suncor Energy Inc. | Oil, Gas & Consumable Fuels | 7,485 | 118,111 | |||||||||||
TC Energy Corp. | Oil, Gas & Consumable Fuels | 4,525 | 198,854 | |||||||||||
Teck Resources Ltd., B | Metals & Mining | 2,335 | 17,504 | |||||||||||
TELUS Corp. | Diversified Telecommunication Services | 1,950 | 30,483 | |||||||||||
The Toronto-Dominion Bank | Banks | 8,830 | 371,166 | |||||||||||
Thomson Reuters Corp. | Professional Services | 955 | 64,331 | |||||||||||
Wheaton Precious Metals Corp. | Metals & Mining | 2,165 | 58,911 | |||||||||||
|
| |||||||||||||
| 4,740,598 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 181 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Canada ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| United States 2.5% | ||||||||||||||
| a | Bausch Health Cos.Inc. | Pharmaceuticals | 1,675 | $ | 25,666 | |||||||||
Waste Connections Inc. | Commercial Services & Supplies | 1,270 | 97,435 | |||||||||||
|
| |||||||||||||
| 123,101 | ||||||||||||||
|
| |||||||||||||
Total Investments (Cost $6,365,137) 99.7% | 4,863,699 | |||||||||||||
Other Assets, less Liabilities 0.3% | 12,320 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 4,876,019 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
| 182 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE China ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 24.01 | $ | 25.99 | $ | 24.95 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment income (loss)c | 0.45 | 0.40 | (0.01 | ) | ||||||||
Net realized and unrealized gains (losses) | (1.78 | ) | (1.99 | ) | 1.05 | |||||||
|
| |||||||||||
Total from investment operations | (1.33 | ) | (1.59 | ) | 1.04 | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.49 | ) | (0.39 | ) | — | d | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 22.19 | $ | 24.01 | $ | 25.99 | ||||||
|
| |||||||||||
Total returne | (5.64)% | (5.94)% | 4.17% | |||||||||
| Ratios to average net assetsf | ||||||||||||
Expenses before waiver and payments by affiliates | 0.19% | 0.19% | 0.19% | |||||||||
Expenses net waiver and payments by affiliates | 0.19% | —% | —% | |||||||||
Net investment income (loss) | 1.94% | 1.70% | (0.12)% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $48,807 | $43,220 | $31,191 | |||||||||
Portfolio turnover rateg | 32.47% | h | 7.21% | 2.71% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
hPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 32.47%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 183 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 100.0% | ||||||||||||||
| China 99.3% | ||||||||||||||
360 Security Technology Inc., A | Software | 2,200 | $ | 5,875 | ||||||||||
| a | 3SBio Inc. | Biotechnology | 33,000 | 34,359 | ||||||||||
| a | 51job Inc., ADR | Professional Services | 671 | 41,193 | ||||||||||
| a | 58.com Inc., ADR | Interactive Media & Services | 2,552 | 124,333 | ||||||||||
A-Living Services Co. Ltd., H | Commercial Services & Supplies | 8,250 | 40,128 | |||||||||||
ADAMA Ltd. | Chemicals | 3,300 | 4,982 | |||||||||||
AECC Aviation Power Co. Ltd., A | Aerospace & Defense | 2,200 | 6,580 | |||||||||||
Agile Group Holdings Ltd. | Real Estate Management & Development | 44,000 | 47,628 | |||||||||||
Agricultural Bank of China Ltd., A | Banks | 170,500 | 81,062 | |||||||||||
Agricultural Bank of China Ltd., H | Banks | 803,000 | 322,199 | |||||||||||
Aier Eye Hospital Group Co. Ltd. | Health Care Providers & Services | 3,300 | 18,334 | |||||||||||
Air China Ltd., A | Airlines | 9,900 | 9,092 | |||||||||||
Air China Ltd., H | Airlines | 44,000 | 28,384 | |||||||||||
Aisino Co.Ltd., A | Software | 4,400 | 11,850 | |||||||||||
| a | Alibaba Group Holding Ltd., ADR | Internet & Direct Marketing Retail | 45,331 | 8,815,973 | ||||||||||
| a | Alibaba Health Information Technology Ltd. | Health Care Technology | 96,000 | 160,518 | ||||||||||
| a | Aluminum Corp. of China Ltd., A | Metals & Mining | 14,300 | 5,810 | ||||||||||
| a | Aluminum Corp. of China Ltd., H | Metals & Mining | 88,000 | 17,484 | ||||||||||
Angang Steel Co. Ltd., H | Metals & Mining | 44,000 | 11,581 | |||||||||||
Anhui Anke Biotechnology Group Co. Ltd. | Biotechnology | 1,100 | 2,142 | |||||||||||
Anhui Conch Cement Co. Ltd., A | Construction Materials | 4,400 | 34,203 | |||||||||||
Anhui Conch Cement Co. Ltd., H | Construction Materials | 31,000 | 215,375 | |||||||||||
Anhui Gujing Distillery Co. Ltd. | Beverages | 200 | 3,223 | |||||||||||
Anhui Gujing Distillery Co. Ltd., B | Beverages | 3,300 | 26,052 | |||||||||||
| a | Anhui Jianghuai Automobile Group Corp. Ltd., A | Automobiles | 3,300 | 2,314 | ||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 31,900 | 234,386 | |||||||||||
| a | Anxin Trust Co. Ltd. | Capital Markets | 7,700 | 2,716 | ||||||||||
| a | Autohome Inc., ADR | Interactive Media & Services | 1,452 | 103,121 | ||||||||||
Avary Holding Shenzhen Co. Ltd., A | Electronic Equipment, Instruments & Components | 1,100 | 4,929 | |||||||||||
AVIC Aircraft Co. Ltd. | Aerospace & Defense | 4,400 | 9,845 | |||||||||||
Avic Capital Co. Ltd., A | Diversified Financial Services | 16,500 | 9,148 | |||||||||||
AVIC Electromechanical Systems Co. Ltd. | Aerospace & Defense | 5,500 | 5,594 | |||||||||||
Avic Heavy Machinery Co. Ltd., A | Machinery | 3,300 | 4,120 | |||||||||||
AVIC Jonhon OptronicTechnology Co. Ltd. | Electronic Equipment, Instruments & Components | 1,100 | 5,307 | |||||||||||
| a | AVIC Shenyang Aircraft Co. Ltd., A | Aerospace & Defense | 2,200 | 8,886 | ||||||||||
AviChina Industry & Technology Co. Ltd., H | Aerospace & Defense | 66,000 | 25,460 | |||||||||||
BAIC Motor Corp. Ltd., H | Automobiles | 60,500 | 24,041 | |||||||||||
| a | Baidu Inc., ADR | Interactive Media & Services | 7,139 | 719,540 | ||||||||||
Bank of Beijing Co. Ltd., A | Banks | 24,200 | 16,490 | |||||||||||
Bank of Changsha Co. Ltd., A | Banks | 4,400 | 4,798 | |||||||||||
Bank of China Ltd., A | Banks | 94,600 | 46,444 | |||||||||||
Bank of China Ltd., H | Banks | 1,958,000 | 750,269 | |||||||||||
Bank of Communications Co. Ltd., A | Banks | 42,900 | 31,230 | |||||||||||
Bank of Communications Co. Ltd., H | Banks | 187,000 | 114,600 | |||||||||||
Bank of Guiyang Co. Ltd. | Banks | 3,300 | 3,566 | |||||||||||
Bank of Jiangsu Co. Ltd., A | Banks | 5,500 | 4,663 | |||||||||||
Bank of Nanjing Co. Ltd., A | Banks | 8,800 | 9,001 | |||||||||||
Bank of Ningbo Co. Ltd., A | Banks | 6,600 | 21,472 | |||||||||||
Bank of Shanghai Co. Ltd., A | Banks | 18,700 | 21,739 | |||||||||||
Baoshan Iron & Steel Co. Ltd., A | Metals & Mining | 22,000 | 15,115 | |||||||||||
BBMG Corp., A | Construction Materials | 13,200 | 6,108 | |||||||||||
BBMG Corp., H | Construction Materials | 55,000 | 13,766 | |||||||||||
Beijing Capital Co. Ltd., A | Water Utilities | 14,300 | 6,093 | |||||||||||
Beijing Capital International Airport Co. Ltd. | Transportation Infrastructure | 44,000 | 28,043 | |||||||||||
Beijing Dabeinong Technology Group Co. Ltd. | Food Products | 5,500 | 6,712 | |||||||||||
Beijing Enlight Media Co. Ltd. | Entertainment | 3,300 | 4,148 | |||||||||||
Beijing Enterprises Holdings Ltd. | Gas Utilities | 11,000 | 40,376 | |||||||||||
Beijing Enterprises Water Group Ltd. | Water Utilities | 154,000 | 60,202 | |||||||||||
| 184 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
| a | Beijing Jetsen Technology Co. Ltd. | Software | 5,500 | $ | 2,716 | |||||||||
Beijing Jingneng Clean Energy Co. Ltd., H | Independent Power and Renewable Electricity Producers | 44,000 | 6,358 | |||||||||||
| a | Beijing Kunlun Tech Co. Ltd. | Entertainment | 2,200 | 5,525 | ||||||||||
| a | Beijing Lanxum Technology Co. Ltd. | IT Services | 1,100 | 2,393 | ||||||||||
Beijing New Building Materials PLC | Building Products | 2,200 | 7,325 | |||||||||||
Beijing North Star Co. Ltd., H | Real Estate Management & Development | 22,000 | 5,109 | |||||||||||
Beijing Orient National Communication Science &Technology Co. Ltd. | Software | 2,200 | 4,423 | |||||||||||
Beijing Oriental Yuhong Waterproof Technology Co. Ltd. | Construction Materials | 1,100 | 5,281 | |||||||||||
Beijing Originwater Technology Co. Ltd. | Commercial Services & Supplies | 4,400 | 5,723 | |||||||||||
Beijing Sanju Environmental Protection and New Material Co. Ltd. | Chemicals | 3,300 | 2,109 | |||||||||||
Beijing Shiji Information Technology Co. | Software | 1,100 | 4,494 | |||||||||||
| a | Beijing Shougang Co. Ltd. | Metals & Mining | 6,600 | 2,738 | ||||||||||
Beijing Tiantan Biological Products Corp. | Biotechnology | 1,100 | 5,646 | |||||||||||
Beijing Tongrentang Co. Ltd., A | Pharmaceuticals | 2,200 | 7,868 | |||||||||||
| a | Beijing Ultrapower Software Co. Ltd. | IT Services | 6,600 | 3,399 | ||||||||||
Beijing Yanjing Brewery Co. Ltd. | Beverages | 8,800 | 7,499 | |||||||||||
Beijing Zhong Ke San Huan High-Tech Co. Ltd. | Electronic Equipment, Instruments & Components | 3,300 | 4,376 | |||||||||||
Bengang Steel Plates Co. Ltd., B | Metals & Mining | 13,200 | 2,759 | |||||||||||
| a | Bilibili Inc., ADR | Entertainment | 1,331 | 31,172 | ||||||||||
Bluedon Information Security Technology Co. Ltd. | Software | 4,400 | 2,744 | |||||||||||
Bluefocus Intelligent Communications Group Co. Ltd. | Media | 3,300 | 2,640 | |||||||||||
Bluestar Adisseo Co., A | Chemicals | 2,200 | 3,628 | |||||||||||
BOE Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 46,200 | 24,181 | |||||||||||
BOE Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 23,100 | 8,196 | |||||||||||
Bosideng International Holdings Ltd. | Textiles, Apparel & Luxury Goods | 66,000 | 15,498 | |||||||||||
Bright Dairy & Food Co. Ltd., A | Food Products | 1,100 | 1,799 | |||||||||||
Brilliance China Automotive Holdings Ltd. | Automobiles | 74,000 | 60,912 | |||||||||||
BTG Hotels Group Co. Ltd., A | Hotels, Restaurants & Leisure | 1,100 | 2,087 | |||||||||||
BYD Co. Ltd. | Automobiles | 2,200 | 18,613 | |||||||||||
BYD Co. Ltd., H | Automobiles | 17,500 | 91,441 | |||||||||||
BYD Electronic International Co. Ltd. | Communications Equipment | 22,000 | 36,729 | |||||||||||
Caitong Securities Co. Ltd., A | Capital Markets | 3,300 | 4,707 | |||||||||||
| a | CAR Inc. | Road & Rail | 11,000 | 6,145 | ||||||||||
CECEP Solar Energy Co. Ltd. | Independent Power and Renewable Electricity Producers | 8,800 | 4,010 | |||||||||||
CECEP Wind-Power Corp. | Independent Power and Renewable Electricity Producers | 15,400 | 4,649 | |||||||||||
Central China Securities Co. Ltd., A | Capital Markets | 4,400 | 3,035 | |||||||||||
Central China Securities Co. Ltd., H | Capital Markets | 22,000 | 3,605 | |||||||||||
| a | CGN Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 11,000 | 4,516 | ||||||||||
CGN Power Co. Ltd., H | Independent Power and Renewable Electricity Producers | 297,000 | 68,206 | |||||||||||
Changchun High & New Technology Industry Group Inc. | Pharmaceuticals | 200 | 15,462 | |||||||||||
Changjiang Securities Co. Ltd. | Capital Markets | 6,600 | 5,950 | |||||||||||
Chaozhou Three-Circle Group Co. Ltd. | Electronic Equipment, Instruments & Components | 2,200 | 5,661 | |||||||||||
Chengdu Xingrong Environment Co. Ltd. | Water Utilities | 4,400 | 2,837 | |||||||||||
| a | China Aerospace Times Electronics Co. | Aerospace & Defense | 5,500 | 4,943 | ||||||||||
China Aoyuan Group Ltd. | Real Estate Management & Development | 33,000 | 38,659 | |||||||||||
China Avic Avionics Equipment Co. Ltd., A | Aerospace & Defense | 2,200 | 4,010 | |||||||||||
China Baoan Group Co. Ltd. | Industrial Conglomerates | 4,400 | 3,650 | |||||||||||
| a | China Biologic Products Holdings Inc. | Biotechnology | 682 | 73,608 | ||||||||||
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
China Bluechemical Ltd. | Chemicals | 44,000 | $ | 6,812 | ||||||||||
China Cinda Asset Management Co. Ltd., H | Capital Markets | 220,000 | 41,724 | |||||||||||
China CITIC Bank Corp. Ltd., A | Banks | 15,400 | 11,254 | |||||||||||
China CITIC Bank Corp. Ltd., H | Banks | 242,000 | 119,581 | |||||||||||
China Coal Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 55,000 | 15,256 | |||||||||||
China Communications Construction Co. Ltd., A | Construction & Engineering | 6,600 | 7,691 | |||||||||||
China Communications Construction Co. Ltd., H | Construction & Engineering | 110,000 | 76,636 | |||||||||||
China Communications Services Corp. Ltd. | Construction & Engineering | 66,000 | 48,025 | |||||||||||
China Conch Venture Holdings Ltd. | Machinery | 44,000 | 196,416 | |||||||||||
China Construction Bank Corp., A | Banks | 14,300 | 12,791 | |||||||||||
China Construction Bank Corp., H | Banks | 2,387,000 | 1,952,493 | |||||||||||
| a | China COSCO Holdings Co. Ltd., A | Marine | 12,100 | 7,016 | ||||||||||
China CSSC Holdings Ltd., A | Machinery | 2,200 | 5,720 | |||||||||||
| a,b,c | China East Education Holdings Ltd., 144A, Reg S | Diversified Consumer Services | 11,000 | 17,825 | ||||||||||
| a | China Eastern Airlines Corp. Ltd., H | Airlines | 44,000 | 15,043 | ||||||||||
China Enterprise Co. Ltd., A | Real Estate Management & Development | 11,000 | 6,611 | |||||||||||
China Everbright Bank Co. Ltd., A | Banks | 52,800 | 26,891 | |||||||||||
China Everbright Bank Co. Ltd., H | Banks | 77,000 | 29,505 | |||||||||||
China Everbright International Ltd. | Commercial Services & Supplies | 99,000 | 56,839 | |||||||||||
China Everbright Ltd. | Capital Markets | 22,000 | 32,471 | |||||||||||
China Evergrande Group | Real Estate Management & Development | 55,000 | 91,254 | |||||||||||
China Film Co. Ltd., A | Entertainment | 2,200 | 3,662 | |||||||||||
China Foods Ltd. | Food Products | 22,000 | 8,061 | |||||||||||
China Fortune Land Development Co. Ltd., A | Real Estate Management & Development | 3,300 | 9,726 | |||||||||||
China Galaxy Securities Co. Ltd., A | Capital Markets | 2,200 | 2,949 | |||||||||||
China Galaxy Securities Co. Ltd., H | Capital Markets | 93,500 | 45,357 | |||||||||||
China Gas Holdings Ltd. | Gas Utilities | 55,000 | 191,591 | |||||||||||
China Gezhouba Group Co. Ltd., A | Construction & Engineering | 6,600 | 6,499 | |||||||||||
China Grand Automotive Services Group Co. Ltd., A | Specialty Retail | 12,100 | 6,948 | |||||||||||
China Great Wall Securities Co. Ltd., A | Capital Markets | 2,200 | 3,756 | |||||||||||
China Greatwall Technology Group Co. Ltd. | Technology Hardware, Storage & Peripherals | 3,300 | 5,559 | |||||||||||
China High Speed Railway Technology Co. Ltd. | Road & Rail | 7,700 | 3,411 | |||||||||||
China Hongqiao Group Ltd. | Metals & Mining | 66,000 | 28,100 | |||||||||||
China Huarong Asset Management Co. Ltd., H | Capital Markets | 286,000 | 36,161 | |||||||||||
China International Capital Corp. Ltd., H | Capital Markets | 26,400 | 42,712 | |||||||||||
China International Marine Containers (Group) Co. Ltd., H | Machinery | 11,000 | 10,275 | |||||||||||
China International Travel Service Corp. Ltd., A | Specialty Retail | 2,200 | 20,857 | |||||||||||
China Jinmao Holdings Group Ltd. | Real Estate Management & Development | 154,000 | 99,741 | |||||||||||
China Jushi Co. Ltd., A | Construction Materials | 4,400 | 4,904 | |||||||||||
China Lesso Group Holdings Ltd. | Building Products | 22,000 | 29,008 | |||||||||||
China Life Insurance Co. Ltd., A | Insurance | 8,800 | 32,701 | |||||||||||
China Life Insurance Co. Ltd., H | Insurance | 187,000 | 366,236 | |||||||||||
| a | China Literature Ltd. | Media | 6,600 | 26,227 | ||||||||||
China Lodging Group Ltd., ADR | Hotels, Restaurants & Leisure | 2,651 | 76,163 | |||||||||||
China Longyuan Power Group Corp. | Independent Power and Renewable Electricity Producers | 88,000 | 48,366 | |||||||||||
China Machinery Engineering Corp., H | Construction & Engineering | 22,000 | 5,961 | |||||||||||
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
China Medical System Holdings Ltd. | Pharmaceuticals | 33,000 | $ | 35,721 | ||||||||||
China Meheco Co. Ltd., A | Trading Companies & Distributors | 2,200 | 4,668 | |||||||||||
China Merchants Bank Co. Ltd., A | Banks | 25,300 | 115,217 | |||||||||||
China Merchants Bank Co. Ltd., H | Banks | 99,000 | 447,045 | |||||||||||
China Merchants Energy Shipping Co. Ltd., A | Oil, Gas & Consumable Fuels | 9,900 | 8,925 | |||||||||||
China Merchants Port Holdings Co. Ltd. | Transportation Infrastructure | 44,000 | 50,296 | |||||||||||
China Merchants Securities Co. Ltd. | Capital Markets | 24,200 | 26,851 | |||||||||||
China Merchants Securities Co. Ltd., A | Capital Markets | 6,600 | 15,941 | |||||||||||
China Merchants Shekou Industrial Zone Holdings Co. Ltd., A | Real Estate Management & Development | 9,900 | 23,017 | |||||||||||
China Minsheng Banking Corp. Ltd., A | Banks | 50,600 | 40,762 | |||||||||||
China Minsheng Banking Corp. Ltd., H | Banks | 148,500 | 110,356 | |||||||||||
China Mobile Ltd. | Wireless Telecommunication Services | 136,440 | 1,014,820 | |||||||||||
China Molybdenum Co. Ltd., A | Metals & Mining | 17,600 | 8,616 | |||||||||||
China Molybdenum Co. Ltd., H | Metals & Mining | 99,000 | 27,717 | |||||||||||
China National Building Material Co. Ltd., H | Construction Materials | 100,000 | 109,278 | |||||||||||
China National Chemical Engineering Co. | Construction & Engineering | 6,600 | 5,559 | |||||||||||
China National Nuclear Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 20,900 | 12,974 | |||||||||||
China National Software & Service Co. | Software | 400 | 4,072 | |||||||||||
China Nonferrous Metal Industry’s Foreign Engineeringand Construction Co. Ltd. | Metals & Mining | 3,300 | 2,081 | |||||||||||
China Northern Rare Earth Group High-Tech Co. Ltd., A | Metals & Mining | 5,500 | 6,976 | |||||||||||
China Oilfield Services Ltd., H | Energy Equipment & Services | 44,000 | 34,004 | |||||||||||
China Orient Securities Co. Ltd., A | Capital Markets | 6,600 | 8,492 | |||||||||||
China Overseas Land & Investment Ltd. | Real Estate Management & Development | 98,000 | 304,081 | |||||||||||
China Pacific Insurance Group Co. Ltd., A | Insurance | 9,900 | 39,415 | |||||||||||
China Pacific Insurance Group Co. Ltd., H | Insurance | 63,800 | 193,024 | |||||||||||
China Petroleum & Chemical Corp., A | Oil, Gas & Consumable Fuels | 57,200 | 35,749 | |||||||||||
China Petroleum & Chemical Corp., H | Oil, Gas & Consumable Fuels | 638,000 | 314,436 | |||||||||||
China Power International Development Ltd. | Independent Power and Renewable Electricity Producers | 110,000 | 20,436 | |||||||||||
China Railway Construction Corp. Ltd., A | Construction & Engineering | 13,200 | 18,306 | |||||||||||
China Railway Construction Corp. Ltd., H | Construction & Engineering | 49,500 | 55,434 | |||||||||||
China Railway Group Ltd., H | Construction & Engineering | 99,000 | 52,751 | |||||||||||
China RailwayHi-tech Industry Co. Ltd., A | Construction & Engineering | 2,200 | 2,955 | |||||||||||
| b | China Railway Signal & Communication Corp. Ltd., H, Reg S | Electronic Equipment, Instruments & Components | 44,000 | 22,196 | ||||||||||
China Reinsurance Group Corp., H | Insurance | 176,000 | 20,436 | |||||||||||
China Resources Beer Holdings Co. Ltd. | Beverages | 41,800 | 190,909 | |||||||||||
China Resources Cement Holdings Ltd. | Construction Materials | 66,000 | 78,765 | |||||||||||
China Resources Double Crane Pharmaceutical Co. Ltd., A | Pharmaceuticals | 1,100 | 1,966 | |||||||||||
China Resources Gas Group Ltd. | Gas Utilities | 22,000 | 110,697 | |||||||||||
China Resources Land Ltd. | Real Estate Management & Development | 73,700 | 304,274 | |||||||||||
China Resources Pharmaceutical Group Ltd. | Pharmaceuticals | 44,000 | 26,397 | |||||||||||
China Resources Power Holdings Co. Ltd. | Independent Power and Renewable Electricity Producers | 53,900 | 59,387 | |||||||||||
China Resources Sanjiu Medical & Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,100 | 4,322 | |||||||||||
| a | China Satellite Communications Co. Ltd., A | Media | 2,200 | 4,435 | ||||||||||
China Shenhua Energy Co. Ltd., A | Oil, Gas & Consumable Fuels | 7,700 | 17,642 | |||||||||||
China Shenhua Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 88,000 | 167,578 | |||||||||||
China Shipbuilding Industry Co. Ltd., A | Machinery | 26,400 | 15,680 | |||||||||||
China Shipping Development Co. Ltd., A | Oil, Gas & Consumable Fuels | 4,400 | 4,656 | |||||||||||
China South City Holdings Ltd. | Real Estate Management & Development | 66,000 | 6,386 | |||||||||||
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
China South Publishing & Media Group Co. Ltd., A | Media | 2,200 | $ | 3,299 | ||||||||||
China Southern Airlines Co. Ltd., A | Airlines | 16,500 | 11,988 | |||||||||||
China Southern Airlines Co. Ltd., H | Airlines | 22,000 | 9,452 | |||||||||||
China Spacesat Co. Ltd., A | Aerospace & Defense | 2,200 | 9,069 | |||||||||||
China State Construction Engineering Corp. Ltd., A | Construction & Engineering | 53,900 | 40,074 | |||||||||||
China State Construction International Holdings Ltd. | Construction & Engineering | 44,000 | 32,585 | |||||||||||
China Taiping Insurance Holdings Co. Ltd. | Insurance | 37,400 | 61,281 | |||||||||||
China Telecom Corp. Ltd., H | Diversified Telecommunication Services | 352,000 | 106,723 | |||||||||||
| b,c | China Tower Corp. Ltd., H, 144A, Reg S | Diversified Telecommunication Services | 1,210,000 | 271,633 | ||||||||||
China Traditional Chinese Medicine Co. Ltd. | Pharmaceuticals | 66,000 | 30,058 | |||||||||||
China TransInfo Technology Co. Ltd. | IT Services | 1,100 | 3,166 | |||||||||||
China Unicom (Hong Kong) Ltd. | Diversified Telecommunication Services | 154,000 | 88,813 | |||||||||||
China United Network Communications Ltd., A | Wireless Telecommunication Services | 30,800 | 22,682 | |||||||||||
China Vanke Co. Ltd., A | Real Estate Management & Development | 13,200 | 47,767 | |||||||||||
China Vanke Co. Ltd., H | Real Estate Management & Development | 38,500 | 126,911 | |||||||||||
China Yangtze Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 18,700 | 45,614 | |||||||||||
China Zhongwang Holdings Ltd. | Metals & Mining | 35,200 | 9,264 | |||||||||||
Chinese Universe Publishing and Media Group Co. Ltd., A | Media | 2,200 | 3,737 | |||||||||||
Chongqing Changan Automobile Co. Ltd. | Automobiles | 4,400 | 6,568 | |||||||||||
Chongqing Changan Automobile Co. Ltd., B | Automobiles | 22,000 | 10,701 | |||||||||||
Chongqing Fuling Zhacai Group Co. Ltd., A | Food Products | 1,100 | 4,895 | |||||||||||
Chongqing Rural Commercial Bank Co. Ltd., H | Banks | 66,000 | 27,078 | |||||||||||
Chongqing Water Group Co. Ltd., A | Water Utilities | 3,300 | 2,426 | |||||||||||
Chongqing Zhifei Biological Products Co. Ltd. | Biotechnology | 2,200 | 20,916 | |||||||||||
CIFI Holdings Group Co. Ltd. | Real Estate Management & Development | 88,000 | 63,580 | |||||||||||
Cinda Real Estate Co. Ltd., A | Real Estate Management & Development | 7,700 | 3,791 | |||||||||||
| a | CITIC Guoan Information Industry Co. Ltd. | Media | 6,600 | 2,905 | ||||||||||
Citic Pacific Ltd. | Industrial Conglomerates | 132,000 | 138,116 | |||||||||||
Citic Pacific Special Steel Group Co. Ltd., A | Metals & Mining | 4,400 | 15,587 | |||||||||||
CITIC Securities Co. Ltd., A | Capital Markets | 14,300 | 44,706 | |||||||||||
CITIC Securities Co. Ltd., H | Capital Markets | 55,000 | 100,762 | |||||||||||
CMST Development Co. Ltd., A | Air Freight & Logistics | 3,300 | 2,114 | |||||||||||
| a | CNOOC Energy Technology & Services Ltd. | Energy Equipment & Services | 14,300 | 4,600 | ||||||||||
CNOOC Ltd. | Oil, Gas & Consumable Fuels | 407,000 | 426,907 | |||||||||||
Contemporary Amperex Technology Co. Ltd. | Electrical Equipment | 1,100 | 18,683 | |||||||||||
COSCO SHIPPING Development Co. Ltd., H | Marine | 99,000 | 10,346 | |||||||||||
COSCO SHIPPING Energy Transportation Co. Ltd., H | Oil, Gas & Consumable Fuels | 34,000 | 18,292 | |||||||||||
| a | COSCO Shipping Holdings Co. Ltd. | Marine | 60,500 | 16,704 | ||||||||||
COSCO SHIPPING Ports Ltd. | Transportation Infrastructure | 44,000 | 21,231 | |||||||||||
Country Garden Holdings Co. Ltd. | Real Estate Management & Development | 187,000 | 226,304 | |||||||||||
Country Garden Services Holdings Co. Ltd. | Commercial Services & Supplies | 33,000 | 134,113 | |||||||||||
CRRC Corp. Ltd., A | Machinery | 28,600 | 26,469 | |||||||||||
| 188 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
CRRC Corp. Ltd., H | Machinery | 110,000 | $ | 55,916 | ||||||||||
CSC Financial Co. Ltd., A | Capital Markets | 2,200 | 9,631 | |||||||||||
CSC Financial Co. Ltd., H | Capital Markets | 22,000 | 17,740 | |||||||||||
CSG Holding Co. Ltd. | Construction Materials | 20,900 | 5,770 | |||||||||||
CSG Holding Co. Ltd. | Construction Materials | 8,800 | 5,450 | |||||||||||
CSPC Pharmaceutical Group Ltd. | Pharmaceuticals | 114,000 | 228,268 | |||||||||||
| a | CSSC Offshore and Marine Engineering Group Co. Ltd. | Machinery | 6,000 | 3,584 | ||||||||||
Da An Gene Co. Ltd. of SunYat-Sen University | Biotechnology | 1,100 | 2,691 | |||||||||||
Dali Foods Group Co. Ltd. | Food Products | 55,000 | 38,318 | |||||||||||
Daqin Railway Co. Ltd., A | Road & Rail | 22,000 | 21,105 | |||||||||||
Datang International Power Generation Co. Ltd., H | Independent Power and Renewable Electricity Producers | 66,000 | 8,856 | |||||||||||
Dawning Information Industry Co. Ltd., A | Technology Hardware, Storage & Peripherals | 1,100 | 6,777 | |||||||||||
Dazhong Transportation (Group) Co. Ltd., B | Road & Rail | 23,100 | 8,270 | |||||||||||
DHC Software Co. Ltd. | IT Services | 4,400 | 8,020 | |||||||||||
Dian Diagnostics Group Co. Ltd. | Health Care Providers & Services | 1,100 | 3,642 | |||||||||||
Dongfang Electric Corp. Ltd., H | Electrical Equipment | 13,200 | 6,523 | |||||||||||
Dongfeng Motor Group Co. Ltd., H | Automobiles | 66,000 | 43,512 | |||||||||||
Dongxing Securities Co. Ltd., A | Capital Markets | 3,300 | 5,079 | |||||||||||
East Money Information Co. Ltd. | Capital Markets | 9,900 | 22,417 | |||||||||||
ENN Energy Holdings Ltd. | Gas Utilities | 19,800 | 191,718 | |||||||||||
| a | Eve Energy Co. Ltd. | Electrical Equipment | 1,100 | 9,018 | ||||||||||
Everbright Securities Co. Ltd., A | Capital Markets | 5,500 | 8,543 | |||||||||||
Everbright Securities Co. Ltd., H | Capital Markets | 4,400 | 2,810 | |||||||||||
| a | Fangda Carbon New Material Co. Ltd. | Electrical Equipment | 5,500 | 6,976 | ||||||||||
Far East Horizon Ltd. | Diversified Financial Services | 55,000 | 44,350 | |||||||||||
FAW CAR Co. Ltd. | Automobiles | 2,200 | 2,706 | |||||||||||
Fiberhome Telecommunication Technologies Co. Ltd., A | Communications Equipment | 2,200 | 10,255 | |||||||||||
Financial Street Holdings Co. Ltd. | Real Estate Management & Development | 4,400 | 4,060 | |||||||||||
First Capital Securities Co. Ltd. | Capital Markets | 3,300 | 3,212 | |||||||||||
Focus Media Information Technology Co. Ltd. | Media | 17,600 | 10,975 | |||||||||||
Foshan Haitian Flavouring & Food Co. Ltd. | Food Products | 1,100 | 19,425 | |||||||||||
Fosun International Ltd. | Industrial Conglomerates | 55,000 | 63,580 | |||||||||||
Founder Securities Co. Ltd., A | Capital Markets | 12,100 | 12,257 | |||||||||||
Foxconn Industrial Internet Co. Ltd., A | Electronic Equipment, Instruments & Components | 6,600 | 12,300 | |||||||||||
Fujian Longking Co. Ltd., A | Machinery | 2,200 | 2,809 | |||||||||||
Fujian Sunner Development Co. Ltd. | Food Products | 1,100 | 3,670 | |||||||||||
Fuyao Group Glass Industries Co. Ltd., H | Auto Components | 13,200 | 28,236 | |||||||||||
Ganfeng Lithium Co. Ltd. | Metals & Mining | 2,200 | 12,493 | |||||||||||
Ganfeng Lithium Co. Ltd., H | Metals & Mining | 4,400 | 14,107 | |||||||||||
| a | GCL System Integration Technology Co. Ltd. | Semiconductors & Semiconductor Equipment | 6,600 | 2,821 | ||||||||||
| a | GDS Holdings Ltd., ADR | IT Services | 1,364 | 79,071 | ||||||||||
Geely Automobile Holdings Ltd. | Automobiles | 132,000 | 194,826 | |||||||||||
GEM Co. Ltd. | Metals & Mining | 5,500 | 3,608 | |||||||||||
Gemdale Corp., A | Real Estate Management & Development | 6,600 | 13,120 | |||||||||||
Genimous Technology Co. Ltd. | Software | 3,300 | 3,380 | |||||||||||
| a | Genscript Biotech Corp. | Life Sciences Tools & Services | 22,000 | 35,650 | ||||||||||
GF Securities Co. Ltd. | Capital Markets | 6,600 | 12,738 | |||||||||||
GF Securities Co. Ltd., H | Capital Markets | 39,600 | 42,456 | |||||||||||
Gigadevice Semiconductor Beijing Inc., A | Semiconductors & Semiconductor Equipment | 300 | 10,243 | |||||||||||
Global TopE-Commerce Co. Ltd. | Internet & Direct Marketing Retail | 1,100 | 900 | |||||||||||
Glodon Co. Ltd. | Software | 1,100 | 6,622 | |||||||||||
GoerTek Inc. | Electronic Equipment, Instruments & Components | 4,400 | 10,186 | |||||||||||
| franklintempleton.com | Annual Report | 189 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
| a | GOME Retail Holdings Ltd. | Specialty Retail | 286,000 | $ | 26,567 | |||||||||
Gosuncn Technology Group Co. Ltd. | Communications Equipment | 4,400 | 4,016 | |||||||||||
Grandjoy Holdings Group Co. Ltd., A | Real Estate Management & Development | 6,600 | 5,009 | |||||||||||
Great Wall Motor Co. Ltd., A | Automobiles | 4,400 | 5,518 | |||||||||||
Great Wall Motor Co. Ltd., H | Automobiles | 82,500 | 52,900 | |||||||||||
Gree Electric Appliances Inc. of Zhuhai, A | Household Durables | 6,600 | 48,605 | |||||||||||
Greendland Holdings Corp. Ltd., A | Real Estate Management & Development | 7,700 | 5,877 | |||||||||||
Greentown China Holdings Ltd. | Real Estate Management & Development | 16,500 | 15,008 | |||||||||||
GRG Banking Equipment Co. Ltd. | Technology Hardware, Storage & Peripherals | 3,300 | 4,018 | |||||||||||
| a | GSX Techedu Inc., ADR | Diversified Consumer Services | 1,067 | 45,198 | ||||||||||
Guangdong Baolihua New Energy Stock Co. Ltd. | Independent Power and Renewable Electricity Producers | 3,300 | 2,421 | |||||||||||
Guangdong Electric Power Development Co. | Independent Power and Renewable Electricity Producers | 15,400 | 4,133 | |||||||||||
| a | Guangdong Golden Dragon Development Inc. | Capital Markets | 2,200 | 3,942 | ||||||||||
Guangdong Haid Group Co. Ltd. | Food Products | 2,200 | 12,477 | |||||||||||
Guangdong HEC Technology Holding Co. Ltd., A | Metals & Mining | 3,300 | 3,254 | |||||||||||
Guangdong Investment Ltd. | Water Utilities | 74,000 | 142,636 | |||||||||||
| a | Guangdong LY Intelligent Manufacturing Co. Ltd. | Electronic Equipment, Instruments & Components | 9,900 | 11,481 | ||||||||||
Guanghui Energy Co. Ltd., A | Oil, Gas & Consumable Fuels | 8,800 | 3,203 | |||||||||||
| �� | Guangshen Railway Co. Ltd., H | Road & Rail | 44,000 | 9,367 | ||||||||||
Guangxi Guiguan Electric Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 4,400 | 2,837 | |||||||||||
Guangxi Liugong Machinery Co. Ltd. | Machinery | 4,400 | 3,886 | |||||||||||
Guangzhou Automobile Group Co. Ltd., A | Automobiles | 3,300 | 4,912 | |||||||||||
Guangzhou Automobile Group Co. Ltd., H | Automobiles | 88,000 | 88,444 | |||||||||||
Guangzhou Baiyun International Airport Co. Ltd., A | Transportation Infrastructure | 2,200 | 3,895 | |||||||||||
Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd. | Pharmaceuticals | 6,600 | 17,797 | |||||||||||
Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd., A | Pharmaceuticals | 2,200 | 9,771 | |||||||||||
Guangzhou Haige Communications Group Inc. Co. | Communications Equipment | 5,500 | 8,753 | |||||||||||
Guangzhou R&F Properties Co. Ltd., H | Real Estate Management & Development | 26,400 | 34,469 | |||||||||||
Guangzhou TInc.i Materials Technology Co. Ltd. | Chemicals | 1,100 | 3,029 | |||||||||||
Guizhou Bailing Group Pharmaceutical Co. Ltd. | Pharmaceuticals | 3,300 | 3,883 | |||||||||||
Guosen Securities Co. Ltd. | Capital Markets | 7,700 | 12,058 | |||||||||||
| a | Guosheng Financial Holding Inc. | Electrical Equipment | 2,200 | 3,020 | ||||||||||
Guotai Junan Securities Co. Ltd. | Capital Markets | 19,800 | 29,479 | |||||||||||
Guotai Junan Securities Co. Ltd., A | Capital Markets | 11,000 | 25,265 | |||||||||||
Guoxuan High-Tech Co. Ltd. | Electrical Equipment | 2,200 | 5,425 | |||||||||||
Guoyuan Securities Co. Ltd. | Capital Markets | 4,400 | 5,171 | |||||||||||
| b,c | Haidilao International Holding Ltd., 144A, | Hotels, Restaurants & Leisure | 11,000 | 42,860 | ||||||||||
Haier Electronics Group Co. Ltd. | Household Durables | 33,000 | 87,919 | |||||||||||
Haier Smart Home Co. Ltd., A | Household Durables | 8,800 | 17,878 | |||||||||||
Haitian International Holdings Ltd. | Machinery | 11,000 | 20,436 | |||||||||||
Haitong Securities Co. Ltd., A | Capital Markets | 13,200 | 23,911 | |||||||||||
Haitong Securities Co. Ltd., H | Capital Markets | 83,600 | 76,472 | |||||||||||
Han’s Laser Technology Industry Group Co. Ltd., A | Machinery | 1,100 | 4,375 | |||||||||||
Hang Zhou Great Star Industrial Co. Ltd. | Household Durables | 2,200 | 2,902 | |||||||||||
Hangzhou Binjiang Real Estate Group Co. Ltd. | Real Estate Management & Development | 4,400 | 2,582 | |||||||||||
| 190 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Hangzhou Hikvision Digital Technology Co. Ltd., A | Electronic Equipment, Instruments & Components | 12,100 | $ | 47,627 | ||||||||||
| a | Hangzhou Lianluo Interactive Information Technology Co. Ltd. | Internet & Direct Marketing Retail | 2,200 | 807 | ||||||||||
Hangzhou Robam Appliances Co. Ltd., A | Household Durables | 1,100 | 4,414 | |||||||||||
| a | Hangzhou Shunwang Technology Co. Ltd. | Entertainment | 1,100 | 3,335 | ||||||||||
Hangzhou Tigermed Consulting Co. Ltd. | Life Sciences Tools & Services | 1,100 | 9,940 | |||||||||||
| a | Hansoh Pharmaceutical Group Co. Ltd. | Pharmaceuticals | 24,000 | 81,436 | ||||||||||
Harbin Boshi Automation Co. Ltd. | Machinery | 2,200 | 2,818 | |||||||||||
| a | Harbin Pharmaceutical Group Co. Ltd., A | Pharmaceuticals | 4,400 | 2,502 | ||||||||||
Health & Happiness H&H International Holdings Ltd. | Food Products | 4,400 | 16,264 | |||||||||||
Heilan Home Co. Ltd., A—SHSC | Specialty Retail | 4,400 | 3,929 | |||||||||||
Heilongjiang Agriculture Co. Ltd., A | Food Products | 3,300 | 8,031 | |||||||||||
Henan Pinggao Electric Co. Ltd., A | Electrical Equipment | 2,200 | 2,526 | |||||||||||
Henan Shuanghui Investment & Development Co. Ltd. | Food Products | 4,400 | 24,395 | |||||||||||
Hengan International Group Co. Ltd. | Personal Products | 18,000 | 135,507 | |||||||||||
Hengdian Group DMEGC Magnetics Co. Ltd. | Electronic Equipment, Instruments & Components | 3,300 | 4,651 | |||||||||||
Hengli Petrochemical Co. Ltd., A | Chemicals | 5,500 | 9,684 | |||||||||||
| a | HengTen Networks Group Ltd. | Internet & Direct Marketing Retail | 484,000 | 4,558 | ||||||||||
Hengtong Optic-electric Co. Ltd., A | Communications Equipment | 3,300 | 7,533 | |||||||||||
Hesteel Co. Ltd. | Metals & Mining | 17,600 | 5,289 | |||||||||||
Hithink RoyalFlush Information Network Co. Ltd. | Capital Markets | 500 | 7,661 | |||||||||||
Holitech Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 4,400 | 3,451 | |||||||||||
| a | Hongta Securities Co. Ltd., A | Capital Markets | 2,200 | 6,220 | ||||||||||
Hopson Development Holdings Ltd. | Real Estate Management & Development | 22,000 | 19,642 | |||||||||||
Huaan Securities Co. Ltd., A | Capital Markets | 5,500 | 5,990 | |||||||||||
Huadian Fuxin Energy Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 66,000 | 10,899 | |||||||||||
Huadian Power International Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 44,000 | 13,113 | |||||||||||
Huadong Medicine Co. Ltd., A | Health Care Providers & Services | 2,200 | 5,416 | |||||||||||
Huagong Tech Co. Ltd. | Electronic Equipment, Instruments & Components | 1,100 | 3,063 | |||||||||||
Huaibei Mining Holdings Co. Ltd., A | Metals & Mining | 2,200 | 2,554 | |||||||||||
Hualan Biological Engineering Inc. | Biotechnology | 2,200 | 14,873 | |||||||||||
Huaneng Power International Inc., A | Independent Power and Renewable Electricity Producers | 8,800 | 5,823 | |||||||||||
Huaneng Power International Inc., H | Independent Power and Renewable Electricity Producers | 110,000 | 41,298 | |||||||||||
Huapont Life Sciences Co. Ltd. | Chemicals | 6,600 | 4,535 | |||||||||||
Huatai Securities Co. Ltd., A | Capital Markets | 8,800 | 21,391 | |||||||||||
Huatai Securities Co. Ltd., H | Capital Markets | 44,000 | 65,396 | |||||||||||
Huaxi Securities Co. Ltd. | Capital Markets | 4,400 | 6,530 | |||||||||||
Huaxia Bank Co. Ltd., A | Banks | 20,900 | 19,077 | |||||||||||
Huaxin Cement Co. Ltd., A | Construction Materials | 2,200 | 7,222 | |||||||||||
Huaxin Cement Co. Ltd., B | Construction Materials | 7,700 | 11,796 | |||||||||||
Huayu Automotive Systems Co. Ltd. | Auto Components | 3,300 | 10,028 | |||||||||||
Hubei Biocause Pharmaceutical Co. Ltd. | Insurance | 5,500 | 4,594 | |||||||||||
Hubei Energy Group Co. Ltd. | Independent Power and Renewable Electricity Producers | 15,400 | 7,691 | |||||||||||
| a | Hunan Valin Steel Co. Ltd. | Metals & Mining | 5,500 | 3,049 | ||||||||||
Hundsun Technologies Inc., A | Software | 1,100 | 13,641 | |||||||||||
Huolinhe Opencut Coal Industry Corp. Ltd. of Inner Mongolia | Oil, Gas & Consumable Fuels | 4,400 | 4,544 | |||||||||||
HyUnion Holding Co. Ltd. | Auto Components | 1,100 | 762 | |||||||||||
Iflytek Co. Ltd. | Software | 3,300 | 16,043 | |||||||||||
Industrial & Commercial Bank of China | Banks | 1,991,000 | 1,363,998 | |||||||||||
Industrial and Commercial Bank of China Ltd. | Banks | 105,600 | 76,725 | |||||||||||
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Industrial Bank Co. Ltd., A | Banks | 26,400 | $ | 59,257 | ||||||||||
Industrial Securities Co. Ltd., A | Capital Markets | 12,100 | 10,669 | |||||||||||
Inner Mongolia BaoTou Steel Union Co. | Metals & Mining | 46,200 | 7,496 | |||||||||||
Inner Mongolia First Machinery Group Co. Ltd., A | Machinery | 2,200 | 2,828 | |||||||||||
Inner Mongolia MengDian HuaNeng Thermal Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 8,800 | 3,203 | |||||||||||
Inner Mongolia Yili Industrial Group Co. | Food Products | 8,800 | 37,071 | |||||||||||
Inner Mongolia Yitai Coal Co. Ltd., B | Oil, Gas & Consumable Fuels | 27,500 | 17,957 | |||||||||||
| a | Innovent Biologics Inc. | Biotechnology | 30,000 | 126,566 | ||||||||||
Inspur Electronic Information Industry Co. Ltd. | Technology Hardware, Storage & Peripherals | 1,208 | 6,609 | |||||||||||
| a | Iqiyi Inc., ADR | Entertainment | 5,753 | 102,403 | ||||||||||
| a | JD.com Inc., ADR | Internet & Direct Marketing Retail | 20,548 | 832,194 | ||||||||||
Jiangsu Eastern Shenghong Co. Ltd. | Chemicals | 5,500 | 3,701 | |||||||||||
Jiangsu Expressway Co. Ltd., A | Transportation Infrastructure | 8,800 | 12,192 | |||||||||||
Jiangsu Expressway Co. Ltd., H | Transportation Infrastructure | 22,000 | 24,552 | |||||||||||
Jiangsu Hengli Hydraulic Co. Ltd., A | Machinery | 1,100 | 9,544 | |||||||||||
Jiangsu Hengrui Medicine Co. Ltd., A | Pharmaceuticals | 5,500 | 71,410 | |||||||||||
Jiangsu Kanion Pharmaceutical Co. | Pharmaceuticals | 3,300 | 6,257 | |||||||||||
Jiangsu King’s Luck Brewery JSC Ltd. | Beverages | 2,200 | 8,737 | |||||||||||
Jiangsu Linyang Energy Co. Ltd., A | Electrical Equipment | 5,500 | 4,012 | |||||||||||
Jiangsu Yanghe Brewery JST Co. Ltd., A | Beverages | 2,200 | 26,031 | |||||||||||
Jiangsu Yuyue Medical Equipment & Supply Co. Ltd. | Health Care Equipment & Supplies | 1,100 | 5,630 | |||||||||||
Jiangsu Zhongnan Construction Group Co. Ltd. | Real Estate Management & Development | 5,500 | 6,014 | |||||||||||
Jiangsu Zhongtian Technology Co. Ltd., A | Electrical Equipment | 5,500 | 7,457 | |||||||||||
Jiangxi Bank Co. Ltd., H | Banks | 22,000 | 11,609 | |||||||||||
Jiangxi Copper Co. Ltd., A | Metals & Mining | 2,200 | 3,920 | |||||||||||
Jiangxi Copper Co. Ltd., H | Metals & Mining | 33,000 | 30,484 | |||||||||||
Jiangxi Zhengbang Technology Co. Ltd., A | Food Products | 3,300 | 8,874 | |||||||||||
Jiayuan International Group Ltd. | Real Estate Management & Development | 22,000 | 8,941 | |||||||||||
Jilin Aodong Pharmaceutical Group Co. Ltd. | Pharmaceuticals | 4,400 | 9,789 | |||||||||||
Jinduicheng Molybdenum Co. Ltd., A | Metals & Mining | 5,500 | 4,694 | |||||||||||
Jinke Properties Group Co. Ltd. | Real Estate Management & Development | 7,700 | 8,647 | |||||||||||
| a,b,c | Jinxin Fertility Group Ltd., 144A, Reg S | Health Care Providers & Services | 22,000 | 24,410 | ||||||||||
JinyuBio-Technology Co. Ltd., A | Biotechnology | 1,100 | 3,309 | |||||||||||
Jizhong Energy Resources Co. Ltd. | Oil, Gas & Consumable Fuels | 6,600 | 2,812 | |||||||||||
JoInc. Pharmaceutical Group Industry Co. Ltd., A | Pharmaceuticals | 2,200 | 3,557 | |||||||||||
Jointown Pharmaceutical Group Co. Ltd., A | Health Care Providers & Services | 2,200 | 5,276 | |||||||||||
| a | JOYY Inc., ADR | Interactive Media & Services | 1,397 | 74,404 | ||||||||||
Kingboard Holdings Ltd. | Electronic Equipment, Instruments & Components | 16,500 | 38,659 | |||||||||||
Kingdee International Software Group Co. Ltd. | Software | 55,000 | 73,372 | |||||||||||
| a | Kingsoft Corp. Ltd. | Software | 22,000 | 71,811 | ||||||||||
| a | Kuang-Chi Technologies Co. Ltd. | Auto Components | 3,300 | 3,408 | ||||||||||
Kunlun Energy Co. Ltd. | Gas Utilities | 78,000 | 45,587 | |||||||||||
Kweichow Moutai Co. Ltd., A | Beverages | 1,600 | 250,783 | |||||||||||
KWG Group Holdings Ltd. | Real Estate Management & Development | 33,000 | 46,918 | |||||||||||
Lao Feng Xiang Co. Ltd., B | Textiles, Apparel & Luxury Goods | 5,500 | 15,114 | |||||||||||
Lee & Man Paper Manufacturing Ltd. | Paper & Forest Products | 33,000 | 20,011 | |||||||||||
Legend Holdings Corp., H | Technology Hardware, Storage & Peripherals | 13,200 | 16,298 | |||||||||||
| d | Legend Holdings Corp., rts., 2/20/49 | Technology Hardware, Storage & Peripherals | 830 | — | ||||||||||
| 192 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Lens Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 2,200 | $ | 4,519 | ||||||||||
| a | Leo Group Co. Ltd. | Media | 9,900 | 5,140 | ||||||||||
Lepu Medical Technology Beijing Co. Ltd. | Health Care Equipment & Supplies | 2,200 | 11,242 | |||||||||||
Leyard Optoelectronic Co. Ltd. | Electronic Equipment, Instruments & Components | 4,400 | 3,905 | |||||||||||
Li Ning Co. Ltd. | Textiles, Apparel & Luxury Goods | 44,000 | 128,579 | |||||||||||
LianChuang Electronic Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 2,200 | 4,178 | |||||||||||
| a | Liaoning Cheng Da Co. Ltd., A | Distributors | 2,200 | 5,633 | ||||||||||
Livzon Pharmaceutical Group Inc. | Pharmaceuticals | 2,200 | 12,192 | |||||||||||
Livzon Pharmaceutical Group Inc., H | Pharmaceuticals | 3,300 | 12,155 | |||||||||||
Logan Property Holdings Co. Ltd. | Real Estate Management & Development | 22,000 | 33,947 | |||||||||||
Lomon Billions Group Co. Ltd. | Chemicals | 2,200 | 4,634 | |||||||||||
| b,c | Longfor Group Holdings Ltd., 144A, Reg S | Real Estate Management & Development | 44,000 | 214,298 | ||||||||||
LONGi Green Energy Technology Co. Ltd., A | Semiconductors & Semiconductor Equipment | 4,400 | 15,419 | |||||||||||
Luenmei Quantum Co. Ltd., A | Water Utilities | 2,200 | 4,333 | |||||||||||
Luxshare Precision Industry Co. Ltd. | Electronic Equipment, Instruments & Components | 7,700 | 41,454 | |||||||||||
Luye Pharma Group Ltd. | Pharmaceuticals | 44,000 | 21,458 | |||||||||||
Luzhou Laojiao Co. Ltd., A | Beverages | 2,200 | 22,859 | |||||||||||
Maanshan Iron & Steel Co. Ltd., H | Metals & Mining | 22,000 | 6,897 | |||||||||||
| a | Mango Excellent Media Co. Ltd. | Entertainment | 2,230 | 13,714 | ||||||||||
Meinian Onehealth Healthcare Holdings Co. Ltd. | Health Care Providers & Services | 6,600 | 10,997 | |||||||||||
| a,b,c | Meitu Inc., 144A, Reg S | Technology Hardware, Storage & Peripherals | 49,500 | 9,452 | ||||||||||
| a,b | Meituan Dianping, B, Reg S | Internet & Direct Marketing Retail | 88,000 | 1,063,257 | ||||||||||
Metallurgical Corp. of China Ltd. | Construction & Engineering | 77,000 | 13,511 | |||||||||||
Metallurgical Corp. of China Ltd., A | Construction & Engineering | 20,900 | 7,725 | |||||||||||
Momo Inc., ADR | Interactive Media & Services | 2,662 | 57,739 | |||||||||||
| a | Montnets Rongxin Technology Group Co. Ltd. | Software | 1,100 | 2,083 | ||||||||||
Muyuan Foodstuff Co. Ltd. | Food Products | 2,200 | 37,931 | |||||||||||
| a | NanJiE-Commerce Co. Ltd. | Media | 3,300 | 5,401 | ||||||||||
Nanjing King-Friend Biochemical Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,100 | 7,834 | |||||||||||
Nanjing Securities Co. Ltd., A | Capital Markets | 2,200 | 4,826 | |||||||||||
Nari Technology Development Co. Ltd., A | Electrical Equipment | 5,500 | 15,325 | |||||||||||
NAURA Technology Group Co. Ltd., A | Electronic Equipment, Instruments & Components | 400 | 6,563 | |||||||||||
NavInfo Co. Ltd. | Household Durables | 2,200 | 4,367 | |||||||||||
NetEase Inc., ADR | Entertainment | 1,837 | 589,604 | |||||||||||
New China Life Insurance Co. Ltd., A | Insurance | 2,200 | 12,353 | |||||||||||
New China Life Insurance Co. Ltd., H | Insurance | 22,000 | 68,547 | |||||||||||
New Hope Liuhe Co. Ltd. | Food Products | 5,500 | 24,388 | |||||||||||
| a | New Oriental Education & Technology Group Inc., ADR | Diversified Consumer Services | 3,520 | 381,005 | ||||||||||
Newland Digital Technology Co. Ltd. | Software | 2,200 | 4,907 | |||||||||||
Nine Dragons Paper Holdings Ltd. | Paper & Forest Products | 44,000 | 40,135 | |||||||||||
Ninestar Corp. | Technology Hardware, Storage & Peripherals | 1,100 | 4,164 | |||||||||||
| a | Ningbo Joyson Electronic Corp. | Auto Components | 1,100 | 2,916 | ||||||||||
Ningbo Tuopu Group Co. Ltd., A | Auto Components | 2,200 | 5,047 | |||||||||||
Ningbo Zhoushan Port Co. Ltd., A | Transportation Infrastructure | 7,700 | 3,856 | |||||||||||
Ningxia Baofeng Energy Group Co. Ltd. | Chemicals | 5,500 | 6,533 | |||||||||||
| a,e | NIO Inc., ADR | Automobiles | 19,360 | 53,821 | ||||||||||
Northeast Securities Co. Ltd. | Capital Markets | 5,500 | 6,433 | |||||||||||
NSFOCUS Information Technology Co. Ltd. | Software | 2,200 | 5,838 | |||||||||||
Oceanwide Holdings Co. Ltd. | Real Estate Management & Development | 6,600 | 3,678 | |||||||||||
Offshore Oil Engineering Co. Ltd., A | Energy Equipment & Services | 6,600 | 4,553 | |||||||||||
| a | OFILM Group Co. Ltd. | Electronic Equipment, Instruments & Components | 4,400 | 8,467 | ||||||||||
Opple Lighting Co. Ltd., A | Household Products | 2,200 | 7,505 | |||||||||||
Orient Securities Co. Ltd. of China, H | Capital Markets | 22,000 | 11,552 | |||||||||||
Oriental Pearl Group Co. Ltd., A | Media | 6,600 | 8,147 | |||||||||||
| a | Ourpalm Co. Ltd. | Entertainment | 5,500 | 4,019 | ||||||||||
| franklintempleton.com | Annual Report | 193 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
| a | Pangang Group Vanadium Titanium & Resources Co. Ltd., A | Metals & Mining | 9,900 | $ | 3,101 | |||||||||
People’s Insurance Co. Group of China Ltd., H | Insurance | 220,000 | 72,663 | |||||||||||
Perfect World Co. Ltd. | Entertainment | 1,100 | 7,379 | |||||||||||
PetroChina Co. Ltd., H | Oil, Gas & Consumable Fuels | 528,000 | 193,464 | |||||||||||
PICC Property and Casualty Co. Ltd., H | Insurance | 176,000 | 170,303 | |||||||||||
| a | Pinduoduo Inc., ADR | Internet & Direct Marketing Retail | 2,816 | 101,460 | ||||||||||
Ping An Bank Co. Ltd., A | Banks | 23,100 | 41,714 | |||||||||||
| a,b | Ping An Healthcare and Technology Co. Ltd., | Health Care Technology | 8,800 | 82,086 | ||||||||||
Ping An Insurance (Group) Co. of China Ltd., H | Insurance | 143,000 | 1,404,927 | |||||||||||
Ping An Insurance Group Co. of China Ltd., A | Insurance | 12,100 | 118,077 | |||||||||||
| a | Pingdingshan Tianan Coal Mining Co. Ltd., A | Oil, Gas & Consumable Fuels | 4,400 | 2,582 | ||||||||||
| a | Polaris Bay Group Co. Ltd., A | Capital Markets | 2,200 | 3,815 | ||||||||||
Poly Developments and Holdings Group Co. Ltd., A | Real Estate Management & Development | 15,400 | 32,307 | |||||||||||
Poly Property Group Co. Ltd. | Real Estate Management & Development | 44,000 | 14,930 | |||||||||||
Postal Savings Bank of China Co. Ltd., H | Banks | 242,000 | 147,369 | |||||||||||
Power Construction Corp. of China Ltd. | Construction & Engineering | 16,500 | 9,172 | |||||||||||
| b | Qingdao Port International Co. Ltd., H, Reg S | Transportation Infrastructure | 33,000 | 18,052 | ||||||||||
Qingdao Rural Commercial Bank Corp., A | Banks | 4,400 | 2,706 | |||||||||||
Qingdao TGOOD Electric Co. Ltd. | Electrical Equipment | 1,100 | 3,029 | |||||||||||
Red Star Macalline Group Corp. Ltd. | Real Estate Management & Development | 13,200 | 8,413 | |||||||||||
Red Star Macalline Group Corp. Ltd., A | Real Estate Management & Development | 2,200 | 2,890 | |||||||||||
RiseSun Real Estate Development Co. Ltd. | Real Estate Management & Development | 4,400 | 4,811 | |||||||||||
Rongsheng Petro Chemical Co. Ltd. | Chemicals | 4,400 | 6,797 | |||||||||||
SAIC Motor Corp. Ltd. | Automobiles | 12,100 | 34,995 | |||||||||||
Sanan Optoelectronics Co. Ltd., A | Semiconductors & Semiconductor Equipment | 6,600 | 17,831 | |||||||||||
Sansteel Minguang Co. Ltd. | Metals & Mining | 3,300 | 3,711 | |||||||||||
Sany Heavy Industry Co. Ltd., A | Machinery | 12,100 | 29,532 | |||||||||||
SDIC Capital Co. Ltd., A | Capital Markets | 3,300 | 5,703 | |||||||||||
SDIC Power Holdings Co. Ltd., A | Independent Power and Renewable Electricity Producers | 9,900 | 11,090 | |||||||||||
Sealand Securities Co. Ltd. | Capital Markets | 8,340 | 5,154 | |||||||||||
Seazen Group Ltd. | Real Estate Management & Development | 44,000 | 39,737 | |||||||||||
Seazen Holdings Co. Ltd., A | Real Estate Management & Development | 2,200 | 9,705 | |||||||||||
SF Holding Co. Ltd. | Air Freight & Logistics | 3,300 | 21,993 | |||||||||||
Shaanxi Coal Industry Co. Ltd. | Oil, Gas & Consumable Fuels | 12,100 | 12,769 | |||||||||||
Shaanxi International Trust Co. Ltd. | Capital Markets | 6,600 | 3,278 | |||||||||||
Shandong Chenming Paper Holdings Ltd., B | Paper & Forest Products | 18,700 | 6,755 | |||||||||||
Shandong Chenming Paper Holdings Ltd., H | Paper & Forest Products | 11,000 | 3,945 | |||||||||||
| a | Shandong Denghai Seeds Co. Ltd., A | Food Products | 2,200 | 3,752 | ||||||||||
| b,c | Shandong Gold Mining Co. Ltd., 144A, Reg S | Metals & Mining | 8,250 | 19,819 | ||||||||||
Shandong Gold Mining Co. Ltd., A | Metals & Mining | 3,360 | 16,278 | |||||||||||
Shandong Hualu Hengsheng Chemical Co. Ltd., A | Chemicals | 2,200 | 4,873 | |||||||||||
Shandong Nanshan Aluminum Co. Ltd., A | Metals & Mining | 19,800 | 5,754 | |||||||||||
Shandong Sun Paper Industry JSC Ltd. | Paper & Forest Products | 4,400 | 5,450 | |||||||||||
Shandong Weigao Group Medical Polymer Co. Ltd., H | Health Care Equipment & Supplies | 63,400 | 80,161 | |||||||||||
| a | Shandong Xinchao Energy Corp. Ltd., A | Oil, Gas & Consumable Fuels | 13,200 | �� | 3,278 | |||||||||
| 194 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Shanghai 2345 Network Holding Group Co. Ltd. | Software | 13,200 | $ | 5,177 | ||||||||||
Shanghai AJ Group Co. Ltd., A | Diversified Financial Services | 4,400 | 4,935 | |||||||||||
Shanghai Bailian Group Co. Ltd., B | Food & Staples Retailing | 3,300 | 2,317 | |||||||||||
Shanghai Baosight Software Co. Ltd., B | Software | 7,720 | 15,633 | |||||||||||
Shanghai Chlor-Alkali Chemical Co. Ltd., B | Chemicals | 11,000 | 5,500 | |||||||||||
Shanghai Construction Group Co. Ltd., A | Construction & Engineering | 9,900 | 4,483 | |||||||||||
Shanghai Dazhong Public Utilities Group Co. Ltd., A | Gas Utilities | 5,500 | 3,135 | |||||||||||
Shanghai Electric Group Co. Ltd., A | Electrical Equipment | 17,600 | 11,422 | |||||||||||
Shanghai Electric Group Co. Ltd., H | Electrical Equipment | 66,000 | 17,456 | |||||||||||
Shanghai Electric Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 4,400 | 4,358 | |||||||||||
Shanghai Environment Group Co. Ltd., A | Commercial Services & Supplies | 2,200 | 3,641 | |||||||||||
Shanghai Fosun Pharmaceutical Group Co. Ltd., A | Pharmaceuticals | 2,200 | 10,199 | |||||||||||
Shanghai Fosun Pharmaceutical Group Co. Ltd., H | Pharmaceuticals | 16,500 | 54,284 | |||||||||||
Shanghai Haixin Group Co., B | Pharmaceuticals | 9,900 | 3,524 | |||||||||||
Shanghai Huayi Group Co. Ltd., B | Chemicals | 7,700 | 3,750 | |||||||||||
Shanghai Industrial Holdings Ltd. | Industrial Conglomerates | 11,000 | 16,633 | |||||||||||
Shanghai International Airport Co. Ltd., A | Transportation Infrastructure | 2,200 | 18,874 | |||||||||||
Shanghai International Port Group Co. Ltd., A | Transportation Infrastructure | 12,100 | 7,648 | |||||||||||
Shanghai Jahwa United Co. Ltd., A | Personal Products | 1,100 | 3,891 | |||||||||||
Shanghai Jinjiang International Hotels Co. Ltd. | Hotels, Restaurants & Leisure | 4,400 | 6,244 | |||||||||||
Shanghai Jinqiao Export Processing Zone Development, B | Real Estate Management & Development | 7,700 | 6,299 | |||||||||||
Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., A | Real Estate Management & Development | 2,200 | 3,442 | |||||||||||
Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., B | Real Estate Management & Development | 28,600 | 23,052 | |||||||||||
Shanghai M&G Stationery Inc., A | Commercial Services & Supplies | 1,100 | 7,185 | |||||||||||
Shanghai Mechanical and Electrical Industry Co. Ltd., B | Machinery | 7,700 | 8,470 | |||||||||||
Shanghai Pharmaceuticals Holding Co. Ltd., A | Health Care Providers & Services | 2,200 | 6,055 | |||||||||||
Shanghai Pharmaceuticals Holding Co. Ltd., H | Health Care Providers & Services | 22,000 | 37,410 | |||||||||||
Shanghai Pudong Development Bank Co. Ltd., A | Banks | 37,400 | 53,555 | |||||||||||
| a | Shanghai RAAS Blood Products Co. Ltd., A | Biotechnology | 7,700 | �� | 8,451 | |||||||||
Shanghai ShibeiHi-Tech Co. Ltd., A | Real Estate Management & Development | 2,200 | 2,160 | |||||||||||
Shanghai ShibeiHi-Tech Co. Ltd., B | Real Estate Management & Development | 12,100 | 4,041 | |||||||||||
Shanghai Shimao Co. Ltd., A | Real Estate Management & Development | 5,500 | 3,166 | |||||||||||
Shanghai Tunnel Engineering Co. Ltd., A | Construction & Engineering | 6,600 | 5,149 | |||||||||||
Shanghai Waigaoqiao Free Trade Zone Group Co. Ltd. | Trading Companies & Distributors | 6,600 | 6,197 | |||||||||||
Shanghai Yuyuan Tourist Mart Group Co. Ltd., A | Specialty Retail | 5,500 | 5,672 | |||||||||||
Shanghai Zhangjiang High-Tech Park Development Co. Ltd., A | Real Estate Management & Development | 1,100 | 1,882 | |||||||||||
Shanghai Zhenhua Port Machinery Co. Ltd., B | Machinery | 24,200 | 6,994 | |||||||||||
Shanxi Lu’an Environmental Energy Development Co. Ltd., A | Oil, Gas & Consumable Fuels | 4,400 | 3,619 | |||||||||||
Shanxi Securities Co. Ltd. | Capital Markets | 4,400 | 4,358 | |||||||||||
Shanxi Xinghuacun Fen Wine Factory Co. Ltd., A | Beverages | 1,100 | 13,995 | |||||||||||
| franklintempleton.com | Annual Report | 195 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
| a | Shanying International Holding Co. Ltd., A | Paper & Forest Products | 5,500 | $ | 2,374 | |||||||||
Shenergy Co. Ltd., A | Independent Power and Renewable Electricity Producers | 9,900 | 7,374 | |||||||||||
Shengyi Technology Co. Ltd., A | Electronic Equipment, Instruments & Components | 3,300 | 12,323 | |||||||||||
Shenwan Hongyuan Group Co. Ltd. | Capital Markets | 39,600 | 24,638 | |||||||||||
| a,b,c | Shenwan Hongyuan Group Co. Ltd., 144A, Reg S | Capital Markets | 35,200 | 8,265 | ||||||||||
Shenzhen Accord Pharmaceutical Co. Ltd., B | Health Care Providers & Services | 1,100 | 2,827 | |||||||||||
Shenzhen Agricultural Products Group Co. Ltd. | Food & Staples Retailing | 4,400 | 4,494 | |||||||||||
Shenzhen Airport Co. Ltd. | Transportation Infrastructure | 2,200 | 2,371 | |||||||||||
Shenzhen Energy Group Co. Ltd. | Independent Power and Renewable Electricity Producers | 5,500 | 4,175 | |||||||||||
Shenzhen Everwin Precision Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 1,100 | 2,927 | |||||||||||
Shenzhen Expressway Co. Ltd., H | Transportation Infrastructure | 22,000 | 22,423 | |||||||||||
| a | Shenzhen Fenda Technology Co. Ltd. | Household Durables | 4,400 | 2,080 | ||||||||||
Shenzhen Goodix Technology Co. Ltd., A | Semiconductors & Semiconductor Equipment | 100 | 3,679 | |||||||||||
Shenzhen Huaqiang Industry Co. Ltd. | Real Estate Management & Development | 2,200 | 3,703 | |||||||||||
Shenzhen Inovance Technology Co. Ltd. | Machinery | 2,200 | 8,023 | |||||||||||
Shenzhen International Holdings Ltd. | Transportation Infrastructure | 22,000 | 40,305 | |||||||||||
Shenzhen Investment Ltd. | Real Estate Management & Development | 88,000 | 27,476 | |||||||||||
Shenzhen Jinjia Group Co. Ltd. | Containers & Packaging | 2,200 | 2,859 | |||||||||||
Shenzhen Kaifa Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 2,200 | 5,338 | |||||||||||
Shenzhen Kangtai Biological Products Co. Ltd. | Biotechnology | 1,100 | 17,784 | |||||||||||
Shenzhen MindrayBio-Medical Electronics Co. Ltd., A | Health Care Equipment & Supplies | 1,100 | 40,613 | |||||||||||
| a | Shenzhen MTC Co. Ltd. | Household Durables | 6,600 | 3,827 | ||||||||||
Shenzhen Neptunus Bioengineering Co. Ltd. | Health Care Providers & Services | 3,300 | 2,128 | |||||||||||
Shenzhen Overseas Chinese Town Co. Ltd. | Hotels, Restaurants & Leisure | 9,900 | 8,925 | |||||||||||
Shenzhen Salubris Pharmaceuticals Co. Ltd. | Pharmaceuticals | 3,300 | 8,259 | |||||||||||
| a | Shenzhen Sunway Communication Co. Ltd. | Communications Equipment | 1,100 | 5,326 | ||||||||||
Shenzhen Yan Tian Port Holding Co. Ltd. | Transportation Infrastructure | 3,300 | 2,062 | |||||||||||
Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd. | Metals & Mining | 6,600 | 3,315 | |||||||||||
Shenzhou International Group Holdings Ltd. | Textiles, Apparel & Luxury Goods | 18,700 | 198,800 | |||||||||||
| a | Shijiazhuang Changshan BeiMing Technology Co. Ltd. | Textiles, Apparel & Luxury Goods | 2,200 | 2,694 | ||||||||||
Shijiazhuang Yiling Pharmaceutical Co. Ltd. | Pharmaceuticals | 2,200 | 6,968 | |||||||||||
Shimao Property Holdings Ltd. | Real Estate Management & Development | 33,000 | 116,232 | |||||||||||
| a | Siasun Robot & Automation Co. Ltd. | Machinery | 3,300 | 6,360 | ||||||||||
Sichuan Chuantou Energy Co. Ltd., A | Independent Power and Renewable Electricity Producers | 7,700 | 9,994 | |||||||||||
Sichuan Expressway Co. Ltd., A | Transportation Infrastructure | 9,900 | 4,763 | |||||||||||
Sichuan Expressway Co. Ltd., H | Transportation Infrastructure | 22,000 | 5,137 | |||||||||||
| a | Sichuan Hebang Biotechnology Co. Ltd., A | Chemicals | 17,600 | 3,600 | ||||||||||
Sichuan Kelun Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,100 | 3,211 | |||||||||||
Sichuan Road & Bridge Co. Ltd., A | Construction & Engineering | 4,400 | 2,390 | |||||||||||
Sieyuan Electric Co. Ltd. | Electrical Equipment | 1,100 | 2,795 | |||||||||||
Sihuan Pharmaceutical Holdings Group Ltd. | Pharmaceuticals | 110,000 | 11,070 | |||||||||||
| a | SINA Corp. | Interactive Media & Services | 1,595 | 50,785 | ||||||||||
Sino-Ocean Land Holdings Ltd. | Real Estate Management & Development | 77,000 | 19,571 | |||||||||||
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Sinochem International Corp., A | Trading Companies & Distributors | 6,600 | $ | 4,767 | ||||||||||
Sinolink Securities Co. Ltd., A | Capital Markets | 4,400 | 5,680 | |||||||||||
Sinoma Science & Technology Co. Ltd. | Chemicals | 2,200 | 3,526 | |||||||||||
Sinopec Engineering Group Co. Ltd. | Construction & Engineering | 38,500 | 16,193 | |||||||||||
| a | Sinopec Oilfield Service Corp. | Energy Equipment & Services | 110,000 | 8,373 | ||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., A | Chemicals | 9,900 | 5,433 | |||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., H | Chemicals | 88,000 | 21,799 | |||||||||||
Sinopharm Group Co. Ltd., H | Health Care Providers & Services | 30,800 | 69,302 | |||||||||||
Sinotrans Ltd., H | Air Freight & Logistics | 55,000 | 13,553 | |||||||||||
Sinotruk Hong Kong Ltd. | Machinery | 16,500 | 27,461 | |||||||||||
Soho China Ltd. | Real Estate Management & Development | 49,500 | 25,545 | |||||||||||
Songcheng Performance Development Co. Ltd. | Hotels, Restaurants & Leisure | 2,200 | 7,753 | |||||||||||
SooChow Securities Co. Ltd., A | Capital Markets | 5,480 | 6,123 | |||||||||||
| a | Sou Yu Te Group Co. Ltd. | Textiles, Apparel & Luxury Goods | 3,300 | 1,550 | ||||||||||
Southwest Securities Co. Ltd., A | Capital Markets | 12,100 | 7,716 | |||||||||||
STO Express Co. Ltd. | Air Freight & Logistics | 1,100 | 2,711 | |||||||||||
Sunac China Holdings Ltd. | Real Estate Management & Development | 66,000 | 305,694 | |||||||||||
Sungrow Power Supply Co. Ltd. | Electrical Equipment | 2,200 | 2,952 | |||||||||||
Suning Universal Co. Ltd. | Real Estate Management & Development | 7,700 | 3,302 | |||||||||||
Suning.com Co. Ltd. | Specialty Retail | 12,100 | 15,415 | |||||||||||
Sunny Optical Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 16,500 | 222,245 | |||||||||||
Sunwoda Electronic Co. Ltd., A | Electrical Equipment | 2,200 | 4,386 | |||||||||||
Suofeiya Home Collection Co. Ltd. | Household Durables | 1,100 | 2,790 | |||||||||||
Suzhou Anjie Technology Co. Ltd., A | Electrical Equipment | 1,100 | 2,734 | |||||||||||
Suzhou Gold Mantis Construction Decoration Co. Ltd. | Construction & Engineering | 4,400 | 5,096 | |||||||||||
Tahoe Group Co. Ltd. | Real Estate Management & Development | 3,300 | 2,407 | |||||||||||
| a | TAL Education Group, ADR | Diversified Consumer Services | 8,767 | 466,930 | ||||||||||
Tangshan Jidong Cement Co. Ltd. | Construction Materials | 2,200 | 6,086 | |||||||||||
TangShan Port Group Co. Ltd., A | Transportation Infrastructure | 14,300 | 4,559 | |||||||||||
Tangshan Sanyou Chemical Industries Co. Ltd., A | Chemicals | 4,400 | 3,116 | |||||||||||
Tasly Pharmaceutical Group Co. Ltd., A | Pharmaceuticals | 4,400 | 8,579 | |||||||||||
TBEA Co. Ltd., A | Electrical Equipment | 6,600 | 6,797 | |||||||||||
TCL Corp. | Household Durables | 18,700 | 10,922 | |||||||||||
Tencent Holdings Ltd. | Interactive Media & Services | 146,900 | 7,205,793 | |||||||||||
| a | Tencent Music Entertainment Group, ADR | Entertainment | 2,871 | 28,882 | ||||||||||
| a | The China Pacific Securities Co. Ltd., A | Capital Markets | 9,900 | 4,637 | ||||||||||
Tian Di Science & Technology Co. Ltd., A | Machinery | 8,800 | 3,724 | |||||||||||
Tianfeng Securities Co. Ltd., A | Capital Markets | 6,850 | 4,948 | |||||||||||
Tianjin Capital Environmental Protection Group Co. Ltd., A | Commercial Services & Supplies | 5,500 | 5,548 | |||||||||||
Tianjin Chase Sun Pharmaceutical Co. Ltd. | Pharmaceuticals | 7,700 | 5,345 | |||||||||||
Tianjin Zhonghuan Semiconductor Co. Ltd. | Semiconductors & Semiconductor Equipment | 4,400 | 8,871 | |||||||||||
Tianma Microelectronics Co. Ltd. | Electronic Equipment, Instruments & Components | 2,200 | 4,137 | |||||||||||
Tianqi Lithium Corp. | Chemicals | 2,680 | 6,976 | |||||||||||
Times China Holdings Ltd. | Real Estate Management & Development | 22,000 | 36,842 | |||||||||||
| a | Times Neighborhood Holdings Ltd. | Commercial Services & Supplies | 6,153 | 4,922 | ||||||||||
| a,b | Tongcheng-Elong Holdings Ltd., Reg S | Internet & Direct Marketing Retail | 22,000 | 30,938 | ||||||||||
Tonghua Dongbao Pharmaceutical Co. Ltd. | Pharmaceuticals | 2,200 | 3,293 | |||||||||||
Tongkun Group Co. Ltd., A | Chemicals | 2,200 | 3,641 | |||||||||||
Tongling Nonferrous Metals Group Co. Ltd. | Metals & Mining | 22,000 | 6,176 | |||||||||||
Tongwei Co. Ltd., A | Food Products | 4,400 | 7,207 | |||||||||||
TravelSky Technology Ltd., H | IT Services | 22,000 | 38,829 | |||||||||||
| a | Trip.com Group Ltd., ADR | Internet & Direct Marketing Retail | 11,594 | 271,879 | ||||||||||
Tsingtao Brewery Co. Ltd., A | Beverages | 1,100 | 7,094 | |||||||||||
Tsingtao Brewery Co. Ltd., H | Beverages | 9,900 | 50,516 | |||||||||||
Tunghsu Optoelectronic Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 7,700 | 3,259 | |||||||||||
Tus-Sound Environmental Resources Co. Ltd. | Commercial Services & Supplies | 2,200 | 2,508 | |||||||||||
| franklintempleton.com | Annual Report | 197 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Unigroup Guoxin Microelectronics Co. Ltd. | Semiconductors & Semiconductor Equipment | 1,100 | $ | 7,744 | ||||||||||
Unisplendour Corp. Ltd. | Electronic Equipment, Instruments & Components | 1,100 | 5,481 | |||||||||||
Universal Scientific Industrial Shanghai Co. Ltd., A | Electronic Equipment, Instruments & Components | 2,200 | 4,929 | |||||||||||
Valiant Co. Ltd. | Chemicals | 2,200 | 3,932 | |||||||||||
Venustech Group Inc. | Software | 1,100 | 5,742 | |||||||||||
| a | Vipshop Holdings Ltd., ADR | Internet & Direct Marketing Retail | 11,231 | 174,979 | ||||||||||
Visual China Group Co. Ltd. | Internet & Direct Marketing Retail | 1,100 | 2,409 | |||||||||||
Walvax Biotechnology Co. Ltd. | Biotechnology | 2,200 | 9,826 | |||||||||||
| a | Wanda Film Holding Co. Ltd., A | Entertainment | 3,300 | 7,333 | ||||||||||
Wangsu Science & Technology Co. Ltd. | IT Services | 3,300 | 3,631 | |||||||||||
Wanhua Chemical Group Co. Ltd., A | Chemicals | 3,300 | 19,204 | |||||||||||
Wanxiang Qianchao Co. Ltd. | Auto Components | 6,600 | 4,749 | |||||||||||
| a | Weibo Corp., ADR | Interactive Media & Services | 1,342 | 44,434 | ||||||||||
Weichai Power Co. Ltd., A | Machinery | 11,000 | 18,560 | |||||||||||
Weichai Power Co. Ltd., H | Machinery | 44,000 | 70,846 | |||||||||||
Weifu High-Technology Co. Ltd., B | Auto Components | 4,400 | 6,806 | |||||||||||
Wens Foodstuffs Group Co. Ltd. | Food Products | 2,200 | 10,025 | |||||||||||
Western Securities Co. Ltd. | Capital Markets | 4,400 | 5,134 | |||||||||||
Westone Information Industry Inc. | Electronic Equipment, Instruments & Components | 2,200 | 6,977 | |||||||||||
Will Semiconductor Ltd. | Semiconductors & Semiconductor Equipment | 500 | 10,997 | |||||||||||
| a | Wingtech Technology Co. Ltd., A | Electronic Equipment, Instruments & Components | 1,100 | 15,752 | ||||||||||
Winning Health Technology Group Co. Ltd. | Health Care Technology | 2,200 | 6,509 | |||||||||||
Wolong Electric Group Co. Ltd., A | Electrical Equipment | 2,200 | 3,203 | |||||||||||
Wonders Information Co. Ltd. | IT Services | 2,200 | 6,186 | |||||||||||
Wuchan Zhongda Group Co. Ltd., A | Distributors | 6,600 | 4,469 | |||||||||||
Wuhan Guide Infrared Co. Ltd. | Electronic Equipment, Instruments & Components | 1,100 | 5,238 | |||||||||||
Wuhu Sanqi Interactive Entertainment NetworkTechnology Group Co. Ltd. | Entertainment | 2,200 | 10,137 | |||||||||||
Wuliangye Yibin Co. Ltd. | Beverages | 4,400 | 71,510 | |||||||||||
WUS Printed Circuit Kunshan Co. Ltd. | Electronic Equipment, Instruments & Components | 2,200 | 7,350 | |||||||||||
WuXi AppTec Co. Ltd., A | Life Sciences Tools & Services | 1,100 | 14,043 | |||||||||||
WuXi AppTec Co. Ltd., H | Life Sciences Tools & Services | 3,300 | 40,617 | |||||||||||
| a | Wuxi Biologics Cayman Inc. | Life Sciences Tools & Services | 19,000 | 246,358 | ||||||||||
Wuxi Lead Intelligent Equipment Co. Ltd. | Electronic Equipment, Instruments & Components | 1,100 | 5,813 | |||||||||||
XCMG Construction Machinery Co. Ltd. | Machinery | 9,900 | 7,053 | |||||||||||
Xiamen C & D Inc., A | Trading Companies & Distributors | 4,400 | 4,749 | |||||||||||
Xiamen Meiya Pico Information Co. Ltd. | Electronic Equipment, Instruments & Components | 2,200 | 6,310 | |||||||||||
Xiamen Tungsten Co. Ltd., A | Metals & Mining | 2,200 | 3,517 | |||||||||||
| a | Xiaomi Corp., B | Technology Hardware, Storage & Peripherals | 277,200 | 373,372 | ||||||||||
Xinhu Zhongbao Co. Ltd., A | Real Estate Management & Development | 9,900 | 4,218 | |||||||||||
Xinhua Winshare Publishing and Media Co. Ltd., H | Distributors | 11,000 | 7,082 | |||||||||||
Xinjiang Goldwind Science & Technology Co. | Electrical Equipment | 22,000 | 19,159 | |||||||||||
Xinjiang Zhongtai Chemical Co. Ltd. | Chemicals | 3,300 | 2,281 | |||||||||||
Xinxing Ductile Iron Pipes Co. Ltd. | Metals & Mining | 7,700 | 3,737 | |||||||||||
Xuji Electric Co. Ltd. | Electrical Equipment | 2,200 | 4,063 | |||||||||||
Yango Group Co. Ltd. | Real Estate Management & Development | 5,500 | 5,424 | |||||||||||
| b | Yangtze Optical Fibre and Cable Joint Stock Ltd. Co., H, Reg S | Communications Equipment | 5,500 | 9,977 | ||||||||||
Yantai Changyu Pioneer Wine Co. Ltd., B | Beverages | 4,400 | 6,965 | |||||||||||
Yanzhou Coal Mining Co. Ltd., H | Oil, Gas & Consumable Fuels | 44,000 | 34,515 | |||||||||||
Yealink Network Technology Corp. Ltd. | Communications Equipment | 400 | 4,603 | |||||||||||
Yifan Pharmaceutical Co. Ltd. | Pharmaceuticals | 2,200 | 5,059 | |||||||||||
Yihai International Holding Ltd. | Food Products | 11,000 | 83,306 | |||||||||||
Yintai Gold Co. Ltd. | Metals & Mining | 2,200 | 4,479 | |||||||||||
Yonghui Superstores Co. Ltd., A | Food & Staples Retailing | 14,300 | 20,659 | |||||||||||
Yonyou Network Technology Co. Ltd., A | Software | 3,300 | 18,837 | |||||||||||
Yotrio Group Co. Ltd. | Leisure Equipment & Products | 4,400 | 2,166 | |||||||||||
| 198 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| China (continued) | ||||||||||||||
Youngor Group Co. Ltd., A | Real Estate Management & Development | 8,800 | $ | 7,908 | ||||||||||
| a | Youzu Interactive Co. Ltd. | Entertainment | 1,100 | 2,916 | ||||||||||
YTO Express Group Co. Ltd., A | Air Freight & Logistics | 2,200 | 3,591 | |||||||||||
Yuan Longping High-tech Agriculture Co. Ltd. | Food Products | 1,100 | 2,812 | |||||||||||
Yuexiu Property Co. Ltd. | Real Estate Management & Development | 154,000 | 27,816 | |||||||||||
Yunda Holding Co. Ltd. | Air Freight & Logistics | 1,100 | 4,781 | |||||||||||
| a | Yunnan Aluminium Co. Ltd. | Metals & Mining | 4,400 | 2,402 | ||||||||||
Yunnan Baiyao Group Co. Ltd. | Pharmaceuticals | 1,100 | 13,276 | |||||||||||
| a | Yunnan Copper Co. Ltd. | Metals & Mining | 3,300 | 4,535 | ||||||||||
Yunnan Energy New Material Co. Ltd. | Containers & Packaging | 1,100 | 6,595 | |||||||||||
| a | Yunnan Tin Co. Ltd. | Metals & Mining | 2,200 | 2,564 | ||||||||||
Zhangzhou Pientzehuang Pharmaceutical Co. | Pharmaceuticals | 1,100 | 19,290 | |||||||||||
Zhaojin Mining Industry Co. Ltd., H | Metals & Mining | 27,500 | 27,603 | |||||||||||
Zhejiang Chint Electrics Co. Ltd., A | Electrical Equipment | 2,200 | 7,340 | |||||||||||
Zhejiang Conba Pharmaceutical Co. Ltd., A | Pharmaceuticals | 6,600 | 4,795 | |||||||||||
Zhejiang Crystal-Optech Co. Ltd. | Electronic Equipment, Instruments & Components | 2,200 | 4,128 | |||||||||||
Zhejiang Dahua Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 3,300 | 7,528 | |||||||||||
Zhejiang Expressway Co. Ltd., H | Transportation Infrastructure | 44,000 | 30,654 | |||||||||||
Zhejiang Hailiang Co. Ltd. | Metals & Mining | 2,200 | 2,806 | |||||||||||
Zhejiang Huace Film & TV Co. Ltd., A | Entertainment | 2,200 | 2,064 | |||||||||||
| a | Zhejiang Huahai Pharmaceutical Co. Ltd., A | Pharmaceuticals | 2,200 | 7,977 | ||||||||||
Zhejiang Huayou Cobalt Co. Ltd., A | Metals & Mining | 1,100 | 4,564 | |||||||||||
Zhejiang Juhua Co. Ltd., A | Chemicals | 4,400 | 4,209 | |||||||||||
Zhejiang Longsheng Group Co. Ltd., A | Chemicals | 4,400 | 7,393 | |||||||||||
Zhejiang Medicine Co. Ltd., A | Pharmaceuticals | 1,100 | 2,910 | |||||||||||
Zhejiang NHU Co. Ltd. | Pharmaceuticals | 2,200 | 8,473 | |||||||||||
Zhejiang Runtu Co. Ltd. | Chemicals | 2,200 | 2,980 | |||||||||||
Zhejiang Sanhua Intelligent Controls Co. Ltd. | Machinery | 3,300 | 7,482 | |||||||||||
Zhejiang Satellite Petrochemical Co. Ltd. | Chemicals | 2,200 | 4,047 | |||||||||||
Zhejiang Semir Garment Co. Ltd. | Textiles, Apparel & Luxury Goods | 1,100 | 1,105 | |||||||||||
Zhejiang Supor Co. Ltd. | Household Durables | 400 | 3,901 | |||||||||||
Zhejiang Wanfeng Auto Wheel Co. Ltd. | Auto Components | 4,400 | 4,097 | |||||||||||
Zhejiang Weixing New Building Materials Co. Ltd. | Building Products | 2,200 | 3,433 | |||||||||||
Zhejiang Yasha Decoration Co. Ltd. | Diversified Consumer Services | 3,300 | 3,226 | |||||||||||
Zhejiang Yongtai Technology Co. Ltd. | Chemicals | 2,200 | 3,597 | |||||||||||
Zhengzhou Yutong Bus Co. Ltd., A | Machinery | 2,200 | 4,249 | |||||||||||
Zheshang Securities Co. Ltd., A | Capital Markets | 3,300 | 4,660 | |||||||||||
| a,b | ZhongAn Online P&C Insurance Co. Ltd., Reg S | Insurance | 8,800 | 29,065 | ||||||||||
Zhongjin Gold Corp. Ltd., A | Metals & Mining | 4,400 | 5,009 | |||||||||||
Zhongsheng Group Holdings Ltd. | Specialty Retail | 16,500 | 57,690 | |||||||||||
Zhuzhou CRRC Times Electric Co. Ltd., H | Electrical Equipment | 13,200 | 39,084 | |||||||||||
Zijin Mining Group Co. Ltd., A | Metals & Mining | 22,000 | 11,453 | |||||||||||
Zijin Mining Group Co. Ltd., H | Metals & Mining | 154,000 | 58,016 | |||||||||||
Zoomlion Heavy Industry Science and Technology Co. Ltd., H | Machinery | 39,600 | 28,815 | |||||||||||
| a | ZTE Corp. | Communications Equipment | 4,400 | 26,568 | ||||||||||
| a | ZTE Corp., H | Communications Equipment | 19,800 | 61,437 | ||||||||||
| a | ZTO Express Cayman Inc., ADR | Air Freight & Logistics | 10,021 | 265,356 | ||||||||||
|
| |||||||||||||
| 48,469,807 | ||||||||||||||
|
| |||||||||||||
| Hong Kong 0.6% | ||||||||||||||
| a | Alibaba Pictures Group Ltd. | Entertainment | 330,000 | 42,575 | ||||||||||
Kingboard Laminates Holdings Ltd. | Chemicals | 27,500 | 25,439 | |||||||||||
Sino Biopharmaceutical Ltd. | Pharmaceuticals | 165,000 | 217,562 | |||||||||||
|
| |||||||||||||
| 285,576 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 199 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE China ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Singapore 0.1% | ||||||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | Machinery | 56,100 | $ | 32,702 | ||||||||||
Yanlord Land Group Ltd. | Real Estate Management & Development | 17,600 | 12,176 | |||||||||||
|
| |||||||||||||
| 44,878 | ||||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 48,800,261 | |||||||||||||
|
| |||||||||||||
| Short Term Investments 0.0%† | ||||||||||||||
Investments from Cash Collateral Received for Loaned Securities 0.0%† | ||||||||||||||
| United States 0.0%† | ||||||||||||||
| f,g | Institutional Fiduciary Trust Portfolio, 0.32% | Money Market Funds | 29,400 | 29,400 | ||||||||||
|
| |||||||||||||
Total Investments | 48,829,661 | |||||||||||||
Other Assets, less Liabilities 0.0%† | (22,542 | ) | ||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 48,807,119 | ||||||||||||
|
| |||||||||||||
See abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $1,864,133, representing 3.8% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $608,562, representing 1.2% of net assets.
dFair valued using significant unobservable inputs. See Note 6 regarding fair value measurements.
eA portion or all of the security is on loan at March 31, 2020 Note 1(d).
fSee Note 3(c) regarding investments in affiliated management investment companies.
gThe rate shown is the annualized seven-day effective yield at period end.
| 200 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Europe ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||||||||||
Net asset value, beginning of year | $ | 23.24 | $ | 24.98 | $ | 25.05 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.76 | 0.86 | 0.24 | |||||||||
Net realized and unrealized gains (losses) | (4.21 | ) | (1.79 | ) | (0.30 | ) | ||||||
|
| |||||||||||
Total from investment operations | (3.45 | ) | (0.93 | ) | (0.06 | ) | ||||||
|
| |||||||||||
Less distributions from net investment income | (0.76 | ) | (0.81 | ) | (0.01 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 19.03 | $ | 23.24 | $ | 24.98 | ||||||
|
| |||||||||||
Total returnd | (15.44)% | (3.69)% | (0.26)% | |||||||||
| Ratios to average net assetse |
| |||||||||||
Expenses before waiver and payments by affiliates | 0.09% | 0.09% | 0.09% | |||||||||
Expenses net waiver and payments by affiliates | 0.09% | —% | —% | |||||||||
Net investment income | 3.23% | 3.61% | 2.35% | |||||||||
| Supplemental data |
| |||||||||||
Net assets, end of year (000’s) | $91,356 | $74,359 | $104,911 | |||||||||
Portfolio turnover ratef | 4.47% | g | 5.81% | 0.96% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 4.47%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 201 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests 98.6% | ||||||||||||||
| Australia 0.7% | ||||||||||||||
Rio Tinto PLC | Metals & Mining | 13,656 | $ | 629,645 | ||||||||||
|
| |||||||||||||
| Austria 0.3% | ||||||||||||||
Andritz AG | Machinery | 888 | 27,847 | |||||||||||
Erste Group Bank AG | Banks | 3,600 | 66,697 | |||||||||||
OMV AG | Oil, Gas & Consumable Fuels | 1,776 | 49,030 | |||||||||||
Raiffeisen Bank International AG | Banks | 1,632 | 23,951 | |||||||||||
Telekom Austria AG | Diversified Telecommunication Services | 1,728 | 12,040 | |||||||||||
Verbund AG | Electric Utilities | 816 | 29,565 | |||||||||||
Vienna Insurance Group AG Wiener Versicherung Gruppe | Insurance | 504 | 9,478 | |||||||||||
Voestalpine AG | Metals & Mining | 1,416 | 28,798 | |||||||||||
|
| |||||||||||||
| 247,406 | ||||||||||||||
|
| |||||||||||||
| Belgium 1.5% | ||||||||||||||
Ackermans & van Haaren NV | Diversified Financial Services | 288 | 37,510 | |||||||||||
Ageas | Insurance | 2,256 | 93,842 | |||||||||||
Anheuser-Busch InBev SA/NV | Beverages | 9,600 | 426,295 | |||||||||||
Colruyt SA | Food & Staples Retailing | 672 | 36,329 | |||||||||||
Elia Group SA/NV | Electric Utilities | 456 | 44,581 | |||||||||||
| a | Galapagos NV | Biotechnology | 624 | 123,928 | ||||||||||
Groupe Bruxelles Lambert SA | Diversified Financial Services | 960 | 75,442 | |||||||||||
KBC Groep NV | Banks | 3,408 | 157,131 | |||||||||||
Proximus SADP | Diversified Telecommunication Services | 1,752 | 40,120 | |||||||||||
Sofina SA | Diversified Financial Services | 192 | 39,143 | |||||||||||
Solvay SA | Chemicals | 864 | 62,930 | |||||||||||
Telenet Group Holding NV | Media | 528 | 15,897 | |||||||||||
UCB SA | Pharmaceuticals | 1,512 | 131,065 | |||||||||||
Umicore SA | Chemicals | 2,544 | 88,906 | |||||||||||
|
| |||||||||||||
| 1,373,119 | ||||||||||||||
|
| |||||||||||||
| China 0.4% | ||||||||||||||
| a | Prosus NV | Internet & Direct Marketing Retail | 5,352 | 370,847 | ||||||||||
|
| |||||||||||||
| Denmark 3.4% | ||||||||||||||
A.P. Moeller-Maersk AS, A | Marine | 48 | 39,772 | |||||||||||
A.P. Moeller-Maersk AS, B | Marine | 72 | 64,496 | |||||||||||
Ambu AS, B | Health Care Equipment & Supplies | 2,088 | 50,720 | |||||||||||
Carlsberg AS, B | Beverages | 1,296 | 146,698 | |||||||||||
Chr. Hansen Holding AS | Chemicals | 1,272 | 95,164 | |||||||||||
Coloplast AS, B | Health Care Equipment & Supplies | 1,656 | 240,238 | |||||||||||
Danske Bank AS | Banks | 8,448 | 95,526 | |||||||||||
DSV Panalpina A/S | Air Freight & Logistics | 2,568 | 233,434 | |||||||||||
| a | Genmab AS | Biotechnology | 720 | 145,783 | ||||||||||
GN Store Nord AS | Health Care Equipment & Supplies | 1,680 | 75,048 | |||||||||||
H. Lundbeck AS | Pharmaceuticals | 744 | 22,077 | |||||||||||
ISS AS | Commercial Services & Supplies | 2,400 | 32,989 | |||||||||||
Novo Nordisk AS, B | Pharmaceuticals | 20,568 | 1,237,413 | |||||||||||
Novozymes AS | Chemicals | 2,568 | 116,792 | |||||||||||
Orsted AS | Electric Utilities | 2,352 | 230,469 | |||||||||||
Pandora AS | Textiles, Apparel & Luxury Goods | 1,104 | 35,859 | |||||||||||
Rockwool International AS, B | Building Products | 72 | 13,022 | |||||||||||
Tryg AS | Insurance | 1,512 | 37,195 | |||||||||||
Vestas Wind Systems AS | Electrical Equipment | 2,424 | 196,962 | |||||||||||
| a | William Demant Holding AS | Health Care Equipment & Supplies | 1,344 | 29,762 | ||||||||||
|
| |||||||||||||
| 3,139,419 | ||||||||||||||
|
| |||||||||||||
| Finland 2.0% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 1,752 | 108,576 | |||||||||||
| b | Fortum OYJ, Reg S | Electric Utilities | 5,424 | 79,601 | ||||||||||
| 202 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Finland (continued) | ||||||||||||||
Huhtamaki OYJ | Containers & Packaging | 1,176 | $ | 37,653 | ||||||||||
Kesko OYJ | Food & Staples Retailing | 840 | 47,559 | |||||||||||
Kone OYJ, B | Machinery | 4,872 | 275,950 | |||||||||||
Metso OYJ | Machinery | 1,320 | 31,459 | |||||||||||
Neste Oil OYJ | Oil, Gas & Consumable Fuels | 5,184 | 175,479 | |||||||||||
Nokia OYJ, A | Communications Equipment | 69,864 | 219,933 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 1,680 | 40,683 | |||||||||||
Nordea Bank Abp | Banks | 40,034 | 225,479 | |||||||||||
Orion OYJ | Pharmaceuticals | 1,272 | 52,032 | |||||||||||
Sampo OYJ, A | Insurance | 6,096 | 178,057 | |||||||||||
Stora Enso OYJ, R | Paper & Forest Products | 7,176 | 72,802 | |||||||||||
UPM-Kymmene OYJ | Paper & Forest Products | 6,648 | 183,020 | |||||||||||
Wartsila OYJ ABP | Machinery | 6,120 | 44,924 | |||||||||||
|
| |||||||||||||
| 1,773,207 | ||||||||||||||
|
| |||||||||||||
| France 16.1% | ||||||||||||||
Accor SA | Hotels, Restaurants & Leisure | 2,424 | 66,493 | |||||||||||
| a | Adevinta ASA, B | Interactive Media & Services | 2,880 | 25,534 | ||||||||||
Aeroports de Paris SA | Transportation Infrastructure | 360 | 34,544 | |||||||||||
| a | AirFrance-KLM | Airlines | 2,400 | 13,425 | ||||||||||
Air Liquide SA | Chemicals | 5,760 | 737,247 | |||||||||||
Airbus SE | Aerospace & Defense | 6,864 | 446,921 | |||||||||||
| c | ALD SA, 144A | Road & Rail | 1,080 | 9,480 | ||||||||||
Alstom SA | Machinery | 2,328 | 97,425 | |||||||||||
Amundi SA | Capital Markets | 696 | 41,125 | |||||||||||
ArcelorMittal SA | Metals & Mining | 7,632 | 72,529 | |||||||||||
Arkema SA | Chemicals | 888 | 61,385 | |||||||||||
Atos SE | IT Services | 1,176 | 79,667 | |||||||||||
AXA SA | Insurance | 23,976 | 415,346 | |||||||||||
Biomerieux | Health Care Equipment & Supplies | 504 | 56,739 | |||||||||||
BNP Paribas SA | Banks | 13,488 | 407,140 | |||||||||||
Bollore | Entertainment | 12,672 | 34,900 | |||||||||||
Bouygues SA | Construction & Engineering | 2,688 | 78,808 | |||||||||||
Bureau Veritas SA | Professional Services | 3,408 | 64,730 | |||||||||||
Capgemini SE | IT Services | 2,016 | 170,328 | |||||||||||
Carrefour SA | Food & Staples Retailing | 7,224 | 114,261 | |||||||||||
Casino Guichard-Perrachon SA | Food & Staples Retailing | 696 | 26,813 | |||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 2,208 | 196,386 | |||||||||||
CNP Assurances | Insurance | 2,016 | 19,732 | |||||||||||
Compagnie de Saint-Gobain | Building Products | 6,048 | 147,091 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 552 | 31,102 | ||||||||||
Credit Agricole SA | Banks | 14,184 | 104,119 | |||||||||||
Danone SA | Food Products | 7,392 | 475,622 | |||||||||||
Dassault Aviation SA | Aerospace & Defense | 24 | 19,724 | |||||||||||
Dassault Systemes | Software | 1,632 | 241,746 | |||||||||||
Edenred | IT Services | 3,048 | 127,389 | |||||||||||
EDF SA | Electric Utilities | 6,443 | 50,802 | |||||||||||
Eiffage SA | Construction & Engineering | 936 | 66,243 | |||||||||||
Elis SA | Commercial Services & Supplies | 2,640 | 25,028 | |||||||||||
Engie SA | Multi-Utilities | 20,616 | 212,908 | |||||||||||
EssilorLuxottica SA | Textiles, Apparel & Luxury Goods | 3,648 | 393,392 | |||||||||||
Eurazeo SE | Diversified Financial Services | 558 | 25,176 | |||||||||||
Eutelsat Communications SA | Media | 2,328 | 24,333 | |||||||||||
Faurecia SE | Auto Components | 936 | 28,038 | |||||||||||
Gecina SA | Equity Real Estate Investment Trusts (REITs | ) | 648 | 85,820 | ||||||||||
Getlink SE | Transportation Infrastructure | 5,688 | 68,590 | |||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 384 | 264,941 | |||||||||||
| franklintempleton.com | Annual Report | 203 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| France (continued) | ||||||||||||||
ICADE | Equity Real Estate Investment Trusts (REITs | ) | 384 | $ | 30,400 | |||||||||
Iliad SA | Diversified Telecommunication Services | 192 | 26,050 | |||||||||||
Imerys SA | Construction Materials | 480 | 12,072 | |||||||||||
Ingenico Group SA | Electronic Equipment, Instruments & Components | 756 | 80,414 | |||||||||||
Ipsen SA | Pharmaceuticals | 432 | 22,364 | |||||||||||
JCDecaux SA | Media | 912 | 16,511 | |||||||||||
Kering SA | Textiles, Apparel & Luxury Goods | 912 | 476,229 | |||||||||||
Klepierre SA | Equity Real Estate Investment Trusts (REITs | ) | 2,400 | 46,269 | ||||||||||
L’Oreal SA | Personal Products | 3,000 | 786,399 | |||||||||||
Legrand SA | Electrical Equipment | 3,288 | 210,982 | |||||||||||
LVMH Moet Hennessy Louis Vuitton SE | Textiles, Apparel & Luxury Goods | 3,096 | 1,149,744 | |||||||||||
Natixis SA | Capital Markets | 10,488 | 34,144 | |||||||||||
Orange SA | Diversified Telecommunication Services | 23,856 | 291,470 | |||||||||||
Orpea | Health Care Providers & Services | 624 | 65,216 | |||||||||||
Pernod Ricard SA | Beverages | 2,616 | 371,574 | |||||||||||
Peugeot SA | Automobiles | 6,672 | 89,058 | |||||||||||
Plastic Omnium SA | Auto Components | 672 | 9,449 | |||||||||||
Publicis Groupe | Media | 2,736 | 78,414 | |||||||||||
Remy Cointreau SA | Beverages | 312 | 34,114 | |||||||||||
Renault SA | Automobiles | 2,304 | 44,767 | |||||||||||
Rexel SA | Trading Companies & Distributors | 3,792 | 28,210 | |||||||||||
Rubis SCA | Gas Utilities | 1,157 | 48,318 | |||||||||||
Safran SA | Aerospace & Defense | 3,984 | 350,328 | |||||||||||
Sanofi | Pharmaceuticals | 13,464 | 1,183,939 | |||||||||||
Sartorius Stedim Biotech | Life Sciences Tools & Services | 288 | 57,829 | |||||||||||
Schneider Electric SE | Electrical Equipment | 6,504 | 560,787 | |||||||||||
SCOR SE | Insurance | 1,920 | 42,303 | |||||||||||
SEB SA | Household Durables | 336 | 41,845 | |||||||||||
Societe Generale SA | Banks | 9,576 | 161,266 | |||||||||||
Sodexo SA | Hotels, Restaurants & Leisure | 1,080 | 73,045 | |||||||||||
Suez | Multi-Utilities | 4,560 | 46,412 | |||||||||||
Teleperformance | Professional Services | 720 | 149,946 | |||||||||||
Thales SA | Aerospace & Defense | 1,296 | 108,615 | |||||||||||
Total SA | Oil, Gas & Consumable Fuels | 29,688 | 1,152,835 | |||||||||||
| a | Ubisoft Entertainment SA | Entertainment | 1,128 | 83,149 | ||||||||||
Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs | ) | 1,680 | 95,045 | ||||||||||
Valeo SA | Auto Components | 3,000 | 50,199 | |||||||||||
Veolia Environnement SA | Multi-Utilities | 6,288 | 134,368 | |||||||||||
Vinci SA | Construction & Engineering | 5,784 | 478,526 | |||||||||||
Vivendi SA | Entertainment | 10,080 | 215,952 | |||||||||||
Wendel SA | Diversified Financial Services | 336 | 26,840 | |||||||||||
| a,b | Worldline SA, Reg S | IT Services | 1,608 | 94,747 | ||||||||||
|
| |||||||||||||
| 14,723,166 | ||||||||||||||
|
| |||||||||||||
| Germany 12.6% | ||||||||||||||
1&1 Drillisch AG | Wireless Telecommunication Services | 600 | 12,509 | |||||||||||
Adidas AG | Textiles, Apparel & Luxury Goods | 2,400 | 542,217 | |||||||||||
Allianz SE | Insurance | 5,136 | 884,094 | |||||||||||
Aroundtown SA | Real Estate Management & Development | 14,904 | 74,474 | |||||||||||
BASF SE | Chemicals | 11,304 | 535,141 | |||||||||||
Bayer AG | Pharmaceuticals | 12,240 | 709,794 | |||||||||||
Bayerische Motoren Werke AG | Automobiles | 4,008 | 207,201 | |||||||||||
Bechtle AG | IT Services | 336 | 43,098 | |||||||||||
Beiersdorf AG | Personal Products | 1,248 | 126,749 | |||||||||||
Brenntag AG | Trading Companies & Distributors | 1,944 | 72,161 | |||||||||||
Carl Zeiss Meditec AG | Health Care Equipment & Supplies | 456 | 44,206 | |||||||||||
Commerzbank AG | Banks | 13,104 | 47,571 | |||||||||||
| 204 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Germany (continued) | ||||||||||||||
Continental AG | Auto Components | 1,344 | $ | 96,755 | ||||||||||
Covestro AG | Chemicals | 2,088 | 63,852 | |||||||||||
CTS Eventim AG & Co. KGaA | Entertainment | 744 | 33,618 | |||||||||||
Daimler AG | Automobiles | 10,008 | 302,205 | |||||||||||
| a | Delivery Hero SE | Internet & Direct Marketing Retail | 1,752 | 130,645 | ||||||||||
Deutsche Bank AG | Capital Markets | 25,440 | 166,619 | |||||||||||
Deutsche Boerse AG | Capital Markets | 2,280 | 312,716 | |||||||||||
Deutsche Lufthansa AG | Airlines | 2,856 | 26,831 | |||||||||||
Deutsche Post AG | Air Freight & Logistics | 12,216 | 332,084 | |||||||||||
Deutsche Telekom AG | Diversified Telecommunication Services | 40,248 | 521,732 | |||||||||||
Deutsche Wohnen AG | Real Estate Management & Development | 4,464 | 170,014 | |||||||||||
| c | DWS Group GmbH & Co. KGaA, 144A | Capital Markets | 432 | 10,684 | ||||||||||
E.ON SE | Multi-Utilities | 27,000 | 279,697 | |||||||||||
Evonik Industries AG | Chemicals | 2,352 | 49,215 | |||||||||||
Fielmann AG | Specialty Retail | 360 | 20,995 | |||||||||||
Fraport AG Frankfurt Airport Services Worldwide | Transportation Infrastructure | 432 | 17,491 | |||||||||||
Fresenius Medical Care AG & Co. KGaA | Health Care Providers & Services | 2,616 | 172,799 | |||||||||||
Fresenius SE and Co. KGaA | Health Care Providers & Services | 5,064 | 188,531 | |||||||||||
Fuchs Petrolub SE | Chemicals | 480 | 15,379 | |||||||||||
GEA Group AG | Machinery | 2,112 | 43,393 | |||||||||||
Grenkeleasing AG | Consumer Finance | 336 | 19,816 | |||||||||||
Hannover Rueck SE | Insurance | 744 | 106,942 | |||||||||||
Hapag-Lloyd AG | Marine | 336 | 26,250 | |||||||||||
HeidelbergCement AG | Construction Materials | 1,872 | 80,293 | |||||||||||
Hella GmbH & Co. KGaA | Auto Components | 552 | 16,087 | |||||||||||
Henkel AG & Co. KGaA | Household Products | 1,272 | 94,001 | |||||||||||
Hochtief AG | Construction & Engineering | 240 | 15,932 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 840 | 21,300 | |||||||||||
Infineon Technologies AG | Semiconductors & Semiconductor Equipment | 15,528 | �� | 228,822 | ||||||||||
KION Group AG | Machinery | 888 | 38,429 | |||||||||||
Knorr-Bremse AG | Machinery | 600 | 53,221 | |||||||||||
Lanxess AG | Chemicals | 1,056 | 42,200 | |||||||||||
LEG Immobilien AG | Real Estate Management & Development | 864 | 97,362 | |||||||||||
Merck KGaA | Pharmaceuticals | 1,608 | 165,181 | |||||||||||
METRO AG | Food & Staples Retailing | 2,136 | 18,440 | |||||||||||
MTU Aero Engines AG | Aerospace & Defense | 648 | 94,814 | |||||||||||
Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen | Insurance | 1,800 | 363,607 | |||||||||||
Nemetschek AG | Software | 672 | 33,387 | |||||||||||
| a | Osram Licht AG | Electrical Equipment | 912 | 32,523 | ||||||||||
ProSiebenSat.1 Media SE | Media | 2,352 | 18,659 | |||||||||||
Puma SE | Textiles, Apparel & Luxury Goods | 984 | 58,735 | |||||||||||
Rational AG | Machinery | 48 | 25,481 | |||||||||||
Rheinmetall AG | Industrial Conglomerates | 552 | 38,800 | |||||||||||
| a,c | Rocket Internet SE, 144A | Internet & Direct Marketing Retail | 744 | 15,037 | ||||||||||
RWE AG | Multi-Utilities | 7,128 | 187,396 | |||||||||||
SAP SE | Software | 12,048 | 1,358,982 | |||||||||||
| b | Scout24 AG, Reg S | Interactive Media & Services | 1,320 | 79,298 | ||||||||||
Siemens AG | Industrial Conglomerates | 9,432 | 801,758 | |||||||||||
Siemens Healthineers AG | Health Care Equipment & Supplies | 1,608 | 63,597 | |||||||||||
Suedzucker AG | Food Products | 984 | 14,112 | |||||||||||
Symrise AG | Chemicals | 1,560 | 145,495 | |||||||||||
| a | Talanx AG | Insurance | 504 | 17,121 | ||||||||||
| a | TeamViewer AG | Software | 1,224 | 48,873 | ||||||||||
Telefonica Deutschland Holding AG | Diversified Telecommunication Services | 8,424 | 20,881 | |||||||||||
| a | thyssenkrupp AG | Metals & Mining | 5,856 | 30,637 | ||||||||||
| franklintempleton.com | Annual Report | 205 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Germany (continued) | ||||||||||||||
| a | Traton SE | Machinery | 600 | $ | 8,387 | |||||||||
TUI AG | Hotels, Restaurants & Leisure | 5,472 | 24,616 | |||||||||||
Uniper SE | Independent Power and Renewable Electricity Producers | 2,400 | 59,225 | |||||||||||
United Internet AG | Diversified Telecommunication Services | 1,368 | 40,333 | |||||||||||
| a | Varta AG | Electrical Equipment | 192 | 13,841 | ||||||||||
Volkswagen AG | Automobiles | 408 | 54,348 | |||||||||||
Vonovia SE | Real Estate Management & Development | 6,768 | 333,139 | |||||||||||
Wacker Chemie AG | Chemicals | 192 | 9,588 | |||||||||||
Wirecard AG | IT Services | 1,416 | 162,595 | |||||||||||
| a | Zalando SE | Internet & Direct Marketing Retail | 1,872 | 71,871 | ||||||||||
|
| |||||||||||||
| 11,505,882 | ||||||||||||||
|
| |||||||||||||
| Ireland 0.9% | ||||||||||||||
| a | AIB Group PLC | Banks | 9,456 | 10,604 | ||||||||||
Bank of Ireland Group PLC | Banks | 11,664 | 22,064 | |||||||||||
CRH PLC | Construction Materials | 9,912 | 270,143 | |||||||||||
Flutter Entertainment PLC | Hotels, Restaurants & Leisure | 936 | 84,584 | |||||||||||
Glanbia PLC | Food Products | 2,448 | 26,512 | |||||||||||
Kerry Group | Food Products | 1,824 | 210,546 | |||||||||||
Kingspan Group PLC | Building Products | 1,872 | 100,032 | |||||||||||
Smurfit Kappa Group PLC | Containers & Packaging | 2,976 | 84,503 | |||||||||||
|
| |||||||||||||
| 808,988 | ||||||||||||||
|
| |||||||||||||
| Italy 3.6% | ||||||||||||||
A2A SpA | Multi-Utilities | 19,392 | 24,108 | |||||||||||
Amplifon SpA | Health Care Providers & Services | 1,440 | 29,578 | |||||||||||
Assicurazioni Generali SpA | Insurance | 15,984 | �� | 217,652 | ||||||||||
Atlantia SpA | Transportation Infrastructure | 6,096 | 76,453 | |||||||||||
Banca Mediolanum SpA | Diversified Financial Services | 3,624 | 18,490 | |||||||||||
| a | Banco BPM SpA | Banks | 19,056 | 25,091 | ||||||||||
Buzzi Unicem SpA | Construction Materials | 888 | 16,243 | |||||||||||
Buzzi Unicem SpA, di Risp | Construction Materials | 528 | 4,953 | |||||||||||
Davide Campari-Milano SpA | Beverages | 6,792 | 48,814 | |||||||||||
DiaSorin SpA | Health Care Equipment & Supplies | 288 | 38,142 | |||||||||||
Enel SpA | Electric Utilities | 96,720 | 672,733 | |||||||||||
Eni SpA | Oil, Gas & Consumable Fuels | 31,152 | 315,154 | |||||||||||
Ferrari NV | Automobiles | 1,536 | 238,565 | |||||||||||
FinecoBank Banca Fineco SpA | Banks | 7,440 | 67,676 | |||||||||||
Hera SpA | Multi-Utilities | 9,864 | 35,371 | |||||||||||
b | Infrastrutture Wireless Italiane SpA, Reg S | Diversified Telecommunication Services | 3,096 | 33,563 | ||||||||||
Intesa Sanpaolo SpA | Banks | 186,504 | 304,589 | |||||||||||
Italgas Reti SpA | Gas Utilities | 6,072 | 33,239 | |||||||||||
Leonardo SpA | Aerospace & Defense | 4,872 | 32,460 | |||||||||||
| a | Mediaset SpA | Media | 4,368 | 9,298 | ||||||||||
Mediobanca Banca di Credito Finanziario SpA | Banks | 9,720 | 53,625 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 2,424 | 88,543 | |||||||||||
| a | Nexi SpA | IT Services | 3,768 | 49,026 | ||||||||||
Pirelli & C SpA | Auto Components | 5,496 | 19,690 | |||||||||||
b | Poste Italiane SpA, Reg S | Insurance | 5,544 | 46,962 | ||||||||||
Prysmian SpA | Electrical Equipment | 3,144 | 50,366 | |||||||||||
Recordati SpA | Pharmaceuticals | 1,200 | 50,746 | |||||||||||
| a | Saipem SpA | Energy Equipment & Services | 7,176 | 17,638 | ||||||||||
Salvatore Ferragamo SpA | Textiles, Apparel & Luxury Goods | 936 | 12,427 | |||||||||||
Snam SpA | Gas Utilities | 28,176 | 129,971 | |||||||||||
| a | Telecom Italia SpA/Milano | Diversified Telecommunication Services | 132,024 | 53,947 | ||||||||||
Telecom Italia SpA/Milano, di Risp | Diversified Telecommunication Services | 75,792 | 29,980 | |||||||||||
| 206 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Italy (continued) | ||||||||||||||
Tenaris SA | Energy Equipment & Services | 5,880 | $ | 36,001 | ||||||||||
Terna Rete Elettrica Nazionale SpA | Electric Utilities | 17,736 | 112,289 | |||||||||||
UniCredit SpA | Banks | 27,888 | 218,699 | |||||||||||
Unione di Banche Italiane SpA | Banks | 12,096 | 31,947 | |||||||||||
UnipolSai Assicurazioni SpA | Insurance | 7,416 | 18,227 | |||||||||||
|
| |||||||||||||
| 3,262,256 | ||||||||||||||
|
| |||||||||||||
| Kazakhstan 0.0%† | ||||||||||||||
KAZ Minerals PLC | Metals & Mining | 2,952 | 12,855 | |||||||||||
|
| |||||||||||||
| Luxembourg 0.1% | ||||||||||||||
Eurofins Scientific SE | Life Sciences Tools & Services | 144 | 71,260 | |||||||||||
RTL Group SA | Media | 504 | 16,989 | |||||||||||
SES SA, IDR | Media | 4,416 | 25,913 | |||||||||||
|
| |||||||||||||
| 114,162 | ||||||||||||||
|
| |||||||||||||
| Netherlands 5.1% | ||||||||||||||
Aalberts NV | Machinery | 1,200 | 28,493 | |||||||||||
ABN AMRO Bank NV, GDR | Banks | 5,208 | 42,767 | |||||||||||
| a | Adyen NV | IT Services | 336 | 284,102 | ||||||||||
Aegon NV | Insurance | 22,033 | 55,943 | |||||||||||
Akzo Nobel NV | Chemicals | 2,424 | 159,611 | |||||||||||
| a | Altice Europe NV, A | Media | 6,792 | 26,315 | ||||||||||
| a | Altice Europe NV, B | Media | 528 | 2,060 | ||||||||||
| a | Argenx SE | Biotechnology | 528 | 71,260 | ||||||||||
ASM International NV | Semiconductors & Semiconductor Equipment | 600 | 60,134 | |||||||||||
ASML Holding NV | Semiconductors & Semiconductor Equipment | 4,992 | 1,328,013 | |||||||||||
ASR Nederland NV | Insurance | 1,680 | 42,324 | |||||||||||
Boskalis Westminster | Construction & Engineering | 1,056 | 19,055 | |||||||||||
| b | Euronext NV, Reg S | Capital Markets | 792 | 58,920 | ||||||||||
EXOR NV | Diversified Financial Services | 1,296 | 66,836 | |||||||||||
Grandvision NV | Specialty Retail | 624 | 17,076 | |||||||||||
Heineken Holding NV | Beverages | 1,344 | 103,008 | |||||||||||
Heineken NV | Beverages | 2,928 | 244,683 | |||||||||||
ING Groep NV | Banks | 48,600 | 254,980 | |||||||||||
| a,b,c | Just Eat Takeaway, 144A, Reg S | Internet & Direct Marketing Retail | 1,344 | 100,989 | ||||||||||
Koninklijke Ahold Delhaize NV | Food & Staples Retailing | 13,560 | 316,693 | |||||||||||
Koninklijke DSM NV | Chemicals | 2,184 | 248,027 | |||||||||||
Koninklijke KPN NV | Diversified Telecommunication Services | 41,424 | 98,905 | |||||||||||
Koninklijke Philips NV | Health Care Equipment & Supplies | 11,112 | 450,091 | |||||||||||
Koninklijke Vopak NV | Oil, Gas & Consumable Fuels | 792 | 41,209 | |||||||||||
NN Group NV | Insurance | 4,104 | 110,777 | |||||||||||
| a | OCI NV | Chemicals | 1,200 | 14,431 | ||||||||||
| a | QIAGEN NV | Life Sciences Tools & Services | 2,784 | 111,834 | ||||||||||
Randstad NV | Professional Services | 1,392 | 49,135 | |||||||||||
Signify NV | Electrical Equipment | 1,536 | 29,814 | |||||||||||
Wolters Kluwer NV | Professional Services | 3,264 | 229,856 | |||||||||||
|
| |||||||||||||
| 4,667,341 | ||||||||||||||
|
| |||||||||||||
| Norway 0.9% | ||||||||||||||
Aker ASA | Diversified Financial Services | 312 | 7,000 | |||||||||||
Aker BP ASA | Oil, Gas & Consumable Fuels | 1,392 | 17,577 | |||||||||||
DNB ASA | Banks | 12,960 | 144,089 | |||||||||||
Equinor ASA | Oil, Gas & Consumable Fuels | 12,216 | 152,569 | |||||||||||
Gjensidige Forsikring ASA | Insurance | 2,088 | 35,403 | |||||||||||
Leroy Seafood Group ASA | Food Products | 3,168 | 15,428 | |||||||||||
Mowi ASA | Food Products | 5,280 | 79,771 | |||||||||||
| franklintempleton.com | Annual Report | 207 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Norway (continued) | ||||||||||||||
Norsk Hydro ASA | Metals & Mining | 16,752 | $ | 36,085 | ||||||||||
Orkla ASA | Food Products | 9,432 | 79,958 | |||||||||||
Salmar ASA | Food Products | 648 | 21,438 | |||||||||||
Schibsted ASA, A | Media | 1,008 | 19,078 | |||||||||||
Schibsted ASA, B | Media | 1,200 | 21,278 | |||||||||||
Telenor ASA | Diversified Telecommunication Services | 8,016 | 115,954 | |||||||||||
Yara International ASA | Chemicals | 2,184 | 68,488 | |||||||||||
|
| |||||||||||||
| 814,116 | ||||||||||||||
|
| |||||||||||||
| Poland 0.4% | ||||||||||||||
Bank Pekao SA | Banks | 1,968 | 26,600 | |||||||||||
CD Projekt SA | Entertainment | 768 | 53,456 | |||||||||||
Cyfrowy Polsat SA | Media | 3,504 | 20,095 | |||||||||||
| a | Dino Polska SA | Food & Staples Retailing | 600 | 23,417 | ||||||||||
Grupa Lotos SA | Oil, Gas & Consumable Fuels | 1,248 | 15,582 | |||||||||||
| a | KGHM Polska Miedz SA | Metals & Mining | 1,728 | 24,887 | ||||||||||
LPP SA | Textiles, Apparel & Luxury Goods | 7 | 8,814 | |||||||||||
| a | mBank SA | Banks | 216 | 11,535 | ||||||||||
| a | PGE Polska Grupa Energetyczna SA | Electric Utilities | 9,144 | 8,381 | ||||||||||
Polski Koncern Naftowy Orlen SA | Oil, Gas & Consumable Fuels | 3,936 | 52,783 | |||||||||||
Polskie Gornictwo Naftowe i Gazownictwo SA | Oil, Gas & Consumable Fuels | 21,240 | 17,591 | |||||||||||
Powszechna Kasa Oszczednosci Bank Polski SA | Banks | 10,704 | 58,294 | |||||||||||
Powszechny Zaklad Ubezpieczen SA | Insurance | 7,080 | 53,405 | |||||||||||
Santander Bank Polska SA | Banks | 336 | 14,036 | |||||||||||
|
| |||||||||||||
| 388,876 | ||||||||||||||
|
| |||||||||||||
| Portugal 0.3% | ||||||||||||||
EDP- Energias de Portugal SA | Electric Utilities | 31,632 | 126,963 | |||||||||||
Galp Energia SGPS SA, B | Oil, Gas & Consumable Fuels | 6,456 | 73,637 | |||||||||||
Jeronimo Martins SGPS SA | Food & Staples Retailing | 2,952 | 53,250 | |||||||||||
|
| |||||||||||||
| 253,850 | ||||||||||||||
|
| |||||||||||||
| Russia 0.1% | ||||||||||||||
Evraz PLC | Metals & Mining | 6,840 | 19,643 | |||||||||||
Polymetal International PLC | Metals & Mining | 4,200 | 71,841 | |||||||||||
|
| |||||||||||||
| 91,484 | ||||||||||||||
|
| |||||||||||||
| South Africa 0.0%† | ||||||||||||||
Investec PLC | Capital Markets | 8,448 | 15,912 | |||||||||||
|
| |||||||||||||
| Spain 4.1% | ||||||||||||||
Acciona SA | Electric Utilities | 264 | 28,200 | |||||||||||
ACS Actividades de Construccion y Servicios SA | Construction & Engineering | 3,017 | 58,975 | |||||||||||
Aena SME SA | Transportation Infrastructure | 888 | 96,968 | |||||||||||
Amadeus IT Group SA, A | IT Services | 5,064 | 240,040 | |||||||||||
Banco Bilbao Vizcaya Argentaria SA | Banks | 82,416 | 263,651 | |||||||||||
Banco de Sabadell SA | Banks | 68,280 | 35,138 | |||||||||||
Banco Santander SA | Banks | 204,336 | 497,293 | |||||||||||
Bankia SA | Banks | 15,408 | 17,211 | |||||||||||
Bankinter SA | Banks | 8,616 | 31,614 | |||||||||||
CaixaBank SA | Banks | 45,168 | 84,253 | |||||||||||
Cellnex Telecom SA | Diversified Telecommunication Services | 3,367 | 153,135 | |||||||||||
Corporacion Mapfre SA | Insurance | 12,408 | 21,191 | |||||||||||
EDP Renovaveis SA | Independent Power and Renewable Electricity Producers | 1,920 | 23,132 | |||||||||||
Enagas SA | Gas Utilities | 3,048 | 60,517 | |||||||||||
| 208 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Spain (continued) | ||||||||||||||
Endesa SA | Electric Utilities | 3,984 | $ | 85,112 | ||||||||||
Ferrovial SA | Construction & Engineering | 5,904 | 141,677 | |||||||||||
Grifols SA | Biotechnology | 4,152 | 141,229 | |||||||||||
Iberdrola SA | Electric Utilities | 73,800 | 727,498 | |||||||||||
Industria de Diseno Textil SA | Specialty Retail | 13,152 | 341,438 | |||||||||||
Inmobiliaria Colonial SA | Equity Real Estate Investment Trusts (REITs | ) | 4,008 | 37,975 | ||||||||||
Merlin Properties Socimi SA | Equity Real Estate Investment Trusts (REITs | ) | 4,200 | 31,660 | ||||||||||
Naturgy Energy Group SA | Gas Utilities | 3,648 | 64,505 | |||||||||||
Red Electrica Corp. SA | Electric Utilities | 5,304 | 95,241 | |||||||||||
Repsol SA | Oil, Gas & Consumable Fuels | 17,040 | 155,785 | |||||||||||
Siemens Gamesa Renewable Energy SA | Electrical Equipment | 2,808 | 42,303 | |||||||||||
Telefonica SA | Diversified Telecommunication Services | 56,544 | 258,936 | |||||||||||
Zardoya Otis SA | Machinery | 2,232 | 15,062 | |||||||||||
|
| |||||||||||||
| 3,749,739 | ||||||||||||||
|
| |||||||||||||
| Sweden 4.5% | ||||||||||||||
Alfa Laval AB | Machinery | 3,936 | 68,429 | |||||||||||
Assa Abloy AB, B | Building Products | 11,472 | 217,336 | |||||||||||
Atlas Copco AB | Machinery | 4,680 | 138,402 | |||||||||||
Atlas Copco AB, A | Machinery | 7,848 | 264,486 | |||||||||||
Boliden AB | Metals & Mining | 3,432 | 62,802 | |||||||||||
Castellum AB | Real Estate Management & Development | 3,336 | 56,567 | |||||||||||
Electrolux AB, B | Household Durables | 2,976 | 37,186 | |||||||||||
| a | Electrolux Professional AB, B | Machinery | 2,976 | 8,561 | ||||||||||
Elekta AB, B | Health Care Equipment & Supplies | 4,536 | 37,633 | |||||||||||
Epiroc AB, A | Machinery | 7,848 | 77,991 | |||||||||||
Epiroc AB, B | Machinery | 4,752 | 47,205 | |||||||||||
| a | EQT AB | Capital Markets | 2,520 | 30,140 | ||||||||||
Ericsson, B | Communications Equipment | 37,056 | 303,174 | |||||||||||
Essity AB, B | Household Products | 7,536 | 232,750 | |||||||||||
| a | Fastighets AB Balder, B | Real Estate Management & Development | 1,248 | 44,969 | ||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 10,896 | 140,768 | |||||||||||
Hexagon AB, B | Electronic Equipment, Instruments & Components | 3,168 | 135,575 | |||||||||||
Hufvudstaden AB, A | Real Estate Management & Development | 1,344 | 18,408 | |||||||||||
Husqvarna AB, B | Household Durables | 5,160 | 26,009 | |||||||||||
ICA Gruppen AB | Food & Staples Retailing | 984 | 41,505 | |||||||||||
Industrivarden AB, A | Diversified Financial Services | 2,928 | 57,214 | |||||||||||
Industrivarden AB, C | Diversified Financial Services | 1,776 | 34,757 | |||||||||||
Investment AB Latour, B | Industrial Conglomerates | 1,512 | 21,609 | |||||||||||
Investor AB, A | Diversified Financial Services | 1,680 | 76,474 | |||||||||||
Investor AB, B | Diversified Financial Services | 5,616 | 259,099 | |||||||||||
Kinnevik AB, B | Diversified Financial Services | 2,952 | 49,192 | |||||||||||
L E Lundbergforetagen AB, B | Diversified Financial Services | 912 | 37,483 | |||||||||||
Lundin Petroleum AB | Oil, Gas & Consumable Fuels | 2,160 | 41,531 | |||||||||||
Nibe Industrier AB | Building Products | 3,792 | 55,343 | |||||||||||
Saab AB, B | Aerospace & Defense | 1,152 | 22,202 | |||||||||||
Sandvik AB | Machinery | 13,344 | 190,240 | |||||||||||
Securitas AB, B | Commercial Services & Supplies | 3,840 | 41,645 | |||||||||||
Skandinaviska Enskilda Banken AB, A | Banks | 17,928 | 121,562 | |||||||||||
Skandinaviska Enskilda Banken AB, C | Banks | 264 | 2,017 | |||||||||||
| a | Skanska AB, B | Construction & Engineering | 4,464 | 68,237 | ||||||||||
SKF AB, B | Machinery | 4,776 | 65,896 | |||||||||||
Svenska Cellulosa AB, A | Paper & Forest Products | 144 | 1,453 | |||||||||||
Svenska Cellulosa AB, B | Paper & Forest Products | 7,440 | 75,431 | |||||||||||
| a | Svenska Handelsbanken AB, A | Banks | 18,432 | 154,671 | ||||||||||
Svenska Handelsbanken AB, B | Banks | 456 | 4,147 | |||||||||||
Swedbank AB, A | Banks | 12,408 | 138,824 | |||||||||||
| franklintempleton.com | Annual Report | 209 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Sweden (continued) | ||||||||||||||
Swedish Match AB | Tobacco | 2,040 | $ | 116,952 | ||||||||||
| a | Swedish Orphan Biovitrum AB | Biotechnology | 2,232 | 38,072 | ||||||||||
Tele2 AB, B | Wireless Telecommunication Services | 6,696 | 90,157 | |||||||||||
Telefonaktiebolaget LM Ericsson, A | Communications Equipment | 456 | 3,728 | |||||||||||
Telia Co. AB | Diversified Telecommunication Services | 32,688 | 117,783 | |||||||||||
Trelleborg AB, B | Machinery | 3,048 | 33,025 | |||||||||||
Volvo AB, B | Machinery | 18,672 | 225,209 | |||||||||||
|
| |||||||||||||
| 4,133,849 | ||||||||||||||
|
| |||||||||||||
| Switzerland 17.2% | ||||||||||||||
ABB Ltd. | Electrical Equipment | 22,272 | 391,438 | |||||||||||
Adecco Group AG | Professional Services | 1,944 | 76,631 | |||||||||||
| a | Alcon Inc. | Health Care Equipment & Supplies | 5,712 | 291,223 | ||||||||||
Baloise Holding AG | Insurance | 576 | 75,546 | |||||||||||
Banque Cantonale Vaudoise | Banks | 24 | 19,695 | |||||||||||
Barry Callebaut AG | Food Products | 31 | 62,157 | |||||||||||
Chocoladefabriken Lindt & Spruengli AG | Food Products | 24 | 202,284 | |||||||||||
Cie Financiere Richemont SA | Textiles, Apparel & Luxury Goods | 6,360 | 348,779 | |||||||||||
Clariant AG | Chemicals | 2,520 | 42,362 | |||||||||||
Coca-Cola HBC AG | Beverages | 2,448 | 52,725 | |||||||||||
Credit Suisse Group AG | Capital Markets | 30,456 | 251,820 | |||||||||||
DKSH Holding AG | Professional Services | 456 | 22,632 | |||||||||||
Dufry AG | Specialty Retail | 360 | 11,192 | |||||||||||
EMS-Chemie Holding AG | Chemicals | 96 | 60,375 | |||||||||||
Flughafen Zurich AG | Transportation Infrastructure | 240 | 27,037 | |||||||||||
Geberit AG | Building Products | 432 | 190,204 | |||||||||||
Georg Fischer AG | Machinery | 48 | 33,189 | |||||||||||
Givaudan AG | Chemicals | 120 | 371,454 | |||||||||||
Glencore PLC | Metals & Mining | 135,048 | 207,307 | |||||||||||
Helvetia Holding AG | Insurance | 408 | 35,126 | |||||||||||
Julius Baer Group Ltd. | Capital Markets | 2,712 | 92,582 | |||||||||||
Kuehne + Nagel International AG | Marine | 624 | 85,679 | |||||||||||
LafargeHolcim Ltd., B | Construction Materials | 6,312 | 230,678 | |||||||||||
Logitech International SA | Technology Hardware, Storage & Peripherals | 1,824 | 78,876 | |||||||||||
Lonza Group AG | Life Sciences Tools & Services | 912 | 379,108 | |||||||||||
Nestle SA | Food Products | 36,000 | 3,700,274 | |||||||||||
Novartis AG | Pharmaceuticals | 26,520 | 2,188,643 | |||||||||||
OC Oerlikon Corp. AG | Machinery | 2,520 | 20,211 | |||||||||||
Pargesa Holding SA, B | Diversified Financial Services | 480 | 31,825 | |||||||||||
Partners Group Holding AG | Capital Markets | 216 | 149,484 | |||||||||||
PSP Swiss Property AG | Real Estate Management & Development | 480 | 59,879 | |||||||||||
Roche Holding AG | Pharmaceuticals | 336 | 107,723 | |||||||||||
Roche Holding AG | Pharmaceuticals | 8,640 | 2,804,395 | |||||||||||
Schindler Holding AG | Machinery | 240 | 50,701 | |||||||||||
Schindler Holding AG, PC | Machinery | 504 | 110,640 | |||||||||||
SGS SA | Professional Services | 72 | 166,838 | |||||||||||
Sika AG | Chemicals | 1,704 | 281,696 | |||||||||||
Sonova Holding AG | Health Care Equipment & Supplies | 672 | 121,127 | |||||||||||
STMicroelectronics NV | Semiconductors & Semiconductor Equipment | 7,872 | 171,671 | |||||||||||
Straumann Holding AG | Health Care Equipment & Supplies | 120 | 89,471 | |||||||||||
Sulzer AG | Machinery | 216 | 13,640 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 336 | 67,179 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 624 | 24,559 | |||||||||||
Swiss Life Holding AG | Insurance | 408 | 138,903 | |||||||||||
Swiss Prime Site AG | Real Estate Management & Development | 960 | 94,011 | |||||||||||
Swiss Re AG | Insurance | 3,456 | 266,321 | |||||||||||
Swisscom AG | Diversified Telecommunication Services | 312 | 167,746 | |||||||||||
| 210 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Switzerland (continued) | ||||||||||||||
Temenos AG | Software | 744 | $ | 97,580 | ||||||||||
UBS Group AG | Capital Markets | 42,192 | 394,469 | |||||||||||
Vifor Pharma AG | Pharmaceuticals | 552 | 76,306 | |||||||||||
Zurich Insurance Group AG | Insurance | 1,848 | 655,887 | |||||||||||
|
| |||||||||||||
| 15,691,278 | ||||||||||||||
|
| |||||||||||||
| United Arab Emirates 0.0%† | ||||||||||||||
NMC Health PLC | Health Care Providers & Services | 1,159 | 1,604 | |||||||||||
|
| |||||||||||||
| United Kingdom 24.4% | ||||||||||||||
3i Group PLC | Capital Markets | 11,712 | 115,046 | |||||||||||
Admiral Group PLC | Insurance | 2,544 | 70,344 | |||||||||||
Anglo American PLC | Metals & Mining | 15,312 | 268,919 | |||||||||||
Antofagasta PLC | Metals & Mining | 4,344 | 41,636 | |||||||||||
Ashmore Group PLC | Capital Markets | 5,592 | 24,740 | |||||||||||
Ashtead Group PLC | Trading Companies & Distributors | 5,592 | 122,416 | |||||||||||
Associated British Foods PLC | Food Products | 4,368 | 98,248 | |||||||||||
AstraZeneca PLC | Pharmaceuticals | 16,344 | 1,462,376 | |||||||||||
Auto Trader Group PLC | Interactive Media & Services | 11,088 | 60,370 | |||||||||||
Avast PLC | Software | 6,696 | 32,663 | |||||||||||
AVEVA Group PLC | Software | 816 | 35,352 | |||||||||||
Aviva PLC | Insurance | 48,648 | 161,962 | |||||||||||
B&M European Value Retail SA | Multiline Retail | 10,032 | 34,307 | |||||||||||
Babcock International Group PLC | Commercial Services & Supplies | 3,168 | 15,053 | |||||||||||
BAE Systems PLC | Aerospace & Defense | 39,912 | 258,233 | |||||||||||
Barclays PLC | Banks | 213,528 | 249,169 | |||||||||||
Barratt Developments PLC | Household Durables | 12,504 | 68,374 | |||||||||||
Bellway PLC | Household Durables | 1,608 | 42,987 | |||||||||||
BHP Group PLC | Metals & Mining | 25,824 | 400,896 | |||||||||||
BP PLC | Oil, Gas & Consumable Fuels | 248,184 | 1,059,227 | |||||||||||
British American Tobacco PLC | Tobacco | 28,416 | 972,118 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs | ) | 11,544 | 48,124 | ||||||||||
BT Group PLC | Diversified Telecommunication Services | 108,648 | 158,833 | |||||||||||
Bunzl PLC | Trading Companies & Distributors | 4,224 | 85,346 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 5,040 | 82,773 | |||||||||||
Centrica PLC | Multi-Utilities | 72,960 | 34,450 | |||||||||||
Cineworld Group PLC | Entertainment | 12,072 | 7,429 | |||||||||||
CNH Industrial NV | Machinery | 12,216 | 69,915 | |||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 19,704 | 308,820 | |||||||||||
ConvaTec Group PLC | Health Care Equipment & Supplies | 18,432 | 42,624 | |||||||||||
Croda International PLC | Chemicals | 1,512 | 80,092 | |||||||||||
DCC PLC | Industrial Conglomerates | 1,224 | 77,403 | |||||||||||
Derwent London PLC | Equity Real Estate Investment Trusts (REITs | ) | 1,248 | 50,602 | ||||||||||
Diageo PLC | Beverages | 28,704 | 920,575 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 17,280 | 63,401 | |||||||||||
DS Smith PLC | Containers & Packaging | 15,768 | 53,845 | |||||||||||
easyJet PLC | Airlines | 2,472 | 17,502 | |||||||||||
Experian PLC | Professional Services | 11,280 | 314,839 | |||||||||||
Ferguson PLC | Trading Companies & Distributors | 2,808 | 176,039 | |||||||||||
Fiat Chrysler Automobiles NV | Automobiles | 13,704 | 98,821 | |||||||||||
Fresnillo PLC | Metals & Mining | 2,328 | 19,248 | |||||||||||
G4S PLC | Commercial Services & Supplies | 19,440 | 22,249 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 61,008 | 1,145,748 | |||||||||||
GVC Holdings PLC | Hotels, Restaurants & Leisure | 7,320 | 50,919 | |||||||||||
Halma PLC | Electronic Equipment, Instruments & Components | 4,752 | 113,190 | |||||||||||
Hargreaves Lansdown PLC | Capital Markets | 3,768 | 64,756 | |||||||||||
Hikma Pharmaceuticals PLC | Pharmaceuticals | 1,752 | 44,208 | |||||||||||
| franklintempleton.com | Annual Report | 211 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| United Kingdom (continued) | ||||||||||||||
Hiscox Ltd. | Insurance | 3,528 | $ | 40,464 | ||||||||||
HomeServe PLC | Commercial Services & Supplies | 3,432 | 45,023 | |||||||||||
Howden Joinery Group PLC | Trading Companies & Distributors | 7,128 | 45,252 | |||||||||||
HSBC Holdings PLC | Banks | 252,264 | 1,420,870 | |||||||||||
IMI PLC | Machinery | 3,360 | 31,138 | |||||||||||
Imperial Brands PLC | Tobacco | 11,856 | 220,042 | |||||||||||
Inchcape PLC | Distributors | 4,896 | 26,299 | |||||||||||
Informa PLC | Media | 15,504 | 85,086 | |||||||||||
InterContinental Hotels Group PLC | Hotels, Restaurants & Leisure | 2,256 | 98,340 | |||||||||||
Intermediate Capital Group PLC | Capital Markets | 3,432 | 38,151 | |||||||||||
International Consolidated Airlines Group SA | Airlines | 5,640 | 15,043 | |||||||||||
Intertek Group PLC | Professional Services | 2,016 | 118,138 | |||||||||||
ITV PLC | Media | 46,800 | 38,311 | |||||||||||
J Sainsbury PLC | Food & Staples Retailing | 20,232 | 52,782 | |||||||||||
JD Sports Fashion PLC | Specialty Retail | 5,328 | 30,238 | |||||||||||
John Wood Group PLC | Energy Equipment & Services | 8,400 | 16,212 | |||||||||||
Johnson Matthey PLC | Chemicals | 2,376 | 52,971 | |||||||||||
Kingfisher PLC | Specialty Retail | 26,544 | 47,362 | |||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 8,952 | 61,805 | ||||||||||
Legal & General Group PLC | Insurance | 73,704 | 177,158 | |||||||||||
Lloyds Banking Group PLC | Banks | 871,776 | 345,907 | |||||||||||
London Stock Exchange Group PLC | Capital Markets | 3,912 | 353,130 | |||||||||||
| a | M&G PLC | Diversified Financial Services | 32,856 | 45,873 | ||||||||||
Marks & Spencer Group PLC | Multiline Retail | 24,338 | 29,949 | |||||||||||
Meggitt PLC | Aerospace & Defense | 9,720 | 34,988 | |||||||||||
Melrose Industries PLC | Electrical Equipment | 59,880 | 67,937 | |||||||||||
Micro Focus International PLC | Software | 4,080 | 20,236 | |||||||||||
Mondi PLC | Paper & Forest Products | 6,120 | 104,797 | |||||||||||
National Grid PLC | Multi-Utilities | 43,296 | 508,181 | |||||||||||
Next PLC | Multiline Retail | 1,560 | 78,766 | |||||||||||
| a | Ninety One PLC | Capital Markets | 4,224 | 9,056 | ||||||||||
| a | Ocado Group PLC | Internet & Direct Marketing Retail | 5,688 | 86,045 | ||||||||||
Pearson PLC | Media | 9,552 | 65,450 | |||||||||||
Pennon Group PLC | Water Utilities | 5,232 | 70,421 | |||||||||||
Persimmon PLC | Household Durables | 3,984 | 94,674 | |||||||||||
Phoenix Group Holdings PLC | Insurance | 6,408 | 49,787 | |||||||||||
Prudential PLC | Insurance | 32,304 | 414,773 | |||||||||||
Quilter PLC | Capital Markets | 22,848 | 33,430 | |||||||||||
Reckitt Benckiser Group PLC | Household Products | 7,824 | 596,634 | |||||||||||
RELX PLC | Professional Services | 23,400 | 502,537 | |||||||||||
Renishaw PLC | Electronic Equipment, Instruments & Components | 432 | 16,948 | |||||||||||
Rentokil Initial PLC | Commercial Services & Supplies | 23,112 | 111,135 | |||||||||||
Rightmove PLC | Interactive Media & Services | 10,800 | 65,270 | |||||||||||
Rolls-Royce Holdings PLC | Aerospace & Defense | 21,504 | 90,817 | |||||||||||
Royal Bank of Scotland Group PLC | Banks | 56,424 | 78,988 | |||||||||||
Royal Dutch Shell PLC, A | Oil, Gas & Consumable Fuels | 51,528 | 906,630 | |||||||||||
Royal Dutch Shell PLC, B | Oil, Gas & Consumable Fuels | 46,536 | 784,636 | |||||||||||
RSA Insurance Group PLC | Insurance | 12,792 | 66,681 | |||||||||||
Schroders PLC | Capital Markets | 1,416 | 43,613 | |||||||||||
Segro PLC | Equity Real Estate Investment Trusts (REITs | ) | 13,536 | 128,229 | ||||||||||
Severn Trent PLC | Water Utilities | 2,976 | 84,134 | |||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 10,896 | 193,808 | |||||||||||
Smiths Group PLC | Industrial Conglomerates | 4,968 | 75,522 | |||||||||||
Spirax-Sarco Engineering PLC | Machinery | 912 | 92,333 | |||||||||||
SSE PLC | Electric Utilities | 12,840 | 207,769 | |||||||||||
St. James’s Place Capital PLC | Capital Markets | 6,552 | 61,711 | |||||||||||
| 212 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| United Kingdom (continued) | ||||||||||||||
Standard Chartered PLC | Banks | 32,736 | $ | 180,955 | ||||||||||
Standard Life Aberdeen PLC | Capital Markets | 28,584 | 79,356 | |||||||||||
Subsea 7 SA | Energy Equipment & Services | 2,976 | 14,040 | |||||||||||
Tate & Lyle PLC | Food Products | 5,832 | 47,438 | |||||||||||
Taylor Wimpey PLC | Household Durables | 40,800 | 59,443 | |||||||||||
TechnipFMC PLC | Energy Equipment & Services | 5,736 | 39,450 | |||||||||||
Tesco PLC | Food & Staples Retailing | 120,408 | 341,598 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 1,464 | 65,623 | |||||||||||
The Sage Group PLC | Software | 13,584 | 99,680 | |||||||||||
Travis Perkins PLC | Trading Companies & Distributors | 3,168 | 34,670 | |||||||||||
Unilever NV | Personal Products | 17,016 | 836,546 | |||||||||||
Unilever PLC | Personal Products | 13,560 | 685,243 | |||||||||||
United Utilities Group PLC | Water Utilities | 8,568 | 95,912 | |||||||||||
| a | Virgin Money UK PLC | Banks | 15,120 | 11,624 | ||||||||||
Vodafone Group PLC | Wireless Telecommunication Services | 333,984 | 467,960 | |||||||||||
Weir Group PLC | Machinery | 3,264 | 29,180 | |||||||||||
Whitbread PLC | Hotels, Restaurants & Leisure | 1,704 | 64,020 | |||||||||||
William Morrison Supermarkets PLC | Food & Staples Retailing | 27,864 | 61,499 | |||||||||||
WPP PLC | Media | 14,832 | 101,408 | |||||||||||
|
| |||||||||||||
| 22,243,312 | ||||||||||||||
|
| |||||||||||||
| United States 0.0%† | ||||||||||||||
Carnival PLC | Hotels, Restaurants & Leisure | 1,968 | 23,948 | |||||||||||
|
| |||||||||||||
Total Common Stocks and Other Equity Interests (Cost $112,999,923) | 90,036,261 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks 0.7% | ||||||||||||||
| Germany 0.7% | ||||||||||||||
| d | Bayerische Motoren Werke AG, 8.989%, pfd. | Automobiles | 720 | 30,937 | ||||||||||
| d | Fuchs Petrolub SE, 2.939%, pfd. | Chemicals | 816 | 28,938 | ||||||||||
| d | Henkel AG & Co. KGaA, 2.527%, pfd. | Household Products | 2,208 | 177,344 | ||||||||||
| d | Porsche Automobil Holding SE, 5.714%, pfd. | Automobiles | 1,896 | 80,469 | ||||||||||
| d | Sartorius AG, 0.279%, pfd. | Health Care Equipment & Supplies | 432 | 105,326 | ||||||||||
| d | Volkswagen AG, 4.549%, pfd. | Automobiles | 2,256 | 264,471 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $955,523) | 687,485 | |||||||||||||
|
| |||||||||||||
Total Investments (Cost $113,955,446) 99.3% | 90,723,746 | |||||||||||||
Other Assets, less Liabilities 0.7% | 632,488 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 91,356,234 | ||||||||||||
|
| |||||||||||||
See abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $494,080, representing 0.5% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $136,190, representing 0.1% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
| franklintempleton.com | Annual Report | 213 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe ETF(continued)
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
EURO STOXX 50 Index | Long | 9 | $ | 271,273 | 6/19/20 | $ | 25,006 | |||||||||||||
FTSE 100 Index | Long | 2 | 139,755 | 6/19/20 | 11,517 | |||||||||||||||
|
| |||||||||||||||||||
Total Futures Contracts | $ | 36,523 | ||||||||||||||||||
|
| |||||||||||||||||||
*As of period end.
See note 8 regarding derivative information
| 214 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Europe Hedged ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||||||||||
Net asset value, beginning of year | $ | 22.81 | $ | 23.88 | $ | 25.05 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.73 | 0.79 | 0.25 | |||||||||
Net realized and unrealized gains (losses) | (2.92 | ) | 0.62 | (1.40 | ) | |||||||
|
| |||||||||||
Total from investment operations | (2.19 | ) | 1.41 | (1.15 | ) | |||||||
|
| |||||||||||
| Less distributions from: |
| |||||||||||
Net investment income | (1.47 | ) | (0.38 | ) | (0.02 | ) | ||||||
Net realized gains | — | (2.10 | ) | — | d | |||||||
|
| |||||||||||
Total distributions | (1.47 | ) | (2.48 | ) | (0.02 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 19.15 | $ | 22.81 | $ | 23.88 | ||||||
|
| |||||||||||
Total returne | (10.67)% | 6.98% | (4.61)% | |||||||||
| Ratios to average net assetsf |
| |||||||||||
Expenses before waiver and payments by affiliates | 0.09% | 0.09% | 0.09% | |||||||||
Expenses net waiver and payments by affiliates | 0.09% | 0.09% | —% | |||||||||
Net investment income | 3.10% | 3.28% | 2.47% | |||||||||
| Supplemental data |
| |||||||||||
Net assets, end of year (000’s) | $3,831 | $4,563 | $33,428 | |||||||||
Portfolio turnover rateg | 14.81% | h | 26.81% | 5.33% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.001 per share.
eTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
hPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 14.81%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 215 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin FTSE Europe Hedged ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests 97.3% | ||||||||||||||
| Australia 0.7% | ||||||||||||||
Rio Tinto PLC | Metals & Mining | 567 | $ | 26,143 | ||||||||||
|
| |||||||||||||
| Austria 0.3% | ||||||||||||||
Andritz AG | Machinery | 37 | 1,160 | |||||||||||
Erste Group Bank AG | Banks | 147 | 2,724 | |||||||||||
OMV AG | Oil, Gas & Consumable Fuels | 71 | 1,960 | |||||||||||
Raiffeisen Bank International AG | Banks | 65 | 954 | |||||||||||
Telekom Austria AG | Diversified Telecommunication Services | 83 | 578 | |||||||||||
Verbund AG | Electric Utilities | 35 | 1,268 | |||||||||||
Vienna Insurance Group AG Wiener Versicherung Gruppe | Insurance | 22 | 414 | |||||||||||
Voestalpine AG | Metals & Mining | 61 | 1,241 | |||||||||||
|
| |||||||||||||
| 10,299 | ||||||||||||||
|
| |||||||||||||
| Belgium 1.5% | ||||||||||||||
Ackermans & van Haaren NV | Diversified Financial Services | 11 | 1,433 | |||||||||||
Ageas | Insurance | 95 | 3,952 | |||||||||||
Anheuser-Busch InBev SA/NV | Beverages | 401 | 17,807 | |||||||||||
Colruyt SA | Food & Staples Retailing | 25 | 1,351 | |||||||||||
Elia Group SA/NV | Electric Utilities | 17 | 1,662 | |||||||||||
| a | Galapagos NV | Biotechnology | 25 | 4,965 | ||||||||||
Groupe Bruxelles Lambert SA | Diversified Financial Services | 38 | 2,986 | |||||||||||
KBC Groep NV | Banks | 141 | 6,501 | |||||||||||
Proximus SADP | Diversified Telecommunication Services | 71 | 1,626 | |||||||||||
Sofina SA | Diversified Financial Services | 8 | 1,631 | |||||||||||
Solvay SA | Chemicals | 36 | 2,622 | |||||||||||
Telenet Group Holding NV | Media | 23 | 692 | |||||||||||
UCB SA | Pharmaceuticals | 61 | 5,288 | |||||||||||
Umicore SA | Chemicals | 108 | 3,774 | |||||||||||
|
| |||||||||||||
| 56,290 | ||||||||||||||
|
| |||||||||||||
| China 0.4% | ||||||||||||||
| a | Prosus NV | Internet & Direct Marketing Retail | 222 | 15,383 | ||||||||||
|
| |||||||||||||
| Denmark 3.4% | ||||||||||||||
A.P. Moeller-Maersk AS, A | Marine | 2 | 1,657 | |||||||||||
A.P. Moeller-Maersk AS, B | Marine | 3 | 2,687 | |||||||||||
Ambu AS, B | Health Care Equipment & Supplies | 86 | 2,089 | |||||||||||
Carlsberg AS, B | Beverages | 54 | 6,112 | |||||||||||
Chr. Hansen Holding AS | Chemicals | 53 | 3,965 | |||||||||||
Coloplast AS, B | Health Care Equipment & Supplies | 69 | 10,010 | |||||||||||
Danske Bank AS | Banks | 335 | 3,788 | |||||||||||
DSV Panalpina A/S | Air Freight & Logistics | 107 | 9,727 | |||||||||||
| a | Genmab AS | Biotechnology | 30 | 6,074 | ||||||||||
GN Store Nord AS | Health Care Equipment & Supplies | 68 | 3,038 | |||||||||||
H. Lundbeck AS | Pharmaceuticals | 32 | 950 | |||||||||||
ISS AS | Commercial Services & Supplies | 98 | 1,347 | |||||||||||
Novo Nordisk AS, B | Pharmaceuticals | 854 | 51,378 | |||||||||||
Novozymes AS | Chemicals | 105 | 4,775 | |||||||||||
Orsted AS | Electric Utilities | 97 | 9,505 | |||||||||||
Pandora AS | Textiles, Apparel & Luxury Goods | 47 | 1,527 | |||||||||||
Rockwool International AS, B | Building Products | 3 | 543 | |||||||||||
Tryg AS | Insurance | 59 | 1,451 | |||||||||||
Vestas Wind Systems AS | Electrical Equipment | 102 | 8,288 | |||||||||||
| a | William Demant Holding AS | Health Care Equipment & Supplies | 59 | 1,307 | ||||||||||
|
| |||||||||||||
| 130,218 | ||||||||||||||
|
| |||||||||||||
| Finland 1.9% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 73 | 4,524 | |||||||||||
b | Fortum OYJ, Reg S | Electric Utilities | 217 | 3,185 | ||||||||||
| 216 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Finland (continued) | ||||||||||||||
Huhtamaki OYJ | Containers & Packaging | 48 | $ | 1,537 | ||||||||||
Kesko OYJ | Food & Staples Retailing | 35 | 1,982 | |||||||||||
Kone OYJ, B | Machinery | 201 | 11,385 | |||||||||||
Metso OYJ | Machinery | 56 | 1,335 | |||||||||||
Neste Oil OYJ | Oil, Gas & Consumable Fuels | 213 | 7,210 | |||||||||||
Nokia OYJ, A | Communications Equipment | 2,905 | 9,145 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 65 | 1,574 | |||||||||||
Nordea Bank Abp | Banks | 1,653 | 9,310 | |||||||||||
Orion OYJ | Pharmaceuticals | 53 | 2,168 | |||||||||||
Sampo OYJ, A | Insurance | 251 | 7,331 | |||||||||||
Stora Enso OYJ, R | Paper & Forest Products | 292 | 2,962 | |||||||||||
UPM-Kymmene OYJ | Paper & Forest Products | 283 | 7,791 | |||||||||||
Wartsila OYJ ABP | Machinery | 257 | 1,886 | |||||||||||
|
| |||||||||||||
| 73,325 | ||||||||||||||
|
| |||||||||||||
| France 15.9% | ||||||||||||||
Accor SA | Hotels, Restaurants & Leisure | 96 | 2,633 | |||||||||||
| a | Adevinta ASA, B | Interactive Media & Services | 112 | 993 | ||||||||||
Aeroports de Paris SA | Transportation Infrastructure | 14 | 1,343 | |||||||||||
| a | AirFrance-KLM | Airlines | 94 | 526 | ||||||||||
Air Liquide SA | Chemicals | 237 | 30,335 | |||||||||||
Airbus SE | Aerospace & Defense | 282 | 18,361 | |||||||||||
| c | ALD SA, 144A | Road & Rail | 46 | 404 | ||||||||||
Alstom SA | Machinery | 95 | 3,976 | |||||||||||
Amundi SA | Capital Markets | 30 | 1,773 | |||||||||||
ArcelorMittal SA | Metals & Mining | 305 | 2,899 | |||||||||||
Arkema SA | Chemicals | 37 | 2,558 | |||||||||||
Atos SE | IT Services | 48 | 3,252 | |||||||||||
AXA SA | Insurance | 1,000 | 17,323 | |||||||||||
Biomerieux | Health Care Equipment & Supplies | 22 | 2,477 | |||||||||||
BNP Paribas SA | Banks | 563 | 16,994 | |||||||||||
Bollore | Entertainment | 519 | 1,429 | |||||||||||
Bouygues SA | Construction & Engineering | 115 | 3,372 | |||||||||||
Bureau Veritas SA | Professional Services | 138 | 2,621 | |||||||||||
Capgemini SE | IT Services | 83 | 7,013 | |||||||||||
Carrefour SA | Food & Staples Retailing | 309 | 4,887 | |||||||||||
Casino Guichard-Perrachon SA | Food & Staples Retailing | 28 | 1,079 | |||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 91 | 8,094 | |||||||||||
CNP Assurances | Insurance | 86 | 842 | |||||||||||
Compagnie de Saint-Gobain | Building Products | 248 | 6,031 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 24 | 1,352 | ||||||||||
Credit Agricole SA | Banks | 588 | 4,316 | |||||||||||
Danone SA | Food Products | 306 | 19,689 | |||||||||||
Dassault Aviation SA | Aerospace & Defense | 1 | 822 | |||||||||||
Dassault Systemes | Software | 67 | 9,925 | |||||||||||
Edenred | IT Services | 124 | 5,182 | |||||||||||
EDF SA | Electric Utilities | 253 | 1,995 | |||||||||||
Eiffage SA | Construction & Engineering | 38 | 2,689 | |||||||||||
Elis SA | Commercial Services & Supplies | 109 | 1,033 | |||||||||||
Engie SA | Multi-Utilities | 853 | 8,809 | |||||||||||
EssilorLuxottica SA | Textiles, Apparel & Luxury Goods | 151 | 16,283 | |||||||||||
Eurazeo SE | Diversified Financial Services | 21 | 948 | |||||||||||
Eutelsat Communications SA | Media | 95 | 993 | |||||||||||
Faurecia SE | Auto Components | 37 | 1,108 | |||||||||||
Gecina SA | Equity Real Estate Investment Trusts (REITs | ) | 26 | 3,443 | ||||||||||
Getlink SE | Transportation Infrastructure | 235 | 2,834 | |||||||||||
| franklintempleton.com | Annual Report | 217 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| France (continued) | ||||||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 16 | $ | 11,039 | ||||||||||
ICADE | Equity Real Estate Investment Trusts (REITs | ) | 16 | 1,267 | ||||||||||
Iliad SA | Diversified Telecommunication Services | 8 | 1,085 | |||||||||||
Imerys SA | Construction Materials | 19 | 478 | |||||||||||
Ingenico Group SA | Electronic Equipment, Instruments & Components | 32 | 3,404 | |||||||||||
Ipsen SA | Pharmaceuticals | 18 | 932 | |||||||||||
JCDecaux SA | Media | 35 | 634 | |||||||||||
Kering SA | Textiles, Apparel & Luxury Goods | 38 | 19,843 | |||||||||||
Klepierre SA | Equity Real Estate Investment Trusts (REITs | ) | 96 | 1,851 | ||||||||||
L’Oreal SA | Personal Products | 124 | 32,505 | |||||||||||
Legrand SA | Electrical Equipment | 138 | 8,855 | |||||||||||
LVMH Moet Hennessy Louis Vuitton SE | Textiles, Apparel & Luxury Goods | 128 | 47,535 | |||||||||||
Natixis SA | Capital Markets | 452 | 1,471 | |||||||||||
Orange SA | Diversified Telecommunication Services | 987 | 12,059 | |||||||||||
Orpea | Health Care Providers & Services | 26 | 2,717 | |||||||||||
Pernod Ricard SA | Beverages | 107 | 15,198 | |||||||||||
Peugeot SA | Automobiles | 301 | 4,018 | |||||||||||
Plastic Omnium SA | Auto Components | 29 | 408 | |||||||||||
Publicis Groupe | Media | 108 | 3,095 | |||||||||||
Remy Cointreau SA | Beverages | 13 | 1,421 | |||||||||||
Renault SA | Automobiles | 92 | 1,788 | |||||||||||
Rexel SA | Trading Companies & Distributors | 151 | 1,123 | |||||||||||
Rubis SCA | Gas Utilities | 47 | 1,963 | |||||||||||
Safran SA | Aerospace & Defense | 167 | 14,685 | |||||||||||
Sanofi | Pharmaceuticals | 558 | 49,067 | |||||||||||
Sartorius Stedim Biotech | Life Sciences Tools & Services | 12 | 2,410 | |||||||||||
Schneider Electric SE | Electrical Equipment | 272 | 23,452 | |||||||||||
SCOR SE | Insurance | 81 | 1,785 | |||||||||||
SEB SA | Household Durables | 13 | 1,619 | |||||||||||
Societe Generale SA | Banks | 395 | 6,652 | |||||||||||
Sodexo SA | Hotels, Restaurants & Leisure | 44 | 2,976 | |||||||||||
Suez | Multi-Utilities | 186 | 1,893 | |||||||||||
Teleperformance | Professional Services | 30 | 6,248 | |||||||||||
Thales SA | Aerospace & Defense | 52 | 4,358 | |||||||||||
Total SA | Oil, Gas & Consumable Fuels | 1,233 | 47,879 | |||||||||||
| a | Ubisoft Entertainment SA | Entertainment | 46 | 3,391 | ||||||||||
Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs | ) | 70 | 3,960 | ||||||||||
Valeo SA | Auto Components | 118 | 1,974 | |||||||||||
Veolia Environnement SA | Multi-Utilities | 257 | 5,492 | |||||||||||
Vinci SA | Construction & Engineering | 242 | 20,021 | |||||||||||
Vivendi SA | Entertainment | 418 | 8,955 | |||||||||||
Wendel SA | Diversified Financial Services | 14 | 1,118 | |||||||||||
| a,b | Worldline SA, Reg S | IT Services | 67 | 3,948 | ||||||||||
|
| |||||||||||||
| 609,208 | ||||||||||||||
|
| |||||||||||||
| Germany 12.4% | ||||||||||||||
1&1 Drillisch AG | Wireless Telecommunication Services | 23 | 480 | |||||||||||
Adidas AG | Textiles, Apparel & Luxury Goods | 99 | 22,366 | |||||||||||
Allianz SE | Insurance | 215 | 37,009 | |||||||||||
Aroundtown SA | Real Estate Management & Development | 600 | 2,998 | |||||||||||
BASF SE | Chemicals | 471 | 22,298 | |||||||||||
Bayer AG | Pharmaceuticals | 505 | 29,285 | |||||||||||
Bayerische Motoren Werke AG | Automobiles | 165 | 8,530 | |||||||||||
Bechtle AG | IT Services | 16 | 2,052 | |||||||||||
Beiersdorf AG | Personal Products | 53 | 5,383 | |||||||||||
Brenntag AG | Trading Companies & Distributors | 86 | 3,192 | |||||||||||
Carl Zeiss Meditec AG | Health Care Equipment & Supplies | 19 | 1,842 | |||||||||||
| 218 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Germany (continued) | ||||||||||||||
Commerzbank AG | Banks | 521 | $ | 1,891 | ||||||||||
Continental AG | Auto Components | 55 | 3,959 | |||||||||||
Covestro AG | Chemicals | 89 | 2,722 | |||||||||||
CTS Eventim AG & Co. KGaA | Entertainment | 30 | 1,356 | |||||||||||
Daimler AG | Automobiles | 413 | 12,471 | |||||||||||
| a | Delivery Hero SE | Internet & Direct Marketing Retail | 75 | 5,593 | ||||||||||
Deutsche Bank AG | Capital Markets | 1,040 | 6,811 | |||||||||||
Deutsche Boerse AG | Capital Markets | 94 | 12,893 | |||||||||||
Deutsche Lufthansa AG | Airlines | 127 | 1,193 | |||||||||||
Deutsche Post AG | Air Freight & Logistics | 499 | 13,565 | |||||||||||
Deutsche Telekom AG | Diversified Telecommunication Services | 1,664 | 21,570 | |||||||||||
Deutsche Wohnen AG | Real Estate Management & Development | 186 | 7,084 | |||||||||||
| c | DWS Group GmbH & Co. KGaA, 144A | Capital Markets | 17 | 420 | ||||||||||
E.ON SE | Multi-Utilities | 1,114 | 11,540 | |||||||||||
Evonik Industries AG | Chemicals | 95 | 1,988 | |||||||||||
Fielmann AG | Specialty Retail | 12 | 700 | |||||||||||
Fraport AG Frankfurt Airport Services Worldwide | Transportation Infrastructure | 19 | 769 | |||||||||||
Fresenius Medical Care AG & Co. KGaA | Health Care Providers & Services | 108 | 7,134 | |||||||||||
Fresenius SE and Co. KGaA | Health Care Providers & Services | 211 | 7,855 | |||||||||||
Fuchs Petrolub SE | Chemicals | 17 | 545 | |||||||||||
GEA Group AG | Machinery | 87 | 1,788 | |||||||||||
Grenkeleasing AG | Consumer Finance | 14 | 826 | |||||||||||
Hannover Rueck SE | Insurance | 32 | 4,600 | |||||||||||
Hapag-Lloyd AG | Marine | 14 | 1,094 | |||||||||||
HeidelbergCement AG | Construction Materials | 77 | 3,303 | |||||||||||
Hella GmbH & Co. KGaA | Auto Components | 24 | 699 | |||||||||||
Henkel AG & Co. KGaA | Household Products | 51 | 3,769 | |||||||||||
Hochtief AG | Construction & Engineering | 11 | 730 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 32 | 811 | |||||||||||
Infineon Technologies AG | Semiconductors & Semiconductor Equipment | 642 | 9,461 | |||||||||||
KION Group AG | Machinery | 37 | 1,601 | |||||||||||
Knorr-Bremse AG | Machinery | 25 | 2,218 | |||||||||||
Lanxess AG | Chemicals | 43 | 1,718 | |||||||||||
LEG Immobilien AG | Real Estate Management & Development | 35 | 3,944 | |||||||||||
Merck KGaA | Pharmaceuticals | 67 | 6,883 | |||||||||||
METRO AG | Food & Staples Retailing | 86 | 742 | |||||||||||
MTU Aero Engines AG | Aerospace & Defense | 27 | 3,951 | |||||||||||
Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen | Insurance | 74 | 14,948 | |||||||||||
Nemetschek AG | Software | 28 | 1,391 | |||||||||||
| a | Osram Licht AG | Electrical Equipment | 38 | 1,355 | ||||||||||
ProSiebenSat.1 Media SE | Media | 92 | 730 | |||||||||||
Puma SE | Textiles, Apparel & Luxury Goods | 43 | 2,567 | |||||||||||
Rational AG | Machinery | 2 | 1,062 | |||||||||||
Rheinmetall AG | Industrial Conglomerates | 22 | 1,546 | |||||||||||
| a,c | Rocket Internet SE, 144A | Internet & Direct Marketing Retail | 33 | 667 | ||||||||||
RWE AG | Multi-Utilities | 291 | 7,650 | |||||||||||
SAP SE | Software | 501 | 56,511 | |||||||||||
| b | Scout24 AG, Reg S | Interactive Media & Services | 56 | 3,364 | ||||||||||
Siemens AG | Industrial Conglomerates | 389 | 33,067 | |||||||||||
Siemens Healthineers AG | Health Care Equipment & Supplies | 68 | 2,689 | |||||||||||
Suedzucker AG | Food Products | 42 | 602 | |||||||||||
Symrise AG | Chemicals | 66 | 6,156 | |||||||||||
| a | Talanx AG | Insurance | 17 | 578 | ||||||||||
| a | TeamViewer AG | Software | 47 | 1,877 | ||||||||||
Telefonica Deutschland Holding AG | Diversified Telecommunication Services | 351 | 870 | |||||||||||
| franklintempleton.com | Annual Report | 219 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Germany (continued) | ||||||||||||||
| a | thyssenkrupp AG | Metals & Mining | 245 | $ | 1,282 | |||||||||
| a | Traton SE | Machinery | 29 | 405 | ||||||||||
TUI AG | Hotels, Restaurants & Leisure | 216 | 972 | |||||||||||
Uniper SE | Independent Power and Renewable Electricity Producers | 102 | 2,517 | |||||||||||
United Internet AG | Diversified Telecommunication Services | 59 | 1,740 | |||||||||||
| a | Varta AG | Electrical Equipment | 6 | 433 | ||||||||||
Volkswagen AG | Automobiles | 16 | 2,131 | |||||||||||
Vonovia SE | Real Estate Management & Development | 279 | 13,733 | |||||||||||
Wacker Chemie AG | Chemicals | 8 | 399 | |||||||||||
Wirecard AG | IT Services | 59 | 6,775 | |||||||||||
| a | Zalando SE | Internet & Direct Marketing Retail | 77 | 2,956 | ||||||||||
|
| |||||||||||||
| 476,605 | ||||||||||||||
|
| |||||||||||||
| Ireland 0.9% | ||||||||||||||
| a | AIB Group PLC | Banks | 402 | 451 | ||||||||||
Bank of Ireland Group PLC | Banks | 447 | 846 | |||||||||||
CRH PLC | Construction Materials | 409 | 11,147 | |||||||||||
Flutter Entertainment PLC | Hotels, Restaurants & Leisure | 39 | 3,524 | |||||||||||
Glanbia PLC | Food Products | 99 | 1,072 | |||||||||||
Kerry Group | Food Products | 74 | 8,542 | |||||||||||
Kingspan Group PLC | Building Products | 78 | 4,168 | |||||||||||
Smurfit Kappa Group PLC | Containers & Packaging | 130 | 3,691 | |||||||||||
|
| |||||||||||||
| 33,441 | ||||||||||||||
|
| |||||||||||||
| Italy 3.5% | ||||||||||||||
A2A SpA | Multi-Utilities | 819 | 1,018 | |||||||||||
Amplifon SpA | Health Care Providers & Services | 63 | 1,294 | |||||||||||
Assicurazioni Generali SpA | Insurance | 676 | 9,205 | |||||||||||
Atlantia SpA | Transportation Infrastructure | 253 | 3,173 | |||||||||||
Banca Mediolanum SpA | Diversified Financial Services | 155 | 791 | |||||||||||
| a | Banco BPM SpA | Banks | 805 | 1,060 | ||||||||||
Buzzi Unicem SpA | Construction Materials | 33 | 604 | |||||||||||
Buzzi Unicem SpA, di Risp | Construction Materials | 23 | 216 | |||||||||||
Davide Campari-Milano SpA | Beverages | 288 | 2,070 | |||||||||||
DiaSorin SpA | Health Care Equipment & Supplies | 12 | 1,589 | |||||||||||
Enel SpA | Electric Utilities | 4,001 | 27,829 | |||||||||||
Eni SpA | Oil, Gas & Consumable Fuels | 1,283 | 12,980 | |||||||||||
Ferrari NV | Automobiles | 64 | 9,940 | |||||||||||
FinecoBank Banca Fineco SpA | Banks | 302 | 2,747 | |||||||||||
Hera SpA | Multi-Utilities | 420 | 1,506 | |||||||||||
b | Infrastrutture Wireless Italiane SpA, Reg S | Diversified Telecommunication Services | 124 | 1,344 | ||||||||||
Intesa Sanpaolo SpA | Banks | 7,681 | 12,544 | |||||||||||
Italgas Reti SpA | Gas Utilities | 241 | 1,319 | |||||||||||
Leonardo SpA | Aerospace & Defense | 202 | 1,346 | |||||||||||
| a | Mediaset SpA | Media | 178 | 379 | ||||||||||
Mediobanca Banca di Credito Finanziario SpA | Banks | 402 | 2,218 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 100 | 3,653 | |||||||||||
| a | Nexi SpA | IT Services | 149 | 1,939 | ||||||||||
Pirelli & C SpA | Auto Components | 231 | 827 | |||||||||||
b | Poste Italiane SpA, Reg S | Insurance | 236 | 1,999 | ||||||||||
Prysmian SpA | Electrical Equipment | 130 | 2,083 | |||||||||||
Recordati SpA | Pharmaceuticals | 49 | 2,072 | |||||||||||
| a | Saipem SpA | Energy Equipment & Services | 299 | 735 | ||||||||||
Salvatore Ferragamo SpA | Textiles, Apparel & Luxury Goods | 40 | 531 | |||||||||||
Snam SpA | Gas Utilities | 1,181 | 5,448 | |||||||||||
| a | Telecom Italia SpA/Milano | Diversified Telecommunication Services | 5,604 | 2,290 | ||||||||||
| 220 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Italy (continued) | ||||||||||||||
Telecom Italia SpA/Milano, di Risp | Diversified Telecommunication Services | 3,158 | $ | 1,249 | ||||||||||
Tenaris SA | Energy Equipment & Services | 238 | 1,457 | |||||||||||
Terna Rete Elettrica Nazionale SpA | Electric Utilities | 733 | 4,641 | |||||||||||
UniCredit SpA | Banks | 1,144 | 8,971 | |||||||||||
Unione di Banche Italiane SpA | Banks | 467 | 1,233 | |||||||||||
UnipolSai Assicurazioni SpA | Insurance | 285 | 700 | |||||||||||
|
| |||||||||||||
| 135,000 | ||||||||||||||
|
| |||||||||||||
| Kazakhstan 0.0%† | ||||||||||||||
KAZ Minerals PLC | Metals & Mining | 100 | 435 | |||||||||||
|
| |||||||||||||
| Luxembourg 0.1% | ||||||||||||||
Eurofins Scientific SE | Life Sciences Tools & Services | 6 | 2,969 | |||||||||||
RTL Group SA | Media | 19 | 640 | |||||||||||
SES SA, IDR | Media | 183 | 1,074 | |||||||||||
|
| |||||||||||||
| 4,683 | ||||||||||||||
|
| |||||||||||||
| Netherlands 5.0% | ||||||||||||||
Aalberts NV | Machinery | 49 | 1,163 | |||||||||||
ABN AMRO Bank NV, GDR | Banks | 220 | 1,807 | |||||||||||
| a | Adyen NV | IT Services | 14 | 11,838 | ||||||||||
Aegon NV | Insurance | 877 | 2,227 | |||||||||||
Akzo Nobel NV | Chemicals | 100 | 6,585 | |||||||||||
| a | Altice Europe NV, A | Media | 279 | 1,081 | ||||||||||
| a | Altice Europe NV, B | Media | 78 | 304 | ||||||||||
| a | Argenx SE | Biotechnology | 20 | 2,699 | ||||||||||
| a | Argenx SE | Biotechnology | 2 | 270 | ||||||||||
ASM International NV | Semiconductors & Semiconductor Equipment | 26 | 2,606 | |||||||||||
ASML Holding NV | Semiconductors & Semiconductor Equipment | 206 | 54,802 | |||||||||||
ASR Nederland NV | Insurance | 70 | 1,763 | |||||||||||
Boskalis Westminster | Construction & Engineering | 45 | 812 | |||||||||||
| b | Euronext NV, Reg S | Capital Markets | 32 | 2,381 | ||||||||||
EXOR NV | Diversified Financial Services | 52 | 2,682 | |||||||||||
Grandvision NV | Specialty Retail | 27 | 739 | |||||||||||
Heineken Holding NV | Beverages | 53 | 4,062 | |||||||||||
Heineken NV | Beverages | 121 | 10,112 | |||||||||||
ING Groep NV | Banks | 2,050 | 10,755 | |||||||||||
| a,b,c | Just Eat Takeaway, 144A, Reg S | Internet & Direct Marketing Retail | 57 | 4,283 | ||||||||||
Koninklijke Ahold Delhaize NV | Food & Staples Retailing | 561 | 13,102 | |||||||||||
Koninklijke DSM NV | Chemicals | 91 | 10,334 | |||||||||||
Koninklijke KPN NV | Diversified Telecommunication Services | 1,679 | 4,009 | |||||||||||
Koninklijke Philips NV | Health Care Equipment & Supplies | 462 | 18,713 | |||||||||||
Koninklijke Vopak NV | Oil, Gas & Consumable Fuels | 33 | 1,717 | |||||||||||
NN Group NV | Insurance | 171 | 4,616 | |||||||||||
| a | OCI NV | Chemicals | 50 | 601 | ||||||||||
| a | QIAGEN NV | Life Sciences Tools & Services | 115 | 4,620 | ||||||||||
Randstad NV | Professional Services | 56 | 1,977 | |||||||||||
Signify NV | Electrical Equipment | 67 | 1,300 | |||||||||||
Wolters Kluwer NV | Professional Services | 136 | 9,577 | |||||||||||
|
| |||||||||||||
| 193,537 | ||||||||||||||
|
| |||||||||||||
| Norway 0.9% | ||||||||||||||
Aker ASA | Diversified Financial Services | 13 | 292 | |||||||||||
Aker BP ASA | Oil, Gas & Consumable Fuels | 55 | 694 | |||||||||||
DNB ASA | Banks | 539 | 5,993 | |||||||||||
Equinor ASA | Oil, Gas & Consumable Fuels | 499 | 6,232 | |||||||||||
Gjensidige Forsikring ASA | Insurance | 84 | 1,424 | |||||||||||
| franklintempleton.com | Annual Report | 221 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Norway (continued) | ||||||||||||||
Leroy Seafood Group ASA | Food Products | 140 | $ | 682 | ||||||||||
Mowi ASA | Food Products | 214 | 3,233 | |||||||||||
Norsk Hydro ASA | Metals & Mining | 647 | 1,394 | |||||||||||
Orkla ASA | Food Products | 386 | 3,272 | |||||||||||
Salmar ASA | Food Products | 26 | 860 | |||||||||||
Schibsted ASA, A | Media | 41 | 776 | |||||||||||
Schibsted ASA, B | Media | 50 | 887 | |||||||||||
Telenor ASA | Diversified Telecommunication Services | 331 | 4,788 | |||||||||||
Yara International ASA | Chemicals | 96 | 3,010 | |||||||||||
|
| |||||||||||||
| 33,537 | ||||||||||||||
|
| |||||||||||||
| Poland 0.4% | ||||||||||||||
Bank Pekao SA | Banks | 82 | 1,108 | |||||||||||
CD Projekt SA | Entertainment | 33 | 2,297 | |||||||||||
Cyfrowy Polsat SA | Media | 138 | 792 | |||||||||||
| a | Dino Polska SA | Food & Staples Retailing | 24 | 937 | ||||||||||
Grupa Lotos SA | Oil, Gas & Consumable Fuels | 52 | 649 | |||||||||||
| a | KGHM Polska Miedz SA | Metals & Mining | 71 | 1,023 | ||||||||||
| a | mBank SA | Banks | 7 | 374 | ||||||||||
| a | PGE Polska Grupa Energetyczna SA | Electric Utilities | 353 | 324 | ||||||||||
Polski Koncern Naftowy Orlen SA | Oil, Gas & Consumable Fuels | 159 | 2,132 | |||||||||||
Polskie Gornictwo Naftowe i Gazownictwo SA | Oil, Gas & Consumable Fuels | 897 | 743 | |||||||||||
Powszechna Kasa Oszczednosci Bank Polski SA | Banks | 442 | 2,407 | |||||||||||
Powszechny Zaklad Ubezpieczen SA | Insurance | 288 | 2,172 | |||||||||||
Santander Bank Polska SA | Banks | 16 | 668 | |||||||||||
|
| |||||||||||||
| 15,626 | ||||||||||||||
|
| |||||||||||||
| Portugal 0.3% | ||||||||||||||
EDP- Energias de Portugal SA | Electric Utilities | 1,369 | 5,495 | |||||||||||
Galp Energia SGPS SA, B | Oil, Gas & Consumable Fuels | 259 | 2,954 | |||||||||||
Jeronimo Martins SGPS SA | Food & Staples Retailing | 127 | 2,291 | |||||||||||
|
| |||||||||||||
| 10,740 | ||||||||||||||
|
| |||||||||||||
| Russia 0.1% | ||||||||||||||
Evraz PLC | Metals & Mining | 281 | 807 | |||||||||||
Polymetal International PLC | Metals & Mining | 178 | 3,045 | |||||||||||
|
| |||||||||||||
| 3,852 | ||||||||||||||
|
| |||||||||||||
| South Africa 0.0%† | ||||||||||||||
Investec PLC | Capital Markets | 329 | 620 | |||||||||||
|
| |||||||||||||
| Spain 4.1% | ||||||||||||||
Acciona SA | Electric Utilities | 11 | 1,175 | |||||||||||
ACS Actividades de Construccion y Servicios SA | Construction & Engineering | 122 | 2,385 | |||||||||||
Aena SME SA | Transportation Infrastructure | 37 | 4,040 | |||||||||||
Amadeus IT Group SA, A | IT Services | 209 | 9,907 | |||||||||||
Banco Bilbao Vizcaya Argentaria SA | Banks | 3,390 | 10,845 | |||||||||||
Banco de Sabadell SA | Banks | 2,986 | 1,537 | |||||||||||
Banco Santander SA | Banks | 8,515 | 20,723 | |||||||||||
Bankia SA | Banks | 600 | 670 | |||||||||||
Bankinter SA | Banks | 353 | 1,295 | |||||||||||
CaixaBank SA | Banks | 1,859 | 3,468 | |||||||||||
Cellnex Telecom SA | Diversified Telecommunication Services | 141 | 6,413 | |||||||||||
Corporacion Mapfre SA | Insurance | 505 | 862 | |||||||||||
EDP Renovaveis SA | Independent Power and Renewable Electricity Producers | 81 | 976 | |||||||||||
Enagas SA | Gas Utilities | 128 | 2,541 | |||||||||||
Endesa SA | Electric Utilities | 162 | 3,461 | |||||||||||
| 222 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Spain (continued) | ||||||||||||||
Ferrovial SA | Construction & Engineering | 244 | $ | 5,855 | ||||||||||
Grifols SA | Biotechnology | 172 | 5,851 | |||||||||||
Iberdrola SA | Electric Utilities | 3,061 | 30,174 | |||||||||||
Industria de Diseno Textil SA | Specialty Retail | 538 | 13,967 | |||||||||||
Inmobiliaria Colonial SA | Equity Real Estate Investment Trusts (REITs | ) | 160 | 1,516 | ||||||||||
Merlin Properties Socimi SA | Equity Real Estate Investment Trusts (REITs | ) | 168 | 1,266 | ||||||||||
Naturgy Energy Group SA | Gas Utilities | 152 | 2,688 | |||||||||||
Red Electrica Corp. SA | Electric Utilities | 222 | 3,986 | |||||||||||
Repsol SA | Oil, Gas & Consumable Fuels | 720 | 6,582 | |||||||||||
Siemens Gamesa Renewable Energy SA | Electrical Equipment | 118 | 1,778 | |||||||||||
Telefonica SA | Diversified Telecommunication Services | 2,345 | 10,739 | |||||||||||
Zardoya Otis SA | Machinery | 92 | 621 | |||||||||||
|
| |||||||||||||
| 155,321 | ||||||||||||||
|
| |||||||||||||
| Sweden 4.5% | ||||||||||||||
Alfa Laval AB | Machinery | 156 | 2,712 | |||||||||||
Assa Abloy AB, B | Building Products | 472 | 8,942 | |||||||||||
Atlas Copco AB | Machinery | 195 | 5,767 | |||||||||||
Atlas Copco AB, A | Machinery | 330 | 11,121 | |||||||||||
Boliden AB | Metals & Mining | 145 | 2,653 | |||||||||||
Castellum AB | Real Estate Management & Development | 143 | 2,425 | |||||||||||
Electrolux AB, B | Household Durables | 126 | 1,574 | |||||||||||
| a | Electrolux Professional AB, B | Machinery | 126 | 362 | ||||||||||
Elekta AB, B | Health Care Equipment & Supplies | 176 | 1,460 | |||||||||||
Epiroc AB, A | Machinery | 321 | 3,190 | |||||||||||
Epiroc AB, B | Machinery | 199 | 1,977 | |||||||||||
| a | EQT AB | Capital Markets | 91 | 1,088 | ||||||||||
Ericsson, B | Communications Equipment | 1,544 | 12,632 | |||||||||||
Essity AB, B | Household Products | 319 | 9,852 | |||||||||||
| a | Fastighets AB Balder, B | Real Estate Management & Development | 51 | 1,838 | ||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 444 | 5,736 | |||||||||||
Hexagon AB, B | Electronic Equipment, Instruments & Components | 135 | 5,777 | |||||||||||
Hufvudstaden AB, A | Real Estate Management & Development | 56 | 767 | |||||||||||
Husqvarna AB, B | Household Durables | 217 | 1,094 | |||||||||||
ICA Gruppen AB | Food & Staples Retailing | 40 | 1,687 | |||||||||||
Industrivarden AB, A | Diversified Financial Services | 111 | 2,169 | |||||||||||
Industrivarden AB, C | Diversified Financial Services | 88 | 1,722 | |||||||||||
Investment AB Latour, B | Industrial Conglomerates | 61 | 872 | |||||||||||
Investor AB, A | Diversified Financial Services | 68 | 3,095 | |||||||||||
Investor AB, B | Diversified Financial Services | 233 | 10,750 | |||||||||||
Kinnevik AB, B | Diversified Financial Services | 129 | 2,150 | |||||||||||
L E Lundbergforetagen AB, B | Diversified Financial Services | 40 | 1,644 | |||||||||||
Lundin Petroleum AB | Oil, Gas & Consumable Fuels | 91 | 1,750 | |||||||||||
Nibe Industrier AB | Building Products | 147 | 2,145 | |||||||||||
Saab AB, B | Aerospace & Defense | 48 | 925 | |||||||||||
Sandvik AB | Machinery | 553 | 7,884 | |||||||||||
Securitas AB, B | Commercial Services & Supplies | 183 | 1,985 | |||||||||||
Skandinaviska Enskilda Banken AB, A | Banks | 726 | 4,923 | |||||||||||
Skandinaviska Enskilda Banken AB, C | Banks | 12 | 92 | |||||||||||
| a | Skanska AB, B | Construction & Engineering | 183 | 2,797 | ||||||||||
SKF AB, B | Machinery | 190 | 2,622 | |||||||||||
Svenska Cellulosa AB, A | Paper & Forest Products | 12 | 121 | |||||||||||
Svenska Cellulosa AB, B | Paper & Forest Products | 297 | 3,011 | |||||||||||
| a | Svenska Handelsbanken AB, A | Banks | 763 | 6,403 | ||||||||||
Svenska Handelsbanken AB, B | �� | Banks | 18 | 164 | ||||||||||
Swedbank AB, A | Banks | 507 | 5,672 | |||||||||||
| franklintempleton.com | Annual Report | 223 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Sweden (continued) | ||||||||||||||
Swedish Match AB | Tobacco | 84 | $ | 4,816 | ||||||||||
| a | Swedish Orphan Biovitrum AB | Biotechnology | 93 | 1,586 | ||||||||||
Tele2 AB, B | Wireless Telecommunication Services | 275 | 3,703 | |||||||||||
Telefonaktiebolaget LM Ericsson, A | Communications Equipment | 19 | 155 | |||||||||||
Telia Co. AB | Diversified Telecommunication Services | 1,341 | 4,832 | |||||||||||
Trelleborg AB, B | Machinery | 123 | 1,333 | |||||||||||
Volvo AB, B | Machinery | 775 | 9,348 | |||||||||||
|
| |||||||||||||
| 171,323 | ||||||||||||||
|
| |||||||||||||
| Switzerland 17.0% | ||||||||||||||
ABB Ltd. | Electrical Equipment | 913 | 16,046 | |||||||||||
Adecco Group AG | Professional Services | 78 | 3,075 | |||||||||||
| a | Alcon Inc. | Health Care Equipment & Supplies | 236 | 12,032 | ||||||||||
Baloise Holding AG | Insurance | 24 | 3,148 | |||||||||||
Banque Cantonale Vaudoise | Banks | 2 | 1,641 | |||||||||||
Barry Callebaut AG | Food Products | 2 | 4,010 | |||||||||||
Chocoladefabriken Lindt & Spruengli AG | Food Products | 1 | 8,429 | |||||||||||
Cie Financiere Richemont SA | Textiles, Apparel & Luxury Goods | 260 | 14,258 | |||||||||||
Clariant AG | Chemicals | 107 | 1,799 | |||||||||||
Coca-Cola HBC AG | Beverages | 101 | 2,175 | |||||||||||
Credit Suisse Group AG | Capital Markets | 1,265 | 10,459 | |||||||||||
DKSH Holding AG | Professional Services | 18 | 893 | |||||||||||
Dufry AG | Specialty Retail | 14 | 435 | |||||||||||
EMS-Chemie Holding AG | Chemicals | 4 | 2,516 | |||||||||||
Flughafen Zurich AG | Transportation Infrastructure | 10 | 1,127 | |||||||||||
Geberit AG | Building Products | 18 | 7,925 | |||||||||||
Georg Fischer AG | Machinery | 2 | 1,383 | |||||||||||
Givaudan AG | Chemicals | 5 | 15,477 | |||||||||||
Glencore PLC | Metals & Mining | 5,774 | 8,863 | |||||||||||
Helvetia Holding AG | Insurance | 17 | 1,464 | |||||||||||
Julius Baer Group Ltd. | Capital Markets | 114 | 3,892 | |||||||||||
Kuehne + Nagel International AG | Marine | 28 | 3,845 | |||||||||||
LafargeHolcim Ltd., B | Construction Materials | 266 | 9,721 | |||||||||||
Logitech International SA | Technology Hardware, Storage & Peripherals | 76 | 3,286 | |||||||||||
Lonza Group AG | Life Sciences Tools & Services | 38 | 15,796 | |||||||||||
Nestle SA | Food Products | 1,485 | 152,636 | |||||||||||
Novartis AG | Pharmaceuticals | 1,097 | 90,533 | |||||||||||
OC Oerlikon Corp. AG | Machinery | 103 | 826 | |||||||||||
Pargesa Holding SA, B | Diversified Financial Services | 20 | 1,326 | |||||||||||
Partners Group Holding AG | Capital Markets | 8 | 5,536 | |||||||||||
PSP Swiss Property AG | Real Estate Management & Development | 20 | 2,495 | |||||||||||
Roche Holding AG | Pharmaceuticals | 14 | 4,488 | |||||||||||
Roche Holding AG | Pharmaceuticals | 358 | 116,201 | |||||||||||
Schindler Holding AG | Machinery | 10 | 2,113 | |||||||||||
Schindler Holding AG, PC | Machinery | 21 | 4,610 | |||||||||||
SGS SA | Professional Services | 3 | 6,952 | |||||||||||
Sika AG | Chemicals | 69 | 11,407 | |||||||||||
Sonova Holding AG | Health Care Equipment & Supplies | 28 | 5,047 | |||||||||||
STMicroelectronics NV | Semiconductors & Semiconductor Equipment | 325 | 7,088 | |||||||||||
Straumann Holding AG | Health Care Equipment & Supplies | 5 | 3,728 | |||||||||||
Sulzer AG | Machinery | 10 | 631 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 14 | 2,799 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 19 | 748 | |||||||||||
Swiss Life Holding AG | Insurance | 17 | 5,788 | |||||||||||
Swiss Prime Site AG | Real Estate Management & Development | 39 | 3,819 | |||||||||||
Swiss Re AG | Insurance | 143 | 11,020 | |||||||||||
| 224 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| Switzerland (continued) | ||||||||||||||
Swisscom AG | Diversified Telecommunication Services | 13 | $ | 6,989 | ||||||||||
Temenos AG | Software | 30 | 3,935 | |||||||||||
UBS Group AG | Capital Markets | 1,750 | 16,361 | |||||||||||
Vifor Pharma AG | Pharmaceuticals | 24 | 3,318 | |||||||||||
Zurich Insurance Group AG | Insurance | 75 | 26,619 | |||||||||||
|
| |||||||||||||
| 650,708 | ||||||||||||||
|
| |||||||||||||
| United Arab Emirates 0.0%† | ||||||||||||||
NMC Health PLC | Health Care Providers & Services | 60 | 83 | |||||||||||
|
| |||||||||||||
| United Kingdom 24.0% | ||||||||||||||
3i Group PLC | Capital Markets | 484 | 4,754 | |||||||||||
Admiral Group PLC | Insurance | 107 | 2,959 | |||||||||||
Anglo American PLC | Metals & Mining | 644 | 11,310 | |||||||||||
Antofagasta PLC | Metals & Mining | 179 | 1,716 | |||||||||||
Ashmore Group PLC | Capital Markets | 262 | 1,159 | |||||||||||
Ashtead Group PLC | Trading Companies & Distributors | 231 | 5,057 | |||||||||||
Associated British Foods PLC | Food Products | 175 | 3,936 | |||||||||||
AstraZeneca PLC | Pharmaceuticals | 678 | 60,664 | |||||||||||
Auto Trader Group PLC | Interactive Media & Services | 472 | 2,570 | |||||||||||
Avast PLC | Software | 245 | 1,195 | |||||||||||
AVEVA Group PLC | Software | 33 | 1,430 | |||||||||||
Aviva PLC | Insurance | 2,027 | 6,748 | |||||||||||
B&M European Value Retail SA | Multiline Retail | 416 | 1,423 | |||||||||||
Babcock International Group PLC | Commercial Services & Supplies | 132 | 627 | |||||||||||
BAE Systems PLC | Aerospace & Defense | 1,653 | 10,695 | |||||||||||
Barclays PLC | Banks | 8,783 | 10,249 | |||||||||||
Barratt Developments PLC | Household Durables | 513 | 2,805 | |||||||||||
Bellway PLC | Household Durables | 64 | 1,711 | |||||||||||
BHP Group PLC | Metals & Mining | 1,063 | 16,502 | |||||||||||
BP PLC | Oil, Gas & Consumable Fuels | 10,303 | 43,972 | |||||||||||
British American Tobacco PLC | Tobacco | 1,173 | 40,129 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs | ) | 475 | 1,980 | ||||||||||
BT Group PLC | Diversified Telecommunication Services | 4,447 | 6,501 | |||||||||||
Bunzl PLC | Trading Companies & Distributors | 174 | 3,516 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 212 | 3,482 | |||||||||||
Centrica PLC | Multi-Utilities | 3,065 | 1,447 | |||||||||||
Cineworld Group PLC | Entertainment | 531 | 327 | |||||||||||
CNH Industrial NV | Machinery | 495 | 2,833 | |||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 810 | 12,695 | |||||||||||
ConvaTec Group PLC | Health Care Equipment & Supplies | 758 | 1,753 | |||||||||||
Croda International PLC | Chemicals | 64 | 3,390 | |||||||||||
DCC PLC | Industrial Conglomerates | 49 | 3,099 | |||||||||||
Derwent London PLC | Equity Real Estate Investment Trusts (REITs | ) | 52 | 2,108 | ||||||||||
Diageo PLC | Beverages | 1,183 | 37,940 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 708 | 2,598 | |||||||||||
DS Smith PLC | Containers & Packaging | 645 | 2,203 | |||||||||||
easyJet PLC | Airlines | 96 | 680 | |||||||||||
Experian PLC | Professional Services | 464 | 12,951 | |||||||||||
Ferguson PLC | Trading Companies & Distributors | 115 | 7,210 | |||||||||||
Fiat Chrysler Automobiles NV | Automobiles | 562 | 4,053 | |||||||||||
Fresnillo PLC | Metals & Mining | 93 | 769 | |||||||||||
G4S PLC | Commercial Services & Supplies | 821 | 940 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 2,534 | 47,589 | |||||||||||
GVC Holdings PLC | Hotels, Restaurants & Leisure | 292 | 2,031 | |||||||||||
Halma PLC | Electronic Equipment, Instruments & Components | 191 | 4,549 | |||||||||||
Hargreaves Lansdown PLC | Capital Markets | 156 | 2,681 | |||||||||||
| franklintempleton.com | Annual Report | 225 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| United Kingdom (continued) | ||||||||||||||
Hikma Pharmaceuticals PLC | Pharmaceuticals | 73 | $ | 1,842 | ||||||||||
Hiscox Ltd. | Insurance | 150 | 1,720 | |||||||||||
HomeServe PLC | Commercial Services & Supplies | 144 | 1,889 | |||||||||||
Howden Joinery Group PLC | Trading Companies & Distributors | 302 | 1,917 | |||||||||||
HSBC Holdings PLC | Banks | 10,445 | 58,831 | |||||||||||
IMI PLC | Machinery | 136 | 1,260 | |||||||||||
Imperial Brands PLC | Tobacco | 484 | 8,983 | |||||||||||
Inchcape PLC | Distributors | 212 | 1,139 | |||||||||||
Informa PLC | Media | 629 | 3,452 | |||||||||||
InterContinental Hotels Group PLC | Hotels, Restaurants & Leisure | 96 | 4,185 | |||||||||||
Intermediate Capital Group PLC | Capital Markets | 145 | 1,612 | |||||||||||
International Consolidated Airlines Group SA | Airlines | 271 | 723 | |||||||||||
Intertek Group PLC | Professional Services | 81 | 4,747 | |||||||||||
ITV PLC | Media | 1,874 | 1,534 | |||||||||||
J Sainsbury PLC | Food & Staples Retailing | 821 | 2,142 | |||||||||||
JD Sports Fashion PLC | Specialty Retail | 243 | 1,379 | |||||||||||
John Wood Group PLC | Energy Equipment & Services | 364 | 702 | |||||||||||
Johnson Matthey PLC | Chemicals | 101 | 2,252 | |||||||||||
Kingfisher PLC | Specialty Retail | 1,114 | 1,988 | |||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 368 | 2,541 | ||||||||||
Legal & General Group PLC | Insurance | 3,037 | 7,300 | |||||||||||
Lloyds Banking Group PLC | Banks | 36,444 | 14,460 | |||||||||||
London Stock Exchange Group PLC | Capital Markets | 161 | 14,533 | |||||||||||
| a | M&G PLC | Diversified Financial Services | 1,343 | 1,875 | ||||||||||
Marks & Spencer Group PLC | Multiline Retail | 1,033 | 1,271 | |||||||||||
Meggitt PLC | Aerospace & Defense | 408 | 1,469 | |||||||||||
Melrose Industries PLC | Electrical Equipment | 2,441 | 2,769 | |||||||||||
Micro Focus International PLC | Software | 159 | 789 | |||||||||||
Mondi PLC | Paper & Forest Products | 244 | 4,178 | |||||||||||
National Grid PLC | Multi-Utilities | 1,804 | 21,174 | |||||||||||
Next PLC | Multiline Retail | 66 | 3,332 | |||||||||||
| a | Ninety One PLC | Capital Markets | 164 | 352 | ||||||||||
| a | Ocado Group PLC | Internet & Direct Marketing Retail | 227 | 3,434 | ||||||||||
Pearson PLC | Media | 389 | 2,665 | |||||||||||
Pennon Group PLC | Water Utilities | 218 | 2,934 | |||||||||||
Persimmon PLC | Household Durables | 175 | 4,159 | |||||||||||
Phoenix Group Holdings PLC | Insurance | 276 | 2,144 | |||||||||||
Prudential PLC | Insurance | 1,353 | 17,372 | |||||||||||
Quilter PLC | Capital Markets | 989 | 1,447 | |||||||||||
Reckitt Benckiser Group PLC | Household Products | 322 | 24,555 | |||||||||||
RELX PLC | Professional Services | 975 | 20,939 | |||||||||||
Renishaw PLC | Electronic Equipment, Instruments & Components | 19 | 745 | |||||||||||
Rentokil Initial PLC | Commercial Services & Supplies | 936 | 4,501 | |||||||||||
Rightmove PLC | Interactive Media & Services | 437 | 2,641 | |||||||||||
Rolls-Royce Holdings PLC | Aerospace & Defense | 886 | 3,742 | |||||||||||
Royal Bank of Scotland Group PLC | Banks | 2,301 | 3,221 | |||||||||||
Royal Dutch Shell PLC, A | Oil, Gas & Consumable Fuels | 2,137 | 37,600 | |||||||||||
Royal Dutch Shell PLC, B | Oil, Gas & Consumable Fuels | 1,925 | 32,457 | |||||||||||
RSA Insurance Group PLC | Insurance | 533 | 2,778 | |||||||||||
Schroders PLC | Capital Markets | 59 | 1,817 | |||||||||||
Segro PLC | Equity Real Estate Investment Trusts (REITs | ) | 550 | 5,210 | ||||||||||
Severn Trent PLC | Water Utilities | 121 | 3,421 | |||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 454 | 8,075 | |||||||||||
Smiths Group PLC | Industrial Conglomerates | 201 | 3,056 | |||||||||||
Spirax-Sarco Engineering PLC | Machinery | 38 | 3,847 | |||||||||||
SSE PLC | Electric Utilities | 537 | 8,689 | |||||||||||
| 226 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks and Other Equity Interests (continued) | ||||||||||||||
| United Kingdom (continued) | ||||||||||||||
St. James’s Place Capital PLC | Capital Markets | 268 | $ | 2,524 | ||||||||||
Standard Chartered PLC | Banks | 1,391 | 7,689 | |||||||||||
Standard Life Aberdeen PLC | Capital Markets | 1,203 | 3,340 | |||||||||||
Subsea 7 SA | Energy Equipment & Services | 125 | 590 | |||||||||||
Tate & Lyle PLC | Food Products | 235 | 1,911 | |||||||||||
Taylor Wimpey PLC | Household Durables | 1,694 | 2,468 | |||||||||||
TechnipFMC PLC | Energy Equipment & Services | 239 | 1,644 | |||||||||||
Tesco PLC | Food & Staples Retailing | 4,964 | 14,083 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 62 | 2,779 | |||||||||||
The Sage Group PLC | Software | 555 | 4,073 | |||||||||||
Travis Perkins PLC | Trading Companies & Distributors | 132 | 1,445 | |||||||||||
Unilever NV | Personal Products | 700 | 34,414 | |||||||||||
Unilever PLC | Personal Products | 563 | 28,451 | |||||||||||
United Utilities Group PLC | Water Utilities | 342 | 3,828 | |||||||||||
| a | Virgin Money UK PLC | Banks | 641 | 493 | ||||||||||
Vodafone Group PLC | Wireless Telecommunication Services | 13,928 | 19,515 | |||||||||||
Weir Group PLC | Machinery | 137 | 1,225 | |||||||||||
Whitbread PLC | Hotels, Restaurants & Leisure | 70 | 2,630 | |||||||||||
William Morrison Supermarkets PLC | Food & Staples Retailing | 1,171 | 2,584 | |||||||||||
WPP PLC | Media | 626 | 4,280 | |||||||||||
|
| |||||||||||||
| 920,691 | ||||||||||||||
|
| |||||||||||||
| United States 0.0%† | ||||||||||||||
Carnival PLC | Hotels, Restaurants & Leisure | 82 | 998 | |||||||||||
|
| |||||||||||||
Total Common Stocks and Other Equity Interests |
| 3,728,066 | ||||||||||||
|
| |||||||||||||
| Preferred Stocks 0.8% | ||||||||||||||
| Germany 0.8% | ||||||||||||||
| d | Bayerische Motoren Werke AG, 8.989%, pfd. | Automobiles | 29 | 1,246 | ||||||||||
| d | Fuchs Petrolub SE, 2.939%, pfd. | Chemicals | 36 | 1,277 | ||||||||||
| d | Henkel AG & Co. KGaA, 2.527%, pfd. | Household Products | 90 | 7,229 | ||||||||||
| d | Porsche Automobil Holding SE, 5.714%, pfd. | Automobiles | 79 | 3,353 | ||||||||||
| d | Sartorius AG, 0.279%, pfd. | Health Care Equipment & Supplies | 18 | 4,388 | ||||||||||
| d | Volkswagen AG, 4.549%, pfd. | Automobiles | 95 | 11,137 | ||||||||||
Total Preferred Stocks (Cost $46,430) | 28,630 | |||||||||||||
|
| |||||||||||||
| Short Term Investments 0.0%† | ||||||||||||||
| United States 0.0%† | ||||||||||||||
| e,f | Institutional Fiduciary Trust Portfolio, 0.32% | Money Market Funds | 1 | 1 | ||||||||||
|
| |||||||||||||
Total Investments (Cost $5,195,477) 98.1% | 3,756,697 | |||||||||||||
Other Assets, less Liabilities 1.9% | 74,288 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 3,830,985 | ||||||||||||
|
| |||||||||||||
See abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $20,504, representing 0.5% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $5,774, representing 0.2% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
| franklintempleton.com | Annual Report | 227 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Europe Hedged ETF(continued)
eSee Note 5 regarding investments in affiliated management investment companies.
fThe rate shown is the annualizedseven-day effective yield at period end.
At March 31, 2020 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
| Forward Exchange Contracts | ||||||||||||||||||||||||||||
| Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
| OTC Forward Exchange Contracts | ||||||||||||||||||||||||||||
Danish Krone | BOFA | Buy | 926,800 | $ | 136,280 | 4/02/20 | $ | — | $ | (2 | ) | |||||||||||||||||
Danish Krone | BOFA | Sell | 926,800 | 136,503 | 4/02/20 | 225 | — | |||||||||||||||||||||
Euro | BOFA | Buy | 664,933 | 729,609 | 4/02/20 | — | (10 | ) | ||||||||||||||||||||
Euro | HSBK | Buy | 664,933 | 729,611 | 4/02/20 | — | (13 | ) | ||||||||||||||||||||
Euro | UBSW | Buy | 664,933 | 729,613 | 4/02/20 | — | (14 | ) | ||||||||||||||||||||
Euro | BOFA | Sell | 664,933 | 731,770 | 4/02/20 | 2,171 | — | |||||||||||||||||||||
Euro | HSBK | Sell | 664,933 | 731,646 | 4/02/20 | 2,048 | — | |||||||||||||||||||||
Euro | UBSW | Sell | 664,933 | 731,756 | 4/02/20 | 2,158 | — | |||||||||||||||||||||
Great British Pound | BOFA | Buy | 877,200 | 1,033,210 | 4/02/20 | 54,474 | — | |||||||||||||||||||||
Great British Pound | DBAB | Buy | 877,200 | 1,087,684 | 4/02/20 | — | — | |||||||||||||||||||||
Great British Pound | BOFA | Sell | 877,200 | 1,121,385 | 4/02/20 | 33,701 | — | |||||||||||||||||||||
Great British Pound | DBAB | Sell | 877,200 | 1,033,210 | 4/02/20 | — | (54,474 | ) | ||||||||||||||||||||
Norwegian Krone | BOFA | Buy | 419,200 | 39,921 | 4/02/20 | — | (1 | ) | ||||||||||||||||||||
Norwegian Krone | BOFA | Sell | 419,200 | 44,264 | 4/02/20 | 4,344 | — | |||||||||||||||||||||
Polish Zloty | BOFA | Buy | 77,700 | 18,707 | 4/02/20 | — | — | |||||||||||||||||||||
Polish Zloty | BOFA | Sell | 77,700 | 19,708 | 4/02/20 | 1,001 | — | |||||||||||||||||||||
Swedish Krona | BOFA | Buy | 1,868,100 | 188,553 | 4/02/20 | — | (3 | ) | ||||||||||||||||||||
Swedish Krona | BOFA | Sell | 1,868,100 | 192,964 | 4/02/20 | 4,413 | — | |||||||||||||||||||||
Swiss Franc | MSCO | Buy | 640,200 | 661,688 | 4/02/20 | — | (17 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 640,200 | 662,795 | 4/02/20 | 1,123 | — | |||||||||||||||||||||
Danish Krone | BOFA | Sell | 890,400 | 131,042 | 5/04/20 | — | (34 | ) | ||||||||||||||||||||
Great British Pound | DBAB | Sell | 759,100 | 941,880 | 5/04/20 | — | (4 | ) | ||||||||||||||||||||
Euro | BOFA | Sell | 561,700 | 617,070 | 5/05/20 | — | (38 | ) | ||||||||||||||||||||
Euro | HSBK | Sell | 561,700 | 617,067 | 5/05/20 | — | (41 | ) | ||||||||||||||||||||
Euro | UBSW | Sell | 561,700 | 617,117 | 5/05/20 | 9 | — | |||||||||||||||||||||
Norwegian Krone | BOFA | Sell | 364,500 | 34,711 | 5/05/20 | — | (6 | ) | ||||||||||||||||||||
Polish Zloty | BOFA | Sell | 66,300 | 15,956 | 5/05/20 | — | (2 | ) | ||||||||||||||||||||
Swedish Krona | BOFA | Sell | 1,676,000 | 169,268 | 5/05/20 | — | (20 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 617,200 | 638,893 | 5/05/20 | — | (137 | ) | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total Forward Exchange Contracts |
| $ | 105,667 | $ | (54,816 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) |
| $ | 50,851 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
EURO STOXX 50 Index | Long | 2 | $ | 60,283 | 6/19/20 | $ | 3,553 | |||||||||||||
*As of period end.
See note 8 regarding derivative information.
| 228 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE France ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||||||||||
Net asset value, beginning of year | $ | 23.86 | $ | 25.33 | $ | 25.32 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.52 | 0.70 | 0.08 | |||||||||
Net realized and unrealized gains (losses) | (4.47 | ) | (1.48 | ) | (0.01 | ) | ||||||
|
| |||||||||||
Total from investment operations | (3.95 | ) | (0.78 | ) | 0.07 | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.57 | ) | (0.69 | ) | (0.06 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 19.34 | $ | 23.86 | $ | 25.33 | ||||||
|
| |||||||||||
Total returnd | (17.08)% | (3.07)% | 0.26% | |||||||||
| Ratios to average net assetse |
| |||||||||||
Total expenses | 0.09% | 0.09% | 0.09% | |||||||||
Net investment income | 2.14% | 2.90% | 0.78% | |||||||||
| Supplemental data |
| |||||||||||
Net assets, end of year (000’s) | $8,702 | $2,386 | $2,533 | |||||||||
Portfolio turnover ratef | 2.60% | g | 5.80% | 1.90% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 2.60%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 229 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.8% | ||||||||||||||
| France 97.4% | ||||||||||||||
Accor SA | Hotels, Restaurants & Leisure | 1,368 | $ | 37,526 | ||||||||||
Aeroports de Paris SA | Transportation Infrastructure | 207 | 19,863 | |||||||||||
| a | AirFrance-KLM | Airlines | 1,386 | 7,753 | ||||||||||
Air Liquide SA | Chemicals | 3,357 | 429,677 | |||||||||||
Airbus SE | Aerospace & Defense | 3,996 | 260,183 | |||||||||||
| b | ALD SA, 144A | Road & Rail | 594 | 5,214 | ||||||||||
Alstom SA | Machinery | 1,323 | 55,366 | |||||||||||
Amundi SA | Capital Markets | 414 | 24,462 | |||||||||||
Arkema SA | Chemicals | 522 | 36,084 | |||||||||||
Atos SE | IT Services | 684 | 46,337 | |||||||||||
AXA SA | Insurance | 13,950 | 241,661 | |||||||||||
Biomerieux | Health Care Equipment & Supplies | 297 | 33,436 | |||||||||||
BNP Paribas SA | Banks | 7,857 | 237,166 | |||||||||||
Bollore | Entertainment | 7,101 | 19,557 | |||||||||||
Bouygues SA | Construction & Engineering | 1,548 | 45,385 | |||||||||||
Bureau Veritas SA | Professional Services | 1,989 | 37,778 | |||||||||||
Capgemini SE | IT Services | 1,143 | 96,570 | |||||||||||
Carrefour SA | Food & Staples Retailing | 4,140 | 65,482 | |||||||||||
Casino Guichard-Perrachon SA | Food & Staples Retailing | 396 | 15,256 | |||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 1,278 | 113,669 | |||||||||||
CNP Assurances | Insurance | 1,143 | 11,187 | |||||||||||
Compagnie de Saint-Gobain | Building Products | 3,519 | 85,584 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 333 | 18,762 | ||||||||||
Credit Agricole SA | Banks | 8,289 | 60,846 | |||||||||||
Danone SA | Food Products | 4,338 | 279,119 | |||||||||||
Dassault Aviation SA | Aerospace & Defense | 18 | 14,793 | |||||||||||
Dassault Systemes | Software | 954 | 141,315 | |||||||||||
Edenred | IT Services | 1,755 | 73,349 | |||||||||||
EDF SA | Electric Utilities | 3,726 | 29,379 | |||||||||||
Eiffage SA | Construction & Engineering | 540 | 38,217 | |||||||||||
Elis SA | Commercial Services & Supplies | 1,584 | 15,017 | |||||||||||
Engie SA | Multi-Utilities | 12,024 | 124,176 | |||||||||||
EssilorLuxottica SA | Textiles, Apparel & Luxury Goods | 2,133 | 230,018 | |||||||||||
Eurazeo SE | Diversified Financial Services | 306 | 13,806 | |||||||||||
Eutelsat Communications SA | Media | 1,332 | 13,923 | |||||||||||
Faurecia SE | Auto Components | 531 | 15,906 | |||||||||||
Gecina SA | Equity Real Estate Investment Trusts (REITs | ) | 378 | 50,062 | ||||||||||
Getlink SE | Transportation Infrastructure | 3,267 | 39,396 | |||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 225 | 155,239 | |||||||||||
ICADE | Equity Real Estate Investment Trusts (REITs | ) | 234 | 18,525 | ||||||||||
Iliad SA | Diversified Telecommunication Services | 117 | 15,874 | |||||||||||
Imerys SA | Construction Materials | 261 | 6,564 | |||||||||||
Ingenico Group SA | Electronic Equipment, Instruments & Components | 450 | 47,865 | |||||||||||
Ipsen SA | Pharmaceuticals | 252 | 13,046 | |||||||||||
JCDecaux SA | Media | 522 | 9,451 | |||||||||||
Kering SA | Textiles, Apparel & Luxury Goods | 540 | 281,978 | |||||||||||
Klepierre SA | Equity Real Estate Investment Trusts (REITs | ) | 1,377 | 26,547 | ||||||||||
L’Oreal SA | Personal Products | 1,746 | 457,684 | |||||||||||
Legrand SA | Electrical Equipment | 1,935 | 124,163 | |||||||||||
LVMH Moet Hennessy Louis Vuitton SE | Textiles, Apparel & Luxury Goods | 1,809 | 671,798 | |||||||||||
Natixis SA | Capital Markets | 6,066 | 19,748 | |||||||||||
Orange SA | Diversified Telecommunication Services | 13,914 | 170,000 | |||||||||||
Orpea | Health Care Providers & Services | 351 | 36,684 | |||||||||||
Pernod Ricard SA | Beverages | 1,530 | 217,320 | |||||||||||
Peugeot SA | Automobiles | 3,924 | 52,378 | |||||||||||
Plastic Omnium SA | Auto Components | 405 | 5,695 | |||||||||||
Publicis Groupe | Media | 1,575 | 45,140 | |||||||||||
Remy Cointreau SA | Beverages | 180 | 19,681 | |||||||||||
| 230 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE France ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| France (continued) | ||||||||||||||
Renault SA | Automobiles | 1,323 | $ | 25,706 | ||||||||||
Rexel SA | Trading Companies & Distributors | 2,196 | 16,337 | |||||||||||
Rubis SCA | Gas Utilities | 657 | 27,437 | |||||||||||
Safran SA | Aerospace & Defense | 2,322 | 204,182 | |||||||||||
Sanofi | Pharmaceuticals | 7,875 | 692,477 | |||||||||||
Sartorius Stedim Biotech | Life Sciences Tools & Services | 171 | 34,336 | |||||||||||
Schneider Electric SE | Electrical Equipment | 3,807 | 328,247 | |||||||||||
SCOR SE | Insurance | 1,125 | 24,787 | |||||||||||
SEB SA | Household Durables | 198 | 24,658 | |||||||||||
Societe Generale SA | Banks | 5,598 | 94,274 | |||||||||||
Sodexo SA | Hotels, Restaurants & Leisure | 630 | 42,610 | |||||||||||
Suez | Multi-Utilities | 2,709 | 27,572 | |||||||||||
Teleperformance | Professional Services | 423 | 88,093 | |||||||||||
Thales SA | Aerospace & Defense | 720 | 60,342 | |||||||||||
Total SA | Oil, Gas & Consumable Fuels | 17,334 | 673,108 | |||||||||||
| a | Ubisoft Entertainment SA | Entertainment | 657 | 48,430 | ||||||||||
Valeo SA | Auto Components | 1,710 | 28,614 | |||||||||||
Veolia Environnement SA | Multi-Utilities | 3,627 | 77,505 | |||||||||||
Vinci SA | Construction & Engineering | 3,375 | 279,223 | |||||||||||
Vivendi SA | Entertainment | 5,850 | 125,329 | |||||||||||
Wendel SA | Diversified Financial Services | 198 | 15,816 | |||||||||||
| a,c | Worldline SA, Reg S | IT Services | 945 | 55,682 | ||||||||||
|
| |||||||||||||
| 8,473,425 | ||||||||||||||
|
| |||||||||||||
| Luxembourg 0.6% | ||||||||||||||
Eurofins Scientific SE | Life Sciences Tools & Services | 81 | 40,084 | |||||||||||
SES SA, IDR | Media | 2,538 | 14,893 | |||||||||||
|
| |||||||||||||
| 54,977 | ||||||||||||||
|
| |||||||||||||
| Netherlands 0.4% | ||||||||||||||
| c | Euronext NV, Reg S | Capital Markets | 441 | 32,808 | ||||||||||
|
| |||||||||||||
| Switzerland 1.1% | ||||||||||||||
STMicroelectronics NV | Semiconductors & Semiconductor Equipment | 4,590 | 100,098 | |||||||||||
|
| |||||||||||||
| United Kingdom 0.3% | ||||||||||||||
TechnipFMC PLC | Energy Equipment & Services | 3,321 | 22,840 | |||||||||||
|
| |||||||||||||
Total Investments | 8,684,148 | |||||||||||||
Other Assets, less Liabilities 0.2% | 17,361 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 8,701,509 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the value of this security was $5,214, representing 0.1% of net assets.
cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $88,490, representing 1.0% of net assets.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 231 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Germany ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||||||||||
Net asset value, beginning of year | $ | 20.70 | $ | 24.60 | $ | 25.55 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.52 | 0.53 | 0.05 | |||||||||
Net realized and unrealized gains (losses) | (3.92 | ) | (3.83 | ) | (1.00 | ) | ||||||
|
| |||||||||||
Total from investment operations | (3.40 | ) | (3.30 | ) | (0.95 | ) | ||||||
|
| |||||||||||
Less distributions from net investment income | (0.57 | ) | (0.60 | ) | — | |||||||
|
| |||||||||||
Net asset value, end of year | $ | 16.73 | $ | 20.70 | $ | 24.60 | ||||||
|
| |||||||||||
Total returnd | (17.00)% | (13.72)% | (3.72)% | |||||||||
| Ratios to average net assetse |
| |||||||||||
Total expenses | 0.09% | 0.09% | 0.09% | |||||||||
Net investment income | 2.46% | 2.44% | 0.52% | |||||||||
| Supplemental data |
| |||||||||||
Net assets, end of year (000’s) | $4,182 | $4,140 | $2,460 | |||||||||
Portfolio turnover ratef | 5.74% | g | 10.75% | 1.75% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 5.74%.
| 232 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 94.3% | ||||||||||||||
| Germany 93.3% | ||||||||||||||
1&1 Drillisch AG | Wireless Telecommunication Services | 200 | $ | 4,170 | ||||||||||
Adidas AG | Textiles, Apparel & Luxury Goods | 815 | 184,128 | |||||||||||
Allianz SE | Insurance | 1,760 | 302,960 | |||||||||||
Aroundtown SA | Real Estate Management & Development | 5,095 | 25,459 | |||||||||||
BASF SE | Chemicals | 3,880 | 183,683 | |||||||||||
Bayer AG | Pharmaceuticals | 4,165 | 241,527 | |||||||||||
Bayerische Motoren Werke AG | Automobiles | 1,360 | 70,308 | |||||||||||
Bechtle AG | IT Services | 115 | 14,751 | |||||||||||
Beiersdorf AG | Personal Products | 420 | 42,656 | |||||||||||
Brenntag AG | Trading Companies & Distributors | 655 | 24,314 | |||||||||||
Carl Zeiss Meditec AG | Health Care Equipment & Supplies | 155 | 15,026 | |||||||||||
Commerzbank AG | Banks | 4,390 | 15,937 | |||||||||||
Continental AG | Auto Components | 460 | 33,116 | |||||||||||
Covestro AG | Chemicals | 720 | 22,018 | |||||||||||
CTS Eventim AG & Co. KGaA | Entertainment | 250 | 11,296 | |||||||||||
Daimler AG | Automobiles | 3,415 | 103,120 | |||||||||||
| a | Delivery Hero SE | Internet & Direct Marketing Retail | 595 | 44,369 | ||||||||||
Deutsche Bank AG | Capital Markets | 8,660 | 56,719 | |||||||||||
Deutsche Boerse AG | Capital Markets | 775 | 106,296 | |||||||||||
Deutsche Lufthansa AG | Airlines | 995 | 9,348 | |||||||||||
Deutsche Post AG | Air Freight & Logistics | 4,130 | 112,271 | |||||||||||
Deutsche Telekom AG | Diversified Telecommunication Services | 13,680 | 177,333 | |||||||||||
Deutsche Wohnen AG | Real Estate Management & Development | 1,515 | 57,700 | |||||||||||
| b | DWS Group GmbH & Co. KGaA, 144A | Capital Markets | 150 | 3,710 | ||||||||||
E.ON SE | Multi-Utilities | 9,190 | 95,200 | |||||||||||
Evonik Industries AG | Chemicals | 805 | 16,844 | |||||||||||
Fielmann AG | Specialty Retail | 105 | 6,123 | |||||||||||
Fraport AG Frankfurt Airport Services Worldwide | Transportation Infrastructure | 150 | 6,073 | |||||||||||
Fresenius Medical Care AG & Co. KGaA | Health Care Providers & Services | 885 | 58,458 | |||||||||||
Fresenius SE and Co. KGaA | Health Care Providers & Services | 1,720 | 64,035 | |||||||||||
Fuchs Petrolub SE | Chemicals | 145 | 4,646 | |||||||||||
GEA Group AG | Machinery | 700 | 14,382 | |||||||||||
Grenkeleasing AG | Consumer Finance | 110 | 6,487 | |||||||||||
Hannover Rueck SE | Insurance | 255 | 36,654 | |||||||||||
Hapag-Lloyd AG | Marine | 115 | 8,984 | |||||||||||
HeidelbergCement AG | Construction Materials | 630 | 27,022 | |||||||||||
Hella GmbH & Co. KGaA | �� | Auto Components | 190 | 5,537 | ||||||||||
Henkel AG & Co. KGaA | Household Products | 430 | 31,777 | |||||||||||
Hochtief AG | Construction & Engineering | 85 | 5,643 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 265 | 6,720 | |||||||||||
Infineon Technologies AG | Semiconductors & Semiconductor Equipment | 5,275 | 77,733 | |||||||||||
KION Group AG | Machinery | 295 | 12,766 | |||||||||||
Knorr-Bremse AG | Machinery | 205 | 18,184 | |||||||||||
Lanxess AG | Chemicals | 350 | 13,987 | |||||||||||
LEG Immobilien AG | Real Estate Management & Development | 290 | 32,679 | |||||||||||
Merck KGaA | Pharmaceuticals | 550 | 56,498 | |||||||||||
METRO AG | Food & Staples Retailing | 715 | 6,173 | |||||||||||
MTU Aero Engines AG | Aerospace & Defense | 225 | 32,922 | |||||||||||
Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen | Insurance | 610 | 123,222 | |||||||||||
Nemetschek AG | Software | 230 | 11,427 | |||||||||||
| a | Osram Licht AG | Electrical Equipment | 310 | 11,055 | ||||||||||
ProSiebenSat.1 Media SE | Media | 825 | 6,545 | |||||||||||
Puma SE | Textiles, Apparel & Luxury Goods | 345 | 20,593 | |||||||||||
Rational AG | Machinery | 15 | 7,963 | |||||||||||
Rheinmetall AG | Industrial Conglomerates | 180 | 12,652 | |||||||||||
| a,b | Rocket Internet SE, 144A | Internet & Direct Marketing Retail | 240 | 4,851 | ||||||||||
RWE AG | Multi-Utilities | 2,425 | 63,754 | |||||||||||
| franklintempleton.com | Annual Report | 233 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Germany ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Germany (continued) | ||||||||||||||
SAP SE | Software | 4,100 | $ | 462,469 | ||||||||||
| c | Scout24 AG, Reg S | Interactive Media & Services | 455 | 27,334 | ||||||||||
Siemens AG | Industrial Conglomerates | 3,205 | 272,438 | |||||||||||
Siemens Healthineers AG | Health Care Equipment & Supplies | 550 | 21,753 | |||||||||||
Suedzucker AG | Food Products | 335 | 4,804 | |||||||||||
Symrise AG | Chemicals | 535 | 49,897 | |||||||||||
| a | Talanx AG | Insurance | 160 | 5,435 | ||||||||||
| a | TeamViewer AG | Software | 410 | 16,371 | ||||||||||
Telefonica Deutschland Holding AG | Diversified Telecommunication Services | 2,770 | 6,866 | |||||||||||
| a | thyssenkrupp AG | Metals & Mining | 1,970 | 10,306 | ||||||||||
| a | Traton SE | Machinery | 215 | 3,005 | ||||||||||
Uniper SE | Independent Power and Renewable Electricity Producers | 825 | 20,359 | |||||||||||
United Internet AG | Diversified Telecommunication Services | 460 | 13,562 | |||||||||||
| a | Varta AG | Electrical Equipment | 60 | 4,325 | ||||||||||
Volkswagen AG | Automobiles | 135 | 17,983 | |||||||||||
Vonovia SE | Real Estate Management & Development | 2,300 | 113,212 | |||||||||||
Wacker Chemie AG | Chemicals | 65 | 3,246 | |||||||||||
Wirecard AG | IT Services | 485 | 55,691 | |||||||||||
| a | Zalando SE | Internet & Direct Marketing Retail | 630 | 24,187 | ||||||||||
|
| |||||||||||||
| 3,903,047 | ||||||||||||||
|
| |||||||||||||
| Luxembourg 0.1% | ||||||||||||||
RTL Group SA | Media | 165 | 5,562 | |||||||||||
|
| |||||||||||||
| Netherlands 0.9% | ||||||||||||||
| a | QIAGEN NV | Life Sciences Tools & Services | 930 | 37,358 | ||||||||||
|
| |||||||||||||
Total Common Stocks | 3,945,967 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks 5.6% | ||||||||||||||
| Germany 5.6% | ||||||||||||||
| d | Bayerische Motoren Werke AG, 8.989%, pfd. | Automobiles | 240 | 10,313 | ||||||||||
| d | Fuchs Petrolub SE, 2.939%, pfd. | Chemicals | 290 | 10,284 | ||||||||||
| d | Henkel AG & Co. KGaA, 2.527%, pfd. | Household Products | 740 | 59,436 | ||||||||||
| d | Porsche Automobil Holding SE, 5.714%, pfd. | Automobiles | 650 | 27,587 | ||||||||||
| d | Sartorius AG, 0.279%, pfd. | Health Care Equipment & Supplies | 145 | 35,352 | ||||||||||
| d | Volkswagen AG, 4.549%, pfd. | Automobiles | 775 | 90,854 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks | 233,826 | |||||||||||||
|
| |||||||||||||
Total Investments | 4,179,793 | |||||||||||||
Other Assets, less Liabilities 0.1% | 2,307 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 4,182,100 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $8,561, representing 0.2% of net assets.
cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $27,334, representing 0.7% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
| 234 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Hong Kong ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||||||||||
Net asset value, beginning of year | $ | 26.82 | $ | 26.17 | $ | 25.30 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.77 | 0.66 | 0.16 | |||||||||
Net realized and unrealized gains (losses) | (6.25 | ) | 0.59 | 0.78 | ||||||||
|
| |||||||||||
Total from investment operations | (5.48 | ) | 1.25 | 0.94 | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.76 | ) | (0.60 | ) | (0.07 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 20.58 | $ | 26.82 | $ | 26.17 | ||||||
|
| |||||||||||
Total returnd | (20.90)% | 4.97% | 3.70% | |||||||||
| Ratios to average net assetse |
| |||||||||||
Total expenses | 0.09% | 0.09% | 0.09% | |||||||||
Net investment income | 3.10% | 2.67% | 1.49% | |||||||||
| Supplemental data |
| |||||||||||
Net assets, end of year (000’s) | $15,433 | $20,118 | $7,852 | |||||||||
Portfolio turnover ratef | 5.99% | g | 5.33% | 0.93% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 5.99%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 235 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.4% | ||||||||||||||
| Cambodia 0.3% | ||||||||||||||
NagaCorp Ltd. | Hotels, Restaurants & Leisure | 50,000 | $ | 51,026 | ||||||||||
|
| |||||||||||||
| China 9.0% | ||||||||||||||
AAC Technologies Holdings Inc. | Electronic Equipment, Instruments & Components | 22,500 | 116,696 | |||||||||||
| a | Budweiser Brewing Co. APAC Ltd. | Beverages | 39,500 | 101,924 | ||||||||||
China Mengniu Dairy Co. Ltd. | Food Products | 90,000 | 312,932 | |||||||||||
China Travel International Investment Hong Kong Ltd. | Hotels, Restaurants & Leisure | 80,000 | 10,012 | |||||||||||
| a | FIH Mobile Ltd. | Electronic Equipment, Instruments & Components | 105,000 | 11,786 | ||||||||||
Kerry Logistics Network Ltd. | Air Freight & Logistics | 18,500 | 22,937 | |||||||||||
Lenovo Group Ltd. | Technology Hardware, Storage & Peripherals | 250,000 | 134,178 | |||||||||||
Minth Group Ltd. | Auto Components | 23,050 | 49,425 | |||||||||||
| a | MMG Ltd. | Metals & Mining | 80,000 | 11,457 | ||||||||||
Nexteer Automotive Group Ltd. | Auto Components | 25,000 | 12,547 | |||||||||||
| a | Semiconductor Manufacturing International Corp. | Semiconductors & Semiconductor Equipment | 102,500 | 161,336 | ||||||||||
Shougang Fushan Resources Group Ltd. | Metals & Mining | 120,000 | 21,830 | |||||||||||
Shui On Land Ltd. | Real Estate Management & Development | 115,000 | 19,288 | |||||||||||
SITC International Holdings Co. Ltd. | Marine | 40,000 | 37,415 | |||||||||||
Tingyi Cayman Islands Holding Corp. | Food Products | 62,000 | 101,428 | |||||||||||
Towngas China Co. Ltd. | Gas Utilities | 35,000 | 17,340 | |||||||||||
Uni-President China Holdings Ltd. | Food Products | 40,000 | 38,808 | |||||||||||
Want Want China Holdings Ltd. | Food Products | 185,000 | 134,139 | |||||||||||
Xinyi Solar Holdings Ltd. | Semiconductors & Semiconductor Equipment | 130,000 | 73,630 | |||||||||||
|
| |||||||||||||
| 1,389,108 | ||||||||||||||
|
| |||||||||||||
| Hong Kong 83.8% | ||||||||||||||
AIA Group Ltd. | Insurance | 361,000 | 3,267,253 | |||||||||||
ASM Pacific Technology Ltd. | Semiconductors & Semiconductor Equipment | 10,000 | 93,667 | |||||||||||
BOC Hong Kong (Holdings) Ltd. | Banks | 120,000 | 332,090 | |||||||||||
Cafe de Coral Holdings Ltd. | Hotels, Restaurants & Leisure | 10,000 | 16,411 | |||||||||||
Cathay Pacific Airways Ltd. | Airlines | 20,000 | 21,417 | |||||||||||
Champion REIT | Equity Real Estate Investment Trusts (REITs | ) | 65,000 | 39,247 | ||||||||||
Chow Tai Fook Jewellery Co. Ltd. | Specialty Retail | 36,000 | 25,499 | |||||||||||
CK Asset Holdings Ltd. | Real Estate Management & Development | 90,000 | 492,910 | |||||||||||
CK Hutchison Holdings Ltd. | Industrial Conglomerates | 89,000 | 600,537 | |||||||||||
CK Infrastructure Holdings Ltd. | Electric Utilities | 20,500 | 108,968 | |||||||||||
CLP Holdings Ltd. | Electric Utilities | 54,500 | 502,748 | |||||||||||
Dah Sing Banking Group Ltd. | Banks | 12,000 | 10,450 | |||||||||||
Dah Sing Financial Group | Banks | 4,000 | 11,379 | |||||||||||
Dairy Farm International Holdings Ltd. | Food & Staples Retailing | 10,000 | 46,000 | |||||||||||
Guotai Junan International holdings Ltd. | Capital Markets | 105,000 | 13,818 | |||||||||||
Haitong International Securities Group Ltd. | Capital Markets | 85,000 | 21,714 | |||||||||||
Hang Lung Group Ltd. | Real Estate Management & Development | 30,000 | 63,244 | |||||||||||
Hang Lung Properties Ltd. | Real Estate Management & Development | 67,000 | 136,059 | |||||||||||
Hang Seng Bank Ltd. | Banks | 24,000 | 410,275 | |||||||||||
Henderson Land Development Co. Ltd. | Real Estate Management & Development | 43,000 | 163,936 | |||||||||||
Hong Kong and China Gas Co. Ltd. | Gas Utilities | 327,000 | 539,171 | |||||||||||
Hong Kong Exchanges and Clearing Ltd. | Capital Markets | 42,000 | 1,266,898 | |||||||||||
Hongkong Land Holdings Ltd. | Real Estate Management & Development | 38,500 | 144,375 | |||||||||||
Huabao International Holdings Ltd. | Chemicals | 30,000 | 10,915 | |||||||||||
Hutchison Telecommunications Hong Kong Holdings Ltd. | Wireless Telecommunication Services | 40,000 | 6,606 | |||||||||||
Hysan Development Co. Ltd. | Real Estate Management & Development | 20,000 | 65,025 | |||||||||||
Jardine Matheson Holdings Ltd. | Industrial Conglomerates | 7,000 | 350,000 | |||||||||||
Jardine Strategic Holdings Ltd. | Industrial Conglomerates | 6,000 | 133,200 | |||||||||||
Johnson Electric Holdings Ltd. | Electrical Equipment | 12,500 | 19,675 | |||||||||||
Kerry Properties Ltd. | Real Estate Management & Development | 20,000 | 52,768 | |||||||||||
Li & Fung Ltd. | Textiles, Apparel & Luxury Goods | 190,000 | 25,004 | |||||||||||
| 236 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Hong Kong ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Hong Kong (continued) | ||||||||||||||
Lifestyle International Holdings Ltd. | Multiline Retail | 15,000 | $ | 12,599 | ||||||||||
Link REIT | Equity Real Estate Investment Trusts (REITs | ) | 69,000 | 584,874 | ||||||||||
Melco International Development Ltd. | Hotels, Restaurants & Leisure | 26,000 | 37,704 | |||||||||||
MTR Corp. Ltd. | Road & Rail | 47,500 | 245,439 | |||||||||||
New World Development Co. Ltd. | Real Estate Management & Development | 190,000 | 204,441 | |||||||||||
NWS Holdings Ltd. | Industrial Conglomerates | 47,000 | 48,329 | |||||||||||
PCCW Ltd. | Diversified Telecommunication Services | 140,000 | 77,127 | |||||||||||
Power Assets Holdings Ltd. | Electric Utilities | 45,500 | 272,088 | |||||||||||
Sa Sa International Holdings Ltd. | Specialty Retail | 40,000 | 5,986 | |||||||||||
Samsonite International SA | Textiles, Apparel & Luxury Goods | 43,500 | 41,418 | |||||||||||
Shangri-La Asia Ltd. | Hotels, Restaurants & Leisure | 40,000 | 27,094 | |||||||||||
Shun Tak Holdings Ltd. | Industrial Conglomerates | 60,000 | 20,514 | |||||||||||
Sino Land Co. Ltd. | Real Estate Management & Development | 110,000 | 139,648 | |||||||||||
Sun Art Retail Group Ltd. | Food & Staples Retailing | 72,500 | 107,568 | |||||||||||
Sun Hung Kai Properties Ltd. | Real Estate Management & Development | 47,500 | 626,314 | |||||||||||
Swire Pacific Ltd., A | Real Estate Management & Development | 16,500 | 106,333 | |||||||||||
Swire Pacific Ltd., B | Real Estate Management & Development | 30,000 | 30,693 | |||||||||||
Swire Properties Ltd. | Real Estate Management & Development | 35,000 | 98,440 | |||||||||||
Techtronic Industries Co. Ltd. | Machinery | 41,500 | 269,317 | |||||||||||
Television Broadcasts Ltd. | Media | 9,500 | 11,828 | |||||||||||
The Bank of East Asia Ltd. | Banks | 42,000 | 90,384 | |||||||||||
The Wharf Holdings Ltd. | Real Estate Management & Development | 30,000 | 53,181 | |||||||||||
United Energy Group Ltd. | Oil, Gas & Consumable Fuels | 250,000 | 48,381 | |||||||||||
Vitasoy International Holdings Ltd. | Food Products | 27,000 | 81,861 | |||||||||||
VTech Holdings Ltd. | Communications Equipment | 5,500 | 39,773 | |||||||||||
b | WH Group Ltd., Reg S | Food Products | 280,000 | 261,905 | ||||||||||
Wharf Real Estate Investment Co. Ltd. | Real Estate Management & Development | 35,000 | 144,048 | |||||||||||
Wheelock and Co. Ltd. | Real Estate Management & Development | 21,000 | 143,325 | |||||||||||
Xinyi Glass Holdings Ltd. | Auto Components | 70,000 | 80,378 | |||||||||||
Yue Yuen Industrial Holdings Ltd. | Textiles, Apparel & Luxury Goods | 22,500 | 34,486 | |||||||||||
|
| |||||||||||||
| 12,936,735 | ||||||||||||||
|
| |||||||||||||
| Indonesia 0.1% | ||||||||||||||
First Pacific Co. Ltd. | Diversified Financial Services | 80,000 | 14,863 | |||||||||||
|
| |||||||||||||
| Italy 0.3% | ||||||||||||||
PRADA SpA | Textiles, Apparel & Luxury Goods | 17,000 | 49,788 | |||||||||||
|
| |||||||||||||
| Luxembourg 0.1% | ||||||||||||||
L’Occitane International SA | Personal Products | 15,000 | 21,868 | |||||||||||
|
| |||||||||||||
| Macau 5.4% | ||||||||||||||
Galaxy Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 71,000 | 378,775 | |||||||||||
| a | Macau Legend Development Ltd. | Hotels, Restaurants & Leisure | 55,000 | 6,244 | ||||||||||
MGM China Holdings Ltd. | Hotels, Restaurants & Leisure | 24,000 | 24,555 | |||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 80,000 | 293,127 | |||||||||||
SJM Holdings Ltd. | Hotels, Restaurants & Leisure | 60,000 | 50,704 | |||||||||||
Wynn Macau Ltd. | Hotels, Restaurants & Leisure | 48,000 | 72,952 | |||||||||||
|
| |||||||||||||
| 826,357 | ||||||||||||||
|
| |||||||||||||
| Singapore 0.3% | ||||||||||||||
BOC Aviation Ltd. | Trading Companies & Distributors | 7,000 | 44,795 | |||||||||||
|
| |||||||||||||
| Taiwan 0.1% | ||||||||||||||
FIT Hon Teng Ltd. | Electronic Equipment, Instruments & Components | 35,000 | 7,496 | |||||||||||
|
| |||||||||||||
| Total Investments (Cost $18,647,955) 99.4% | 15,342,036 | |||||||||||||
Other Assets, less Liabilities 0.6% | 91,281 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 15,433,317 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
| franklintempleton.com | Annual Report | 237 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Hong Kong ETF(continued)
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $261,905, representing 1.7% of net assets.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||
| Equity Contracts | ||||||||||||||||||
HKG Mini Hang Seng Index | Long | 2 | $ | 61,206 | 4/28/20 | $ | 5,668 | |||||||||||
| *As | of period end. |
See Note 8 regarding other derivative information.
| 238 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE India ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 23.36 | $ | 22.74 | $ | 23.72 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.26 | 0.29 | 0.09 | |||||||||
Net realized and unrealized gains (losses) | (7.43 | ) | 0.53 | (1.07 | ) | |||||||
|
| |||||||||||
Total from investment operations | (7.17 | ) | 0.82 | (0.98 | ) | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.21 | ) | (0.20 | ) | — | |||||||
|
| |||||||||||
Net asset value, end of year | $ | 15.98 | $ | 23.36 | $ | 22.74 | ||||||
|
| |||||||||||
Total returnd | (30.98)% | 3.66% | (4.13)% | |||||||||
| Ratios to average net assetse | ||||||||||||
Total expenses | 0.19% | 0.19% | 0.19% | |||||||||
Net investment income | 1.20% | 1.33% | 2.78% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $8,790 | $7,007 | $2,274 | |||||||||
Portfolio turnover ratef | 36.55% | g | 8.03% | 1.59% | ||||||||
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 6.83%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 239 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.7% | ||||||||||||||
| India 99.7% | ||||||||||||||
| a | 3M India Ltd. | Industrial Conglomerates | 44 | $ | 10,951 | |||||||||
ABB India Ltd. | Electrical Equipment | 1,100 | 13,601 | |||||||||||
| a | ABB Power Products & Systems India Ltd. | Electrical Equipment | 291 | 2,884 | ||||||||||
ACC Ltd. | Construction Materials | 990 | 12,674 | |||||||||||
Adani Enterprises Ltd. | Trading Companies & Distributors | 5,819 | 10,584 | |||||||||||
Adani Ports And Special Economic Zone Ltd. | Transportation Infrastructure | 15,147 | 50,316 | |||||||||||
| a | Adani Power Ltd. | Independent Power and Renewable Electricity Producers | 20,405 | 7,485 | ||||||||||
| a | Aditya Birla Capital Ltd. | Diversified Financial Services | 12,155 | 6,772 | ||||||||||
Alkem Laboratories Ltd. | Pharmaceuticals | 891 | 27,393 | |||||||||||
Ambuja Cements Ltd. | Construction Materials | 17,050 | 35,091 | |||||||||||
Ashok Leyland Ltd. | Machinery | 25,861 | 14,716 | |||||||||||
Asian Paints Ltd. | Chemicals | 6,336 | 139,574 | |||||||||||
AU Small Finance Bank Ltd. | Banks | 3,278 | 21,897 | |||||||||||
Aurobindo Pharma Ltd. | Pharmaceuticals | 5,841 | 31,899 | |||||||||||
| a | Avenue Supermarts Ltd. | Food & Staples Retailing | 2,684 | 77,609 | ||||||||||
Axis Bank Ltd. | Banks | 43,483 | 217,843 | |||||||||||
Bajaj Auto Ltd. | Automobiles | 1,914 | 51,166 | |||||||||||
Bajaj Finance Ltd. | Consumer Finance | 3,971 | 116,309 | |||||||||||
Bajaj Finserv Ltd. | Insurance | 847 | 51,404 | |||||||||||
Bajaj Holdings & Investment Ltd. | Diversified Financial Services | 594 | 14,122 | |||||||||||
Bandhan Bank Ltd | Banks | 13,838 | 37,270 | |||||||||||
| a | Bank of Baroda | Banks | 20,394 | 14,436 | ||||||||||
| a | Bank of India | Banks | 6,611 | 2,818 | ||||||||||
Bata India Ltd. | Textiles, Apparel & Luxury Goods | 682 | 11,098 | |||||||||||
Berger Paints India Ltd. | Chemicals | 5,126 | �� | 33,740 | ||||||||||
Bharat Electronics Ltd. | Aerospace & Defense | 12,914 | 12,709 | |||||||||||
Bharat Forge Ltd. | Auto Components | 4,092 | 12,709 | |||||||||||
Bharat Heavy Electricals Ltd. | Electrical Equipment | 18,216 | 5,008 | |||||||||||
Bharat Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 22,055 | 92,388 | |||||||||||
| a | Bharti Airtel Ltd. | Wireless Telecommunication Services | 38,489 | 224,316 | ||||||||||
Bharti Infratel Ltd. | Diversified Telecommunication Services | 19,019 | 40,225 | |||||||||||
Biocon Ltd. | Biotechnology | 6,270 | 22,423 | |||||||||||
Bosch Ltd. | Auto Components | 154 | 19,126 | |||||||||||
Britannia Industries Ltd. | Food Products | 1,276 | 45,354 | |||||||||||
Cadila Healthcare Ltd. | Pharmaceuticals | 5,456 | 19,274 | |||||||||||
| a | Canara Bank Ltd. | Banks | 6,424 | 7,685 | ||||||||||
Castrol India Ltd. | Chemicals | 10,659 | 14,012 | |||||||||||
Cholamandalam Investment and Finance Co. Ltd. | Consumer Finance | 4,279 | 8,646 | |||||||||||
Cipla Ltd. | Pharmaceuticals | 7,128 | 39,842 | |||||||||||
Coal India Ltd. | Oil, Gas & Consumable Fuels | 32,065 | 59,361 | |||||||||||
Colgate-Palmolive India Ltd. | Personal Products | 1,452 | 24,044 | |||||||||||
Container Corp. of India Ltd. | Road & Rail | 4,554 | 19,964 | |||||||||||
Cummins India Ltd. | Machinery | 1,485 | 6,413 | |||||||||||
Dabur India Ltd. | Personal Products | 11,715 | 69,693 | |||||||||||
| a | Dalmia Bharat Ltd. | Construction Materials | 1,023 | 6,634 | ||||||||||
Divi’s Laboratories Ltd. | Life Sciences Tools & Services | 1,760 | 46,275 | |||||||||||
DLF Ltd. | Real Estate Management & Development | 13,090 | 23,783 | |||||||||||
Dr Reddy’s Laboratories Ltd. | Pharmaceuticals | 1,793 | 73,964 | |||||||||||
Eicher Motors Ltd. | Automobiles | 297 | 51,413 | |||||||||||
Emami Ltd. | Personal Products | 2,376 | 5,338 | |||||||||||
| a | Embassy Office Parks REIT | Equity Real Estate Investment Trusts (REITs | ) | 3,600 | 16,691 | |||||||||
Exide Industries Ltd. | Auto Components | 4,543 | 7,903 | |||||||||||
Federal Bank Ltd. | Banks | 32,373 | 17,566 | |||||||||||
| a | Future Retail Ltd. | Multiline Retail | 4,774 | 4,941 | ||||||||||
GAIL India Ltd. | Gas Utilities | 24,035 | 24,321 | |||||||||||
Gillette India Ltd. | Personal Products | 176 | 12,726 | |||||||||||
| 240 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE India ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| India (continued) | ||||||||||||||
GlaxoSmithKline Consumer Healthcare Ltd. | Food Products | 220 | $ | 29,006 | ||||||||||
Glenmark Pharmaceuticals Ltd. | Pharmaceuticals | 3,025 | 8,231 | |||||||||||
| a | GMR Infrastructure Ltd. | Transportation Infrastructure | 31,856 | 6,885 | ||||||||||
Godrej Consumer Products Ltd. | Personal Products | 8,140 | 56,043 | |||||||||||
Godrej Industries Ltd. | Industrial Conglomerates | 1,551 | 5,805 | |||||||||||
| a | Godrej Properties Ltd. | Real Estate Management & Development | 1,331 | 10,614 | ||||||||||
Grasim Industries Ltd. | Construction Materials | 7,117 | 44,790 | |||||||||||
Havell’s India Ltd. | Electrical Equipment | 5,313 | 33,742 | |||||||||||
HCL Technologies Ltd. | IT Services | 23,870 | 137,696 | |||||||||||
HDFC Asset Management Co. Ltd. | Capital Markets | 957 | 26,727 | |||||||||||
| a | HDFC Life Insurance Co. Ltd. | Insurance | 12,221 | 71,297 | ||||||||||
| a,b | Hemisphere Properties India Ltd. | Real Estate Management & Development | 2,002 | 4,414 | ||||||||||
Hero Motocorp Ltd. | Automobiles | 2,167 | 45,730 | |||||||||||
Hindalco Industries Ltd. | Metals & Mining | 19,756 | 24,992 | |||||||||||
Hindustan Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 13,431 | 33,750 | |||||||||||
Hindustan Unilever Ltd. | Household Products | 15,642 | 475,248 | |||||||||||
| a | Hindustan Zinc Ltd. | Metals & Mining | 5,192 | 10,665 | ||||||||||
Housing Development Finance Corp. Ltd. | Thrifts & Mortgage Finance | 38,005 | 820,422 | |||||||||||
ICICI Bank Ltd. | Banks | 14,212 | 60,820 | |||||||||||
| c,d | ICICI Lombard General Insurance Co. Ltd., 144A, Reg S | Insurance | 4,015 | 57,406 | ||||||||||
| c | ICICI Prudential Life Insurance Co. Ltd., Reg S | Insurance | 6,732 | 31,653 | ||||||||||
| a | IDFC First Bank Ltd. | Banks | 51,568 | 14,383 | ||||||||||
IDFC Ltd. | Diversified Financial Services | 5,896 | 1,157 | |||||||||||
Indiabulls Housing Finance Ltd. | Thrifts & Mortgage Finance | 7,128 | 9,116 | |||||||||||
Indian Oil Corp. Ltd. | Oil, Gas & Consumable Fuels | 46,915 | 50,635 | |||||||||||
Info Edge India Ltd. | Interactive Media & Services | 1,353 | 36,396 | |||||||||||
Infosys Ltd. | IT Services | 81,708 | 692,859 | |||||||||||
| c | InterGlobe Aviation Ltd., Reg S | Airlines | 2,134 | 30,074 | ||||||||||
ITC Ltd. | Tobacco | 65,010 | 147,548 | |||||||||||
| a | Jindal Steel & Power Ltd. | Metals & Mining | 8,943 | 9,717 | ||||||||||
JSW Energy Ltd. | Independent Power and Renewable Electricity Producers | 8,569 | 4,837 | |||||||||||
JSW Steel Ltd. | Metals & Mining | 26,015 | 50,293 | |||||||||||
Jubilant Foodworks Ltd. | Hotels, Restaurants & Leisure | 1,595 | 31,023 | |||||||||||
Kansai Nerolac Paints Ltd. | Chemicals | 2,860 | 14,648 | |||||||||||
L&T Finance Holdings Ltd. | Diversified Financial Services | 10,538 | 7,146 | |||||||||||
| c | Larsen & Toubro Infotech Ltd., Reg S | IT Services | 627 | 11,842 | ||||||||||
Larsen & Toubro Ltd. | Construction & Engineering | 7,447 | 79,588 | |||||||||||
LIC Housing Finance Ltd. | Thrifts & Mortgage Finance | 5,434 | 16,902 | |||||||||||
Lupin Ltd. | Pharmaceuticals | 4,906 | 38,239 | |||||||||||
Mahindra & Mahindra Financial Services Ltd. | Consumer Finance | 6,501 | 12,649 | |||||||||||
Mahindra & Mahindra Ltd. | Automobiles | 12,859 | 48,435 | |||||||||||
Mangalore Refinery and Petrochemicals Ltd. | Oil, Gas & Consumable Fuels | 4,400 | 1,346 | |||||||||||
Marico Ltd. | Personal Products | 9,977 | 36,248 | |||||||||||
Maruti Suzuki India Ltd. | Automobiles | 2,673 | 151,519 | |||||||||||
Motherson Sumi Systems Ltd. | Auto Components | 20,856 | 16,831 | |||||||||||
Mphasis Ltd. | IT Services | 1,617 | 14,202 | |||||||||||
MRF Ltd. | Auto Components | 22 | 16,915 | |||||||||||
Muthoot Finance Ltd. | Consumer Finance | 2,123 | 17,207 | |||||||||||
Nestle India Ltd. | Food Products | 506 | 109,028 | |||||||||||
NHPC Ltd. | Independent Power and Renewable Electricity Producers | 53,570 | 14,127 | |||||||||||
Nippon Life India Asset Management Ltd. | Capital Markets | 3,234 | 10,653 | |||||||||||
NMDC Ltd. | Metals & Mining | 16,280 | 17,216 | |||||||||||
NTPC Ltd. | Independent Power and Renewable Electricity Producers | 52,481 | 58,411 | |||||||||||
Oberoi Realty Ltd. | Real Estate Management & Development | 1,925 | 8,442 | |||||||||||
| franklintempleton.com | Annual Report | 241 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE India ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| India (continued) | ||||||||||||||
Oil & Natural Gas Corp. Ltd. | Oil, Gas & Consumable Fuels | 66,726 | $ | 60,242 | ||||||||||
Oil India Ltd. | Oil, Gas & Consumable Fuels | 5,819 | 6,357 | |||||||||||
| a | Oracle Financial Services Software Ltd. | Software | 473 | 12,653 | ||||||||||
Page Industries Ltd. | Textiles, Apparel & Luxury Goods | 110 | 24,666 | |||||||||||
Petronet LNG Ltd. | Oil, Gas & Consumable Fuels | 11,605 | 30,634 | |||||||||||
Pidilite Industries Ltd. | Chemicals | 2,695 | 48,320 | |||||||||||
Piramal Enterprises Ltd. | Pharmaceuticals | 2,299 | 28,551 | |||||||||||
Power Finance Corp., Ltd. | Diversified Financial Services | 14,025 | 17,047 | |||||||||||
Power Grid Corp. of India Ltd. | Electric Utilities | 40,469 | 85,109 | |||||||||||
| a | Punjab National Bank Ltd. | Banks | 21,197 | 9,064 | ||||||||||
Rajesh Exports Ltd. | Textiles, Apparel & Luxury Goods | 3,069 | 22,217 | |||||||||||
| c | RBL Bank Ltd., Reg S | Banks | 8,283 | 14,836 | ||||||||||
REC Ltd. | Diversified Financial Services | 14,432 | 16,931 | |||||||||||
Reliance Industries Ltd. | Oil, Gas & Consumable Fuels | 68,574 | 1,009,558 | |||||||||||
SBI Life Insurance Co. Ltd. | Insurance | 8,228 | 69,717 | |||||||||||
Shree Cement Ltd. | Construction Materials | 187 | 43,372 | |||||||||||
Shriram Transport Finance Co. Ltd. | Consumer Finance | 3,696 | 32,277 | |||||||||||
Siemens Ltd. | Industrial Conglomerates | 1,881 | 27,684 | |||||||||||
| a | State Bank of India | Banks | 39,446 | 102,641 | ||||||||||
Steel Authority of India Ltd. | Metals & Mining | 22,132 | 6,743 | |||||||||||
Sun Pharmaceutical Industries Ltd. | Pharmaceuticals | 24,189 | 112,646 | |||||||||||
Sun TV Network Ltd. | Media | 1,870 | 7,068 | |||||||||||
Tata Communications Ltd. | Diversified Telecommunication Services | 1,507 | 4,644 | |||||||||||
Tata Consultancy Services Ltd. | IT Services | 19,877 | 479,799 | |||||||||||
| a | Tata Motors Ltd. | Automobiles | 23,837 | 22,387 | ||||||||||
| a | Tata Motors Ltd., A | Automobiles | 8,371 | 3,425 | ||||||||||
Tata Power Co. Ltd. | Electric Utilities | 20,867 | 9,061 | |||||||||||
Tata Steel Ltd. | Metals & Mining | 5,995 | 21,365 | |||||||||||
Tech Mahindra Ltd. | IT Services | 10,219 | 76,388 | |||||||||||
Titan Co. Ltd. | Textiles, Apparel & Luxury Goods | 6,875 | 84,852 | |||||||||||
Torrent Pharmaceuticals Ltd. | Pharmaceuticals | 891 | 23,223 | |||||||||||
Torrent Power Ltd. | Electric Utilities | 2,530 | 9,332 | |||||||||||
TVS Motor Co. Ltd. | Automobiles | 2,508 | 9,864 | |||||||||||
UltraTech Cement Ltd. | Construction Materials | 2,376 | 101,912 | |||||||||||
| a | Union Bank of India Ltd. | Banks | 13,453 | 5,104 | ||||||||||
United Breweries Ltd. | Beverages | 1,463 | 17,769 | |||||||||||
| a | United Spirits Ltd. | Beverages | 6,578 | 42,137 | ||||||||||
UPL Ltd. | Chemicals | 11,858 | 51,177 | |||||||||||
Vedanta Ltd. | Metals & Mining | 36,894 | 31,553 | |||||||||||
| a | Vodafone Idea Ltd. | Wireless Telecommunication Services | 180,103 | 7,380 | ||||||||||
Voltas Ltd. | Construction & Engineering | 2,200 | 13,869 | |||||||||||
Whirlpool of India Ltd. | Household Durables | 671 | 16,133 | |||||||||||
Wipro Ltd. | IT Services | 30,173 | 78,453 | |||||||||||
Yes Bank Ltd. | Banks | 31,573 | 9,369 | |||||||||||
Zee Entertainment Enterprises Ltd. | Media | 19,745 | 32,351 | |||||||||||
|
| |||||||||||||
Total Investments (Cost $11,426,059) 99.7% | 8,763,847 | |||||||||||||
Other Assets, less Liabilities 0.3% | 26,107 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 8,789,954 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
bFair valued using significant unobservable inputs. See Note 9 regarding fair value measurements.
cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $145,811, representing 1.7% of net assets.
| 242 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE India ETF(continued)
dSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the value of this security was $57,406, representing 0.7% of net assets.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
SGX Nifty 50 | Long | 1 | $ | 17,141 | 4/30/20 | $ | 1,682 | |||||||||||||
*As of period end.
See Note 8 regarding other derivative information.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 243 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Italy ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 23.13 | $ | 26.27 | $ | 25.51 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.90 | 0.46 | 0.11 | |||||||||
Net realized and unrealized gains (losses) | (5.52 | ) | (2.99 | ) | 0.70 | |||||||
|
| |||||||||||
Total from investment operations | (4.62 | ) | (2.53 | ) | 0.81 | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.90 | ) | (0.61 | ) | (0.05 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 17.61 | $ | 23.13 | $ | 26.27 | ||||||
|
| |||||||||||
Total returnd | (20.84)% | (9.67)% | 3.19% | |||||||||
| Ratios to average net assetse | ||||||||||||
Total expenses | 0.09% | 0.09% | 0.09% | |||||||||
Net investment income | 3.85% | 2.05% | 1.01% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $2,641 | $10,410 | $2,627 | |||||||||
Portfolio turnover ratef | 9.89% | g | 16.67% | 3.09% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 9.89%.
| 244 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 100.0% | ||||||||||||||
| Italy 93.2% | ||||||||||||||
A2A SpA | Multi-Utilities | 15,888 | $ | 19,752 | ||||||||||
Amplifon SpA | Health Care Providers & Services | 1,224 | 25,142 | |||||||||||
Assicurazioni Generali SpA | Insurance | 11,979 | 163,117 | |||||||||||
Atlantia SpA | Transportation Infrastructure | 5,073 | 63,623 | |||||||||||
Banca Mediolanum SpA | Diversified Financial Services | 2,955 | 15,077 | |||||||||||
| a | Banco BPM SpA | Banks | 15,621 | 20,568 | ||||||||||
Buzzi Unicem SpA | Construction Materials | 690 | 12,621 | |||||||||||
Buzzi Unicem SpA, di Risp | Construction Materials | 408 | 3,828 | |||||||||||
Davide Campari-Milano SpA | Beverages | 5,703 | 40,987 | |||||||||||
DiaSorin SpA | Health Care Equipment & Supplies | 231 | 30,593 | |||||||||||
Enel SpA | Electric Utilities | 71,442 | 496,913 | |||||||||||
Eni SpA | Oil, Gas & Consumable Fuels | 23,286 | 235,576 | |||||||||||
Ferrari NV | Automobiles | 825 | 128,136 | |||||||||||
FinecoBank Banca Fineco SpA | Banks | 6,264 | 56,979 | |||||||||||
Hera SpA | Multi-Utilities | 8,391 | 30,089 | |||||||||||
| b | Infrastrutture Wireless Italiane SpA, Reg S | Diversified Telecommunication Services | 2,466 | 26,733 | ||||||||||
Intesa Sanpaolo SpA | Banks | 138,465 | 226,134 | |||||||||||
Italgas Reti SpA | Gas Utilities | 5,037 | 27,573 | |||||||||||
Leonardo SpA | Aerospace & Defense | 3,987 | 26,563 | |||||||||||
| a | Mediaset SpA | Media | 3,171 | 6,750 | ||||||||||
Mediobanca Banca di Credito Finanziario SpA | Banks | 8,256 | 45,548 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 1,992 | 72,763 | |||||||||||
| a | Nexi SpA | IT Services | 3,072 | 39,970 | ||||||||||
Pirelli & C SpA | Auto Components | 4,443 | 15,917 | |||||||||||
| b | Poste Italiane SpA, Reg S | Insurance | 4,701 | 39,821 | ||||||||||
Prysmian SpA | Electrical Equipment | 2,574 | 41,235 | |||||||||||
Recordati SpA | Pharmaceuticals | 990 | 41,865 | |||||||||||
| a | Saipem SpA | Energy Equipment & Services | 5,790 | 14,231 | ||||||||||
Salvatore Ferragamo SpA | Textiles, Apparel & Luxury Goods | 690 | 9,161 | |||||||||||
Snam SpA | Gas Utilities | 20,505 | 94,586 | |||||||||||
| a | Telecom Italia SpA/Milano | Diversified Telecommunication Services | 109,227 | 44,632 | ||||||||||
Telecom Italia SpA/Milano, di Risp | Diversified Telecommunication Services | 61,857 | 24,468 | |||||||||||
Tenaris SA | Energy Equipment & Services | 4,812 | 29,462 | |||||||||||
Terna Rete Elettrica Nazionale SpA | Electric Utilities | 13,638 | 86,344 | |||||||||||
UniCredit SpA | Banks | 20,805 | 163,154 | |||||||||||
Unione di Banche Italiane SpA | Banks | 9,846 | 26,004 | |||||||||||
UnipolSai Assicurazioni SpA | Insurance | 5,958 | 14,644 | |||||||||||
|
| |||||||||||||
| 2,460,559 | ||||||||||||||
|
| |||||||||||||
| Netherlands 2.1% | ||||||||||||||
EXOR NV | Diversified Financial Services | 1,074 | 55,387 | |||||||||||
|
| |||||||||||||
| United Kingdom 4.7% | ||||||||||||||
CNH Industrial NV | Machinery | 10,179 | 58,257 | |||||||||||
Fiat Chrysler Automobiles NV | Automobiles | 9,177 | 66,177 | |||||||||||
|
| |||||||||||||
| 124,434 | ||||||||||||||
|
| |||||||||||||
Total Investments | 2,640,380 | |||||||||||||
Other Assets, less Liabilities 0.0%† | 940 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 2,641,320 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $66,554, representing 2.5% of net assets.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 245 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Japan ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 24.18 | $ | 26.69 | $ | 25.91 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.56 | 0.59 | 0.44 | |||||||||
Net realized and unrealized gains (losses) | (2.22 | ) | (2.76 | ) | 0.37 | |||||||
|
| |||||||||||
Total from investment operations | (1.66 | ) | (2.17 | ) | 0.81 | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.59 | ) | (0.34 | ) | (0.03 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 21.93 | $ | 24.18 | $ | 26.69 | ||||||
|
| |||||||||||
Total returnd | (7.15)% | (8.10)% | 3.11% | |||||||||
| Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 0.09% | 0.09% | 0.09% | |||||||||
Expenses net waiver and payments by affiliates | 0.09% | 0.09% | —% | |||||||||
Net investment income | 2.30% | 2.39% | 4.07% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $315,851 | $290,205 | $96,082 | |||||||||
Portfolio turnover ratef | 4.59% | g | 4.35% | 0.93% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 4.51%.
| 246 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 98.7% | ||||||||||||||
| Japan 98.7% | ||||||||||||||
ABC-Mart Inc. | Specialty Retail | 2,400 | $ | 120,272 | ||||||||||
Acom Co. Ltd. | Consumer Finance | 36,000 | 146,394 | |||||||||||
Advantest Corp. | Semiconductors & Semiconductor Equipment | 19,200 | 771,877 | |||||||||||
AEON Co. Ltd. | Food & Staples Retailing | 67,200 | 1,493,333 | |||||||||||
AEON Financial Service Co. Ltd. | Consumer Finance | 12,000 | 128,720 | |||||||||||
AEON Mall Co. Ltd. | Real Estate Management & Development | 12,000 | 151,508 | |||||||||||
AGC Inc. | Building Products | 16,800 | 413,795 | |||||||||||
Aica Kogyo Co. Ltd. | Building Products | 4,800 | 137,613 | |||||||||||
AIN Holdings Inc. | Food & Staples Retailing | 2,400 | 141,170 | |||||||||||
Air Water Inc. | Chemicals | 16,800 | 231,252 | |||||||||||
Aisin Seiki Co. Ltd. | Auto Components | 16,800 | 414,573 | |||||||||||
Ajinomoto Co. Inc. | Food Products | 48,000 | 893,928 | |||||||||||
Alfresa Holdings Corp. | Health Care Providers & Services | 16,800 | 313,419 | |||||||||||
Alps Alpine Co. Ltd. | Electronic Equipment, Instruments & Components | 19,200 | 186,567 | |||||||||||
Amada Co. Ltd. | Machinery | 31,200 | 246,525 | |||||||||||
Amano Corp. | Electronic Equipment, Instruments & Components | 7,200 | 159,200 | |||||||||||
ANA Holdings Inc. | Airlines | 9,600 | 234,676 | |||||||||||
Anritsu Corp. | Electronic Equipment, Instruments & Components | 12,000 | 222,982 | |||||||||||
Aozora Bank Ltd. | Banks | 12,000 | 229,207 | |||||||||||
Ariake Japan Co. Ltd. | Food Products | 1,700 | 107,397 | |||||||||||
Asahi Group Holdings Ltd. | Beverages | 36,000 | 1,170,488 | |||||||||||
Asahi Intecc Co. Ltd. | Health Care Equipment & Supplies | 16,800 | 415,818 | |||||||||||
Asahi Kasei Corp. | Chemicals | 120,000 | 850,132 | |||||||||||
Asics Corp. | Textiles, Apparel & Luxury Goods | 16,800 | 155,465 | |||||||||||
ASKUL Corp. | Internet & Direct Marketing Retail | 2,400 | 71,141 | |||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 177,600 | 2,749,012 | |||||||||||
Autobacs Seven Co. Ltd. | Specialty Retail | 4,800 | 55,401 | |||||||||||
Azbil Corp. | Electronic Equipment, Instruments & Components | 12,000 | 311,685 | |||||||||||
Bandai Namco Holdings Inc. | Leisure Equipment & Products | 19,200 | 932,122 | |||||||||||
Benefit One Inc. | Professional Services | 4,800 | 62,693 | |||||||||||
Benesse Holdings Inc. | Diversified Consumer Services | 7,200 | 183,476 | |||||||||||
BIC CAMERA Inc. | Specialty Retail | 14,400 | 116,715 | |||||||||||
Bridgestone Corp. | Auto Components | 55,200 | 1,699,130 | |||||||||||
Brother Industries Ltd. | Technology Hardware, Storage & Peripherals | 21,600 | 330,938 | |||||||||||
Calbee Inc. | Food Products | 7,200 | 194,815 | |||||||||||
CANON Inc. | Technology Hardware, Storage & Peripherals | 96,000 | 2,097,763 | |||||||||||
Canon Marketing Japan Inc. | Electronic Equipment, Instruments & Components | 4,800 | 95,329 | |||||||||||
Capcom Co. Ltd. | Entertainment | 9,600 | 301,459 | |||||||||||
Casio Computer Co. Ltd. | Household Durables | 21,600 | 303,526 | |||||||||||
Central Japan Railway Co. | Road & Rail | 17,300 | 2,775,564 | |||||||||||
Chubu Electric Power Co. Inc. | Electric Utilities | 67,200 | 948,973 | |||||||||||
Chugai Pharmaceutical Co. Ltd. | Pharmaceuticals | 20,800 | 2,408,411 | |||||||||||
Chuo Mitsui Trust Holdings Inc. | Banks | 36,000 | 1,041,767 | |||||||||||
Citizen Watch Co. Ltd. | Electronic Equipment, Instruments & Components | 26,400 | 93,906 | |||||||||||
Coca-Cola Bottlers Japan Holdings Inc. | Beverages | 14,400 | 295,990 | |||||||||||
COMSYS Holdings Corp. | Construction & Engineering | 9,600 | 247,481 | |||||||||||
Concordia Financial Group Ltd. | Banks | 105,600 | 308,128 | |||||||||||
Cosmo Energy Holdings Co. Ltd. | Oil, Gas & Consumable Fuels | 7,200 | 101,442 | |||||||||||
Cosmos Pharmaceutical Corp. | Food & Staples Retailing | 850 | 202,983 | |||||||||||
Credit Saison Co. Ltd. | Consumer Finance | 14,400 | 167,536 | |||||||||||
CyberAgent Inc. | Media | 9,600 | 372,600 | |||||||||||
Dai Nippon Printing Co. Ltd. | Commercial Services & Supplies | 26,400 | 562,701 | |||||||||||
Daicel Corp. | Chemicals | 26,400 | 192,947 | |||||||||||
Daido Steel Co. Ltd. | Metals & Mining | 2,400 | 77,366 | |||||||||||
Daifuku Co. Ltd. | Machinery | 9,600 | 609,143 | |||||||||||
Daiichi Sankyo Co. Ltd. | Pharmaceuticals | 60,000 | 4,131,722 | |||||||||||
Daiichikosho Co. Ltd. | Entertainment | 4,800 | 128,098 | |||||||||||
Daikin Industries Ltd. | Building Products | 25,370 | 3,095,020 | |||||||||||
Daishi Hokuetsu Financial Group Inc. | Banks | 4,800 | 105,066 | |||||||||||
| franklintempleton.com | Annual Report | 247 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 6,348 | $ | 591,845 | ||||||||||
Daiwa House Industry Co. Ltd. | Real Estate Management & Development | 62,400 | 1,547,645 | |||||||||||
Daiwa Securities Group Inc. | Capital Markets | 144,000 | 559,166 | |||||||||||
DeNA Co. Ltd. | Entertainment | 9,600 | 105,110 | |||||||||||
Denka Co. Ltd. | Chemicals | 7,200 | 151,863 | |||||||||||
Denso Corp. | Auto Components | 43,200 | 1,396,982 | |||||||||||
Dentsu Group Inc. | Media | 21,600 | 417,574 | |||||||||||
DIC Corp. | Chemicals | 7,200 | 159,600 | |||||||||||
Disco Corp. | Semiconductors & Semiconductor Equipment | 2,677 | 529,672 | |||||||||||
DMG Mori Co. Ltd. | Machinery | 9,600 | 80,211 | |||||||||||
Dowa Holdings Co. Ltd. | Metals & Mining | 4,800 | 125,786 | |||||||||||
East Japan Railway Co. | Road & Rail | 34,400 | 2,605,293 | |||||||||||
EBARA Corp. | Machinery | 9,600 | 182,921 | |||||||||||
Eisai Co. Ltd. | Pharmaceuticals | 25,400 | 1,866,031 | |||||||||||
Electric Power Development Co. Ltd. | Independent Power and Renewable Electricity Producers | 16,800 | 338,941 | |||||||||||
Ezaki Glico Co. Ltd. | Food Products | 4,800 | 201,862 | |||||||||||
FamilyMart Co. Ltd. | Food & Staples Retailing | 21,600 | 387,762 | |||||||||||
Fancl Corp. | Personal Products | 7,200 | 161,867 | |||||||||||
FANUC Corp. | Machinery | 18,600 | 2,524,969 | |||||||||||
Fast Retailing Co. Ltd. | Specialty Retail | 4,900 | 2,005,752 | |||||||||||
FP Corp. | Containers & Packaging | 2,400 | 159,400 | |||||||||||
Fuji Electric Co. Ltd. | Electrical Equipment | 12,000 | 272,225 | |||||||||||
Fuji Media Holdings Inc. | Media | 4,800 | 47,887 | |||||||||||
Fuji Oil Holdings Inc. | Food Products | 4,800 | 115,959 | |||||||||||
Fuji Seal International Inc. | Containers & Packaging | 4,800 | 85,013 | |||||||||||
FUJIFILM Holdings Corp. | Technology Hardware, Storage & Peripherals | 33,600 | 1,692,839 | |||||||||||
Fujikura Ltd. | Electrical Equipment | 26,400 | 76,543 | |||||||||||
Fujitsu General Ltd. | Household Durables | 4,800 | 86,836 | |||||||||||
Fujitsu Ltd. | IT Services | 18,400 | 1,662,656 | |||||||||||
Fukuoka Financial Group Inc. | Banks | 14,400 | 190,880 | |||||||||||
Fukuyama Transporting Co. Ltd. | Road & Rail | 2,400 | 85,925 | |||||||||||
Furukawa Electric Co. Ltd. | Electrical Equipment | 4,800 | 87,370 | |||||||||||
Fuyo General Lease Co. Ltd. | Diversified Financial Services | 2,400 | 121,829 | |||||||||||
Glory Ltd. | Machinery | 4,800 | 110,713 | |||||||||||
GMO Internet Inc. | IT Services | 4,800 | 80,745 | |||||||||||
GMO Payment Gateway Inc. | IT Services | 3,500 | 245,751 | |||||||||||
Goldwin Inc. | Textiles, Apparel & Luxury Goods | 3,600 | 200,750 | |||||||||||
GS Yuasa Corp. | Electrical Equipment | 7,200 | 96,974 | |||||||||||
GungHo Online Entertainment Inc. | Entertainment | 3,250 | 45,519 | |||||||||||
Gunma Bank Ltd. | Banks | 38,400 | 116,671 | |||||||||||
H2O Retailing Corp. | Multiline Retail | 7,200 | 52,755 | |||||||||||
Hachijuni Bank Ltd. | Banks | 43,200 | 156,465 | |||||||||||
Hakuhodo DY Holdings Inc. | Media | 21,600 | 218,091 | |||||||||||
Hamamatsu Photonics K.K. | Electronic Equipment, Instruments & Components | 12,000 | 491,316 | |||||||||||
Hankyu Hanshin Holdings Inc. | Road & Rail | 21,600 | 727,303 | |||||||||||
Haseko Corp. | Household Durables | 26,400 | 282,940 | |||||||||||
Heiwa Corp. | Leisure Equipment & Products | 4,800 | 89,860 | |||||||||||
Hikari Tsushin Inc. | Specialty Retail | 2,400 | 403,057 | |||||||||||
Hino Motors Ltd. | Machinery | 26,400 | 142,081 | |||||||||||
Hirose Electric Co. Ltd. | Electronic Equipment, Instruments & Components | 3,200 | 331,990 | |||||||||||
HIS Co. Ltd. | Hotels, Restaurants & Leisure | 2,400 | 31,413 | |||||||||||
Hisamitsu Pharmaceutical Co. Inc. | Pharmaceuticals | 7,200 | 336,140 | |||||||||||
Hitachi Capital Corp. | Consumer Finance | 4,800 | 90,571 | |||||||||||
Hitachi Chemical Co. Ltd. | Chemicals | 9,600 | 408,170 | |||||||||||
Hitachi Construction Machinery Co. Ltd. | Machinery | 9,600 | 194,659 | |||||||||||
Hitachi High-Tech Corp. | Electronic Equipment, Instruments & Components | 5,900 | 436,126 | |||||||||||
Hitachi Ltd. | Electronic Equipment, Instruments & Components | 88,800 | 2,585,322 | |||||||||||
Hitachi Metals Ltd. | Metals & Mining | 19,200 | 202,573 | |||||||||||
Hitachi Transport System Ltd. | Road & Rail | 4,800 | 104,444 | |||||||||||
| 248 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Hokugin Financial Group Inc. | Banks | 12,000 | $ | 107,600 | ||||||||||
Hokuriku Electric Power Co. | Electric Utilities | 16,800 | 117,805 | |||||||||||
Honda Motor Co. Ltd. | Automobiles | 165,600 | 3,727,553 | |||||||||||
HORIBA Ltd. | Electronic Equipment, Instruments & Components | 3,500 | 174,425 | |||||||||||
Hoshizaki Corp. | Machinery | 4,800 | 360,595 | |||||||||||
House Foods Group Inc. | Food Products | 7,200 | 235,098 | |||||||||||
Hoya Corp. | Health Care Equipment & Supplies | 36,000 | 3,067,945 | |||||||||||
Ibiden Co. Ltd. | Electronic Equipment, Instruments & Components | 9,600 | 210,843 | |||||||||||
Ichigo Inc. | Real Estate Management & Development | 19,200 | 44,463 | |||||||||||
Idemitsu Kosan Co. Ltd. | Oil, Gas & Consumable Fuels | 21,600 | 495,807 | |||||||||||
IHI Corp. | Machinery | 12,000 | 140,281 | |||||||||||
Iida Group Holdings Co. Ltd. | Household Durables | 14,400 | 199,683 | |||||||||||
INPEX Corp. | Oil, Gas & Consumable Fuels | 86,400 | 487,243 | |||||||||||
Isetan Mitsukoshi Holdings Ltd. | Multiline Retail | 33,600 | 196,082 | |||||||||||
Isuzu Motors Ltd. | Automobiles | 48,000 | 318,044 | |||||||||||
Ito En Ltd. | Beverages | 4,800 | 254,328 | |||||||||||
ITOCHU Corp. | Trading Companies & Distributors | 129,600 | 2,692,122 | |||||||||||
ITOCHU Techno-Solutions Corp. | IT Services | 9,600 | 274,337 | |||||||||||
Itoham Yonekyu Holdings Inc. | Food Products | 12,000 | 70,807 | |||||||||||
Izumi Co. Ltd. | Multiline Retail | 4,800 | 132,500 | |||||||||||
J Front Retailing Co. Ltd. | Multiline Retail | 24,000 | 199,639 | |||||||||||
Japan Airlines Co. Ltd. | Airlines | 12,000 | 221,203 | |||||||||||
Japan Airport Terminal Co. Ltd. | Transportation Infrastructure | 4,800 | 185,633 | |||||||||||
Japan Aviatn Elect | Electronic Equipment, Instruments & Components | 4,800 | 57,846 | |||||||||||
Japan Exchange Group Inc. | Capital Markets | 50,400 | 889,837 | |||||||||||
Japan Petroleum Exploration Co. Ltd. | Oil, Gas & Consumable Fuels | 2,400 | 39,505 | |||||||||||
Japan Post Bank Co. Ltd. | Banks | 38,400 | 354,637 | |||||||||||
Japan Post Holdings Co. Ltd. | Insurance | 127,200 | 996,462 | |||||||||||
Japan Post Insurance Co. Ltd. | Insurance | 16,800 | 208,687 | |||||||||||
Japan Tobacco Inc. | Tobacco | 112,800 | 2,085,580 | |||||||||||
JCR Pharmaceuticals Co., Ltd. | Pharmaceuticals | 1,200 | 104,710 | |||||||||||
JFE Holdings Inc. | Metals & Mining | 48,000 | 312,575 | |||||||||||
JGC Holdings Corp. | Construction & Engineering | 21,600 | 173,672 | |||||||||||
JSR Corp. | Chemicals | 16,800 | 310,151 | |||||||||||
JTEKT Corp. | Auto Components | 21,600 | 147,061 | |||||||||||
Justsystems Corp. | Software | 2,400 | 109,268 | |||||||||||
JXTG Holdings Inc. | Oil, Gas & Consumable Fuels | 288,000 | 987,611 | |||||||||||
K’s Holdings Corp. | Specialty Retail | 16,800 | 159,200 | |||||||||||
Kagome Co. Ltd. | Food Products | 7,200 | 187,078 | |||||||||||
Kajima Corp. | Construction & Engineering | 43,200 | 443,785 | |||||||||||
Kakaku.com Inc. | Interactive Media & Services | 12,000 | 220,647 | |||||||||||
Kaken Pharmaceutical Co. Ltd. | Pharmaceuticals | 2,400 | 111,824 | |||||||||||
Kamigumi Co. Ltd. | Transportation Infrastructure | 9,600 | 162,557 | |||||||||||
Kandenko Co. Ltd. | Construction & Engineering | 9,600 | 76,565 | |||||||||||
Kaneka Corp. | Chemicals | 4,800 | 115,159 | |||||||||||
Kansai Electric Power Co. Inc. | Electric Utilities | 69,600 | 775,912 | |||||||||||
Kansai Mirai Financial Group Inc | Banks | 16,800 | 60,536 | |||||||||||
Kansai Paint Co. Ltd. | Chemicals | 19,200 | 366,019 | |||||||||||
KAO Corp. | Personal Products | 45,174 | 3,694,932 | |||||||||||
Kawasaki Heavy Industries Ltd. | Machinery | 14,400 | 209,287 | |||||||||||
| a | Kawasaki Kisen Kaisha Ltd. | Marine | 7,200 | 54,156 | ||||||||||
KDDI Corp. | Wireless Telecommunication Services | 163,200 | 4,822,454 | |||||||||||
Keihan Holdings Co. Ltd. | Industrial Conglomerates | 9,600 | 426,845 | |||||||||||
Keikyu Corp. | Road & Rail | 24,000 | 403,946 | |||||||||||
Keio Corp. | Road & Rail | 12,000 | 710,296 | |||||||||||
Keisei Electric Railway Co. Ltd. | Road & Rail | 14,400 | 416,173 | |||||||||||
Kewpie Corp. | Food Products | 9,600 | 192,169 | |||||||||||
Keyence Corp. | Electronic Equipment, Instruments & Components | 17,232 | 5,559,637 | |||||||||||
Kikkoman Corp. | Food Products | 16,800 | 716,632 | |||||||||||
| franklintempleton.com | Annual Report | 249 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Kinden Corp. | Construction & Engineering | 12,000 | $ | 177,296 | ||||||||||
Kintetsu Group Holdings Co. Ltd. | Road & Rail | 16,800 | 778,102 | |||||||||||
Kirin Holdings Co. Ltd. | Beverages | 76,800 | 1,520,634 | |||||||||||
Kissei Pharmaceutical Co. Ltd. | Pharmaceuticals | 2,400 | 61,826 | |||||||||||
Kobayashi Pharmaceutical Co. Ltd. | Personal Products | 5,500 | 509,472 | |||||||||||
Kobe Bussan Co Ltd | Food & Staples Retailing | 2,600 | 102,598 | |||||||||||
Kobe Steel Ltd. | Metals & Mining | 28,800 | 89,104 | |||||||||||
Koei Tecmo Holdings Co. Ltd. | Entertainment | 4,800 | 123,829 | |||||||||||
Koito Manufacturing Co. Ltd. | Auto Components | 12,000 | 406,280 | |||||||||||
Kokuyo Co. Ltd. | Commercial Services & Supplies | 7,200 | 100,842 | |||||||||||
Komatsu Ltd. | Machinery | 88,800 | 1,462,932 | |||||||||||
Konami Holdings Corp. | Entertainment | 9,600 | 294,790 | |||||||||||
Konica Minolta Inc. | Technology Hardware, Storage & Peripherals | 43,200 | 175,673 | |||||||||||
KOSE Corp. | Personal Products | 2,400 | 296,346 | |||||||||||
Kotobuki Spirits Co. Ltd. | Food Products | 2,400 | 108,156 | |||||||||||
Kubota Corp. | Machinery | 105,600 | 1,351,363 | |||||||||||
Kuraray Co. Ltd. | Chemicals | 33,600 | 339,875 | |||||||||||
Kurita Water Industries Ltd. | Machinery | 9,600 | 222,137 | |||||||||||
Kusuri No Aoki Holdings Co. Ltd. | Food & Staples Retailing | 1,000 | 83,183 | |||||||||||
Kyocera Corp. | Electronic Equipment, Instruments & Components | 28,800 | 1,709,512 | |||||||||||
Kyoritsu Maintenance Co. Ltd. | Hotels, Restaurants & Leisure | 2,400 | 53,000 | |||||||||||
Kyowa Exeo Corp. | Construction & Engineering | 9,600 | 213,956 | |||||||||||
Kyowa Kirin Co. Ltd. | Pharmaceuticals | 24,000 | 538,447 | |||||||||||
Kyudenko Corp. | Construction & Engineering | 4,800 | 129,965 | |||||||||||
Kyushu Electric Power Co. Inc. | Electric Utilities | 43,200 | 347,745 | |||||||||||
Kyushu Financial Group Inc. | Banks | 36,000 | 137,724 | |||||||||||
Kyushu Railway Co. | Road & Rail | 14,400 | 413,506 | |||||||||||
Lasertec Corp. | Semiconductors & Semiconductor Equipment | 7,200 | 337,474 | |||||||||||
Lawson Inc. | Food & Staples Retailing | 4,800 | 263,665 | |||||||||||
| a | Line Corp. | Interactive Media & Services | 4,800 | 231,652 | ||||||||||
LINTEC Corp. | Chemicals | 4,800 | 101,109 | |||||||||||
Lion Corp. | Household Products | 24,000 | 514,214 | |||||||||||
LIXIL Group Corp. | Building Products | 24,000 | 299,013 | |||||||||||
M3 Inc. | Health Care Technology | 40,800 | 1,207,503 | |||||||||||
Mabuchi Motor Co. Ltd. | Electrical Equipment | 4,800 | 143,171 | |||||||||||
Maeda Corp. | Construction & Engineering | 12,000 | 88,592 | |||||||||||
Maeda Road Construction Co. Ltd. | Construction & Engineering | 4,800 | 89,860 | |||||||||||
Makita Corp. | Machinery | 24,000 | 736,974 | |||||||||||
Mani Inc. | Health Care Equipment & Supplies | 4,800 | 117,782 | |||||||||||
Marubeni Corp. | Trading Companies & Distributors | 148,800 | 742,932 | |||||||||||
Maruha Nichiro Corp. | Food Products | 2,400 | 50,199 | |||||||||||
Marui Group Co. Ltd. | Multiline Retail | 19,200 | 322,801 | |||||||||||
Maruichi Steel Tube Ltd. | Metals & Mining | 4,800 | 115,559 | |||||||||||
Matsui Securities Co. Ltd. | Capital Markets | 9,600 | 70,518 | |||||||||||
Matsumotokiyoshi Holdings Co. Ltd. | Food & Staples Retailing | 7,200 | 262,109 | |||||||||||
Mazda Motor Corp. | Automobiles | 55,200 | 292,477 | |||||||||||
Mebuki Financial Group Inc. | Banks | 96,000 | 195,637 | |||||||||||
Medipal Holdings Corp. | Health Care Providers & Services | 14,400 | 269,179 | |||||||||||
Megmilk Snow Brand Co. Ltd. | Food Products | 4,800 | 109,201 | |||||||||||
Meiji Holdings Co. Ltd. | Food Products | 12,000 | 853,689 | |||||||||||
Minebea Mitsumi Inc. | Machinery | 40,800 | 609,987 | |||||||||||
Miraca Holdings Inc. | Health Care Providers & Services | 4,800 | 101,287 | |||||||||||
MISUMI Group Inc. | Machinery | 26,400 | 575,907 | |||||||||||
Mitsubishi Chemical Holdings Corp. | Chemicals | 122,400 | 728,810 | |||||||||||
Mitsubishi Corp. | Trading Companies & Distributors | 115,200 | 2,445,286 | |||||||||||
Mitsubishi Electric Corp. | Electrical Equipment | 189,600 | 2,344,644 | |||||||||||
Mitsubishi Estate Co. Ltd. | Real Estate Management & Development | 110,400 | 1,631,124 | |||||||||||
Mitsubishi Gas Chemical Co. Inc. | Chemicals | 16,800 | 183,010 | |||||||||||
Mitsubishi Heavy Industries Ltd. | Machinery | 26,400 | 668,223 | |||||||||||
| 250 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Mitsubishi Logistics Corp. | Transportation Infrastructure | 7,200 | $ | 145,527 | ||||||||||
Mitsubishi Materials Corp. | Metals & Mining | 12,000 | 246,214 | |||||||||||
Mitsubishi Motors Corp. | Automobiles | 60,000 | 170,071 | |||||||||||
Mitsubishi Shokuhin Co. Ltd. | Food & Staples Retailing | 2,400 | 61,781 | |||||||||||
Mitsubishi UFJ Financial Group Inc. | Banks | 1,195,200 | 4,461,726 | |||||||||||
Mitsubishi UFJ Lease & Finance Co. Ltd. | Diversified Financial Services | 40,800 | 201,062 | |||||||||||
Mitsui & Co. Ltd. | Trading Companies & Distributors | 163,200 | 2,272,903 | |||||||||||
Mitsui Chemicals Inc. | Chemicals | 16,800 | 319,177 | |||||||||||
Mitsui Fudosan Co. Ltd. | Real Estate Management & Development | 91,200 | 1,580,192 | |||||||||||
Mitsui Mining and Smelting Co. Ltd. | Metals & Mining | 4,800 | 80,345 | |||||||||||
Mitsui O.S.K. Lines Ltd. | Marine | 9,600 | 155,354 | |||||||||||
Miura Co. Ltd. | Machinery | 9,600 | 342,810 | |||||||||||
Mizuho Financial Group Inc. | Banks | 2,431,200 | 2,783,533 | |||||||||||
Mochida Pharmaceutical Co. Ltd. | Pharmaceuticals | 2,400 | 92,705 | |||||||||||
Monotaro Co. Ltd. | Trading Companies & Distributors | 12,000 | 318,800 | |||||||||||
Morinaga & Co. Ltd. | Food Products | 4,800 | 196,526 | |||||||||||
Morinaga Milk Industry Co. Ltd. | Food Products | 4,800 | 185,855 | |||||||||||
MS&AD Insurance Group Holdings Inc. | Insurance | 45,600 | 1,277,755 | |||||||||||
Murata Manufacturing Co. Ltd. | Electronic Equipment, Instruments & Components | 55,200 | 2,797,966 | |||||||||||
Nabtesco Corp. | Machinery | 12,000 | 277,338 | |||||||||||
Nagase & Co. Ltd. | Trading Companies & Distributors | 9,600 | 113,736 | |||||||||||
Nagoya Railroad Co. Ltd. | Road & Rail | 19,200 | 538,891 | |||||||||||
Nankai Electric Railway Co. Ltd. | Road & Rail | 9,600 | 218,758 | |||||||||||
NEC Corp. | IT Services | 23,000 | 840,489 | |||||||||||
Net One Systems Co. Ltd. | IT Services | 7,200 | 149,929 | |||||||||||
Nexon Co. Ltd. | Entertainment | 38,400 | 627,817 | |||||||||||
NGK Insulators Ltd. | Machinery | 24,000 | 315,020 | |||||||||||
NGK Spark Plug Co. Ltd. | Auto Components | 19,200 | 270,691 | |||||||||||
NH Foods Ltd. | Food Products | 9,600 | 334,806 | |||||||||||
NHK Spring Co. Ltd. | Auto Components | 14,400 | 94,439 | |||||||||||
Nichirei Corp. | Food Products | 9,600 | 271,669 | |||||||||||
Nidec Corp. | Electrical Equipment | 44,600 | 2,316,449 | |||||||||||
Nifco Inc. | Auto Components | 7,200 | 129,387 | |||||||||||
Nihon Kohden Corp. | Health Care Equipment & Supplies | 7,200 | 270,779 | |||||||||||
Nihon M&A Center Inc. | Professional Services | 12,000 | 328,470 | |||||||||||
Nihon Unisys Ltd. | IT Services | 7,200 | 192,947 | |||||||||||
Nikon Corp. | Household Durables | 31,200 | 288,431 | |||||||||||
Nintendo Co. Ltd. | Entertainment | 10,200 | 3,931,471 | |||||||||||
Nippo Corp. | Construction & Engineering | 4,800 | 105,822 | |||||||||||
Nippon Electric Glass Co. Ltd. | Electronic Equipment, Instruments & Components | 7,200 | 96,574 | |||||||||||
Nippon Express Co. Ltd. | Road & Rail | 7,200 | 352,814 | |||||||||||
Nippon Kayaku Co. Ltd. | Chemicals | 16,800 | 154,842 | |||||||||||
Nippon Paint Holdings Co. Ltd. | Chemicals | 14,400 | 754,981 | |||||||||||
Nippon Paper Industries Co. Ltd. | Paper & Forest Products | 9,600 | 136,857 | |||||||||||
Nippon Shinyaku Co. Ltd. | Pharmaceuticals | 4,800 | 377,046 | |||||||||||
Nippon Shobukai Co. Ltd. | Chemicals | 2,400 | 110,046 | |||||||||||
Nippon Steel Corp. | Metals & Mining | 79,200 | 678,910 | |||||||||||
Nippon Telegraph & Telephone Corp. | Diversified Telecommunication Services | 115,200 | 2,748,345 | |||||||||||
Nippon Television Holdings Inc. | Media | 2,400 | 26,789 | |||||||||||
Nippon Yusen KK | Marine | 14,400 | 171,538 | |||||||||||
Nipro Corp. | Health Care Equipment & Supplies | 12,000 | 141,281 | |||||||||||
Nishi-Nippon Financial Holdings Inc. | Banks | 14,400 | 81,367 | |||||||||||
Nishi-Nippon Railroad Co. Ltd. | Road & Rail | 7,200 | 177,207 | |||||||||||
Nissan Chemical Corp. | Chemicals | 14,400 | 525,552 | |||||||||||
Nissan Motor Co. Ltd. | Automobiles | 184,800 | 610,437 | |||||||||||
Nissan Shatai Co. Ltd. | Automobiles | 4,800 | 41,751 | |||||||||||
Nisshin Seifun Group Inc. | Food Products | 24,000 | 400,611 | |||||||||||
Nisshinbo Holdings Inc. | Industrial Conglomerates | 12,000 | 80,145 | |||||||||||
Nissin Foods Holdings Co. Ltd. | Food Products | 7,200 | 600,250 | |||||||||||
| franklintempleton.com | Annual Report | 251 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Nitori Co. Ltd. | Specialty Retail | 7,200 | $ | 972,405 | ||||||||||
Nitto Denko Corp. | Chemicals | 14,400 | 643,601 | |||||||||||
Noevir Holdings Co. Ltd. | Personal Products | 2,400 | 122,718 | |||||||||||
NOF Corp. | Chemicals | 7,200 | 228,762 | |||||||||||
NOK Corp. | Auto Components | 12,000 | 132,611 | |||||||||||
Nomura Holdings Inc. | Capital Markets | 290,400 | 1,231,486 | |||||||||||
Nomura Real Estate Holdings Inc. | Real Estate Management & Development | 12,000 | 195,081 | |||||||||||
Nomura Research Institute Ltd. | IT Services | 24,000 | 508,656 | |||||||||||
NS Solutions Corp. | IT Services | 2,400 | 58,513 | |||||||||||
NSK Ltd. | Machinery | 43,200 | 277,716 | |||||||||||
NTN Corp. | Machinery | 40,800 | 71,430 | |||||||||||
NTT Data Corp. | IT Services | 60,000 | 578,019 | |||||||||||
NTT DOCOMO Inc. | Wireless Telecommunication Services | 110,400 | 3,453,483 | |||||||||||
Obayashi Corp. | Construction & Engineering | 64,800 | 555,832 | |||||||||||
OBIC Business Consultants Co. Ltd. | Software | 2,400 | 97,374 | |||||||||||
OBIC Co. Ltd. | IT Services | 6,500 | 852,577 | |||||||||||
Odakyu Electric Railway Co. Ltd. | Road & Rail | 28,800 | 632,797 | |||||||||||
Oji Holdings Corp. | Paper & Forest Products | 84,000 | 450,521 | |||||||||||
Okuma Corp. | Machinery | 2,400 | 77,477 | |||||||||||
Olympus Corp. | Health Care Equipment & Supplies | 100,800 | 1,458,474 | |||||||||||
Omron Corp. | Electronic Equipment, Instruments & Components | 19,200 | 1,001,306 | |||||||||||
Ono Pharmaceutical Co. Ltd. | Pharmaceuticals | 40,800 | 939,547 | |||||||||||
Open House Co. Ltd. | Real Estate Management & Development | 4,800 | 98,930 | |||||||||||
Oracle Corp. Japan | Software | 3,245 | 283,755 | |||||||||||
Orient Corp. | Consumer Finance | 52,800 | 59,180 | |||||||||||
Oriental Land Co. Ltd. | Hotels, Restaurants & Leisure | 17,800 | 2,278,690 | |||||||||||
ORIX Corp. | Diversified Financial Services | 122,400 | 1,474,514 | |||||||||||
Osaka Gas Co. Ltd. | Gas Utilities | 38,400 | 724,213 | |||||||||||
OSG Corp. | Machinery | 7,200 | 96,507 | |||||||||||
Otsuka Corp. | IT Services | 9,600 | 410,838 | |||||||||||
Otsuka Holdings Co. Ltd. | Pharmaceuticals | 40,800 | 1,599,044 | |||||||||||
Paltac Corp. | Distributors | 2,400 | 119,828 | |||||||||||
Pan Pacific International Holdings Corp. | Multiline Retail | 48,000 | 911,046 | |||||||||||
Panasonic Corp. | Household Durables | 204,000 | 1,558,983 | |||||||||||
Park24 Co. Ltd. | Commercial Services & Supplies | 9,600 | 141,481 | |||||||||||
Penta-Ocean Construction Co. Ltd. | Construction & Engineering | 26,400 | 139,147 | |||||||||||
| a | PeptiDream Inc. | Biotechnology | 7,200 | 251,438 | ||||||||||
Persol Holdings Co. Ltd. | Professional Services | 16,800 | 169,004 | |||||||||||
Pigeon Corp. | Household Products | 9,600 | 368,598 | |||||||||||
Pilot Corp. | Commercial Services & Supplies | 2,400 | 79,922 | |||||||||||
Pola Orbis Holdings Inc. | Personal Products | 7,200 | 133,055 | |||||||||||
Rakuten Inc. | Internet & Direct Marketing Retail | 76,800 | 583,354 | |||||||||||
Recruit Holdings Co. Ltd. | Professional Services | 120,000 | 3,107,962 | |||||||||||
Relo Group Inc. | Real Estate Management & Development | 9,600 | 201,595 | |||||||||||
| a | Renesas Electronics Corp. | Semiconductors & Semiconductor Equipment | 67,200 | 242,145 | ||||||||||
Rengo Co. Ltd. | Containers & Packaging | 19,200 | 149,751 | |||||||||||
Resona Holdings Inc. | Banks | 208,800 | 628,982 | |||||||||||
Resorttrust Inc. | Hotels, Restaurants & Leisure | 7,200 | 70,429 | |||||||||||
Ricoh Co. Ltd. | Technology Hardware, Storage & Peripherals | 64,800 | 476,599 | |||||||||||
Rinnai Corp. | Household Durables | 3,100 | 219,675 | |||||||||||
Rohm Co. Ltd. | Semiconductors & Semiconductor Equipment | 8,000 | 439,442 | |||||||||||
Rohto Pharmaceutical Co. Ltd. | Personal Products | 9,600 | 263,221 | |||||||||||
Ryohin Keikaku Co. Ltd. | Multiline Retail | 21,600 | 242,901 | |||||||||||
Sankyo Co. Ltd. | Leisure Equipment & Products | 4,800 | 139,836 | |||||||||||
Sankyu Inc. | Road & Rail | 4,800 | 179,408 | |||||||||||
Sanrio Co. Ltd. | Specialty Retail | 4,800 | 63,893 | |||||||||||
Santen Pharmaceutical Co. Ltd. | Pharmaceuticals | 33,600 | 578,285 | |||||||||||
Sanwa Holdings Corp. | Building Products | 19,200 | 150,107 | |||||||||||
Sapporo Holdings Ltd. | Beverages | 4,800 | 88,615 | |||||||||||
| 252 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Sawai Pharmaceutical Co. Ltd. | Pharmaceuticals | 4,800 | $ | 256,551 | ||||||||||
SBI Holdings Inc. | Capital Markets | 21,600 | 315,732 | |||||||||||
SCREEN Holdings Co. Ltd. | Semiconductors & Semiconductor Equipment | 3,700 | 137,094 | |||||||||||
SCSK Corp. | IT Services | 4,800 | 214,089 | |||||||||||
Secom Co. Ltd. | Commercial Services & Supplies | 19,200 | 1,596,043 | |||||||||||
Sega Sammy Holdings Inc. | Leisure Equipment & Products | 19,200 | 233,875 | |||||||||||
Seibu Holdings Inc. | Road & Rail | 21,600 | 237,699 | |||||||||||
Seiko Epson Corp. | Technology Hardware, Storage & Peripherals | 26,400 | 286,119 | |||||||||||
Seino Holdings Co. Ltd. | Road & Rail | 14,400 | 156,465 | |||||||||||
Sekisui Chemical Co. Ltd. | Household Durables | 33,600 | 446,008 | |||||||||||
Sekisui House Ltd. | Household Durables | 55,200 | 912,458 | |||||||||||
Seven & i Holdings Co. Ltd. | Food & Staples Retailing | 74,400 | 2,464,494 | |||||||||||
Seven Bank Ltd. | Banks | 62,400 | 161,267 | |||||||||||
SG Holdings Co. Ltd. | Air Freight & Logistics | 19,200 | 457,613 | |||||||||||
Sharp Corp. | Household Durables | 14,400 | 151,396 | |||||||||||
Shikoku Electric Power Co. Inc. | Electric Utilities | 14,400 | 113,914 | |||||||||||
Shimadzu Corp. | Electronic Equipment, Instruments & Components | 26,400 | 695,734 | |||||||||||
Shimamura Co. Ltd. | Specialty Retail | 2,400 | 144,949 | |||||||||||
SHIMANO Inc. | Leisure Equipment & Products | 7,200 | 1,029,762 | |||||||||||
Shimizu Corp. | Construction & Engineering | 52,800 | 413,283 | |||||||||||
Shin-Etsu Chemical Co. Ltd. | Chemicals | 38,400 | 3,816,701 | |||||||||||
| a | Shinsei Bank Ltd. | Banks | 19,200 | 256,462 | ||||||||||
Shionogi & Co. Ltd. | Pharmaceuticals | 26,400 | 1,300,253 | |||||||||||
Ship Healthcare Holdings Inc. | Health Care Providers & Services | 2,400 | 98,374 | |||||||||||
Shiseido Co. Ltd. | Personal Products | 37,200 | 2,199,161 | |||||||||||
SHO-BOND Holdings Co. Ltd. | Construction & Engineering | 4,800 | 192,080 | |||||||||||
Shochiku Co. Ltd. | Entertainment | 845 | 94,867 | |||||||||||
Shoei Co. Ltd. | Real Estate Management & Development | 33,600 | 341,742 | |||||||||||
Showa Denko K.K. | Chemicals | 14,400 | 298,391 | |||||||||||
Sky Perfect JSAT Holdings Inc. | Media | 12,000 | 42,684 | |||||||||||
Skylark Holdings Co. Ltd. | Hotels, Restaurants & Leisure | 19,200 | 284,919 | |||||||||||
SMC Corp. | Machinery | 5,503 | 2,332,104 | |||||||||||
SMS Co. Ltd. | Professional Services | 4,800 | 93,061 | |||||||||||
Softbank Corp. | Wireless Telecommunication Services | 153,600 | 1,955,659 | |||||||||||
SoftBank Group Corp. | Wireless Telecommunication Services | 156,000 | 5,473,836 | |||||||||||
Sohgo Security Services Co. Ltd. | Commercial Services & Supplies | 7,200 | 350,813 | |||||||||||
Sojitz Corp. | Trading Companies & Distributors | 117,600 | 276,693 | |||||||||||
Sompo Holdings Inc. | Insurance | 33,600 | 1,040,478 | |||||||||||
Sony Corp. | Household Durables | 117,600 | 6,994,670 | |||||||||||
Sony Financial Holdings Inc. | Insurance | 14,400 | 243,702 | |||||||||||
Sotetsu Holdings Inc. | Road & Rail | 7,200 | 184,944 | |||||||||||
Square Enix Holdings Co. Ltd. | Entertainment | 7,200 | 321,801 | |||||||||||
Stanley Electric Co. Ltd. | Auto Components | 14,400 | 284,385 | |||||||||||
Subaru Corp. | Automobiles | 57,600 | 1,106,328 | |||||||||||
Sugi Pharmacy Co. Ltd. | Food & Staples Retailing | 2,400 | 128,276 | |||||||||||
Sumco Corp. | Semiconductors & Semiconductor Equipment | 21,600 | 278,716 | |||||||||||
Sumitomo Bakelite Co. Ltd. | Chemicals | 2,400 | 51,021 | |||||||||||
Sumitomo Chemical Co. Ltd. | Chemicals | 144,000 | 428,178 | |||||||||||
Sumitomo Corp. | Trading Companies & Distributors | 108,000 | 1,239,516 | |||||||||||
Sumitomo Dainippon Pharma Co. Ltd. | Pharmaceuticals | 16,800 | 218,335 | |||||||||||
Sumitomo Electric Industries Ltd. | Auto Components | 72,000 | 758,983 | |||||||||||
Sumitomo Forestry Co. Ltd. | Household Durables | 12,000 | 153,953 | |||||||||||
Sumitomo Heavy Industries Ltd. | Machinery | 9,600 | 173,495 | |||||||||||
Sumitomo Metal Mining Co. Ltd. | Metals & Mining | 21,600 | 443,785 | |||||||||||
Sumitomo Mitsui Financial Group Inc. | Banks | 124,800 | 3,032,286 | |||||||||||
Sumitomo Osaka Cement Co. Ltd. | Construction Materials | 2,400 | 72,030 | |||||||||||
Sumitomo Realty & Development Co. Ltd. | Real Estate Management & Development | 38,400 | 937,279 | |||||||||||
Sumitomo Rubber Industries Ltd. | Auto Components | 16,800 | 158,577 | |||||||||||
Sundrug Co. Ltd. | Food & Staples Retailing | 7,200 | 230,763 | |||||||||||
| franklintempleton.com | Annual Report | 253 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Suntory Beverage & Food Ltd. | Beverages | 12,000 | $ | 454,078 | ||||||||||
Sushiro Global Holdings Ltd | Hotels, Restaurants & Leisure | 9,600 | 141,481 | |||||||||||
Suzuken Co. Ltd. | Health Care Providers & Services | 7,200 | 262,443 | |||||||||||
Suzuki Motor Corp. | Automobiles | 43,200 | 1,034,231 | |||||||||||
Sysmex Corp. | Health Care Equipment & Supplies | 18,400 | 1,337,283 | |||||||||||
T&D Holdings Inc. | Insurance | 52,800 | 432,358 | |||||||||||
Tadano Ltd. | Machinery | 12,000 | 86,036 | |||||||||||
Taiheiyo Cement Corp. | Construction Materials | 12,000 | 205,641 | |||||||||||
Taisei Corp. | Construction & Engineering | 19,200 | 587,800 | |||||||||||
Taisho Pharmaceutical Holdings Co. Ltd. | Pharmaceuticals | 4,800 | 295,234 | |||||||||||
Taiyo Nippon Sanso Corp. | Chemicals | 14,400 | 213,556 | |||||||||||
Taiyo Yuden Co. Ltd. | Electronic Equipment, Instruments & Components | 12,000 | 318,021 | |||||||||||
Takara Bio Inc. | Biotechnology | 4,800 | 99,197 | |||||||||||
Takara Holdings Inc. | Beverages | 16,800 | 126,053 | |||||||||||
Takashimaya Co. Ltd. | Multiline Retail | 14,400 | 129,787 | |||||||||||
Takeda Pharmaceutical Co. Ltd. | Pharmaceuticals | 146,400 | 4,486,047 | |||||||||||
TDK Corp. | Electronic Equipment, Instruments & Components | 12,000 | 931,499 | |||||||||||
TechnoPro Holdings Inc. | Professional Services | 2,400 | 112,714 | |||||||||||
Teijin Ltd. | Chemicals | 16,800 | 284,785 | |||||||||||
Terumo Corp. | Health Care Equipment & Supplies | 62,400 | 2,150,229 | |||||||||||
The 77 Bank Ltd. | Banks | 7,200 | 93,306 | |||||||||||
The Bank of Kyoto Ltd. | Banks | 7,200 | 229,429 | |||||||||||
The Chiba Bank Ltd. | Banks | 57,600 | 252,372 | |||||||||||
The Chugoku Bank Ltd. | Banks | 16,800 | 149,862 | |||||||||||
The Chugoku Electric Power Co. Inc. | Electric Utilities | 26,400 | 368,776 | |||||||||||
TheDai-ichi Life Holdings Inc. | Insurance | 103,200 | 1,238,438 | |||||||||||
The Hiroshima Bank Ltd. | Banks | 28,800 | 120,317 | |||||||||||
The Iyo Bank Ltd. | Banks | 26,400 | 133,767 | |||||||||||
The Japan Steel Works Ltd. | Machinery | 4,800 | 58,158 | |||||||||||
The Shiga Bank Ltd. | Banks | 4,800 | 114,181 | |||||||||||
The Shizuoka Bank Ltd. | Banks | 48,000 | 292,122 | |||||||||||
THK Co. Ltd. | Machinery | 12,000 | 245,880 | |||||||||||
TIS Inc. | IT Services | 21,600 | 357,549 | |||||||||||
Tobu Railway Co. Ltd. | Road & Rail | 19,200 | 670,502 | |||||||||||
Toda Corp. | Construction & Engineering | 21,600 | 125,852 | |||||||||||
Toho Co. Ltd. | Entertainment | 12,000 | 366,820 | |||||||||||
Toho Gas Co. Ltd. | Gas Utilities | 9,600 | 435,737 | |||||||||||
Tohoku Electric Power Co. Inc. | Electric Utilities | 45,600 | 439,717 | |||||||||||
Tokai Carbon Co. Ltd. | Chemicals | 19,200 | 158,644 | |||||||||||
Tokai Rika Co. Ltd. | Auto Components | 4,800 | 59,847 | |||||||||||
Tokio Marine Holdings Inc. | Insurance | 62,400 | 2,861,192 | |||||||||||
Tokuyama Corp. | Chemicals | 7,200 | 139,525 | |||||||||||
Tokyo Broadcasting System Holdings Inc. | Media | 2,400 | 33,436 | |||||||||||
Tokyo Century Corp. | Diversified Financial Services | 4,800 | 150,507 | |||||||||||
| a | Tokyo Electric Power Co. Holdings Inc. | Electric Utilities | 148,800 | 519,639 | ||||||||||
Tokyo Electron Ltd. | Semiconductors & Semiconductor Equipment | 14,400 | 2,715,131 | |||||||||||
Tokyo Gas Co. Ltd. | Gas Utilities | 40,800 | 966,002 | |||||||||||
Tokyo Tatemono Co. Ltd. | Real Estate Management & Development | 19,200 | 203,996 | |||||||||||
TOKYU Corp. | Road & Rail | 48,000 | 755,870 | |||||||||||
Tokyu Fudosan Holdings Corp. | Real Estate Management & Development | 57,600 | 276,382 | |||||||||||
Topcon Corp. | Electronic Equipment, Instruments & Components | 9,600 | 71,319 | |||||||||||
Toppan Printing Co. Ltd. | Commercial Services & Supplies | 26,400 | 404,969 | |||||||||||
Toray Industries Inc. | Chemicals | 144,000 | 625,594 | |||||||||||
Toshiba Corp. | Industrial Conglomerates | 43,200 | 952,397 | |||||||||||
Toshiba Tec Corp. | Technology Hardware, Storage & Peripherals | 2,400 | 75,587 | |||||||||||
Tosoh Corp. | Chemicals | 26,400 | 300,792 | |||||||||||
TOTO Ltd. | Building Products | 14,400 | 479,533 | |||||||||||
Toyo Seikan Group Holdings Ltd. | Containers & Packaging | 14,400 | 164,602 | |||||||||||
Toyo Suisan Kaisha Ltd. | Food Products | 9,600 | 464,193 | |||||||||||
| 254 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Toyo Tire Corp. | Auto Components | 9,600 | $ | 110,268 | ||||||||||
Toyobo Co. Ltd. | Chemicals | 7,200 | 76,232 | |||||||||||
Toyoda Gosei Co. Ltd. | Auto Components | 7,200 | 123,652 | |||||||||||
Toyota Boshoku Corp. | Auto Components | 4,800 | 57,224 | |||||||||||
Toyota Industries Corp. | Auto Components | 14,400 | 690,955 | |||||||||||
Toyota Motor Corp. | Automobiles | 236,240 | 14,226,263 | |||||||||||
Toyota Tsusho Corp. | Trading Companies & Distributors | 21,600 | 509,412 | |||||||||||
Trend Micro Inc. | Software | 12,000 | 593,581 | |||||||||||
TS TECH Co. Ltd. | Auto Components | 4,800 | 113,736 | |||||||||||
Tsumura & Co. | Pharmaceuticals | 7,200 | 183,543 | |||||||||||
Tsuruha Holdings Inc. | Food & Staples Retailing | 3,500 | 462,322 | |||||||||||
TV Asahi Holdings Corp. | Media | 2,400 | 36,282 | |||||||||||
Ube Industries Ltd. | Chemicals | 9,600 | 147,350 | |||||||||||
Ulvac Inc. | Semiconductors & Semiconductor Equipment | 4,800 | 115,159 | |||||||||||
Unicharm Corp. | Household Products | 36,000 | 1,350,896 | |||||||||||
Ushio Inc. | Electrical Equipment | 9,600 | 91,861 | |||||||||||
USS Co. Ltd. | Specialty Retail | 19,200 | 264,288 | |||||||||||
Wacoal Corp. | Textiles, Apparel & Luxury Goods | 4,800 | 104,355 | |||||||||||
Welcia Holdings Co. Ltd. | Food & Staples Retailing | 4,800 | 335,695 | |||||||||||
West Japan Railway Co. | Road & Rail | 16,800 | 1,150,968 | |||||||||||
Yakult Honsha Co. Ltd. | Food Products | 12,000 | 710,296 | |||||||||||
Yamada Denki Co. Ltd. | Specialty Retail | 74,400 | 297,035 | |||||||||||
Yamaguchi Financial Group Inc. | Banks | 21,600 | 122,451 | |||||||||||
Yamaha Corp. | Leisure Equipment & Products | 14,400 | 562,234 | |||||||||||
Yamaha Motor Co. Ltd. | Automobiles | 26,400 | 319,622 | |||||||||||
Yamato Holdings Co. Ltd. | Air Freight & Logistics | 33,600 | 528,176 | |||||||||||
Yamato Kogyo Co. Ltd. | Metals & Mining | 2,400 | 41,217 | |||||||||||
Yamazaki Baking Co. Ltd. | Food Products | 12,000 | 250,882 | |||||||||||
Yaoko Co. Ltd. | Food & Staples Retailing | 2,400 | 148,284 | |||||||||||
YASKAWA Electric Corp. | Machinery | 24,000 | 661,609 | |||||||||||
Yokogawa Electric Corp. | Electronic Equipment, Instruments & Components | 24,000 | 289,676 | |||||||||||
Yokohama Rubber Co. Ltd. | Auto Components | 9,600 | 119,428 | |||||||||||
Z Holdings Corp. | Interactive Media & Services | 249,600 | 804,602 | |||||||||||
Zenkoku Hosho Co. Ltd. | Diversified Financial Services | 4,800 | 150,952 | |||||||||||
Zensho Holdings Co. Ltd. | Hotels, Restaurants & Leisure | 9,600 | 183,276 | |||||||||||
Zeon Corp. | Chemicals | 14,400 | 108,579 | |||||||||||
Zozo Inc. | Internet & Direct Marketing Retail | 9,600 | 129,032 | |||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 311,631,698 | |||||||||||||
|
| |||||||||||||
| Short Term Investment 0.0%† | ||||||||||||||
| United States 0.0%† | ||||||||||||||
| b,c | Institutional Fiduciary Trust Portfolio, 0.32% | 124,941 | 124,941 | |||||||||||
|
| |||||||||||||
Total Investments | 311,756,639 | |||||||||||||
Other Assets, less Liabilities 1.3% | 4,094,017 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 315,850,656 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSee Note 3(c) regarding investments in affiliated management investment companies.
cThe rate shown is the annualizedseven-day effective yield at period end.
| franklintempleton.com | Annual Report | 255 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan ETF(continued)
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
Nikkei 225 Mini | Long | 224 | $ | 3,925,784 | 6/11/20 | $ | (62,697 | ) | ||||||||||||
*As of period end.
See Note 8 regarding other derivative information.
| 256 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Japan Hedged ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 23.12 | $ | 25.11 | $ | 25.91 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.38 | 0.38 | 0.32 | |||||||||
Net realized and unrealized gains (losses) | (2.15 | ) | (1.11 | ) | (1.11 | ) | ||||||
|
| |||||||||||
Total from investment operations | (1.77 | ) | (0.73 | ) | (0.79 | ) | ||||||
|
| |||||||||||
| Less distributions from: | ||||||||||||
Net investment income | — | (0.01 | ) | (0.01 | ) | |||||||
Net realized gains | — | (1.25 | ) | — | d | |||||||
|
| |||||||||||
Total distributions | — | (1.26 | ) | (0.01 | ) | |||||||
|
| |||||||||||
Net asset value, end of year | $ | 21.35 | $ | 23.12 | $ | 25.11 | ||||||
|
| |||||||||||
Total returne | (7.66)% | (2.59)% | (3.04)% | |||||||||
| Ratios to average net assetsf | ||||||||||||
Expenses before waiver and payments by affiliates | 0.09% | 0.09% | 0.09% | |||||||||
Expenses net waiver and payments by affiliates | 0.09% | 0.09% | —% | |||||||||
Net investment income | 1.59% | 1.51% | 3.10% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $4,269 | $13,870 | $45,197 | |||||||||
Portfolio turnover rateg | 10.06% | h | 19.78% | 1.92% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.001 per share.
eTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year, except fornon-recurring expenses, if any.
gPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
hPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 10.06%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 257 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin FTSE Japan Hedged ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks 98.5% | ||||||||||||||
| Japan 98.5% | ||||||||||||||
ABC-Mart Inc. | Specialty Retail | 34 | $ | 1,704 | ||||||||||
Acom Co. Ltd. | Consumer Finance | 568 | 2,310 | |||||||||||
Advantest Corp. | Semiconductors & Semiconductor Equipment | 250 | 10,051 | |||||||||||
AEON Co. Ltd. | Food & Staples Retailing | 968 | 21,511 | |||||||||||
AEON Financial Service Co. Ltd. | Consumer Finance | 134 | 1,437 | |||||||||||
AEON Mall Co. Ltd. | Real Estate Management & Development | 168 | 2,121 | |||||||||||
AGC Inc. | Building Products | 234 | 5,764 | |||||||||||
Aica Kogyo Co. Ltd. | Building Products | 18 | 516 | |||||||||||
AIN Holdings Inc. | Food & Staples Retailing | 34 | 2,000 | |||||||||||
Air Water Inc. | Chemicals | 200 | 2,753 | |||||||||||
Aisin Seiki Co. Ltd. | Auto Components | 214 | 5,281 | |||||||||||
Ajinomoto Co. Inc. | Food Products | 614 | 11,435 | |||||||||||
Alfresa Holdings Corp. | Health Care Providers & Services | 200 | 3,731 | |||||||||||
Alps Alpine Co. Ltd. | Electronic Equipment, Instruments & Components | 268 | 2,604 | |||||||||||
Amada Co. Ltd. | Machinery | 434 | 3,429 | |||||||||||
Amano Corp. | Electronic Equipment, Instruments & Components | 100 | 2,211 | |||||||||||
ANA Holdings Inc. | Airlines | 142 | 3,471 | |||||||||||
Anritsu Corp. | Electronic Equipment, Instruments & Components | 150 | 2,787 | |||||||||||
Aozora Bank Ltd. | Banks | 168 | 3,209 | |||||||||||
Ariake Japan Co. Ltd. | Food Products | 24 | 1,516 | |||||||||||
Asahi Group Holdings Ltd. | Beverages | 481 | 15,639 | |||||||||||
Asahi Intecc Co. Ltd. | Health Care Equipment & Supplies | 275 | 6,807 | |||||||||||
Asahi Kasei Corp. | Chemicals | 1,661 | 11,767 | |||||||||||
Asics Corp. | Textiles, Apparel & Luxury Goods | 200 | 1,851 | |||||||||||
ASKUL Corp. | Internet & Direct Marketing Retail | 34 | 1,008 | |||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 2,500 | 38,697 | |||||||||||
Autobacs Seven Co. Ltd. | Specialty Retail | 68 | 785 | |||||||||||
Azbil Corp. | Electronic Equipment, Instruments & Components | 168 | 4,364 | |||||||||||
Bandai Namco Holdings Inc. | Leisure Equipment & Products | 245 | 11,894 | |||||||||||
Benefit One Inc. | Professional Services | 68 | 888 | |||||||||||
Benesse Holdings Inc. | Diversified Consumer Services | 100 | 2,548 | |||||||||||
BIC CAMERA Inc. | Specialty Retail | 168 | 1,362 | |||||||||||
Bridgestone Corp. | Auto Components | 746 | 22,963 | |||||||||||
Brother Industries Ltd. | Technology Hardware, Storage & Peripherals | 300 | 4,596 | |||||||||||
Calbee Inc. | Food Products | 100 | 2,706 | |||||||||||
CANON Inc. | Technology Hardware, Storage & Peripherals | 1,300 | 28,407 | |||||||||||
Canon Marketing Japan Inc. | Electronic Equipment, Instruments & Components | 68 | 1,351 | |||||||||||
Capcom Co. Ltd. | Entertainment | 113 | 3,548 | |||||||||||
Casio Computer Co. Ltd. | Household Durables | 268 | 3,766 | |||||||||||
Central Japan Railway Co. | Road & Rail | 243 | 38,986 | |||||||||||
Chubu Electric Power Co. Inc. | Electric Utilities | 885 | 12,498 | |||||||||||
Chugai Pharmaceutical Co. Ltd. | Pharmaceuticals | 273 | 31,610 | |||||||||||
Chuo Mitsui Trust Holdings Inc. | Banks | 468 | 13,543 | |||||||||||
Citizen Watch Co. Ltd. | Electronic Equipment, Instruments & Components | 534 | 1,899 | |||||||||||
Coca-Cola Bottlers Japan Holdings Inc. | Beverages | 168 | 3,453 | |||||||||||
COMSYS Holdings Corp. | Construction & Engineering | 134 | 3,454 | |||||||||||
Concordia Financial Group Ltd. | Banks | 1,468 | 4,283 | |||||||||||
Cosmo Energy Holdings Co. Ltd. | Oil, Gas & Consumable Fuels | 80 | 1,127 | |||||||||||
Cosmos Pharmaceutical Corp. | Food & Staples Retailing | 11 | 2,627 | |||||||||||
Credit Saison Co. Ltd. | Consumer Finance | 200 | 2,327 | |||||||||||
CyberAgent Inc. | Media | 124 | 4,813 | |||||||||||
Dai Nippon Printing Co. Ltd. | Commercial Services & Supplies | 368 | 7,844 | |||||||||||
Daicel Corp. | Chemicals | 368 | 2,690 | |||||||||||
Daido Steel Co. Ltd. | Metals & Mining | 42 | 1,354 | |||||||||||
Daifuku Co. Ltd. | Machinery | 120 | 7,614 | |||||||||||
Daiichi Sankyo Co. Ltd. | Pharmaceuticals | 828 | 57,018 | |||||||||||
Daiichikosho Co. Ltd. | Entertainment | 34 | 907 | |||||||||||
Daikin Industries Ltd. | Building Products | 341 | 41,600 | |||||||||||
| 258 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Daishi Hokuetsu Financial Group Inc. | Banks | 34 | $ | 744 | ||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 86 | 8,018 | |||||||||||
Daiwa House Industry Co. Ltd. | Real Estate Management & Development | 818 | 20,288 | |||||||||||
Daiwa Securities Group Inc. | Capital Markets | 2,034 | 7,898 | |||||||||||
DeNA Co. Ltd. | Entertainment | 134 | 1,467 | |||||||||||
Denka Co. Ltd. | Chemicals | 100 | 2,109 | |||||||||||
Denso Corp. | Auto Components | 624 | 20,179 | |||||||||||
Dentsu Group Inc. | Media | 275 | 5,316 | |||||||||||
DIC Corp. | Chemicals | 100 | 2,217 | |||||||||||
Disco Corp. | Semiconductors & Semiconductor Equipment | 34 | 6,727 | |||||||||||
DMG Mori Co. Ltd. | Machinery | 134 | 1,120 | |||||||||||
Dowa Holdings Co. Ltd. | Metals & Mining | 68 | 1,782 | |||||||||||
East Japan Railway Co. | Road & Rail | 472 | 35,747 | |||||||||||
EBARA Corp. | Machinery | 134 | 2,553 | |||||||||||
Eisai Co. Ltd. | Pharmaceuticals | 332 | 24,391 | |||||||||||
Electric Power Development Co. Ltd. | Independent Power and Renewable Electricity Producers | 200 | 4,035 | |||||||||||
Ezaki Glico Co. Ltd. | Food Products | 68 | 2,860 | |||||||||||
FamilyMart Co. Ltd. | Food & Staples Retailing | 286 | 5,134 | |||||||||||
Fancl Corp. | Personal Products | 83 | 1,866 | |||||||||||
FANUC Corp. | Machinery | 253 | 34,345 | |||||||||||
Fast Retailing Co. Ltd. | Specialty Retail | 65 | 26,607 | |||||||||||
FP Corp. | Containers & Packaging | 34 | 2,258 | |||||||||||
Fuji Electric Co. Ltd. | Electrical Equipment | 168 | 3,811 | |||||||||||
Fuji Media Holdings Inc. | Media | 68 | 678 | |||||||||||
Fuji Oil Holdings Inc. | Food Products | 68 | 1,643 | |||||||||||
Fuji Seal International Inc. | Containers & Packaging | 68 | 1,204 | |||||||||||
FUJIFILM Holdings Corp. | Technology Hardware, Storage & Peripherals | 456 | 22,974 | |||||||||||
Fujikura Ltd. | Electrical Equipment | 434 | 1,258 | |||||||||||
Fujitsu General Ltd. | Household Durables | 68 | 1,230 | |||||||||||
Fujitsu Ltd. | IT Services | 240 | 21,687 | |||||||||||
Fukuoka Financial Group Inc. | Banks | 200 | 2,651 | |||||||||||
Fukuyama Transporting Co. Ltd. | Road & Rail | 34 | 1,217 | |||||||||||
Furukawa Electric Co. Ltd. | Electrical Equipment | 78 | 1,420 | |||||||||||
Fuyo General Lease Co. Ltd. | Diversified Financial Services | 25 | 1,269 | |||||||||||
Glory Ltd. | Machinery | 68 | 1,568 | |||||||||||
GMO Internet Inc. | IT Services | 100 | 1,682 | |||||||||||
GMO Payment Gateway Inc. | IT Services | 52 | 3,651 | |||||||||||
Goldwin Inc. | Textiles, Apparel & Luxury Goods | 44 | 2,454 | |||||||||||
GS Yuasa Corp. | Electrical Equipment | 100 | 1,347 | |||||||||||
GungHo Online Entertainment Inc. | Entertainment | 50 | 700 | |||||||||||
Gunma Bank Ltd. | Banks | 634 | 1,926 | |||||||||||
H2O Retailing Corp. | Multiline Retail | 100 | 733 | |||||||||||
Hachijuni Bank Ltd. | Banks | 568 | 2,057 | |||||||||||
Hakuhodo DY Holdings Inc. | Media | 300 | 3,029 | |||||||||||
Hamamatsu Photonics K.K. | Electronic Equipment, Instruments & Components | 168 | 6,878 | |||||||||||
Hankyu Hanshin Holdings Inc. | Road & Rail | 275 | 9,260 | |||||||||||
Haseko Corp. | Household Durables | 368 | 3,944 | |||||||||||
Heiwa Corp. | Leisure Equipment & Products | 68 | 1,273 | |||||||||||
Hikari Tsushin Inc. | Specialty Retail | 29 | 4,870 | |||||||||||
Hino Motors Ltd. | Machinery | 368 | 1,981 | |||||||||||
Hirose Electric Co. Ltd. | Electronic Equipment, Instruments & Components | 42 | 4,357 | |||||||||||
HIS Co. Ltd. | Hotels, Restaurants & Leisure | 34 | 445 | |||||||||||
Hisamitsu Pharmaceutical Co. Inc. | Pharmaceuticals | 100 | 4,669 | |||||||||||
Hitachi Capital Corp. | Consumer Finance | 68 | 1,283 | |||||||||||
Hitachi Chemical Co. Ltd. | Chemicals | 134 | 5,697 | |||||||||||
Hitachi Construction Machinery Co. Ltd. | Machinery | 134 | 2,717 | |||||||||||
Hitachi High-Tech Corp. | Electronic Equipment, Instruments & Components | 80 | 5,914 | |||||||||||
Hitachi Ltd. | Electronic Equipment, Instruments & Components | 1,200 | 34,937 | |||||||||||
| franklintempleton.com | Annual Report | 259 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Hitachi Metals Ltd. | Metals & Mining | 268 | $ | 2,828 | ||||||||||
Hitachi Transport System Ltd. | Road & Rail | 52 | 1,131 | |||||||||||
Hokugin Financial Group Inc. | Banks | 134 | 1,202 | |||||||||||
Hokuriku Electric Power Co. | Electric Utilities | 200 | 1,402 | |||||||||||
Honda Motor Co. Ltd. | Automobiles | 2,256 | 50,781 | |||||||||||
HORIBA Ltd. | Electronic Equipment, Instruments & Components | 46 | 2,292 | |||||||||||
Hoshizaki Corp. | Machinery | 68 | 5,108 | |||||||||||
House Foods Group Inc. | Food Products | 100 | 3,265 | |||||||||||
Hoya Corp. | Health Care Equipment & Supplies | 484 | 41,247 | |||||||||||
Ibiden Co. Ltd. | Electronic Equipment, Instruments & Components | 134 | 2,943 | |||||||||||
Ichigo Inc. | Real Estate Management & Development | 200 | 463 | |||||||||||
Idemitsu Kosan Co. Ltd. | Oil, Gas & Consumable Fuels | 297 | 6,817 | |||||||||||
IHI Corp. | Machinery | 168 | 1,964 | |||||||||||
Iida Group Holdings Co. Ltd. | Household Durables | 168 | 2,330 | |||||||||||
INPEX Corp. | Oil, Gas & Consumable Fuels | 1,160 | 6,542 | |||||||||||
Isetan Mitsukoshi Holdings Ltd. | Multiline Retail | 534 | 3,116 | |||||||||||
Isuzu Motors Ltd. | Automobiles | 634 | 4,201 | |||||||||||
Ito En Ltd. | Beverages | 68 | 3,603 | |||||||||||
ITOCHU Corp. | Trading Companies & Distributors | 1,738 | 36,103 | |||||||||||
ITOCHU Techno-Solutions Corp. | IT Services | 150 | 4,287 | |||||||||||
Itoham Yonekyu Holdings Inc. | Food Products | 368 | 2,171 | |||||||||||
Izumi Co. Ltd. | Multiline Retail | 52 | 1,435 | |||||||||||
J Front Retailing Co. Ltd. | Multiline Retail | 300 | 2,496 | |||||||||||
Japan Airlines Co. Ltd. | Airlines | 146 | 2,691 | |||||||||||
Japan Airport Terminal Co. Ltd. | Transportation Infrastructure | 68 | 2,630 | |||||||||||
Japan Aviatn Elect | Electronic Equipment, Instruments & Components | 68 | 820 | |||||||||||
Japan Exchange Group Inc. | Capital Markets | 668 | 11,794 | |||||||||||
Japan Petroleum Exploration Co. Ltd. | Oil, Gas & Consumable Fuels | 34 | 560 | |||||||||||
Japan Post Bank Co. Ltd. | Banks | 625 | 5,772 | |||||||||||
Japan Post Holdings Co. Ltd. | Insurance | 1,634 | 12,800 | |||||||||||
Japan Post Insurance Co. Ltd. | Insurance | 249 | 3,093 | |||||||||||
Japan Tobacco Inc. | Tobacco | 1,600 | 29,583 | |||||||||||
JCR Pharmaceuticals Co., Ltd. | Pharmaceuticals | 25 | 2,181 | |||||||||||
JFE Holdings Inc. | Metals & Mining | 653 | 4,252 | |||||||||||
JGC Holdings Corp. | Construction & Engineering | 268 | 2,155 | |||||||||||
JSR Corp. | Chemicals | 234 | 4,320 | |||||||||||
JTEKT Corp. | Auto Components | 300 | 2,043 | |||||||||||
Justsystems Corp. | Software | 50 | 2,276 | |||||||||||
JXTG Holdings Inc. | Oil, Gas & Consumable Fuels | 4,016 | 13,772 | |||||||||||
K’s Holdings Corp. | Specialty Retail | 234 | 2,217 | |||||||||||
Kagome Co. Ltd. | Food Products | 100 | 2,598 | |||||||||||
Kajima Corp. | Construction & Engineering | 568 | 5,835 | |||||||||||
Kakaku.com Inc. | Interactive Media & Services | 168 | 3,089 | |||||||||||
Kaken Pharmaceutical Co. Ltd. | Pharmaceuticals | 40 | 1,864 | |||||||||||
Kamigumi Co. Ltd. | Transportation Infrastructure | 134 | 2,269 | |||||||||||
Kandenko Co. Ltd. | Construction & Engineering | 134 | 1,069 | |||||||||||
Kaneka Corp. | Chemicals | 68 | 1,631 | |||||||||||
Kansai Electric Power Co. Inc. | Electric Utilities | 920 | 10,256 | |||||||||||
Kansai Mirai Financial Group Inc | Banks | 200 | 721 | |||||||||||
Kansai Paint Co. Ltd. | Chemicals | 247 | 4,709 | |||||||||||
KAO Corp. | Personal Products | 606 | 49,567 | |||||||||||
Kawasaki Heavy Industries Ltd. | Machinery | 178 | 2,587 | |||||||||||
| a | Kawasaki Kisen Kaisha Ltd. | Marine | 100 | 752 | ||||||||||
KDDI Corp. | Wireless Telecommunication Services | 2,199 | 64,979 | |||||||||||
Keihan Holdings Co. Ltd. | Industrial Conglomerates | 123 | 5,469 | |||||||||||
Keikyu Corp. | Road & Rail | 300 | 5,049 | |||||||||||
Keio Corp. | Road & Rail | 145 | 8,583 | |||||||||||
Keisei Electric Railway Co. Ltd. | Road & Rail | 176 | 5,087 | |||||||||||
| 260 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Kewpie Corp. | Food Products | 134 | $ | 2,682 | ||||||||||
Keyence Corp. | Electronic Equipment, Instruments & Components | 234 | 75,496 | |||||||||||
Kikkoman Corp. | Food Products | 234 | 9,982 | |||||||||||
Kinden Corp. | Construction & Engineering | 168 | 2,482 | |||||||||||
Kintetsu Group Holdings Co. Ltd. | Road & Rail | 224 | 10,375 | |||||||||||
Kirin Holdings Co. Ltd. | Beverages | 1,016 | 20,117 | |||||||||||
Kissei Pharmaceutical Co. Ltd. | Pharmaceuticals | 34 | 876 | |||||||||||
Kobayashi Pharmaceutical Co. Ltd. | Personal Products | 76 | 7,040 | |||||||||||
Kobe Bussan Co Ltd | Food & Staples Retailing | 50 | 1,973 | |||||||||||
Kobe Steel Ltd. | Metals & Mining | 400 | 1,238 | |||||||||||
Koei Tecmo Holdings Co. Ltd. | Entertainment | 84 | 2,167 | |||||||||||
Koito Manufacturing Co. Ltd. | Auto Components | 142 | 4,808 | |||||||||||
Kokuyo Co. Ltd. | Commercial Services & Supplies | 100 | 1,401 | |||||||||||
Komatsu Ltd. | Machinery | 1,149 | 18,929 | |||||||||||
Konami Holdings Corp. | Entertainment | 119 | 3,654 | |||||||||||
Konica Minolta Inc. | Technology Hardware, Storage & Peripherals | 568 | 2,310 | |||||||||||
KOSE Corp. | Personal Products | 36 | 4,445 | |||||||||||
Kotobuki Spirits Co. Ltd. | Food Products | 25 | 1,127 | |||||||||||
Kubota Corp. | Machinery | 1,396 | 17,865 | |||||||||||
Kuraray Co. Ltd. | Chemicals | 434 | 4,390 | |||||||||||
Kurita Water Industries Ltd. | Machinery | 134 | 3,101 | |||||||||||
Kusuri No Aoki Holdings Co. Ltd. | Food & Staples Retailing | 10 | 832 | |||||||||||
Kyocera Corp. | Electronic Equipment, Instruments & Components | 386 | 22,912 | |||||||||||
Kyoritsu Maintenance Co. Ltd. | Hotels, Restaurants & Leisure | 34 | 751 | |||||||||||
Kyowa Exeo Corp. | Construction & Engineering | 134 | 2,987 | |||||||||||
Kyowa Kirin Co. Ltd. | Pharmaceuticals | 284 | 6,372 | |||||||||||
Kyudenko Corp. | Construction & Engineering | 45 | 1,218 | |||||||||||
Kyushu Electric Power Co. Inc. | Electric Utilities | 668 | 5,377 | |||||||||||
Kyushu Financial Group Inc. | Banks | 468 | 1,790 | |||||||||||
Kyushu Railway Co. | Road & Rail | 200 | 5,743 | |||||||||||
Lasertec Corp. | Semiconductors & Semiconductor Equipment | 100 | 4,687 | |||||||||||
Lawson Inc. | Food & Staples Retailing | 68 | 3,735 | |||||||||||
| a | Line Corp. | Interactive Media & Services | 68 | 3,282 | ||||||||||
LINTEC Corp. | Chemicals | 68 | 1,432 | |||||||||||
Lion Corp. | Household Products | 314 | 6,728 | |||||||||||
LIXIL Group Corp. | Building Products | 334 | 4,161 | |||||||||||
M3 Inc. | Health Care Technology | 527 | 15,597 | |||||||||||
Mabuchi Motor Co. Ltd. | Electrical Equipment | 68 | 2,028 | |||||||||||
Maeda Corp. | Construction & Engineering | 168 | 1,240 | |||||||||||
Maeda Road Construction Co. Ltd. | Construction & Engineering | 68 | 1,273 | |||||||||||
Makita Corp. | Machinery | 307 | 9,427 | |||||||||||
Mani Inc. | Health Care Equipment & Supplies | 100 | 2,454 | |||||||||||
Marubeni Corp. | Trading Companies & Distributors | 2,068 | 10,325 | |||||||||||
Maruha Nichiro Corp. | Food Products | 43 | 899 | |||||||||||
Marui Group Co. Ltd. | Multiline Retail | 268 | 4,506 | |||||||||||
Maruichi Steel Tube Ltd. | Metals & Mining | 78 | 1,878 | |||||||||||
Matsui Securities Co. Ltd. | Capital Markets | 134 | 984 | |||||||||||
Matsumotokiyoshi Holdings Co. Ltd. | Food & Staples Retailing | 100 | 3,640 | |||||||||||
Mazda Motor Corp. | Automobiles | 724 | 3,836 | |||||||||||
Mebuki Financial Group Inc. | Banks | 1,168 | 2,380 | |||||||||||
Medipal Holdings Corp. | Health Care Providers & Services | 150 | 2,804 | |||||||||||
Megmilk Snow Brand Co. Ltd. | Food Products | 46 | 1,047 | |||||||||||
Meiji Holdings Co. Ltd. | Food Products | 168 | 11,952 | |||||||||||
Minebea Mitsumi Inc. | Machinery | 534 | 7,984 | |||||||||||
Miraca Holdings Inc. | Health Care Providers & Services | 68 | 1,435 | |||||||||||
MISUMI Group Inc. | Machinery | 395 | 8,617 | |||||||||||
Mitsubishi Chemical Holdings Corp. | Chemicals | 1,700 | 10,122 | |||||||||||
Mitsubishi Corp. | Trading Companies & Distributors | 1,526 | 32,392 | |||||||||||
| franklintempleton.com | Annual Report | 261 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Mitsubishi Electric Corp. | Electrical Equipment | 2,587 | $ | 31,992 | ||||||||||
Mitsubishi Estate Co. Ltd. | Real Estate Management & Development | 1,488 | 21,985 | |||||||||||
Mitsubishi Gas Chemical Co. Inc. | Chemicals | 234 | 2,549 | |||||||||||
Mitsubishi Heavy Industries Ltd. | Machinery | 360 | 9,112 | |||||||||||
Mitsubishi Logistics Corp. | Transportation Infrastructure | 81 | 1,637 | |||||||||||
Mitsubishi Materials Corp. | Metals & Mining | 168 | 3,447 | |||||||||||
Mitsubishi Motors Corp. | Automobiles | 1,000 | 2,835 | |||||||||||
Mitsubishi Shokuhin Co. Ltd. | Food & Staples Retailing | 34 | 875 | |||||||||||
Mitsubishi UFJ Financial Group Inc. | Banks | 16,000 | 59,729 | |||||||||||
Mitsubishi UFJ Lease & Finance Co. Ltd. | Diversified Financial Services | 534 | 2,632 | |||||||||||
Mitsui & Co. Ltd. | Trading Companies & Distributors | 2,237 | 31,155 | |||||||||||
Mitsui Chemicals Inc. | Chemicals | 234 | 4,446 | |||||||||||
Mitsui Fudosan Co. Ltd. | Real Estate Management & Development | 1,181 | 20,463 | |||||||||||
Mitsui Mining and Smelting Co. Ltd. | Metals & Mining | 68 | 1,138 | |||||||||||
Mitsui O.S.K. Lines Ltd. | Marine | 134 | 2,169 | |||||||||||
Miura Co. Ltd. | Machinery | 134 | 4,785 | |||||||||||
Mizuho Financial Group Inc. | Banks | 33,200 | 38,011 | |||||||||||
Mochida Pharmaceutical Co. Ltd. | Pharmaceuticals | 34 | 1,313 | |||||||||||
Monotaro Co. Ltd. | Trading Companies & Distributors | 145 | 3,852 | |||||||||||
Morinaga & Co. Ltd. | Food Products | 51 | 2,088 | |||||||||||
Morinaga Milk Industry Co. Ltd. | Food Products | 52 | 2,013 | |||||||||||
MS&AD Insurance Group Holdings Inc. | Insurance | 618 | 17,317 | |||||||||||
Murata Manufacturing Co. Ltd. | Electronic Equipment, Instruments & Components | 738 | 37,408 | |||||||||||
Nabtesco Corp. | Machinery | 144 | 3,328 | |||||||||||
Nagase & Co. Ltd. | Trading Companies & Distributors | 134 | 1,588 | |||||||||||
Nagoya Railroad Co. Ltd. | Road & Rail | 244 | 6,848 | |||||||||||
Nankai Electric Railway Co. Ltd. | Road & Rail | 134 | 3,054 | |||||||||||
NEC Corp. | IT Services | 315 | 11,511 | |||||||||||
Net One Systems Co. Ltd. | IT Services | 100 | 2,082 | |||||||||||
Nexon Co. Ltd. | Entertainment | 518 | 8,469 | |||||||||||
NGK Insulators Ltd. | Machinery | 368 | 4,830 | |||||||||||
NGK Spark Plug Co. Ltd. | Auto Components | 247 | 3,482 | |||||||||||
NH Foods Ltd. | Food Products | 134 | 4,673 | |||||||||||
NHK Spring Co. Ltd. | Auto Components | 200 | 1,312 | |||||||||||
Nichirei Corp. | Food Products | 134 | 3,792 | |||||||||||
Nidec Corp. | Electrical Equipment | 600 | 31,163 | |||||||||||
Nifco Inc. | Auto Components | 100 | 1,797 | |||||||||||
Nihon Kohden Corp. | Health Care Equipment & Supplies | 100 | 3,761 | |||||||||||
Nihon M&A Center Inc. | Professional Services | 168 | 4,599 | |||||||||||
Nihon Unisys Ltd. | IT Services | 78 | 2,090 | |||||||||||
Nikon Corp. | Household Durables | 534 | 4,937 | |||||||||||
Nintendo Co. Ltd. | Entertainment | 139 | 53,576 | |||||||||||
Nippo Corp. | Construction & Engineering | 68 | 1,499 | |||||||||||
Nippon Electric Glass Co. Ltd. | Electronic Equipment, Instruments & Components | 100 | 1,341 | |||||||||||
Nippon Express Co. Ltd. | Road & Rail | 100 | 4,900 | |||||||||||
Nippon Kayaku Co. Ltd. | Chemicals | 200 | 1,843 | |||||||||||
Nippon Paint Holdings Co. Ltd. | Chemicals | 200 | 10,486 | |||||||||||
Nippon Paper Industries Co. Ltd. | Paper & Forest Products | 114 | 1,625 | |||||||||||
Nippon Shinyaku Co. Ltd. | Pharmaceuticals | 64 | 5,027 | |||||||||||
Nippon Shobukai Co. Ltd. | Chemicals | 39 | 1,788 | |||||||||||
Nippon Steel Corp. | Metals & Mining | 1,125 | 9,644 | |||||||||||
Nippon Telegraph & Telephone Corp. | Diversified Telecommunication Services | 1,562 | 37,265 | |||||||||||
Nippon Television Holdings Inc. | Media | 68 | 759 | |||||||||||
Nippon Yusen KK | Marine | 200 | 2,383 | |||||||||||
Nipro Corp. | Health Care Equipment & Supplies | 134 | 1,578 | |||||||||||
Nishi-Nippon Financial Holdings Inc. | Banks | 200 | 1,130 | |||||||||||
Nishi-Nippon Railroad Co. Ltd. | �� | Road & Rail | 100 | 2,461 | ||||||||||
Nissan Chemical Corp. | Chemicals | 168 | 6,131 | |||||||||||
Nissan Motor Co. Ltd. | Automobiles | 2,546 | 8,410 | |||||||||||
| 262 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Nissan Shatai Co. Ltd. | Automobiles | 68 | $ | 591 | ||||||||||
Nisshin Seifun Group Inc. | Food Products | 316 | 5,275 | |||||||||||
Nisshinbo Holdings Inc. | Industrial Conglomerates | 168 | 1,122 | |||||||||||
Nissin Foods Holdings Co. Ltd. | Food Products | 88 | 7,336 | |||||||||||
Nitori Co. Ltd. | Specialty Retail | 93 | 12,560 | |||||||||||
Nitto Denko Corp. | Chemicals | 195 | 8,715 | |||||||||||
Noevir Holdings Co. Ltd. | Personal Products | 23 | 1,176 | |||||||||||
NOF Corp. | Chemicals | 100 | 3,177 | |||||||||||
NOK Corp. | Auto Components | 168 | 1,857 | |||||||||||
Nomura Holdings Inc. | Capital Markets | 3,900 | 16,539 | |||||||||||
Nomura Real Estate Holdings Inc. | Real Estate Management & Development | 134 | 2,178 | |||||||||||
Nomura Research Institute Ltd. | IT Services | 302 | 6,401 | |||||||||||
NS Solutions Corp. | IT Services | 34 | 829 | |||||||||||
NSK Ltd. | Machinery | 568 | 3,651 | |||||||||||
NTN Corp. | Machinery | 634 | 1,110 | |||||||||||
NTT Data Corp. | IT Services | 900 | 8,670 | |||||||||||
NTT DOCOMO Inc. | Wireless Telecommunication Services | 1,517 | 47,454 | |||||||||||
Obayashi Corp. | Construction & Engineering | 968 | 8,303 | |||||||||||
OBIC Business Consultants Co. Ltd. | Software | 21 | 852 | |||||||||||
OBIC Co. Ltd. | IT Services | 83 | 10,887 | |||||||||||
Odakyu Electric Railway Co. Ltd. | Road & Rail | 380 | 8,349 | |||||||||||
Oji Holdings Corp. | Paper & Forest Products | 1,200 | 6,436 | |||||||||||
Okuma Corp. | Machinery | 34 | 1,098 | |||||||||||
Olympus Corp. | Health Care Equipment & Supplies | 1,412 | 20,430 | |||||||||||
Omron Corp. | Electronic Equipment, Instruments & Components | 234 | 12,203 | |||||||||||
Ono Pharmaceutical Co. Ltd. | Pharmaceuticals | 551 | 12,689 | |||||||||||
Open House Co. Ltd. | Real Estate Management & Development | 68 | 1,402 | |||||||||||
Oracle Corp. Japan | Software | 40 | 3,498 | |||||||||||
Orient Corp. | Consumer Finance | 800 | 897 | |||||||||||
Oriental Land Co. Ltd. | Hotels, Restaurants & Leisure | 245 | 31,364 | |||||||||||
ORIX Corp. | Diversified Financial Services | 1,617 | 19,480 | |||||||||||
Osaka Gas Co. Ltd. | Gas Utilities | 500 | 9,430 | |||||||||||
OSG Corp. | Machinery | 100 | 1,340 | |||||||||||
Otsuka Corp. | IT Services | 134 | 5,735 | |||||||||||
Otsuka Holdings Co. Ltd. | Pharmaceuticals | 526 | 20,615 | |||||||||||
Paltac Corp. | Distributors | 40 | 1,997 | |||||||||||
Pan Pacific International Holdings Corp. | Multiline Retail | 632 | 11,995 | |||||||||||
Panasonic Corp. | Household Durables | 2,700 | 20,634 | |||||||||||
Park24 Co. Ltd. | Commercial Services & Supplies | 143 | 2,108 | |||||||||||
Penta-Ocean Construction Co. Ltd. | Construction & Engineering | 334 | 1,760 | |||||||||||
| a | PeptiDream Inc. | Biotechnology | 105 | 3,667 | ||||||||||
Persol Holdings Co. Ltd. | Professional Services | 210 | 2,113 | |||||||||||
Pigeon Corp. | Household Products | 134 | 5,145 | |||||||||||
Pilot Corp. | Commercial Services & Supplies | 41 | 1,365 | |||||||||||
Pola Orbis Holdings Inc. | Personal Products | 70 | 1,294 | |||||||||||
Rakuten Inc. | Internet & Direct Marketing Retail | 993 | 7,543 | |||||||||||
Recruit Holdings Co. Ltd. | Professional Services | 1,671 | 43,278 | |||||||||||
Relo Group Inc. | Real Estate Management & Development | 134 | 2,814 | |||||||||||
| a | Renesas Electronics Corp. | Semiconductors & Semiconductor Equipment | 1,000 | 3,603 | ||||||||||
Rengo Co. Ltd. | Containers & Packaging | 268 | 2,090 | |||||||||||
Resona Holdings Inc. | Banks | 2,834 | 8,537 | |||||||||||
Resorttrust Inc. | Hotels, Restaurants & Leisure | 68 | 665 | |||||||||||
Ricoh Co. Ltd. | Technology Hardware, Storage & Peripherals | 859 | 6,318 | |||||||||||
Rinnai Corp. | Household Durables | 44 | 3,118 | |||||||||||
Rohm Co. Ltd. | Semiconductors & Semiconductor Equipment | 109 | 5,987 | |||||||||||
Rohto Pharmaceutical Co. Ltd. | Personal Products | 134 | 3,674 | |||||||||||
Ryohin Keikaku Co. Ltd. | Multiline Retail | 300 | 3,374 | |||||||||||
Sankyo Co. Ltd. | Leisure Equipment & Products | 68 | 1,981 | |||||||||||
| franklintempleton.com | Annual Report | 263 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Sankyu Inc. | Road & Rail | 68 | $ | 2,542 | ||||||||||
Sanrio Co. Ltd. | Specialty Retail | 68 | 905 | |||||||||||
Santen Pharmaceutical Co. Ltd. | Pharmaceuticals | 448 | 7,711 | |||||||||||
Sanwa Holdings Corp. | Building Products | 234 | 1,829 | |||||||||||
Sapporo Holdings Ltd. | Beverages | 68 | 1,255 | |||||||||||
Sawai Pharmaceutical Co. Ltd. | Pharmaceuticals | 47 | 2,512 | |||||||||||
SBI Holdings Inc. | Capital Markets | 278 | 4,064 | |||||||||||
SCREEN Holdings Co. Ltd. | Semiconductors & Semiconductor Equipment | 48 | 1,779 | |||||||||||
SCSK Corp. | IT Services | 56 | 2,498 | |||||||||||
Secom Co. Ltd. | Commercial Services & Supplies | 244 | 20,283 | |||||||||||
Sega Sammy Holdings Inc. | Leisure Equipment & Products | 234 | 2,850 | |||||||||||
Seibu Holdings Inc. | Road & Rail | 268 | 2,949 | |||||||||||
Seiko Epson Corp. | Technology Hardware, Storage & Peripherals | 334 | 3,620 | |||||||||||
Seino Holdings Co. Ltd. | Road & Rail | 200 | 2,173 | |||||||||||
Sekisui Chemical Co. Ltd. | Household Durables | 468 | 6,212 | |||||||||||
Sekisui House Ltd. | Household Durables | 734 | 12,133 | |||||||||||
Seven & i Holdings Co. Ltd. | Food & Staples Retailing | 1,008 | 33,390 | |||||||||||
Seven Bank Ltd. | Banks | 768 | 1,985 | |||||||||||
SG Holdings Co. Ltd. | Air Freight & Logistics | 268 | 6,388 | |||||||||||
Sharp Corp. | Household Durables | 200 | 2,103 | |||||||||||
Shikoku Electric Power Co. Inc. | Electric Utilities | 200 | 1,582 | |||||||||||
Shimadzu Corp. | Electronic Equipment, Instruments & Components | 334 | 8,802 | |||||||||||
Shimamura Co. Ltd. | Specialty Retail | 34 | 2,053 | |||||||||||
SHIMANO Inc. | Leisure Equipment & Products | 100 | 14,302 | |||||||||||
Shimizu Corp. | Construction & Engineering | 734 | 5,745 | |||||||||||
Shin-Etsu Chemical Co. Ltd. | Chemicals | 520 | 51,685 | |||||||||||
| a | Shinsei Bank Ltd. | Banks | 300 | 4,007 | ||||||||||
Shionogi & Co. Ltd. | Pharmaceuticals | 353 | 17,386 | |||||||||||
Ship Healthcare Holdings Inc. | Health Care Providers & Services | 50 | 2,050 | |||||||||||
Shiseido Co. Ltd. | Personal Products | 502 | 29,677 | |||||||||||
SHO-BOND Holdings Co. Ltd. | Construction & Engineering | 68 | 2,721 | |||||||||||
Shochiku Co. Ltd. | Entertainment | 14 | 1,572 | |||||||||||
Shoei Co. Ltd. | Real Estate Management & Development | 434 | 4,414 | |||||||||||
Showa Denko K.K. | Chemicals | 178 | 3,688 | |||||||||||
Sky Perfect JSAT Holdings Inc. | Media | 368 | 1,309 | |||||||||||
Skylark Holdings Co. Ltd. | Hotels, Restaurants & Leisure | 234 | 3,472 | |||||||||||
SMC Corp. | Machinery | 73 | 30,937 | |||||||||||
SMS Co. Ltd. | Professional Services | 100 | 1,939 | |||||||||||
Softbank Corp. | Wireless Telecommunication Services | 2,131 | 27,132 | |||||||||||
SoftBank Group Corp. | Wireless Telecommunication Services | 2,088 | 73,265 | |||||||||||
Sohgo Security Services Co. Ltd. | Commercial Services & Supplies | 82 | 3,995 | |||||||||||
Sojitz Corp. | Trading Companies & Distributors | 1,568 | 3,689 | |||||||||||
Sompo Holdings Inc. | Insurance | 434 | 13,440 | |||||||||||
Sony Corp. | Household Durables | 1,608 | 95,641 | |||||||||||
Sony Financial Holdings Inc. | Insurance | 230 | 3,892 | |||||||||||
Sotetsu Holdings Inc. | Road & Rail | 100 | 2,569 | |||||||||||
Square Enix Holdings Co. Ltd. | Entertainment | 100 | 4,469 | |||||||||||
Stanley Electric Co. Ltd. | Auto Components | 179 | 3,535 | |||||||||||
Subaru Corp. | Automobiles | 803 | 15,423 | |||||||||||
Sugi Pharmacy Co. Ltd. | Food & Staples Retailing | 41 | 2,191 | |||||||||||
Sumco Corp. | Semiconductors & Semiconductor Equipment | 350 | 4,516 | |||||||||||
Sumitomo Bakelite Co. Ltd. | Chemicals | 34 | 723 | |||||||||||
Sumitomo Chemical Co. Ltd. | Chemicals | 2,100 | 6,244 | |||||||||||
Sumitomo Corp. | Trading Companies & Distributors | 1,500 | 17,216 | |||||||||||
Sumitomo Dainippon Pharma Co. Ltd. | Pharmaceuticals | 200 | 2,599 | |||||||||||
Sumitomo Electric Industries Ltd. | Auto Components | 934 | 9,846 | |||||||||||
Sumitomo Forestry Co. Ltd. | Household Durables | 168 | 2,155 | |||||||||||
Sumitomo Heavy Industries Ltd. | Machinery | 134 | 2,422 | |||||||||||
| 264 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Sumitomo Metal Mining Co. Ltd. | Metals & Mining | 300 | $ | 6,164 | ||||||||||
Sumitomo Mitsui Financial Group Inc. | Banks | 1,672 | 40,625 | |||||||||||
Sumitomo Osaka Cement Co. Ltd. | Construction Materials | 41 | 1,231 | |||||||||||
Sumitomo Realty & Development Co. Ltd. | Real Estate Management & Development | 495 | 12,082 | |||||||||||
Sumitomo Rubber Industries Ltd. | Auto Components | 234 | 2,209 | |||||||||||
Sundrug Co. Ltd. | Food & Staples Retailing | 77 | 2,468 | |||||||||||
Suntory Beverage & Food Ltd. | Beverages | 183 | 6,925 | |||||||||||
Sushiro Global Holdings Ltd | Hotels, Restaurants & Leisure | 140 | 2,063 | |||||||||||
Suzuken Co. Ltd. | Health Care Providers & Services | 100 | 3,645 | |||||||||||
Suzuki Motor Corp. | Automobiles | 583 | 13,957 | |||||||||||
Sysmex Corp. | Health Care Equipment & Supplies | 238 | 17,298 | |||||||||||
T&D Holdings Inc. | Insurance | 700 | 5,732 | |||||||||||
Tadano Ltd. | Machinery | 134 | 961 | |||||||||||
Taiheiyo Cement Corp. | Construction Materials | 145 | 2,485 | |||||||||||
Taisei Corp. | Construction & Engineering | 268 | 8,205 | |||||||||||
Taisho Pharmaceutical Holdings Co. Ltd. | Pharmaceuticals | 54 | 3,321 | |||||||||||
Taiyo Nippon Sanso Corp. | Chemicals | 181 | 2,684 | |||||||||||
Taiyo Yuden Co. Ltd. | Electronic Equipment, Instruments & Components | 168 | 4,452 | |||||||||||
Takara Bio Inc. | Biotechnology | 68 | 1,405 | |||||||||||
Takara Holdings Inc. | Beverages | 200 | 1,501 | |||||||||||
Takashimaya Co. Ltd. | Multiline Retail | 168 | 1,514 | |||||||||||
Takeda Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,974 | 60,488 | |||||||||||
TDK Corp. | Electronic Equipment, Instruments & Components | 155 | 12,032 | |||||||||||
TechnoPro Holdings Inc. | Professional Services | 44 | 2,066 | |||||||||||
Teijin Ltd. | Chemicals | 234 | 3,967 | |||||||||||
Terumo Corp. | Health Care Equipment & Supplies | 814 | 28,050 | |||||||||||
The 77 Bank Ltd. | Banks | 84 | 1,089 | |||||||||||
The Bank of Kyoto Ltd. | Banks | 100 | 3,187 | |||||||||||
The Chiba Bank Ltd. | Banks | 800 | 3,505 | |||||||||||
The Chugoku Bank Ltd. | Banks | 200 | 1,784 | |||||||||||
The Chugoku Electric Power Co. Inc. | Electric Utilities | 368 | 5,141 | |||||||||||
TheDai-ichi Life Holdings Inc. | Insurance | 1,368 | 16,417 | |||||||||||
The Hiroshima Bank Ltd. | Banks | 368 | 1,537 | |||||||||||
The Iyo Bank Ltd. | Banks | 434 | 2,199 | |||||||||||
The Japan Steel Works Ltd. | Machinery | 100 | 1,212 | |||||||||||
The Shiga Bank Ltd. | Banks | 68 | 1,618 | |||||||||||
The Shizuoka Bank Ltd. | Banks | 634 | 3,858 | |||||||||||
THK Co. Ltd. | Machinery | 145 | 2,971 | |||||||||||
TIS Inc. | IT Services | 300 | 4,966 | |||||||||||
Tobu Railway Co. Ltd. | Road & Rail | 268 | 9,359 | |||||||||||
Toda Corp. | Construction & Engineering | 300 | 1,748 | |||||||||||
Toho Co. Ltd. | Entertainment | 140 | 4,280 | |||||||||||
Toho Gas Co. Ltd. | Gas Utilities | 109 | 4,947 | |||||||||||
Tohoku Electric Power Co. Inc. | Electric Utilities | 568 | 5,477 | |||||||||||
Tokai Carbon Co. Ltd. | Chemicals | 234 | 1,933 | |||||||||||
Tokai Rika Co. Ltd. | Auto Components | 68 | 848 | |||||||||||
Tokio Marine Holdings Inc. | Insurance | 832 | 38,149 | |||||||||||
Tokuyama Corp. | Chemicals | 100 | 1,938 | |||||||||||
Tokyo Broadcasting System Holdings Inc. | Media | 68 | 947 | |||||||||||
Tokyo Century Corp. | Diversified Financial Services | 68 | 2,132 | |||||||||||
| a | Tokyo Electric Power Co. Holdings Inc. | Electric Utilities | 2,100 | 7,334 | ||||||||||
Tokyo Electron Ltd. | Semiconductors & Semiconductor Equipment | 197 | 37,145 | |||||||||||
Tokyo Gas Co. Ltd. | Gas Utilities | 544 | 12,880 | |||||||||||
Tokyo Tatemono Co. Ltd. | Real Estate Management & Development | 268 | 2,847 | |||||||||||
TOKYU Corp. | Road & Rail | 716 | 11,275 | |||||||||||
Tokyu Fudosan Holdings Corp. | Real Estate Management & Development | 868 | 4,165 | |||||||||||
Topcon Corp. | Electronic Equipment, Instruments & Components | 134 | 996 | |||||||||||
Toppan Printing Co. Ltd. | Commercial Services & Supplies | 334 | 5,124 | |||||||||||
| franklintempleton.com | Annual Report | 265 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Japan (continued) | ||||||||||||||
Toray Industries Inc. | Chemicals | 2,000 | $ | 8,689 | ||||||||||
Toshiba Corp. | Industrial Conglomerates | 591 | 13,029 | |||||||||||
Tosoh Corp. | Chemicals | 368 | 4,193 | |||||||||||
TOTO Ltd. | Building Products | 179 | 5,961 | |||||||||||
Toyo Seikan Group Holdings Ltd. | Containers & Packaging | 200 | 2,286 | |||||||||||
Toyo Suisan Kaisha Ltd. | Food Products | 111 | 5,367 | |||||||||||
Toyo Tire Corp. | Auto Components | 134 | 1,539 | |||||||||||
Toyobo Co. Ltd. | Chemicals | 100 | 1,059 | |||||||||||
Toyoda Gosei Co. Ltd. | Auto Components | 100 | 1,717 | |||||||||||
Toyota Boshoku Corp. | Auto Components | 68 | 811 | |||||||||||
Toyota Industries Corp. | Auto Components | 200 | 9,597 | |||||||||||
Toyota Motor Corp. | Automobiles | 3,195 | 192,401 | |||||||||||
Toyota Tsusho Corp. | Trading Companies & Distributors | 300 | 7,075 | |||||||||||
Trend Micro Inc. | Software | 142 | 7,024 | |||||||||||
TS TECH Co. Ltd. | Auto Components | 100 | 2,370 | |||||||||||
Tsumura & Co. | Pharmaceuticals | 100 | 2,549 | |||||||||||
Tsuruha Holdings Inc. | Food & Staples Retailing | 46 | 6,076 | |||||||||||
TV Asahi Holdings Corp. | Media | 34 | 514 | |||||||||||
Ube Industries Ltd. | Chemicals | 134 | 2,057 | |||||||||||
Ulvac Inc. | Semiconductors & Semiconductor Equipment | 68 | 1,631 | |||||||||||
Unicharm Corp. | Household Products | 487 | 18,275 | |||||||||||
Ushio Inc. | Electrical Equipment | 134 | 1,282 | |||||||||||
USS Co. Ltd. | Specialty Retail | 268 | 3,689 | |||||||||||
Wacoal Corp. | Textiles, Apparel & Luxury Goods | 68 | 1,478 | |||||||||||
Welcia Holdings Co. Ltd. | Food & Staples Retailing | 68 | 4,756 | |||||||||||
West Japan Railway Co. | Road & Rail | 230 | 15,757 | |||||||||||
Yakult Honsha Co. Ltd. | Food Products | 153 | 9,056 | |||||||||||
Yamada Denki Co. Ltd. | Specialty Retail | 1,000 | 3,992 | |||||||||||
Yamaguchi Financial Group Inc. | Banks | 268 | 1,519 | |||||||||||
Yamaha Corp. | Leisure Equipment & Products | 200 | 7,809 | |||||||||||
Yamaha Motor Co. Ltd. | Automobiles | 349 | 4,225 | |||||||||||
Yamato Holdings Co. Ltd. | Air Freight & Logistics | 446 | 7,011 | |||||||||||
Yamato Kogyo Co. Ltd. | Metals & Mining | 34 | 584 | |||||||||||
Yamazaki Baking Co. Ltd. | Food Products | 168 | 3,512 | |||||||||||
Yaoko Co. Ltd. | Food & Staples Retailing | 34 | 2,101 | |||||||||||
YASKAWA Electric Corp. | Machinery | 300 | 8,270 | |||||||||||
Yokogawa Electric Corp. | Electronic Equipment, Instruments & Components | 300 | 3,621 | |||||||||||
Yokohama Rubber Co. Ltd. | Auto Components | 134 | 1,667 | |||||||||||
Z Holdings Corp. | Interactive Media & Services | 3,434 | 11,070 | |||||||||||
Zenkoku Hosho Co. Ltd. | Diversified Financial Services | 68 | 2,139 | |||||||||||
Zensho Holdings Co. Ltd. | Hotels, Restaurants & Leisure | 113 | 2,157 | |||||||||||
Zeon Corp. | Chemicals | 168 | 1,267 | |||||||||||
Zozo Inc. | Internet & Direct Marketing Retail | 134 | 1,801 | |||||||||||
|
| |||||||||||||
Total Investments | 4,204,422 | |||||||||||||
Other Assets, less Liabilities 1.5% | 64,972 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 4,269,394 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
| 266 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Japan Hedged ETF(continued)
At March 31, 2020 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
| Forward Exchange Contracts | ||||||||||||||||||||||||||||
| Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
| OTC Forward Exchange Contracts | ||||||||||||||||||||||||||||
Japanese Yen | BOFA | Buy | 142,702,000 | $ | 1,317,107 | 4/02/20 | $ | 4,758 | $ | — | ||||||||||||||||||
Japanese Yen | UBSW | Buy | 142,702,000 | 1,321,892 | 4/02/20 | — | (27 | ) | ||||||||||||||||||||
Japanese Yen | DBAB | Buy | 142,702,000 | 1,321,866 | 4/02/20 | — | — | |||||||||||||||||||||
Japanese Yen | HSBK | Buy | 142,702,000 | 1,321,884 | 4/02/20 | — | (18 | ) | ||||||||||||||||||||
Japanese Yen | MSCO | Buy | 58,378,000 | 540,776 | 4/02/20 | — | (14 | ) | ||||||||||||||||||||
Japanese Yen | MSCO | Sell | 58,378,000 | 542,098 | 4/02/20 | 1,336 | — | |||||||||||||||||||||
Japanese Yen | BOFA | Sell | 142,702,000 | 1,325,187 | 4/02/20 | 3,322 | — | |||||||||||||||||||||
Japanese Yen | UBSW | Sell | 142,702,000 | 1,325,165 | 4/02/20 | 3,299 | — | |||||||||||||||||||||
Japanese Yen | DBAB | Sell | 142,702,000 | 1,317,108 | 4/02/20 | — | (4,758 | ) | ||||||||||||||||||||
Japanese Yen | HSBK | Sell | 142,702,000 | 1,325,014 | 4/02/20 | 3,148 | — | |||||||||||||||||||||
Japanese Yen | MSCO | Sell | 55,706,000 | 516,809 | 5/07/20 | — | (28 | ) | ||||||||||||||||||||
Japanese Yen | UBSW | Sell | 136,169,000 | 1,263,390 | 5/07/20 | 21 | — | |||||||||||||||||||||
Japanese Yen | DBAB | Sell | 136,169,000 | 1,263,333 | 5/07/20 | — | (35 | ) | ||||||||||||||||||||
Japanese Yen | HSBK | Sell | 136,169,000 | 1,263,298 | 5/07/20 | — | (70 | ) | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total Forward Exchange Contracts |
| $ | 15,884 | $ | (4,950 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) |
| $ | 10,934 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
Nikkei 225 Mini | Long | 3 | $ | 52,577 | 6/11/20 | $ | (114 | ) | ||||||||||||
*As of period end.
See Note 8 regarding other derivative information.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 267 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Latin America ETF
| Year Ended March 31, | ||||||||
| 2020 | 2019a | |||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||
Net asset value, beginning of year | $ | 26.41 | $ | 26.17 | ||||
|
| |||||||
| Income from investment operationsb: |
| |||||||
Net investment incomec | 0.77 | 0.38 | ||||||
Net realized and unrealized gains (losses) | (11.08 | ) | (0.02 | ) | ||||
|
| |||||||
Total from investment operations | (10.31 | ) | 0.36 | |||||
|
| |||||||
Less distributions from net investment income | (0.90 | ) | (0.12 | ) | ||||
|
| |||||||
Net asset value, end of year | $ | 15.20 | $ | 26.41 | ||||
|
| |||||||
Total returnd | (40.49)% | 1.42% | ||||||
| Ratios to average net assetse | ||||||||
Total expenses | 0.21% | 0.19% | ||||||
Net investment income | 2.97% | 3.08% | ||||||
| Supplemental data | ||||||||
Net assets, end of year (000’s) | $1,520 | $2,641 | ||||||
Portfolio turnover ratef | 12.74% | g | 4.08% | |||||
aFor the period October 9, 2018 (commencement of operations) to March 31, 2019.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 12.74%.
| 268 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin FTSE Latin America ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks 79.0% | ||||||||||||||
| Brazil 44.0% | ||||||||||||||
Aliansce Sonae Shopping Centers SA | Real Estate Management & Development | 500 | $ | 2,564 | ||||||||||
Ambev SA | Beverages | 16,300 | 37,461 | |||||||||||
Atacadao Distribuicao Comercio e Industria Ltd. | Food & Staples Retailing | 1,200 | 4,773 | |||||||||||
| a | B2W Cia Digital | Internet & Direct Marketing Retail | 699 | 6,469 | ||||||||||
B3 SA – Brasil Bolsa Balcao | Capital Markets | 7,500 | 51,913 | |||||||||||
Banco Bradesco SA | Banks | 3,900 | 14,144 | |||||||||||
Banco BTG Pactual SA | Capital Markets | 900 | 5,768 | |||||||||||
Banco do Brasil SA | Banks | 3,200 | 17,207 | |||||||||||
Banco Santander Brasil SA | Banks | 1,500 | 7,713 | |||||||||||
BB Seguridade Participacoes SA | Insurance | 2,500 | 11,978 | |||||||||||
BR Malls Paricipacoes SA | Real Estate Management & Development | 2,800 | 5,388 | |||||||||||
| a | BRF SA | Food Products | 2,100 | 6,110 | ||||||||||
CCR SA | Transportation Infrastructure | 4,200 | 9,499 | |||||||||||
Centrais Eletricas Brasileiras SA | Electric Utilities | 1,800 | 8,281 | |||||||||||
Cia Brasileira de Distribuicao | Food & Staples Retailing | 600 | 7,674 | |||||||||||
Cia de Saneamento do Parana | Water Utilities | 750 | 3,449 | |||||||||||
Cia Siderurgica Nacional SA | Metals & Mining | 2,300 | 3,095 | |||||||||||
Cielo SA | IT Services | 4,200 | 3,595 | |||||||||||
Cogna Educacao | Diversified Consumer Services | 6,300 | 4,859 | |||||||||||
Companhia de Locacao das Americas | Road & Rail | 800 | 1,618 | |||||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | Water Utilities | 1,300 | 9,803 | |||||||||||
Companhia Energetica de Minas Gerais | Electric Utilities | 300 | 523 | |||||||||||
Companhia Paranaense de Energia-Copel | Electric Utilities | 100 | 1,126 | |||||||||||
| a | Cosan Logistica SA | Road & Rail | 500 | 1,612 | ||||||||||
Cosan SA | Oil, Gas & Consumable Fuels | 600 | 6,219 | |||||||||||
CPFL Energia SA | Electric Utilities | 700 | 3,626 | |||||||||||
CVC Brasil Operadora e Agencia de Viagens SA | Hotels, Restaurants & Leisure | 400 | 856 | |||||||||||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | Household Durables | 1,000 | 2,724 | |||||||||||
Duratex SA | Paper & Forest Products | 1,000 | 1,803 | |||||||||||
EDP-Energias do Brasil SA | Electric Utilities | 1,100 | 3,453 | |||||||||||
| a | Embraer SA | Aerospace & Defense | 2,700 | 4,966 | ||||||||||
Energisa SA | Electric Utilities | 700 | 5,102 | |||||||||||
| a | Eneva SA | Independent Power and Renewable Electricity Producers | 300 | 2,010 | ||||||||||
Engie Brasil Energia SA | Independent Power and Renewable Electricity Producers | 625 | 4,690 | |||||||||||
Equatorial Energia SA | Electric Utilities | 3,200 | 10,859 | |||||||||||
Fleury SA | Health Care Providers & Services | 800 | 3,122 | |||||||||||
Grendene SA | Textiles, Apparel & Luxury Goods | 900 | 1,307 | |||||||||||
Guararapes Confeccoes SA | Textiles, Apparel & Luxury Goods | 300 | 631 | |||||||||||
| b,c | Hapvida Participacoes e Investimentos SA, 144A, Reg S | Health Care Providers & Services | 500 | 4,087 | ||||||||||
Hypera SA | Pharmaceuticals | 1,500 | 8,268 | |||||||||||
IRB Brasil Resseguros SA | Insurance | 3,100 | 5,786 | |||||||||||
Itau Unibanco Holding SA | Banks | 1,900 | 8,089 | |||||||||||
Klabin SA | Containers & Packaging | 2,100 | 6,474 | |||||||||||
Localiza Rent a Car SA | Road & Rail | 2,105 | 10,674 | |||||||||||
Lojas Americanas SA | Multiline Retail | 808 | 2,251 | |||||||||||
Lojas Renner SA | Multiline Retail | 2,980 | 19,282 | |||||||||||
M Dias Branco SA | Food Products | 300 | 1,683 | |||||||||||
Magazine Luiza SA | Multiline Retail | 2,428 | 18,252 | |||||||||||
Multiplan Empreendimentos Imobiliarios SA | Real Estate Management & Development | 1,000 | 3,679 | |||||||||||
Natura & Co Holding SA | Personal Products | 2,500 | 12,407 | |||||||||||
Neoenergia SA | Electric Utilities | 800 | 2,651 | |||||||||||
Notre Dame Intermedica Participacoes SA | Health Care Providers & Services | 1,700 | 14,736 | |||||||||||
| franklintempleton.com | Annual Report | 269 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Latin America ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Brazil (continued) | ||||||||||||||
Odontoprev SA | Health Care Providers & Services | 1,000 | $ | 2,792 | ||||||||||
Petrobras Distribuidora SA | Specialty Retail | 2,600 | 7,775 | |||||||||||
Petroleo Brasileiro SA | Oil, Gas & Consumable Fuels | 13,900 | 37,895 | |||||||||||
Porto Seguro SA | Insurance | 400 | 3,464 | |||||||||||
Qualicorp Consultoria E Corretora de Seguros SA | Health Care Providers & Services | 900 | 4,095 | |||||||||||
Raia Drogasil SA | Food & Staples Retailing | 860 | 16,888 | |||||||||||
| a | Rumo SA | Road & Rail | 4,200 | 15,912 | ||||||||||
Sao Martinho SA | Food Products | 600 | 1,710 | |||||||||||
Sul America SA | Insurance | 800 | 5,213 | |||||||||||
Suzano SA | Paper & Forest Products | 3,019 | 20,833 | |||||||||||
Telefonica Brasil SA | Diversified Telecommunication Services | 100 | 976 | |||||||||||
Tim Participacoes SA | Wireless Telecommunication Services | 3,000 | 7,196 | |||||||||||
Totvs SA | Software | 600 | 5,400 | |||||||||||
Transmissora Alianca de Energia Eletrica SA | Electric Utilities | 800 | 3,984 | |||||||||||
Ultrapar Participacoes SA | Oil, Gas & Consumable Fuels | 3,164 | 7,644 | |||||||||||
Vale SA | Metals & Mining | 12,900 | 107,496 | |||||||||||
| a | Via Varejo SA | Specialty Retail | 1,400 | 1,425 | ||||||||||
Weg SA | Electrical Equipment | 2,800 | 18,123 | |||||||||||
YDUQS PART | Diversified Consumer Services | 900 | 3,847 | |||||||||||
|
| |||||||||||||
| 668,977 | ||||||||||||||
|
| |||||||||||||
| Chile 7.2% | ||||||||||||||
AES Gener SA | Independent Power and Renewable Electricity Producers | 10,845 | 1,323 | |||||||||||
Aguas Andinas SA, A | Water Utilities | 10,590 | 3,131 | |||||||||||
Banco de Chile | Banks | 168,619 | 13,671 | |||||||||||
Banco de Credito e Inversiones SA | Banks | 166 | 5,648 | |||||||||||
Banco Santander Chile SA | Banks | 233,065 | 9,024 | |||||||||||
Cencosud SA | Food & Staples Retailing | 5,024 | 5,247 | |||||||||||
| a | Cencosud Shopping SA | Real Estate Management & Development | 1,850 | 2,995 | ||||||||||
Colbun SA | Independent Power and Renewable Electricity Producers | 25,700 | 2,804 | |||||||||||
Compania Cervecerias Unidas SA | Beverages | 552 | 3,802 | |||||||||||
E CL SA | Electric Utilities | 1,869 | 2,070 | |||||||||||
| a | Empresa Nacional de Telecomunicaciones SA | Wireless Telecommunication Services | 529 | 2,247 | ||||||||||
Empresas CMPC SA | Paper & Forest Products | 4,197 | 9,006 | |||||||||||
Empresas COPEC SA | Oil, Gas & Consumable Fuels | 1,832 | 10,533 | |||||||||||
Enel Americas SA | Electric Utilities | 137,507 | 16,875 | |||||||||||
Enel Chile SA | Electric Utilities | 101,454 | 6,904 | |||||||||||
Itau CorpBanca | Banks | 628,427 | 1,636 | |||||||||||
Latam Airlines Group SA | Airlines | 700 | 1,807 | |||||||||||
Parque Arauco SA | Real Estate Management & Development | 2,250 | 3,168 | |||||||||||
Plaza SA | Real Estate Management & Development | 976 | 1,248 | |||||||||||
S.A.C.I. Falabella | Multiline Retail | 2,650 | 5,864 | |||||||||||
|
| |||||||||||||
| 109,003 | ||||||||||||||
|
| |||||||||||||
| Colombia 2.5% | ||||||||||||||
Bancolombia SA | Banks | 1,035 | 6,144 | |||||||||||
Cementos Argos SA | Construction Materials | 1,972 | 1,986 | |||||||||||
| a | Corporacion Financiera Colombiana SA | Diversified Financial Services | 398 | 2,527 | ||||||||||
Ecopetrol SA | Oil, Gas & Consumable Fuels | 17,830 | 8,344 | |||||||||||
| a | Empresa De Energia De Bogota SA | Gas Utilities | 7,046 | 3,905 | ||||||||||
Grupo Agros SA | Construction Materials | 1,252 | 3,799 | |||||||||||
Grupo Inversiones Suramericana SA | Diversified Financial Services | 949 | 4,679 | |||||||||||
Interconexion Electrica SA ESP | Electric Utilities | 1,587 | 6,051 | |||||||||||
|
| |||||||||||||
| 37,435 | ||||||||||||||
|
| |||||||||||||
| 270 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Latin America ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Mexico 24.0% | ||||||||||||||
Alfa SAB de CV | Industrial Conglomerates | 11,429 | $ | 3,118 | ||||||||||
Alpek SAB de CV | Chemicals | 1,454 | 524 | |||||||||||
| a | Alsea de Mexico S.A.B de C.V. | Hotels, Restaurants & Leisure | 2,011 | 1,301 | ||||||||||
America Movil SAB de CV, L | Wireless Telecommunication Services | 103,187 | 61,800 | |||||||||||
Arca Continental SAB de CV | Beverages | 1,462 | 5,959 | |||||||||||
Banco del Bajio SA | Banks | 2,599 | 2,269 | |||||||||||
Banco Santander (Mexico), SA, Institucion de Banca Multiple, Grupo Financiero Santander, B | Banks | 2,163 | 1,442 | |||||||||||
Becle SA de CV | Beverages | 2,126 | 2,627 | |||||||||||
Cemex SAB de CV | Construction Materials | 56,956 | 11,969 | |||||||||||
Coca-Cola FEMSA SA de CV | Beverages | 1,936 | 7,894 | |||||||||||
Concentradora Fibra Danhos SA de CV | Equity Real Estate Investment Trusts (REITs | ) | 883 | 732 | ||||||||||
El Puerto de Liverpool SAB de CV | Multiline Retail | 757 | 1,671 | |||||||||||
Fibra Uno Administracion SA de CV | Equity Real Estate Investment Trusts (REITs | ) | 11,382 | 9,020 | ||||||||||
Fomento Economico Mexicano SAB de CV | Beverages | 7,904 | 48,254 | |||||||||||
| c | GMexico Transportes SAB de CV, 144A | Road & Rail | 1,662 | 1,482 | ||||||||||
Gruma SAB de CV | Food Products | 750 | 5,808 | |||||||||||
Grupo Aeroportuario del Centro Norte SAB de CV | Transportation Infrastructure | 1,209 | 4,132 | |||||||||||
Grupo Aeroportuario del Pacifico SAB de CV | Transportation Infrastructure | 1,327 | 7,206 | |||||||||||
Grupo Aeroportuario del Sureste SAB de CV, B | Transportation Infrastructure | 574 | 5,465 | |||||||||||
Grupo Bimbo SAB de CV, A | Food Products | 8,857 | 13,018 | |||||||||||
Grupo Carso SAB de CV | Industrial Conglomerates | 1,805 | 3,583 | |||||||||||
Grupo Elektra SAB de CV | Banks | 243 | 14,544 | |||||||||||
Grupo Financiero Banorte SAB de CV | Banks | 10,578 | 29,309 | |||||||||||
Grupo Financiero Inbursa SAB de CV | Banks | 8,507 | 6,179 | |||||||||||
Grupo Lala SAB de CV | Food Products | 2,214 | 1,012 | |||||||||||
Grupo Mexico SAB de CV, B | Metals & Mining | 13,483 | 25,139 | |||||||||||
Grupo Televisa SA | Media | 8,132 | 9,463 | |||||||||||
Industrias Bachoco SAB de CV, B | Food Products | 620 | 1,783 | |||||||||||
Industrias Penoles SA | Metals & Mining | 467 | 3,143 | |||||||||||
| a | Infraestructura Energetica Nova SAB de CV | Gas Utilities | 1,940 | 6,010 | ||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 3,140 | 4,808 | |||||||||||
Megacable Holdings SAB de CV | Media | 1,157 | 3,200 | |||||||||||
Orbia Advance Corp. SAB de CV | Chemicals | 3,885 | 4,321 | |||||||||||
Promotora y Operadora de Infraestructura SAB de CV | Transportation Infrastructure | 806 | 5,469 | |||||||||||
Regional SAB de CV | Banks | 876 | 2,333 | |||||||||||
| a | Telesites SAB de CV | Diversified Telecommunication Services | 4,989 | 3,247 | ||||||||||
Wal-Mart de Mexico SAB de CV, V | Food & Staples Retailing | 19,403 | 46,110 | |||||||||||
|
| |||||||||||||
| 365,344 | ||||||||||||||
|
| |||||||||||||
| Peru 0.4% | ||||||||||||||
Compania de Minas Buenaventura SA, ADR | Metals & Mining | 798 | 5,817 | |||||||||||
|
| |||||||||||||
| United States 0.9% | ||||||||||||||
JBS SA | Food Products | 3,700 | 14,510 | |||||||||||
|
| |||||||||||||
Total Common Stocks (Cost $1,965,082) | 1,201,086 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks 20.5% | ||||||||||||||
| Brazil 18.8% | ||||||||||||||
| d | Alpargatas SA, 0.237%, pfd. | Textiles, Apparel & Luxury Goods | 750 | 3,349 | ||||||||||
| a | Azul SA | Airlines | 700 | 2,368 | ||||||||||
| d | Banco Bradesco SA, 10.010%, pfd. | Banks | 15,120 | 60,549 | ||||||||||
| d | Banco do Estado do Rio Grande do Sul SA, 9.883%, | Banks | 800 | 1,840 | ||||||||||
| d | Bradespar SA, 4.781%, pfd. | Metals & Mining | 800 | 4,498 | ||||||||||
| d | Braskem SA, 4.872%, pfd., A | Chemicals | 700 | 2,324 | ||||||||||
| d | Centrais Eletricas Brasileiras SA, 5.651%, pfd., B | Electric Utilities | 1,000 | 5,019 | ||||||||||
| franklintempleton.com | Annual Report | 271 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Latin America ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Preferred Stocks (continued) | ||||||||||||||
| Brazil 18.8%(continued) | ||||||||||||||
| d | Cia de Transmissao de Energia Eletrica Paulista, 7.965%, pfd. | Electric Utilities | 700 | $ | 2,560 | |||||||||
| d | Cia Energetica de Sao Paulo, 3.300%, pfd., B | | Independent Power and Renewable Electricity Producers | | 700 | 3,628 | ||||||||
| d | Companhia Energetica de Minas Gerais, 8.137%, pfd. | Electric Utilities | 3,500 | 6,012 | ||||||||||
| d | Companhia Paranaense de Energia, 5.320%, pfd., B | Electric Utilities | 400 | 4,126 | ||||||||||
| d | Gerdau SA, 2.090%, pfd. | Metals & Mining | 3,900 | 7,557 | ||||||||||
| a | Gol Linhas Aereas Inteligentes SA, pfd. | Airlines | 400 | 877 | ||||||||||
| d | Itau Unibanco Holding SA, 8.709%, pfd. | Banks | 17,700 | 78,798 | ||||||||||
| d | Itausa-Investimentos Itau SA, 9.918%, pfd. | Banks | 16,400 | 27,731 | ||||||||||
| d | Lojas Americanas SA, 1.011%, pfd. | Multiline Retail | 2,828 | 9,814 | ||||||||||
| d | Petroleo Brasileiro SA, 6.665%, pfd. | Oil, Gas & Consumable Fuels | 17,700 | 47,743 | ||||||||||
| d | Telefonica Brasil SA, 6.951%, pfd. | Diversified Telecommunication Services | 1,600 | 15,255 | ||||||||||
| d | Usinas Siderurgicas de Minas Gerais SA Usiminas, 1.626%, pfd., A | Metals & Mining | 1,400 | 1,328 | ||||||||||
|
| |||||||||||||
| 285,376 | ||||||||||||||
|
| |||||||||||||
| Chile 0.6% | ||||||||||||||
| d | Embotelladora Andina SA, 5.048%, pfd., B | Beverages | 760 | 1,692 | ||||||||||
| d | Sociedad Quimica y Minera de Chile SA, 0.006%, pfd., B | Chemicals | 357 | 8,185 | ||||||||||
|
| |||||||||||||
| 9,877 | ||||||||||||||
|
| |||||||||||||
| Colombia 1.1% | ||||||||||||||
| d | Bancolombia SA, 5.749%, pfd. | Banks | 1,690 | 11,447 | ||||||||||
| d | Grupo Aval Acciones y Valores SA, 6.689%, pfd. | Banks | 15,299 | 3,380 | ||||||||||
| d | Grupo de Inversiones Suramericana SA, 3.278%, pfd. | Diversified Financial Services | 291 | 1,202 | ||||||||||
|
| |||||||||||||
| 16,029 | ||||||||||||||
|
| |||||||||||||
| Total Preferred Stocks (Cost $590,515) | 311,282 | |||||||||||||
|
| |||||||||||||
Total Investments (Cost $2,555,597) 99.5% | 1,512,368 | |||||||||||||
Other Assets, less Liabilities 0.5% | 8,000 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 1,520,368 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $4,087, representing 0.3% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $5,569, representing 0.4% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
Mini Bovespa Index | Long | 2 | $ | 5,585 | 4/15/20 | $ | (1,305 | ) | ||||||||||||
*As of period end.
See Note 8 regarding other derivative information.
| 272 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Mexico ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 22.11 | $ | 24.98 | $ | 24.90 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.64 | 0.51 | 0.12 | |||||||||
Net realized and unrealized gains (losses) | (7.73 | ) | (2.86 | ) | 0.04 | |||||||
|
| |||||||||||
Total from investment operations | (7.09 | ) | (2.35 | ) | 0.16 | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.67 | ) | (0.52 | ) | (0.08 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 14.35 | $ | 22.11 | $ | 24.98 | ||||||
|
| |||||||||||
Total returnd | (33.13)% | (9.28)% | 0.63% | |||||||||
| Ratios to average net assetse | ||||||||||||
Total expenses | 0.19% | 0.19% | 0.19% | |||||||||
Net investment income | 2.93% | 2.21% | 1.18% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $2,871 | $4,422 | $2,498 | |||||||||
Portfolio turnover ratef | 19.32% | g | 10.31% | 9.64% | ||||||||
aFor the period November 3, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 19.32%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 273 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.8% | ||||||||||||||
| Mexico 99.8% | ||||||||||||||
Alfa SAB de CV | Industrial Conglomerates | 105,376 | $ | 28,748 | ||||||||||
Alpek SAB de CV | Chemicals | 13,152 | 4,737 | |||||||||||
| a | Alsea de Mexico S.A.B de C.V. | Hotels, Restaurants & Leisure | 18,084 | 11,702 | ||||||||||
America Movil SAB de CV, L | Wireless Telecommunication Services | 761,144 | 455,857 | |||||||||||
Arca Continental SAB de CV | Beverages | 13,484 | 54,955 | |||||||||||
Banco del Bajio SA | Banks | 23,960 | 20,917 | |||||||||||
Banco Santander (Mexico), SA, Institucion de Banca Multiple, Grupo Financiero Santander, B | Banks | 19,620 | 13,080 | |||||||||||
Becle SA de CV | Beverages | 19,044 | 23,534 | |||||||||||
Cemex SAB de CV | Construction Materials | 432,164 | 90,820 | |||||||||||
Coca-Cola FEMSA SA de CV | Beverages | 17,848 | 72,771 | |||||||||||
Concentradora Fibra Danhos SA de CV | Equity Real Estate Investment Trusts (REITs | ) | 7,864 | 6,517 | ||||||||||
El Puerto de Liverpool SAB de CV | Multiline Retail | 6,860 | 15,139 | |||||||||||
Fibra Uno Administracion SA de CV | Equity Real Estate Investment Trusts (REITs | ) | 87,968 | 69,709 | ||||||||||
Fomento Economico Mexicano SAB de CV | Beverages | 58,644 | 358,025 | |||||||||||
| b | GMexico Transportes SAB de CV, 144A | Road & Rail | 14,964 | 13,344 | ||||||||||
Gruma SAB de CV | Food Products | 6,912 | 53,527 | |||||||||||
Grupo Aeroportuario del Centro Norte SAB de CV | Transportation Infrastructure | 11,144 | 38,084 | |||||||||||
Grupo Aeroportuario del Pacifico SAB de CV | Transportation Infrastructure | 11,880 | 64,512 | |||||||||||
Grupo Aeroportuario del Sureste SAB de CV, B | Transportation Infrastructure | 5,296 | 50,424 | |||||||||||
Grupo Bimbo SAB de CV, A | Food Products | 73,028 | 107,335 | |||||||||||
Grupo Carso SAB de CV | Industrial Conglomerates | 16,644 | 33,041 | |||||||||||
Grupo Elektra SAB de CV | Banks | 1,788 | 107,011 | |||||||||||
Grupo Financiero Banorte SAB de CV | Banks | 79,244 | 219,566 | |||||||||||
Grupo Financiero Inbursa SAB de CV | Banks | 78,432 | 56,970 | |||||||||||
Grupo Lala SAB de CV | Food Products | 20,056 | 9,165 | |||||||||||
Grupo Mexico SAB de CV, B | Metals & Mining | 77,684 | 144,843 | |||||||||||
Grupo Televisa SA | Media | 72,096 | 83,900 | |||||||||||
Industrias Bachoco SAB de CV, B | Food Products | 5,576 | 16,039 | |||||||||||
Industrias Penoles SA | Metals & Mining | 4,308 | 28,993 | |||||||||||
| a | Infraestructura Energetica Nova SAB de CV | Gas Utilities | 17,892 | 55,424 | ||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 28,948 | 44,324 | |||||||||||
Megacable Holdings SAB de CV | Media | 10,424 | 28,829 | |||||||||||
Orbia Advance Corp. SAB de CV | Chemicals | 35,816 | 39,833 | |||||||||||
Promotora y Operadora de Infraestructura SAB de CV | Transportation Infrastructure | 7,432 | 50,432 | |||||||||||
Regional SAB de CV | Banks | 7,884 | 21,001 | |||||||||||
| a | Telesites SAB de CV | Diversified Telecommunication Services | 44,712 | 29,104 | ||||||||||
Wal-Mart de Mexico SAB de CV, V | Food & Staples Retailing | 144,620 | 343,684 | |||||||||||
|
| |||||||||||||
Total Investments | 2,865,896 | |||||||||||||
Other Assets, less Liabilities 0.2% | 4,724 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 2,870,620 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the value of this security was $13,344, representing 0.5% of net assets.
| 274 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Russia ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 23.37 | $ | 24.24 | $ | 23.90 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment income (loss)c | 1.73 | 1.03 | (0.00 | )d | ||||||||
Net realized and unrealized gains (losses) | (4.44 | ) | (1.26 | ) | 0.34 | |||||||
|
| |||||||||||
Total from investment operations | (2.71 | ) | (0.23 | ) | 0.34 | |||||||
|
| |||||||||||
Less distributions from net investment income | (1.75 | ) | (0.64 | ) | — | |||||||
|
| |||||||||||
Net asset value, end of year | $ | 18.91 | $ | 23.37 | $ | 24.24 | ||||||
|
| |||||||||||
Total returne | (13.90)% | (0.63)% | 1.42% | |||||||||
| Ratios to average net assetsf | ||||||||||||
Expenses before waiver and payments by affiliates | 0.19% | 0.19% | 0.19% | |||||||||
Expenses net waiver and payments by affiliates | 0.19% | —% | —% | |||||||||
Net investment income (loss) | 6.49% | 4.57% | (0.13)% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $13,240 | $11,683 | $2,424 | |||||||||
Portfolio turnover rateg | 15.74% | h | 31.57% | 7.58% | ||||||||
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
hPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 15.74%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 275 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 94.9% | ||||||||||||||
| Russia 94.9% | ||||||||||||||
Aeroflot – Russian Airlines PJSC | Airlines | 96,852 | $ | 84,762 | ||||||||||
Alrosa PJSC | Metals & Mining | 356,146 | 294,411 | |||||||||||
Federal Grid Co. Unified Energy System PJSC | Electric Utilities | 48,162,730 | 99,230 | |||||||||||
Federal Hydrogenerating Co. | Electric Utilities | 21,290,962 | 165,594 | |||||||||||
Gazprom PJSC | Oil, Gas & Consumable Fuels | 864,360 | 2,006,861 | |||||||||||
Inter RAO UES PJSC | Electric Utilities | 5,084,534 | 320,330 | |||||||||||
LUKOIL PJSC | Oil, Gas & Consumable Fuels | 33,908 | 2,046,186 | |||||||||||
Magnit PJSC | Food & Staples Retailing | 9,142 | 374,707 | |||||||||||
Magnitogorsk Iron & Steel Works | Metals & Mining | 327,768 | 161,506 | |||||||||||
MMC Norilsk Nickel PJSC | Metals & Mining | 2,394 | 598,027 | |||||||||||
Mobile TeleSystems PJSC | Wireless Telecommunication Services | 92,078 | 352,479 | |||||||||||
Moscow Exchange MICEX | Capital Markets | 240,926 | 299,871 | |||||||||||
Mosenergo PAO | Electric Utilities | 1,487,402 | 35,199 | |||||||||||
NLMK PJSC | Metals & Mining | 191,436 | 303,813 | |||||||||||
NovaTek PJSC | Oil, Gas & Consumable Fuels | 51,002 | 598,966 | |||||||||||
PhosAgro PJSC | Chemicals | 6,538 | 207,519 | |||||||||||
Polyus Gold OJSC | Metals & Mining | 2,814 | 383,111 | |||||||||||
Rosneft PJSC | Oil, Gas & Consumable Fuels | 99,568 | 400,585 | |||||||||||
Rosseti PJSC | Electric Utilities | 5,448,954 | 82,236 | |||||||||||
| a | Rostelecom PJSC | Diversified Telecommunication Services | 192,150 | 181,984 | ||||||||||
| a | RussNeft PJSC | Oil, Gas & Consumable Fuels | 8,218 | 49,350 | ||||||||||
Sberbank of Russia PJSC | Banks | 840,980 | 2,015,005 | |||||||||||
Severstal PJSC | Metals & Mining | 27,552 | 305,586 | |||||||||||
Sistema PJSFC | Wireless Telecommunication Services | 534,044 | 89,641 | |||||||||||
Surgutneftegas PJSC | Oil, Gas & Consumable Fuels | 466,354 | 202,338 | |||||||||||
Tatneft PAO | Oil, Gas & Consumable Fuels | 75,894 | 536,759 | |||||||||||
Unipro PJSC | Independent Power and Renewable Electricity Producers | 1,914,178 | 63,060 | |||||||||||
VTB Bank PJSC | Banks | 713,209,084 | 297,575 | |||||||||||
|
| |||||||||||||
Total Common Stocks | 12,556,691 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks 5.1% | ||||||||||||||
| Russia 5.1% | ||||||||||||||
| b | Bashneft PJSC, 9.547%, pfd. | Oil, Gas & Consumable Fuels | 3,556 | 60,531 | ||||||||||
| b | Surgutneftegas PJSC, 20.266%, pfd. | Oil, Gas & Consumable Fuels | 502,600 | 241,864 | ||||||||||
| b | Tatneft PJSC, 18.720%, pfd., 3 | Oil, Gas & Consumable Fuels | 7,504 | 49,989 | ||||||||||
| b | Transneft PJSC, 7.246%, pfd. | Oil, Gas & Consumable Fuels | 173 | 327,141 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks | 679,525 | |||||||||||||
|
| |||||||||||||
Total Investments | 13,236,216 | |||||||||||||
Other Assets, less Liabilities 0.0% | 3,479 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 13,239,695 | ||||||||||||
|
| |||||||||||||
aNon-income producing.
bVariable rate security. The rate shown represents the yield at period end.
| 276 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Saudi Arabia ETF
| Year Ended March 31, | ||||||||
| 2020 | 2019a | |||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||
Net asset value, beginning of year | $ | 27.89 | $ | 24.71 | ||||
|
| |||||||
| Income from investment operationsb: |
| |||||||
Net investment incomec | 0.89 | 0.11 | ||||||
Net realized and unrealized gains (losses) | (7.80 | ) | 3.07 | |||||
|
| |||||||
Total from investment operations | (6.91 | ) | 3.18 | |||||
|
| |||||||
Less distributions from net investment income | (0.83 | ) | — | |||||
|
| |||||||
Net asset value, end of year | $ | 20.15 | $ | 27.89 | ||||
|
| |||||||
Total returnd | (25.51)% | 12.87% | ||||||
| Ratios to average net assetse | ||||||||
Total expenses | 0.39% | 0.39% | ||||||
Net investment income | 3.46% | 0.93% | ||||||
| Supplemental data | ||||||||
Net assets, end of year (000’s) | $2,015 | $2,789 | ||||||
Portfolio turnover ratef | 32.37% | g | 12.41% | |||||
aFor the period October 9, 2018 (commencement of operations) to March 31, 2019.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 32.37%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 277 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin FTSE Saudi Arabia ETF
| Industry | Shares | Value | ||||||||||
| Common Stocks 100.0% | ||||||||||||
| Saudi Arabia 100.0% | ||||||||||||
Abdullah Al Othaim Markets Co. | Food & Staples Retailing | 660 | $ | 16,302 | ||||||||
Advanced Petrochemical Co. | Chemicals | 1,600 | 18,951 | |||||||||
Al-Rajhi Bank | Banks | 16,778 | 240,260 | |||||||||
Alinma Bank | Banks | 11,020 | 61,010 | |||||||||
Almarai Co. JSC | Food Products | 3,810 | 47,663 | |||||||||
Arab National Bank | Banks | 9,686 | 47,180 | |||||||||
Arabian Centres Co. Ltd. | Real Estate Management & Development | 2,468 | 13,861 | |||||||||
BankAl-Jazira | Banks | 6,058 | 18,285 | |||||||||
Bank Albilad | Banks | 5,540 | 30,140 | |||||||||
Banque Saudi Fransi | Banks | 8,762 | 60,287 | |||||||||
Bupa Arabia for Cooperative Insurance Co. | Insurance | 938 | 22,820 | |||||||||
Dallah Healthcare Co. | Health Care Providers & Services | 454 | 5,528 | |||||||||
| a | Dar Al Arkan Real Estate Development Co. | Real Estate Management & Development | 7,978 | 17,413 | ||||||||
| a | Emaar Economic City | Real Estate Management & Development | 6,236 | 11,353 | ||||||||
| a | Etihad Etisalat Co. | Wireless Telecommunication Services | 5,682 | 32,758 | ||||||||
| a | Fawaz Abdulaziz Al Hokair & Co. | Specialty Retail | 974 | 4,542 | ||||||||
Jarir Marketing Co. | Specialty Retail | 888 | 30,207 | |||||||||
| a | Mobile Telecommunications Co. | Wireless Telecommunication Services | 4,310 | 10,887 | ||||||||
Mouwasat Medical Services Co. | Health Care Providers & Services | 724 | 16,091 | |||||||||
National Commercial Bank | Banks | 18,738 | 173,066 | |||||||||
| a | National Industrialization Co. | Chemicals | 4,942 | 12,102 | ||||||||
National Petrochemical Co. | Chemicals | 1,798 | 8,930 | |||||||||
| a | Rabigh Refining and Petrochemical Co. | Oil, Gas & Consumable Fuels | 3,298 | 9,393 | ||||||||
Riyad Bank | Banks | 20,894 | 83,198 | |||||||||
Sahara International Petrochemical Co. | Chemicals | 5,414 | 17,696 | |||||||||
Samba Financial Group | Banks | 14,226 | 76,185 | |||||||||
Saudi Airlines Catering Co. | Hotels, Restaurants & Leisure | 574 | 11,535 | |||||||||
Saudi Arabian Fertilizer Co. | Chemicals | 3,022 | 49,871 | |||||||||
| a | Saudi Arabian Mining Co. | Metals & Mining | 6,494 | 53,584 | ||||||||
| b,c | Saudi Aramco, 144A, Reg S | Oil, Gas & Consumable Fuels | 17,652 | 141,658 | ||||||||
Saudi Basic Industries Corp. | Chemicals | 12,364 | 230,365 | |||||||||
Saudi Cement Co. | Construction Materials | 1,132 | 14,764 | |||||||||
Saudi Electricity Co. | Electric Utilities | 11,934 | 50,569 | |||||||||
Saudi Ground Services Co. | Transportation Infrastructure | 1,346 | 8,219 | |||||||||
Saudi Industrial Investment Group | Chemicals | 3,324 | 13,961 | |||||||||
| a | Saudi Kayan Petrochemical Co. | Chemicals | 11,080 | 21,381 | ||||||||
| a | Saudi Research And Marketing Group | Media | 492 | 7,910 | ||||||||
Saudi Telecom Co. | Diversified Telecommunication Services | 8,302 | 193,352 | |||||||||
| a | SavolaAl-Azizia United Co. | Food Products | 3,944 | 37,477 | ||||||||
Seera Group Holding | Hotels, Restaurants & Leisure | 2,216 | 8,199 | |||||||||
Southern Province Cement Co. | Construction Materials | 1,036 | 15,028 | |||||||||
| a | The Company for Cooperative Insurance | Insurance | 922 | 14,872 | ||||||||
The Qassim Cement | Construction Materials | 666 | 9,377 | |||||||||
Yanbu Cement | Construction Materials | 1,156 | 7,908 | |||||||||
Yanbu National Petrochemical Co. | Chemicals | 3,512 | 38,887 | |||||||||
|
| |||||||||||
Total Investments | 2,015,025 | |||||||||||
Other Assets, less Liabilities 0.0%† | 52 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 2,015,077 | ||||||||||
|
| |||||||||||
| 278 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Saudi Arabia ETF(continued)
See Abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the value of this security was $141,658, representing 7.0% of net assets.
cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $141,658, representing 7.0% of net assets.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 279 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE South Africa ETF
| Year Ended March 31, | ||||||||
| 2020 | 2019a | |||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||
Net asset value, beginning of year | $ | 26.62 | $ | 24.42 | ||||
|
| |||||||
| Income from investment operationsb: |
| |||||||
Net investment incomec | 2.65 | 0.22 | ||||||
Net realized and unrealized gains (losses) | (11.76 | ) | 2.04 | |||||
|
| |||||||
Total from investment operations | (9.11 | ) | 2.26 | |||||
|
| |||||||
Less distributions from net investment income | (2.70 | ) | (0.06 | ) | ||||
|
| |||||||
Net asset value, end of year | $ | 14.81 | $ | 26.62 | ||||
|
| |||||||
Total returnd | (38.46)% | 9.26% | ||||||
| Ratios to average net assetse | ||||||||
Total expenses | 0.19% | 0.19% | ||||||
Net investment income | 10.42% | 1.75% | ||||||
| Supplemental data | ||||||||
Net assets, end of year (000’s) | $1,481 | $2,662 | ||||||
Portfolio turnover ratef | 21.44% | g | 7.12% | |||||
aFor the period October 10, 2018 (commencement of operations) to March 31, 2019.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 21.44%.
| 280 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin FTSE South Africa ETF
| Industry | Shares | Value | ||||||||||
| Common Stocks 99.8% | ||||||||||||
| Isle Of Man 0.2% | ||||||||||||
MAS Real Estate Inc. | Real Estate Management & Development | 3,930 | $ | 2,242 | ||||||||
|
| |||||||||||
| Romania 0.9% | ||||||||||||
NEPI Rockcastle PLC | Real Estate Management & Development | 3,354 | 14,085 | |||||||||
|
| |||||||||||
| South Africa 98.7% | ||||||||||||
Absa Group Ltd. | Banks | 6,732 | 28,270 | |||||||||
African Rainbow Minerals Ltd. | Metals & Mining | 970 | 5,474 | |||||||||
Anglo American Platinum Ltd. | Metals & Mining | 562 | 23,732 | |||||||||
AngloGold Ashanti Ltd. | Metals & Mining | 3,864 | 69,039 | |||||||||
| a | Aspen Pharmacare Holdings Ltd. | Pharmaceuticals | 3,566 | 18,457 | ||||||||
Assore Ltd. | Metals & Mining | 312 | 5,199 | |||||||||
AVI Ltd. | Food Products | 2,908 | 11,459 | |||||||||
Barloworld Ltd. | Trading Companies & Distributors | 2,038 | 7,389 | |||||||||
Bid Corp. Ltd. | Food & Staples Retailing | 3,092 | 36,820 | |||||||||
Bidvest Group Ltd. | Industrial Conglomerates | 3,146 | 25,753 | |||||||||
Capitec Bank Holdings Ltd. | Banks | 494 | 24,340 | |||||||||
Clicks Group Ltd. | Food & Staples Retailing | 2,254 | 32,523 | |||||||||
Coronation Fund Managers Ltd. | Capital Markets | 2,408 | 4,247 | |||||||||
| b | Dis-Chem Pharmacies Ltd., Reg S | Food & Staples Retailing | 3,656 | 5,425 | ||||||||
Discovery Ltd. | Insurance | 3,374 | 14,728 | |||||||||
Distell Group Holdings Ltd. | Beverages | 748 | 3,274 | |||||||||
Exxaro Resources Ltd. | Oil, Gas & Consumable Fuels | 2,336 | 12,947 | |||||||||
FirstRand Ltd. | Diversified Financial Services | 29,622 | 66,790 | |||||||||
Fortress REIT Ltd. | Equity Real Estate Investment Trusts (REITs) | 8,332 | 784 | |||||||||
Fortress REIT Ltd., A | Equity Real Estate Investment Trusts (REITs) | 10,918 | 6,174 | |||||||||
Gold Fields Ltd. | Metals & Mining | 7,580 | 39,165 | |||||||||
Growthpoint Properties Ltd. | Equity Real Estate Investment Trusts (REITs) | 27,450 | 19,781 | |||||||||
| a | Harmony Gold Mining Co. Ltd. | Metals & Mining | 4,252 | 9,416 | ||||||||
Hyprop Investments Ltd. | Equity Real Estate Investment Trusts (REITs) | 2,342 | 2,492 | |||||||||
Impala Platinum Holdings Ltd. | Metals & Mining | 6,820 | 28,922 | |||||||||
Investec Ltd. | Capital Markets | 2,804 | 5,336 | |||||||||
Kumba Iron Ore Ltd. | Metals & Mining | 480 | 7,527 | |||||||||
Liberty Holdings Ltd. | Insurance | 1,122 | 4,165 | |||||||||
Life Healthcare Group Holdings Ltd. | Health Care Providers & Services | 13,024 | 13,462 | |||||||||
Momentum Metropolitan Holdings | Insurance | 9,262 | 8,085 | |||||||||
| a | Motus Holdings Ltd. | Specialty Retail | 1,648 | 2,510 | ||||||||
Mr. Price Group Ltd. | Specialty Retail | 2,330 | 14,883 | |||||||||
MTN Group Ltd. | Wireless Telecommunication Services | 16,768 | 45,431 | |||||||||
| a | MultiChoice Group Ltd. | Media | 3,972 | 19,075 | ||||||||
Naspers Ltd., N | Internet & Direct Marketing Retail | 2,554 | 365,183 | |||||||||
Nedbank Group Ltd. | Banks | 3,710 | 17,171 | |||||||||
Netcare Ltd. | Health Care Providers & Services | 13,420 | 11,271 | |||||||||
| a | Ninety One Ltd. | Capital Markets | 1,414 | 2,720 | ||||||||
| a | Northam Platinum Ltd. | Metals & Mining | 3,262 | 12,677 | ||||||||
Old Mutual Ltd. | Insurance | 42,902 | 28,465 | |||||||||
| b,c | Pepkor Holdings Ltd., 144A, Reg S | Specialty Retail | 6,578 | 3,923 | ||||||||
Pick ‘N Pay Stores Ltd. | Food & Staples Retailing | 3,180 | 10,790 | |||||||||
PSG Group Ltd. | Diversified Financial Services | 1,528 | 11,048 | |||||||||
Rand Merchant Investment Holdings Ltd. | Insurance | 7,016 | 8,658 | |||||||||
Redefine Properties Ltd. | Equity Real Estate Investment Trusts (REITs) | 52,496 | 6,966 | |||||||||
Remgro Ltd. | Diversified Financial Services | 4,794 | 32,981 | |||||||||
Resilient REIT Ltd. | Equity Real Estate Investment Trusts (REITs) | 2,887 | 5,173 | |||||||||
Reunert Ltd. | Industrial Conglomerates | 1,496 | 3,630 | |||||||||
RMB Holdings Ltd. | Diversified Financial Services | 6,980 | 19,322 | |||||||||
Sanlam Ltd. | Insurance | 16,286 | 46,587 | |||||||||
Santam Ltd. | Insurance | 386 | 5,792 | |||||||||
| a | Sappi Ltd. | Paper & Forest Products | 5,096 | 5,992 | ||||||||
| franklintempleton.com | Annual Report | 281 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE South Africa ETF(continued)
| Industry | Shares | Value | ||||||||||
| Common Stocks (continued) | ||||||||||||
| South Africa (continued) | ||||||||||||
| a | Sasol Ltd. | Chemicals | 5,198 | $ | 10,748 | |||||||
Shoprite Holdings Ltd. | Food & Staples Retailing | 4,572 | 31,999 | |||||||||
| a | Sibanye Stillwater Ltd. | Metals & Mining | 20,152 | 25,466 | ||||||||
Standard Bank Group Ltd. | Banks | 11,932 | 68,459 | |||||||||
Telkom SA SOC Ltd. | Diversified Telecommunication Services | 2,736 | 3,145 | |||||||||
The Foschini Group Ltd. | Specialty Retail | 2,140 | 8,108 | |||||||||
The SPAR Group Ltd. | Food & Staples Retailing | 1,794 | 18,256 | |||||||||
Tiger Brands Ltd. | Food Products | 1,542 | 15,973 | |||||||||
Truworths International Ltd. | Specialty Retail | 3,976 | 5,561 | |||||||||
Tsogo Sun Gaming Ltd. | Hotels, Restaurants & Leisure | 5,002 | 868 | |||||||||
Vodacom Group Ltd. | Wireless Telecommunication Services | 5,556 | 36,400 | |||||||||
Vukile Property Fund Ltd. | Equity Real Estate Investment Trusts (REITs) | 8,218 | 3,258 | |||||||||
Woolworths Holdings Ltd. | Multiline Retail | 8,112 | 12,536 | |||||||||
|
| |||||||||||
| 1,462,200 | ||||||||||||
|
| |||||||||||
Total Investments | 1,478,527 | |||||||||||
Other Assets, less Liabilities 0.2% | 2,777 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 1,481,304 | ||||||||||
|
| |||||||||||
See Abbreviations on page 351.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the aggregate value of these securities was $9,348, representing 0.6% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the value of this security was $3,923, representing 0.3% of net assets.
| 282 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE South Korea ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 21.19 | $ | 25.98 | $ | 25.75 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 0.36 | 0.40 | 0.10 | |||||||||
Net realized and unrealized gains (losses) | (4.58 | ) | (4.81 | ) | 0.40 | |||||||
|
| |||||||||||
Total from investment operations | (4.22 | ) | (4.41 | ) | 0.50 | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.45 | ) | (0.38 | ) | (0.27 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 16.52 | $ | 21.19 | $ | 25.98 | ||||||
|
| |||||||||||
Total returnd | (20.24)% | (16.92)% | 1.95% | |||||||||
| Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 0.09% | 0.09% | 0.09% | |||||||||
Expenses net waiver and payments by affiliates | 0.09% | 0.09% | —% | |||||||||
Net investment income | 1.78% | 1.74% | 0.94% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $11,562 | $16,948 | $25,981 | |||||||||
Portfolio turnover ratef | 21.72% | g | 5.21% | 3.85% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 8.02%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 283 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 94.4% | ||||||||||||||
| South Korea 94.4% | ||||||||||||||
Amorepacific Corp. | Personal Products | 826 | $ | 114,331 | ||||||||||
AmorePacific Group | Personal Products | 756 | 34,405 | |||||||||||
BGF Retail Co. Ltd. | Food & Staples Retailing | 161 | 17,458 | |||||||||||
BNK Financial Group Inc. | Banks | 7,637 | 27,823 | |||||||||||
| a | Celltrion Healthcare Co. Ltd. | Health Care Providers & Services | 1,743 | 128,432 | ||||||||||
| a | Celltrion Inc. | Biotechnology | 2,709 | 509,600 | ||||||||||
Cheil Worldwide Inc. | Media | 1,806 | 23,514 | |||||||||||
CJ CheilJedang Corp. | Food Products | 210 | 37,261 | |||||||||||
CJ Corp. | Industrial Conglomerates | 322 | 17,061 | |||||||||||
CJ ENM Co. Ltd. | Internet & Direct Marketing Retail | 252 | 21,549 | |||||||||||
| a | CJ Logistics Corp. | Road & Rail | 196 | 21,897 | ||||||||||
Coway Co. Ltd. | Household Durables | 1,463 | 69,464 | |||||||||||
Daelim Industrial Co. Ltd. | Construction & Engineering | 714 | 43,227 | |||||||||||
| a | Daewoo Engineering & Construction Co. Ltd. | Construction & Engineering | 4,648 | 11,225 | ||||||||||
| a | Daewoo Shipbuilding & Marine Engineering Co. Ltd. | Machinery | 1,253 | 13,844 | ||||||||||
DB Insurance Co. Ltd. | Insurance | 1,225 | 34,968 | |||||||||||
DGB Financial Group Inc. | Banks | 4,018 | 15,150 | |||||||||||
Dongsuh Cos. Inc. | Food & Staples Retailing | 805 | 10,415 | |||||||||||
Doosan Bobcat Inc. | Machinery | 630 | 9,289 | |||||||||||
Doosan Co. Ltd. | Industrial Conglomerates | 147 | 4,033 | |||||||||||
| a | Doosan Fuel Cell Co. Ltd. | Electrical Equipment | 543 | 2,328 | ||||||||||
| a | Doosan Heavy Industries and Construction Co. Ltd. | Electrical Equipment | 3,129 | 8,778 | ||||||||||
| a | Doosan Infracore Co. Ltd. | Machinery | 3,479 | 8,988 | ||||||||||
| a | Doosan Solus Co. Ltd. | Electronic Equipment, Instruments & Components | 294 | 4,456 | ||||||||||
E-MART Inc. | Food & Staples Retailing | 518 | 45,317 | |||||||||||
Fila Korea Ltd. | Textiles, Apparel & Luxury Goods | 1,365 | 32,573 | |||||||||||
GS Engineering & Construction Corp. | Construction & Engineering | 1,533 | 25,816 | |||||||||||
GS Holdings Corp. | Oil, Gas & Consumable Fuels | 1,337 | 40,417 | |||||||||||
GS Retail Co. Ltd. | Food & Staples Retailing | 693 | 17,590 | |||||||||||
Hana Financial Group Inc. | Banks | 7,553 | 143,323 | |||||||||||
Hankook Tire & Technology Co. Ltd. | Auto Components | 1,960 | 31,155 | |||||||||||
Hanmi Pharm Co. Ltd. | Pharmaceuticals | 189 | 40,599 | |||||||||||
Hanmi Science Co. Ltd. | Pharmaceuticals | 336 | 7,438 | |||||||||||
Hanon Systems | Auto Components | 4,221 | 30,756 | |||||||||||
Hanssem Co. Ltd. | Household Durables | 259 | 10,702 | |||||||||||
| a | Hanwha Aerospace Co. Ltd. | Aerospace & Defense | 931 | 15,716 | ||||||||||
Hanwha Corp. | Industrial Conglomerates | 1,106 | 13,901 | |||||||||||
Hanwha Corp. | Industrial Conglomerates | 595 | 4,536 | |||||||||||
Hanwha Life Insurance Co. Ltd. | Insurance | 7,245 | 8,273 | |||||||||||
Hanwha Solutions Corp. | Chemicals | 2,128 | 23,424 | |||||||||||
HDC Hyundai DevelopmentCo-Engineering & Construction | Construction & Engineering | 1,204 | 15,379 | |||||||||||
| a | Helixmith Co. Ltd. | Biotechnology | 476 | 26,863 | ||||||||||
Hite Jinro Co. Ltd. | Beverages | 798 | 17,601 | |||||||||||
| a | HLB Inc. | Leisure Equipment & Products | 889 | 65,725 | ||||||||||
Hotel Shilla Co. Ltd. | Specialty Retail | 812 | 47,025 | |||||||||||
Hyundai Department Store Co. Ltd. | Multiline Retail | 392 | 18,934 | |||||||||||
Hyundai Engineering & Construction Co. Ltd. | Construction & Engineering | 1,904 | 42,933 | |||||||||||
Hyundai Glovis Co. Ltd. | Air Freight & Logistics | 483 | 35,947 | |||||||||||
Hyundai Heavy Industries Holdings Co. Ltd. | Machinery | 273 | 44,291 | |||||||||||
Hyundai Marine & Fire Insurance Co. Ltd. | Insurance | 1,582 | 29,435 | |||||||||||
Hyundai Mipo Dockyard Co. Ltd. | Machinery | 532 | 11,843 | |||||||||||
Hyundai Mobis Co. Ltd. | Auto Components | 1,708 | 237,817 | |||||||||||
Hyundai Motor Co. | Automobiles | 3,710 | 270,322 | |||||||||||
Hyundai Steel Co. | Metals & Mining | 1,967 | 29,004 | |||||||||||
Hyundai Wia Corp. | Auto Components | 420 | 9,246 | |||||||||||
Industrial Bank of Korea | Banks | 7,112 | 43,816 | |||||||||||
| 284 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE South Korea ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| South Korea (continued) | ||||||||||||||
Kakao Corp. | Interactive Media & Services | 1,323 | $ | 168,995 | ||||||||||
Kangwon Land Inc. | Hotels, Restaurants & Leisure | 2,786 | 45,199 | |||||||||||
KB Financial Group Inc. | Banks | 10,171 | 288,666 | |||||||||||
KCC Corp. | Chemicals | 123 | 13,085 | |||||||||||
| a | KCC Glass Corp. | Building Products | 116 | 1,749 | ||||||||||
KEPCO Plant Service and Engineering Co. Ltd. | Commercial Services & Supplies | 553 | 13,196 | |||||||||||
Kia Motors Corp. | Automobiles | 6,748 | 144,123 | |||||||||||
Korea Aerospace Industries Ltd. | Aerospace & Defense | 1,694 | 29,153 | |||||||||||
| a | Korea Electric Power Corp. | Electric Utilities | 6,685 | 105,710 | ||||||||||
Korea Gas Corp. | Gas Utilities | 693 | 12,239 | |||||||||||
Korea Investment Holdings Co. Ltd. | Capital Markets | 1,001 | 40,908 | |||||||||||
| a | Korea Shipbuilding & Offshore Engineering Co. Ltd. | Machinery | 1,127 | 72,766 | ||||||||||
Korea Zinc Co. Ltd. | Metals & Mining | 259 | 75,742 | |||||||||||
| a | Korean Air Lines Co. Ltd. | Airlines | 1,246 | 19,140 | ||||||||||
KT&G Corp. | Tobacco | 2,898 | 177,829 | |||||||||||
Kumho Petrochemical Co. Ltd. | Chemicals | 455 | 24,220 | |||||||||||
LG Chem Ltd. | Chemicals | 1,197 | 299,901 | |||||||||||
LG Corp. | Industrial Conglomerates | 2,359 | 114,331 | |||||||||||
| a | LG Display Co. Ltd. | Electronic Equipment, Instruments & Components | 5,852 | 53,360 | ||||||||||
LG Electronics, Inc. | Household Durables | 2,828 | 111,972 | |||||||||||
LG Household & Health Care Ltd. | Personal Products | 231 | 212,527 | |||||||||||
LG Uplus Corp. | Diversified Telecommunication Services | 5,061 | 44,900 | |||||||||||
Lotte Chemical Corp. | Chemicals | 385 | 61,038 | |||||||||||
Lotte Chilsung Beverage Co. Ltd. | Beverages | 91 | 6,354 | |||||||||||
Lotte Corp. | Industrial Conglomerates | 686 | 13,524 | |||||||||||
LOTTE Fine Chemical Co. Ltd. | Chemicals | 455 | 11,605 | |||||||||||
Lotte Shopping Co. Ltd. | Multiline Retail | 294 | 18,113 | |||||||||||
LS Corp. | Electrical Equipment | 455 | 10,802 | |||||||||||
Mando Corp. | Auto Components | 861 | 14,641 | |||||||||||
Medy-tox Inc. | Biotechnology | 112 | 18,152 | |||||||||||
Mirae Asset Daewoo Co. Ltd. | Capital Markets | 3,815 | 9,120 | |||||||||||
Mirae Asset Daewoo Co. Ltd. | Capital Markets | 9,884 | 42,789 | |||||||||||
Naver Corp. | Interactive Media & Services | 3,500 | 488,767 | |||||||||||
NCsoft Corp. | Entertainment | 441 | 236,195 | |||||||||||
| a | Netmarble Corp. | Entertainment | 448 | 34,299 | ||||||||||
NH Investment & Securities Co. Ltd. | Capital Markets | 3,360 | 24,813 | |||||||||||
| a | NHN Corp. | Entertainment | 252 | 14,180 | ||||||||||
Nongshim Co. Ltd. | Food Products | 84 | 19,907 | |||||||||||
| a | OCI Co. Ltd. | Chemicals | 476 | 13,607 | ||||||||||
Orion Corp. | Food Products | 567 | 53,563 | |||||||||||
Ottogi Corp. | Food Products | 35 | 13,671 | |||||||||||
Paradise Co. Ltd. | Hotels, Restaurants & Leisure | 1,190 | 12,659 | |||||||||||
POSCO | Metals & Mining | 1,785 | 236,074 | |||||||||||
POSCO Chemical Co. Ltd. | Construction Materials | 560 | 20,149 | |||||||||||
Posco International Corp. | Trading Companies & Distributors | 1,288 | 12,009 | |||||||||||
S-1 Corp. | Commercial Services & Supplies | 497 | 32,661 | |||||||||||
S-Oil Corp. | Oil, Gas & Consumable Fuels | 1,071 | 50,235 | |||||||||||
| a | Samsung Biologics Co. Ltd. | Life Sciences Tools & Services | 350 | 138,580 | ||||||||||
Samsung C&T Corp. | Industrial Conglomerates | 2,198 | 161,778 | |||||||||||
Samsung Card Co. Ltd. | Consumer Finance | 791 | 19,428 | |||||||||||
Samsung Electro-Mechanics Co. Ltd. | Electronic Equipment, Instruments & Components | 1,456 | 116,853 | |||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 48,496 | 1,902,234 | |||||||||||
| a | Samsung Engineering Co. Ltd. | Construction & Engineering | 4,130 | 34,435 | ||||||||||
Samsung Fire & Marine Insurance Co. Ltd. | Insurance | 861 | 108,920 | |||||||||||
| a | Samsung Heavy Industries Co. Ltd. | Machinery | 11,452 | 36,689 | ||||||||||
Samsung Life Insurance Co. Ltd. | Insurance | 1,666 | 58,847 | |||||||||||
Samsung SDI Co. Ltd. | Electronic Equipment, Instruments & Components | 1,379 | 272,436 | |||||||||||
| franklintempleton.com | Annual Report | 285 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE South Korea ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| South Korea (continued) | ||||||||||||||
Samsung SDS Co. Ltd. | IT Services | 833 | $ | 102,299 | ||||||||||
Samsung Securities Co. Ltd. | Capital Markets | 1,652 | 39,829 | |||||||||||
Shinhan Financial Group Co. Ltd. | Banks | 12,425 | 291,909 | |||||||||||
Shinsegae Co. Ltd. | Multiline Retail | 182 | 32,517 | |||||||||||
| a | SillaJen Inc. | Biotechnology | 1,393 | 15,162 | ||||||||||
SK Holdings Co. Ltd. | Industrial Conglomerates | 868 | 119,432 | |||||||||||
SK Hynix Inc. | Semiconductors & Semiconductor Equipment | 13,580 | 929,243 | |||||||||||
SK Innovation Co. Ltd. | Oil, Gas & Consumable Fuels | 1,498 | 107,057 | |||||||||||
SK Networks Co. Ltd. | Trading Companies & Distributors | 3,857 | 14,416 | |||||||||||
SK Telecom Co. Ltd. | Wireless Telecommunication Services | 609 | 88,547 | |||||||||||
SKC Co. Ltd. | Chemicals | 490 | 14,974 | |||||||||||
Ssangyong Cement Industrial Co. Ltd. | Construction Materials | 2,723 | 10,088 | |||||||||||
Woori Financial Group Inc. | Banks | 14,182 | 89,122 | |||||||||||
Yuhan Corp. | Pharmaceuticals | 238 | 44,771 | |||||||||||
|
| |||||||||||||
Total Common Stocks | 10,915,417 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks 3.8% | ||||||||||||||
| South Korea 3.8% | ||||||||||||||
| b | Amorepacific Corp., 1.686%, pfd. | Personal Products | 280 | 13,708 | ||||||||||
| b | CJ CheilJedang Corp., 4.011%, pfd. | Food Products | 35 | 2,544 | ||||||||||
| b | Hyundai Motor Co., 7.206%, pfd., 2 | Automobiles | 994 | 46,460 | ||||||||||
| b | Hyundai Motor Co., 7.849%, pfd. | Automobiles | 609 | 25,814 | ||||||||||
| b | LG Chem Ltd., 1.385%, pfd. | Chemicals | 203 | 24,680 | ||||||||||
| b | LG Electronics Inc., 4.482%, pfd. | Household Durables | 448 | 6,569 | ||||||||||
| b | LG Household & Health Care Ltd., 1.727%, pfd. | Personal Products | 53 | 27,864 | ||||||||||
| b | Samsung Electronics Co. Ltd., 2.651%, pfd. | Technology Hardware, Storage & Peripherals | 8,498 | 279,928 | ||||||||||
| b | Samsung Fire & Marine Insurance Co. Ltd., 7.594%, pfd. | Insurance | 70 | 6,440 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $580,427) | 434,007 | |||||||||||||
|
| |||||||||||||
Total Investments | 11,349,424 | |||||||||||||
Other Assets, less Liabilities 1.8% | 212,847 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 11,562,271 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
bVariable rate security. The rate shown represents the yield at period end.
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
Kospi 200 Mini | Long | 22 | $ | 213,575 | 4/09/20 | $ | (17,785 | ) | ||||||||||||
*As of period end.
See Note 8 regarding other derivative information.
| 286 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Switzerland ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 23.86 | $ | 23.11 | $ | 23.56 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 1.06 | 0.53 | 0.22 | |||||||||
Net realized and unrealized gains (losses) | (0.16 | ) | 0.83 | (0.67 | ) | |||||||
|
| |||||||||||
Total from investment operations | 0.90 | 1.36 | (0.45 | ) | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.32 | ) | (0.61 | ) | — | |||||||
|
| |||||||||||
Net asset value, end of year | $ | 24.44 | $ | 23.86 | $ | 23.11 | ||||||
|
| |||||||||||
Total returnd | 3.70% | 6.13% | (1.91)% | |||||||||
| Ratios to average net assetse | ||||||||||||
Total expenses | 0.09% | 0.09% | 0.09% | |||||||||
Net investment income | 4.12% | 2.35% | 6.54% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $34,213 | $2,386 | $2,311 | |||||||||
Portfolio turnover ratef | 16.25% | g | 14.06% | 2.72% | ||||||||
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 16.25%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 287 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.1% | ||||||||||||||
| Switzerland 99.1% | ||||||||||||||
ABB Ltd. | Electrical Equipment | 58,702 | $ | 1,031,706 | ||||||||||
Adecco Group AG | Professional Services | 5,222 | 205,847 | |||||||||||
| a | Alcon Inc. | Health Care Equipment & Supplies | 15,652 | 798,009 | ||||||||||
Baloise Holding AG | Insurance | 1,582 | 207,489 | |||||||||||
Banque Cantonale Vaudoise | Banks | 98 | 80,422 | |||||||||||
Barry Callebaut AG | Food Products | 103 | 206,522 | |||||||||||
Chocoladefabriken Lindt & Spruengli AG | Food Products | 69 | 581,567 | |||||||||||
Cie Financiere Richemont SA | Textiles, Apparel & Luxury Goods | 16,856 | 924,375 | |||||||||||
Clariant AG | Chemicals | 6,818 | 114,614 | |||||||||||
Credit Suisse Group AG | Capital Markets | 83,944 | 694,075 | |||||||||||
DKSH Holding AG | Professional Services | 1,218 | 60,450 | |||||||||||
Dufry AG | Specialty Retail | 1,036 | 32,208 | |||||||||||
EMS-Chemie Holding AG | Chemicals | 238 | 149,680 | |||||||||||
Flughafen Zurich AG | Transportation Infrastructure | 658 | 74,127 | |||||||||||
Geberit AG | Building Products | 1,218 | 536,270 | |||||||||||
Georg Fischer AG | Machinery | 140 | 96,801 | |||||||||||
Givaudan AG | Chemicals | 308 | 953,398 | |||||||||||
Helvetia Holding AG | Insurance | 1,120 | 96,425 | |||||||||||
Julius Baer Group Ltd. | Capital Markets | 7,420 | 253,302 | |||||||||||
Kuehne + Nagel International AG | Marine | 1,708 | 234,518 | |||||||||||
LafargeHolcim Ltd., B | Construction Materials | 17,262 | 630,856 | |||||||||||
Logitech International SA | Technology Hardware, Storage & Peripherals | 4,984 | 215,524 | |||||||||||
Lonza Group AG | Life Sciences Tools & Services | 2,478 | 1,030,078 | |||||||||||
Nestle SA | Food Products | 66,262 | 6,810,765 | |||||||||||
Novartis AG | Pharmaceuticals | 50,610 | 4,176,744 | |||||||||||
OC Oerlikon Corp. AG | Machinery | 6,958 | 55,805 | |||||||||||
Pargesa Holding SA, B | Diversified Financial Services | 1,302 | 86,324 | |||||||||||
Partners Group Holding AG | Capital Markets | 560 | 387,552 | |||||||||||
PSP Swiss Property AG | Real Estate Management & Development | 1,330 | 165,915 | |||||||||||
Roche Holding AG | Pharmaceuticals | 616 | 197,492 | |||||||||||
Roche Holding AG | Pharmaceuticals | 16,212 | 5,262,135 | |||||||||||
Schindler Holding AG | Machinery | 644 | 136,048 | |||||||||||
Schindler Holding AG, PC | Machinery | 1,386 | 304,260 | |||||||||||
SGS SA | Professional Services | 203 | 470,390 | |||||||||||
Sika AG | Chemicals | 4,732 | 782,268 | |||||||||||
Sonova Holding AG | Health Care Equipment & Supplies | 1,820 | 328,053 | |||||||||||
Straumann Holding AG | Health Care Equipment & Supplies | 350 | 260,958 | |||||||||||
Sulzer AG | Machinery | 630 | 39,784 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 924 | 184,743 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 1,442 | 56,753 | |||||||||||
Swiss Life Holding AG | Insurance | 1,134 | 386,067 | |||||||||||
Swiss Prime Site AG | Real Estate Management & Development | 2,562 | 250,891 | |||||||||||
Swiss Re AG | Insurance | 9,492 | 731,459 | |||||||||||
Swisscom AG | Diversified Telecommunication Services | 868 | 466,677 | |||||||||||
Temenos AG | Software | 2,044 | 268,083 | |||||||||||
UBS Group AG | Capital Markets | 111,916 | 1,046,346 | |||||||||||
Vifor Pharma AG | Pharmaceuticals | 1,526 | 210,948 | |||||||||||
Zurich Insurance Group AG | Insurance | 4,620 | 1,639,717 | |||||||||||
|
| |||||||||||||
Total Investments | 33,914,440 | |||||||||||||
Other Assets, less Liabilities 0.9% | 298,093 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 34,212,533 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
| 288 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Switzerland ETF(continued)
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Index Contracts | ||||||||||||||||||||
Swiss Mid Cap | Long | 8 | $ | 177,686 | 6/19/20 | $ | 18,917 | |||||||||||||
*As of period end.
See Note 8 regarding other derivative information.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 289 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Taiwan ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 24.72 | $ | 26.34 | $ | 25.59 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment income (loss)c | 0.89 | 0.47 | (0.02 | ) | ||||||||
Net realized and unrealized gains (losses) | (1.56 | ) | (1.85 | ) | 0.77 | |||||||
|
| |||||||||||
Total from investment operations | (0.67 | ) | (1.38 | ) | 0.75 | |||||||
|
| |||||||||||
Less distributions from net investment income | (0.87 | ) | (0.24 | ) | (— | )d | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 23.18 | $ | 24.72 | $ | 26.34 | ||||||
|
| |||||||||||
Total returne | (3.29)% | (5.15)% | 2.93% | |||||||||
| Ratios to average net assetsf | ||||||||||||
Total expenses | 0.19% | 0.19% | 0.19% | |||||||||
Net investment income (loss) | 3.39% | 1.96% | (0.19)% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $13,906 | $14,834 | $5,268 | |||||||||
Portfolio turnover rateg | 12.57% | h | 8.71% | 3.63% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.001 per share.
eTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
hPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 12.57%.
| 290 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.7% | ||||||||||||||
| Taiwan 99.7% | ||||||||||||||
Accton Technology Corp. | Communications Equipment | 16,000 | $ | 86,239 | ||||||||||
Acer Inc. | Technology Hardware, Storage & Peripherals | 84,000 | 43,331 | |||||||||||
Advantech Co. Ltd. | Technology Hardware, Storage & Peripherals | 11,000 | 90,753 | |||||||||||
ASE Industrial Holding Co. Ltd. | Semiconductors & Semiconductor Equipment | 102,000 | 197,649 | |||||||||||
Asia Cement Corp. | Construction Materials | 69,000 | 89,896 | |||||||||||
Asustek Computer Inc. | Technology Hardware, Storage & Peripherals | 21,000 | 142,007 | |||||||||||
AU Optronics Corp. | Electronic Equipment, Instruments & Components | 264,000 | 55,346 | |||||||||||
Capital Securities Corp. | Capital Markets | 63,000 | 19,541 | |||||||||||
Catcher Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 22,000 | 142,222 | |||||||||||
Cathay Financial Holding Co. Ltd. | Insurance | 249,000 | 290,650 | |||||||||||
Chailease Holding Co. Ltd. | Diversified Financial Services | 36,080 | 109,165 | |||||||||||
Chang Hwa Commercial Bank Ltd. | Banks | 189,000 | 119,057 | |||||||||||
Cheng Shin Rubber Industry Co. Ltd. | Auto Components | 54,000 | 54,997 | |||||||||||
Chicony Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 18,030 | 45,192 | |||||||||||
China Airlines Ltd. | Airlines | 69,000 | 15,082 | |||||||||||
China Development Financial Holding Corp. | Insurance | 417,000 | 102,314 | |||||||||||
| a | China Life Insurance Co. Ltd. | Insurance | 87,000 | 48,475 | ||||||||||
China Motor Corp. | Automobiles | 9,000 | 7,410 | |||||||||||
China Steel Corp. | Metals & Mining | 369,000 | 231,224 | |||||||||||
Chunghwa Telecom Co. Ltd. | Diversified Telecommunication Services | 114,000 | 405,238 | |||||||||||
Compal Electronics Inc. | Technology Hardware, Storage & Peripherals | 123,000 | 70,364 | |||||||||||
CTBC Financial Holding Co. Ltd. | Banks | 546,000 | 323,178 | |||||||||||
Delta Electronics, Inc. | Electronic Equipment, Instruments & Components | 66,000 | 262,983 | |||||||||||
E.Sun Financial Holding Co. Ltd. | Banks | 330,000 | 264,620 | |||||||||||
Eclat Textile Co. Ltd. | Textiles, Apparel & Luxury Goods | 6,000 | 47,716 | |||||||||||
Epistar Corp. | Semiconductors & Semiconductor Equipment | 30,000 | 25,594 | |||||||||||
Eternal Materials Co. Ltd. | Chemicals | 30,630 | 22,840 | |||||||||||
EVA Airways Corp. | Airlines | 69,000 | 20,284 | |||||||||||
| a | Evergreen Marine Corp. Taiwan Ltd. | Marine | 72,035 | 22,033 | ||||||||||
Far Eastern International Bank | Banks | 63,000 | 20,936 | |||||||||||
Far Eastern New Century Corp. | Industrial Conglomerates | 117,000 | 87,243 | |||||||||||
Far EasTone Telecommunications Co. Ltd. | Wireless Telecommunication Services | 48,000 | 100,471 | |||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 11,000 | 47,286 | |||||||||||
First Financial Holding Co. Ltd. | Banks | 294,000 | 191,032 | |||||||||||
Formosa Chemicals & Fibre Corp. | Chemicals | 102,000 | 225,981 | |||||||||||
Formosa Petrochemical Corp. | Oil, Gas & Consumable Fuels | 42,000 | 113,050 | |||||||||||
Formosa Plastics Corp. | Chemicals | 147,000 | 365,051 | |||||||||||
Formosa Taffeta Co. Ltd. | Textiles, Apparel & Luxury Goods | 30,000 | 30,554 | |||||||||||
Foxconn Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 33,000 | 54,015 | |||||||||||
Fubon Financial Holding Co. Ltd. | Insurance | 222,000 | 275,651 | |||||||||||
Giant Manufacturing Co. Ltd. | Leisure Equipment & Products | 9,000 | 39,879 | |||||||||||
Globalwafers Co. Ltd. | Semiconductors & Semiconductor Equipment | 6,300 | 71,038 | |||||||||||
Hon Hai Precision Industry Co. Ltd. | Electronic Equipment, Instruments & Components | 357,000 | 825,167 | |||||||||||
Hotai Motor Co. Ltd. | Specialty Retail | 9,480 | 153,917 | |||||||||||
HTC Corp. | Technology Hardware, Storage & Peripherals | 21,000 | 19,721 | |||||||||||
Hua Nan Financial Holdings Co. Ltd. | Banks | 273,000 | 162,943 | |||||||||||
Innolux Corp. | Electronic Equipment, Instruments & Components | 258,000 | 44,619 | |||||||||||
Inventec Corp. | Technology Hardware, Storage & Peripherals | 90,000 | 69,342 | |||||||||||
Largan Precision Co. Ltd. | Electronic Equipment, Instruments & Components | 3,060 | 387,540 | |||||||||||
Lite-On Technology Corp. | Technology Hardware, Storage & Peripherals | 63,000 | 86,037 | |||||||||||
MediaTek Inc. | Semiconductors & Semiconductor Equipment | 44,000 | 476,498 | |||||||||||
Mega Financial Holding Co. Ltd. | Banks | 327,000 | 307,629 | |||||||||||
Nan Ya Plastics Corp. | Chemicals | 168,000 | 303,874 | |||||||||||
Nanya Technology Corp. | Semiconductors & Semiconductor Equipment | 24,000 | 42,617 | |||||||||||
Novatek Microelectronics Corp. Ltd. | Semiconductors & Semiconductor Equipment | 17,000 | 96,688 | |||||||||||
| a | OBI Pharma, Inc. | Biotechnology | 4,194 | 9,625 | ||||||||||
Oriental Union Chemical Corp. | Chemicals | 21,000 | 9,895 | |||||||||||
| franklintempleton.com | Annual Report | 291 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE Taiwan ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Taiwan (continued) | ||||||||||||||
Pegatron Corp. | Technology Hardware, Storage & Peripherals | 60,000 | $ | 115,074 | ||||||||||
Pou Chen Corp. | Textiles, Apparel & Luxury Goods | 78,000 | 66,157 | |||||||||||
President Chain Store Corp. | Food & Staples Retailing | 16,600 | 155,343 | |||||||||||
Quanta Computer Inc. | Technology Hardware, Storage & Peripherals | 81,000 | 161,242 | |||||||||||
Realtek Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 14,000 | 101,152 | |||||||||||
Shin Kong Financial Holding Co. Ltd. | Insurance | 342,008 | 86,289 | |||||||||||
SinoPac Financial Holdings Co. Ltd. | Banks | 312,040 | 114,017 | |||||||||||
Synnex Technology International Corp. | Electronic Equipment, Instruments & Components | 42,000 | 51,595 | |||||||||||
Taishin Financial Holding Co. Ltd. | Banks | 303,114 | 117,270 | |||||||||||
Taiwan Business Bank | Banks | 141,000 | 45,179 | |||||||||||
Taiwan Cement Corp. | Construction Materials | 144,000 | 188,086 | |||||||||||
Taiwan Cooperative Financial Holding Co. Ltd. | Banks | 279,000 | 169,292 | |||||||||||
Taiwan Fertilizer Co. Ltd. | Chemicals | 21,000 | 29,026 | |||||||||||
Taiwan Glass Industry Corp. | Building Products | 51,000 | 12,463 | |||||||||||
Taiwan High Speed Rail Corp. | Transportation Infrastructure | 63,000 | 59,893 | |||||||||||
Taiwan Mobile Co. Ltd. | Wireless Telecommunication Services | 48,000 | 158,564 | |||||||||||
Taiwan Secom Co. Ltd. | Commercial Services & Supplies | 9,000 | 24,374 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 304,000 | 2,754,361 | |||||||||||
Teco Electric & Machinery Co. Ltd. | Electrical Equipment | 54,000 | 43,034 | |||||||||||
The Shanghai Commercial & Savings Bank Ltd. | Banks | 99,000 | 128,818 | |||||||||||
| a | TPK Holding Co. Ltd. | Electronic Equipment, Instruments & Components | 9,000 | 10,312 | ||||||||||
Transcend Information, Inc. | Technology Hardware, Storage & Peripherals | 9,000 | 19,791 | |||||||||||
U-Ming Marine Transport Corp. | Marine | 12,000 | 10,317 | |||||||||||
Uni-President Enterprises Corp. | Food Products | 144,000 | 312,365 | |||||||||||
Unimicron Technology Corp. | Electronic Equipment, Instruments & Components | 39,000 | 41,268 | |||||||||||
United Microelectronics Corp. | Semiconductors & Semiconductor Equipment | 333,000 | 150,305 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 27,000 | 52,944 | |||||||||||
Walsin Lihwa Corp. | Electrical Equipment | 93,000 | 33,828 | |||||||||||
Walsin Technology Corp. | Electronic Equipment, Instruments & Components | 15,000 | 79,857 | |||||||||||
Wan Hai Lines Ltd. | Marine | 24,000 | 10,912 | |||||||||||
Win Semiconductors Corp. | Semiconductors & Semiconductor Equipment | 12,000 | 104,558 | |||||||||||
Wistron Corp. | Technology Hardware, Storage & Peripherals | 81,000 | 65,622 | |||||||||||
Wiwynn Corp. | Technology Hardware, Storage & Peripherals | 2,500 | 58,033 | |||||||||||
Yageo Corp. | Electronic Equipment, Instruments & Components | 12,000 | 108,923 | |||||||||||
Yuanta Financial Holding Co. Ltd. | Diversified Financial Services | 333,000 | 171,227 | |||||||||||
Yulon Motor Co. Ltd. | Automobiles | 27,000 | 13,124 | |||||||||||
Yulon Nissan Motor Co. Ltd. | Automobiles | 1,000 | 7,639 | |||||||||||
Zhen Ding Technology Holding Ltd. | Electronic Equipment, Instruments & Components | 18,000 | 55,354 | |||||||||||
|
| |||||||||||||
Total Investments | 13,861,307 | |||||||||||||
Other Assets, less Liabilities 0.3% | 44,523 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 13,905,830 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
aNon-income producing.
| 292 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE United Kingdom ETF
| Year Ended March 31, | ||||||||||||
| 2020 | 2019 | 2018a | ||||||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||||||
Net asset value, beginning of year | $ | 24.23 | $ | 25.23 | $ | 24.89 | ||||||
|
| |||||||||||
| Income from investment operationsb: |
| |||||||||||
Net investment incomec | 1.08 | 1.05 | 0.38 | |||||||||
Net realized and unrealized gains (losses) | (6.30 | ) | (1.21 | ) | 0.07 | |||||||
|
| |||||||||||
Total from investment operations | (5.22 | ) | (0.16 | ) | 0.45 | |||||||
|
| |||||||||||
Less distributions from net investment income | (1.09 | ) | (0.84 | ) | (0.11 | ) | ||||||
|
| |||||||||||
Net asset value, end of year | $ | 17.92 | $ | 24.23 | $ | 25.23 | ||||||
|
| |||||||||||
Total returnd | (22.42)% | (0.51)% | 1.80% | |||||||||
| Ratios to average net assetse | ||||||||||||
Total expenses | 0.09% | 0.09% | 0.09% | |||||||||
Net investment income | 4.84% | 4.46% | 3.68% | |||||||||
| Supplemental data | ||||||||||||
Net assets, end of year (000’s) | $89,624 | $29,076 | $2,523 | |||||||||
Portfolio turnover ratef | 4.41% | g | 10.10% | 1.61% | ||||||||
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year, except fornon-recurring expenses, if any.
fPortfolio turnover rate excludes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 4.41%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 293 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin FTSE United Kingdom ETF
| Industry | Shares | Value | ||||||||||||
| Common Stocks 99.0% | ||||||||||||||
| Australia 2.7% | ||||||||||||||
Rio Tinto PLC | Metals & Mining | 53,300 | $ | 2,457,532 | ||||||||||
|
| |||||||||||||
| Germany 0.1% | ||||||||||||||
TUI AG | Hotels, Restaurants & Leisure | 21,100 | 94,919 | |||||||||||
|
| |||||||||||||
| Ireland 1.9% | ||||||||||||||
CRH PLC | Construction Materials | 38,600 | 1,052,009 | |||||||||||
Flutter Entertainment PLC | Hotels, Restaurants & Leisure | 3,700 | 334,360 | |||||||||||
Smurfit Kappa Group PLC | Containers & Packaging | 11,500 | 326,541 | |||||||||||
|
| |||||||||||||
| 1,712,910 | ||||||||||||||
|
| |||||||||||||
| Kazakhstan 0.1% | ||||||||||||||
KAZ Minerals PLC | Metals & Mining | 10,600 | 46,160 | |||||||||||
|
| |||||||||||||
| Netherlands 0.5% | ||||||||||||||
| a,b,c | Just Eat Takeaway, 144A, Reg S | Internet & Direct Marketing Retail | 5,300 | 398,247 | ||||||||||
|
| |||||||||||||
| Russia 0.4% | ||||||||||||||
Evraz PLC | Metals & Mining | 26,400 | 75,814 | |||||||||||
Polymetal International PLC | Metals & Mining | 16,400 | 280,524 | |||||||||||
|
| |||||||||||||
| 356,338 | ||||||||||||||
|
| |||||||||||||
| South Africa 0.1% | ||||||||||||||
Investec PLC | Capital Markets | 32,200 | 60,648 | |||||||||||
|
| |||||||||||||
| Switzerland 1.1% | ||||||||||||||
Coca-Cola HBC AG | Beverages | 9,400 | 202,456 | |||||||||||
Glencore PLC | Metals & Mining | 525,200 | 806,213 | |||||||||||
|
| |||||||||||||
| 1,008,669 | ||||||||||||||
|
| |||||||||||||
| United Arab Emirates 0.0%† | ||||||||||||||
NMC Health PLC | Health Care Providers & Services | 3,705 | 5,128 | |||||||||||
|
| |||||||||||||
| United Kingdom 92.0% | ||||||||||||||
3i Group PLC | Capital Markets | 46,200 | 453,817 | |||||||||||
Admiral Group PLC | Insurance | 10,000 | 276,509 | |||||||||||
Anglo American PLC | Metals & Mining | 59,800 | 1,050,247 | |||||||||||
Antofagasta PLC | Metals & Mining | 16,800 | 161,025 | |||||||||||
Ashmore Group PLC | Capital Markets | 22,100 | 97,774 | |||||||||||
Ashtead Group PLC | Trading Companies & Distributors | 21,800 | 477,231 | |||||||||||
Associated British Foods PLC | Food Products | 16,900 | 380,127 | |||||||||||
AstraZeneca PLC | Pharmaceuticals | 63,600 | 5,690,598 | |||||||||||
Auto Trader Group PLC | Interactive Media & Services | 44,000 | 239,563 | |||||||||||
Avast PLC | Software | 26,300 | 128,291 | |||||||||||
AVEVA Group PLC | Software | 3,100 | 134,304 | |||||||||||
Aviva PLC | Insurance | 189,300 | 630,230 | |||||||||||
B&M European Value Retail SA | Multiline Retail | 42,900 | 146,709 | |||||||||||
Babcock International Group PLC | Commercial Services & Supplies | 12,300 | 58,443 | |||||||||||
BAE Systems PLC | Aerospace & Defense | 155,200 | 1,004,153 | |||||||||||
Barclays PLC | Banks | 833,300 | 972,392 | |||||||||||
Barratt Developments PLC | Household Durables | 48,900 | 267,394 | |||||||||||
Bellway PLC | Household Durables | 6,000 | 160,400 | |||||||||||
BHP Group PLC | Metals & Mining | 100,800 | 1,564,837 | |||||||||||
BP PLC | Oil, Gas & Consumable Fuels | 965,800 | 4,121,946 | |||||||||||
British American Tobacco PLC | Tobacco | 110,700 | 3,787,072 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs | ) | 45,100 | 188,009 | ||||||||||
BT Group PLC | Diversified Telecommunication Services | 423,500 | 619,115 | |||||||||||
Bunzl PLC | Trading Companies & Distributors | 16,300 | 329,341 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 19,500 | 320,251 | |||||||||||
Centrica PLC | Multi-Utilities | 282,400 | 133,342 | |||||||||||
Cineworld Group PLC | Entertainment | 48,500 | 29,846 | |||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 76,800 | 1,203,684 | |||||||||||
| 294 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE United Kingdom ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| United Kingdom (continued) | ||||||||||||||
ConvaTec Group PLC | Health Care Equipment & Supplies | 70,900 | $ | 163,957 | ||||||||||
Croda International PLC | Chemicals | 6,000 | 317,824 | |||||||||||
DCC PLC | Industrial Conglomerates | 4,800 | 303,540 | |||||||||||
Derwent London PLC | Equity Real Estate Investment Trusts (REITs | ) | 4,900 | 198,677 | ||||||||||
Diageo PLC | Beverages | 111,800 | 3,585,573 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 66,700 | 244,723 | |||||||||||
DS Smith PLC | Containers & Packaging | 61,800 | 211,036 | |||||||||||
easyJet PLC | Airlines | 9,400 | 66,553 | |||||||||||
Experian PLC | Professional Services | 44,000 | 1,228,096 | |||||||||||
Ferguson PLC | Trading Companies & Distributors | 11,000 | 689,611 | |||||||||||
Fresnillo PLC | Metals & Mining | 8,900 | 73,585 | |||||||||||
G4S PLC | Commercial Services & Supplies | 75,200 | 86,065 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 237,600 | 4,462,196 | |||||||||||
GVC Holdings PLC | Hotels, Restaurants & Leisure | 28,100 | 195,467 | |||||||||||
Halma PLC | Electronic Equipment, Instruments & Components | 18,400 | 438,278 | |||||||||||
Hargreaves Lansdown PLC | Capital Markets | 14,800 | 254,349 | |||||||||||
Hikma Pharmaceuticals PLC | Pharmaceuticals | 6,800 | 171,584 | |||||||||||
Hiscox Ltd. | Insurance | 13,500 | 154,839 | |||||||||||
HomeServe PLC | Commercial Services & Supplies | 13,200 | 173,167 | |||||||||||
Howden Joinery Group PLC | Trading Companies & Distributors | 28,000 | 177,759 | |||||||||||
HSBC Holdings PLC | Banks | 981,700 | 5,529,400 | |||||||||||
IMI PLC | Machinery | 13,000 | 120,476 | |||||||||||
Imperial Brands PLC | Tobacco | 46,200 | 857,452 | |||||||||||
Inchcape PLC | Distributors | 19,400 | 104,206 | |||||||||||
Informa PLC | Media | 60,400 | 331,476 | |||||||||||
InterContinental Hotels Group PLC | Hotels, Restaurants & Leisure | 8,800 | 383,596 | |||||||||||
Intermediate Capital Group PLC | Capital Markets | 13,500 | 150,068 | |||||||||||
International Consolidated Airlines Group SA | Airlines | 21,700 | 57,877 | |||||||||||
Intertek Group PLC | Professional Services | 7,800 | 457,080 | |||||||||||
ITV PLC | Media | 180,600 | 147,842 | |||||||||||
J Sainsbury PLC | Food & Staples Retailing | 78,700 | 205,317 | |||||||||||
JD Sports Fashion PLC | Specialty Retail | 20,800 | 118,045 | |||||||||||
John Wood Group PLC | Energy Equipment & Services | 32,100 | 61,952 | |||||||||||
Johnson Matthey PLC | Chemicals | 9,200 | 205,108 | |||||||||||
Kingfisher PLC | Specialty Retail | 102,300 | 182,533 | |||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 34,500 | 238,190 | ||||||||||
Legal & General Group PLC | Insurance | 287,000 | 689,846 | |||||||||||
Lloyds Banking Group PLC | Banks | 3,389,900 | 1,345,058 | |||||||||||
London Stock Exchange Group PLC | Capital Markets | 15,200 | 1,372,079 | |||||||||||
| a | M&G PLC | Diversified Financial Services | 126,000 | 175,919 | ||||||||||
Marks & Spencer Group PLC | Multiline Retail | 94,600 | 116,408 | |||||||||||
Meggitt PLC | Aerospace & Defense | 37,600 | 135,344 | |||||||||||
Melrose Industries PLC | Electrical Equipment | 233,400 | 264,805 | |||||||||||
Micro Focus International PLC | Software | 15,900 | 78,861 | |||||||||||
Mondi PLC | Paper & Forest Products | 23,500 | 402,407 | |||||||||||
National Grid PLC | Multi-Utilities | 168,600 | 1,978,920 | |||||||||||
Next PLC | Multiline Retail | 6,200 | 313,043 | |||||||||||
| a | Ninety One PLC | Capital Markets | 15,952 | 34,199 | ||||||||||
| a | Ocado Group PLC | Internet & Direct Marketing Retail | 21,900 | 331,290 | ||||||||||
Pearson PLC | Media | 37,200 | 254,893 | |||||||||||
Pennon Group PLC | Water Utilities | 20,300 | 273,231 | |||||||||||
Persimmon PLC | Household Durables | 15,400 | 365,960 | |||||||||||
Phoenix Group Holdings PLC | Insurance | 25,500 | 198,123 | |||||||||||
Prudential PLC | Insurance | 126,000 | 1,617,800 | |||||||||||
Quilter PLC | Capital Markets | 90,500 | 132,414 | |||||||||||
Reckitt Benckiser Group PLC | Household Products | 30,500 | 2,325,837 | |||||||||||
RELX PLC | Professional Services | 91,100 | 1,956,458 | |||||||||||
Renishaw PLC | Electronic Equipment, Instruments & Components | 1,700 | 66,694 | |||||||||||
| franklintempleton.com | Annual Report | 295 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE United Kingdom ETF(continued)
| Industry | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| United Kingdom (continued) | ||||||||||||||
Rentokil Initial PLC | Commercial Services & Supplies | 89,700 | $ | 431,325 | ||||||||||
Rightmove PLC | Interactive Media & Services | 42,400 | 256,245 | |||||||||||
Rolls-Royce Holdings PLC | Aerospace & Defense | 83,500 | 352,643 | |||||||||||
Royal Bank of Scotland Group PLC | Banks | 220,200 | 308,259 | |||||||||||
Royal Dutch Shell PLC, A | Oil, Gas & Consumable Fuels | 200,000 | 3,518,979 | |||||||||||
Royal Dutch Shell PLC, B | Oil, Gas & Consumable Fuels | 181,700 | 3,063,615 | |||||||||||
RSA Insurance Group PLC | Insurance | 49,900 | 260,116 | |||||||||||
Schroders PLC | Capital Markets | 5,400 | 166,322 | |||||||||||
Segro PLC | | Equity Real Estate Investment Trusts (REITs | ) | 52,800 | 500,186 | |||||||||
Severn Trent PLC | Water Utilities | 11,500 | 325,115 | |||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 42,400 | 754,172 | |||||||||||
Smiths Group PLC | Industrial Conglomerates | 19,200 | 291,874 | |||||||||||
Spirax-Sarco Engineering PLC | Machinery | 3,600 | 364,471 | |||||||||||
SSE PLC | Electric Utilities | 50,200 | 812,304 | |||||||||||
St. James’s Place Capital PLC | Capital Markets | 25,400 | 239,234 | |||||||||||
Standard Chartered PLC | Banks | 127,600 | 705,334 | |||||||||||
Standard Life Aberdeen PLC | Capital Markets | 112,400 | 312,050 | |||||||||||
Tate & Lyle PLC | Food Products | 22,700 | 184,644 | |||||||||||
Taylor Wimpey PLC | Household Durables | 157,600 | 229,614 | |||||||||||
Tesco PLC | Food & Staples Retailing | 469,000 | 1,330,556 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 5,700 | 255,498 | |||||||||||
The Sage Group PLC | Software | 52,700 | 386,714 | |||||||||||
Travis Perkins PLC | Trading Companies & Distributors | 12,200 | 133,514 | |||||||||||
Unilever PLC | Personal Products | 52,800 | 2,668,204 | |||||||||||
United Utilities Group PLC | Water Utilities | 33,100 | 370,530 | |||||||||||
| a | Virgin Money UK PLC | Banks | 59,900 | 46,049 | ||||||||||
Vodafone Group PLC | Wireless Telecommunication Services | 1,301,500 | 1,823,589 | |||||||||||
Weir Group PLC | Machinery | 12,600 | 112,645 | |||||||||||
Whitbread PLC | Hotels, Restaurants & Leisure | 6,500 | 244,208 | |||||||||||
William Morrison Supermarkets PLC | Food & Staples Retailing | 107,000 | 236,161 | |||||||||||
WPP PLC | Media | 58,200 | 397,918 | |||||||||||
|
| |||||||||||||
| 82,485,824 | ||||||||||||||
|
| |||||||||||||
| United States 0.1% | ||||||||||||||
Carnival PLC | Hotels,Restaurants & Leisure | 7,400 | 90,050 | |||||||||||
|
| |||||||||||||
Total Investments | 88,716,425 | |||||||||||||
|
| |||||||||||||
Other Assets, less Liabilities 1.0% | 907,759 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 89,624,184 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 351.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the value of this security was $398,247, representing 0.4% of net assets.
cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $398,247, representing 0.4% of net assets.
| 296 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin FTSE United Kingdom ETF(continued)
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Equity Contracts | ||||||||||||||||||||
FTSE 100 Index | Long | 13 | $ | 908,406 | 6/19/20 | $ | 77,270 | |||||||||||||
*As of period end.
See Note 8 regarding other derivative information.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 297 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
March 31, 2020
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 18,205,698 | $ | 11,774,833 | $ | 196,823,499 | $ | 6,365,137 | ||||||||
Cost –Non-controlled affiliates (Note 3c) | 5,040 | — | — | — | ||||||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers+ | $ | 14,650,177 | $ | 7,811,389 | $ | 102,437,504 | $ | 4,863,699 | ||||||||
Value –Non-controlled affiliates (Note 3c) | 5,040 | — | — | — | ||||||||||||
Cash | 1,555 | — | — | 807 | ||||||||||||
Foreign currency, at value (cost $13,438, $28,235, $22,297 and $11,787, respectively) | 13,394 | 28,108 | 22,065 | 11,880 | ||||||||||||
Receivables: | ||||||||||||||||
Dividends and interest | 49,342 | 37,428 | 696,318 | 12,232 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | 22 | — | 39,359 | — | ||||||||||||
|
| |||||||||||||||
Total assets | 14,719,530 | 7,876,925 | 103,195,246 | 4,888,618 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | — | 6,044 | — | 12,182 | ||||||||||||
Management fees | 2,454 | 659 | 20,322 | 417 | ||||||||||||
Variation margin on futures contracts | — | — | 3,490 | — | ||||||||||||
Funds advanced by custodian | — | 49,946 | 471,890 | — | ||||||||||||
Payable upon return of securities loaned | 5,040 | — | — | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 7,494 | 56,649 | 495,702 | 12,599 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 14,712,036 | $ | 7,820,276 | $ | 102,699,544 | $ | 4,876,019 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 18,898,409 | $ | 11,782,341 | $ | 211,873,922 | $ | 6,459,960 | ||||||||
Total distributable earnings (loss) | (4,186,373 | ) | (3,962,065 | ) | (109,174,378 | ) | (1,583,941 | ) | ||||||||
|
| |||||||||||||||
Net assets, at value | $ | 14,712,036 | $ | 7,820,276 | $ | 102,699,544 | $ | 4,876,019 | ||||||||
|
| |||||||||||||||
Shares outstanding | 800,000 | 450,000 | 7,100,000 | 250,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 18.39 | $ | 17.38 | $ | 14.46 | $ | 19.50 | ||||||||
|
| |||||||||||||||
+Includes securities loaned | 4,878 | — | — | — | ||||||||||||
| 298 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities(continued)
March 31, 2020
| Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 51,152,443 | $ | 113,955,446 | $ | 5,195,476 | $ | 11,454,628 | ||||||||
Cost –Non-controlled affiliates (Note 3c) | 29,400 | — | 1 | — | ||||||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers+ | $ | 48,800,261 | $ | 90,723,746 | $ | 3,756,696 | $ | 8,684,148 | ||||||||
Value –Non-controlled affiliates (Note 3c) | 29,400 | — | 1 | — | ||||||||||||
Cash | 4,056 | 76,190 | — | — | ||||||||||||
Foreign currency, at value (cost $9,609, $171,960, $13,520 and $6,043, respectively) | 9,613 | 173,864 | 13,667 | 6,142 | ||||||||||||
Receivables: | ||||||||||||||||
Dividends and interest++ | 336 | 314,488 | 38,263 | 12,171 | ||||||||||||
Variation margin on futures contracts | — | 4,871 | — | — | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | — | 69,149 | 11,766 | — | ||||||||||||
Unrealized appreciation on OTC forward exchange contracts | — | — | 105,667 | — | ||||||||||||
|
| |||||||||||||||
Total assets | 48,843,666 | 91,362,308 | 3,926,060 | 8,702,461 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Cash deposit due to brokers | 36 | — | — | — | ||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | — | — | 27,364 | — | ||||||||||||
Management fees | 7,111 | 6,074 | 293 | 689 | ||||||||||||
Variation margin on futures contracts | — | — | 5,566 | — | ||||||||||||
Funds advanced by custodian | — | — | 7,036 | 263 | ||||||||||||
Payable upon return of securities loaned | 29,400 | — | — | — | ||||||||||||
Unrealized depreciation on OTC forward exchange contracts | — | — | 54,816 | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 36,547 | 6,074 | 95,075 | 952 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 48,807,119 | $ | 91,356,234 | $ | 3,830,985 | $ | 8,701,509 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 55,669,122 | $ | 115,126,451 | $ | 5,713,922 | $ | 11,504,245 | ||||||||
Total distributable earnings (loss) | (6,862,003 | ) | (23,770,217 | ) | (1,882,937 | ) | (2,802,736 | ) | ||||||||
|
| |||||||||||||||
Net assets, at value | $ | 48,807,119 | $ | 91,356,234 | $ | 3,830,985 | $ | 8,701,509 | ||||||||
|
| |||||||||||||||
Shares outstanding | 2,200,000 | 4,800,000 | 200,000 | 450,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 22.19 | $ | 19.03 | $ | 19.15 | $ | 19.34 | ||||||||
|
| |||||||||||||||
+Includes securities loaned | 28,455 | — | — | — | ||||||||||||
++Includes European Union tax reclaims | $ | — | $ | 181,241 | $ | 32,327 | $ | 821 | ||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 299 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities(continued)
March 31, 2020
| Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 5,682,244 | $ | 18,647,955 | $ | 11,426,059 | $ | 3,522,911 | ||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers | $ | 4,179,793 | $ | 15,342,036 | $ | 8,763,847 | $ | 2,640,380 | ||||||||
Cash | — | 11,840 | 17,699 | 156 | ||||||||||||
Foreign currency, at value (cost $2,902, $24,521, $7,317 and $843, respectively) | 2,940 | 24,521 | 7,245 | 848 | ||||||||||||
Receivables: | ||||||||||||||||
Dividends and interest | — | 47,596 | 193 | 421 | ||||||||||||
Variation margin on futures contracts | — | 577 | 582 | — | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | — | 7,976 | 1,980 | 8 | ||||||||||||
|
| |||||||||||||||
Total assets | 4,182,733 | 15,434,546 | 8,791,546 | 2,641,813 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Management fees | 328 | 1,229 | 1,592 | 493 | ||||||||||||
Funds advanced by custodian | 305 | — | — | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 633 | 1,229 | 1,592 | 493 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 4,182,100 | $ | 15,433,317 | $ | 8,789,954 | $ | 2,641,320 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 5,794,408 | $ | 18,826,786 | $ | 12,053,336 | $ | 3,728,641 | ||||||||
Total distributable earnings (loss) | (1,612,308 | ) | (3,393,469 | ) | (3,263,382 | ) | (1,087,321 | ) | ||||||||
|
| |||||||||||||||
Net assets, at value | $ | 4,182,100 | $ | 15,433,317 | $ | 8,789,954 | $ | 2,641,320 | ||||||||
|
| |||||||||||||||
Shares outstanding | 250,000 | 750,000 | 550,000 | 150,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 16.73 | $ | 20.58 | $ | 15.98 | $ | 17.61 | ||||||||
|
| |||||||||||||||
| 300 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities(continued)
March 31, 2020
| Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 391,126,755 | $ | 5,376,088 | $ | 2,555,597 | $ | 4,447,432 | ||||||||
Cost –Non-controlled affiliates (Note 3c) | 124,941 | — | — | — | ||||||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers | $ | 311,631,698 | $ | 4,204,422 | $ | 1,512,368 | $ | 2,865,896 | ||||||||
Value –Non-controlled affiliates (Note 3c) | 124,941 | — | — | — | ||||||||||||
Cash | — | — | — | 434 | ||||||||||||
Foreign currency, at value (cost $730,645, $6,801, $8,975 and $4,246, respectively) | 738,919 | 6,935 | 8,817 | 4,339 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 34,862 | — | — | — | ||||||||||||
Dividends and interest | 3,521,941 | 47,834 | 7,740 | 494 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | 336,140 | 4,501 | 984 | — | ||||||||||||
Unrealized appreciation on OTC forward exchange contracts | — | 15,884 | — | — | ||||||||||||
|
| |||||||||||||||
Total assets | 316,388,501 | 4,279,576 | 1,529,909 | 2,871,163 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 220 | — | — | — | ||||||||||||
Management fees | 24,483 | 318 | 293 | 543 | ||||||||||||
Variation margin on futures contracts | 296,304 | 4,622 | 87 | — | ||||||||||||
Funds advanced by custodian | 216,838 | 292 | 9,161 | — | ||||||||||||
Unrealized depreciation on OTC forward exchange contracts | — | 4,950 | — | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 537,845 | 10,182 | 9,541 | 543 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 315,850,656 | $ | 4,269,394 | $ | 1,520,368 | $ | 2,870,620 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 395,966,563 | $ | 6,975,249 | $ | 2,619,441 | $ | 4,836,326 | ||||||||
Total distributable earnings (loss) | (80,115,907 | ) | (2,705,855 | ) | (1,099,073 | ) | (1,965,706 | ) | ||||||||
|
| |||||||||||||||
Net assets, at value | $ | 315,850,656 | $ | 4,269,394 | $ | 1,520,368 | $ | 2,870,620 | ||||||||
|
| |||||||||||||||
Shares outstanding | 14,400,000 | 200,000 | 100,000 | 200,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 21.93 | $ | 21.35 | $ | 15.20 | $ | 14.35 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 301 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities(continued)
March 31, 2020
| Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 15,785,963 | $ | 2,435,550 | $ | 2,360,764 | $ | 17,123,396 | ||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers | $ | 13,236,216 | $ | 2,015,025 | $ | 1,478,527 | $ | 11,349,424 | ||||||||
Cash | 3,089 | — | — | — | ||||||||||||
Foreign currency, at value (cost $-, $3,278, $2,284 and $15,401, respectively) | — | 3,278 | 2,529 | 15,666 | ||||||||||||
Receivables: | ||||||||||||||||
Dividends and interest | 2,574 | 16,287 | 798 | 196,502 | ||||||||||||
Variation margin on futures contracts | — | — | — | 4,431 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | — | — | — | 29,531 | ||||||||||||
|
| |||||||||||||||
Total assets | 13,241,879 | 2,034,590 | 1,481,854 | 11,595,554 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Management fees | 2,184 | 669 | 275 | 898 | ||||||||||||
Funds advanced by custodian | — | 18,844 | 275 | 32,385 | ||||||||||||
|
| |||||||||||||||
Total liabilities | 2,184 | 19,513 | 550 | 33,283 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 13,239,695 | $ | 2,015,077 | $ | 1,481,304 | $ | 11,562,271 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 16,206,684 | $ | 2,482,525 | $ | 2,441,624 | $ | 21,044,528 | ||||||||
Total distributable earnings (loss) | (2,966,989 | ) | (467,448 | ) | (960,320 | ) | (9,482,257 | ) | ||||||||
|
| |||||||||||||||
Net assets, at value | $ | 13,239,695 | $ | 2,015,077 | $ | 1,481,304 | $ | 11,562,271 | ||||||||
|
| |||||||||||||||
Shares outstanding | 700,000 | 100,000 | 100,000 | 700,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 18.91 | $ | 20.15 | $ | 14.81 | $ | 16.52 | ||||||||
|
| |||||||||||||||
| 302 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities(continued)
March 31, 2020
| Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | ||||||||||
Assets: | ||||||||||||
Investments in securities: | ||||||||||||
Cost – Unaffiliated issuers | $ | 38,233,037 | $ | 14,184,770 | $ | 118,603,881 | ||||||
|
| |||||||||||
Value – Unaffiliated issuers | $ | 33,914,440 | $ | 13,861,307 | $ | 88,716,425 | ||||||
Cash | — | 6,738 | 84,363 | |||||||||
Foreign currency, at value (cost $150,406, $19,548 and $260,485, respectively) | 151,963 | 19,575 | 261,766 | |||||||||
Receivables: | ||||||||||||
Capital shares sold | — | — | 2,694,989 | |||||||||
Dividends and interest | 154,593 | 20,572 | 416,773 | |||||||||
Variation margin on futures contracts | 10,806 | — | 13,059 | |||||||||
Deposits with brokers for: | ||||||||||||
Futures contracts | 32,559 | 4 | 105,308 | |||||||||
|
| |||||||||||
Total assets | 34,264,361 | 13,908,196 | 92,292,683 | |||||||||
|
| |||||||||||
Liabilities: | ||||||||||||
Payables: | ||||||||||||
Investment securities purchased | — | — | 2,661,336 | |||||||||
Management fees | 2,648 | 2,366 | 7,163 | |||||||||
Funds advanced by custodian | 49,180 | — | — | |||||||||
|
| |||||||||||
Total liabilities | 51,828 | 2,366 | 2,668,499 | |||||||||
|
| |||||||||||
Net assets, at value | $ | 34,212,533 | $ | 13,905,830 | $ | 89,624,184 | ||||||
|
| |||||||||||
Net assets consist of: | ||||||||||||
Paid-in capital | $ | 38,353,403 | $ | 14,383,078 | $ | 119,525,004 | ||||||
Total distributable earnings (loss) | (4,140,870 | ) | (477,248 | ) | (29,900,820 | ) | ||||||
|
| |||||||||||
Net assets, at value | $ | 34,212,533 | $ | 13,905,830 | $ | 89,624,184 | ||||||
|
| |||||||||||
Shares outstanding | 1,400,000 | 600,000 | 5,000,000 | |||||||||
|
| |||||||||||
Net asset value per share | $ | 24.44 | $ | 23.18 | $ | 17.92 | ||||||
|
| |||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 303 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the year ended March 31, 2020
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 427,820 | $ | 478,638 | $ | 2,893,711 | $ | 158,016 | ||||||||
Interest: | ||||||||||||||||
Unaffiliated issuers | — | — | 36,809 | — | ||||||||||||
Interest from securities loaned: (Note 1d) | ||||||||||||||||
Unaffiliated issuers (net of fees and rebates) | 125 | — | — | — | ||||||||||||
Non-Controlled affiliates (Note 3c) | 32 | — | — | — | ||||||||||||
|
| |||||||||||||||
Total investment income | 427,977 | 478,638 | 2,930,520 | 158,016 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 32,418 | 9,862 | 124,056 | 5,037 | ||||||||||||
Other | 17 | — | 26,842 | — | ||||||||||||
|
| |||||||||||||||
Total expenses | 32,435 | 9,862 | 150,898 | 5,037 | ||||||||||||
Expenses waived/paid by affiliates (Note 3c) | (120 | ) | — | — | — | |||||||||||
|
| |||||||||||||||
Net investment income | 395,662 | 468,776 | 2,779,622 | 152,979 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (408,157 | ) | (133,821 | ) | (5,569,980 | ) | (83,607 | ) | ||||||||
In-kind redemptions | — | 339,724 | — | 118,870 | ||||||||||||
Foreign currency transactions | (2,718 | ) | (2,860 | ) | (186,689 | ) | (742 | ) | ||||||||
Futures contracts | (2,901 | ) | — | (779,044 | ) | — | ||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (413,776 | ) | 203,043 | (6,535,713 | ) | 34,521 | ||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (2,369,455 | ) | (3,512,210 | ) | (95,412,983 | ) | (1,426,842 | ) | ||||||||
Translation of other assets and liabilities denominated in foreign currencies | (918 | ) | (2,616 | ) | (161,233 | ) | 13 | |||||||||
Futures contracts | (519 | ) | — | (7,118 | ) | — | ||||||||||
Change in deferred taxes on unrealized appreciation | 16,641 | — | — | — | ||||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (2,354,251 | ) | (3,514,826 | ) | (95,581,334 | ) | (1,426,829 | ) | ||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (2,768,027 | ) | (3,311,783 | ) | (102,117,047 | ) | (1,392,308 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (2,372,365 | ) | $ | (2,843,007 | ) | $ | (99,337,425 | ) | $ | (1,239,329 | ) | ||||
|
| |||||||||||||||
aForeign taxes withheld on dividends | $ | 47,315 | $ | 8,304 | $ | 316,932 | $ | 27,863 | ||||||||
|
| |||||||||||||||
| 304 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations(continued)
for the year ended March 31, 2020
| Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 863,614 | $ | 2,824,408 | $ | 150,396 | $ | 104,690 | ||||||||
Interest: | ||||||||||||||||
Unaffiliated issuers | — | — | 49 | — | ||||||||||||
Interest from securities loaned: (Note 1d) | ||||||||||||||||
Unaffiliated issuers (net of fees and rebates) | 100 | 462 | — | — | ||||||||||||
Non-Controlled affiliates (Note 3c) | 46 | 27 | — | — | ||||||||||||
|
| |||||||||||||||
Total investment income | 863,760 | 2,824,897 | 150,445 | 104,690 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 76,892 | 76,634 | 4,245 | 4,223 | ||||||||||||
Other | — | 124 | 141 | — | ||||||||||||
|
| |||||||||||||||
Total expenses | 76,892 | 76,758 | 4,386 | 4,223 | ||||||||||||
Expenses waived/paid by affiliates (Note 3c) | (23 | ) | (5 | ) | (107 | ) | — | |||||||||
|
| |||||||||||||||
Net investment income | 786,891 | 2,748,144 | 146,166 | 100,467 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (3,862,227 | ) | (866,247 | ) | (84,088 | ) | (37,186 | ) | ||||||||
In-kind redemptions | — | 2,479,647 | — | — | ||||||||||||
Foreign currency transactions | 11,657 | (9,711 | ) | 19,141 | (124 | ) | ||||||||||
Futures contracts | (1,415 | ) | (59,156 | ) | 1,517 | 965 | ||||||||||
Forwards exchange contracts | — | — | 379,425 | — | ||||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (3,851,985 | ) | 1,544,533 | 315,995 | (36,345 | ) | ||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | 686,179 | (16,721,041 | ) | (728,926 | ) | (2,635,072 | ) | |||||||||
Translation of other assets and liabilities denominated in foreign currencies | 74 | 7,284 | 1,474 | 40 | ||||||||||||
Futures contracts | — | 30,567 | 2,646 | — | ||||||||||||
Forward exchange contracts | — | — | (174,949 | ) | — | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | 686,253 | (16,683,190 | ) | (899,755 | ) | (2,635,032 | ) | |||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (3,165,732 | ) | (15,138,657 | ) | (583,760 | ) | (2,671,377 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (2,378,841 | ) | $ | (12,390,513 | ) | $ | (437,594 | ) | $ | (2,570,910 | ) | ||||
|
| |||||||||||||||
aForeign taxes withheld on dividends | $ | 68,724 | $ | 294,928 | $ | 17,605 | $ | 17,738 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 305 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations(continued)
for the year ended March 31, 2020
| Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 112,365 | $ | 578,087 | $ | 164,987 | $ | 431,940 | ||||||||
Interest: | ||||||||||||||||
Unaffiliated issuers | — | — | — | 28 | ||||||||||||
|
| |||||||||||||||
Total investment income | 112,365 | 578,087 | 164,987 | 431,968 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 3,973 | 16,321 | 22,558 | 9,862 | ||||||||||||
Other | — | — | 187 | 9 | ||||||||||||
|
| |||||||||||||||
Total expenses | 3,973 | 16,321 | 22,745 | 9,871 | ||||||||||||
|
| |||||||||||||||
Net investment income | 108,392 | 561,766 | 142,242 | 422,097 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (95,313 | ) | (105,985 | ) | (523,841 | ) | (154,859 | ) | ||||||||
In-kind redemptions | — | 464,882 | — | (1,529,558 | ) | |||||||||||
Foreign currency transactions | (7 | ) | 447 | (56,980 | ) | (462 | ) | |||||||||
Futures contracts | — | (12,094 | ) | (23,933 | ) | 799 | ||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (95,320 | ) | 347,250 | (604,754 | ) | (1,684,080 | ) | |||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (983,867 | ) | (5,058,405 | ) | (2,767,432 | ) | (1,387,615 | ) | ||||||||
Translation of other assets and liabilities denominated in foreign currencies | 74 | 67 | 58 | 140 | ||||||||||||
Futures contracts | — | 5,668 | 1,262 | — | ||||||||||||
Change in deferred taxes on unrealized appreciation | — | — | 38,391 | — | ||||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (983,793 | ) | (5,052,670 | ) | (2,727,721 | ) | (1,387,475 | ) | ||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (1,079,113 | ) | (4,705,420 | ) | (3,332,475 | ) | (3,071,555 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (970,721 | ) | $ | (4,143,654 | ) | $ | (3,190,233 | ) | $ | (2,649,458 | ) | ||||
|
| |||||||||||||||
aForeign taxes withheld on dividends | $ | 17,794 | $ | 366 | $ | 9 | $ | 62,109 | ||||||||
|
| |||||||||||||||
| 306 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations(continued)
for the year ended March 31, 2020
| Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 6,216,439 | $ | 110,231 | $ | 82,601 | $ | 136,872 | ||||||||
Non-controlled affiliates (Note 3c) | 2,560 | 444 | — | — | ||||||||||||
Interest from securities loaned: (Note 1d) | ||||||||||||||||
Unaffiliated issuers (net of fees and rebates) | 2,971 | — | — | — | ||||||||||||
Non-Controlled affiliates (Note 3c) | 1,658 | — | — | — | ||||||||||||
|
| |||||||||||||||
Total investment income | 6,223,628 | 110,675 | 82,601 | 136,872 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 233,888 | 5,919 | 4,935 | 8,320 | ||||||||||||
Other | 1,520 | 74 | 442 | 37 | ||||||||||||
|
| |||||||||||||||
Total expenses | 235,408 | 5,993 | 5,377 | 8,357 | ||||||||||||
Expenses waived/paid by affiliates (Note 3c) | (760 | ) | (93 | ) | — | — | ||||||||||
|
| |||||||||||||||
Net investment income | 5,988,980 | 104,775 | 77,224 | 128,515 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (2,461,195 | ) | (124,393 | ) | (56,809 | ) | (297,359 | ) | ||||||||
In-kind redemptions | 2,168,597 | (1,341,580 | ) | — | — | |||||||||||
Foreign currency transactions | 56,393 | 1,492 | (3,142 | ) | (250 | ) | ||||||||||
Futures contracts | 142,382 | (6,469 | ) | (50 | ) | 127 | ||||||||||
Forwards exchange contracts | — | (128,377 | ) | — | — | |||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (93,823 | ) | (1,599,327 | ) | (60,001 | ) | (297,482 | ) | ||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (46,805,217 | ) | 1,019,595 | (1,044,708 | ) | (1,248,053 | ) | |||||||||
Translation of other assets and liabilities denominated in foreign currencies | 21,284 | 455 | (1,533 | ) | 200 | |||||||||||
Futures contracts | (56,914 | ) | 1,589 | (1,060 | ) | — | ||||||||||
Forward exchange contracts | — | (8,107 | ) | — | — | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (46,840,847 | ) | 1,013,532 | (1,047,301 | ) | (1,247,853 | ) | |||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (46,934,670 | ) | (585,795 | ) | (1,107,302 | ) | (1,545,335 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (40,945,690 | ) | $ | (481,020 | ) | $ | (1,030,078 | ) | $ | (1,416,820 | ) | ||||
|
| |||||||||||||||
aForeign taxes withheld on dividends | $ | 690,749 | $ | 12,314 | $ | 7,569 | $ | 6,930 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 307 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations(continued)
for the year ended March 31, 2020
| Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 1,055,230 | $ | 99,475 | $ | 270,263 | $ | 271,646 | ||||||||
Interest from securities loaned: (Note 1d) | ||||||||||||||||
Unaffiliated issuers (net of fees and rebates) | (323 | ) | — | — | 3,981 | |||||||||||
Non-Controlled affiliates (Note 3c) | 681 | — | — | 281 | ||||||||||||
|
| |||||||||||||||
Total investment income | 1,055,588 | 99,475 | 270,263 | 275,908 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 30,030 | 10,070 | 4,838 | 13,293 | ||||||||||||
Other | — | — | — | 36 | ||||||||||||
|
| |||||||||||||||
Total expenses | 30,030 | 10,070 | 4,838 | 13,329 | ||||||||||||
Expenses waived/paid by affiliates (Note 3c) | (133 | ) | — | — | (66 | ) | ||||||||||
|
| |||||||||||||||
Net investment income | 1,025,691 | 89,405 | 265,425 | 262,645 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (208,625 | ) | (62,727 | ) | (84,552 | ) | (2,042,442 | ) | ||||||||
Foreign currency transactions | (8,692 | ) | (75 | ) | (995 | ) | 17,539 | |||||||||
Futures contracts | — | — | — | (6,694 | ) | |||||||||||
Forwards exchange contracts | — | (58 | ) | — | — | |||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (217,317 | ) | (62,860 | ) | (85,547 | ) | (2,031,597 | ) | ||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (3,085,796 | ) | (717,503 | ) | (1,090,949 | ) | (1,639,777 | ) | ||||||||
Translation of other assets and liabilities denominated in foreign currencies | 174 | (4 | ) | 79 | (3,461 | ) | ||||||||||
Futures contracts | — | — | — | (16,486 | ) | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (3,085,622 | ) | (717,507 | ) | (1,090,870 | ) | (1,659,724 | ) | ||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (3,302,939 | ) | (780,367 | ) | (1,176,417 | ) | (3,691,321 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (2,277,248 | ) | $ | (690,962 | ) | $ | (910,992 | ) | $ | (3,428,676 | ) | ||||
|
| |||||||||||||||
aForeign taxes withheld on dividends | $ | 118,715 | $ | 3,822 | $ | 11,914 | $ | 53,072 | ||||||||
|
| |||||||||||||||
| 308 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations(continued)
for the year ended March 31, 2020
| Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | ||||||||||
Investment income: | ||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||
Unaffiliated issuers | $ | 442,635 | $ | 562,171 | $ | 1,864,275 | ||||||
Interest: | ||||||||||||
Unaffiliated issuers | 7 | 56 | — | |||||||||
|
| |||||||||||
Total investment income | 442,642 | 562,227 | 1,864,275 | |||||||||
|
| |||||||||||
Expenses: | ||||||||||||
Management fees (Note 3a) | 9,456 | 29,853 | 34,029 | |||||||||
Other | — | 375 | 128 | |||||||||
|
| |||||||||||
Total expenses | 9,456 | 30,228 | 34,157 | |||||||||
|
| |||||||||||
Net investment income | 433,186 | 531,999 | 1,830,118 | |||||||||
|
| |||||||||||
Realized and unrealized gains (losses): | ||||||||||||
Net realized gain (loss) from: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (200,968 | ) | (80,205 | ) | (699,579 | ) | ||||||
In-kind redemptions | 61,171 | — | (870,010 | ) | ||||||||
Foreign currency transactions | (3,356 | ) | (573 | ) | (17,147 | ) | ||||||
Futures contracts | (1,942 | ) | 13,729 | (222,075 | ) | |||||||
|
| |||||||||||
Net realized gain (loss) | (145,095 | ) | (67,049 | ) | (1,808,811 | ) | ||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (4,270,914 | ) | (872,169 | ) | (29,710,450 | ) | ||||||
Translation of other assets and liabilities denominated in foreign currencies | 2,086 | 159 | (1,643 | ) | ||||||||
Futures contracts | 25,928 | — | 70,468 | |||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) | (4,242,900 | ) | (872,010 | ) | (29,641,625 | ) | ||||||
|
| |||||||||||
Net realized and unrealized gain (loss) | (4,387,995 | ) | (939,059 | ) | (31,450,436 | ) | ||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (3,954,809 | ) | $ | (407,060 | ) | $ | (29,620,318 | ) | |||
|
| |||||||||||
aForeign taxes withheld on dividends | $ | 77,269 | $ | 150,814 | $ | 25,528 | ||||||
|
| |||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 309 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 395,662 | $ | 382,992 | $ | 468,776 | $ | 374,062 | ||||||||
Net realized gain (loss) | (413,776 | ) | (215,726 | ) | 203,043 | 392,801 | ||||||||||
Net change in unrealized appreciation (depreciation) | (2,354,251 | ) | (1,187,115 | ) | (3,514,826 | ) | (276,343 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (2,372,365 | ) | (1,019,849 | ) | (2,843,007 | ) | 490,520 | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (403,670 | ) | (370,953 | ) | (500,460 | ) | (242,641 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | 9,428,138 | 3,774,628 | 4,674,690 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (2,776,035 | ) | 8,037,336 | 431,161 | 4,922,569 | |||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 17,488,071 | 9,450,735 | 7,389,115 | 2,466,546 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 14,712,036 | $ | 17,488,071 | $ | 7,820,276 | $ | 7,389,115 | ||||||||
|
| |||||||||||||||
| 310 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 2,779,622 | $ | 831,596 | $ | 152,979 | $ | 110,177 | ||||||||
Net realized gain (loss) | (6,535,713 | ) | (9,920,956 | ) | 34,521 | (143,008 | ) | |||||||||
Net change in unrealized appreciation (depreciation) | (95,581,334 | ) | 950,677 | (1,426,829 | ) | 91,259 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (99,337,425 | ) | (8,138,683 | ) | (1,239,329 | ) | 58,428 | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (1,076,875 | ) | (923,263 | ) | (139,563 | ) | (95,664 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 182,535,019 | (14,952,279 | ) | 1,428,015 | 2,487,064 | |||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 82,120,719 | (24,014,225 | ) | 49,123 | 2,449,828 | |||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 20,578,825 | 44,593,050 | 4,826,896 | 2,377,068 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 102,699,544 | $ | 20,578,825 | $ | 4,876,019 | $ | 4,826,896 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 311 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE China ETF | Franklin FTSE Europe ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 786,891 | $ | 576,193 | $ | 2,748,144 | $ | 3,116,118 | ||||||||
Net realized gain (loss) | (3,851,985 | ) | (603,039 | ) | 1,544,533 | (1,055,832 | ) | |||||||||
Net change in unrealized appreciation (depreciation) | 686,253 | (1,780,744 | ) | (16,683,190 | ) | (5,306,884 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (2,378,841 | ) | (1,807,590 | ) | (12,390,513 | ) | (3,246,598 | ) | ||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (787,837 | ) | (584,365 | ) | (2,821,950 | ) | (3,141,008 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 8,753,375 | 14,421,020 | 32,209,377 | (24,163,732 | ) | |||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 5,586,697 | 12,029,065 | 16,996,914 | (30,551,338 | ) | |||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 43,220,422 | 31,191,357 | 74,359,320 | 104,910,658 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 48,807,119 | $ | 43,220,422 | $ | 91,356,234 | $ | 74,359,320 | ||||||||
|
| |||||||||||||||
| 312 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 146,166 | $ | 1,007,339 | $ | 100,467 | $ | 70,225 | ||||||||
Net realized gain (loss) | 315,995 | (619,268 | ) | (36,345 | ) | (13,591 | ) | |||||||||
Net change in unrealized appreciation (depreciation) | (899,755 | ) | 581,744 | (2,635,032 | ) | (134,495 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (437,594 | ) | 969,815 | (2,570,910 | ) | (77,861 | ) | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (294,228 | ) | (3,462,145 | ) | (86,176 | ) | (68,766 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | (26,372,741 | ) | 8,972,173 | — | |||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (731,822 | ) | (28,865,071 | ) | 6,315,087 | (146,627 | ) | |||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 4,562,807 | 33,427,878 | 2,386,422 | 2,533,049 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 3,830,985 | $ | 4,562,807 | $ | 8,701,509 | $ | 2,386,422 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 313 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 108,392 | $ | 74,153 | $ | 561,766 | $ | 329,771 | ||||||||
Net realized gain (loss) | (95,320 | ) | (26,064 | ) | 347,250 | (82,452 | ) | |||||||||
Net change in unrealized appreciation (depreciation) | (983,793 | ) | (420,241 | ) | (5,052,670 | ) | 1,512,009 | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (970,721 | ) | (372,152 | ) | (4,143,654 | ) | 1,759,328 | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (114,909 | ) | (59,669 | ) | (569,121 | ) | (273,434 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 1,127,565 | 2,111,997 | 28,395 | 10,779,669 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 41,935 | 1,680,176 | (4,684,380 | ) | 12,265,563 | |||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 4,140,165 | 2,459,989 | 20,117,697 | 7,852,134 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 4,182,100 | $ | 4,140,165 | $ | 15,433,317 | $ | 20,117,697 | ||||||||
|
| |||||||||||||||
| 314 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 142,242 | $ | 70,302 | $ | 422,097 | $ | 117,532 | ||||||||
Net realized gain (loss) | (604,754 | ) | (78,187 | ) | (1,684,080 | ) | (226,842 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (2,727,721 | ) | 175,178 | (1,387,475 | ) | 433,507 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (3,190,233 | ) | 167,293 | (2,649,458 | ) | 324,197 | ||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (83,995 | ) | (47,624 | ) | (414,228 | ) | (91,568 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 5,057,008 | 4,613,517 | (4,705,377 | ) | 7,550,898 | |||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 1,782,780 | 4,733,186 | (7,769,063 | ) | 7,783,527 | |||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 7,007,174 | 2,273,988 | 10,410,383 | 2,626,856 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 8,789,954 | $ | 7,007,174 | $ | 2,641,320 | $ | 10,410,383 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 315 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 5,988,980 | $ | 5,403,894 | $ | 104,775 | $ | 618,951 | ||||||||
Net realized gain (loss) | (93,823 | ) | 1,361,394 | (1,599,327 | ) | (379,945 | ) | |||||||||
Net change in unrealized appreciation (depreciation) | (46,840,847 | ) | (27,193,949 | ) | 1,013,532 | (1,905,925 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (40,945,690 | ) | (20,428,661 | ) | (481,020 | ) | (1,666,919 | ) | ||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (5,496,937 | ) | (3,317,982 | ) | — | (2,263,375 | ) | |||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 72,087,879 | 217,869,864 | (9,119,221 | ) | (27,397,137 | ) | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 25,645,252 | 194,123,221 | (9,600,241 | ) | (31,327,431 | ) | ||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 290,205,404 | 96,082,183 | 13,869,635 | 45,197,066 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 315,850,656 | $ | 290,205,404 | $ | 4,269,394 | $ | 13,869,635 | ||||||||
|
| |||||||||||||||
| 316 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019a | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 77,224 | $ | 37,946 | $ | 128,515 | $ | 79,171 | ||||||||
Net realized gain (loss) | (60,001 | ) | (5,596 | ) | (297,482 | ) | (72,084 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (1,047,301 | ) | 834 | (1,247,853 | ) | (350,568 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (1,030,078 | ) | 33,184 | (1,416,820 | ) | (343,481 | ) | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (90,264 | ) | (11,915 | ) | (134,178 | ) | (78,632 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | 2,619,441 | — | 2,346,009 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (1,120,342 | ) | 2,640,710 | (1,550,998 | ) | 1,923,896 | ||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 2,640,710 | — | 4,421,618 | 2,497,722 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 1,520,368 | $ | 2,640,710 | $ | 2,870,620 | $ | 4,421,618 | ||||||||
|
| |||||||||||||||
aFor the period October 9, 2018 (commencement of operations) to March 31, 2019.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 317 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019a | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 1,025,691 | $ | 319,495 | $ | 89,405 | $ | 11,269 | ||||||||
Net realized gain (loss) | (217,317 | ) | (76,440 | ) | (62,860 | ) | (1,893 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (3,085,622 | ) | 499,491 | (717,507 | ) | 296,978 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (2,277,248 | ) | 742,546 | (690,962 | ) | 306,354 | ||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (1,112,109 | ) | (307,541 | ) | (82,840 | ) | — | |||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 4,946,037 | 8,824,329 | — | 2,482,525 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 1,556,680 | 9,259,334 | (773,802 | ) | 2,788,879 | |||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 11,683,015 | 2,423,681 | 2,788,879 | — | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 13,239,695 | $ | 11,683,015 | $ | 2,015,077 | $ | 2,788,879 | ||||||||
|
| |||||||||||||||
aFor the period October 9, 2018 (commencement of operations) to March 31, 2019.
| 318 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019a | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 265,425 | $ | 21,691 | $ | 262,645 | $ | 378,016 | ||||||||
Net realized gain (loss) | (85,547 | ) | (4,371 | ) | (2,031,597 | ) | (1,589,948 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (1,090,870 | ) | 208,803 | (1,659,724 | ) | (3,252,311 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (910,992 | ) | 226,123 | (3,428,676 | ) | (4,464,243 | ) | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (269,501 | ) | (5,950 | ) | (322,884 | ) | (340,269 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | 2,441,624 | (1,634,635 | ) | (4,227,746 | ) | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (1,180,493 | ) | 2,661,797 | (5,386,195 | ) | (9,032,258 | ) | |||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 2,661,797 | — | 16,948,466 | 25,980,724 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 1,481,304 | $ | 2,661,797 | $ | 11,562,271 | $ | 16,948,466 | ||||||||
|
| |||||||||||||||
aFor the period October 10, 2018 (commencement of operations) to March 31, 2019.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 319 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 433,186 | $ | 57,316 | $ | 531,999 | $ | 158,804 | ||||||||
Net realized gain (loss) | (145,095 | ) | (119,463 | ) | (67,049 | ) | (103,534 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (4,242,900 | ) | 18,957 | (872,010 | ) | 400,486 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (3,954,809 | ) | (43,190 | ) | (407,060 | ) | 455,756 | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (65,702 | ) | (60,937 | ) | (520,726 | ) | (144,725 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 35,847,030 | 179,347 | — | 9,254,307 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 31,826,519 | 75,220 | (927,786 | ) | 9,565,338 | |||||||||||
Net assets: |
| |||||||||||||||
Beginning of year | 2,386,014 | 2,310,794 | 14,833,616 | 5,268,278 | ||||||||||||
|
| |||||||||||||||
End of year (Note 1f) | $ | 34,212,533 | $ | 2,386,014 | $ | 13,905,830 | $ | 14,833,616 | ||||||||
|
| |||||||||||||||
| 320 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets(continued)
| Franklin FTSE United Kingdom ETF | ||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||
Increase (decrease) in net assets: |
| |||||||
Operations: |
| |||||||
Net investment income | $ | 1,830,118 | $ | 633,075 | ||||
Net realized gain (loss) | (1,808,811 | ) | 680,822 | |||||
Net change in unrealized appreciation (depreciation) | (29,641,625 | ) | (181,708 | ) | ||||
|
| |||||||
Net increase (decrease) in net assets resulting from operations | (29,620,318 | ) | 1,132,189 | |||||
|
| |||||||
Distributions to shareholders (Note 1f) | (1,337,064 | ) | (324,863 | ) | ||||
|
| |||||||
Capital share transactions: (Note 2) | 91,505,345 | 25,746,068 | ||||||
|
| |||||||
Net increase (decrease) in net assets | 60,547,963 | 26,553,394 | ||||||
Net assets: |
| |||||||
Beginning of year | 29,076,221 | 2,522,827 | ||||||
|
| |||||||
End of year (Note 1f) | $ | 89,624,184 | $ | 29,076,221 | ||||
|
| |||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 321 | ||||
FRANKLIN TEMPLETON ETF TRUST
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting offorty-two separate funds, twenty-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). Each of the Funds are an exchange traded fund (ETF) and seek to provide the investment results that closely correspond, before fees and expenses, to the performance of each Fund’s corresponding underlying index.
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 as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. 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 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. London 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.
Certain derivative financial instruments are centrally cleared or trade in the OTC market. The Funds’ 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 Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
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. 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 anon-business day, certain foreign markets may be open on those days that
| 322 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
a. Financial Instrument Valuation(continued)
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 significant 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. Derivative Financial Instruments
Certain or all Funds 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 Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. Certain or all Funds attempt to reduce their 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 Funds include failure of the Funds 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 thenon-defaulting party the right to net andclose-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 Statements of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement.
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. 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
| franklintempleton.com | Annual Report | 323 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
c. Derivative Financial Instruments(continued)
and/or received by the Fund, 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 Funds’ 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 counterpartynon-performance.
Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to equity price 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 Statements of Assets and Liabilities.
Certain or all Funds 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.
See Note 8 regarding other derivative information.
d. Securities Lending
Certain or all Funds participate in an agency based securities lending program to earn additional income. The Fund receives cash collateral 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. The collateral 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. 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 the 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.
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 March 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 theex-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 theex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded
| 324 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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.
For the year ended March 31, 2019, distributions to shareholders were as follows:
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Distributions from net investment income: | $ | (370,953 | ) | $ | (242,641 | ) | $ | (923,263 | ) | $ | (95,664 | ) | ||||
Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged | Franklin FTSE France ETF | |||||||||||||
Distributions from net investment income: | $ | (584,365 | ) | $ | (3,141,008 | ) | $ | (3,462,145 | ) | $ | (68,766 | ) | ||||
Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Distributions from net investment income: | $ | (59,669 | ) | $ | (273,434 | ) | $ | (47,624 | ) | (91,568 | ) | |||||
Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged | Franklin FTSE Latin America | Franklin FTSE Mexico ETF | |||||||||||||
Distributions from net investment income: | $ | (3,317,982 | ) | $ | (2,263,375 | ) | $ | (11,915 | ) | $ | (78,632 | ) | ||||
Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia | Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||
Distributions from net investment income: | $ | (307,541 | ) | $ | — | $ | (5,950 | ) | $ | (340,269 | ) | |||||
Franklin FTSE | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom | ||||||||||||||
Distributions from net investment income: | $ | (60,937 | ) | $ | (144,725 | ) | $ | (324,863 | ) | |||||||
For the year ended March 31, 2019, undistributed net investment income, distributions in excess of net investment income, and accumulated net investment loss included in net assets were as follows:
| Fund | Undistributed net investment income | Distribution in excess of net investment income | Accumulated net investment loss | |||||||||
Franklin FTSE Asia ex Japan ETF | $ | 16,688 | $ | — | $ | — | ||||||
Franklin FTSE Australia ETF | 172,520 | — | — | |||||||||
Franklin FTSE Brazil ETF | 200,193 | — | — | |||||||||
Franklin FTSE Canada ETF | 29,245 | — | — | |||||||||
| franklintempleton.com | Annual Report | 325 | ||||
1. Organization and Significant Accounting Policies(continued)
f. Security Transactions, Investment Income, Expenses and Distributions(continued)
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
f. Security Transactions, Investment Income, Expenses and Distributions(continued)
| Fund | Undistributed net investment income | Distribution in excess of net investment income | Accumulated net investment loss | |||||||||
Franklin FTSE China ETF | $ | — | $ | (19,065 | ) | $ | — | |||||
Franklin FTSE Europe ETF | 589,782 | — | — | |||||||||
Franklin FTSE Europe Hedged ETF | — | (103 | ) | — | ||||||||
Franklin FTSE France ETF | 3,535 | — | — | |||||||||
Franklin FTSE Germany ETF | 18,761 | — | — | |||||||||
Franklin FTSE Hong Kong ETF | 84,248 | — | — | |||||||||
Franklin FTSE India ETF | 18,951 | — | — | |||||||||
Franklin FTSE Italy ETF | 30,969 | — | — | |||||||||
Franklin FTSE Japan ETF | 2,854,317 | — | — | |||||||||
Franklin FTSE Japan Hedged ETF | — | (257,591 | ) | — | ||||||||
Franklin FTSE Latin America ETF | 25,461 | — | — | |||||||||
Franklin FTSE Mexico ETF | 5,792 | — | — | |||||||||
Franklin FTSE Russia ETF | 11,613 | — | — | |||||||||
Franklin FTSE Saudi Arabia ETF | 9,546 | — | — | |||||||||
Franklin FTSE South Africa ETF | 15,557 | — | — | |||||||||
Franklin FTSE South Korea ETF | 39,728 | — | — | |||||||||
Franklin FTSE Switzerland ETF | 18,255 | — | — | |||||||||
Franklin FTSE Taiwan ETF | — | (697 | ) | — | ||||||||
Franklin FTSE United Kingdom ETF | 340,278 | — | — | |||||||||
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. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense. These expenses are paid by the Funds or by the investment manager, as applicable, according to the terms of the unified management fee agreement.
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 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.
| 326 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specified number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At March 31, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| Franklin FTSE Asia ex Japan ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 400,000 | $ | 9,428,138 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | 400,000 | $ | 9,428,138 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Australia ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 250,000 | $ | 6,380,606 | 500,000 | $ | 12,241,732 | ||||||||||||||
Shares redeemed | (100,000 | ) | (2,605,978 | ) | (300,000 | ) | (7,567,042 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 150,000 | $ | 3,774,628 | 200,000 | $ | 4,674,690 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Brazil ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 6,800,000 | $ | 194,991,129 | 300,000 | $ | 7,431,063 | ||||||||||||||
Shares redeemed | (500,000 | ) | (12,456,110 | ) | (1,100,000 | ) | (22,383,342 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 6,300,000 | $ | 182,535,019 | (800,000 | ) | $ | (14,952,279 | ) | ||||||||||||
|
| |||||||||||||||||||
| franklintempleton.com | Annual Report | 327 | �� | |||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest(continued)
| Franklin FTSE Canada ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 100,000 | $ | 2,645,197 | 200,000 | $ | 4,802,307 | ||||||||||||||
Shares redeemed | (50,000 | ) | (1,217,182 | ) | (100,000 | ) | (2,315,243 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 50,000 | $ | 1,428,015 | 100,000 | $ | 2,487,064 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE China ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 600,000 | $ | 13,290,874 | 600,000 | $ | 14,421,020 | ||||||||||||||
Shares redeemed | (200,000 | ) | (4,537,499 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 400,000 | $ | 8,753,375 | 600,000 | $ | 14,421,020 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Europe ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 3,600,000 | $ | 79,020,679 | — | $ | — | ||||||||||||||
Shares redeemed | (2,000,000 | ) | (46,811,302 | ) | (1,000,000 | ) | (24,163,732 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 1,600,000 | $ | 32,209,377 | (1,000,000 | ) | $ | (24,163,732 | ) | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Europe Hedged ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares redeemed | — | $ | — | (1,200,000 | ) | $ | (26,372,741 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | (1,200,000 | ) | $ | (26,372,741 | ) | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE France ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 350,000 | $ | 8,972,173 | — | $ | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 350,000 | $ | 8,972,173 | — | $ | — | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Germany ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 50,000 | $ | 1,127,565 | 100,000 | $ | 2,111,997 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 50,000 | $ | 1,127,565 | 100,000 | $ | 2,111,997 | ||||||||||||||
|
| |||||||||||||||||||
| 328 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest(continued)
| Franklin FTSE Hong Kong ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 300,000 | $ | 7,218,089 | 450,000 | $ | 10,779,669 | ||||||||||||||
Shares redeemed | (300,000 | ) | (7,189,694 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | $ | 28,395 | 450,000 | $ | 10,779,669 | |||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE India ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 400,000 | $ | 8,528,590 | 200,000 | $ | 4,613,517 | ||||||||||||||
Shares redeemed | (150,000 | ) | (3,471,582 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 250,000 | $ | 5,057,008 | 200,000 | $ | 4,613,517 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Italy ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 50,000 | $ | 1,118,853 | 650,000 | $ | 14,664,447 | ||||||||||||||
Shares redeemed | (350,000 | ) | (5,824,230 | ) | (300,000 | ) | (7,113,549 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (300,000 | ) | $ | (4,705,377 | ) | 350,000 | $ | 7,550,898 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Japan ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 7,800,000 | $ | 202,804,002 | 9,600,000 | $ | 246,910,441 | ||||||||||||||
Shares redeemed | (5,400,000 | ) | (130,716,123 | ) | (1,200,000 | ) | (29,040,577 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 2,400,000 | $ | 72,087,879 | 8,400,000 | $ | 217,869,864 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Japan Hedged ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares redeemed | (400,000 | ) | $ | (9,119,221 | ) | (1,200,000 | ) | $ | (27,397,137 | ) | ||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (400,000 | ) | $ | (9,119,221 | ) | (1,200,000 | ) | $ | (27,397,137 | ) | ||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Latin America ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019a | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 100,000 | $ | 2,619,441 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | 100,000 | $ | 2,619,441 | ||||||||||||||
|
| |||||||||||||||||||
| franklintempleton.com | Annual Report | 329 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest(continued)
| Franklin FTSE Mexico ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 100,000 | $ | 2,346,009 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | 100,000 | $ | 2,346,009 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Russia ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 4,946,037 | 500,000 | $ | 11,087,284 | ||||||||||||||
Shares redeemed | — | — | (100,000 | ) | (2,262,955 | ) | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 200,000 | $ | 4,946,037 | 400,000 | $ | 8,824,329 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Saudi Arabia ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019a | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 100,000 | $ | 2,482,525 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | 100,000 | $ | 2,482,525 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE South Africa ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019b | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 100,000 | $ | 2,441,624 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | 100,000 | $ | 2,441,624 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE South Korea ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 100,000 | $ | 2,002,593 | — | $ | 13,712 | ||||||||||||||
Shares redeemed | (200,000 | ) | (3,637,228 | ) | (200,000 | ) | (4,241,458 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (100,000 | ) | $ | (1,634,635 | ) | (200,000 | ) | $ | (4,227,746 | ) | ||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Switzerland ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 1,400,000 | $ | 37,960,491 | 100,000 | $ | 2,352,537 | ||||||||||||||
Shares redeemed | (100,000 | ) | (2,113,461 | ) | (100,000 | ) | (2,173,190 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 1,300,000 | $ | 35,847,030 | $ | 179,347 | |||||||||||||||
|
| |||||||||||||||||||
| 330 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
2. Shares of Beneficial Interest(continued)
| Franklin FTSE Taiwan ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 400,000 | $ | 9,254,307 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | 400,000 | $ | 9,254,307 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE United Kingdom ETF | ||||||||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 4,800,000 | $ | 111,979,995 | 1,450,000 | $ | 34,027,374 | ||||||||||||||
Shares redeemed | (1,000,000 | ) | (20,474,650 | ) | (350,000 | ) | (8,281,306 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 3,800,000 | $ | 91,505,345 | 1,100,000 | $ | 25,746,068 | ||||||||||||||
|
| |||||||||||||||||||
aFor the period October 9, 2018 (commencement of operations) to March 31, 2019.
bFor the period October 10, 2018 (commencement of operations) to March 31, 2019.
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 Funds are also officers and/or directors of the following subsidiaries:
| Subsidiary | Affiliation | |
Franklin Advisers, Inc (Advisers) | Investment manager | |
Franklin Advisory Services, LLC (FASL) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | |
a. Management Fees
The Funds pay a unified management fee to Advisers whereby Advisers has agreed to reimburse the Funds’ acquired fund fee and expenses (if any) and pay all of the ordinary operating expenses of the Funds, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding payments under the Funds’ Rule12b-1 plan (if any), brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments), taxes, interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto), and othernon-routine or extraordinary expenses. The fees are based on the daily net assets of each of the Funds as follows:
| Annualized Fee Rate | ||
Franklin FTSE Asia ex Japan ETF | 0.19% | |
Franklin FTSE Australia ETF | 0.09% | |
Franklin FTSE Brazil ETF | 0.19% | |
Franklin FTSE Canada ETF | 0.09% | |
Franklin FTSE China ETF | 0.19% | |
Franklin FTSE Europe ETF | 0.09% | |
Franklin FTSE Europe Hedged ETF | 0.09% | |
| franklintempleton.com | Annual Report | 331 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
a. Management Fees(continued)
| Annualized Fee Rate | ||
Franklin FTSE France ETF | 0.09% | |
Franklin FTSE Germany ETF | 0.09% | |
Franklin FTSE Hong Kong ETF | 0.09% | |
Franklin FTSE India ETF | 0.19% | |
Franklin FTSE Italy ETF | 0.09% | |
Franklin FTSE Japan ETF | 0.09% | |
Franklin FTSE Japan Hedged ETF | 0.09% | |
Franklin FTSE Latin America ETF | 0.19% | |
Franklin FTSE Mexico ETF | 0.19% | |
Franklin FTSE Russia ETF | 0.19% | |
Franklin FTSE Saudi Arabia ETF | 0.39% | |
Franklin FTSE South Africa ETF | 0.19% | |
Franklin FTSE South Korea ETF | 0.09% | |
Franklin FTSE Switzerland ETF | 0.09% | |
Franklin FTSE Taiwan ETF | 0.19% | |
Franklin FTSE United Kingdom ETF | 0.09% | |
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. 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 year ended March 31, 2020, investments in affiliated management investment companies were as follows:
| Value at Beginning of Year | Purchases | Sales | Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Value at End of Year | Number of Shares Held at End of Year | Investment Income | |||||||||||||||||||||||||
| Franklin FTSE Asia ex Japan ETF | ||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | | Income from securities loaned | | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | $ | 140,825 | $ | (135,785 | ) | $ | — | $ | — | $ | 5,040 | 5,040 | $ | 32 | ||||||||||||||||
| Franklin FTSE China ETF | ||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | Income from securities loaned | |||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | $ | 390,240 | $ | (360,840 | ) | $ | — | $ | — | $ | 29,400 | 29,400 | $ | 46 | ||||||||||||||||
| 332 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
c. Investments in Affiliated Management Investment Companies(continued)
| Value at Beginning of Year | Purchases | Sales | Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Value at End of Year | Number of Shares Held at End of Year | Investment Income | |||||||||||||||||||||||||
| Franklin FTSE Europe ETF | ||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | | Income from securities loaned | | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | $ | 30,019 | $ | (30,019 | ) | $ | — | $ | — | $ | — | — | $ | 27 | ||||||||||||||||
| Franklin FTSE Europe Hedged ETF | ||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | | Dividend Income | | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | 38 | $ | 176,222 | $ | (176,259 | ) | $ | — | $ | — | $ | 1 | 1 | $ | — | ||||||||||||||||
| Franklin FTSE Japan ETF | ||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | | Dividend Income | | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | 114,341 | $ | 3,704,825 | $ | (3,694,225 | ) | $ | — | $ | — | $ | 124,941 | 124,941 | $ | 2,560 | ||||||||||||||||
| Non-Controlled Affiliates | | Income from securities loaned | | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | 117,035 | $ | 2,129,861 | $ | (2,246,896 | ) | $ | — | $ | — | $ | — | — | $ | 1,658 | ||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total Affiliated Securities | $ | 231,376 | $ | 5,834,686 | $ | (5,941,121 | ) | $ | — | $ | — | $ | 124,941 | 124,941 | $ | 4,218 | ||||||||||||||||
|
| |||||||||||||||||||||||||||||||
| Franklin FTSE Japan Hedged ETF | ||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | | Dividend Income | | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | 28,014 | $ | 133,045 | $ | (161,059 | ) | $ | — | $ | — | $ | — | — | $ | 444 | ||||||||||||||||
| Franklin FTSE Russia ETF | ||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | | Income from securities loaned | | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | $ | 1,728,315 | $ | (1,728,315 | ) | $ | — | $ | — | $ | — | — | $ | 681 | ||||||||||||||||
| Franklin FTSE South Korea ETF | ||||||||||||||||||||||||||||||||
| Non-Controlled Affiliates | | Income from securities loaned | | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 0.32% | $ | — | $ | 223,950 | $ | (223,950 | ) | $ | — | $ | — | $ | — | — | $ | 281 | ||||||||||||||||
| franklintempleton.com | Annual Report | 333 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
d. Other Affiliated Transactions
At March 31, 2020, the shares of the Funds were owned by the following entities:
| Funds | Shares | Percentage of Outstanding Sharesa | ||||||
| Franklin FTSE Brazil ETF | ||||||||
Franklin Resource Inc. | 2,110,000 | 29.7% | ||||||
|
| |||||||
| Franklin FTSE Europe ETF | ||||||||
Franklin Conservative Allocation Fund | 542,880 | 11.3% | ||||||
Franklin Moderate Allocation Fund | 1,321,337 | 27.5% | ||||||
Franklin Growth Allocation Fund | 1,167,000 | 24.3% | ||||||
Franklin LifeSmart™ 2020 – 2055 Retirement Target Funds | 576,220 | 12.0% | ||||||
Franklin 529 Portfolios | 901,550 | 18.8% | ||||||
|
| |||||||
Total | 4,508,987 | 93.9% | ||||||
|
| |||||||
| Franklin FTSE Europe Hedge ETF | ||||||||
Franklin Resource Inc. | 110,000 | 55.0% | ||||||
|
| |||||||
| Franklin FTSE Japan ETF | ||||||||
Franklin 529 Portfolios | 761,136 | 5.3% | ||||||
|
| |||||||
| Franklin FTSE Japan Hedge ETF | ||||||||
Franklin Resources Inc. | 75,000 | 37.5% | ||||||
|
| |||||||
| Franklin FTSE Latin America ETF | ||||||||
Franklin Resource Inc. | 46,000 | 46.0% | ||||||
|
| |||||||
| Franklin FTSE Russia ETF | ||||||||
Franklin Resources Inc. | 80,000 | 11.4% | ||||||
|
| |||||||
| Franklin FTSE Saudi Arabia ETF | ||||||||
Franklin Resources Inc. | 46,000 | 46.0% | ||||||
|
| |||||||
| Franklin FTSE South Africa ETF | ||||||||
Franklin Resources Inc. | 31,000 | 31.0% | ||||||
|
| |||||||
| Franklin FTSE United Kingdom ETF | ||||||||
Franklin Managed Income Fund | 2,000,000 | 40.0% | ||||||
|
| |||||||
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. At March 31, 2020, the capital loss carryforwards were as follows:
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||||||
Long term | $ | 430,651 | $ | 66,544 | $ | 1,261,450 | $ | 74,271 | ||||||||
Short term | 174,730 | 28,847 | 14,433,121 | 40,746 | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 605,381 | $ | 95,391 | $ | 15,694,571 | $ | 115,017 | ||||||||
|
| |||||||||||||||
| 334 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
4. Income Taxes(continued)
| Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||||||
Long term | $ | 3,409,806 | $ | 694,903 | $ | 141,696 | $ | 25,552 | ||||||||
Short term | 634,115 | 202,195 | 275,648 | 19,947 | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 4,043,921 | $ | 897,098 | $ | 417,344 | $ | 45,499 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||||||
Long term | $ | 69,418 | $ | 45,269 | $ | 531,381 | $ | 159,490 | ||||||||
Short term | 27,546 | 68,066 | — | 12,639 | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 96,964 | $ | 113,335 | $ | 531,381 | $ | 172,129 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||||||
Long term | $ | 1,925,069 | $ | 566,970 | $ | 33,641 | $ | 289,134 | ||||||||
Short term | 1,768,589 | 923,873 | 9,886 | 53,017 | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 3,693,658 | $ | 1,490,843 | $ | 43,527 | $ | 342,151 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||||||
Long term | $ | 158,259 | $ | 42,547 | $ | 63,669 | $ | 1,672,354 | ||||||||
Short term | 56,094 | 15,417 | 25,690 | 906,331 | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 214,353 | $ | 57,964 | $ | 89,359 | $ | 2,578,685 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | ||||||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||||||
Long term | $ | 36,215 | $ | 54,844 | $ | 395,355 | ||||||||||
Short term | 163,488 | 44,305 | 164,474 | |||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 199,703 | $ | 99,149 | $ | 559,829 | ||||||||||
|
| |||||||||||||||
For tax purposes, the Funds may elect to defer any portion of late-year ordinary loss to the first day of the following fiscal year. At March 31, 2020, the deferred losses were as follows:
Franklin FTSE Russia ETF | Franklin FTSE South Korea ETF | |||||||
Late-year ordinary losses | $ | (63,961 | ) | $ | (636 | ) | ||
| franklintempleton.com | Annual Report | 335 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
4. Income Taxes(continued)
The tax character of distributions paid during the years ended March 31, 2020 and 2019, were as follows:
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 403,670 | $ | 370,953 | $ | 500,460 | $ | 242,641 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 1,076,875 | $ | 923,263 | $ | 139,563 | $ | 95,664 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE China ETF | Franklin FTSE Europe ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 787,837 | $ | 584,365 | $ | 2,821,950 | $ | 3,141,008 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 294,228 | $ | 1,270,015 | $ | 86,176 | $ | 68,766 | ||||||||||||
Distributions paid from long term gain | — | 2,192,130 | — | — | ||||||||||||||||
|
| |||||||||||||||||||
Total | $ | 294,228 | $ | 3,462,145 | $ | 86,176 | $ | 68,766 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 114,909 | $ | 59,669 | $ | 569,121 | $ | 273,434 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 83,995 | $ | 47,624 | $ | 414,228 | $ | 91,568 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 5,496,937 | $ | 3,317,982 | $ | — | $ | 16,486 | ||||||||||||
Distributions paid from long term gain | — | — | — | 2,246,889 | ||||||||||||||||
|
| |||||||||||||||||||
Total | $ | 5,496,937 | $ | 3,317,982 | $ | — | $ | 2,263,375 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 90,264 | $ | 11,915 | $ | 134,178 | $ | 78,632 | ||||||||||||
|
| |||||||||||||||||||
| 336 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
4. Income Taxes(continued)
| Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 1,112,109 | $ | 307,541 | $ | 82,840 | $ | — | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 269,501 | $ | 5,950 | $ | 322,884 | $ | 340,269 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
Distributions paid from ordinary income | $ | 65,702 | $ | 60,937 | $ | 520,726 | $ | 144,725 | ||||||||||||
|
| |||||||||||||||||||
| Franklin FTSE United Kingdom ETF | ||||||||||||||||||||
| 2020 | 2019 | |||||||||||||||||||
Distributions paid from ordinary income | $ | 1,337,064 | $ | 324,863 | ||||||||||||||||
|
|
|
| |||||||||||||||||
At March 31, 2020, the cost of investments, net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:
Franklin Asia ex Japan | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin Canada | |||||||||||||
Cost of investments | $ | 18,260,839 | $ | 11,858,766 | $ | 197,487,074 | $ | 6,374,601 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 640,351 | $ | 154,956 | $ | 128,055 | $ | 105,657 | ||||||||
Unrealized depreciation | (4,251,013 | ) | (4,202,333 | ) | (95,177,625 | ) | (1,616,559 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (3,610,662 | ) | $ | (4,047,377 | ) | $ | (95,049,570 | ) | $ | (1,510,902 | ) | ||||
|
| |||||||||||||||
Distribution earnings – undistributed ordinary Income | $ | 31,087 | $ | 183,194 | $ | 1,731,642 | $ | 41,919 | ||||||||
|
| |||||||||||||||
| Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Cost of investments | $ | 51,625,135 | $ | 114,148,285 | $ | 5,222,440 | $ | 11,459,054 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 2,917,404 | $ | 2,221,623 | $ | 183,025 | $ | 15,063 | ||||||||
Unrealized depreciation | (5,742,278 | ) | (25,646,163 | ) | (1,648,770 | ) | (2,789,969 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (2,824,874 | ) | $ | (23,424,540 | ) | $ | (1,465,745 | ) | $ | (2,774,906 | ) | ||||
|
| |||||||||||||||
Distribution earnings – undistributed ordinary Income | $ | 6,789 | $ | 549,397 | $ | — | $ | 17,702 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Cost of investments | $ | 5,707,813 | $ | 18,706,396 | $ | 11,561,265 | $ | 3,593,932 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 70,325 | $ | 66,632 | $ | 268,310 | $ | 82,197 | ||||||||
Unrealized depreciation | (1,598,345 | ) | (3,430,992 | ) | (3,065,728 | ) | (1,035,749 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (1,528,020 | ) | $ | (3,364,360 | ) | $ | (2,797,418 | ) | $ | (953,552 | ) | ||||
|
| |||||||||||||||
Distribution earnings – undistributed ordinary Income | $ | 12,638 | $ | 84,165 | $ | 65,492 | $ | 38,376 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | Annual Report | 337 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
4. Income Taxes(continued)
| Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||||
Cost of investments | $ | 391,624,709 | $ | 5,419,566 | $ | 2,578,637 | $ | 4,516,179 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 5,590,452 | $ | 222,060 | $ | 27,575 | $ | 36,637 | ||||||||
Unrealized depreciation | (85,458,522 | ) | (1,437,204 | ) | (1,093,844 | ) | (1,686,920 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (79,868,070 | ) | $ | (1,215,144 | ) | $ | (1,066,269 | ) | $ | (1,650,283 | ) | ||||
|
| |||||||||||||||
Distribution earnings – undistributed ordinary Income | $ | 3,432,053 | $ | — | $ | 12,684 | $ | 26,635 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||
Cost of investments | $ | 15,924,279 | $ | 2,440,483 | $ | 2,371,442 | $ | 18,245,203 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 327,739 | $ | 37,902 | $ | 94,891 | $ | 89,362 | ||||||||
Unrealized depreciation | (3,015,802 | ) | (463,360 | ) | (987,806 | ) | (6,985,140 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (2,688,063 | ) | $ | (425,458 | ) | $ | (892,915 | ) | $ | (6,895,778 | ) | ||||
|
| |||||||||||||||
Distribution earnings – undistributed ordinary Income | $ | — | $ | 15,978 | $ | 21,784 | $ | — | ||||||||
|
| |||||||||||||||
Franklin FTSE Switzerland ETF | Franklin FTSE ETF | Franklin FTSE United Kingdom | ||||||||||||||
Cost of investments | $ | 38,239,695 | $ | 14,252,130 | $ | 118,926,085 | ||||||||||
|
|
|
| |||||||||||||
Unrealized appreciation | $ | 117,074 | $ | 1,110,481 | $ | 214,473 | ||||||||||
Unrealized depreciation | (4,442,329 | ) | (1,501,304 | ) | (30,424,134 | ) | ||||||||||
|
|
|
| |||||||||||||
Net unrealized appreciation (depreciation) | $ | (4,325,255 | ) | $ | (390,823 | ) | $ | (30,209,661 | ) | |||||||
|
|
|
| |||||||||||||
Distribution earnings – undistribution ordinary Income | $ | 382,447 | $ | 12,565 | $ | 873,349 | ||||||||||
|
|
|
| |||||||||||||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of foreign currency transactions, financial futures transactions, passive foreign investment company shares and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities andin-kind transactions, if any) for the year ended March 31, 2020, were as follows:
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Purchases | $ | 1,931,626 | $ | 875,398 | $ | 206,885,163 | $ | 273,752 | ||||||||
Sales | $ | 1,924,352 | $ | 874,185 | $ | 23,922,624 | $ | 256,930 | ||||||||
| Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Purchases | $ | 18,295,349 | $ | 4,172,501 | $ | 832,619 | $ | 143,764 | ||||||||
Sales | $ | 13,207,267 | $ | 3,882,303 | $ | 684,886 | $ | 131,597 | ||||||||
| 338 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
5. Investment Transactions(continued)
| Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Purchases | $ | 254,278 | $ | 7,990,527 | $ | 9,334,493 | $ | 1,061,134 | ||||||||
Sales | $ | 250,042 | $ | 1,072,529 | $ | 4,303,761 | $ | 1,041,278 | ||||||||
| Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||||
Purchases | $ | 12,555,437 | $ | 724,190 | $ | 324,269 | $ | 825,799 | ||||||||
Sales | $ | 12,038,731 | $ | 680,642 | $ | 337,930 | $ | 829,369 | ||||||||
| Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||
Purchases | $ | 2,441,759 | $ | 838,959 | $ | 529,431 | $ | 3,190,838 | ||||||||
Sales | $ | 2,511,953 | $ | 831,211 | $ | 724,152 | $ | 4,803,149 | ||||||||
| Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | ||||||||||||||
Purchases | $ | 1,832,131 | $ | 1,949,208 | $ | 2,287,677 | ||||||||||
Sales | $ | 1,653,334 | $ | 1,971,192 | $ | 1,811,884 | ||||||||||
In-kind transactions associated with creation and redemptions for the year ended March 31, 2020, were as follows:
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Cost of Securities Received | $ | — | $ | 6,373,954 | $ | — | $ | 2,641,653 | ||||||||
Value of Securities Delivereda | $ | — | $ | 2,606,712 | $ | — | $ | 1,215,015 | ||||||||
| Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Cost of Securities Received | $ | 3,693,036 | $ | 78,446,833 | $ | — | $ | 8,962,718 | ||||||||
Value of Securities Delivereda | $ | — | $ | 46,582,428 | $ | 157 | $ | — | ||||||||
Franklin ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Cost of Securities Received | $ | 1,127,347 | $ | 328,027 | $ | — | $ | 1,115,735 | ||||||||
Value of Securities Delivereda | $ | — | $ | 7,128,363 | $ | — | $ | 5,818,687 | ||||||||
| Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||||
Cost of Securities Received | $ | 200,615,114 | $ | — | $ | — | $ | — | ||||||||
Value of Securities Delivereda | $ | 128,994,422 | $ | 9,007,028 | $ | — | $ | — | ||||||||
| franklintempleton.com | Annual Report | 339 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
5. Investment Transactions(continued)
| Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||||
Cost of Securities Received | $ | 4,936,458 | $ | — | $ | — | $ | — | ||||||||
Value of Securities Delivereda | $ | — | $ | — | $ | — | $ | — | ||||||||
| Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | ||||||||||||||
Cost of Securities Received | $ | 37,861,443 | $ | — | $ | 111,248,777 | ||||||||||
Value of Securities Delivereda | $ | 2,091,525 | $ | — | $ | 20,255,088 | ||||||||||
aRealized gains and losses fromin-kind redemptions, as shown on the Statements of Operations, are not recognized by the Funds for tax purposes.
At March 31, 2020, in connection with securities lending transactions, certain or all Funds loaned investments and received cash collateral as follows:
| Franklin FTSE Asia ex Japan ETF | Franklin FTSE China ETF | |||||||
| Securities lending transactionsa: | ||||||||
Equity investmentsb | $ | 5,040 | $ | 29,400 | ||||
|
|
|
| |||||
a The agreements can be terminated at any time.
b The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statements of Assets and Liabilities.
6. 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.
The United States and other nations have imposed and could impose additional sanctions on certain issuers in Russia due to regional conflicts. These sanctions could result in the devaluation of Russia’s currency, a downgrade in Russian issuers’ credit ratings, or a decline in the value and liquidity of Russian stocks or other securities. Such sanctions could also adversely affect Russia’s economy. Certain or all Funds may be prohibited from investing in securities issued by companies subject to such sanctions. In addition, if the Fund holds the securities of an issuer that is subject to such sanctions, an immediate freeze of that issuer’s securities could result, impairing the ability of the Fund to buy, sell, receive or deliver those securities. There is also the risk that countermeasures could be taken by Russia’s government, which could involve the seizure of the Fund’s assets. These risks could affect the value of the Funds’ portfolio. While the Funds hold securities of certain issuers recently impacted by the sanctions, existing investments do not presently violate the applicable terms and conditions of the sanctions. The sanctions currently do not affect the Funds’ ability to sell these securities. At March 31, 2020, Franklin FTSE Russia ETF had 99.9% of its net assets invested in Russia. The remaining Funds in the Trust did not have significant investment in Russia.
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.
| 340 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. Other Derivative Information
At March 31, 2020, the Funds’ investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
Asset Derivatives | Liability Derivatives | |||||||||||
| Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||
| Franklin FTSE Brazil ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | — | Variation margin on futures contracts | $ | 3,490 | a | |||||
|
|
|
| |||||||||
Totals | $ | — | $ | 3,490 | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Europe ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 4,871 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Totals | $ | 4,871 | $ | — | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Europe Hedged ETF | ||||||||||||
Foreign exchange contracts | Unrealized appreciation on OTC forward exchange contracts | $ | 105,667 | a | Unrealized depreciation on OTC forward exchange contracts | $ | 54,816 | a | ||||
Equity contracts | Variation margin on futures contracts | $ | — | Variation margin on futures contracts | $ | 5,566 | a | |||||
|
|
|
| |||||||||
Totals | $ | 105,667 | $ | 60,382 | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Hong Kong ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 577 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Totals | $ | 577 | $ | — | ||||||||
|
|
|
| |||||||||
| Franklin FTSE India ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 582 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Totals | $ | 582 | $ | — | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Japan ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | — | Variation margin on futures contracts | $ | 296,304 | a | |||||
|
|
|
| |||||||||
Totals | $ | — | $ | 296,304 | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Japan Hedged ETF | ||||||||||||
Foreign exchange contracts | Unrealized appreciation on OTC forward exchange contracts | $ | 15,884 | Unrealized depreciation on OTC forward exchange contracts | $ | 4,950 | ||||||
Equity contracts | Variation margin on futures contracts | $ | — | Variation margin on futures contracts | $ | 4,622 | a | |||||
|
|
|
| |||||||||
Totals | $ | 15,884 | $ | 9,572 | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Latin America ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | — | Variation margin on futures contracts | $ | 87 | a | |||||
|
|
|
| |||||||||
Totals | $ | — | $ | 87 | ||||||||
|
|
|
| |||||||||
| Franklin FTSE South Korea ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 4,431 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Totals | $ | 4,431 | $ | — | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Switzerland ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 10,806 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Totals | $ | 10,806 | $ | — | ||||||||
|
|
|
| |||||||||
| franklintempleton.com | Annual Report | 341 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. Other Derivative Information(continued)
Asset Derivatives | Liability Derivatives | |||||||||||
| Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||
| Franklin FTSE United Kingdom ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 13,059 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Totals | $ | 13,059 | $ | — | ||||||||
|
|
|
| |||||||||
aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.
For the year ended March 31, 2020, the effect of derivative contracts in the Funds’ Statements of Operations was as
follows:
| Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
| Franklin FTSE Asia ex Japan ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (2,901 | ) | Futures contracts | $ | (519 | ) | ||||
|
|
|
| |||||||||
Totals | $ | (2,901 | ) | $ | (519 | ) | ||||||
|
|
|
| |||||||||
| Franklin FTSE Brazil ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (779,044 | ) | Futures contracts | $ | (7,118 | ) | ||||
|
|
|
| |||||||||
Totals | $ | (779,044 | ) | $ | (7,118 | ) | ||||||
|
|
|
| |||||||||
| Franklin FTSE China ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (1,415 | ) | Futures contracts | $ | — | |||||
|
|
|
| |||||||||
Totals | $ | (1,415 | ) | $ | — | |||||||
|
|
|
| |||||||||
| Franklin FTSE Europe ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (59,156 | ) | Futures contracts | $ | 30,567 | |||||
|
|
|
| |||||||||
Totals | $ | (59,156 | ) | $ | 30,567 | |||||||
|
|
|
| |||||||||
| Franklin FTSE Europe Hedged ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized appreciation (depreciation) on: |
| |||||||||
Equity contracts | Futures contracts | $ | 1,517 | Futures contracts | $ | 2,646 | ||||||
Foreign currency transactions | $ | 379,425 | Translation of other assets and liabilities denominated in foreign currencies | $ | (174,949 | ) | ||||||
|
|
|
| |||||||||
Totals | $ | 380,942 | $ | (172,303 | ) | |||||||
|
|
|
| |||||||||
| 342 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. Other Derivative Information(continued)
| Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
| Franklin FTSE France ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | 965 | Futures contracts | $ | — | ||||||
|
|
|
| |||||||||
Totals | $ | 965 | $ | — | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Hong Kong ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (12,094 | ) | Futures contracts | $ | 5,668 | |||||
|
|
|
| |||||||||
Totals | $ | (12,094 | ) | $ | 5,668 | |||||||
|
|
|
| |||||||||
| Franklin FTSE India ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (23,933 | ) | Futures contracts | $ | 1,262 | |||||
|
|
|
| |||||||||
Totals | $ | (23,933 | ) | $ | 1,262 | |||||||
|
|
|
| |||||||||
| Franklin FTSE Italy ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | 799 | Futures contracts | $ | — | ||||||
|
|
|
| |||||||||
Totals | $ | 799 | $ | — | ||||||||
|
|
|
| |||||||||
| Franklin FTSE Japan ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | 142,382 | Futures contracts | $ | (56,914 | ) | |||||
|
|
|
| |||||||||
Totals | $ | 142,382 | $ | (56,914 | ) | |||||||
|
|
|
| |||||||||
| Franklin FTSE Japan Hedged ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized appreciation (depreciation) on: |
| |||||||||
Equity contracts | Futures contracts | $ | (6,469 | ) | Futures contracts | $ | 1,589 | |||||
Forward exchange contracts | $ | (128,377 | ) | Translation of other assets and liabilities denominated in foreign currencies | $ | (8,107 | ) | |||||
|
|
|
| |||||||||
Totals | $ | (134,846 | ) | $ | (6,518 | ) | ||||||
|
|
|
| |||||||||
| Franklin FTSE Latin America ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (50 | ) | Futures contracts | $ | (1,060 | ) | ||||
|
|
|
| |||||||||
Totals | $ | (50 | ) | $ | (1,060 | ) | ||||||
|
|
|
| |||||||||
| franklintempleton.com | Annual Report | 343 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. Other Derivative Information(continued)
| Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
| Franklin FTSE Mexico ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | 127 | Futures contracts | $ | — | ||||||
|
|
|
| |||||||||
Totals | $ | 127 | $ | — | ||||||||
|
|
|
| |||||||||
| Franklin FTSE South Korea ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (6,694 | ) | Futures contracts | $ | (16,486 | ) | ||||
|
|
|
| |||||||||
Totals | $ | (6,694 | ) | $ | (16,486 | ) | ||||||
|
|
|
| |||||||||
| Franklin FTSE Switzerland ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (1,942 | ) | Futures contracts | $ | 25,928 | |||||
|
|
|
| |||||||||
Totals | $ | (1,942 | ) | $ | 25,928 | |||||||
|
|
|
| |||||||||
| Franklin FTSE Taiwan ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | 13,729 | Futures contracts | $ | — | ||||||
|
|
|
| |||||||||
Totals | $ | 13,729 | $ | — | ||||||||
|
|
|
| |||||||||
| Franklin FTSE United Kingdom ETF | ||||||||||||
Net realized gain (loss) from: |
| Net change in unrealized |
| |||||||||
Equity contracts | Futures contracts | $ | (222,075 | ) | Futures contracts | $ | 70,468 | |||||
|
|
|
| |||||||||
Totals | $ | (222,075 | ) | $ | 70,468 | |||||||
|
|
|
| |||||||||
For the year ended March 31, 2020, the average month end notional amount of futures contracts and average month end contract value for forward exchange contracts were as follows:
Franklin Asia ex Japan | Franklin Brazil ETF | Franklin China ETF | Franklin Europe ETF | |||||||||||||
Futures contracts | $ | 43,291 | $ | 408,291 | $ | 51,022 | $ | 417,509 | ||||||||
Forward exchange contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
Franklin Europe Hedged ETF | Franklin France ETF | Franklin Hong Kong ETF | Franklin India ETF | |||||||||||||
Futures contracts | $ | 69,474 | $ | 1,818 | $ | 55,664 | $ | 24,630 | ||||||||
Forward exchange contracts | $ | 16,278,086 | $ | — | $ | — | $ | — | ||||||||
| 344 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. Other Derivative Information(continued)
Franklin Italy ETF | Franklin Japan ETF | Franklin Japan Hedged ETF | Franklin Latin America ETF | |||||||||||||
Futures contracts | $ | 14,563 | $ | 1,840,761 | $ | 87,282 | $ | 5,098 | ||||||||
Forward exchange contracts | $ | — | $ | — | $ | 24,336,187 | $ | — | ||||||||
Franklin South Korea | Franklin Switzerland | Franklin Taiwan ETF | Franklin United Kingdom ETF | |||||||||||||
Futures contracts | $ | 105,049 | $ | 13,668 | $ | 42,552 | $ | 315,200 | ||||||||
Forward exchange contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
At March 31, 2020, the Funds’ OTC derivative assets and liabilities are as follows:
| Gross and Net Amounts of Assets and Liabilities Presented in the Statements of Assets and Liabilities | ||||||||
| Assetsa | Liabilitiesa | |||||||
| Franklin FTSE Europe Hedged ETF | ||||||||
Forward exchange contracts | $ | 105,667 | $ | 54,816 | ||||
|
| |||||||
| Franklin FTSE Japan Hedged ETF | ||||||||
Forward exchange contracts | $ | 15,884 | $ | 4,950 | ||||
|
| |||||||
aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.
At March 31, 2020, the Funds’ OTC derivative assets, which may be offset against the Funds’ OTC derivative liabilities and collateral received from the counterparty, are as follows:
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Gross and Net Amounts of Assets Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Receiveda | Cash Collateral Receiveda | Net Amount (Not less than zero) | ||||||||||||||||
| Franklin FTSE Europe Hedged ETF | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
BOFA | $ | 100,329 | $ | (116 | ) | $ | — | $ | — | $ | 100,213 | |||||||||
HSBK | 2,048 | (54 | ) | — | — | 1,994 | ||||||||||||||
MSCO | 1,123 | (154 | ) | — | — | 969 | ||||||||||||||
UBSW | 2,167 | (14 | ) | — | — | 2,153 | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 105,667 | $ | (338 | ) | $ | — | $ | — | $ | 105,329 | |||||||||
|
| |||||||||||||||||||
| franklintempleton.com | Annual Report | 345 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
8. Other Derivative Information(continued)
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Gross and Net Amounts of Assets Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Receiveda | Cash Collateral Receiveda | Net Amount (Not less than zero) | ||||||||||||||||
| Franklin FTSE Japan Hedged ETF | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
BOFA | $ | 8,080 | $ | — | $ | — | $ | — | $ | 8,080 | ||||||||||
HSBK | 3,148 | (88 | ) | — | — | 3,060 | ||||||||||||||
MSCO | 1,336 | (42 | ) | — | — | 1,294 | ||||||||||||||
UBSW | 3,320 | (27 | ) | — | — | 3,293 | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 15,884 | $ | (157 | ) | $ | — | $ | — | $ | 15,727 | |||||||||
|
| |||||||||||||||||||
At March 31, 2020, the Funds’ OTC derivative liabilities, which may be offset against the Funds’ OTC derivative assets and collateral pledged to the counterparty, are as follows:
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Gross and Net Amounts of Assets Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Receiveda | Cash Collateral Receiveda | Net Amount (Not less than zero) | ||||||||||||||||
| Franklin FTSE Europe Hedged ETF | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
BOFA | $ | 116 | $ | (116 | ) | $ | — | $ | — | $ | — | |||||||||
DBAB | 54,478 | — | — | — | 54,478 | |||||||||||||||
HSBK | 54 | (54 | ) | — | — | — | ||||||||||||||
MSCO | 154 | (154 | ) | — | — | — | ||||||||||||||
UBSW | 14 | (14 | ) | — | — | — | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 54,816 | $ | (338 | ) | $ | — | $ | — | $ | 54,478 | |||||||||
|
| |||||||||||||||||||
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Franklin FTSE Japan Hedged ETF | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
DBAB | $ | 4,793 | $ | — | $ | — | $ | — | $ | 4,793 | ||||||||||
HSBK | 88 | (88 | ) | — | — | — | ||||||||||||||
MSCO | 42 | (42 | ) | — | — | — | ||||||||||||||
UBSW | 27 | (27 | ) | — | — | — | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 4,950 | $ | (157 | ) | $ | — | $ | — | $ | 4,793 | |||||||||
|
| |||||||||||||||||||
See Note 1(b) regarding derivative financial instruments.
| 346 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
9. 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) |
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 March 31, 2020, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin FTSE Asia ex Japan ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | ||||||||||||||||
China | $ | 6,413,212 | 282 | $ | — | $ | 6,413,494 | |||||||||
India | 1,318,176 | — | 578c | 1,318,754 | ||||||||||||
Other Equity Investments | 6,917,929 | — | — | 6,917,929 | ||||||||||||
Short-Term Investments | 5,040 | — | — | 5,040 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 14,654,357 | $ | 282 | $ | 578c | $ | 14,655,217 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Australia ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | ||||||||||||||||
Australia | $ | 7,614,983 | $ | 13,155 | $ | — | $ | 7,628,138 | ||||||||
Other Equity Investments | 183,251 | — | — | 183,251 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 7,798,234 | $ | 13,155 | $ | — | $ | 7,811,389 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Brazil ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 102,437,504 | $ | — | $ | — | $ | 102,437,504 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 9,433 | $ | — | $ | — | $ | 9,433 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Canada ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 4,863,699 | $ | — | $ | — | $ | 4,863,699 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | Annual Report | 347 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
9. Fair Value Measurements(continued)
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin FTSE China ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | ||||||||||||||||
China | $ | 44,359,091 | $ | 2,716 | $ | — | $ | 44,361,807 | ||||||||
Other Equity Investments | 4,438,454 | — | — | 4,438,454 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 48,797,545 | $ | 2,716 | $ | — | $ | 48,800,261 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Europe ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | ||||||||||||||||
United Arab Emirates | $ | — | $ | — | $ | 1,604c | $ | 1,604 | ||||||||
Other Equity Investments | 90,722,142 | — | — | 90,722,142 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 90,722,142 | $ | — | $ | 1,604c | $ | 90,723,746 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 36,523 | $ | — | $ | — | $ | 36,523 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Europe Hedged ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | ||||||||||||||||
United Arab Emirates | $ | — | $ | — | $ | 83c | $ | 83 | ||||||||
Other Equity Investments | 3,756,613 | — | — | 3,756,613 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 3,756,613 | $ | — | $ | 83c | $ | 3,756,696 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 105,667 | $ | — | $ | 105,667 | ||||||||
Futures Contracts | 3,553 | — | — | 3,553 | ||||||||||||
|
| |||||||||||||||
Total Other Financial Instruments | $ | 3,553 | $ | 105,667 | $ | — | $ | 109,220 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 54,816 | $ | — | $ | 54,816 | ||||||||
|
| |||||||||||||||
| Franklin FTSE France ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 8,684,148 | $ | — | $ | — | $ | 8,684,148 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Germany ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 4,179,793 | $ | — | $ | — | $ | 4,179,793 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Hong Kong ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 15,342,036 | $ | — | $ | — | $ | 15,342,036 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 5,668 | $ | — | $ | — | $ | 5,668 | ||||||||
|
| |||||||||||||||
| 348 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
9. Fair Value Measurements(continued)
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin FTSE India ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | ||||||||||||||||
India | $ | 8,759,433 | $ | — | $ | 4,414c | $ | 8,763,847 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 1,682 | $ | — | $ | — | $ | 1,682 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Italy ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 2,640,380 | $ | — | $ | — | $ | 2,640,380 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Japan ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 311,631,698 | $ | — | $ | — | $ | 311,631,698 | ||||||||
Short-Term Investments | 124,941 | — | — | 124,941 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 311,756,639 | $ | — | $ | — | $ | 311,756,639 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 62,697 | $ | — | $ | — | $ | 62,697 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Japan Hedged ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 4,204,422 | $ | — | $ | — | $ | 4,204,422 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 15,884 | $ | — | $ | 15,884 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 4,950 | $ | — | $ | 4,950 | ||||||||
Futures Contracts | 114 | — | — | 114 | ||||||||||||
|
| |||||||||||||||
Total Other Financial Instruments | $ | 114 | $ | 4,950 | $ | — | $ | 5,064 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Latin America ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 1,512,368 | $ | — | $ | — | $ | 1,512,368 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 1,305 | $ | — | $ | — | $ | 1,305 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Mexico ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 2,865,896 | $ | — | $ | — | $ | 2,865,896 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Russia ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 13,236,216 | $ | — | $ | — | $ | 13,236,216 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | Annual Report | 349 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
9. Fair Value Measurements(continued)
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin FTSE Saudi Arabia ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 2,015,025 | $ | — | $ | — | $ | 2,015,025 | ||||||||
|
| |||||||||||||||
| Franklin FTSE South Africa ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 1,478,527 | $ | — | $ | — | $ | 1,478,527 | ||||||||
|
| |||||||||||||||
| Franklin FTSE South Korea ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 11,349,424 | $ | — | $ | — | $ | 11,349,424 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 17,785 | $ | — | $ | — | $ | 17,785 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Switzerland ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 33,914,440 | $ | — | $ | — | $ | 33,914,440 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 18,917 | $ | — | $ | — | $ | 18,917 | ||||||||
|
| |||||||||||||||
| Franklin FTSE Taiwan ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments:b | $ | 13,861,307 | $ | — | $ | — | $ | 13,861,307 | ||||||||
|
| |||||||||||||||
| Franklin FTSE United Kingdom ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
United Arab Emirates | $ | — | $ | — | $ | 5,128c | $ | 5,128 | ||||||||
Equity Investments:b | 88,711,297 | — | — | 88,711,297 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 88,711,297 | $ | — | $ | 5,128c | $ | 88,716,425 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 77,270 | $ | — | $ | — | $ | 77,270 | ||||||||
|
| |||||||||||||||
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common and convertible preferred stocks, warrants, as well as other equity investments.
cIncludes securities determined to have no value at March 31, 2020
| 350 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
9. 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.
| Selected Portfolio | ||
| ADR | American Depositary Receipt | |
| CDI | Clearing House Electronic Subregister System Depositary Interest | |
| GDR | Global Depositary Receipt | |
| IDR | International Depositary Receipt | |
| NVDR | Non-Voting Depositary Receipt | |
| REIT | Real Estate Investment Trust | |
| SF | Single Family | |
| Counterparty | ||
| BOFA | Bank of America Corp. | |
| HSBK | HSBC Bank PLC | |
| MSCO | Morgan Stanley | |
| UBSW | UBS AG | |
| franklintempleton.com | Annual Report | 351 | ||||
FRANKLIN TEMPLETON ETF TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Franklin Templeton ETF Trust and Shareholders of Franklin FTSE Asia ex Japan ETF, Franklin FTSE Australia ETF, Franklin FTSE Brazil ETF, Franklin FTSE Canada ETF, Franklin FTSE China ETF, Franklin FTSE Europe ETF, Franklin FTSE Europe Hedged ETF, Franklin FTSE France ETF, Franklin FTSE Germany ETF, Franklin FTSE Hong Kong ETF, Franklin FTSE India ETF, Franklin FTSE Italy ETF, Franklin FTSE Japan ETF, Franklin FTSE Japan Hedged ETF, Franklin FTSE Latin America ETF, Franklin FTSE Mexico ETF, Franklin FTSE Russia ETF, Franklin FTSE Saudi Arabia ETF, Franklin FTSE South Africa ETF, Franklin FTSE South Korea ETF, Franklin FTSE Switzerland ETF, Franklin FTSE Taiwan ETF, and Franklin FTSE United Kingdom ETF
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin FTSE Asia ex Japan ETF, Franklin FTSE Australia ETF, Franklin FTSE Brazil ETF, Franklin FTSE Canada ETF, Franklin FTSE China ETF, Franklin FTSE Europe ETF, Franklin FTSE Europe Hedged ETF, Franklin FTSE France ETF, Franklin FTSE Germany ETF, Franklin FTSE Hong Kong ETF, Franklin FTSE India ETF, Franklin FTSE Italy ETF, Franklin FTSE Japan ETF, Franklin FTSE Japan Hedged ETF, Franklin FTSE Latin America ETF, Franklin FTSE Mexico ETF, Franklin FTSE Russia ETF, Franklin FTSE Saudi Arabia ETF, Franklin FTSE South Africa ETF, Franklin FTSE South Korea ETF, Franklin FTSE Switzerland ETF, Franklin FTSE Taiwan ETF, and Franklin FTSE United Kingdom ETF(the “Funds”) as ofMarch 31, 2020, the related statementsof operations, and of changes in net assets for each of the periods indicated in the table below, including the related notes, and the financial highlights for each of the periods indicated in the table below (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2020, the results of each of their operations, the changes in each of their net assets, and each of the financial highlights for each of the periods indicated in the table below in conformity with accounting principles generally accepted in the United States of America.
| Franklin Templeton ETF Trust | Statements of Operations | Statement of changes in net assets | Financial highlights | |||
Franklin FTSE Asia ex Japan ETF Franklin FTSE Australia ETF Franklin FTSE Brazil ETF Franklin FTSE Canada ETF Franklin FTSE China ETF Franklin FTSE Europe ETF Franklin FTSE Europe Hedged ETF Franklin FTSE France ETF Franklin FTSE Germany ETF Franklin FTSE Hong Kong ETF Franklin FTSE India ETF Franklin FTSE Italy ETF Franklin FTSE Japan ETF Franklin FTSE Japan Hedged ETF Franklin FTSE Mexico ETF Franklin FTSE Russia ETF Franklin FTSE South Korea ETF Franklin FTSE Switzerland ETF Franklin FTSE Taiwan ETF Franklin FTSE United Kingdom ETF | For the year ended March 31, 2020 | For the years ended March 31, 2020 and March 31, 2019 | For each of the periods indicated therein | |||
Franklin FTSE Latin America ETF | For the year ended March 31, 2020 | For the year ended March 31, 2020 and for the period October 9, 2018 (commencement of operations) through March 31, 2019 | ||||
Franklin FTSE Saudi Arabia ETF Franklin FTSE South Africa ETF | For the year ended March 31, 2020 | For the year ended March 31, 2020 and for the period October 10, 2018 (commencement of operations) through March 31, 2019 | ||||
| 352 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditsof these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of March 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
San Francisco, California
May 19, 2020
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
| franklintempleton.com | Annual Report | 353 | ||||
FRANKLIN TEMPLETON ETF TRUST
Under Section 854(b)(1)(B) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended March 31, 2020:
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||
| $ 219,340 | $ 470,450 | $— | $180,689 | |||||||||||
|
| |||||||||||||
Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||
| $ 699,257 | $2,922,951 | $ 165,018 | $122,369 | |||||||||||
|
| |||||||||||||
Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||
| $ 125,976 | $ 5,268 | $ 164,197 | $493,587 | |||||||||||
|
| |||||||||||||
Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Latin America ETF | Franklin FTSE Mexico ETF | |||||||||||
| $6,408,011 | $ 117,576 | $ 21,040 | $143,715 | |||||||||||
|
| |||||||||||||
Franklin FTSE Russia ETF | Franklin FTSE Saudi Arabia ETF | Franklin FTSE South Africa ETF | Franklin FTSE South Korea ETF | |||||||||||
| $1,117,191 | $— | $ 80,885 | $313,994 | |||||||||||
|
| |||||||||||||
Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | ||||||||||||
| $ 148,021 | $— | $1,346,584 | ||||||||||||
|
| |||||||||||||
Distributions, including qualified dividend income, paid during calendar year 2020 will be reported to shareholders onForm 1099-DIV bymid-February 2021. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns.
At March 31, 2020, more than 50% of the Funds’ total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Funds on these investments. The following Funds elect to treat foreign taxes paid as allowed under Section 853 of the Code. This election will allow shareholders of record as of the June 2020 distribution, to treat their proportionate share of foreign taxes paid by the Funds as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they received the Fund distribution.
| 354 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Franklin FTSE Asia ex Japan ETF
Franklin FTSE Australia ETF
Franklin FTSE Brazil ETF
Franklin FTSE Canada ETF
Franklin FTSE China ETF
Franklin FTSE Europe ETF
Franklin FTSE Europe Hedged ETF
Franklin FTSE France ETF
Franklin FTSE Germany ETF
Franklin FTSE Hong Kong ETF
Franklin FTSE Italy ETF
Franklin FTSE India ETF
Franklin FTSE Japan ETF
Franklin FTSE Japan Hedged ETF
Franklin FTSE Latin America ETF
Franklin FTSE Mexico ETF
Franklin FTSE Russia ETF
Franklin FTSE Saudi Arabia ETF
Franklin FTSE South Africa ETF
Franklin FTSE South Korea ETF
Franklin FTSE Switzerland ETF
Franklin FTSE Taiwan ETF
Franklin FTSE United Kingdom ETF
| franklintempleton.com | Annual Report | 355 | ||||
FRANKLIN TEMPLETON ETF TRUST
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Rohit Bhagat (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Lead Independent Trustee and Trustee | Since 2016 | 44 | Axis Bank (2013-present), AssetMark Financial Holdings, Inc. (investment solutions) (2018-present) and FlipKart Limited (2019-present) (eCommerce company);formerly, CapFloat Financial Services Pvt., Ltd.(non-banking finance company) (2018) and Zentific Investment Management (hedge fund) (2015-2018). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Managing Member, Mukt Capital, LLC (private investment firm) (2014-present); Advisor, Optimal Asset Management (investment technology and advisory services company) (2015-present); andformerly, Chairman, Asia Pacific, BlackRock (2009-2012); Global Chief Operating Officer, Barclays Global Investors (investment management) (2005-2009); and Senior Partner, The Boston Consulting Group (management consulting) (1992-2005). | ||||||||
| Deborah D. McWhinney (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since January 2020 | 44 | Fluor Corporation (construction and engineering) (2014-present), IHS Markit (information services)(2015-present), Borg Warner (automotive) (2018-present) and Focus Financial Partner, LLC (financial services) (2018-present). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Director of various companies; andformerly, Board Member, Lloyds Banking Group (2015-2018) (financial institution) and Fresenius Medical Group (2016-2018) (healthcare); Chief Executive Officer (2013-2014) and Chief Operating Officer (2011-2013), CitiGroup Global Enterprise Payments (financial services); and President, Citi’s Personal Banking and Wealth Management (2009-2011). | ||||||||
| Anantha K. Pradeep (1963) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since 2016 | 44 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, Smilable, Inc. (technology company) (2014-present); Chief Executive Officer, MachineVantage (technology company) (2018-present); Founder and Managing Partner, Consult Meridian, LLC (consulting company) (2009-present); andformerly, Founder, BoardVantage (board portal solutions provider delivering paperless process for boards and leadership) (2000-2002). | ||||||||
Interested Board Members and Officers
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| **Jennifer M. Johnson (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee and Chairperson of the Board | Since 2016 | 49 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, President and Director, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of four of the investment companies in Franklin Templeton; andformerly, Chief Operating Officer and Executive Vice President, Franklin Resources, Inc. (1994-2015); Executive Vice President of Operations and Technology, Franklin Resources, Inc. (2005-2010); and Senior Vice President, Franklin Resources, Inc. (2003-2005). | ||||||||
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FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers (continued)
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
Breda M. Beckerle (1958) 280 Park Avenue New York, NY 10017 | Interim Chief Compliance Officer | Since January 2020 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Compliance Officer, Fiduciary Investment Management International, Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | Chief Executive Officer – Finance and Administration | Since 2017 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017). | ||||||||
| Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President – AML Compliance | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Patrick O’Connor (1967) One Franklin Parkway San Mateo, CA 94403-1906 | President and Chief Executive Officer – Investment Management | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| President and Chief Investment Officer, Franklin Advisory Services, LLC; Senior Vice President, Franklin Advisers, Inc.; officer of two of the investment companies in Franklin Templeton; andformerly, Managing Director, Head of iShares Product Canada, BlackRock (1998-2014). | ||||||||
| franklintempleton.com | Annual Report | 357 | ||||
FRANKLIN TEMPLETON ETF TRUST
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
Vivek Pai (1970) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Treasurer, Chief Financial Officer and Chief Accounting Officer | Since May 2019 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Treasurer, U.S. Fund Administration & Reporting and officer of two of the investment companies in Franklin Templeton. | ||||||||
| Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President and Secretary | Since 2015 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
| Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Jennifer M. Johnson is considered to be an interested person of the Fund under the federal securities laws due to her position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated Rohit Bhagat as its audit committee financial expert. The Board believes that Mr. Bhagat qualifies as such an expert in view of his extensive business background and experience, including extensive experience in the asset management and financial services industries. Mr. Bhagat has been a Member and Chairman of the Fund’s Audit Committee since 2016. As a result of such background and experience, the Board believes that Mr. Bhagat has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Bhagat is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request.
Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
| 358 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
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 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 recent12-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 FormN-PORT. Shareholders may view the filedForm 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.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at franklintempleton.com.
| franklintempleton.com | Annual Report | 359 | ||||
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.
 | Annual Report Franklin Templeton ETF Trust | |||||
| Investment Manager | Distributor | Investor Services | ||||
| Franklin Advisory Services, LLC | Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 franklintempleton.com | Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 | ||||
| © 2020 Franklin Templeton Investments. All rights reserved. | ETF5 A 05/20 | |||||
ANNUAL REPORT
FRANKLIN TEMPLETON
ETF TRUST
March 31, 2020
Franklin Liberty High Yield Corporate ETF | Franklin Liberty Senior Loan ETF | |
Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Systematic Style Premia ETF |
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 to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visitfranklintempleton.com/investor/investments-and-solutions/investment-options/etfs/for fund updates and documents.
| Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
| franklintempleton.com | Not part of the annual report | 1 | ||||
Annual Report
The U.S. bond market’s performance during the12-month period, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, was defined by two phases: before and during the outbreak of the novel coronavirus(COVID-19) in the country. Until late February 2020, prices for most U.S. bonds rose, as low inflation, interest-rate cuts and strong demand for yield, which moves inversely to price, supported fixed-income markets. In late February, as more countries adopted social distancing and lockdown measures to slow the global pandemic, the U.S. bond market began pricing in the adverse impact on economic activity. Higher-quality, longer-term bonds rallied, while riskier, lower-rated corporate bonds declined sharply, reflecting a reversal in many investors’ risk appetite. Similarly, strong demand for cash and cash equivalents drove yields on certain U.S. Treasury bill maturities to fall briefly below zero. Thereafter, bond prices fell then somewhat stabilized as the magnitude of the downturn led to constricted liquidity and subsequent intervention by the U.S. Federal Reserve (Fed).
After reducing the federal funds target rate three times in 2019 to a range of 1.50%-1.75%, the Fed enacted two emergency rate cuts in March 2020 in response to theCOVID-19 pandemic, further lowering the federal funds target rate to a range of 0.00%-0.25%. In addition, the Fed announced a plan to purchase government, government-backed and corporate bonds to help keep markets functioning, significantly expanding its balance sheet.
U.S. Treasury bonds, as measured by the Bloomberg Barclays U.S. Treasury Index, rose significantly during the reporting period, despite high levels of Treasury issuance due to deficit spending and investor expectations for large increases in debt issuance for fiscal stimulus to alleviate the economic downturn. The yield on10-year U.S. Treasury bonds declined to historic lows nearperiod-end, driven by fears of a prolonged global economic disruption due to theCOVID-19 pandemic. Mortgage-backed securities (MBS), as measured by the Bloomberg Barclays MBS Index, also posted positive returns, aided by the Fed’s announcement that it would make substantial MBS purchases.
U.S. corporate bond performance was hampered during the period’s last month by investor concerns about the pandemic-related economic disruption and the potential credit downgrades of many companies amid high levels of
indebtedness. For the12-month period, investment-grade corporate bonds, as represented by the Bloomberg Barclays U.S. Corporate Bond Index, posted positive returns, while high-yield corporate bonds, as represented by the Bloomberg Barclays U.S. Corporate High Yield Bond Index, posted negative returns due to investor concerns about a potential increase in credit defaults.
The review period began with yields falling in many government bond markets, amid heightened concerns among investors about global economic growth and trade tensions. Many central banks eased monetary policy, with the Fed cutting interest rates in July and September, and the European Central Bank (ECB) responding with a package of easing measures in September, including a rate cut and restarting its bond purchases. Global bond yields then rose steadily over the last quarter of 2019. The Fed lowered interest rates again in October, in light of concerns about U.S.-China trade relations, low inflation and a global downturn. In Europe, benchmark German Bund and French government bond yields both rose over the fourth quarter with the latter moving into positive territory for the first time in several months.
The first quarter of 2020 was dominated by growing concerns about theCOVID-19 pandemic and the potential magnitude of its economic and social impact. The Fed lowered interest rates to zero bymid-March and then pledged towards the end of the quarter to purchase government bonds in unlimited amounts, together with a historic decision to buy corporate debt. In this environment, the U.S. Treasury market was extremely volatile, with yields falling to historic lows early in March, then moving sharply higher as investors sought to raise cash, before ending significantly lower for the quarter overall. Despite initial inaction by the ECB, it launched an additional€750 billion of quantitative easing in March, and later suspended the parameters of the Stability and Growth Pact, in order to support eurozone economies. Against this backdrop, yields on benchmark German bunds fell over the first quarter, despite moving slightly higher in March.
The foregoing information reflects our analysis and opinions as of March 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: U.S. Bureau of Labor Statistics
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Franklin Liberty High Yield Corporate ETF
This annual report for Franklin Liberty High Yield Corporate ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks a high level of current income with a secondary goal of seeking capital appreciation to the extent it is possible and consistent with the Fund’s principal goal. The Fund invests at least 80% of its net assets in high yield corporate debt securities and investments that provide exposure to high yield corporate debt securities, including fixed or floating-rate corporate loans and corporate debt securities.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-6.06% based on market price and-5.12% based on net asset value (NAV). In comparison, the ICE BofAML U.S. High Yield Constrained Index posted a-7.46% total return for the same period.1 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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund may invest up to 100% of its total assets in high yield debt securities. The Fund may buy both rated and unrated debt securities, including securities rated below B by Moody’s or Standard & Poor’s® (or deemed comparable by the Fund’s investment manager). The Fund may invest in fixed or floating rate corporate loans and corporate debt securities. The Fund may also invest in defaulted debt securities. The Fund may invest in debt securities of any maturity or duration.
The Fund may invest in debt securities of U.S. and foreign issuers, including those in developing or emerging markets. The Fund may enter into certain derivative transactions, principally currency and cross currency forwards; and swap
| Portfolio Composition | ||
| Based on Total Net Assets as of 3/31/20 | ||
agreements, including interest rate and credit default swaps (including credit default index swaps). The use of these derivative transactions may allow the Fund to obtain net long or short exposures to select currencies, interest rates, countries, durations or credit risks.
We are research driven, fundamental investors who rely on our team of analysts to providein-depth industry expertise and use qualitative and quantitative analysis to evaluate companies. Asbottom-up investors, we focus primarily on individual securities but consider sectors when choosing investments. In selecting securities, we do not rely principally on the ratings assigned by rating agencies, but perform our own independent investment analysis to evaluate the creditworthiness of the issuer. We consider a variety of factors, including the issuer’s experience and managerial strength, its sensitivity to economic conditions, and its current and prospective financial condition.
What is a currency forward contract?
A currency forward contract, or a currency forward, is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.
What is a credit default swap?
A credit default swap, or CDS, is an agreement between two parties whereby the buyer receives credit protection from the seller. The buyer makes periodic payments over the term of the agreement in return for a payment by the seller in the event of a default or other credit event.
1. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does 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 30.
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
| Top 10 Sector/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Media & Entertainment | 17.7% | |||
| Materials | 14.8% | |||
| Health Care Equipment & Services | 8.9% | |||
| Energy | 8.1% | |||
| Capital Goods | 7.9% | |||
| Utilities | 6.9% | |||
| Pharmaceuticals, Biotechnology & Life Sciences | 5.4% | |||
| Food, Beverage & Tobacco | 5.4% | |||
| Telecommunication Services | 5.2% | |||
Commercial & Professional Services | 4.8% | |||
Manager’s Discussion
Despite posting positive results for much of the period under review, high-yield corporate bonds came under severe pressure in late February and throughout March, and the benchmark ICE BofAML U.S. High Yield Constrained Index returned-7.46%.
Favorable returns gave way to a notable increase in volatility in February as COVID-19 began to spread more rapidly across the globe. As governments took increasingly aggressive actions to try to contain the virus, the short-term outlook for the global economy significantly deteriorated. Ultimately, markets spent most of February and all of March trying to “price in” an event for which there is no readily known precedent. Compounding the situation was the plunge in oil prices in the wake of the collapse in talks between members of the Organization of the Petroleum Exporting Countries and allies including Russia and Mexico, and the subsequent price wars between Russia and Saudi Arabia. This situation weighed particularly heavily on the U.S. high yield corporate bond market, where energy is the largest single sector exposure for the Fund’s benchmark index. The simultaneous, negative shocks to oil demand and supply were key drivers in the high-yield market selloff to end the period, with the benchmark index returning-1.55% and-11.77% in February and March, respectively.
Based on benchmark index data, high-yield spreads ended the period at 877 basis points (bps), representing a widening 472 bps for the period overall. Although most segments of the high yield market posted negative absolute returns for the period, some areas weathered the volatility better than others. Based on benchmark index data, BB rated bonds led the way with a return of-3.60%, which compared to returns of-7.24% and-20.53% for the B and CCC rated segments,
| Top 10 Fund Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry | % of Total Net Assets | |||
| CCO Holdings LLC/CCO Holdings Capital Corp., senior bond, 144A, senior bond, 144A, 5.375%, 6/01/2029 Media & Entertainment | 2.5% | |||
| CSC Holdings LLC, senior bond, 144A, senior note, 144A, 7.50%, 4/01/2028 Media & Entertainment | 2.4% | |||
| Netflix Inc., senior bond, senior bond, 5.875%, 2/15/2025 Retailing | 2.4% | |||
| B&G Foods Inc., senior note, 5.25%, 4/01/2025 Food, Beverage & Tobacco | 2.3% | |||
| Clearway Energy Operating LLC, senior bond, 5.00%, 9/15/2026 Utilities | 2.3% | |||
| Owens-Brockway Glass Container Inc., senior note, 144A, 5.875%, 8/15/2023 Materials | 2.3% | |||
| Beacon Roofing Supply Inc., senior note, 144A, 4.875%, 11/01/2025 Capital Goods | 2.1% | |||
| Centene Corp., senior note, 144A, 4.25%, 12/15/2027 Health Care Equipment & Services | 2.1% | |||
| Gray Escrow Inc., senior note, 144A, 7.00%, 5/15/2027 Media & Entertainment | 2.1% | |||
| JBS USA LUX SA/JBS USA Food Co./JBS USA Finance Inc., senior bond, 144A, 5.50%, 1/15/2030 Food, Beverage & Tobacco | 2.1% | |||
respectively. From an industry standpoint, energy stood out as a key underperformer, but other sectors more likely to be impacted by a prolonged economic downturn also underperformed, including gaming and leisure. Meanwhile, some sectors managed to provide some form of downside protection over the period. For example, consumernon-cyclical industries such as food and beverage and supermarkets outperformed the broader market. The health care and packaging industries also outperformed relative to the broader market.
The Fund outperformed its benchmark as well as its Morningstar high-yield category average.
Several positive factors contributed to the Fund’s relative outperformance for the period, led by the effects from overall credit quality and industry positioning. As it relates to credit quality, the Fund benefited especially from its bias towards higher-quality segments of the market, which included some exposure to rising stars, which had been upgraded to BBB.
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
Even within the CCC ratings category, the Fund benefited from being mostly in the higher end of the category with CCC+ credits, which held up better than the lower end of the category.
The quality theme was also seen in industry sectors, where the Fund benefited significantly from its underweighted position to the energy sector. The Fund’s overweighted positions in the health care and packaging sectors also contributed to relative results, as these groups outperformed other sectors amid the recent increase in market volatility.
In contrast, the Fund’s security selection detracted slightly from relative results overall, led by effects seen in the energy, retail and entertainment sectors. However, the Fund did benefit from positive selection effects across several sectors, most notably from the finance, media and wireless industries, which helped to offset negative selection effects to some extent.
The Fund held mostly cash bonds during the period under review and also held a small position in high yield CDX that was put in place to help manage exposure following a large inflow.
Thank you for your participation in Franklin Liberty High Yield Corporate ETF. We look forward to serving your future investment needs.
 |
Glenn I. Voyles, CFA® |
 |
Patricia O’Connor, CFA | |
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
CFA® is a trademark owned by CFA Institute.
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/1/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -5.12% | -6.06% | -5.12% | -6.06% | ||||||||||||
Since Inception (5/30/18) | +1.58% | +0.89% | +0.86% | +0.49% | ||||||||||||
| 30-Day Standardized Yield6 | ||||||||
| Distribution Rate5 | (with fee waiver) | (without fee waiver) | ||||||
6.87% | 7.25% | 6.82% | ||||||
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 recentmonth-end performance, go to franklintempleton.com or call(800)342-5236.
See page 8 for Performance Summary footnotes.
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
5/30/18–3/31/20
See page 8 for Performance Summary footnotes.
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
| Net Investment Income |
$1.560387 |
Total Annual Operating Expenses8
| With Fee Waiver | Without Fee Waiver | |||
0.40% | 1.54% | |||
All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Distributions to shareholders may decline when prevailing interest rates fall or when the Fund experiences defaults on debt securities it holds. The high-yield corporate debt securities and instruments in which the Fund invests tend to be rated below investment grade. Investing in higher-yielding, lower-rated corporate debt securities and instruments involves greater risk of default, which could result in loss of principal—a risk that may be heightened in a slowing economy. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The markets for particular securities or types of securities are or may become relatively illiquid. Reduced liquidity will have an adverse impact on the security’s value and on the Fund’s ability to sell such securities when necessary to meet the Fund’s liquidity needs or in response to a specific market event. 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 orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.
6. The Fund’s30-day standardized yield is calculated over a trailing30-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. Source: Morningstar. The ICE BofAML U.S. High Yield Constrained Index tracks the performance of U.S. dollar denominated below investment-grade corporate debt publicly issued in the U.S. domestic market.
8. 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.
| 8 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $ 7.50, then 8.6× $ 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 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 ETFs. In addition, if transactional costs were included, your total costs would have been higher.
| Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 908.50 | $ | 1.91 | $ | 1,023.00 | $ | 2.02 | 0.40 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
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Franklin Liberty International Aggregate Bond ETF
This annual report for Franklin Liberty International Aggregate Bond ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks total investment return, consisting of a combination of interest income and capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and investments that provide exposure to bonds.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of +4.25% based on market price and +4.05% based on net asset value (NAV). In comparison, the Fund’s new benchmark, the Bloomberg Barclays Global Aggregateex-USD Index (100% Hedged to USD), posted a +5.00% total return.1 The Fund’s old benchmark, the Bloomberg Barclays Global Aggregateex-USD Index posted a +0.74% total return for the same period.1 We believe the new benchmark’s composition more accurately reflects the Fund’s holdings. You can find more of the Fund’s performance data in the Performance Summary beginning on page 12.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund invests predominantly in fixed and floating-rate bonds issued by governments, government agencies and governmental-related or corporate issuers located outside the U.S. The Fund may also invest in securities or structured products that are linked to or derive their value from another security, asset or currency of any nation. In addition, the Fund’s assets are invested in issuers located in at least three countries (excluding the U.S.).
The Fund may invest in debt securities of any maturity or duration, and the average maturity or duration of debt securities in the Fund’s portfolio will fluctuate depending on the
| Geographic Composition | ||
| Based on Total Net Assets as of 3/31/20 | ||
investment manager’s outlook on changing market, economic and political conditions.
The Fund is a“non-diversified” fund, which means it generally invests a greater portion of its assets in the securities of one or more issuers and invests overall in a smaller number of issuers than a diversified fund.
What is duration?
Duration is a measure of a bond’s price sensitivity to interest rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest rate changes than a portfolio with a higher duration.
When choosing investments for the Fund, we allocate the Fund’s assets based upon our assessment of changing market, political and economic conditions. We consider various factors, including evaluation of interest rates, currency exchange rate changes and credit risks. We may consider selling a security when we believe the security has become fully valued due to either its price appreciation or changes in the issuer’s fundamentals, or when we believe another security is a more attractive investment opportunity.
1. Source: Morningstar
The index is unmanaged and includes reinvestment of any income or distributions. It does 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 36.
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FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
| Portfolio Composition |
| Based on Total Net Assets as of 3/31/20 |
 |
We seek to hedge substantially all of the Fund’s foreign currency exposure using currency related derivatives, including currency and cross currency forwards and currency futures contracts. We expect to maintain extensive positions in currency related derivative instruments as a hedging technique or to implement a currency investment strategy, which exposes a large amount of the Fund’s assets to obligations under these instruments. The results of such transactions may represent, from time to time, a large component of the Fund’s investment returns. The use of these derivative transactions may allow the fund to obtain net long or net negative (short) exposure to selected currencies. The Fund may also enter into various other transactions involving derivatives, including interest rate/bond futures contracts and interest rate swap agreements. These derivative instruments may be used for hedging purposes. Derivatives that provide exposure to bonds may be used to satisfy the Fund’s 80% policy.
Manager’s Discussion
The Fund’s sector allocation and security selection contributed to relative returns, helped by positioning in Spanish and Italian government bonds. An underweight exposure to corporate investment-grade industrial issues and security selection among corporate investment-grade financial bonds also added relative value.
The Fund’s currency positioning also contributed to relative returns, largely due to positioning in the euro and the South Korean won. However, exposure to the Australian dollar and Polish zloty weighed on relative results.
In addition, the Fund’s duration and yield-curve positioning helped relative results, largely due to duration stances on eurozone and Polish bonds. An underweighted duration position in U.K. issues taken early in the review period contributed to relative performance, although a similar stance in Canadian debt detracted.
In contrast, the Fund’s local market allocation detracted from relative returns, largely as a result of exposure to the Chinese market.
Thank you for your participation in Franklin Liberty International Aggregate Bond ETF. We look forward to serving your future investment needs.
 |
John Beck | |
| Co-Lead Portfolio Manager |
 |
Sonal Desai, Ph.D. | |
| Co-Lead Portfolio Manager |
| David Zahn, CFA | ||
| Portfolio Manager |
| Patrick Klein, Ph.D. | ||
| Portfolio Manager |
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
| franklintempleton.com | Annual Report | 11 | ||||
FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/1/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | +4.05% | +4.25% | +4.05% | +4.25% | ||||||||||||
Since Inception (5/30/18) | +4.05% | +4.38% | +2.19% | +2.36% | ||||||||||||
| 30-Day Standardized Yield6 | ||||||||
| Distribution Rate5 | (with fee waiver) | (without fee waiver) | ||||||
2.21% | 0.50% | -2.06% | ||||||
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 recentmonth-end performance, go to franklintempleton.com or call(800)342-5236.
See page 14 for Performance Summary footnotes.
| 12 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
5/30/18–3/31/20
See page 14 for Performance Summary footnotes.
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FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
PERFORMANCE SUMMARY
Distributions(4/1/19–3/31/20)
Net Investment Income |
$0.089110 |
Total Annual Operating Expenses8
| With Fee Waiver | Without Fee Waiver | |||
0.25% | 2.32% | |||
All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. As the 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. The Fund’s investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. 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. The Fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a governmental entity may be unwilling or unable to pay interest and repay principal on its sovereign debt, or otherwise meet its obligations when due because of cash flow problems, insufficient foreign reserves, the relative size of the debt service burden to the economy as a whole, the government’s policy toward principal international lenders such as the International Monetary Fund, or the political considerations to which the government may be subject. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.
6. The Fund’s30-day standardized yield is calculated over a trailing30-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. Source: Morningstar. The Bloomberg Barclays Global Aggregate ex-USD Index and the Bloomberg Barclays Global Aggregate ex-USD Index (100% Hedged to USD) are the same index with the latter being 100% hedged to the U.S. dollar. This index measures global investment-grade debt from 24 local currency markets. This multicurrency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.
8. 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.
| 14 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
| Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 990.80 | $ | 1.24 | $ | 1,023.75 | $ | 1.26 | 0.25 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| franklintempleton.com | Annual Report | 15 | ||||
Franklin Liberty Senior Loan ETF
This annual report for Franklin Liberty Senior Loan ETF covers the period ended March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide a high level of current income with a secondary goal of preservation of capital. The Fund invests at least 80% of its net assets in senior loans and investments that provide exposure to senior loans.
Performance Overview
During the12-month period, the Fund posted cumulative total returns of-5.55% based on market price and-3.92% based on net asset value (NAV). In comparison, the Fund’s primary benchmark, the S&P/LSTA U.S. Leveraged Loan 100 Index, posted a-5.15% total return for the same period.1 The Fund’s additional benchmark, the Custom Franklin Senior Loan Index, posted a-3.78% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 19.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund invests predominantly in income-producing senior floating interest rate corporate loans made to or issued by U.S. companies,non-U.S. entities and U.S. subsidiaries ofnon-U.S. entities. Floating interest rates vary with and are periodically adjusted to a generally recognized base interest rate such as the London Interbank Offered Rate (LIBOR) or the Prime Rate. The Fund may invest in companies whose financial condition is troubled or uncertain and that may be involved in bankruptcy proceedings, reorganizations or financial restructurings.
| Portfolio Composition |
| Based on Total Net Assets as of 3/31/20 |
 |
Senior loans generally have credit ratings below investment grade and may be subject to restrictions on resale. Under normal market conditions, the Fund invests at least 75% of its net assets in senior loans that are ratedB- or higher at the time of purchase by a nationally recognized statistical rating organization (NRSRO) or, if unrated, are determined to be of comparable quality by the Fund’s investment manager. Under normal market conditions, the Fund may invest up to 25% of its net assets in senior loans that are rated belowB- by an NRSRO or, if unrated, are determined to be of comparable quality by the investment manager.
Manager’s Discussion
Favorable investor sentiment for much of 2019 and demand from newcollateralized-loan-obligation securities led to solid returns for the asset class, despite continued outflows from loan retail securities. As the period progressed, many investors expected future rate cuts to be on hold, which led to a significant deceleration in outflows from retail loan securities and investors turned to discounted, lower-rated names in order to put cash to work, particularly towards the end of 2019 and beginning of 2020. However, as fears of the impact of theCOVID-19 pandemic on the global economy surfaced, the loan market entered arisk-off mode in March, which recorded some of the worst daily declines since the global financial crisis. The combination of aggressive U.S. Fed interest rate cuts and what we considered an increasing possibility of a global recession resulted in heavy outflows from loan retail securities. While the market partially retraced
1. Source: Morningstar.
2. Source: FactSet. The Custom Franklin Senior Loan Index comprises the Subset Index of Top 50 Obligors in Credit Suisse Leveraged Loan Index, which includes only the top 50 obligors of the Credit Suisse Leveraged Loan Index. Credit Suisse is not responsible for or involved in the calculation or management of the Subset Index of Top 50 Obligors in Credit Suisse Leveraged Loan Index.
The indexes are unmanaged and includes reinvestment of any income or distributions. It does 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 41.
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FRANKLIN LIBERTY SENIOR LOAN ETF
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Media | 12.0% | |||
| Software | 8.9% | |||
| Hotels Restaurants & Leisure | 6.6% | |||
| Health Care Providers & Services | 5.0% | |||
| Pharmaceuticals | 4.9% | |||
| Specialty Retail | 4.9% | |||
| Containers & Packaging | 4.4% | |||
| Communications Equipment | 4.1% | |||
| Commercial Services & Supplies | 3.9% | |||
| Diversified Financial Services | 3.9% | |||
the worst declines by the end of the period, led by a rebound in higher rated loans, the technical environment remained weak and aggressive credit rating downgrades negatively impacted lower-rated loans.
During the period, the Fund outperformed its primary benchmark, the S&P/LSTA U.S. Leveraged Loan 100 Index, on a NAV basis, but underperformed its additional benchmark, the Custom Franklin Senior Loan Index. The Fund continued to invest in loans from the largest obligors in the loan market, which experienced more severe principal declines during the peak of selling activity as investors looked to sell the largest, most liquid loans to meet heavy outflows. These loans, however, rebounded strongly at the end of the period and higher rated loans recorded the highest returns. Some of the loans that outperformed at the end of the period were more heavily weighted in the custom benchmark, which led to higher returns compared to our primary benchmark, as well as the portfolio. However, compared to the primary benchmark and the broader market, the portfolio’s overweighted position in higher rated loans led to outperformance during theone-year period. Upper-tier loans in the primary benchmark returned-1.46%, middle-tier loans returned-4.40%, and lower-tier loans returned-6.68%. As ofperiod-end, the Fund had approximately 61% of its loan portfolio in the upper tier and 39% in the middle tier, compared to the primary benchmark, which had 38% in the upper tier and 61% in the middle tier.
Among individual issuers, major contributors to performance versus the benchmark were higher rated loans in industries that investors perceived to be more insulated from the impact ofCOVID-19. CSC Holdings (a broadband services provider), Davita (a provider of kidney dialysis services) and Asurion (a provider of technology protection services) all reported solid results during the period and avoided the worst price declines in a period of severe dislocation. However,
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry | % of Total Net Assets | |||
| DaVita Inc., Tranche B-1 Term Loan, 3.353%, 2.739%, 8/12/2026 Health Care Equipment & Services | 2.8% | |||
| CommScope Inc., Initial Term Loans, 8.853%, 4.239%, 4/04/2026 Technology Hardware & Equipment | 2.8% | |||
| Asurion LLC, Replacement B-6 Term Loans, 4.603%, 3.989%, 11/03/2023 Commercial & Professional Services | 2.7% | |||
| Clarios Global LP (Power Solutions), Initial Dollar Term Loan, 5.103%, 4.441%, 4/30/2026 Auto Components | 2.7% | |||
| Nexstar Broadcasting Inc., Term B-4 Loan, 4.331%, 4.331%, 9/19/2026 Media | 2.7% | |||
| CSC Holdings LLC, March 2017 Incremental Term Loans, 2.861%, 2.862%, 7/17/2025 Media | 2.6% | |||
| Genesee & Wyoming Inc., Initial Term Loan, 3.960%, 3.45%, 12/30/2026 Transportation | 2.5% | |||
| Go Daddy Operating Co. LLC, Tranche B-2 Term Loan, 3.353%, 2.739%, 2/15/2024 Software | 2.5% | |||
| 1011778 B.C. ULC, Term B-4 Loan, TBD, 2.739%, 11/19/2026 Consumer Services | 2.4% | |||
| Caesars Resort Collection LLC, Term B Loans, 4.353%, 12/22/24 Hotels Restaurants & Leisure | 2.4% | |||
major detractors from performance were in industries that investors believed to be more impacted byCOVID-19 shutdowns and travel restrictions. Caesars Resort Collection (a gaming company) declined amid closures of the company’s casinos and American Airlines (a global airline operator) detracted from performance due to a steep fall in travel. Both issuers drew from available credit facilities to support liquidity.
Thank you for your participation in Franklin Liberty Senior loan ETF. We look forward to serving your future investment needs.
| franklintempleton.com | Annual Report | 17 | ||||
FRANKLIN LIBERTY SENIOR LOAN ETF
 |
Reema Agarwal, CFA | |
| Co-Lead Portfolio Manager |
 |
Justin Ma, CFA | |
| Co-Lead Portfolio Manager |
| Margaret Chiu, CFA, FRM | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
| 18 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY SENIOR LOAN ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/1/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
1-Year | -3.92% | -5.55% | -3.92% | -5.55% | ||||||||||||
Since Inception (5/30/18) | -1.58% | -3.10% | -0.86% | -1.70% | ||||||||||||
| 30-Day Standardized Yield6 | ||||||||
| Distribution Rate5 | (with fee waiver) | (without fee waiver) | ||||||
4.02% | 5.05% | 4.47% | ||||||
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
See page 21 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 19 | ||||
FRANKLIN LIBERTY SENIOR LOAN ETF
PERFORMANCE SUMMARY
Total Return Index Comparison for a Hypothetical $10,000 Investment1
Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. It includes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of any income or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannot invest directly in an index.
5/30/18–3/31/20
See page 21 for Performance Summary footnotes.
| 20 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY SENIOR LOAN ETF
PERFORMANCE SUMMARY
| Distributions (4/1/19–3/31/20) |
Net Investment Income |
$1.086808 |
Total Annual Operating Expenses9
| With Fee Waiver | Without Fee Waiver | |||
0.45% | 1.00% | |||
All investments involve risks, including possible loss of principal. Investors should be aware that the Fund’s share price and yield will fluctuate with market conditions. The senior loans and debt securities in which the Fund invests tend to be rated below investment grade. Investing in higher-yielding, lower-rated, senior loans and debt securities involves greater risk of default, which could result in loss of principal—a risk that may be heightened in a slowing economy. Interest earned on senior loans varies with changes in prevailing interest rates. Therefore, while senior loans offer higher interest income when interest rates rise, they will also generate less income when interest rates decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The markets for particular securities or types of securities are or may become relatively illiquid. Reduced liquidity will have an adverse impact on the security’s value and on the Fund’s ability to sell such securities when necessary to meet the Fund’s liquidity needs or in response to a specific market event. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.
6. The Fund’s30-day standardized yield is calculated over a trailing30-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. Source: Morningstar. The S&P/LSTA U.S. Leveraged Loan 100 Index reflects the performance of the largest facilities in the leveraged loan market. This rules-based index consists of the 100 largest loan facilities in the benchmark S&P/LSTA Leveraged Loan Index.
8. Source: FactSet. The Custom Franklin Senior Loan Index comprises the Subset Index of Top 50 Obligors in Credit Suisse Leveraged Loan Index includes only the top 50 obligors of the Credit Suisse Leveraged Loan Index. Credit Suisse is not responsible for or involved in the calculation or management of the Subset Index of Top 50 Obligors in Credit Suisse Leveraged Loan Index.
9. 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.
| franklintempleton.com | Annual Report | 21 | ||||
FRANKLIN LIBERTY SENIOR LOAN ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
| Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 10/1/19 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/201,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
| $1,000.00 | $ | 936.00 | $ | 2.18 | $ | 1,022.75 | $ | 2.28 | 0.45 | % | ||||||||||||
1. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period.
2. Reflects expenses after fee waivers and expense reimbursements.
| 22 | Annual Report | franklintempleton.com | ||
Franklin Liberty Systematic Style Premia ETF
This annual report for Franklin Liberty Systematic Style Premia ETF covers the period since the Fund’s inception on December 18, 2019, through March 31, 2020.
Your Fund’s Goal and Main Investments
The Fund seeks to provide absolute return by allocating its assets across two underlying alternative investment strategies, which representtop-down andbottom-up approaches to capturing factor-based risk premia. The strategies consist of a top-down risk premia strategy and a bottom-up long/short equity strategy.
What is a futures contract?
A futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an asset at a specific price on a future date.
What is a total return swap?
A total return swap is a swap agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income it generates and any capital gains.
What is a currency forward contract?
A currency forward contract, or a currency forward, is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.
What is a risk premium swap?
A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield. An asset’s risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.
Performance Overview
For the period since the Fund’s inception on December 18, 2019, through March 31, 2020, the Fund posted cumulative total returns of-6.98% based on market price and-7.34%
| Portfolio Composition |
| Based on Total Net Assets as of 3/31/20 |
 |
based on net asset value (NAV). In comparison, the ICE BofAML US3-Month Treasury Bill Index posted a +0.64% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 26.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
The Fund’stop-down risk premia strategy focuses on value, momentum and carry factors in taking both long and short positions across equity, fixed income, commodity and currency asset classes.
The Fund’sbottom-up long/short equity strategy focuses on quality, value and momentum factors in determining whether to hold long or short positions in individual equity securities. Long/short equity strategies generally seek to produce returns from investments in the equity markets by taking long and short positions in stocks and stock indices (through the use of derivatives or through a short position in an exchange-traded fund). Long positions benefit from an increase in the price of the underlying instrument, while short positions benefit from a decrease in that price.
1. Source: Factset.
The index is unmanaged and includes reinvestment of any income or distributions. It does 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 45.
| franklintempleton.com | Annual Report | 23 | ||||
FRANKLIN LIBERTY SYSTEMATIC STYLE PREMIA ETF
Under normal market conditions, thetop-down risk premia strategy invests primarily in equity, interest rate/bond and commodity index futures; equity and commodity-linked total return swaps; and currency forwards. Under normal market conditions, thebottom-up long/short equity strategy invests primarily in equity securities and equity total return swaps, with equity total return swaps being used to obtain short exposures.
Under normal market conditions, we seek to allocate assets between the two factor-based risk premia alternative investment strategies described above according to each strategy’s estimated risk, as measured by historical returns based risk models. We seek to maintain equal risk contributions between the two strategies.
Through the two strategies, we invest the Fund’s assets based on a systematic investment process for securities selection and asset allocation by utilizing quantitative trading models. By employing these two approaches, we seek to provide positive absolute return over time while maintaining a relatively low correlation with traditional markets. The exposure to individual factors may vary based on the market opportunity of the individual factors.
The Fund may use derivatives for both hedging andnon-hedging (investment) purposes. The Fund’s derivative investments may include, among other instruments: (i) futures contracts, including futures on equity, interest rate/bond and commodity indices; (ii) swaps, including equity and commodity-linked total return swaps; and (iii) currency forward contracts. These derivatives may be used to enhance Fund returns, increase liquidity, gain long or short exposure to certain instruments, markets or factors in a more efficient or less expensive way and/or hedge risks associated with its other portfolio investments. The results of such transactions are expected to represent a material component of the Fund’s investment returns.
Manager’s Discussion
At period-end, global equity markets sold off to register the worst drawdowns since the Global Financial Crisis more than a decade ago. Developed markets and emerging markets were both down significantly from their March lows before slightly recovering and closing higher. Broader commodity markets also had a challenging first quarter of 2020. The
| Top 10 Sectors/Industries | ||||
| 3/31/20 | ||||
| % of Total Net Assets | ||||
| Financials | 11.9% | |||
| Information Technology | 8.5% | |||
| Health Care | 6.5% | |||
| Consumer Discretionary | 5.5% | |||
| Industrials | 5.2% | |||
| Consumer Staples | 3.9% | |||
| Communication Services | 3.7% | |||
| Materials | 3.1% | |||
| Energy | 1.9% | |||
| Utilities | 1.4% | |||
| Top 10 Long Positionsa | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| FLSP Holdings Corp. Diversified Financial Services, Cayman Islands | 3.6% | |||
| McDonald’s Corp. Hotels, Restaurants & Leisure, United States | 0.8% | |||
| Total SA Oil, Gas & Consumable Fuels, France | 0.8% | |||
| Lockheed Martin Corp. Aerospace & Defense, United States | 0.8% | |||
| Novo Nordisk AS, B Pharmaceuticals, Denmark | 0.8% | |||
| AbbVie Inc. Biotechnology, United States | 0.8% | |||
| Medtronic PLC Health Care Equipment & Supplies, United States | 0.8% | |||
| SAP SE Software, Germany | 0.7% | |||
| The Home Depot Inc. Specialty Retail, United States | 0.7% | |||
| Novartis AG Pharmaceuticals, Switzerland | 0.7% | |||
| Top 10 Short Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry, Country | % of Total Net Assets | |||
| BeiGene Ltd. Pharmaceuticals, Biotechnology & Life Sciences, China | 0.0% | |||
| Tapestry Inc. Consumer Durables & Apparel, United States | 0.0% | |||
| Delta Air Lines Inc. Transportation, United States | 0.0% | |||
| Lincoln National Corp. Insurance, United States | -0.1% | |||
| Targa Resources Corp Energy, United States | -0.1% | |||
| Pinterest Inc Media & Entertainment, United States | -0.1% | |||
| Apache Corp. Energy, United States | -0.1% | |||
| Barratt Developments PLC Consumer Durables & Apparel, United Kingdom | -0.1% | |||
| VEREIT Inc. Real Estate, United States | -0.1% | |||
| Aramark Consumer Durables & Apparel, United States | -0.1% | |||
| 24 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY SYSTEMATIC STYLE PREMIA ETF
energy heavy S&P GSCI Index and the Bloomberg Commodity Index suffered major declines. 2020’s first quarter was a difficult period for long/short factor strategies (value, carry and momentum) in commodities markets. In our opinion, commodities markets experienced a perfect storm from the combination of demand-shock from the COVID-19 pandemic and an oil price war between Russia and Saudi Arabia in March. Also, West Texas Intermediate, Brent and gasoline futures fell substantially during the quarter.
Fund performance during the short period since inception was negative. The Fund’s strategies, while beta neutral in design, were affected by rapid changes in volatility. We saw similar challenges across the multi-alternative sector, particularly among style premia strategy managers. Under normal conditions, these strategies are expected to deliver strong performance when volatility returns to more normal levels. Looking forward, we believe that volatility in markets will continue to remain elevated over the next few months as the world tacklesCOVID-19 and its economic fallout. We have reduced risk in the overall portfolio based on our proprietary systematic risk indicator that we run every day. This indicator is strongly signaling that this is arisk-off environment. We will continue to monitor this risk indicator to look for an opportunity to recalibrate risk.
The Fund’stop-down and bottom-up long/short equity components had negative results during the period, with a larger proportion coming from thetop-down component.
All asset classes from within the top-down component—commodities, equity indexes, fixed income and foreign currencies—detracted from the Fund’s performance. On a relative basis, commodity strategies and equity index strategies fared more poorly than fixed income and foreign currency strategies within the top-down component during the period.
The commodity carry and commodity value models performed poorly during the period, and accounted for more than 40% of the negative performance coming out of the Fund’stop-down asset class strategies. Detractors included long positions in gasoline and soybeans as well as short positions in lean hogs and natural gas.
The equity indexes value model from ourtop-down risk premia strategy also hurt Fund performance due to the valuation model’s long positions in EuroStoxx, Italy and Canada. We believe this is a result of rapidly changing outlooks for many sectors in the market (energy being the most relevant example), during the period.
In our bottom-up long/short equity component, the quality and momentum model of our multifactor process contributed to the Fund’s performance and value detracted. Being net long in exposure relative to short exposure hurt Fund results. Realized risk that arose in the market ended up being higher than modeled ex-ante risk in portfolio construction. We have recalibrated the portfolio with updated risk forecasts, while being engaged to value, momentum and quality with respect to positioning going forward.
Atperiod-end, among equity indexes, our largest long positions were EuroStoxx, Spain and Sweden and our largest short positions were Hong Kong, U.K. and NASDAQ.
Among fixed income indexes, our largest long positions were Canada, Italy and France, and our largest short positions were Gilts, German Bunds and U.S. Treasuries.
Among foreign currency exposures, our largest long positions were the Japanese yen, Swedish krona and Turkish lira, and our largest short positions were the Swiss Krone, New Zealand dollar and Swiss Franc. All foreign currency exchange rates are measured against the U.S. dollar.
Among commodity indexes, our largest long positions were sugar, cocoa and gold, and our largest short positions were lean soybeans, natural gas and lean hogs.
Thank you for your participation in Franklin Liberty Systematic Style Premia ETF. We look forward to serving your future investment needs.
 |
Chandra Seethamraju, Ph.D. |
 |
Sundaram Chettiappan, CFA |
| Vaneet Chadha, CFA | ||
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
| franklintempleton.com | Annual Report | 25 | ||||
FRANKLIN LIBERTY SYSTEMATIC STYLE PREMIA ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables and graph 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (12/20/19), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
Since Inception (12/18/19) | -7.34% | -6.98% | -7.34% | -6.98% | ||||||||||||
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 recentmonth-end performance, go to franklintempleton.com or call(800)342-5236.
See page 27 for Performance Summary footnotes.
| 26 | Annual Report | franklintempleton.com | ||
FRANKLIN LIBERTY SYSTEMATIC STYLE PREMIA ETF
PERFORMANCE SUMMARY
Distributions(12/18/19–3/31/20)
Net Investment Income |
$0.005020 |
Total Annual Operating Expenses5
| With Fee Waiver | Without Fee Waiver | |||
0.65% | 0.92% | |||
All investments involve risks, including possible loss of principal. The Fund is actively managed and could experience losses if the manager’s judgment about particular investments, or its evaluation of the risks, potential returns and correlation properties of the various risk premia in which the Fund invests, prove to be incorrect. The manager’s allocation of Fund assets among different strategies, asset classes and investments may not prove beneficial or produce the desired results. Trading models used by the manager for securities selection and asset allocation may become outdated and the historical patterns upon which the models are based may weaken or disappear. There can be no assurance that the factor-based risk premia investment strategies utilized by the manager will enhance Fund performance, reduce volatility or reduce potential loss. Investments in derivatives involve costs and create economic leverage, which may result in significant volatility and cause the Fund to participate in losses (as well as gains) that significantly exceed the Fund’s initial investment. Certain derivatives have the potential for unlimited loss. Investing in derivatives and the use of foreign currency techniques involve special risks and may not achieve the anticipated benefits and/or may result in losses to the Fund. Other risks include illiquidity, mispricing or improper valuation of the derivative, and imperfect correlation between the value of the derivative and the underlying instrument. The Fund may realize losses when a counterparty fails to perform as promised. Currency management strategies could result in losses to the Fund if currencies do not perform as the manager expects. The Fund will incur a loss as a result of a short position if the price of the asset sold short increases in value, which involves the risk of theoretically unlimited losses. Short positions are speculative transactions and involve special risks, including greater reliance on the manager’s ability to accurately anticipate the future value of a security. Taking short positions in securities results in a form of leverage which may cause the Fund to be more volatile. Investing in physical commodities, including through commodity-linked derivative instruments such as commodity-linked total returns swaps and commodity index futures, is speculative and can be extremely volatile. Market prices of commodities may fluctuate rapidly based on numerous factors. The current or “spot” prices of physical commodities may also affect, in a volatile and inconsistent manner, the prices of futures contracts in respect of the relevant commodity. Liquidity risk exists when securities or other investments become more difficult to sell, or are unable to be sold, at the price at which they’ve been valued. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. 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 or adverse developments in such areas of focus than a Fund that invests in a wider variety of countries, regions, industries or sectors or investments. Smaller- and midsize-company stocks have historically experienced more price volatility than larger-company stocks, especially over the short term. The market values of securities or other investments owned by the Fund will go up or down, sometimes rapidly or unpredictably. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in an issuer’s financial strength or in a security’s credit rating may affect its value. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/21. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
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 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.
| franklintempleton.com | Annual Report | 27 | ||||
FRANKLIN LIBERTY SYSTEMATIC STYLE PREMIA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $ 7.50, then 8.6× $ 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 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 ETFs. In addition, if transactional costs were included, your total costs would have been higher.
| Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 12/18/191 | Ending Account Value 3/31/20 | Expenses Paid During Period 12/18/19–3/31/202,3 | Ending Account Value 3/31/20 | Expenses Paid During Period 10/1/19–3/31/202,3 | Net Annualized Expense Ratio3 | |||||||||||||||||
| $1,000.00 | $ | 926.60 | $ | 1.78 | $ | 1,012.36 | $ | 1.86 | 0.65 | % | ||||||||||||
1. 12/18/19 for Actual; 12/18/19 for Hypothetical.
2. Expenses are equal to the annualized expense ratio for thesix-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 183/366 to reflect theone-half year period. For Actual expenses, the multiplier is 104/366 to reflect the number of days since commencement of operations.
3. Reflects expenses after fee waivers and expense reimbursements.
| 28 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty High Yield Corporate ETF
| Year Ended March 31, | ||||||||
| 2020 | 2019a | |||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||
Net asset value, beginning of year | $25.45 | $25.00 | ||||||
|
| |||||||
| Income from investment operationsb | ||||||||
Net investment incomec | 1.33 | 1.21 | ||||||
Net realized and unrealized gains (losses) | (2.51 | ) | 0.49 | |||||
|
| |||||||
Total from investment operations | (1.18 | ) | 1.70 | |||||
|
| |||||||
| Less distributions from: | ||||||||
Net investment income | (1.56 | ) | (1.23 | ) | ||||
Net realized gains | (0.04 | ) | (0.02 | ) | ||||
|
| |||||||
Total Distributions | (1.60 | ) | (1.25 | ) | ||||
|
| |||||||
Net asset value, end of year | $22.67 | $25.45 | ||||||
|
| |||||||
Total returnd | (5.12)% | 7.07% | ||||||
| Ratios to average net assetse | ||||||||
Expenses before waiver and payments by affiliates | 0.86% | 1.54% | ||||||
Expenses net of waiver and payments by affiliates | 0.40% | 0.40% | ||||||
Net investment income | 5.29% | 5.80% | ||||||
| Supplemental data | ||||||||
Net assets, end of year (000’s) | $130,362 | $10,181 | ||||||
Portfolio turnover ratef | 129.98% | g | 23.57% | |||||
aFor the period May 30, 2018 (commencement of operations) to March 31, 2019.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 129.98%
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 29 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty High Yield Corporate ETF
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes 98.2% | ||||||||||||||
| Automobiles & Components 0.9% | ||||||||||||||
| a | Adient US LLC, senior secured note, 144A, 7.00%, 5/15/26 | United States | 1,200,000 | $ | 1,116,746 | |||||||||
|
| |||||||||||||
| Capital Goods 7.9% | ||||||||||||||
| a | Beacon Roofing Supply Inc., senior note, 144A, 4.875%, 11/01/25 | United States | 3,000,000 | 2,726,265 | ||||||||||
| a | Cloud Crane LLC, secured note, second lien, 144A, 10.125%, 8/01/24 | United States | 700,000 | 555,628 | ||||||||||
| a | Harsco Corp., senior note, 144A, 5.75%, 7/31/27 | United States | 600,000 | 559,749 | ||||||||||
Jeld-Wen Inc., | ||||||||||||||
a senior bond, 144A, 4.875%, 12/15/27 | United States | 1,600,000 | 1,425,668 | |||||||||||
a senior note, 144A, 4.625%, 12/15/25 | United States | 500,000 | 444,373 | |||||||||||
| a | Manitowoc Co. Inc., secured note, second lien, 144A, 9.00%, 4/01/26 | United States | 400,000 | 356,847 | ||||||||||
| a | NCI Building Systems Inc., senior secured note, 144A, 8.00%, 4/15/26 | United States | 3,000,000 | 2,602,725 | ||||||||||
| a | Resideo Funding Inc., senior note, 144A, 6.125%, 11/01/26 | United States | 1,200,000 | 1,056,090 | ||||||||||
| a | TransDigm Inc., senior secured note, 144A, 6.25%, 3/15/26 | United States | 600,000 | 600,373 | ||||||||||
|
| |||||||||||||
| 10,327,718 | ||||||||||||||
|
| |||||||||||||
| Commercial & Professional Services 4.8% | ||||||||||||||
| a | GFL Environmental Inc., senior note, 144A, 5.125%, 12/15/26 | Canada | 2,200,000 | 2,161,500 | ||||||||||
H&E Equipment Services Inc., senior note, 5.625%, 9/01/25 | United States | 500,000 | 466,878 | |||||||||||
| a | Herc Holdings Inc., senior note, 144A, 5.50%, 7/15/27 | United States | 2,200,000 | 2,062,665 | ||||||||||
| a | Intrado Corp., senior note, 144A, 8.50%, 10/15/25 | United States | 200,000 | 147,440 | ||||||||||
United Rentals North America Inc., | ||||||||||||||
senior bond, 5.50%, 5/15/27 | United States | 900,000 | 884,183 | |||||||||||
a senior note, second lien, 144A, 3.875%, 11/15/27 | United States | 600,000 | 570,330 | |||||||||||
|
| |||||||||||||
| 6,292,996 | ||||||||||||||
|
| |||||||||||||
| Consumer Durables & Apparel 1.9% | ||||||||||||||
| a | Ashton Woods USA LLC / Ashton Woods Finance Co., senior note, 144A, 9.875%, 4/01/27 | United States | 2,400,000 | 2,420,502 | ||||||||||
|
| |||||||||||||
| Consumer Services 1.9% | ||||||||||||||
| a | 1011778 BC ULC/New Red Finance Inc., secured note, second lien, 144A, 4.375%, 1/15/28 | Canada | 700,000 | 650,615 | ||||||||||
| a | 24 Hour Holdings III LLC, senior note, 144A, 8.00%, 6/01/22 | United States | 800,000 | 86,749 | ||||||||||
| a | Downstream Development Authority of Quapaw Tribe of Oklahoma, secured note, 144A, 10.50%, 2/15/23 | United States | 100,000 | 80,874 | ||||||||||
| a | Golden Nugget Inc., senior note, 144A, 6.75%, 10/15/24 | United States | 400,000 | 254,944 | ||||||||||
Yum! Brands Inc., 7.75%, 4/01/25 | United States | 1,300,000 | 1,368,250 | |||||||||||
|
| |||||||||||||
| 2,441,432 | ||||||||||||||
|
| |||||||||||||
| Diversified Financials 4.1% | ||||||||||||||
| a | Five Point Operating Co. LP/Five Point Capital Corp., senior note, 144A, 7.875%, 11/15/25 | United States | 2,000,000 | 1,734,940 | ||||||||||
| a | HAT Holdings I LLC/HAT Holdings II LLC, senior note, 144A, 5.25%, 7/15/24 | United States | 600,000 | 579,753 | ||||||||||
MPT Operating Partnership LP/MPT Finance Corp., senior bond, 5.00%, 10/15/27 | United States | 1,400,000 | 1,368,605 | |||||||||||
Springleaf Finance Corp., | ||||||||||||||
senior bond, 5.375%, 11/15/29 | United States | 1,100,000 | 1,013,177 | |||||||||||
senior note, 6.625%, 1/15/28 | United States | 700,000 | 659,365 | |||||||||||
|
| |||||||||||||
| 5,355,840 | ||||||||||||||
|
| |||||||||||||
| Energy 8.1% | ||||||||||||||
Cheniere Energy Partners LP, | ||||||||||||||
senior secured note, first lien, 5.25%, 10/01/25 | United States | 600,000 | 562,482 | |||||||||||
a senior secured note, first lien, senior bond, 144A, 4.50%, 10/01/29 | United States | 1,500,000 | 1,343,325 | |||||||||||
| a | Chesapeake Energy Corp., secured note, second lien, 144A, 11.50%, 1/01/25 | United States | 310,000 | 52,700 | ||||||||||
| 30 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty High Yield Corporate ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Energy (continued) | ||||||||||||||
Crestwood Midstream Partners LP/Crestwood Midstream Finance Corp., | ||||||||||||||
senior note, 5.75%, 4/01/25 | United States | 600,000 | $ | 348,018 | ||||||||||
a senior note, 144A, 5.625%, 5/01/27 | United States | 1,600,000 | 891,656 | |||||||||||
| a | CSI Compressco LP/CSI Compressco Finance Inc., senior secured note, first lien, 144A, 7.50%, 4/01/25 | United States | 1,100,000 | 746,631 | ||||||||||
| a | CVR Energy Inc., senior note, 144A, 5.25%, 2/15/25 | United States | 2,500,000 | 1,962,500 | ||||||||||
| a | Endeavor Energy Resources LP/EER Finance Inc., senior bond, 144A, 5.75%, 1/30/28 | United States | 700,000 | 479,885 | ||||||||||
EnLink Midstream LLC, senior bond, 5.375%, 6/01/29 | United States | 1,100,000 | 579,664 | |||||||||||
EnLink Midstream Partners LP, senior note, 4.15%, 6/01/25 | United States | 1,900,000 | 932,814 | |||||||||||
Martin Midstream Partners LP/Martin Midstream Finance Corp., senior note, 7.25%, 2/15/21 | United States | 100,000 | 54,505 | |||||||||||
Murphy Oil USA Inc., senior bond, 4.75%, 9/15/29 | United States | 500,000 | 471,525 | |||||||||||
Nabors Industries Inc., senior note, 5.10%, 9/15/23 | United States | 1,200,000 | 309,000 | |||||||||||
| a | Nabors Industries Ltd., senior note, 144A, 7.25%, 1/15/26 | Bermuda | 300,000 | 104,250 | ||||||||||
QEP Resources Inc., senior note, 5.625%, 3/01/26 | United States | 500,000 | 186,288 | |||||||||||
| a | Tullow Oil PLC, senior note, 144A, 6.25%, 4/15/22 | United Kingdom | 900,000 | 228,825 | ||||||||||
| a | Viper Energy Partners LP, senior note, 144A, 5.375%, 11/01/27 | United States | 200,000 | 169,110 | ||||||||||
WPX Energy Inc., senior bond, 4.50%, 1/15/30 | United States | 2,100,000 | 1,148,175 | |||||||||||
|
| |||||||||||||
| 10,571,353 | ||||||||||||||
|
| |||||||||||||
| Food, Beverage & Tobacco 5.4% | ||||||||||||||
B&G Foods Inc., senior note, 5.25%, 4/01/25 | United States | 3,100,000 | 3,043,936 | |||||||||||
| a | JBS USA LUX SA/JBS USA Food Co./JBS USA Finance Inc., senior bond, 144A, 5.50%, 1/15/30 | Free of Tax | 2,600,000 | 2,698,930 | ||||||||||
| a | Post Holdings Inc., senior bond, 144A, 4.625%, 4/15/30 | United States | 1,300,000 | 1,254,500 | ||||||||||
|
| |||||||||||||
| 6,997,366 | ||||||||||||||
|
| |||||||||||||
| Health Care Equipment & Services 8.9% | ||||||||||||||
| a | Centene Corp., senior note, 144A, 4.25%, 12/15/27 | United States | 2,700,000 | 2,720,115 | ||||||||||
CHS/Community Health Systems Inc., senior secured note, first lien, 6.25%, 3/31/23 | United States | 2,600,000 | 2,487,875 | |||||||||||
HCA Inc., senior bond, 3.50%, 9/01/30 | United States | 2,300,000 | 2,096,154 | |||||||||||
| a | MEDNAX Inc., senior note, 144A, 6.25%, 1/15/27 | United States | 1,500,000 | 1,215,113 | ||||||||||
| a | MPH Acquisition Holdings LLC, senior note, 144A, 7.125%, 6/01/24 | United States | 1,400,000 | 1,228,542 | ||||||||||
| a,b | Polaris Intermediate Corp., senior note, 144A, PIK, 8.50%, 12/01/22 | United States | 100,000 | 78,248 | ||||||||||
| a | Tenet Healthcare Corp., senior note, second lien, 144A, 6.25%, 2/01/27 | United States | 1,800,000 | 1,761,750 | ||||||||||
|
| |||||||||||||
| 11,587,797 | ||||||||||||||
|
| |||||||||||||
| Insurance 0.8% | ||||||||||||||
| a | Alliant Holdings Intermediate LLC/Alliant HoldingsCo-Issuer, senior note, 144A, 6.75%, 10/15/27 | United States | 1,100,000 | 1,036,145 | ||||||||||
|
| |||||||||||||
| Materials 14.8% | ||||||||||||||
| a | Ardagh Packaging Finance PLC/Ardagh Holdings USA Inc., senior note, 144A, 6.00%, 2/15/25 | Luxembourg | 600,000 | 606,180 | ||||||||||
| a | Cleveland-Cliffs Inc., senior secured note, 144A, 6.75%, 3/15/26 | United States | 1,100,000 | 978,312 | ||||||||||
| a | CSN Resources SA, senior note, 144A, 7.625%, 4/17/26 | Luxembourg | 1,200,000 | 788,106 | ||||||||||
| a | Element Solutions Inc., senior note, 144A, 5.875%, 12/01/25 | United States | 600,000 | 592,482 | ||||||||||
| a | Gates Global LLC/Gates Corp., senior note, 144A, 6.25%, 1/15/26 | United States | 2,300,000 | 2,048,161 | ||||||||||
| a | Kaiser Aluminum Corp., senior note, 144A, 4.625%, 3/01/28 | United States | 2,700,000 | 2,411,235 | ||||||||||
| a | Mauser Packaging Solutions Holding Co., senior note, 144A, 7.25%, 4/15/25 | United States | 1,700,000 | 1,300,551 | ||||||||||
| a | Neon Holdings Inc., senior note, 144A, 10.125%, 4/01/26 | United States | 600,000 | 541,730 | ||||||||||
| a | Novelis Corp., senior bond, 144A, 4.75%, 1/30/30 | United States | 400,000 | 358,250 | ||||||||||
| a | Owens-Brockway Glass Container Inc., senior note, 144A, 5.875%, 8/15/23 | United States | 3,000,000 | 2,958,765 | ||||||||||
| a | Plastipak Holdings Inc., senior note, 144A, 6.25%, 10/15/25 | United States | 500,000 | 451,250 | ||||||||||
| franklintempleton.com | Annual Report | 31 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty High Yield Corporate ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Materials (continued) | ||||||||||||||
| a | Rain CII Carbon LLC/CII Carbon Corp., senior note, second lien, 144A, 7.25%, 4/01/25 | United States | 400,000 | $ | 338,988 | |||||||||
| a | Reynolds Group Issuer Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer Luxembourg SA, senior secured note, first lien, 144A, 5.125%, 7/15/23 | United States | 500,000 | 499,373 | ||||||||||
| a | Sealed Air Corp., senior bond, 144A, 5.125%, 12/01/24 | United States | 2,400,000 | 2,430,000 | ||||||||||
| a | SunCoke Energy Partners LP / SunCoke Energy Partners Finance Corp., senior note, 144A, 7.50%, 6/15/25 | United States | 500,000 | 363,735 | ||||||||||
| a | TPC Group Inc., secured note, 144A, 10.50%, 8/01/24 | United States | 600,000 | 495,153 | ||||||||||
| a | Trivium Packaging Finance BV, senior secured note, 144A, 5.50%, 8/15/26 | Netherlands | 2,100,000 | 2,101,306 | ||||||||||
| a | Univar Solutions USA Inc/Washington, senior note, 144A, 5.125%, 12/01/27 | United States | 100,000 | 91,555 | ||||||||||
|
| |||||||||||||
| 19,355,132 | ||||||||||||||
|
| |||||||||||||
| Media & Entertainment 17.7% | ||||||||||||||
| a | Banijay Entertainment SASU, senior note, 144A, 5.375%, 3/01/25 | France | 1,200,000 | 1,107,000 | ||||||||||
CCO Holdings LLC / CCO Holdings Capital Corp., | ||||||||||||||
a senior bond, 144A, 4.50%, 8/15/30 | United States | 2,000,000 | 1,971,250 | |||||||||||
a senior bond, 144A, 5.375%, 6/01/29 | United States | 1,200,000 | 1,239,780 | |||||||||||
| a | Clear Channel Worldwide Holdings Inc., senior secured note, first lien, 144A, 5.125%, 8/15/27 | United States | 1,300,000 | 1,224,535 | ||||||||||
CSC Holdings LLC, | ||||||||||||||
a senior bond, 144A, 6.625%, 10/15/25 | United States | 500,000 | 529,390 | |||||||||||
a senior note, 144A, 7.50%, 4/01/28 | United States | 2,400,000 | 2,573,730 | |||||||||||
| a | Diamond Sports Group LLC/Diamond Sports Finance Co., senior note, 144A, 6.625%, 8/15/27 | United States | 600,000 | 404,580 | ||||||||||
DISH DBS Corp., senior bond, 5.875%, 7/15/22 | United States | 2,100,000 | 2,056,236 | |||||||||||
| a | Gray Escrow Inc., senior note, 144A, 7.00%, 5/15/27 | United States | 2,700,000 | 2,701,485 | ||||||||||
| a | LCPR Senior Secured Financing DAC, senior secured note, first lien, 144A, 6.75%, 10/15/27 | United States | 2,200,000 | 2,179,210 | ||||||||||
| a | Live Nation Entertainment Inc., senior note, 144A, 4.75%, 10/15/27 | United States | 100,000 | 90,055 | ||||||||||
Netflix Inc., | ||||||||||||||
senior bond, 5.75%, 3/01/24 | United States | 2,600,000 | 2,752,763 | |||||||||||
senior bond, 5.875%, 2/15/25 | United States | 300,000 | 318,677 | |||||||||||
| a | Nexstar Broadcasting Inc., senior note, 144A, 5.625%, 7/15/27 | United States | 600,000 | 589,830 | ||||||||||
| a | Scripps Escrow Inc., senior note, 144A, 5.875%, 7/15/27 | United States | 500,000 | 442,775 | ||||||||||
| a | Univision Communications Inc., senior secured note, first lien, 144A, 5.125%, 5/15/23 | United States | 2,700,000 | 2,409,750 | ||||||||||
| a | WMG Acquisition Corp., secured note, first lien, 144A, 5.00%, 8/01/23 | United States | 500,000 | 500,622 | ||||||||||
|
| |||||||||||||
| 23,091,668 | ||||||||||||||
|
| |||||||||||||
| Pharmaceuticals, Biotechnology & Life Sciences 5.4% | ||||||||||||||
| a | Bausch Health Americas Inc., senior note, 144A, 9.25%, 4/01/26 | United States | 2,000,000 | 2,098,900 | ||||||||||
| a | Bausch Health Companies Inc., senior note, 144A, 5.00%, 1/30/28 | Canada | 500,000 | 477,100 | ||||||||||
| a | Catalent Pharma Solutions Inc., senior note, 144A, 5.00%, 7/15/27 | United States | 1,400,000 | 1,365,770 | ||||||||||
| a | Horizon Therapeutics USA Inc., senior note, 144A, 5.50%, 8/01/27 | United States | 400,000 | 403,780 | ||||||||||
| a | Par Pharmaceutical Inc., senior secured note, 144A, 7.50%, 4/01/27 | United States | 1,000,000 | 1,002,575 | ||||||||||
Teva Pharmaceutical Finance Netherlands III BV, senior bond, 3.15%, 10/01/26 | Netherlands | 2,000,000 | 1,699,850 | |||||||||||
|
| |||||||||||||
| 7,047,975 | ||||||||||||||
|
| |||||||||||||
| Retailing 0.9% | ||||||||||||||
| a | Lithia Motors Inc., senior note, 144A, 4.625%, 12/15/27 | United States | 1,300,000 | 1,179,880 | ||||||||||
| a | Party City Holdings Inc., senior note, 144A, 6.625%, 8/01/26 | United States | 500,000 | 52,500 | ||||||||||
|
| |||||||||||||
| 1,232,380 | ||||||||||||||
|
| |||||||||||||
| 32 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty High Yield Corporate ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| Corporate Bonds & Notes (continued) | ||||||||||||||
| Semiconductors & Semiconductor Equipment 0.5% | ||||||||||||||
| a | Amkor Technology Inc., senior note, 144A, 6.625%, 9/15/27 | United States | 700,000 | $ | 661,885 | |||||||||
|
| |||||||||||||
| Software & Services 0.6% | ||||||||||||||
| a | Blackboard Inc., secured note, second lien, 144A, 10.375%, 11/15/24 | United States | 500,000 | 458,750 | ||||||||||
| a | Camelot Finance SA, senior note, 144A, 4.50%, 11/01/26 | Luxembourg | 400,000 | 390,249 | ||||||||||
|
| |||||||||||||
| 848,999 | ||||||||||||||
|
| |||||||||||||
| Technology Hardware & Equipment 1.0% | ||||||||||||||
| a | CommScope Technologies LLC, senior bond, 144A, 6.00%, 6/15/25 | United States | 500,000 | 461,350 | ||||||||||
| a | Presidio Holdings Inc., senior note, 144A, 8.25%, 2/01/28 | United States | 100,000 | 88,875 | ||||||||||
| a | Tempo Acquisition LLC / Tempo Acquisition Finance Corp., senior note, 144A, 6.75%, 6/01/25 | United States | 800,000 | 738,024 | ||||||||||
|
| |||||||||||||
| 1,288,249 | ||||||||||||||
|
| |||||||||||||
| Telecommunication Services 5.2% | ||||||||||||||
| a | Altice France SA, senior note, first lien, 144A, 8.125%, 2/01/27 | France | 2,300,000 | 2,410,515 | ||||||||||
Altice France Holding SA, | ||||||||||||||
a senior note, 144A, 10.50%, 5/15/27 | Luxembourg | 2,000,000 | 2,120,000 | |||||||||||
a senior note, 144A, 6.00%, 2/15/28 | Luxembourg | 300,000 | 266,154 | |||||||||||
| a | CommScope Inc., senior note, 144A, 5.00%, 6/15/21 | United States | 300,000 | 299,610 | ||||||||||
Front Range BidCo Inc., | ||||||||||||||
a senior note, 144A, 6.125%, 3/01/28 | United States | 500,000 | 477,813 | |||||||||||
a senior note, 144A, 4.00%, 3/01/27 | United States | 500,000 | 481,250 | |||||||||||
Sprint Corp., senior note, 7.625%, 2/15/25 | United States | 700,000 | 779,905 | |||||||||||
|
| |||||||||||||
| 6,835,247 | ||||||||||||||
|
| |||||||||||||
| Transportation 0.4% | ||||||||||||||
| a | DAE Funding LLC, senior note, 144A, 5.75%, 11/15/23 | United States | 600,000 | 560,247 | ||||||||||
|
| |||||||||||||
| Utilities 6.9% | ||||||||||||||
Calpine Corp., | ||||||||||||||
a first lien, 144A, 4.50%, 2/15/28 | United States | 300,000 | 291,900 | |||||||||||
a senior note, 144A, 5.125%, 3/15/28 | United States | 700,000 | 649,250 | |||||||||||
Clearway Energy Operating LLC, senior bond, 5.00%, 9/15/26 | United States | 3,100,000 | 3,025,732 | |||||||||||
| a | InterGen NV, secured bond, 144A, 7.00%, 6/30/23 | Netherlands | 3,000,000 | 2,655,000 | ||||||||||
Talen Energy Supply LLC, senior note, 6.50%, 6/01/25 | United States | 500,000 | 328,022 | |||||||||||
| a | Vistra Operations Co. LLC, senior note, 144A, 5.50%, 9/01/26 | United States | 2,000,000 | 2,073,935 | ||||||||||
|
| |||||||||||||
| 9,023,839 | ||||||||||||||
|
| |||||||||||||
Total Corporate Bonds & Notes | 128,093,516 | |||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 128,093,516 | |||||||||||||
|
| |||||||||||||
| Short Term Investments 0.1% | ||||||||||||||
U.S. Government & Agency Securities (Cost $100,000) 0.1% |
| |||||||||||||
| c | FHLB, 4/01/20 | 100,000 | 100,000 | |||||||||||
|
| |||||||||||||
Total Investments (Cost $146,629,672) 98.3% | 128,193,516 | |||||||||||||
Other Assets, less Liabilities 1.7% | 2,168,514 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 130,362,030 | ||||||||||||
|
| |||||||||||||
See abbreviations on page 79.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $99,151,437, representing 76.1% of net assets.
bIncome may be received in additional securities and/or cash.
cThe security was issued on a discount basis with no stated coupon rate.
| franklintempleton.com | Annual Report | 33 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty High Yield Corporate ETF(continued)
At March 31, 2020, the Fund had the following credit default swap contracts outstanding. See Note 1(c).
| Description | Periodic Payment Rate Received (Paid) | Payment Frequency | Maturity Date | Notional Amount | Value | Unamortized Upfront Payments (Reciepts) | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||
| Centrally Cleared Swap Contracts | ||||||||||||||||||||||||||||
| Contracts to Sell Protectiond,e | ||||||||||||||||||||||||||||
Long: S3195204 CDS USD R F 5.00000 CDX | 5% | Quarterly | 12/20/24 | 3,465,000 | (205,481 | ) | 308,039 | (513,520 | ) | |||||||||||||||||||
dThe Fund enters contracts to sell protection to create a long credit position.
ePerformance 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.
| 34 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty International Aggregate Bond ETF
| Year Ended March 31, | ||||||||
| 2020 | 2019a | |||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||
Net asset value, beginning of year | $ | 24.56 | $ | 25.00 | ||||
|
| |||||||
| Income from investment operationsb: | ||||||||
Net investment incomec | 0.22 | 0.39 | ||||||
Net realized and unrealized gains (losses) | 0.78 | (0.40 | ) | |||||
|
| |||||||
Total from investment operations | 1.00 | (0.01 | ) | |||||
|
| |||||||
Less distributions from: | ||||||||
Net investment income | (0.09 | ) | (0.43 | ) | ||||
Net realized gains | (0.52 | ) | — | |||||
|
| |||||||
Total Distributions | (0.61 | ) | (0.43 | ) | ||||
|
| |||||||
Net asset value, end of year | $24.95 | $24.56 | ||||||
|
| |||||||
Total returnd | 4.05% | 0.00% | ||||||
| Ratios to average net assetse | ||||||||
Expenses before waiver and payments by affiliates | 3.23% | 2.32% | ||||||
Expenses net of waiver and payments by affiliates | 0.28% | 0.35% | ||||||
Net investment income | 0.87% | 1.91% | ||||||
| Supplemental data | ||||||||
Net assets, end of year (000’s) | $4,989 | $4,912 | ||||||
Portfolio turnover ratef | 66.78% | g | 50.32% | |||||
aFor the period May 30, 2018 (commencement of operations) to March 31, 2019.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 66.78%
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 35 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty International Aggregate Bond ETF
| Principal Amount* | Value | |||||||||||||
| Foreign Government and Agency Securities 82.9% | ||||||||||||||
| Australia 2.1% | ||||||||||||||
| a | New South Wales Treasury Corp., senior bond, Reg S, 3.00%, 5/20/27 | 50,000 | AUD | $ | 34,806 | |||||||||
| a,b | Queensland Treasury Corp., senior bond, 144A, Reg S, 3.25%, 8/21/29 | 50,000 | AUD | 35,902 | ||||||||||
| a | Western Australian Treasury Corp., senior note, 26, Reg S, 3.00%, 10/21/26 | 50,000 | AUD | 34,571 | ||||||||||
|
| |||||||||||||
| 105,279 | ||||||||||||||
|
| |||||||||||||
| Belgium 3.1% | ||||||||||||||
| a | Government of Belgium, Reg S, 1.25%, 4/22/33 | 125,000 | EUR | 155,947 | ||||||||||
|
| |||||||||||||
| Canada 4.8% | ||||||||||||||
Government of Canada, 2.75%, 6/01/22 | 320,000 | CAD | 238,553 | |||||||||||
|
| |||||||||||||
| Finland 2.0% | ||||||||||||||
| a | Government of Finland, Reg S, 0.375%, 9/15/20 | 90,000 | EUR | 99,676 | ||||||||||
|
| |||||||||||||
| France 5.7% | ||||||||||||||
Government of France, | 200,000 | EUR | 236,853 | |||||||||||
a,c senior note, Reg S, 0.00% , 5/25/22 | 40,000 | EUR | 44,673 | |||||||||||
|
| |||||||||||||
| 281,526 | ||||||||||||||
|
| |||||||||||||
| Germany 10.4% | ||||||||||||||
Government of Germany, | 140,000 | EUR | 162,826 | |||||||||||
a Reg S, 5.50%, 1/04/31 | 30,000 | EUR | 54,888 | |||||||||||
a,c Strip, Reg S, .01%, 10/08/21 | 80,000 | EUR | 89,171 | |||||||||||
KFW, senior note, 2.05%, 2/16/26 | 20,000,000 | JPY | 211,743 | |||||||||||
|
| |||||||||||||
| 518,628 | ||||||||||||||
|
| |||||||||||||
| Hungary 1.0% | ||||||||||||||
Government of Hungary, 6.75%, 10/22/28 | 12,800,000 | HUF | 51,786 | |||||||||||
|
| |||||||||||||
| Indonesia 0.6% | ||||||||||||||
Indonesia Treasury Bond, senior bond, 8.25%, 5/15/36 | 500,000,000 | IDR | 29,869 | |||||||||||
|
| |||||||||||||
| Ireland 3.6% | ||||||||||||||
| a,b | Government of Ireland, 144A, Reg S, senior bond, 1.50%, 5/15/50 | 140,000 | EUR | 180,635 | ||||||||||
|
| |||||||||||||
| Italy 7.0% | ||||||||||||||
| a,b | Italy Buoni Poliennali Del Tesoro Reg S,144A, senior bond, 2.45%, 9/01/50 | 95,000 | EUR | 105,964 | ||||||||||
Italy Treasury Bond, | 150,000 | EUR | 166,989 | |||||||||||
a,b senior bond, 144A, Reg S, 4.00%, 2/01/37 | 55,000 | EUR | 77,198 | |||||||||||
|
| |||||||||||||
| 350,151 | ||||||||||||||
|
| |||||||||||||
| Japan 16.1% | ||||||||||||||
Development Bank of Japan, senior bond, 2.30%, 3/19/26 | 20,000,000 | JPY | 211,244 | |||||||||||
Government of Japan, | 40,000,000 | JPY | 412,880 | |||||||||||
senior bond, 1.50%, 3/20/33 | 16,500,000 | JPY | 178,991 | |||||||||||
|
| |||||||||||||
| 803,115 | ||||||||||||||
|
| |||||||||||||
| Mexico 0.9% | ||||||||||||||
Government of Mexico, M, senior bond, 7.50%, 6/03/27 | 1,000,000d | MXN | 42,886 | |||||||||||
|
| |||||||||||||
| Netherlands 2.6% | ||||||||||||||
Government of Netherlands, | 70,000 | EUR | 81,885 | |||||||||||
a,b senior bond, 144A, Reg S, .50%, 1/15/40 | 40,000 | EUR | 47,911 | |||||||||||
|
| |||||||||||||
| 129,796 | ||||||||||||||
|
| |||||||||||||
| 36 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty International Aggregate Bond ETF(continued)
| Principal Amount* | Value | |||||||||||||
| Foreign Government and Agency Securities (continued) | ||||||||||||||
| Poland 2.3% | ||||||||||||||
Government of Poland, | 200,000 | PLN | $ | 51,447 | ||||||||||
5.75%, 4/25/29 | 200,000 | PLN | 64,458 | |||||||||||
|
| |||||||||||||
| 115,905 | ||||||||||||||
|
| |||||||||||||
| South Africa 0.4% | ||||||||||||||
Government of South Africa, senior bond, 7.00%, 2/28/31 | 500,000 | ZAR | 20,684 | |||||||||||
|
| |||||||||||||
| Spain 2.8% | ||||||||||||||
Government of Spain, | ||||||||||||||
a,b senior bond, 144A, Reg S, 1.85%, 7/30/35 | 100,000 | EUR | 123,112 | |||||||||||
a,b senior bond, 144A, Reg S, 2.70%, 10/31/48 | 10,000 | EUR | 14,080 | |||||||||||
|
| |||||||||||||
| 137,192 | ||||||||||||||
|
| |||||||||||||
| e | Supranational 8.6% | |||||||||||||
Asian Development Bank, senior bond,339-00-1, 2.35%, 6/21/27 | 20,000,000 | JPY | 219,947 | |||||||||||
| a | European Investment Bank, senior bond, Reg S, 1.90%, 1/26/26 | 20,000,000 | JPY | 209,823 | ||||||||||
|
| |||||||||||||
| 429,770 | ||||||||||||||
|
| |||||||||||||
| United Kingdom 8.9% | ||||||||||||||
United Kingdom Treasury Bond, | ||||||||||||||
a Reg S, 1.75%, 9/07/37 | 60,000 | GBP | 86,942 | |||||||||||
a Reg S, 2.25%, 9/07/23 | 120,000 | GBP | 159,789 | |||||||||||
a Reg S, 3.50%, 7/22/68 | 10,000 | GBP | 26,922 | |||||||||||
a Reg S, 4.25%, 12/07/46 | 35,000 | GBP | 79,194 | |||||||||||
a Reg S, 4.75%, 12/07/30 | 50,000 | GBP | 90,751 | |||||||||||
|
| |||||||||||||
| 443,598 | ||||||||||||||
|
| |||||||||||||
Total Foreign Government and Agency Securities (Cost $4,138,383) | 4,134,996 | |||||||||||||
|
| |||||||||||||
| Corporate Bonds & Notes 8.7% | ||||||||||||||
| Belgium 1.3% | ||||||||||||||
| a | Anheuser Busch Inbev SA/NV , senior note, Reg S, 1.50%, 3/17/25 | 60,000 | EUR | 66,550 | ||||||||||
|
| |||||||||||||
| Czech Republic 2.1% | ||||||||||||||
| a | Energo-Pro AS, senior note, Reg S, 4.00%, 12/07/22 | 100,000 | EUR | 105,007 | ||||||||||
|
| |||||||||||||
| Denmark 1.0% | ||||||||||||||
| a | Nordea Kredit Realkreditaktieselskab, secured bond, Reg S, 1.00%, 10/01/50 | 177,343 | DKK | 25,240 | ||||||||||
| a | Nykredit Realkredit A/S secured bond, Reg S, 1.00%, 10/01/50 | 166,147 | DKK | 23,686 | ||||||||||
|
| |||||||||||||
| 48,926 | ||||||||||||||
|
| |||||||||||||
| Germany 2.1% | ||||||||||||||
| a | Aroundtown SA, senior note, Reg S, 1.625%, 1/31/28 | 100,000 | EUR | 104,403 | ||||||||||
|
| |||||||||||||
| Guernsey 2.2% | ||||||||||||||
| a | Globalworth Real Estate Investments Ltd., senior note, Reg S, 3.00%, 3/29/25 | 100,000 | EUR | 110,678 | ||||||||||
|
| |||||||||||||
Total Corporate Bonds & Notes | 435,564 | |||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 4,570,560 | |||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 37 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty International Aggregate Bond ETF(continued)
| Principal Amount* | Value | |||||||||||||
| Short Term Investments 2.0% | ||||||||||||||
U.S. Government & Agency Securities (Cost $100,000) 2.0% |
| |||||||||||||
| c | FHLB, 4/01/20 | 100,000 | $ | 100,000 | ||||||||||
|
| |||||||||||||
Total Investments (Cost $4,705,774) 93.6% | 4,670,560 | |||||||||||||
Other Assets, less Liabilities 6.4% | 318,601 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 4,989,161 | ||||||||||||
|
| |||||||||||||
See abbreviations on page 79.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At March 31, 2020, the aggregate value of these securities was $2,669,083, representing 53.5% of net assets.
bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $584,802, representing 11.7% of net assets.
cThe security was issued on a discount basis with no stated coupon rate.
dPrincipal amount is stated in 100 Mexican Peso Units.
eA supranational organization is an entity formed by two or more central governments through international treaties.
At March 31, 2020 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
| Forward Exchange Contracts | ||||||||||||||||||||||||||||
| Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
| OTC Forward Exchange Contracts | ||||||||||||||||||||||||||||
Australian Dollar | CITI | Buy | 175,000 | $ | 106,241 | 4/06/20 | $ | 1,185 | $ | — | ||||||||||||||||||
Australian Dollar | CITI | Sell | 175,000 | 114,593 | 4/06/20 | 7,167 | — | |||||||||||||||||||||
Canadian Dollar | CITI | Buy | 330,000 | 234,458 | 4/06/20 | — | (738 | ) | ||||||||||||||||||||
Canadian Dollar | CITI | Sell | 330,000 | 247,244 | 4/06/20 | 13,523 | — | |||||||||||||||||||||
Danish Krone | CITI | Buy | 700,000 | 103,215 | 4/06/20 | 134 | — | |||||||||||||||||||||
Danish Krone | CITI | Sell | 700,000 | 103,808 | 4/06/20 | 458 | — | |||||||||||||||||||||
Euro | CITI | Buy | 53,788 | 18,300,000 | 4/06/20 | 3,367 | — | |||||||||||||||||||||
Euro | CITI | Buy | 2,200,000 | 2,426,556 | 4/06/20 | — | (2,649 | ) | ||||||||||||||||||||
Euro | CITI | Sell | 2,200,000 | 2,439,129 | 4/06/20 | 15,221 | — | �� | ||||||||||||||||||||
Great British Pound | CITI | Buy | 350,000 | 428,071 | 4/06/20 | 7,822 | — | |||||||||||||||||||||
Great British Pound | CITI | Sell | 350,000 | 448,746 | 4/06/20 | 12,853 | — | |||||||||||||||||||||
Hungarian Forint | CITI | Buy | 18,300,000 | 51,611 | 4/06/20 | — | (969 | ) | ||||||||||||||||||||
Japanese Yen | CITI | Buy | 165,000,000 | 1,519,897 | 4/06/20 | 14,522 | — | |||||||||||||||||||||
Japanese Yen | CITI | Sell | 165,000,000 | 1,523,083 | 4/06/20 | — | (11,336 | ) | ||||||||||||||||||||
Mexican Peso | CITI | Buy | 1,100,000 | 47,154 | 4/06/20 | — | (283 | ) | ||||||||||||||||||||
Mexican Peso | CITI | Sell | 1,100,000 | 56,041 | 4/06/20 | 9,170 | — | |||||||||||||||||||||
Polish Zloty | CITI | Buy | 500,000 | 121,468 | 4/06/20 | — | (455 | ) | ||||||||||||||||||||
Polish Zloty | CITI | Sell | 500,000 | 128,173 | 4/06/20 | 7,160 | — | |||||||||||||||||||||
South African Rand | CITI | Buy | 470,000 | 26,815 | 4/06/20 | — | (391 | ) | ||||||||||||||||||||
South African Rand | CITI | Sell | 470,000 | 30,149 | 4/06/20 | 3,726 | — | |||||||||||||||||||||
Australian Dollar | CITI | Sell | 175,000 | 106,158 | 10/06/20 | — | (1,270 | ) | ||||||||||||||||||||
Canadian Dollar | CITI | Sell | 330,000 | 234,885 | 10/06/20 | 891 | — | |||||||||||||||||||||
Danish Krone | CITI | Sell | 341,000 | 50,661 | 10/06/20 | — | (6 | ) | ||||||||||||||||||||
Euro | CITI | Buy | 51,506 | 18,300,000 | 10/06/20 | 1,048 | — | |||||||||||||||||||||
Euro | CITI | Sell | 2,200,000 | 2,438,931 | 10/06/20 | 111 | — | |||||||||||||||||||||
Great British Pound | CITI | Sell | 350,000 | 429,097 | 10/06/20 | — | (7,641 | ) | ||||||||||||||||||||
Japanese Yen | CITI | Sell | 165,000,000 | 1,533,450 | 10/06/20 | — | (11,253 | ) | ||||||||||||||||||||
Mexican Peso | CITI | Sell | 1,100,000 | 45,831 | 10/06/20 | 204 | — | |||||||||||||||||||||
| 38 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty International Aggregate Bond ETF(continued)
| Forward Exchange Contracts(continued) | ||||||||||||||||||||||||||||
| Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
| OTC Forward Exchange Contracts(continued) | ||||||||||||||||||||||||||||
Polish Zloty | CITI | Sell | 500,000 | $ | 121,424 | 10/06/20 | $ | 381 | $ | — | ||||||||||||||||||
South African Rand | CITI | Sell | 470,000 | 26,209 | 10/06/20 | 344 | — | |||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total Forward Exchange Contracts |
| $ | 99,287 | $ | (36,991 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) |
| $ | 62,296 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 39 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty Senior Loan ETF
| Year Ended March 31, | ||||||||
| 2020 | 2019a | |||||||
| Per share operating performance (for a share outstanding throughout the year) | ||||||||
Net asset value, beginning of year | $ | 24.85 | $ | 25.00 | ||||
|
|
|
| |||||
| Income from investment operationsb: | ||||||||
Net investment incomec | 0.99 | 0.81 | ||||||
Net realized and unrealized gains (losses) | (1.90 | ) | (0.21 | ) | ||||
|
|
|
| |||||
Total from investment operations | (0.91 | ) | 0.60 | |||||
|
|
|
| |||||
Less distributions from net investment income | (1.09 | ) | (0.75 | ) | ||||
|
|
|
| |||||
Net asset value, end of year | $ | 22.85 | $ | 24.85 | ||||
|
|
|
| |||||
Total returnd | (3.92)% | 2.44% | ||||||
| Ratios to average net assetse | ||||||||
Expenses before waiver and payments by affiliates | 0.97% | 1.00% | ||||||
Expenses net of waiver and payments by affiliates | 0.45% | 0.45% | ||||||
Net investment income | 4.02% | 3.90% | ||||||
| Supplemental data | ||||||||
Net assets, end of year (000’s) | $54,833 | $57,165 | ||||||
Portfolio turnover ratef | 51.48% | g | 10.62% | |||||
aFor the period May 30, 2018 (commencement of operations) to March 31, 2019.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 51.48%
| 40 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty Senior Loan ETF
| Country | Principal Amount* | Value | ||||||||||||
| a,b | Senior Floating Rate Interests 85.3% | |||||||||||||
| Aerospace & Defense 1.3% | ||||||||||||||
Dynasty Acquisition Co. Inc., | United States | 329,075 | $ | 259,311 | ||||||||||
Initial Term Loan, 5.212%, 4/04/26 | United States | 612,080 | 482,319 | |||||||||||
|
| |||||||||||||
| 741,630 | ||||||||||||||
|
| |||||||||||||
| Airlines 1.9% | ||||||||||||||
American Airlines Inc., 2018 Replacement Term Loan, 2.710%, 6/27/25 | United States | 1,267,200 | 1,049,875 | |||||||||||
|
| |||||||||||||
| Auto Components 2.7% | ||||||||||||||
Clarios Global LP (Power Solutions), Initial Dollar Term Loan, 5.103%, 4/30/26 | United States | 1,592,000 | 1,464,640 | |||||||||||
|
| |||||||||||||
| Chemicals 3.7% | ||||||||||||||
Axalta Coating Systems U.S. Holdings Inc. (DuPont Performance Coatings), TermB-3 Dollar Loan, FRN, 3.694%, 6/01/24 | United States | 969,960 | 916,612 | |||||||||||
Univar Solutions USA Inc., first lien, TermB-5 Loans, 3.603%, 7/01/26 | United States | 73,085 | 66,873 | |||||||||||
Univar USA Inc., TermB-3 Loans, 3.853%, 7/01/24 | United States | 1,098,071 | 1,029,442 | |||||||||||
|
| |||||||||||||
| 2,012,927 | ||||||||||||||
|
| |||||||||||||
| Commercial Services & Supplies 3.9% | ||||||||||||||
| c | Prime Security Services Borrower LLC, TermB-1 Facility, 4.610%, 9/12/26 | United States | 1,433,183 | 1,304,197 | ||||||||||
Staples Inc., 2019 Refinancing Term B-1 Loans, 6.515%, 4/16/26 | United States | 585,807 | 470,842 | |||||||||||
West Corp., Term B Loans, 5.603%, 10/10/24 | United States | 447,317 | 344,434 | |||||||||||
|
| |||||||||||||
| 2,119,473 | ||||||||||||||
|
| |||||||||||||
| Communications Equipment 4.1% | ||||||||||||||
CommScope Inc., Initial Term Loans, 4.850%, 4/04/26 | United States | 1,592,000 | 1,512,400 | |||||||||||
Zayo Group Holdings Inc, (Front Range BidCo), Term Loan B, 4.005%, 3/09/27 | United States | 775,700 | 727,219 | |||||||||||
|
| |||||||||||||
| 2,239,619 | ||||||||||||||
|
| |||||||||||||
| Containers & Packaging 4.4% | ||||||||||||||
Berry Global Inc., | United States | 967,840 | 934,450 | |||||||||||
Term Y Loans, 2.862%, 7/01/26 | United States | 297,750 | 281,969 | |||||||||||
Reynolds Group Holdings Inc., U.S. Term Loans, 4.353%, 2/05/23 | United States | 1,258,946 | 1,200,720 | |||||||||||
|
| |||||||||||||
| 2,417,139 | ||||||||||||||
|
| |||||||||||||
| Diversified Financial Services 3.9% | ||||||||||||||
Asurion LLC, ReplacementB-6 Term Loans, 4.603%, 11/03/23 | United States | 1,530,731 | 1,477,155 | |||||||||||
| c | Trans Union LLC, 2019 Replacement TermB-5 Loans, TBD, 11/16/26 | United States | 712,104 | 686,588 | ||||||||||
|
| |||||||||||||
| 2,163,743 | ||||||||||||||
|
| |||||||||||||
| Electric Utilities 1.3% | ||||||||||||||
| c | Brookfield WEC Holdings Inc., Initial Term Loans, TBD, 8/01/25 | United States | 728,157 | 694,479 | ||||||||||
|
| |||||||||||||
| Food & Staples Retailing 1.2% | ||||||||||||||
Aramark Corp., U.S. TermB-3 Loan, 3.353%, 3/11/25 | United States | 697,750 | 654,722 | |||||||||||
|
| |||||||||||||
| Food Products 1.7% | ||||||||||||||
JBS USA Lux SA, New Term Loans, 3.603%, 5/01/26 | United States | 967,069 | 913,190 | |||||||||||
|
| |||||||||||||
| Health Care Providers & Services 5.0% | ||||||||||||||
Air Medical Group Holdings Inc., 2018 New Term Loans, 5.863%, 3/14/25 | United States | 713,981 | 644,367 | |||||||||||
DaVita Inc., TrancheB-1 Term Loan, 3.353%, 8/12/26 | United States | 1,592,010 | 1,521,696 | |||||||||||
Gentiva Health Services Inc., Term Loan B, 4.875%, 7/02/25 | United States | 450,000 | 425,250 | |||||||||||
Mallinckrodt International Finance SA & Mallinckrodt CB LLC, 2017 Term B Loans, 4.694%, 9/24/24 | Luxembourg | 190,544 | 130,999 | |||||||||||
|
| |||||||||||||
| 2,722,312 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 41 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Senior Loan ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| a,b | Senior Floating Rate Interests (continued) | |||||||||||||
| Hotels Restaurants & Leisure 6.6% | ||||||||||||||
| c | 1011778 B.C. ULC, TermB-4 Loan, 3.350%, 11/19/26 | Canada | 1,462,068 | $ | 1,356,068 | |||||||||
Aristocrat Technologies Inc., TermB-3 Loans, 3.576%, 10/19/24 | United States | 1,073,993 | 977,334 | |||||||||||
Caesars Resort Collection LLC, Term B Loans, 4.353%, 12/22/24 | United States | 1,603,424 | 1,317,099 | |||||||||||
|
| |||||||||||||
| 3,650,501 | ||||||||||||||
|
| |||||||||||||
| Household Products 0.6% | ||||||||||||||
Reynolds Consumer Products LLC, Initial Term Loans, 3.501%, 2/04/27 | United States | 338,667 | 321,522 | |||||||||||
|
| |||||||||||||
| Insurance 0.8% | ||||||||||||||
Alliant Holdings Intermediate LLC/Alliant HoldingsCo-Issue, Initial Term Loan, 4.603%, 5/09/25 | United States | 448,858 | 417,064 | |||||||||||
|
| |||||||||||||
| Leisure Equipment & Products 1.5% | ||||||||||||||
Playtika Holding Corp., Term B Loans, FRN, 7.603%, 12/10/24 | United States | 878,875 | 829,072 | |||||||||||
|
| |||||||||||||
| Media 12.0% | ||||||||||||||
Charter Communications Operating LLC (CCO Safari III LLC), TermB-2 Loan, 3.360%, 2/01/27 | United States | 1,129,512 | 1,091,862 | |||||||||||
CSC Holdings LLC, March 2017 Incremental Term Loans, 2.861%, 7/17/25 | United States | 1,467,401 | 1,423,379 | |||||||||||
Diamond Sports Group LLC, Term Loan, 4.180%, 8/24/26 | United States | 708,193 | 555,932 | |||||||||||
Gray Television Inc., Term C Loan, 4.015%, 1/02/26 | United States | 254,893 | 245,972 | |||||||||||
| d | Nexstar Broadcasting Inc., TermB-4 Loan, 4.331%, 9/19/26 | United States | 1,537,000 | 1,452,465 | ||||||||||
Sinclair Television Group Inc., Tranche B Term Loans, 3.860%, 1/03/24 | United States | 822,987 | 790,068 | |||||||||||
WideOpenWest Finance LLC, Term B Loan, 4.250%, 8/19/23 | United States | 1,107,161 | 1,011,668 | |||||||||||
|
| |||||||||||||
| 6,571,346 | ||||||||||||||
|
| |||||||||||||
| Oil, Gas & Consumable Fuels 2.0% | ||||||||||||||
Buckeye Partners LP, Initial Term Loans, 4.265%, 11/01/26 | United States | 1,200,000 | 1,116,000 | |||||||||||
|
| |||||||||||||
| Personal Products 2.3% | ||||||||||||||
Sunshine Luxembourg VII SARL (Nestle Skin Health), Facility B1 Commitments, FRN, 9/25/26 | Luxembourg | 1,396,500 | 1,277,797 | |||||||||||
|
| |||||||||||||
| Pharmaceuticals 4.9% | ||||||||||||||
Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 5.875%, 4/29/24 | United States | 323,753 | 290,569 | |||||||||||
Grifols Worldwide Operations USA Inc., Dollar Tranche B Term Loan, 2.683%, 11/15/27 | United States | 1,290,054 | 1,236,301 | |||||||||||
Valeant Pharmaceuticals International, Initial Term Loans, 3.616%, 6/02/25 | United States | 1,186,406 | 1,136,972 | |||||||||||
|
| |||||||||||||
| 2,663,842 | ||||||||||||||
|
| |||||||||||||
| Professional Services 2.0% | ||||||||||||||
Nielsen Finance LLC (VNU Inc.),Class B-4 Term Loans, 3.005%, 10/04/23 | United States | 1,181,620 | 1,108,753 | |||||||||||
|
| |||||||||||||
| Real Estate Management & Development 1.2% | ||||||||||||||
Cushman & Wakefield U.S. Borrower LLC, Replacement Term Loan, FRN, 4.353%, 8/21/25 | United States | 732,667 | 659,400 | |||||||||||
|
| |||||||||||||
| Road & Rail 2.5% | ||||||||||||||
Genesee & Wyoming Inc., Initial Term Loan, 3.960%, 12/30/26 | United States | 1,430,000 | 1,385,312 | |||||||||||
|
| |||||||||||||
| Software 8.9% | ||||||||||||||
Finastra USA Inc., Dollar Term Loan, FRN, 5.277%, 6/13/24 | United States | 905,997 | 788,217 | |||||||||||
Go Daddy Operating Co. LLC, TrancheB-2 Term Loan, 3.353%, 2/15/24 | United States | 1,422,114 | 1,363,807 | |||||||||||
Hyland Software Inc., Term Loans, 4.850%, 7/01/24 | United States | 1,065,855 | 995,687 | |||||||||||
Infor (U.S.) Inc. (Lawson), TrancheB-6 Term Loan, 4.694%, 2/01/22 | United States | 596,923 | 578,717 | |||||||||||
| c | SS&C European Holdings Sarl, TermB-4 Loan, 3.350%, 4/16/25 | Luxembourg | 202,380 | 192,767 | ||||||||||
| 42 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Senior Loan ETF(continued)
| Country | Principal Amount* | Value | ||||||||||||
| a,b | Senior Floating Rate Interests (continued) | |||||||||||||
| Software (continued) | ||||||||||||||
SS&C Technologies Inc., | ||||||||||||||
c TermB-3 Loans, 3.350%, 4/16/25 | United States | 283,617 | $ | 270,145 | ||||||||||
c TermB-5 Loan, 3.350%, 4/16/25 | United States | 295,453 | 280,828 | |||||||||||
| c | Vertafore Inc., Initial Term Loans, TBD, 7/02/25 | United States | 448,864 | 405,099 | ||||||||||
|
| |||||||||||||
| 4,875,267 | ||||||||||||||
|
| |||||||||||||
| Specialty Retail 4.9% | ||||||||||||||
Bass Pro Group LLC, Initial Term Loans, TBD, 9/25/24 | United States | 598,465 | 508,696 | |||||||||||
| c | EG America LLC, Additional Facility Loan, TBD, 2/07/25 | United States | 434,843 | 318,522 | ||||||||||
Harbor Freight Tools USA Inc., Refinancing Loans, 4.103%, 8/19/23 | United States | 912,527 | 837,243 | |||||||||||
Michaels Stores Inc., 2018 New Replacement Term B Loan, 3.916%, 1/28/23 | United States | 585,563 | 494,801 | |||||||||||
PetSmart Inc., Amended Loan, 5.000%, 3/11/22 | United States | 574,600 | 553,771 | |||||||||||
|
| |||||||||||||
| 2,713,033 | ||||||||||||||
|
| |||||||||||||
Total Floating Rate Loans (Cost $50,624,120) | 46,782,658 | |||||||||||||
|
| |||||||||||||
| Asset-Backed Securities 9.3% | ||||||||||||||
| e,f | AMMC CLO 15 Ltd.,2014-15A, CRR, 144A, 4.131%, 4,01/15/2032 | United States | 1,000,000 | 858,800 | ||||||||||
| e,f | Atrium XV, 15A, C, 144A, 4.006%, 4,01/23/2031 | United States | 1,000,000 | 848,587 | ||||||||||
| e,f | BlueMountain CLO Ltd.,2018-3A, C, 144A, 3.994%, 4,10/25/2030 | United States | 1,000,000 | 844,919 | ||||||||||
| e,f | Dryden 45 Senior Loan Fund,2016-45A, CR, 144A, 4.031%, 4,10/15/2030 | United States | 1,000,000 | 862,655 | ||||||||||
| e,f | Harbor Park CLO Ltd., 1A, C, 144A, 3.919%, 4,01/20/2031 | United States | 1,000,000 | 847,564 | ||||||||||
| e,f | LCM XVIII LP, 2018A, CR, 144A, 3.669%, 4,04/20/2031 | United States | 1,000,000 | 831,658 | ||||||||||
|
| |||||||||||||
Total Asset-Backed Securities (Cost $5,996,875) | 5,094,183 | |||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments (Cost $56,620,995) | 51,876,841 | |||||||||||||
|
| |||||||||||||
| Short Term Investments 0.4% | ||||||||||||||
U.S. Government & Agency Securities (Cost $235,000) 0.4% |
| |||||||||||||
| g | FHLB,4/01/20 | United States | 235,000 | 235,000 | ||||||||||
|
| |||||||||||||
Total Investments (Cost $56,855,995) 95.0% | 52,111,841 | |||||||||||||
Other Assets, less Liabilities 5.0% | 2,721,324 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 54,833,165 | ||||||||||||
|
| |||||||||||||
See abbreviations on page 79.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aThe coupon rate shown represents the rate at period end.
bSee Note 1(e) regarding senior floating rate interests.
cA portion or all of the security represents an unsettled loan commitment. The coupon rate isto-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.
dA portion or all of the security purchased on a delayed delivery basis.
eSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and 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. At March 31, 2020, the aggregate value of these securities was $5,094,183, representing 9.3% of net assets.
fThe coupon rate shown represents the rate inclusive of any caps or floors, if applicable, in effect at period end.
gThe security was issued on a discount basis with no stated coupon rate.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 43 | ||||
FRANKLIN TEMPLETON ETF TRUST
Consolidated Financial Highlights
Franklin Liberty Systematic Style Premia ETF
| Year Ended March 31, 2020a | ||||
| Per share operating performance (for a share outstanding throughout the year) | ||||
Net asset value, beginning of year | $ | 25.00 | ||
|
| |||
| Income from investment operationsb: | ||||
Net investment incomec | 0.11 | |||
Net realized and unrealized gains (losses) | (1.94 | ) | ||
|
| |||
Total from investment operations | (1.83 | ) | ||
|
| |||
Less distributions from net investment income | (0.01 | ) | ||
|
| |||
Net asset value, end of year | $ | 23.16 | ||
|
| |||
Total returnd | (7.34)% | |||
| Ratios to average net assetse | ||||
Expenses before waiver and payments by affiliates | 1.15% | |||
Expenses net of waiver and payments by affiliates | 0.65% | |||
Net investment income | 1.67% | |||
| Supplemental data | ||||
Net assets, end of year (000’s) | $50,948 | |||
Portfolio turnover ratef | 60.95% | g | ||
aFor the period December 18, 2019 (commencement of operations) to March 31, 2020.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 60.95%
| 44 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Consolidated Statement of Investments, March 31, 2020
Franklin Liberty Systematic Style Premia ETF
| Country | Shares | Value | ||||||||||||
| Common Stocks 49.3% | ||||||||||||||
| Aerospace & Defense 1.3% | ||||||||||||||
Lockheed Martin Corp. | United States | 1,166 | $ | 395,216 | ||||||||||
Raytheon Co. | United States | 1,500 | 196,725 | |||||||||||
| a | Teledyne Technologies Inc. | United States | 227 | 67,480 | ||||||||||
|
| |||||||||||||
| 659,421 | ||||||||||||||
|
| |||||||||||||
| Air Freight & Logistics 0.3% | ||||||||||||||
Deutsche Post AG | Germany | 4,836 | 131,464 | |||||||||||
|
| |||||||||||||
| Auto Components 0.1% | ||||||||||||||
Magna International Inc. | Canada | 1,300 | 41,018 | |||||||||||
|
| |||||||||||||
| Automobiles 0.1% | ||||||||||||||
Peugeot SA | France | 2,868 | 38,282 | |||||||||||
|
| |||||||||||||
| Banks 1.4% | ||||||||||||||
Banco Bilbao Vizcaya Argentaria SA | Spain | 32,209 | 103,038 | |||||||||||
BNP Paribas SA | France | 5,881 | 177,520 | |||||||||||
BOC Hong Kong (Holdings) Ltd. | Hong Kong | 19,500 | 53,965 | |||||||||||
Canadian Imperial Bank of Commerce | Canada | 2,500 | 144,026 | |||||||||||
Hang Seng Bank Ltd. | Hong Kong | 4,200 | 71,798 | |||||||||||
Japan Post Bank Co. Ltd. | Japan | 2,200 | 20,318 | |||||||||||
National Bank of Canada | Canada | 1,700 | 64,961 | |||||||||||
Skandinaviska Enskilda Banken AB, A | Sweden | 7,891 | 53,506 | |||||||||||
|
| |||||||||||||
| 689,132 | ||||||||||||||
|
| |||||||||||||
Beverages 0.0%† | ||||||||||||||
Suntory Beverage & Food Ltd. | Japan | 500 | 18,920 | |||||||||||
|
| |||||||||||||
| Biotechnology 2.0% | ||||||||||||||
AbbVie Inc. | United States | 5,100 | 388,569 | |||||||||||
| a | Biogen Inc. | United States | 1,000 | 316,380 | ||||||||||
CSL Ltd. | Australia | 1,842 | 334,476 | |||||||||||
|
| |||||||||||||
| 1,039,425 | ||||||||||||||
|
| |||||||||||||
| Building Products 0.3% | ||||||||||||||
AGC Inc. | Japan | 800 | 19,705 | |||||||||||
Geberit AG | Switzerland | 182 | 80,132 | |||||||||||
Masco Corp. | United States | 1,530 | 52,892 | |||||||||||
|
| |||||||||||||
| 152,729 | ||||||||||||||
|
| |||||||||||||
| Capital Markets 3.6% | ||||||||||||||
3i Group PLC | United Kingdom | 4,732 | 46,482 | |||||||||||
Amundi SA | France | 296 | 17,490 | |||||||||||
BlackRock Inc. | United States | 611 | 268,822 | |||||||||||
Brookfield Asset Management Inc., A | Canada | 5,400 | 236,661 | |||||||||||
Deutsche Boerse AG | Germany | 915 | 125,498 | |||||||||||
FactSet Research Systems Inc. | United States | 41 | 10,688 | |||||||||||
Hargreaves Lansdown PLC | United Kingdom | 1,366 | 23,476 | |||||||||||
Moody’s Corp. | United States | 900 | 190,350 | |||||||||||
Morgan Stanley | United States | 6,900 | 234,600 | |||||||||||
MSCI Inc. | United States | 394 | 113,850 | |||||||||||
Partners Group Holding AG | Switzerland | 90 | 62,285 | |||||||||||
S&P Global Inc. | United States | 1,258 | 308,273 | |||||||||||
SEI Investments Co. | United States | 500 | 23,170 | |||||||||||
Singapore Exchange Ltd. | Singapore | 3,900 | 25,172 | |||||||||||
T. Rowe Price Group Inc. | United States | 1,362 | 132,999 | |||||||||||
|
| |||||||||||||
| 1,819,816 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 45 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Chemicals 1.8% | ||||||||||||||
Air Liquide SA | France | 2,503 | $ | 320,370 | ||||||||||
Akzo Nobel NV | Netherlands | 892 | 58,735 | |||||||||||
BASF SE | Germany | 5,153 | 243,948 | |||||||||||
Croda International PLC | United Kingdom | 637 | 33,742 | |||||||||||
EMS-Chemie Holding AG | Switzerland | 39 | �� | 24,527 | ||||||||||
Evonik Industries AG | Germany | 902 | 18,874 | |||||||||||
Givaudan AG | Switzerland | 48 | 148,581 | |||||||||||
Nitto Denko Corp. | Japan | 900 | 40,225 | |||||||||||
Novozymes AS | Denmark | 1,066 | 48,482 | |||||||||||
|
| |||||||||||||
| 937,484 | ||||||||||||||
|
| |||||||||||||
| Commercial Services & Supplies 0.5% | ||||||||||||||
Cintas Corp. | United States | 400 | 69,288 | |||||||||||
| a | Copart Inc. | United States | 1,300 | 89,076 | ||||||||||
Dai Nippon Printing Co. Ltd. | Japan | 1,300 | 27,709 | |||||||||||
Secom Co. Ltd. | Japan | 900 | 74,814 | |||||||||||
Toppan Printing Co. Ltd. | Japan | 1,300 | 19,942 | |||||||||||
|
| |||||||||||||
| 280,829 | ||||||||||||||
|
| |||||||||||||
| Communications Equipment 0.2% | ||||||||||||||
Motorola Solutions Inc. | United States | 700 | 93,044 | |||||||||||
|
| |||||||||||||
| Construction & Engineering 0.2% | ||||||||||||||
Eiffage SA | France | 386 | 27,318 | |||||||||||
Obayashi Corp. | Japan | 3,100 | 26,591 | |||||||||||
| a | Skanska AB, B | Sweden | 1,673 | 25,574 | ||||||||||
|
| |||||||||||||
| 79,483 | ||||||||||||||
|
| |||||||||||||
| Containers & Packaging 0.1% | ||||||||||||||
Avery Dennison Corp. | United States | 400 | 40,748 | |||||||||||
|
| |||||||||||||
| Diversified Financial Services 0.4% | ||||||||||||||
Investor AB, B | Sweden | 2,219 | 102,375 | |||||||||||
Kinnevik AB, B | Sweden | 1,166 | 19,430 | |||||||||||
| a | M&G PLC | United Kingdom | 13,311 | 18,585 | ||||||||||
ORIX Corp. | Japan | 6,600 | 79,508 | |||||||||||
|
| |||||||||||||
| 219,898 | ||||||||||||||
|
| |||||||||||||
| Diversified Telecommunication Services 1.4% | ||||||||||||||
BCE Inc. | Canada | 900 | 36,503 | |||||||||||
BT Group PLC | United Kingdom | 41,510 | 60,683 | |||||||||||
Deutsche Telekom AG | Germany | 18,090 | 234,499 | |||||||||||
Nippon Telegraph & Telephone Corp. | Japan | 6,700 | 159,843 | |||||||||||
Orange SA | France | 9,706 | 118,587 | |||||||||||
Swisscom AG | Switzerland | 127 | 68,281 | |||||||||||
Telstra Corp. Ltd. | Australia | 20,325 | 38,191 | |||||||||||
|
| |||||||||||||
| 716,587 | ||||||||||||||
|
| |||||||||||||
| Electric Utilities 0.9% | ||||||||||||||
Chubu Electric Power Co. Inc. | Japan | 2,700 | 38,128 | |||||||||||
CLP Holdings Ltd. | Hong Kong | 8,500 | 78,410 | |||||||||||
Endesa SA | Spain | 1,547 | 33,049 | |||||||||||
Eversource Energy | United States | 1,800 | 140,778 | |||||||||||
NRG Energy Inc. | United States | 1,278 | 34,838 | |||||||||||
Power Assets Holdings Ltd. | Hong Kong | 6,000 | 35,880 | |||||||||||
Red Electrica Corp. SA | Spain | 2,101 | 37,727 | |||||||||||
Terna Rete Elettrica Nazionale SpA | Italy | 6,712 | 42,495 | |||||||||||
| a | Tokyo Electric Power Co. Holdings Inc. | Japan | 7,800 | 27,239 | ||||||||||
|
| |||||||||||||
| 468,544 | ||||||||||||||
|
| |||||||||||||
| 46 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Electrical Equipment 0.3% | ||||||||||||||
Legrand SA | France | 1,292 | $ | 82,904 | ||||||||||
Vestas Wind Systems AS | Denmark | 919 | 74,673 | |||||||||||
|
| |||||||||||||
| 157,577 | ||||||||||||||
|
| |||||||||||||
| Electronic Equipment, Instruments & Components 0.4% | ||||||||||||||
CDW Corp. | United States | 660 | 61,558 | |||||||||||
Hitachi High-Tech Corp. | Japan | 300 | 22,176 | |||||||||||
Hitachi Ltd. | Japan | 4,800 | 139,747 | |||||||||||
|
| |||||||||||||
| 223,481 | ||||||||||||||
|
| |||||||||||||
| Entertainment 0.5% | ||||||||||||||
| a | Electronic Arts Inc. | United States | 1,400 | 140,238 | ||||||||||
Nexon Co. Ltd. | Japan | 2,700 | 44,144 | |||||||||||
Vivendi SA | France | 4,177 | 89,487 | |||||||||||
|
| |||||||||||||
| 273,869 | ||||||||||||||
|
| |||||||||||||
| Equity Real Estate Investment Trusts (REITs) 1.0% | ||||||||||||||
Dexus | Australia | 5,353 | 29,782 | |||||||||||
Equity Lifestyle Properties Inc. | United States | 611 | 35,120 | |||||||||||
Gecina SA | France | 221 | 29,269 | |||||||||||
Japan Real Estate Investment Corp. | Japan | 4 | 23,454 | |||||||||||
Link REIT | Hong Kong | 10,900 | 92,393 | |||||||||||
Nippon Building Fund Inc. | Japan | 6 | 40,239 | |||||||||||
Public Storage | United States | 974 | 193,446 | |||||||||||
Segro PLC | United Kingdom | 5,446 | 51,591 | |||||||||||
|
| |||||||||||||
| 495,294 | ||||||||||||||
|
| |||||||||||||
| Food & Staples Retailing 0.6% | ||||||||||||||
Koninklijke Ahold Delhaize NV | Netherlands | 5,857 | 136,790 | |||||||||||
Woolworths Group Ltd. | Australia | 6,855 | 147,266 | |||||||||||
|
| |||||||||||||
| 284,056 | ||||||||||||||
|
| |||||||||||||
| Food Products 0.6% | ||||||||||||||
Nestle SA | Switzerland | 2,572 | 264,364 | |||||||||||
| b | WH Group Ltd., Reg S | Hong Kong | 48,500 | 45,366 | ||||||||||
|
| |||||||||||||
| 309,730 | ||||||||||||||
|
| |||||||||||||
| Gas Utilities 0.4% | ||||||||||||||
Enagas SA | Spain | 1,101 | 21,860 | |||||||||||
Hong Kong and China Gas Co. Ltd. | Hong Kong | 59,000 | 97,282 | |||||||||||
Naturgy Energy Group SA | Spain | 1,448 | 25,604 | |||||||||||
Osaka Gas Co. Ltd. | Japan | 1,700 | 32,061 | |||||||||||
Tokyo Gas Co. Ltd. | Japan | 1,700 | 40,250 | |||||||||||
|
| |||||||||||||
| 217,057 | ||||||||||||||
|
| |||||||||||||
| Health Care Equipment & Supplies 1.7% | ||||||||||||||
| a | Align Technology Inc. | United States | 380 | 66,101 | ||||||||||
Carl Zeiss Meditec AG | Germany | 196 | 19,001 | |||||||||||
Cochlear Ltd. | Australia | 348 | 39,926 | |||||||||||
Coloplast AS, B | Denmark | 554 | 80,369 | |||||||||||
Hoya Corp. | Japan | 2,300 | 196,008 | |||||||||||
Medtronic PLC | United States | 4,300 | 387,774 | |||||||||||
Siemens Healthineers AG | Germany | 733 | 28,990 | |||||||||||
Sonova Holding AG | Switzerland | 271 | 48,847 | |||||||||||
|
| |||||||||||||
| 867,016 | ||||||||||||||
|
| |||||||||||||
| Health Care Technology 0.2% | ||||||||||||||
Cerner Corp. | United States | 1,500 | 94,485 | |||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 47 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Hotels, Restaurants & Leisure 1.3% | ||||||||||||||
Compass Group PLC | United Kingdom | 7,820 | $ | 122,562 | ||||||||||
Domino’s Pizza Inc. | United States | 200 | 64,814 | |||||||||||
McDonald’s Corp. | United States | 2,400 | 396,840 | |||||||||||
Sands China Ltd. | Macau | 12,400 | 45,435 | |||||||||||
Sodexo SA | France | 433 | 29,286 | |||||||||||
|
| |||||||||||||
| 658,937 | ||||||||||||||
|
| |||||||||||||
| Household Durables 0.2% | ||||||||||||||
Garmin Ltd. | United States | 500 | 37,480 | |||||||||||
Sekisui House Ltd. | Japan | 3,100 | 51,243 | |||||||||||
The Berkeley Group Holdings PLC | United Kingdom | 607 | 27,208 | |||||||||||
|
| |||||||||||||
| 115,931 | ||||||||||||||
|
| |||||||||||||
| Household Products 0.5% | ||||||||||||||
Henkel AG & Co. KGaA | Germany | 507 | 37,467 | |||||||||||
Kimberly-Clark Corp. | United States | 1,800 | 230,166 | |||||||||||
|
| |||||||||||||
| 267,633 | ||||||||||||||
|
| |||||||||||||
| Industrial Conglomerates 0.1% | ||||||||||||||
Jardine Matheson Holdings Ltd. | Hong Kong | 900 | 45,000 | |||||||||||
Jardine Strategic Holdings Ltd. | Hong Kong | 1,100 | 24,420 | |||||||||||
|
| |||||||||||||
| 69,420 | ||||||||||||||
|
| |||||||||||||
| Insurance 2.4% | ||||||||||||||
Admiral Group PLC | United Kingdom | 919 | 25,411 | |||||||||||
Allianz SE | Germany | 1,943 | 334,462 | |||||||||||
Fidelity National Financial Inc. | United States | 1,300 | 32,344 | |||||||||||
Great-West Lifeco Inc. | Canada | 1,300 | 22,203 | |||||||||||
Hannover Rueck SE | Germany | 296 | 42,547 | |||||||||||
Intact Financial Corp. | Canada | 453 | 38,710 | |||||||||||
MS&AD Insurance Group Holdings Inc. | Japan | 2,300 | 64,448 | |||||||||||
Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen | Germany | 740 | 149,483 | |||||||||||
NN Group NV | Netherlands | 1,482 | 40,003 | |||||||||||
Power Corp. of Canada | Canada | 2,150 | 34,198 | |||||||||||
Sun Life Financial Inc. | Canada | 3,100 | 98,596 | |||||||||||
Swiss Life Holding AG | Switzerland | 165 | 56,174 | |||||||||||
Zurich Insurance Group AG | Switzerland | 751 | 266,543 | |||||||||||
|
| |||||||||||||
| 1,205,122 | ||||||||||||||
|
| |||||||||||||
| Interactive Media & Services 1.5% | ||||||||||||||
| a | Alphabet Inc. , A | United States | 40 | 46,478 | ||||||||||
| a | Alphabet, Inc., C | United States | 304 | 353,494 | ||||||||||
Auto Trader Group PLC | United Kingdom | 4,472 | 24,348 | |||||||||||
| a | Facebook Inc., A | United States | 2,151 | 358,787 | ||||||||||
|
| |||||||||||||
| 783,107 | ||||||||||||||
|
| |||||||||||||
| Internet & Direct Marketing Retail 0.5% | ||||||||||||||
| a | Booking Holdings Inc. | United States | 146 | 196,416 | ||||||||||
Expedia Group Inc. | United States | 600 | 33,762 | |||||||||||
| a | Zalando SE | Germany | 664 | 25,493 | ||||||||||
|
| |||||||||||||
| 255,671 | ||||||||||||||
|
| |||||||||||||
| IT Services 2.3% | ||||||||||||||
Accenture PLC, A | United States | 2,278 | 371,906 | |||||||||||
Atos SE | France | 485 | 32,856 | |||||||||||
Capgemini SE | France | 759 | 64,127 | |||||||||||
| a | CGI Inc., A | Canada | 1,100 | 58,881 | ||||||||||
Cognizant Technology Solutions Corp., A | United States | 2,700 | 125,469 | |||||||||||
Edenred | France | 1,158 | 48,398 | |||||||||||
| 48 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| IT Services (continued) | ||||||||||||||
Fujitsu Ltd. | Japan | 900 | $ | 81,325 | ||||||||||
Mastercard Inc., A | United States | 751 | 181,411 | |||||||||||
NEC Corp. | Japan | 1,300 | 47,506 | |||||||||||
Nomura Research Institute Ltd. | Japan | 1,700 | 36,030 | |||||||||||
| a | VeriSign Inc. | United States | 618 | 111,296 | ||||||||||
Western Union Co. | United States | 2,074 | 37,602 | |||||||||||
|
| |||||||||||||
| 1,196,807 | ||||||||||||||
|
| |||||||||||||
| Leisure Equipment & Products 0.2% | ||||||||||||||
Bandai Namco Holdings Inc. | Japan | 900 | 43,693 | |||||||||||
SHIMANO Inc. | Japan | 400 | 57,209 | |||||||||||
|
| |||||||||||||
| 100,902 | ||||||||||||||
|
| |||||||||||||
| Machinery 0.7% | ||||||||||||||
Alfa Laval AB | Sweden | 1,529 | 26,582 | |||||||||||
Atlas Copco AB | Sweden | 1,876 | 55,479 | |||||||||||
Atlas Copco AB, A | Sweden | 3,232 | 108,922 | |||||||||||
Epiroc AB, A | Sweden | 3,186 | 31,662 | |||||||||||
Epiroc AB, B | Sweden | 1,877 | 18,645 | |||||||||||
Schindler Holding AG | Switzerland | 101 | 21,337 | |||||||||||
Schindler Holding AG, PC | Switzerland | 201 | 44,124 | |||||||||||
SKF AB, B | Sweden | 1,842 | 25,415 | |||||||||||
Techtronic Industries Co. Ltd. | Hong Kong | 6,500 | 42,182 | |||||||||||
|
| |||||||||||||
| 374,348 | ||||||||||||||
|
| |||||||||||||
| Marine 0.1% | ||||||||||||||
Kuehne + Nagel International AG | Switzerland | 270 | 37,072 | |||||||||||
|
| |||||||||||||
| Media 0.1% | ||||||||||||||
WPP PLC | United Kingdom | 6,244 | 42,691 | |||||||||||
|
| |||||||||||||
| Metals & Mining 1.2% | ||||||||||||||
Barrick Gold Corp. | Canada | 8,800 | 159,882 | |||||||||||
BHP Group Ltd. | Australia | 14,847 | 263,345 | |||||||||||
Boliden AB | Sweden | 1,317 | 24,100 | |||||||||||
Fortescue Metals Group Ltd. | Australia | 6,799 | 41,613 | |||||||||||
Franco-Nevada Corp. | Canada | 900 | 88,909 | |||||||||||
Kirkland Lake Gold Ltd. | Canada | 900 | 26,209 | |||||||||||
|
| |||||||||||||
| 604,058 | ||||||||||||||
|
| |||||||||||||
| Multi-Utilities 0.1% | ||||||||||||||
Algonquin Power & Utilities Corp. | Canada | 2,700 | 35,947 | |||||||||||
|
| |||||||||||||
| Multiline Retail 0.1% | ||||||||||||||
Next PLC | United Kingdom | 658 | 33,223 | |||||||||||
|
| |||||||||||||
| Oil, Gas & Consumable Fuels 1.9% | ||||||||||||||
Cabot Oil & Gas Corp., A | United States | 2,300 | 39,537 | |||||||||||
Eni SpA | Italy | 12,443 | 125,882 | |||||||||||
HollyFrontier Corp. | United States | 478 | 11,716 | |||||||||||
INPEX Corp. | Japan | 4,800 | 27,069 | |||||||||||
Neste Oil OYJ | Finland | 2,032 | 68,784 | |||||||||||
OMV AG | Austria | 722 | 19,932 | |||||||||||
Phillips 66 | United States | 2,700 | 144,855 | |||||||||||
Repsol SA | Spain | 7,275 | 66,510 | |||||||||||
Total SA | France | 10,187 | 395,578 | |||||||||||
Valero Energy Corp. | United States | 2,000 | 90,720 | |||||||||||
|
| |||||||||||||
| 990,583 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 49 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Personal Products 2.1% | ||||||||||||||
Beiersdorf AG | Germany | 489 | $ | 49,664 | ||||||||||
L’Oreal SA | France | 1,257 | 329,501 | |||||||||||
Unilever NV | United Kingdom | 7,356 | 361,638 | |||||||||||
Unilever PLC | United Kingdom | 6,243 | 315,485 | |||||||||||
|
| |||||||||||||
| 1,056,288 | ||||||||||||||
|
| |||||||||||||
| Pharmaceuticals 2.6% | ||||||||||||||
Chugai Pharmaceutical Co. Ltd. | Japan | 1,100 | 127,368 | |||||||||||
| a | Jazz Pharmaceuticals PLC | United States | 260 | 25,932 | ||||||||||
Novartis AG | Switzerland | 4,531 | 373,934 | |||||||||||
Novo Nordisk AS, B | Denmark | 6,530 | 392,858 | |||||||||||
Otsuka Holdings Co. Ltd. | Japan | 1,700 | 66,627 | |||||||||||
Roche Holding AG | Switzerland | 1,029 | 333,996 | |||||||||||
|
| |||||||||||||
| 1,320,715 | ||||||||||||||
|
| |||||||||||||
| Professional Services 0.9% | ||||||||||||||
Adecco Group AG | Switzerland | 758 | 29,880 | |||||||||||
ManpowerGroup Inc. | United States | 200 | 10,598 | |||||||||||
Randstad NV | Netherlands | 586 | 20,685 | |||||||||||
RELX PLC | United Kingdom | 9,316 | 200,070 | |||||||||||
Robert Half International Inc. | United States | 500 | 18,875 | |||||||||||
SGS SA | Switzerland | 26 | 60,247 | |||||||||||
Wolters Kluwer NV | Netherlands | 1,360 | 95,773 | |||||||||||
|
| |||||||||||||
| 436,128 | ||||||||||||||
|
| |||||||||||||
| Real Estate Management & Development 1.0% | ||||||||||||||
Aroundtown SA | Germany | 4,498 | 22,476 | |||||||||||
CK Asset Holdings Ltd. | Hong Kong | 13,500 | 73,937 | |||||||||||
Daito Trust Construction Co. Ltd. | Japan | 300 | 27,970 | |||||||||||
Deutsche Wohnen AG | Germany | 1,703 | 64,860 | |||||||||||
Hang Lung Properties Ltd. | Hong Kong | 11,000 | 22,338 | |||||||||||
Henderson Land Development Co. Ltd. | Hong Kong | 9,000 | 34,312 | |||||||||||
Jones Lang LaSalle Inc. | United States | 200 | 20,196 | |||||||||||
New World Development Co. Ltd. | Hong Kong | 28,000 | 30,128 | |||||||||||
Sino Land Co. Ltd. | Hong Kong | 16,000 | 20,312 | |||||||||||
Sun Hung Kai Properties Ltd. | Hong Kong | 8,000 | 105,485 | |||||||||||
Swiss Prime Site AG | Switzerland | 369 | 36,135 | |||||||||||
Wheelock and Co. Ltd. | Hong Kong | 5,000 | 34,125 | |||||||||||
|
| |||||||||||||
| 492,274 | ||||||||||||||
|
| |||||||||||||
| Road & Rail 0.4% | ||||||||||||||
Kyushu Railway Co. | Japan | 900 | 25,844 | |||||||||||
Nagoya Railroad Co. Ltd. | Japan | 900 | 25,261 | |||||||||||
Old Dominion Freight Line Inc. | United States | 654 | 85,778 | |||||||||||
Tobu Railway Co. Ltd. | Japan | 900 | 31,430 | |||||||||||
West Japan Railway Co. | Japan | 700 | 47,957 | |||||||||||
|
| |||||||||||||
| 216,270 | ||||||||||||||
|
| |||||||||||||
| Semiconductors & Semiconductor Equipment 1.8% | ||||||||||||||
Intel Corp. | United States | 6,800 | 368,016 | |||||||||||
Skyworks Solutions Inc. | United States | 800 | 71,504 | |||||||||||
Texas Instruments Inc. | United States | 3,368 | 336,564 | |||||||||||
Tokyo Electron Ltd. | Japan | 800 | 150,841 | |||||||||||
|
| |||||||||||||
| 926,925 | ||||||||||||||
|
| |||||||||||||
| Software 2.7% | ||||||||||||||
| a | Adobe Inc. | United States | 1,053 | 335,107 | ||||||||||
| a | Cadence Design Systems Inc. | United States | 1,300 | 85,852 | ||||||||||
| a | Check Point Software Technologies Ltd. | Israel | 534 | 53,688 | ||||||||||
| 50 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| Software (continued) | ||||||||||||||
Citrix Systems Inc. | United States | 600 | $ | 84,930 | ||||||||||
Intuit Inc. | United States | 1,389 | 319,470 | |||||||||||
| a | Nice Ltd. | Israel | 301 | 44,544 | ||||||||||
SAP SE | Germany | 3,369 | 380,014 | |||||||||||
The Sage Group PLC | United Kingdom | 5,356 | 39,303 | |||||||||||
Trend Micro Inc. | Japan | 500 | 24,733 | |||||||||||
|
| |||||||||||||
| 1,367,641 | ||||||||||||||
|
| |||||||||||||
| Specialty Retail 1.6% | ||||||||||||||
| a | AutoZone Inc. | United States | 126 | 106,596 | ||||||||||
Best Buy Co. Inc. | United States | 1,100 | 62,700 | |||||||||||
Hennes & Mauritz AB, B | Sweden | 3,934 | 50,824 | |||||||||||
Nitori Co. Ltd. | Japan | 400 | 54,023 | |||||||||||
Ross Stores Inc. | United States | 1,800 | 156,546 | |||||||||||
The Home Depot Inc. | United States | 2,020 | 377,154 | |||||||||||
|
| |||||||||||||
| 807,843 | ||||||||||||||
|
| |||||||||||||
| Technology Hardware, Storage & Peripherals 0.3% | ||||||||||||||
HP Inc. | United States | 7,700 | 133,672 | |||||||||||
|
| |||||||||||||
| Textiles, Apparel & Luxury Goods 0.7% | ||||||||||||||
Adidas AG | Germany | 921 | 208,076 | |||||||||||
Burberry Group PLC | United Kingdom | 2,028 | 33,306 | |||||||||||
Hermes International | France | 157 | 108,322 | |||||||||||
Puma SE | Germany | 408 | 24,354 | |||||||||||
|
| |||||||||||||
| 374,058 | ||||||||||||||
|
| |||||||||||||
| Trading Companies & Distributors 0.4% | ||||||||||||||
Ferguson PLC | United Kingdom | 1,097 | 68,773 | |||||||||||
ITOCHU Corp. | Japan | 6,600 | 137,099 | |||||||||||
|
| |||||||||||||
| 205,872 | ||||||||||||||
|
| |||||||||||||
| Transportation Infrastructure 0.1% | ||||||||||||||
Aena SME SA | Spain | 335 | 36,581 | |||||||||||
|
| |||||||||||||
| Wireless Telecommunication Services 1.2% | ||||||||||||||
KDDI Corp. | Japan | 8,800 | 260,034 | |||||||||||
NTT DOCOMO Inc. | Japan | 7,600 | 237,740 | |||||||||||
Softbank Corp. | Japan | 9,500 | 120,956 | |||||||||||
|
| |||||||||||||
| 618,730 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks (Cost $31,308,400) | 25,113,838 | |||||||||||||
|
| |||||||||||||
| Preferred Stocks (Cost $86,946) 0.1% | ||||||||||||||
Germany 0.2% | ||||||||||||||
| c | Henkel AG & Co. KGaA, 2.527%, pfd. | Germany | 862 | 69,235 | ||||||||||
|
| |||||||||||||
Total Investments (Cost $31,395,346) 49.4% | 25,183,073 | |||||||||||||
Other Assets, less Liabilities 50.6% | 25,764,992 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 50,948,065 | ||||||||||||
|
| |||||||||||||
*The principal amount is stated in U.S. dollars unless otherwise indicated.
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $45,366, representing 0.1% of net assets.
cVariable rate security. The rate shown represents the yield at period end.
A supranational organization is an entity formed by two or more central governments through international treaties.
| franklintempleton.com | Annual Report | 51 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
At March 31, 2020, the Fund had the following total return swap contracts outstanding. See Note 1(c).
| Swaps | ||||||||||||||||||||||||
| Description | Financing Rate | Payment Frequency | Counterparty | Maturity Date | Notional Amount (000)s | Unrealized Appreciation (Depreciation) | ||||||||||||||||||
| OTC Swap Contracts Short | ||||||||||||||||||||||||
MSFTLSSP | 1-month USD LIBOR | At Maturity | MSCS | 4/22/20 | $ | (19,797 | ) | $ | — | |||||||||||||||
At March 31, 2020 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
| Forward Exchange Contracts | ||||||||||||||||||||||||||||
| Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
| OTC Forward Exchange Contracts | ||||||||||||||||||||||||||||
Australian Dollar | MSCO | Sell | 1,635,000 | $ | 974,071 | 6/17/20 | $ | — | $ | (26,851 | ) | |||||||||||||||||
Brazilian Real | MSCO | Buy | 913,000 | 192,714 | 6/17/20 | — | (17,534 | ) | ||||||||||||||||||||
Brazilian Real | MSCO | Sell | 938,000 | 185,416 | 6/17/20 | 5,440 | — | |||||||||||||||||||||
Brazilian Real | MSCO | Sell | 913,000 | 179,760 | 6/17/20 | 4,580 | — | |||||||||||||||||||||
Canadian Dollar | MSCO | Buy | 1,930,000 | 1,362,874 | 6/17/20 | — | (6,040 | ) | ||||||||||||||||||||
Canadian Dollar | MSCO | Sell | 1,930,000 | 1,399,797 | 6/17/20 | 42,963 | — | |||||||||||||||||||||
Czech Koruna | MSCO | Buy | 80,848,000 | 3,223,107 | 6/17/20 | 18,780 | — | |||||||||||||||||||||
Czech Koruna | MSCO | Sell | 109,197,000 | 4,651,828 | 6/17/20 | 273,188 | — | |||||||||||||||||||||
Euro | MSCO | Buy | 311,000 | 341,554 | 6/17/20 | 683 | — | |||||||||||||||||||||
Euro | MSCO | Buy | 9,026,000 | 9,912,755 | 6/17/20 | 19,817 | — | |||||||||||||||||||||
Euro | MSCO | Sell | 9,026,000 | 10,121,281 | 6/17/20 | 188,709 | — | |||||||||||||||||||||
Great British Pound | MSCO | Buy | 3,761,000 | 4,744,916 | 6/17/20 | — | (75,220 | ) | ||||||||||||||||||||
Great British Pound | MSCO | Sell | 2,820,000 | 3,366,291 | 6/17/20 | — | (135,050 | ) | ||||||||||||||||||||
Hungarian Forint | MSCO | Buy | 242,763,000 | 804,334 | 6/17/20 | — | (64,472 | ) | ||||||||||||||||||||
Hungarian Forint | MSCO | Sell | 242,763,000 | 747,571 | 6/17/20 | 7,709 | — | |||||||||||||||||||||
Israeli Shekel | MSCO | Buy | 18,596,000 | 5,147,689 | 6/17/20 | 128,625 | — | |||||||||||||||||||||
Israeli Shekel | MSCO | Sell | 22,347,000 | 6,053,235 | 6/17/20 | — | (287,365 | ) | ||||||||||||||||||||
Japanese Yen | MSCO | Buy | 76,692,000 | 726,050 | 6/17/20 | — | (13,359 | ) | ||||||||||||||||||||
Japanese Yen | MSCO | Buy | 69,039,000 | 630,863 | 6/17/20 | 10,710 | — | |||||||||||||||||||||
Mexican Peso | MSCO | Buy | 117,076,000 | 5,352,046 | 6/17/20 | — | (419,124 | ) | ||||||||||||||||||||
Mexican Peso | MSCO | Sell | 99,661,000 | 4,087,483 | 6/17/20 | — | (111,670 | ) | ||||||||||||||||||||
New Turkish Lira | MSCO | Buy | 21,743,000 | 3,400,436 | 6/17/20 | — | (173,192 | ) | ||||||||||||||||||||
New Turkish Lira | MSCO | Sell | 12,362,000 | 1,858,910 | 6/17/20 | 24,058 | — | |||||||||||||||||||||
New Zealand Dollar | MSCO | Buy | 3,527,000 | 2,067,326 | 6/17/20 | 22,369 | — | |||||||||||||||||||||
New Zealand Dollar | MSCO | Sell | 5,727,000 | 3,519,997 | 6/17/20 | 126,835 | — | |||||||||||||||||||||
Norwegian Krone | MSCO | Buy | 53,374,000 | 4,986,777 | 6/17/20 | 97,417 | — | |||||||||||||||||||||
Norwegian Krone | MSCO | Sell | 60,386,000 | 6,014,771 | 6/17/20 | 262,642 | — | |||||||||||||||||||||
Russian Ruble | MSCO | Buy | 171,346,000 | 2,321,708 | 6/17/20 | — | (154,420 | ) | ||||||||||||||||||||
Russian Ruble | MSCO | Sell | 133,975,000 | 1,686,705 | 6/17/20 | — | (7,892 | ) | ||||||||||||||||||||
South African Rand | MSCO | Buy | 26,995,000 | 1,648,444 | 6/17/20 | — | (152,081 | ) | ||||||||||||||||||||
South African Rand | MSCO | Sell | 16,568,000 | 936,818 | 6/17/20 | 18,435 | — | |||||||||||||||||||||
South Korean Won | MSCO | Sell | 1,167,172,000 | 953,122 | 6/17/20 | — | (8,344 | ) | ||||||||||||||||||||
Swedish Krona | MSCO | Buy | 13,554,000 | 1,369,903 | 6/17/20 | 11,829 | (11,476 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 1,369,000 | 1,427,296 | 6/17/20 | 12,338 | (5,101 | ) | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total Forward Exchange Contracts |
| $ | 1,277,127 | $ | (1,669,191 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) |
| $ | (392,064 | ) | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
| 52 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).
| Futures Contracts | ||||||||||||||||||||
| Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
| Index Contracts | ||||||||||||||||||||
OMXS30 Index | Long | 183 | $ | 2,733,631 | 4/17/20 | $ | 156,200 | |||||||||||||
Canada 10 Yr. Bond | Long | 25 | 2,584,396 | 6/19/20 | 33,872 | |||||||||||||||
EURO STOXX 50 Index | Long | 59 | 1,778,347 | 6/19/20 | 48,493 | |||||||||||||||
Euro-BTP | Long | 8 | 1,241,297 | 6/08/20 | (43,534 | ) | ||||||||||||||
IBEX 35 Index | Long | 15 | 1,113,204 | 4/17/20 | 2,885 | |||||||||||||||
Euro-OAT | Long | 4 | 733,885 | 6/08/20 | 11,726 | |||||||||||||||
SPI 200 Index | Long | 9 | 703,567 | 6/18/20 | (18,057 | ) | ||||||||||||||
S&P/TSX 60 Index | Long | 5 | 572,031 | 6/18/20 | 55,367 | |||||||||||||||
Australian 10 Yr. Bond | Long | 6 | 553,088 | 6/15/20 | 7,240 | |||||||||||||||
FTSE/MIB Index | Long | 3 | 278,548 | 6/19/20 | 30,448 | |||||||||||||||
U.S. Treasury 10 Yr. Note | Long | 1 | 138,688 | 6/19/20 | 6,926 | |||||||||||||||
CAC 40 10 Euro | Long | 1 | 48,224 | 4/17/20 | 943 | |||||||||||||||
Mexican IPC Index | Short | 6 | 90,453 | 6/19/20 | 2,410 | |||||||||||||||
SGX Nifty 50 | Short | 7 | 119,987 | 4/30/20 | (15,097 | ) | ||||||||||||||
FTSE/JSE Africa Top40 Index | Short | 22 | 505,532 | 6/18/20 | (8,832 | ) | ||||||||||||||
DAX Index | Short | 3 | 815,326 | 6/19/20 | (83,328 | ) | ||||||||||||||
Nikkei 225 Mini | Short | 6 | 1,051,549 | 6/11/20 | (14,549 | ) | ||||||||||||||
Long Gilt | Short | 7 | 1,182,082 | 6/26/20 | (5,040 | ) | ||||||||||||||
NASDAQ 100E-Mini | Short | 8 | 1,245,800 | 6/19/20 | (95,067 | ) | ||||||||||||||
FTSE 100 Index | Short | 22 | 1,537,303 | 6/19/20 | (37,702 | ) | ||||||||||||||
Hang Seng Index | Short | 18 | 2,754,261 | 4/28/20 | (136,827 | ) | ||||||||||||||
Euro-Bund | Short | 32 | 6,057,173 | 6/08/20 | 18,575 | |||||||||||||||
| Commodity Contracts | ||||||||||||||||||||
Cocoa, May | Long | 58 | 1,304,420 | 5/13/20 | (243,500 | ) | ||||||||||||||
Wheat, May | Long | 37 | 1,052,187 | 5/14/20 | 10,864 | |||||||||||||||
Gold 100 Ounce, June | Long | 6 | 957,960 | 6/26/20 | 4,829 | |||||||||||||||
Soybean Meal, May | Long | 14 | 450,100 | 5/14/20 | (7,417 | ) | ||||||||||||||
Live Cattle, June | Long | 12 | 441,960 | 6/30/20 | (24,356 | ) | ||||||||||||||
Sugar No. 11, April | Long | 35 | 408,464 | 4/30/20 | (134,638 | ) | ||||||||||||||
Platinum, July | Long | 8 | 291,960 | 7/29/20 | (28,221 | ) | ||||||||||||||
Gasoline Rbob, May | Long | 7 | 174,254 | 4/30/20 | (117,675 | ) | ||||||||||||||
Silver, May | Short | 1 | 70,780 | 5/27/20 | 21,403 | |||||||||||||||
WTI Crude, May | Short | 7 | 143,360 | 4/21/20 | 21,543 | |||||||||||||||
Brent Crude, June | Short | 8 | 210,800 | 4/30/20 | 25,646 | |||||||||||||||
Low Sulphur Gas Oil, May | Short | 11 | 324,225 | 5/12/20 | 15,381 | |||||||||||||||
Cotton No. 2 | Short | 13 | 332,345 | 5/06/20 | 11,026 | |||||||||||||||
Natural Gas, May | Short | 24 | 393,600 | 4/28/20 | 74,684 | |||||||||||||||
Lean Hogs, June | Short | 18 | 434,340 | 6/12/20 | 117,324 | |||||||||||||||
Soybean Oil, May | Short | 31 | 502,386 | 5/14/20 | 48,915 | |||||||||||||||
Soybean, May | Short | 12 | 531,600 | 5/14/20 | 6,104 | |||||||||||||||
Natural Gas, October | Short | 26 | 538,200 | 9/28/20 | 3,648 | |||||||||||||||
|
| |||||||||||||||||||
Total Futures Contracts | $ | (277,388 | ) | |||||||||||||||||
|
| |||||||||||||||||||
*As of period end.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 53 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Liberty Systematic Style Premia ETF
The following table represents the individual short positions and related values of the equity securities underlying the total return swap with Morgan Stanley Capital Services LLC as of March 31, 2020, expiration date 4/22/20:
| Country | Shares | Value | ||||||||||||
| Reference Entity – Short 100.00% | ||||||||||||||
| Automobiles & Components 4.83% | ||||||||||||||
Aptiv PLC | United States | (1,779 | ) | $ | (87,598 | ) | ||||||||
Bayerische Motoren Werke AG | Germany | (2,236 | ) | (115,594 | ) | |||||||||
Daimler AGGermany | (5,716 | ) | (172,602 | ) | ||||||||||
Ferrari NV | Italy | (759 | ) | (117,885 | ) | |||||||||
Fiat Chrysler Automobiles NV | United Kingdom | (7,358 | ) | (53,059 | ) | |||||||||
General Motors Co | United States | (8,103 | ) | (168,380 | ) | |||||||||
Harley-Davidson Inc | United States | (1,300 | ) | (24,609 | ) | |||||||||
Renault SA | France | (1,182 | ) | (22,966 | ) | |||||||||
Tesla Inc | United States | (55 | ) | (28,820 | ) | |||||||||
Valeo SA | France | (1,586 | ) | (26,539 | ) | |||||||||
Volkswagen AG | Germany | (1,161 | ) | (136,104 | ) | |||||||||
|
| |||||||||||||
| (954,156 | ) | |||||||||||||
|
| |||||||||||||
| Banks 8.13% | ||||||||||||||
Banco de Sabadell SA | Spain | (36,295 | ) | (18,678 | ) | |||||||||
Banco Santander SA | Spain | (82,676 | ) | (201,209 | ) | |||||||||
Barclays PLC | United Kingdom | (114,753 | ) | (133,907 | ) | |||||||||
CaixaBank SA | Spain | (22,551 | ) | (42,065 | ) | |||||||||
Commerzbank AG | Germany | (6,918 | ) | (25,114 | ) | |||||||||
DBS Group Holdings Ltd | Singapore | (12,100 | ) | (157,809 | ) | |||||||||
DNB ASA | Norway | (6,418 | ) | (71,355 | ) | |||||||||
East West Bancorp Inc | United States | (1,059 | ) | (27,259 | ) | |||||||||
Erste Group Bank AG | Austria | (2,019 | ) | (37,406 | ) | |||||||||
FinecoBank Banca Fineco SpA | Italy | (3,851 | ) | (35,029 | ) | |||||||||
ING Groep NV | Netherlands | (13,444 | ) | (70,534 | ) | |||||||||
Intesa Sanpaolo SpA | Italy | (98,746 | ) | (161,267 | ) | |||||||||
KBC Group NV | Belgium | (1,677 | ) | (77,321 | ) | |||||||||
Mediobanca Banca di Credito Finanziario SpA | Italy | (3,879 | ) | (21,400 | ) | |||||||||
Oversea-Chinese Banking Corp Ltd | Singapore | (21,800 | ) | (132,284 | ) | |||||||||
Royal Bank of Scotland Group PLC | United Kingdom | (32,874 | ) | (46,020 | ) | |||||||||
Societe Generale SA | France | (5,434 | ) | (91,512 | ) | |||||||||
SVB Financial Group | United States | (258 | ) | (38,979 | ) | |||||||||
UniCredit SpA | Italy | (12,798 | ) | (100,363 | ) | |||||||||
United Overseas Bank Ltd | Singapore | (8,600 | ) | (117,477 | ) | |||||||||
|
| |||||||||||||
| (1,606,988 | ) | |||||||||||||
|
| |||||||||||||
| Capital Goods 8.00% | ||||||||||||||
ACS Actividades de Construccion y Servicios SA | Spain | (1,826 | ) | (35,694 | ) | |||||||||
Caterpillar Inc | United States | (2,007 | ) | (232,892 | ) | |||||||||
Cie de Saint-Gobain | France | (3,278 | ) | (79,723 | ) | |||||||||
CK Hutchison Holdings Ltd | Hong Kong | (13,500 | ) | (91,093 | ) | |||||||||
CNH Industrial NV | United Kingdom | (6,376 | ) | (36,491 | ) | |||||||||
Daifuku Co Ltd | Japan | (700 | ) | (44,417 | ) | |||||||||
Ferrovial SA | Spain | (3,276 | ) | (78,614 | ) | |||||||||
Flowserve Corp | United States | (939 | ) | (22,433 | ) | |||||||||
General Electric Co | United States | (26,222 | ) | (208,203 | ) | |||||||||
Kingspan Group PLC | Ireland | (973 | ) | (51,993 | ) | |||||||||
Kone Oyj | Finland | (2,067 | ) | (117,075 | ) | |||||||||
Leonardo SpA | Italy | (2,548 | ) | (16,976 | ) | |||||||||
Melrose Industries PLC | United Kingdom | (30,887 | ) | (35,043 | ) | |||||||||
MTU Aero Engines AG | Germany | (120 | ) | (17,558 | ) | |||||||||
Prysmian SpA | Italy | (1,492 | ) | (23,902 | ) | |||||||||
Schneider Electric SE | France | (2,619 | ) | (225,815 | ) | |||||||||
Singapore Technologies Engineering Ltd | Singapore | (10,100 | ) | (22,132 | ) | |||||||||
| 54 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Reference Entity – Short (continued) | ||||||||||||||
| Capital Goods (continued) | ||||||||||||||
TransDigm Group Inc | United States | (200 | ) | $ | (64,038 | ) | ||||||||
Wartsila OYJ Abp | Finland | (2,719 | ) | (19,959 | ) | |||||||||
Westinghouse Air Brake Technologies Corp | United States | (1,300 | ) | (62,569 | ) | |||||||||
WSP Global Inc | Canada | (800 | ) | (44,919 | ) | |||||||||
Yaskawa Electric Corp | Japan | (1,800 | ) | (49,621 | ) | |||||||||
|
| |||||||||||||
| (1,581,160 | ) | |||||||||||||
|
| |||||||||||||
| Commercial & Professional Services 0.59% | ||||||||||||||
Brambles Ltd | Australia | (10,671 | ) | (68,969 | ) | |||||||||
Nielsen Holdings PLC | United States | (2,300 | ) | (28,842 | ) | |||||||||
SEEK Ltd | Australia | (2,063 | ) | (18,725 | ) | |||||||||
|
| |||||||||||||
| (116,536 | ) | |||||||||||||
|
| |||||||||||||
| Consumer Durables & Apparel 1.11% | ||||||||||||||
Barratt Developments PLC | United Kingdom | (2,026 | ) | (11,079 | ) | |||||||||
DR Horton Inc | United States | (800 | ) | (27,200 | ) | |||||||||
Lennar Corp | United States | (600 | ) | (22,920 | ) | |||||||||
Lululemon Athletica Inc | United States | (300 | ) | (56,865 | ) | |||||||||
Moncler SpA | Italy | (1,154 | ) | (42,153 | ) | |||||||||
Newell Brands Inc | United States | (2,800 | ) | (37,184 | ) | |||||||||
PulteGroup Inc | United States | (600 | ) | (13,392 | ) | |||||||||
Tapestry Inc | United States | (600 | ) | (7,770 | ) | |||||||||
|
| |||||||||||||
| (218,563 | ) | |||||||||||||
|
| |||||||||||||
| Consumer Services 2.29% | ||||||||||||||
Accor SA | France | (1,071 | ) | (29,379 | ) | |||||||||
Aramark | United States | (600 | ) | (11,982 | ) | |||||||||
Flutter Entertainment PLC | Ireland | (502 | ) | (45,465 | ) | |||||||||
Galaxy Entertainment Group Ltd | Macau | (15,000 | ) | (80,023 | ) | |||||||||
GVC Holdings PLC | United Kingdom | (3,708 | ) | (25,793 | ) | |||||||||
Marriott International Inc/MD | United States | (600 | ) | (44,886 | ) | |||||||||
MGM Resorts International | United States | (3,513 | ) | (41,453 | ) | |||||||||
Restaurant Brands International Inc | Canada | (1,900 | ) | (75,701 | ) | |||||||||
Stars Group Inc/The | Canada | (1,800 | ) | (36,396 | ) | |||||||||
Tabcorp Holdings Ltd | Australia | (12,784 | ) | (19,796 | ) | |||||||||
Wynn Resorts Ltd | United States | (700 | ) | (42,133 | ) | |||||||||
|
| |||||||||||||
| (453,007 | ) | |||||||||||||
|
| |||||||||||||
| Diversified Financials 4.42% | ||||||||||||||
Ameriprise Financial Inc | United States | (300 | ) | (30,744 | ) | |||||||||
Charles Schwab Corp/The | United States | (6,993 | ) | (235,105 | ) | |||||||||
Credit Suisse Group AG | Switzerland | (4,912 | ) | (40,614 | ) | |||||||||
Deutsche Bank AG | Germany | (13,566 | ) | (88,850 | ) | |||||||||
EXOR NV | Netherlands | (737 | ) | (38,008 | ) | |||||||||
Groupe Bruxelles Lambert SA | Belgium | (502 | ) | (39,450 | ) | |||||||||
Hong Kong Exchanges & Clearing Ltd | Hong Kong | (8,200 | ) | (247,347 | ) | |||||||||
Standard Life Aberdeen PLC | United Kingdom | (15,006 | ) | (41,660 | ) | |||||||||
TD Ameritrade Holding Corp | United States | (2,000 | ) | (69,320 | ) | |||||||||
Voya Financial Inc | United States | (1,053 | ) | (42,699 | ) | |||||||||
|
| |||||||||||||
| (873,797 | ) | |||||||||||||
|
| |||||||||||||
| Energy 3.86% | ||||||||||||||
Apache Corp | United States | (2,600 | ) | (10,868 | ) | |||||||||
BP PLC | United Kingdom | (32,600 | ) | (139,134 | ) | |||||||||
Caltex Australia Ltd | Australia | (1,587 | ) | (21,680 | ) | |||||||||
Cenovus Energy Inc | Canada | (6,800 | ) | (13,568 | ) | |||||||||
Equinor ASA | Norway | (1,961 | ) | (24,491 | ) | |||||||||
Galp Energia SGPS SA | Portugal | (3,107 | ) | (35,438 | ) | |||||||||
| franklintempleton.com | Annual Report | 55 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Reference Entity – Short (continued) | ||||||||||||||
| Energy (continued) | ||||||||||||||
Halliburton Co | United States | (6,100 | ) | $ | (41,785 | ) | ||||||||
Hess Corp | United States | (1,900 | ) | (63,270 | ) | |||||||||
Idemitsu Kosan Co Ltd | Japan | (1,300 | ) | (29,840 | ) | |||||||||
National Oilwell Varco Inc | United States | (2,700 | ) | (26,541 | ) | |||||||||
Noble Energy Inc | United States | (3,400 | ) | (20,536 | ) | |||||||||
Occidental Petroleum Corp | Ireland | (6,183 | ) | (71,599 | ) | |||||||||
Oil Search Ltd | Australia | (8,713 | ) | (12,692 | ) | |||||||||
Royal Dutch Shell PLC | United Kingdom | (4,894 | ) | (82,517 | ) | |||||||||
Schlumberger Ltd | United States | (8,517 | ) | (114,894 | ) | |||||||||
Suncor Energy Inc | Canada | (1,500 | ) | (23,670 | ) | |||||||||
Targa Resources Corp | United States | (1,542 | ) | (10,655 | ) | |||||||||
TechnipFMC PLC | United Kingdom | (2,800 | ) | (18,872 | ) | |||||||||
|
| |||||||||||||
| (762,050 | ) | |||||||||||||
|
| |||||||||||||
| Food & Staples Retailing 1.05% | ||||||||||||||
Aeon Co Ltd | Japan | (4,400 | ) | (97,778 | ) | |||||||||
Carrefour SA | United Kingdom | (3,808 | ) | (60,231 | ) | |||||||||
George Weston Ltd | Australia | (700 | ) | (49,490 | ) | |||||||||
|
| |||||||||||||
| (207,499 | ) | |||||||||||||
|
| |||||||||||||
| Food, Beverage & Tobacco 4.68% | ||||||||||||||
a2 Milk Co Ltd | New Zealand | (4,736 | ) | (48,265 | ) | |||||||||
Anheuser-Busch InBev SA/NV | Belgium | (4,357 | ) | (193,476 | ) | |||||||||
Conagra Brands Inc | United States | (3,325 | ) | (97,556 | ) | |||||||||
Constellation Brands Inc | United States | (1,031 | ) | (147,804 | ) | |||||||||
Davide Campari-Milano SpA | Italy | (3,642 | ) | (26,175 | ) | |||||||||
Heineken NV | Netherlands | (1,590 | ) | (132,871 | ) | |||||||||
Kerry Group PLC | Ireland | (1,021 | ) | (117,855 | ) | |||||||||
Mowi ASA | Norway | (2,835 | ) | (43,008 | ) | |||||||||
Orkla ASA | Norway | (4,757 | ) | (40,326 | ) | |||||||||
Swedish Match AB | Sweden | (369 | ) | (21,154 | ) | |||||||||
Treasury Wine Estates Ltd | Australia | (4,636 | ) | (28,460 | ) | |||||||||
Wilmar International Ltd | Singapore | (12,300 | ) | (27,903 | ) | |||||||||
|
| |||||||||||||
| (924,853 | ) | |||||||||||||
|
| |||||||||||||
| Health Care Equipment & Services 5.34% | ||||||||||||||
Boston Scientific Corp | United States | (7,424 | ) | (242,245 | ) | |||||||||
Cardinal Health Inc | United States | (2,100 | ) | (100,674 | ) | |||||||||
Centene Corp | United States | (1,300 | ) | (77,233 | ) | |||||||||
DexCom Inc | United States | (533 | ) | (143,521 | ) | |||||||||
Fisher & Paykel Healthcare Corp Ltd | New Zealand | (3,637 | ) | (65,505 | ) | |||||||||
Fresenius Medical Care AG & Co KGaA | Germany | (1,457 | ) | (96,241 | ) | |||||||||
Fresenius SE & Co KGaA | Germany | (2,792 | ) | (103,945 | ) | |||||||||
Insulet Corp | United States | (395 | ) | (65,444 | ) | |||||||||
Laboratory Corp of America Holdings | United States | (607 | ) | (76,719 | ) | |||||||||
Ramsay Health Care Ltd | Australia | (1,096 | ) | (38,424 | ) | |||||||||
Sonic Healthcare Ltd | Australia | (3,047 | ) | (45,373 | ) | |||||||||
|
| |||||||||||||
| (1,055,324 | ) | |||||||||||||
|
| |||||||||||||
| Household & Personal Products 0.54% | ||||||||||||||
Essity AB | Sweden | (1,361 | ) | (42,035 | ) | |||||||||
Estee Lauder Cos Inc/The | United States | (400 | ) | (63,736 | ) | |||||||||
|
| |||||||||||||
| (105,771 | ) | |||||||||||||
|
| |||||||||||||
| Insurance 4.97% | ||||||||||||||
Aegon NV | Netherlands | (10,199 | ) | (25,896 | ) | |||||||||
Ageas | Belgium | (1,224 | ) | (50,914 | ) | |||||||||
AIA Group Ltd | Hong Kong | (34,400 | ) | (311,339 | ) | |||||||||
| 56 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Reference Entity – Short (continued) | ||||||||||||||
| Insurance (continued) | ||||||||||||||
American International Group Inc | United States | (5,553 | ) | $ | (134,660 | ) | ||||||||
Assicurazioni Generali SpA | Italy | (3,447 | ) | (46,937 | ) | |||||||||
Lincoln National Corp | United States | (400 | ) | (10,528 | ) | |||||||||
Manulife Financial Corp | Canada | (9,900 | ) | (122,902 | ) | |||||||||
Markel Corp | United States | (96 | ) | (89,077 | ) | |||||||||
Medibank Pvt Ltd | Australia | (17,246 | ) | (28,077 | ) | |||||||||
Poste Italiane SpA | Italy | (3,311 | ) | (28,047 | ) | |||||||||
QBE Insurance Group Ltd | Australia | (8,812 | ) | (46,383 | ) | |||||||||
Sampo Oyj | Finland | (2,966 | ) | (86,633 | ) | |||||||||
|
| |||||||||||||
| (981,395 | ) | |||||||||||||
|
| |||||||||||||
| Materials 5.94% | ||||||||||||||
Agnico Eagle Mines Ltd | Canada | (1,500 | ) | (59,205 | ) | |||||||||
Albemarle Corp | United States | (800 | ) | (45,096 | ) | |||||||||
ArcelorMittal SA | France | (4,530 | ) | (43,050 | ) | |||||||||
CRH PLC | Ireland | (4,906 | ) | (133,770 | ) | |||||||||
First Quantum Minerals Ltd | Zambia | (4,600 | ) | (23,237 | ) | |||||||||
Freeport-McMoRan Inc | United States | (9,600 | ) | (64,800 | ) | |||||||||
Glencore PLC | Switzerland | (73,902 | ) | (113,444 | ) | |||||||||
JFE Holdings Inc | Japan | (3,500 | ) | (22,792 | ) | |||||||||
Mosaic Co/The | United States | (2,300 | ) | (24,886 | ) | |||||||||
Nutrien Ltd | Canada | (4,000 | ) | (135,202 | ) | |||||||||
Orica Ltd | Australia | (2,388 | ) | (22,435 | ) | |||||||||
Rio Tinto Ltd | Australia | (2,504 | ) | (129,610 | ) | |||||||||
Smurfit Kappa Group PLC | Ireland | (1,399 | ) | (39,482 | ) | |||||||||
Solvay SA | Belgium | (484 | ) | (35,252 | ) | |||||||||
South32 Ltd | Australia | (34,199 | ) | (36,944 | ) | |||||||||
Stora Enso Oyj | Finland | (3,702 | ) | (37,557 | ) | |||||||||
Teck Resources Ltd | Canada | (4,000 | ) | (29,986 | ) | |||||||||
Umicore SA | Belgium | (1,255 | ) | (43,859 | ) | |||||||||
UPM-Kymmene Oyj | Finland | (3,570 | ) | (98,282 | ) | |||||||||
Yara International ASA | Norway | (1,127 | ) | (35,342 | ) | |||||||||
|
| |||||||||||||
| (1,174,231 | ) | |||||||||||||
|
| |||||||||||||
| Media & Entertainment 3.13% | ||||||||||||||
DISH Network Corp | United States | (600 | ) | (11,994 | ) | |||||||||
Live Nation Entertainment Inc | United States | (300 | ) | (13,638 | ) | |||||||||
Netflix Inc | United States | (618 | ) | (232,059 | ) | |||||||||
Pinterest Inc | United States | (700 | ) | (10,808 | ) | |||||||||
Roku Inc | United States | (600 | ) | (52,488 | ) | |||||||||
Shaw Communications Inc | Canada | (3,200 | ) | (51,327 | ) | |||||||||
Snap Inc | United States | (4,900 | ) | (58,261 | ) | |||||||||
Twitter Inc | United States | (4,700 | ) | (115,432 | ) | |||||||||
Ubisoft Entertainment SA | France | (535 | ) | (39,437 | ) | |||||||||
Zillow Group Inc | United States | (900 | ) | (32,418 | ) | |||||||||
|
| |||||||||||||
| (617,862 | ) | |||||||||||||
|
| |||||||||||||
| Pharmaceuticals, Biotechnology & Life Sciences 8.96% | ||||||||||||||
Alnylam Pharmaceuticals Inc | United States | (800 | ) | (87,080 | ) | |||||||||
Astellas Pharma Inc | Japan | (10,400 | ) | (160,978 | ) | |||||||||
Bausch Health Cos Inc | United States | (2,300 | ) | (35,243 | ) | |||||||||
BeiGene Ltd | China | (30 | ) | (3,693 | ) | |||||||||
BioMarin Pharmaceutical Inc | United States | (1,300 | ) | (109,850 | ) | |||||||||
Canopy Growth Corp | Canada | (1,306 | ) | (18,773 | ) | |||||||||
Eisai Co Ltd | Japan | (1,800 | ) | (132,238 | ) | |||||||||
Elanco Animal Health Inc | United States | (2,600 | ) | (58,214 | ) | |||||||||
Exact Sciences Corp | United States | (1,062 | ) | (61,596 | ) | |||||||||
Galapagos NV | Belgium | (270 | ) | (53,623 | ) | |||||||||
| franklintempleton.com | Annual Report | 57 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Reference Entity – Short (continued) | ||||||||||||||
| Pharmaceuticals, Biotechnology & Life Sciences (continued) | ||||||||||||||
Grifols SA | Spain | (1,873 | ) | $ | (63,710 | ) | ||||||||
Illumina Inc | United States | (800 | ) | (218,496 | ) | |||||||||
Ionis Pharmaceuticals Inc | United States | (1,000 | ) | (47,280 | ) | |||||||||
IQVIA Holdings Inc | United States | (1,083 | ) | (116,812 | ) | |||||||||
Perrigo Co PLC | United States | (800 | ) | (38,472 | ) | |||||||||
QIAGEN NV | Netherlands | (1,431 | ) | (57,484 | ) | |||||||||
Sarepta Therapeutics Inc | United States | (577 | ) | (56,442 | ) | |||||||||
Seattle Genetics Inc | United States | (900 | ) | (103,842 | ) | |||||||||
Takeda Pharmaceutical Co Ltd | Japan | (8,900 | ) | (272,717 | ) | |||||||||
UCB SA | Belgium | (847 | ) | (73,420 | ) | |||||||||
|
| |||||||||||||
| (1,769,963 | ) | |||||||||||||
|
| |||||||||||||
| Real Estate 2.49% | ||||||||||||||
Ascendas Real Estate Investment Trust | Singapore | (18,400 | ) | (36,571 | ) | |||||||||
CapitaLand Ltd | Singapore | (16,200 | ) | (32,426 | ) | |||||||||
CapitaLand Mall Trust | Singapore | (16,700 | ) | (20,994 | ) | |||||||||
Hongkong Land Holdings Ltd | Hong Kong | (5,900 | ) | (22,125 | ) | |||||||||
Lendlease Group | Australia | (3,503 | ) | (22,083 | ) | |||||||||
Omega Healthcare Investors Inc | United States | (500 | ) | (13,270 | ) | |||||||||
SBA Communications Corp | United States | (108 | ) | (29,157 | ) | |||||||||
Simon Property Group Inc | United States | (600 | ) | (32,916 | ) | |||||||||
Stockland | Australia | (11,571 | ) | (17,918 | ) | |||||||||
Swire Pacific Ltd | Hong Kong | (3,500 | ) | (22,555 | ) | |||||||||
Unibail-Rodamco-Westfield | France | (388 | ) | (21,951 | ) | |||||||||
Ventas Inc | United States | (700 | ) | (18,760 | ) | |||||||||
VEREIT Inc | United States | (2,400 | ) | (11,736 | ) | |||||||||
VICI Properties Inc | United States | (900 | ) | (14,976 | ) | |||||||||
Vicinity Centres | Australia | (20,065 | ) | (12,711 | ) | |||||||||
Welltower Inc | United States | (1,000 | ) | (45,780 | ) | |||||||||
Weyerhaeuser Co | United States | (5,097 | ) | (86,394 | ) | |||||||||
Wharf Real Estate Investment Co Ltd | Hong Kong | (7,000 | ) | (28,810 | ) | |||||||||
|
| |||||||||||||
| (491,133 | ) | |||||||||||||
|
| |||||||||||||
| Retailing 2.91% | ||||||||||||||
Delivery Hero SE | Germany | (774 | ) | (57,716 | ) | |||||||||
Grubhub Inc | United States | (698 | ) | (28,430 | ) | |||||||||
Industria de Diseno Textil SA | Spain | (786 | ) | (20,405 | ) | |||||||||
MercadoLibre Inc | Argentina | (304 | ) | (148,528 | ) | |||||||||
Ocado Group PLC | United Kingdom | (2,963 | ) | (44,822 | ) | |||||||||
Prosus NV | China | (2,996 | ) | (207,597 | ) | |||||||||
Rakuten Inc | Japan | (5,600 | ) | (42,536 | ) | |||||||||
Wayfair Inc | United States | (466 | ) | (24,903 | ) | |||||||||
|
| |||||||||||||
| (574,937 | ) | |||||||||||||
|
| |||||||||||||
| Semiconductors & Semiconductor Equipment 5.10% | ||||||||||||||
Advanced Micro Devices Inc | United States | (4,800 | ) | (218,304 | ) | |||||||||
ASML Holding NV | Netherlands | (806 | ) | (214,419 | ) | |||||||||
Lam Research Corp | United States | (300 | ) | (72,000 | ) | |||||||||
Marvell Technology Group Ltd | Bermuda | (4,400 | ) | (99,572 | ) | |||||||||
Microchip Technology Inc | United States | (1,662 | ) | (112,684 | ) | |||||||||
NVIDIA Corp | United States | (300 | ) | (79,080 | ) | |||||||||
NXP Semiconductors NV | Netherlands | (1,900 | ) | (157,567 | ) | |||||||||
ON Semiconductor Corp | United States | (2,800 | ) | (34,832 | ) | |||||||||
Renesas Electronics Corp | Japan | (5,100 | ) | (18,377 | ) | |||||||||
|
| |||||||||||||
| (1,006,835 | ) | |||||||||||||
|
| |||||||||||||
| Software & Services 9.28% | ||||||||||||||
Adyen NV | Netherlands | (65 | ) | (54,960 | ) | |||||||||
| 58 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Reference Entity – Short (continued) | ||||||||||||||
| Software & Services (continued) | ||||||||||||||
Amadeus IT Group SA | Spain | (2,665 | ) | $ | (126,324 | ) | ||||||||
Autodesk Inc | United States | (1,466 | ) | (228,843 | ) | |||||||||
DocuSign Inc | United States | (800 | ) | (73,920 | ) | |||||||||
DXC Technology Co | United States | (1,800 | ) | (23,490 | ) | |||||||||
GoDaddy Inc | United States | (1,300 | ) | (74,243 | ) | |||||||||
Guidewire Software Inc | United States | (588 | ) | (46,634 | ) | |||||||||
MongoDB Inc | United States | (246 | ) | (33,589 | ) | |||||||||
NortonLifeLock Inc | United States | (4,300 | ) | (80,453 | ) | |||||||||
Okta Inc | United States | (700 | ) | (85,582 | ) | |||||||||
Paycom Software Inc | United States | (200 | ) | (40,402 | ) | |||||||||
PTC Inc | United States | (800 | ) | (48,968 | ) | |||||||||
RingCentral Inc | United States | (200 | ) | (42,382 | ) | |||||||||
salesforce.com Inc | United States | (1,346 | ) | (193,797 | ) | |||||||||
Shopify Inc | Canada | (500 | ) | (207,124 | ) | |||||||||
Splunk Inc | United States | (956 | ) | (120,676 | ) | |||||||||
Square Inc | United States | (2,359 | ) | (123,564 | ) | |||||||||
Temenos AG | Switzerland | (130 | ) | (17,050 | ) | |||||||||
Twilio Inc | United States | (800 | ) | (71,592 | ) | |||||||||
Workday Inc | United States | (1,081 | ) | (140,768 | ) | |||||||||
|
| |||||||||||||
| (1,834,361 | ) | |||||||||||||
|
| |||||||||||||
| Technology Hardware & Equipment 2.24% | ||||||||||||||
Corning Inc | United States | (5,300 | ) | (108,862 | ) | |||||||||
Flex Ltd | Singapore | (3,500 | ) | (29,313 | ) | |||||||||
IPG Photonics Corp | United States | (242 | ) | (26,688 | ) | |||||||||
NetApp Inc | United States | (1,700 | ) | (70,873 | ) | |||||||||
Nokia Oyj | Finland | (37,643 | ) | (118,501 | ) | |||||||||
Western Digital Corp | United States | (2,100 | ) | (87,402 | ) | |||||||||
|
| |||||||||||||
| (441,639 | ) | |||||||||||||
|
| |||||||||||||
| Telecommunication Services 4.13% | ||||||||||||||
Cellnex Telecom SA | Spain | (1,598 | ) | (72,679 | ) | |||||||||
Elisa Oyj | Finland | (884 | ) | (54,784 | ) | |||||||||
HKT Trust & HKT Ltd | Hong Kong | (26,000 | ) | (35,423 | ) | |||||||||
Singapore Telecommunications Ltd | Singapore | (55,300 | ) | (98,649 | ) | |||||||||
SoftBank Group Corp | Japan | (6,900 | ) | (242,112 | ) | |||||||||
Spark New Zealand Ltd | New Zealand | (11,785 | ) | (28,541 | ) | |||||||||
Tele2 AB | Sweden | (1,108 | ) | (14,918 | ) | |||||||||
Telecom Italia SpA/Milano | Italy | (57,138 | ) | (23,347 | ) | |||||||||
Telefonica SA | Spain | (29,429 | ) | (134,766 | ) | |||||||||
Telenor ASA | Norway | (4,879 | ) | (70,576 | ) | |||||||||
TELUS Corp | Canada | (2,600 | ) | (40,644 | ) | |||||||||
|
| |||||||||||||
| (816,439 | ) | |||||||||||||
|
| |||||||||||||
| Transportation 2.04% | ||||||||||||||
Atlantia SpA | Italy | (3,300 | ) | (41,387 | ) | |||||||||
Aurizon Holdings Ltd | Australia | (12,564 | ) | (32,528 | ) | |||||||||
Delta Air Lines Inc | United States | (300 | ) | (8,559 | ) | |||||||||
FedEx Corp | United States | (1,576 | ) | (191,106 | ) | |||||||||
MTR Corp Ltd | Hong Kong | (11,500 | ) | (59,422 | ) | |||||||||
Uber Technologies Inc | United States | (1,300 | ) | (36,296 | ) | |||||||||
XPO Logistics Inc | United States | (700 | ) | (34,125 | ) | |||||||||
|
| |||||||||||||
| (403,423 | ) | |||||||||||||
|
| |||||||||||||
| Utilities 3.99% | ||||||||||||||
AES Corp/VA | United States | (4,500 | ) | (61,200 | ) | |||||||||
AGL Energy Ltd | Australia | (4,078 | ) | (42,905 | ) | |||||||||
APA Group | Australia | (7,983 | ) | (50,130 | ) | |||||||||
| franklintempleton.com | Annual Report | 59 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Liberty Systematic Style Premia ETF(continued)
| Country | Shares | Value | ||||||||||||
| Reference Entity – Short (continued) | ||||||||||||||
| Utilities (continued) | ||||||||||||||
CK Infrastructure Holdings Ltd | Hong Kong | (4,500 | ) | $ | (23,920 | ) | ||||||||
E.ON SE | Germany | (13,584 | ) | (140,719 | ) | |||||||||
EDP – Energias de Portugal SA | Portugal | (17,060 | ) | (68,474 | ) | |||||||||
Electricite de France SA | France | (3,836 | ) | (30,246 | ) | |||||||||
Essential Utilities Inc | United States | (500 | ) | (20,350 | ) | |||||||||
Fortum Oyj | Finland | (2,977 | ) | (43,690 | ) | |||||||||
Hydro One Ltd | Canada | (2,300 | ) | (40,947 | ) | |||||||||
RWE AG | Germany | (1,276 | ) | (33,546 | ) | |||||||||
Snam SpA | Italy | (13,611 | ) | (62,785 | ) | |||||||||
Southern Co/The | United States | (2,400 | ) | (129,936 | ) | |||||||||
SSE PLC | United Kingdom | (1,418 | ) | (22,945 | ) | |||||||||
United Utilities Group PLC | United Kingdom | (1,441 | ) | (16,131 | ) | |||||||||
|
| |||||||||||||
| (787,924 | ) | |||||||||||||
|
| |||||||||||||
Total Value of Reference Entity – Morgan Stanley Capital Services LLC | $ | (19,759,844 | ) | |||||||||||
|
| |||||||||||||
| 60 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statements of Assets and Liabilities
March 31, 2020
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | Franklin Liberty Systematic Style Premia ETFa | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 146,629,672 | $ | 4,705,774 | $ | 56,855,995 | $ | 31,395,346 | ||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers | $ | 128,193,516 | $ | 4,670,560 | $ | 52,111,841 | $ | 25,183,073 | ||||||||
Cash | 1,425,609 | 7,176 | 4,686,556 | 16,945,721 | ||||||||||||
Foreign currency, at value (cost $–, $280,927, $– and $13,035, respectively) | — | 279,284 | — | 13,003 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 1,054,294 | — | 1,319,415 | — | ||||||||||||
Interest | 2,525,893 | 28,091 | 189,233 | 77,698 | ||||||||||||
Affiliates | — | 9,145 | — | — | ||||||||||||
Closed swap contracts | — | — | — | 46,057,673 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | — | — | — | 2,747,621 | ||||||||||||
Swap Contracts | 288,512 | — | — | — | ||||||||||||
Unrealized appreciation on OTC forward exchange contracts | — | 99,287 | — | 1,277,127 | ||||||||||||
|
| |||||||||||||||
Total assets | 133,487,824 | 5,093,543 | 58,307,045 | 92,301,916 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Management fees | 22,982 | — | 3,870 | 20,187 | ||||||||||||
Investment securities purchased | 2,221,500 | — | 3,172,607 | — | ||||||||||||
Transfer agent fees | 14,300 | 14,300 | 14,300 | 6,301 | ||||||||||||
Distributions to shareholders | 746,293 | — | 183,562 | — | ||||||||||||
Custodian fees | 4,518 | 5,016 | 45,792 | 1,272 | ||||||||||||
Professional fees | 36,644 | 40,454 | 46,044 | 22,990 | ||||||||||||
Reports to shareholders | 1,163 | 1,277 | 1,112 | 2,740 | ||||||||||||
Closed Swap Contracts | — | — | — | 39,542,031 | ||||||||||||
Variation margin on futures contracts | — | — | — | 84,293 | ||||||||||||
Variation margin on centrally cleared swap contracts | 53,803 | — | — | — | ||||||||||||
Registration and filing fees | 18,382 | 129 | 353 | — | ||||||||||||
Unrealized depreciation on OTC forward exchange contracts | — | 36,991 | — | 1,669,191 | ||||||||||||
Accrued expenses and other liabilities | 6,209 | 6,215 | 6,240 | 4,846 | ||||||||||||
|
| |||||||||||||||
Total liabilities | 3,125,794 | 104,382 | 3,473,880 | 41,353,851 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 130,362,030 | $ | 4,989,161 | $ | 54,833,165 | $ | 50,948,065 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 149,255,775 | $ | 5,005,000 | $ | 60,417,704 | $ | 54,371,205 | ||||||||
Total distributable earnings (loss) | (18,893,745 | ) | (15,839 | ) | (5,584,539 | ) | (3,423,140 | ) | ||||||||
|
| |||||||||||||||
Net assets, at value | $ | 130,362,030 | $ | 4,989,161 | $ | 54,833,165 | $ | 50,948,065 | ||||||||
|
| |||||||||||||||
Shares outstanding | 5,750,000 | 200,000 | 2,400,000 | 2,200,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 22.67 | $ | 24.95 | $ | 22.85 | $ | 23.16 | ||||||||
|
| |||||||||||||||
aConsolidated financial statements. See Note 12.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 61 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the year ended March 31, 2020
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | Franklin Liberty Systematic Style Premia ETFb | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: | ||||||||||||||||
Unaffiliated issuers | $ | — | $ | — | $ | — | $ | 183,477 | ||||||||
|
| |||||||||||||||
Interest: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | 2,901,939 | 58,619 | 2,585,042 | — | ||||||||||||
Total investment income | 2,901,939 | 58,619 | 2,585,042 | 183,477 | ||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 308,939 | 22,839 | 375,996 | 52,570 | ||||||||||||
Transfer agent fees | 16,900 | 16,900 | 16,900 | 6,301 | ||||||||||||
Custodian fees | 4,803 | 5,541 | 50,046 | 1,272 | ||||||||||||
Reports to shareholders | 7,309 | 7,438 | 7,405 | 3,030 | ||||||||||||
Registration and filing fees | 22,556 | 4,175 | 7,987 | 317 | ||||||||||||
Professional fees | 61,256 | 94,200 | 82,449 | 23,223 | ||||||||||||
Trustee fees and expenses | 2,952 | 628 | 7,231 | 46 | ||||||||||||
Other | 12,588 | 12,187 | 12,850 | 4,846 | ||||||||||||
|
| |||||||||||||||
Total expenses | 437,303 | 163,908 | 560,864 | 91,605 | ||||||||||||
Expenses waived/paid by affiliates (Note 3c) | (233,130 | ) | (149,552 | ) | (300,559 | ) | (40,016 | ) | ||||||||
|
| |||||||||||||||
Net expenses | 204,173 | 14,356 | 260,305 | 51,589 | ||||||||||||
|
| |||||||||||||||
Net investment income | 2,697,766 | 44,263 | 2,324,737 | 131,888 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (47,161 | ) | 138,596 | (592,448 | ) | 5,359,401 | ||||||||||
Foreign currency transactions | — | (43,927 | ) | — | (28,371 | ) | ||||||||||
Forwards exchange contracts | — | 602 | — | (501,235 | ) | |||||||||||
Futures contracts | — | — | — | (2,873,377 | ) | |||||||||||
Swap contracts | 20,467 | — | — | — | ||||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (26,694 | ) | 95,271 | (592,448 | ) | 1,956,418 | ||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (18,570,176 | ) | (4,631 | ) | (4,015,523 | ) | (6,212,273 | ) | ||||||||
Translation of other assets and liabilities denominated in foreign currencies | — | 1,653 | — | 20,127 | ||||||||||||
Futures contracts | — | — | — | (277,388 | ) | |||||||||||
Swap contracts | (513,520 | ) | — | — | — | |||||||||||
Forward exchange contracts | — | 62,296 | — | (392,064 | ) | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (19,083,696 | ) | 59,318 | (4,015,523 | ) | (6,861,598 | ) | |||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (19,110,390 | ) | 154,589 | (4,607,971 | ) | (4,905,180 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (16,412,624 | ) | $ | 198,852 | $ | (2,283,234 | ) | $ | (4,773,292 | ) | |||||
|
| |||||||||||||||
aForeign taxes withheld on interest | $ | — | $ | 723 | $ | — | $ | — | ||||||||
|
| |||||||||||||||
bConsolidated financial statements. See Note 12.
| 62 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019a | Year Ended March 31, 2020 | Year Ended March 31, 2019a | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 2,697,766 | $ | 484,624 | $ | 44,263 | $ | 77,976 | ||||||||
Net realized gain (loss) | (26,694 | ) | 28,881 | 95,271 | (49,575 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) | (19,083,696 | ) | 134,020 | 59,318 | (34,953 | ) | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (16,412,624 | ) | 647,525 | 198,852 | (6,552 | ) | ||||||||||
|
| |||||||||||||||
Distributions to shareholders | (3,146,157 | ) | (501,784 | ) | (121,439 | ) | (86,700 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 139,740,070 | 10,035,000 | — | 5,005,000 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 120,181,289 | 10,180,741 | 77,413 | 4,911,748 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of year | 10,180,741 | — | 4,911,748 | — | ||||||||||||
|
| |||||||||||||||
End of year | $ | 130,362,030 | $ | 10,180,741 | $ | 4,989,161 | $ | 4,911,748 | ||||||||
|
| |||||||||||||||
aFor the period May 30, 2018 (commencement of operations) to March 31, 2019.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 63 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin Liberty Senior Loan ETF | Franklin Liberty Systematic Style Premia ETFc | |||||||||||||||
| Year Ended March 31, 2020 | Year Ended March 31, 2019a | Year Ended March 31, 2020b | ||||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 2,324,737 | $ | 1,318,709 | $ | 131,888 | ||||||||||
Net realized gain (loss) | (592,448 | ) | (52,149 | ) | 1,956,418 | |||||||||||
Net change in unrealized appreciation (depreciation) | (4,015,523 | ) | (728,631 | ) | (6,861,598 | ) | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from | (2,283,234 | ) | 537,929 | (4,773,292 | ) | |||||||||||
|
| |||||||||||||||
Distributions to shareholders | (2,537,917 | ) | (1,301,317 | ) | (2,008 | ) | ||||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 2,489,243 | 57,928,461 | 55,723,365 | |||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (2,331,908 | ) | 57,165,073 | 50,948,065 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of year | 57,165,073 | — | — | |||||||||||||
|
| |||||||||||||||
End of year | $ | 54,833,165 | $ | 57,165,073 | $ | 50,948,065 | ||||||||||
|
| |||||||||||||||
aFor the period May 30, 2018 (commencement of operations) to March 31, 2019.
bFor the period December 18, 2019 (commencement of operations) to March 31, 2020.
cConsolidated financial statements. See Note 12.
| 64 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting offorty-two separate funds, four 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). Each of the Funds are an exchange traded fund (ETF) and are actively managed, thus they are not designed to track an index. The Trust began offering shares of Franklin Liberty High Yield Corporate ETF, Franklin Liberty International Aggregate Bond ETF, Franklin Liberty Senior Loan ETF and Franklin Liberty Systematic Style Premia ETF.
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 as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) open for trading. 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.
Debt securities generally trade in theover-the-counter (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. Securi-
ties 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.
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. 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 anon-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 significant security valuation changes due to
| franklintempleton.com | Annual Report | 65 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
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. Derivative Financial Instruments
Certain or all Funds 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 Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. Certain or all Funds attempt to reduce their 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 Funds include failure of the Funds 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 closeout all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement.
The Funds 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
| 66 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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. 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 Statements 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 Statements of Operations.
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. 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, 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 Funds’ 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.
Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to equity price 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 Statements of Assets and Liabilities.
See Note 10 regarding other derivative information.
d. Securities Purchased on a Delayed Delivery Basis
Certain or all Funds purchase securities on a delayed delivery 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 Funds will generally purchase these securities with the intention of holding the securities, they may sell the securities before the settlement date. Sufficient assets have been segregated for these securities.
e. 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 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.
f. 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
| franklintempleton.com | Annual Report | 67 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
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 March 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).
g. 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. Distributions to shareholders are recorded on theex-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. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense. These expenses are paid by the Fund or by investment manager, as applicable, according to the terms of the unified management fee agreement.
h. 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.
i. 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
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specific number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities). For the year ended March 31, 2020, all Creation Unit transactions were made in cash.
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
At March 31, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| Franklin Liberty High Yield Corporate ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019a | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 6,900,000 | $ | 179,541,274 | 400,000 | $ | 10,035,000 | ||||||||||||||
Shares redeemed | (1,550,000 | ) | (39,801,204 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 5,350,000 | $ | 139,740,070 | 400,000 | $ | 10,035,000 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin Liberty International Aggregate Bond ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019a | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 200,000 | $ | 5,005,000 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | 200,000 | $ | 5,005,000 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin Liberty Senior Loan ETF | ||||||||||||||||||||
Year Ended March 31, 2020 | Year Ended March 31, 2019a | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 100,000 | $ | 2,489,243 | 2,300,000 | $ | 57,928,461 | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 100,000 | $ | 2,489,243 | 2,300,000 | $ | 57,928,461 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin Liberty Systematic Style Premia ETF | ||||||||||||||||||||
Year Ended March 31, 2020b | Year Ended March 31, 2019 | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 2,200,001 | $ | 55,723,390 | — | $ | — | ||||||||||||||
Shares redeemed | (1 | ) | (25 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 2,200,000 | $ | 55,723,365 | — | $ | — | ||||||||||||||
|
| |||||||||||||||||||
aFor the period May 30, 2018 (commencement of operations) to March 31, 2019.
bFor the period December 18, 2019 (commencement of operations) to March 31, 2020.
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 Funds are also officers and/or directors of the following subsidiaries:
| Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Investment Management Limited (FTIML) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | |
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
a. Management Fees
Franklin Liberty High Yield Corporate ETF pays an investment management fee to Advisers based on the average daily net assets of the fund as follows:
| 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 | |
Franklin Liberty International Aggregate Bond ETF pays an investment management fee to FTIML based on the average daily net assets of the fund as follows:
| Annualized Fee Rate | Net Assets | |
0.450% | Up to and including $1 billion | |
0.400% | Over $1 billion, up to and including $5 billion | |
0.350% | Over $5 billion, up to and including $10 billion | |
0.345% | Over $10 billion, up to and including $15 billion | |
0.340% | Over $15 billion, up to and including $20 billion | |
0.335% | In excess of $20 billion | |
Franklin Liberty Senior Loan ETF pays an investment management fee to Advisers based on the average daily net assets of the fund as follows:
| Annualized Fee Rate | Net Assets | |
0.650% | Up to and including $500 million | |
0.550% | Over $500 million, up to and including $1 billion | |
0.500% | Over $1 billion, up to and including $1.5 billion | |
0.450% | Over $1.5 billion, up to and including $6.5 billion | |
0.425% | Over $6.5 billion, up to and including $11.5 billion | |
0.400% | Over $11.5 billion, up to and including $16.5 billion | |
0.390% | Over $16.5 billion, up to and including $19 billion | |
0.380% | Over $19 billion, up to and including $21.5 billion | |
0.370% | In excess of $21.5 billion | |
Franklin Liberty Systematic Style Premia ETF pays an investment management fees to Advisors based on a fee equal to an annual rate of 0.65% the average daily net assets of the Fund.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 2020, each Fund’s annualized effective investment management fee rate based on daily net assets was as follows:
| Annualized Fee Rate | ||
Franklin Liberty High Yield Corporate ETF | 0.605% | |
Franklin Liberty International Aggregate Bond ETF | 0.450% | |
Franklin Liberty Senior Loan ETF | 0.650% | |
Franklin Liberty Systematic Style Premia ETF | 0.650% | |
Effective March 1, 2019, under a subadvisory agreement, FTIML, an affiliate of Advisers, provides subadvisory services to Franklin Liberty International Aggregate Bond ETF. The subadvisory fee is paid by Advisers based on the Fund’s average daily net assets, and is not an additional expense of the Fund.
b. Administrative Fees
Under an agreement with Advisers, and FTIML, FT Services provides administrative services to the Funds. The fee is paid by Advisers, and FTIML, based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.
c. Waiver and Expense Reimbursements
Advisers have contractually agreed in advance to waive or limit its fees and to assume as their own expense certain expenses otherwise payable by Franklin Liberty High Yield Corporate ETF and Franklin Liberty Senior Loan ETF so that the expenses (including acquired fund fees and expenses) for each of the Funds do not exceed 0.40% and 0.45%, respectively, based on the average net assets (other than certainnon-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until July 31, 2019. FTIML has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by Franklin Liberty International Aggregate Bond ETF so that the expenses (including acquired fund fees and expenses) of the Fund do not exceed 0.25% based on the average net assets (other than certainnon-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until July 31, 2020. Prior to August 1, 2019, expenses (including acquired fund fees and expenses) for Franklin Liberty International Aggregate Bond ETF were limited to 0.35% based on the average net assets of the fund. Total expenses waived or paid are not subject to recapture subsequent to the Fund’s fiscal year end. For Franklin Liberty Systematic Style Premia ETF, the investment manager has contractually agreed to waive the management fee it receives from the Fund in an amount equal to the management fee paid by a Cayman Islands-based company that is wholly-owned by the Fund (Subsidiary). The waiver may not be terminated and will remain in effect for as long as the investment manager’s contract with the Subsidiary is in place. Additionally, 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 certainnon-routine expenses) for the Fund do not exceed 0.65% 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.
| franklintempleton.com | Annual Report | 71 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
d. Other Affiliated Transactions
At March 31, 2020, the shares of the Funds were owned by the following entities.
| Fund | Shares | Percentage of Outstanding Sharesa | ||||||
| Franklin Liberty High Yield Corporate ETF | ||||||||
Franklin Conservative Allocation Fund | 675,064 | 11.7% | ||||||
Franklin Moderate Allocation Fund | 669,251 | 11.6% | ||||||
Franklin Total Return Fund | 3,830,000 | 66.6% | ||||||
|
| |||||||
| 5,174,315 | 89.9% | |||||||
|
| |||||||
| Franklin Liberty International Aggregate Bond ETF | ||||||||
Franklin Resources Inc. | 50,000 | 25.0% | ||||||
|
| |||||||
| Franklin Liberty Senior Loan ETF | ||||||||
Franklin Total Return Fund | 914,900 | 38.1% | ||||||
Franklin Floating Rate Master Trust | 1,093,000 | 45.5% | ||||||
|
| |||||||
| 2,007,900 | 83.6% | |||||||
|
| |||||||
| Franklin Liberty Systematic Style Premia ETF | ||||||||
Franklin Conservative Allocation Fund | 241,375 | 11.0% | ||||||
Franklin Moderate Allocation Fund | 385,025 | 17.5% | ||||||
Franklin Growth Allocation Fund | 255,675 | 11.6% | ||||||
Franklin Managed Income Fund | 1,175,000 | 53.4% | ||||||
Franklin LifeSmart™ 2020 – 2055 Retirement Target Funds | 113,500 | 5.2% | ||||||
|
| |||||||
| 2,170,575 | 98.7% | |||||||
|
| |||||||
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2020, the capital loss carryforwards were as follows:
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | Franklin Liberty Systematic Style Premia ETF | |||||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||||||
Long term | $ | — | $ | — | $ | 367,180 | $ | — | ||||||||
Short term | — | — | 290,092 | — | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | — | $ | — | $ | 657,272 | $ | — | ||||||||
|
| |||||||||||||||
The tax character of distributions paid during the years ended March 31, 2020 and 2019, were as follows:
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Distributions paid from: | ||||||||||||||||||||
Ordinary income | $ | 3,077,201 | $ | 501,784 | $ | 100,249 | $ | 86,700 | ||||||||||||
Long-Term Capital Gain | 68,956 | — | 21,190 | — | ||||||||||||||||
|
| |||||||||||||||||||
Total Distributions paid | $ | 3,146,157 | $ | 501,784 | $ | 121,439 | $ | 86,700 | ||||||||||||
|
| |||||||||||||||||||
| 72 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
| Franklin Liberty Senior Loan ETF | Franklin Liberty Systematic Style Premia ETF | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Distributions paid from: | ||||||||||||||||||||
Ordinary income | $ | 2,537,917 | $ | 1,301,317 | $ | 2,008 | $ | — | ||||||||||||
Long-Term Capital Gain | — | — | — | — | ||||||||||||||||
|
| |||||||||||||||||||
Total Distributions paid | $ | 2,537,917 | $ | 1,301,317 | $ | 2,008 | $ | — | ||||||||||||
|
| |||||||||||||||||||
For tax purposes, the Funds may elect to defer any portion of a Post October Capital loss to the first day of the following fiscal year. At March 31, 2020, Franklin Liberty High Yield Corporate ETF deferred Post October Capital loss of $271,097
At March 31, 2020, the cost of investments, net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | Franklin Liberty Systematic Style Premia ETF | |||||||||||||
Cost of investments | $ | 146,866,732 | $ | 4,762,819 | $ | 56,866,775 | $ | 32,120,395 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 414,165 | $ | 116,421 | $ | — | $ | 81,908 | ||||||||
Unrealized depreciation | 19,087,382 | (208,679 | ) | (4,754,934 | ) | (7,019,230 | ) | |||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | 18,673,217 | $ | (92,258 | ) | $ | (4,754,934 | ) | $ | (6,937,322 | ) | |||||
|
| |||||||||||||||
Distributable earnings – undistributed ordinary income | $ | 791,086 | $ | 78,062 | $ | 11,229 | $ | 3,688,495 | ||||||||
|
| |||||||||||||||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of bond discounts and premiums.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities andin-kind transactions, if any) for the year ended March 31, 2020, were as follows:
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | Franklin Liberty Systematic Style Premia ETF | |||||||||||||
Purchases | $ | 199,124,714 | $ | 3,595,425 | $ | 31,482,587 | $ | 46,741,402 | ||||||||
Sales | $ | 62,158,927 | $ | 3,146,310 | $ | 28,073,873 | $ | 12,294,222 | ||||||||
6. Credit Risk
At March 31, 2020, Franklin Liberty High Yield ETF, Franklin Liberty International Aggregate Bond ETF and Franklin Liberty Senior Loan ETF had 96.48%, 2.69%, and 84.15%, respectively, of their portfolio invested in high yield securities, senior secured floating rate notes, 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.
7. Global Credit Facility
The Funds, except for Franklin Liberty International Aggregate Bond Fund ETF, together with other U.S. registered and foreign investment funds (collectively, Borrowers), managed by Franklin Templeton, are borrowers in a joint syndicated senior
| franklintempleton.com | �� | Annual Report | 73 | |||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
7. Global Credit Facility(continued)
unsecured credit facility totaling $2 billion (Global Credit Facility) which the Funds entered into on February 8, 2019 and matures on February 7, 2020. 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 Statement of Operations. During the year ended March 31, 2020, the Fund did not use the Global Credit Facility.
8. 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.
9. 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.
10. Other Derivative Information
At March 31, 2020, the Funds’ investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
Asset Derivatives | Liability Derivatives | |||||||||||
| Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||
| Franklin Liberty High Yield Corporate ETF | ||||||||||||
Swap Contracts | Variation margin on centrally cleared swap contracts | $ | — | Variation margin on centrally cleared swap contracts | $ | 53,803 | a | |||||
|
|
|
| |||||||||
Totals | $ | — | $ | 53,803 | ||||||||
|
|
|
| |||||||||
| Franklin Liberty International Aggregate Bond ETF | ||||||||||||
Foreign exchange contracts | Unrealized appreciation on OTC forward exchange contracts | $ | 99,287 | Unrealized depreciation on OTC forward exchange contracts | $ | 36,991 | ||||||
|
|
|
| |||||||||
Totals | $ | 99,287 | $ | 36,991 | ||||||||
|
|
|
| |||||||||
| Franklin Liberty Systematic Style Premia ETF | ||||||||||||
Foreign exchange contracts | Unrealized appreciation on OTC forward exchange contracts | $ | 1,277,127 | Unrealized depreciation on OTC forward exchange contracts | $ | 1,699,191 | ||||||
Equity contracts | Variation margin on futures contracts | — | Variation margin on futures contracts | 84,293 | a | |||||||
|
|
|
| |||||||||
Totals | $ | 1,277,127 | $ | 1,783,484 | ||||||||
|
|
|
| |||||||||
aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable
| 74 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
For the year ended March 31, 2020, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:
| Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
| Franklin Liberty High Yield Corporate ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Swap Contracts | Swap Contracts | $ | 20,467 | Swap Contracts | $ | (513,520 | ) | |||||
|
|
|
| |||||||||
Totals | $ | 20,467 | $ | (513,520 | ) | |||||||
|
|
|
| |||||||||
| Franklin Liberty International Aggregate Bond ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Foreign exchange contracts | Foreign currency transactions | $ | 602 | Translation of other assets and liabilities denominated in foreign currencies | $ | 62,296 | ||||||
|
|
|
| |||||||||
Totals | $ | 602 | $ | 62,296 | ||||||||
|
|
|
| |||||||||
| Franklin Liberty Systematic Style Premia ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Index contracts | Futures contracts | $ | (2,873,377 | ) | Futures contracts | $ | (277,388 | ) | ||||
Foreign exchange contracts | Forward exchange Contract | (501,235 | ) | Forward exchange Contract | (392,064 | ) | ||||||
|
|
|
| |||||||||
Totals | $ | (3,374,612 | ) | $ | (669,452 | ) | ||||||
|
|
|
| |||||||||
For the year ended March 31, 2020, the average month end notional amount of futures contracts and average month end contract value for forward exchange contracts were as follows:
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Systematic Style Premia ETF | ||||||||||
Credit default swap contracts | $ | 533,077 | $ | — | $ | — | ||||||
Futures contracts | $ | — | $ | — | $ | 42,907,508 | ||||||
Foreign exchange contracts | $ | — | $ | 1,241,133 | $ | 53,210,627 | ||||||
Interest rate contracts | $ | — | $ | — | $ | 13,999,172 | ||||||
At March 31, 2020, the Funds’ OTC derivative assets and liabilities are as follows:
| Gross and Net Amounts of Assets and Liabilities Presented in the Statements of Assets and Liabilities | ||||||||
| Assetsa | Liabilitiesa | |||||||
| Franklin Liberty International Aggregate Bond ETF | ||||||||
Foreign exchange contracts | $ | 99,287 | $ | 36,991 | ||||
|
| |||||||
| Franklin Liberty Systematic Style Premia ETF | ||||||||
Foreign exchange contracts | $ | 1,277,127 | $ | 1,669,191 | ||||
|
| |||||||
aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.
| franklintempleton.com | Annual Report | 75 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
10. Other Derivative Information(continued)
At March 31, 2020, the Funds’ OTC derivative assets, which may be offset against the Funds’ OTC derivative liabilities and collateral received from the counterparty, are as follows:
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Gross and Net Amounts of Assets Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Receiveda | Cash Collateral Receiveda | Net Amount (Not less than zero) | ||||||||||||||||
| Franklin Liberty International Aggregate Bond ETF | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
CITI | $ | 99,287 | $ | (36,991 | ) | $ | — | $ | — | $ | 62,296 | |||||||||
|
| |||||||||||||||||||
aIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Gross and Net Amounts of Assets Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Receiveda | Cash Collateral Receiveda | Net Amount (Not less than zero) | ||||||||||||||||
| Franklin Liberty Systematic Style Premia ETF | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
MSCO | $ | 1,277,127 | $ | (1,277,127 | ) | $ | — | $ | — | $ | — | |||||||||
|
| |||||||||||||||||||
aIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.
At March 31, 2020, the Funds’ OTC derivative liabilities, which may be offset against the Funds’ OTC derivative assets and collateral pledged to the counterparty, are as follows:
| Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
| Gross and Net Amounts of Liabilities Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Pledgeda | Cash Collateral Pledgeda | Net Amount (Not less than zero) | ||||||||||||||||
| Franklin Liberty International Aggregate Bond ETF | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
CITI | $ | 36,991 | $ | (36,991 | ) | $ | — | $ | — | $ | — | |||||||||
|
| |||||||||||||||||||
| Franklin Liberty Systematic Style Premia ETF | ||||||||||||||||||||
| Counterparty | ||||||||||||||||||||
MSCO | $ | 1,669,191 | $ | (1,277,127 | ) | $ | — | $ | — | $ | 392,064 | |||||||||
|
| |||||||||||||||||||
aIn some instances, the collateral amounts disclosed in the table above were adjusted due to the requirement to limit collateral amounts to avoid the effect of overcollateralization. Actual collateral received and/or pledged may be more than the amounts disclosed herein.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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) |
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 March 31, 2020, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin Liberty High Yield Corporate ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Foreign Government and Agency Securities | $ | — | $ | 128,093,516 | $ | — | $ | 128,093,516 | ||||||||
Short-Term Investments | — | 100,000 | — | 100,000 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | — | $ | 128,193,516 | $ | — | $ | 128,193,516 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Credit Default Swap Contracts | $ | — | $ | 513,520 | $ | — | $ | 513,520 | ||||||||
|
| |||||||||||||||
| Franklin Liberty International Aggregate Bond ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Foreign Government and Agency Securities | $ | — | $ | 4,570,560 | $ | — | $ | 4,570,560 | ||||||||
Short-Term Investments | — | 100,000 | — | 100,000 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | — | $ | 4,670,560 | $ | — | $ | 4,670,560 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 99,287 | $ | — | $ | 99,287 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 36,991 | $ | — | $ | 36,991 | ||||||||
|
| |||||||||||||||
| Franklin Liberty Senior Loan ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Senior Floating Rate Interests | $ | — | $ | 46,782,658 | $ | — | $ | 46,782,658 | ||||||||
Asset-Backed Securities | — | 5,094,183 | — | 5,094,183 | ||||||||||||
Short-Term Investments | — | 235,000 | — | 235,000 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | — | $ | 52,111,841 | $ | — | $ | 52,111,841 | ||||||||
|
| |||||||||||||||
| franklintempleton.com | Annual Report | 77 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
11. Fair Value Measurements(continued)
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Franklin Liberty Systematic Style Premia ETF | ||||||||||||||||
| Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Total Investments in Securities | $ | 25,183,073 | $ | — | $ | — | $ | 25,183,073 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 1,277,127 | $ | — | $ | 1,277,127 | ||||||||
Futures Contracts | 736,452 | — | — | 736,452 | ||||||||||||
|
| |||||||||||||||
Total Other Financial Instruments | $ | 736,452 | $ | 1,277,127 | $ | — | $ | 2,013,579 | ||||||||
|
| |||||||||||||||
| Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 1,669,191 | $ | — | $ | 1,669,191 | ||||||||
Futures Contracts | 1,013,840 | — | — | 1,013,840 | ||||||||||||
|
| |||||||||||||||
Total Other Financial Instruments | $ | 1,013,840 | $ | 1,669,191 | $ | — | $ | 2,683,031 | ||||||||
|
| |||||||||||||||
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common and convertible preferred stocks, warrants, as well as other equity investments.
12. Investments in FLSP Holdings Corporation
Franklin Liberty Systematic Style Premia ETF, (the “Fund”), invests in certain financial instruments and commodities/or commodity-linked derivative investments. The FLSP Holdings Corporation is a Cayman Islands exempted company with limited liability, is a wholly-owned subsidiary of the Fund, and is able to invest in certain financial instruments and/or commodity-linked derivative investments consistent with the investment objective of the Fund. At March 31, 2020, the Franklin Liberty Systematic Style Premia ETF investment(s) FLSP Holdings Corporation is reflected in the Fund’s Consolidated Statement of Investments. At March 31, 2020, the net assets of the FLSP Holdings Corporation were $1,847,400, representing 3.63% of the fund’s consolidated net assets. The Fund’s investment (s) in the FLSP Holdings Corporation is limited to 25% of consolidated assets.
13. New Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (FASB) 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 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 is currently evaluating the impact, if any, of applying this ASU.
14. 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.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
| Selected Portfolio | Currency | |||||
| FHLB | Federal Home Loan Bank Rate | AUD | Australian Dollar | |||
| NCI | National Median Cost of Funds Index | CAD | Canadian Dollar | |||
| PIK | Payment-In-Kind | DKK | Danish Krone | |||
| USD | Unified/Union School District | EUR | Euro | |||
| CAC | Cotation Assistée en Continu | HUF | Hungary | |||
| FRN | Floating Rate Note | IDR | Indonesian Rupiah | |||
| TBD | To be determined | JPY | Japanese Yen | |||
| MXN | Mexican Peso | |||||
| USD | United States Dollar | |||||
| franklintempleton.com | Annual Report | 79 | ||||
FRANKLIN TEMPLETON ETF TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Franklin Templeton ETF Trust and Shareholders of Franklin Liberty High Yield Corporate ETF, Franklin Liberty International Aggregate Bond ETF, Franklin Liberty Senior Loan ETF, and Franklin Liberty Systematic Style Risk Premia ETF
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Franklin Liberty High Yield Corporate ETF, Franklin Liberty International Aggregate Bond ETF, Franklin Liberty Senior Loan ETF, and Franklin Liberty Systematic Style Risk Premia ETF(the “Funds”) as ofMarch 31, 2020, the related statementsof operationsand of changes in net assets for each of the periods indicated in the table below, including the related notes, and each of the financial highlights for each periods indicated in the table below (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2020, and the results of each of their operations, the changes in each of their net assets, and each of the financial highlights for each of the periods indicated in the table below in conformity with accounting principles generally accepted in the United States of America.
| Franklin Templeton ETF Trust | Statements of Operations | Statement of changes in net assets, and financial highlights | ||
Franklin Liberty High Yield Corporate ETF Franklin Liberty International Aggregate Bond ETF Franklin Liberty Senior Loan ETF | For the year ended March 31, 2020 | For the year ended March 31, 2020 and for the period May 30, 2018 (commencement of operations) through March 31, 2019 | ||
Franklin Liberty Systematic Style Risk Premia ETF | For the period December 18, 2019 (commencement of operations) through March 31, 2020 | |||
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditsof these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of March 31, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
San Francisco, California
May 19, 2020
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
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FRANKLIN TEMPLETON ETF TRUST
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as long term capital gain dividends for the fiscal year ended March 31, 2020:
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | |||||||
| $68,955 | $21,190 | |||||||
Under Section 854(b)(1)(B) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Internal Revenue Code for the fiscal year ended March 31, 2020.
| Franklin Liberty Systematic Style Premia ETF | ||||||||||
| $47,316 | ||||||||||
Under Section 871(k)(2)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as short term capital gain dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended March 31, 2020:
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | |||||||
| $50,686 | $73,869 | |||||||
Under Section 871(k)(1)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no less than the following amounts as interest related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of the Internal Revenue Code for the fiscal year ended March 31, 2020:
| Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | ||||||
| $2,641,973 | $1,579 | $2,020,165 | ||||||
At March 31, 2020, more than 50% of the Franklin Liberty International Aggregate Bond ETF’s total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. The Fund elects to treat foreign taxes paid as allowed under Section 853 of the Internal Revenue Code. This election will allow shareholders of record as of the April 2020 distribution to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.
| franklintempleton.com | Annual Report | 81 | ||||
FRANKLIN TEMPLETON ETF TRUST
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Rohit Bhagat (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Lead Independent Trustee and Trustee | Since 2016 | 44 | Axis Bank (2013-present), AssetMark Financial Holdings, Inc. (investment solutions) (2018-present) and FlipKart Limited (2019-present) (eCommerce company);formerly, CapFloat Financial Services Pvt., Ltd.(non-banking finance company) (2018) and Zentific Investment Management (hedge fund) (2015-2018). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Managing Member, Mukt Capital, LLC (private investment firm) (2014-present); Advisor, Optimal Asset Management (investment technology and advisory services company) (2015-present); andformerly, Chairman, Asia Pacific, BlackRock (2009-2012); Global Chief Operating Officer, Barclays Global Investors (investment management) (2005-2009); and Senior Partner, The Boston Consulting Group (management consulting) (1992-2005). | ||||||||
| Deborah D. McWhinney (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since January 2020 | 44 | Fluor Corporation (construction and engineering) (2014-present), IHS Markit (information services)(2015-present), Borg Warner (automotive) (2018-present) and Focus Financial Partner, LLC (financial services) (2018-present). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Director of various companies; andformerly, Board Member, Lloyds Banking Group (2015-2018) (financial institution) and Fresenius Medical Group (2016-2018) (healthcare); Chief Executive Officer (2013-2014) and Chief Operating Officer (2011-2013), CitiGroup Global Enterprise Payments (financial services); and President, Citi’s Personal Banking and Wealth Management (2009-2011). | ||||||||
| Anantha K. Pradeep (1963) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since 2016 | 44 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, Smilable, Inc. (technology company) (2014-present); Chief Executive Officer, MachineVantage (technology company) (2018-present); Founder and Managing Partner, Consult Meridian, LLC (consulting company) (2009-present); andformerly, Founder, BoardVantage (board portal solutions provider delivering paperless process for boards and leadership) (2000-2002). | ||||||||
| 82 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| **Jennifer M. Johnson (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee and Chairperson of the Board | Since 2016 | 49 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, President and Director, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of four of the investment companies in Franklin Templeton; andformerly, Chief Operating Officer and Executive Vice President, Franklin Resources, Inc. (1994-2015); Executive Vice President of Operations and Technology, Franklin Resources, Inc. (2005-2010); and Senior Vice President, Franklin Resources, Inc. (2003-2005). | ||||||||
| Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
Breda M. Beckerle (1958) 280 Park Avenue New York, NY 10017 | Interim Chief Compliance Officer | Since January 2020 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Compliance Officer, Fiduciary Investment Management International, Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | Chief Executive Officer – Finance and Administration | Since 2017 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017). | ||||||||
| Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President – AML Compliance | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Patrick O’Connor (1967) One Franklin Parkway San Mateo, CA 94403-1906 | President and Chief Executive Officer – Investment Management | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| President and Chief Investment Officer, Franklin Advisory Services, LLC; Senior Vice President, Franklin Advisers, Inc.; officer of two of the investment companies in Franklin Templeton; andformerly, Managing Director, Head of iShares Product Canada, BlackRock (1998-2014). | ||||||||
| franklintempleton.com | Annual Report | 83 | ||||
FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers (continued)
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
Vivek Pai (1970) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Treasurer, Chief Financial Officer and Chief Accounting Officer | Since May 2019 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Treasurer, U.S. Fund Administration & Reporting and officer of two of the investment companies in Franklin Templeton. | ||||||||
| Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President and Secretary | Since 2015 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
| Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Jennifer M. Johnson is considered to be an interested person of the Fund under the federal securities laws due to her position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated Rohit Bhagat as its audit committee financial expert. The Board believes that Mr. Bhagat qualifies as such an expert in view of his extensive business background and experience, including extensive experience in the asset management and financial services industries. Mr. Bhagat has been a Member and Chairman of the Fund’s Audit Committee since 2016. As a result of such background and experience, the Board believes that Mr. Bhagat has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Bhagat is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request. Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
| 84 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Board Approval of Investment Management Agreements
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty Systematic Style Premia ETF
(Fund)
At anin-person meeting held on May 29, 2019 (Meeting), the Board of Trustees (Board) of Franklin Templeton ETF Trust (Trust), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved an investment management agreement between Franklin Advisers, Inc. (Manager) and the Trust, on behalf of the Fund (Management Agreement) for an initialtwo-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the Management Agreement.
In considering the approval of the Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting, in memoranda dated February 21, 2019 and May 20, 2019 and throughout the year at meetings of the Board and its committees. The Board reviewed and considered all of the factors it deemed relevant in approving the Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services to be provided by the Manager; (ii) the costs of the services to be provided by the Manager and the profits realized/expected to be realized by the Manager and its affiliates from the relationship with the Fund; and (iii) the extent to which economies of scale may be realized as the Fund grows. The Board also reviewed and considered the form of Management Agreement and the terms of the Management Agreement which were explained at the Meeting, noting that the form of Management Agreement was substantially the same as the standard forms of investment management agreement (that include administration services) for the other actively managed exchange-traded funds that are series of the Trust.
In approving the Management Agreement, the Board, including a majority of the Independent Trustees, determined that the terms of the Management Agreement are fair and reasonable and that such Management Agreement is in the interests of the Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board reviewed and considered information regarding the
nature, extent and quality of investment management services to be provided by the Manager and its affiliates to the Fund and its shareholders. This information included, among other things, the Fund’s proposed investment goals and the Manager’s proposed investment strategies and ability to implement such investment strategies; the qualifications, background and experience of the investment personnel that will be responsible for theday-to-day portfolio management of the Fund; the Manager’s experience as the manager of other funds and accounts, including other series of the Trust and other funds in the Franklin Templeton family of funds; the Manager’s strength and reputation within the industry; the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the Manager; and the Manager’s compliance capabilities, as demonstrated by, among other things, its policies and procedures designed to prevent violations of the Federal Securities Laws (as defined in Rule38a-1 of the Investment Company Act of 1940). Following consideration of such information, the Board was satisfied with the nature, extent and quality of services to be provided by the Manager and its affiliates to the Fund and its shareholders.
FUND PERFORMANCE. The Board noted that, as the Fund had not yet commenced investment operations, there was no investment performance for the Fund. The Board considered the proposed performance benchmark for the Fund and how such benchmark would be utilized to measure performance of the Manager.
COMPARATIVE FEES AND EXPENSES. The Board reviewed and considered information regarding the Fund’s proposed total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule12b-1 andnon-Rule12b-1 service fees; and othernon-management fees. The Board considered the proposed total expense ratio and, separately, the proposed contractual management fee rate, without the effect of fee waivers, if any (Management Rate) of the Fund in comparison to the median expense ratio and median Management Rate, respectively, of other exchange-traded funds deemed comparable to and with a similar expense structure proposed for the Fund (Expense Group) as selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent organization. Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report (excluding the Fund), which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact
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FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges. The Board received a description of the methodology used by Broadridge to select the exchange-traded funds included in the Expense Group.
The Expense Group for the Fund was comprised of actively managed exchange-traded funds, which included the Fund, five other alternative multi-strategy funds, three alternative global macro funds, and five absolute-return funds. The Board noted that the proposed Management Rate and proposed total expense ratio were below the medians of its Expense Group. The Board concluded that the Management Rate to be charged to the Fund is reasonable. In doing so, the Board noted that the Fund’s proposed total expense ratio reflected a fee waiver from management.
PROFITABILITY. The Board then noted that the Manager (and its affiliates) could not report any financial results from their relationships with the Fund because the Fund has not yet commenced investment operations, and thus, the Board could not evaluate the Manager’s (or its affiliates’) profitability with respect to the Fund.
ECONOMIES OF SCALE. The Board considered the extent to which the Manager and its affiliates may realize economies of scale, if any, and whether the Fund’s proposed investment management fee structure reflects any economies of scale for the benefit of shareholders. The Board noted that the Manager (and its affiliates) could not report on any potential economies of scale at this time as the Fund had not yet commenced operations and it is not anticipated that the Fund will generate significant, if any, profit for the Manager and/or its affiliates for some time.
CONCLUSION. Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the Management Agreement for the Fund for an initialtwo-year period.
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 libertyshares.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 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 recent12-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 onForm N-PORT. Shareholders may view the filedForm 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.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at libertyshares.com.
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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.
 | Annual Report Franklin Templeton ETF Trust | |||||
| Investment Managers | Distributor | Investor Services | ||||
Franklin Advisers, Inc. Franklin Templeton Investment Management Limited | Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 franklintempleton.com | Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 | ||||
| © 2020 Franklin Templeton Investments. All rights reserved. | ETF6 A 05/20 | |||||
ANNUAL REPORT
FRANKLIN TEMPLETON
ETF TRUST
March 31, 2020
Franklin Disruptive Commerce ETF | Franklin Intelligent Machines ETF | |
Franklin Genomic Advancements ETF |
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 to receive reports in paper will apply to all funds held in your account.
Franklin Templeton
Successful investing begins with ambition. And achievement only comes when you reach for it. That��s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visitfranklintempleton.com/investor/investments-and-solutions/investment-options/etfs/for fund updates and documents.
| Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
| franklintempleton.com | Not part of the Annual Report | 1 | ||||
ANNUAL REPORT
U.S. equities, as measured by the Standard & Poor’s® 500 Index (S&P 500®), declined significantly during the period since the Fund’s inception on February 25, 2020, through March 31, 2020. A sharp selloff began in late February amid fears of a global economic slowdown due to the novel coronavirus(COVID-19) pandemic. Concerns about global supply chain disruptions, business and personal restrictions, and subdued consumer spending drove many investors to sell equity holdings in favor of perceived safe investments such as government bonds and cash.
U.S. economic activity weakened considerably as theCOVID-19 pandemic spread across the U.S. and many state and local governments issuedstay-at-home orders, which included business closures and restrictions. Weekly unemployment claims surged nearperiod-end, reflecting layoffs in many industries, particularly retail, restaurants and hospitality. As a result, the unemployment rate jumped from a50-year low of 3.5% in February 2020 to 4.4% at period-end, and the economy contracted in the first quarter, following an expansion that lasted more than a decade.1
Market volatility persisted at a heightened level throughout March 2020, as social distancing measures intended to mitigate the pandemic severely weakened the economy. In an effort to boost the U.S. economy and aid businesses and individuals directly impacted by the pandemic, the federal government passed an unprecedented $2 trillion stimulus package. Furthermore, the U.S. Federal Reserve cut the federal funds target rate to a range of 0.00%–0.25% and announced sweeping quantitative easing measures aimed at stimulating lending and credit availability. Many investors were encouraged by policymakers’ swift and decisive fiscal and stimulus measures. U.S. stocks, as measured by the S&P 500, bounced from multi-year lows, but still finished the reporting period with negative returns.
The foregoing information reflects our analysis and opinions as of March 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
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Franklin Disruptive Commerce ETF
This inaugural annual report for Franklin Disruptive Commerce ETF covers the period since the Fund’s inception on February 25, 2020, through March 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 equity securities of companies that are relevant to the Fund’s investment theme of disruptive commerce. These companies include those that are focused on or stand to benefit from electronic commerce, the sharing economy, electronic payments, significant decreases in shipping costs and other activities or developments outlined in more detail in the Prospectus.
Performance Overview
During the period from February 25, 2020, through March 31, 2020, the Fund posted cumulative total returns of-14.40% based on market price and -14.72% based on net asset value (NAV). In comparison, the Russell 3000® Index posted a-18.62% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 5.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
We use fundamental,bottom-up research analysis to identify companies positioned to capitalize on disruptive innovation or are enabling the further development of the disruptive commerce themes in the markets in which they operate. We evaluate market segments, products, services and business models position to benefit significantly from disruptive innova-
| Portfolio Composition | ||
| Based on Total Net Assets as of 3/31/20 | ||
tions in commerce relative to broad securities markets, and seek to identify the primary beneficiaries of new trends or developments in commerce. We may invest in companies in any economic sector or of any market capitalization and may invest in companies both inside and outside of the U.S. Although we search for investments across a large number of sectors, we expect to concentrate our investments in consumer discretionary-related industries.
1. Source: FactSet. 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 index is 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.
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 19.
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FRANKLIN DISRUPTIVE COMMERCE ETF
Manager’s Discussion
During the reporting period, the sectors that detracted the most from the Fund’s absolute performance were industrials, consumer discretionary and information technology (IT).2In industrials, commercial real estate analytics firm CoStar Group and ride-share application provider Uber detracted from absolute results. In consumer discretionary, online marketplace Mercado Libre and online used car retailer Carvana hurt performance. In IT, financial technology companies Mastercard, Square and Afterpay hindered performance.
In contrast, the health care sector helped absolute performance due to the contribution of telemedicine technology company Teledoc.3 Elsewhere, online pet products retailer Chewy and electronic signatures platform provider Docusign helped performance as well.
Thank you for your participation in Franklin Disruptive Commerce ETF. We look forward to serving your future investment needs.
 |
Matthew J. Moberg, CPA |
 |
Joyce Lin, CFA | |
| Portfolio Management Team | ||
| Top 10 Holdings | ||||
| 3/31/20 | ||||
| Company Sector/Industry | % of Total Net Assets | |||
| Amazon.com Inc. Internet & Direct Marketing Retail | 7.0% | |||
| Alibaba Group Holding Ltd., ADR Internet & Direct Marketing Retail | 6.5% | |||
| Shopify Inc., A IT Services | 4.7% | |||
| Sea Ltd., ADR Entertainment | 4.0% | |||
| Visa Inc., A IT Services | 3.5% | |||
| Tencent Holdings Ltd. Interactive Media & Services | 3.4% | |||
| Mastercard Inc., A IT Services | 3.3% | |||
| Coupa Software Inc. Software | 3.2% | |||
| PayPal Holdings Inc. IT Services | 3.2% | |||
| MercadoLibre Inc. Internet & Direct Marketing Retail | 3.2% | |||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
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CFA® is a trademark owned by CFA Institute.
2. The industrials sector comprises aerospace and defense, air freight and logistics, professional services, and road and rail in the SOI. The consumer discretionary sector comprises diversified consumer services; internet and direct marketing retail; leisure equipment and products; specialty retail; and textiles, apparel and luxury goods in the SOI. The IT sector comprises IT services and software in the SOI.
3. The health care sector comprises health care technology in the SOI.
See www.franklintempletondatasources.com for additional data provider information.
FRANKLIN DISRUPTIVE COMMERCE ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/27/20), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
Since Inception (2/25/20) | -14.72% | -14.40% | -14.72% | -14.40% | ||||||||||||
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 recentmonth-end performance, go to franklintempleton.com or call(800)342-5236.
See page 6 for Performance Summary footnotes.
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FRANKLIN DISRUPTIVE COMMERCE ETF
PERFORMANCE SUMMARY
Total Annual Operating Expenses5
| With Fee Waiver | Without Fee Waiver | |||
0.50% | 0.77% | |||
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund’s 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. By focusing its investments in consumer discretionary related industries, the Fund carries much greater risks of adverse developments and price movements in such industries than a fund that invests in a wider variety of industries. Companies operating within consumer discretionary related industries could be affected by, among other things, overall economic conditions, interest rates, disposable income, fluctuating consumer confidence and consumer demand. Many of these companies compete aggressively on price, potentially affecting their long run profitability. Companies within consumer discretionary related industries may have extensive online operations, which could make these companies particularly vulnerable to cyber security risk. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/21. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
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.
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FRANKLIN DISRUPTIVE COMMERCE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $ 7.50, then 8.6× $ 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 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 ETFs. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 2/25/201 | Ending Account Value 3/31/20 | Expenses Paid During 2/25/20–3/31/202,3 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/202,3 | Net Annualized Expense Ratio3 | |||||||||||||||||
| $1,000.00 | $ | 852.80 | $ | 0.44 | $ | 1,004.30 | $ | 0.48 | 0.50 | % | ||||||||||||
1. 2/25/20 for Actual; 2/25/20 for Hypothetical
2. Expenses are equal to annualized expense ratio for the six-month period as indicated above—in the far right column—multipied by the simple average account value over the period indicated, and then multiplied by 183/366 to reflect the one-half year period. For Actual expenses, the multiplier is 35/366 to reflect the number of days since commencement of operations.
3. Reflects expenses after fee waivers and expense reimbursements.
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Franklin Genomic Advancements ETF
This inaugural annual report for Franklin Genomic Advancements ETF covers the period since the Fund’s inception on February 25, 2020, through March 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 equity securities of companies that are relevant to the Fund’s investment theme of genomic advancements. These companies are focused on, or stand to benefit from, extending and enhancing the quality of human and animal life through technological or scientific advancements in such areas as genetic engineering, gene therapy, DNA analysis and other uses outlined in more detail in the Prospectus.
Performance Overview
During the period from February 25, 2020, through March 31, 2020, the Fund posted cumulative total returns of-10.52% based on market price and-9.68% based on net asset value (NAV). In comparison, the Russell 3000® Index posted a-18.62% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 10.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
We use fundamental,bottom-up research analysis to identify companies positioned to capitalize on disruptive innovation or are enabling the further development of the genomic advancements theme in the markets in which they operate. We evaluate market segments, products, services and business models position to benefit significantly from advancements in genomics relative to broad securities
| Portfolio Composition |
| Based on Total Net Assets as of 3/31/20 |
 |
markets, and seek to identify the primary beneficiaries of new trends or developments in genomics. We may invest in companies in any economic sector or of any market capitalization and may invest in companies both inside and outside of the U.S. Although we search for investments across a large number of sectors, we expect to concentrate our investments in health care-related industries.
Manager’s Discussion
During the reporting period, the health care and information technology (IT) sectors detracted from absolute performance.2 In health care, detractors included clinical research company Medpace Holdings, clinical research and health technology solutions provider IQVIA Holdings, and biopharmaceutical development technology platform company Wuxi Biologics Cayman. In IT, revenue management software company Model N hindered results.
No sectors helped absolute performance. Individual holdings that contributed included telemedicine technology company Teledoc, biopharmaceutical immunotherapy developer
1. Source: FactSet. 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 index is 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.
2. The health care sector comprises biotechnology, health care equipment and supplies, health care providers and services, health care technology, life sciences tools and services, and pharmaceuticals in the SOI. The IT sector comprises semiconductors and semiconductor equipment and software.
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 22.
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FRANKLIN GENOMIC ADVANCEMENTS ETF
BionTech, and medical and pharmaceutical technology company Quiagen.
Thank you for your participation in Franklin Genomic Advancements ETF. We look forward to serving your future investment needs.
|
Matthew J. Moberg, CPA |
|
Joyce Lin, CFA | |
| Portfolio Management Team | ||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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
| 3/31/20 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Wuxi Biologics Cayman Inc. Life Sciences Tools & Services | 4.6% | |||
Lonza Group AG Life Sciences Tools & Services | 4.5% | |||
Illumina Inc. Life Sciences Tools & Services | 4.4% | |||
Repligen Corp. Life Sciences Tools & Services | 4.2% | |||
QIAGEN N.V. Life Sciences Tools & Services | 3.6% | |||
Veeva Systems Inc. Health Care Technology | 3.5% | |||
Vertex Pharmaceuticals Inc. Biotechnology | 3.4% | |||
Medpace Holdings Inc. Life Sciences Tools & Services | 3.2% | |||
IQVIA Holdings Inc. Life Sciences Tools & Services | 3.2% | |||
Agilent Technologies Inc. Life Sciences Tools & Services | 3.0% | |||
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FRANKLIN GENOMIC ADVANCEMENTS ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/27/20), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
Since Inception (2/25/20) | -9.68% | -10.52% | -9.68% | -10.52% | ||||||||||||
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 recentmonth-end performance, go to franklintempleton.com or call(800)342-5236.
See page 11 for Performance Summary footnotes.
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FRANKLIN GENOMIC ADVANCEMENTS ETF
PERFORMANCE SUMMARY
Total Annual Operating Expenses5
| With Fee Waiver | Without Fee Waiver | |||
0.50% | 0.77% | |||
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund’s 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. By focusing its investments in health care related industries, the Fund carries much greater risks of adverse developments and price movements in such industries than a fund that invests in a wider variety of industries. Companies operating within health care related industries face intense competition and potentially rapid product obsolescence. These companies are also heavily dependent on intellectual property rights and may be adversely affected by loss or impairment of those rights. 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, or that competitors will not develop technology that is substantially similar or superior to such companies’ technology. The field of genomic science 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. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/21. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
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.
| franklintempleton.com | Annual Report | 11 | ||||
FRANKLIN GENOMIC ADVANCEMENTS ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 2/25/201 | Ending Account Value 3/31/20 | Expenses Paid During 2/25/20–3/31/202,3 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/202,3 | Net Annualized Expense Ratio3 | |||||||||||||||||
| $1,000.00 | $ | 903.20 | $ | 0.46 | $ | 1,004.30 | $ | 0.48 | 0.50 | % | ||||||||||||
1. 2/25/20 for Actual; 2/25/20 for Hypothetical
2. Expenses are equal to annualized expense ratio for the six-month period as indicated above—in the far right column—multipied by the simple average account value over the period indicated, and then multiplied by 183/366 to reflect the one-half year period. For Actual expenses, the multiplier is 35/366 to reflect the number of days since commencement of operations.
3. Reflects expenses after fee waivers and expense reimbursements.
| 12 | Annual Report | franklintempleton.com | ||
Franklin Intelligent Machines ETF
This inaugural annual report for Franklin Intelligent Machines ETF covers the period since the Fund’s inception on February 25, 2020, through March 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 equity securities of companies that are relevant to the Fund’s investment theme of intelligent machines. These companies include those that are focused on, or stand to benefit from, the ongoing technology-driven transformation of products and processes such as software, systems, manufacturing and logistics, including through developments in artificial intelligence. More details can be found in the Prospectus.
Performance Overview
During the period from February 25, 2020, through March 31, 2020, the Fund posted cumulative total returns of-17.52% based on market price and-17.32% based on net asset value (NAV). In comparison, the Russell 3000® Index posted a-18.62% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 15.
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 recentmonth-end performance, go tofranklintempleton.com or call(800)342-5236.
Investment Strategy
We use fundamental,bottom-up research analysis to identify companies positioned to capitalize on disruptive innovation in or are enabling the further development of the intelligent machines theme in the markets in which they operate. We evaluate market segments, products, services and business
| Portfolio Composition | ||
| Based on Total Net Assets as of 3/31/20 | ||
models positioned to benefit significantly from disruptive innovations in intelligent products, design, manufacturing and/or predictive maintenance relative to broad securities markets, and seek to identify the primary beneficiaries of new trends or developments in physical applications of these innovations. We may invest in companies in any economic sector or of any market capitalization and may invest in companies both inside and outside of the U.S. Although we search for investments across a large number of sectors, we expect to have significant investments in particular sectors, including technology.
1. Source: FactSet. 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 index is 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.
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.
| franklintempleton.com | Annual Report | 13 | ||||
FRANKLIN INTELLIGENT MACHINES ETF
Manager’s Discussion
During the reporting period, the sectors that detracted the most from the Fund’s absolute performance included information technology (IT), industrials and health care.2
In IT, detractors included semiconductor manufacturer Infineon Technologies, logistical technology software provider Descartes Systems Group, and software company PTC. In industrials, home and business security company Allegion hurt results. In health care, sleep apnea technology treatment developer Inspire Medical Systems and robotic surgical device maker Intuitive Surgical detracted. Elsewhere, electric car maker Tesla also hurt absolute results.
No sectors contributed to absolute performance. Individual contributors included graphic processing unit designer Nvidia, drone manufacturer Aeroenvironment and digital health care company iRhythm.
Thank you for your participation in Franklin Intelligent Machines ETF. We look forward to serving your future investment needs.
|
Matthew J. Moberg, CPA |
|
Joyce Lin, CFA | |
| Portfolio Management Team | ||
| Top 10 Holdings | ||||
| 3/31/20 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Intuitive Surgical Inc. Health Care Equipment & Services | 5.3% | |||
Tesla Inc. Automobiles & Components | 4.2% | |||
Dassault Systemes Software & Services | 4.2% | |||
Apple Inc. Technology Hardware & Equipment | 3.8% | |||
ANSYS Inc. Software & Services | 3.8% | |||
Autodesk Inc. Software & Services | 3.7% | |||
iRhythm Technologies Inc. Health Care Equipment & Services | 3.6% | |||
Axon Enterprise Inc. Aerospace & Defense | 3.2% | |||
Zebra Technologies Corp., A Electronic Equipment, Instruments & Components | 2.9% | |||
NVIDIA Corp. Semiconductors & Semiconductor Equipment | 2.8% | |||
The foregoing information reflects our analysis, opinions and portfolio holdings as of March 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.
2. The IT sector comprises electronic equipment, instruments and components; semiconductors and semiconductor equipment; software; and technology hardware, storage and peripherals in the SOI. The industrials sector comprises aerospace and defense, air freight and logistics, electrical equipment, industrial conglomerates and machinery. The health care sector comprises health care equipment and supplies and health care technology in the SOI.
See www.franklintempletondatasources.com for additional data provider information
| 14 | Annual Report | franklintempleton.com | ||
FRANKLIN INTELLIGENT MACHINES ETF
Performance Summary as of March 31, 2020
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. 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.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/27/20), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 3/31/201
| Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
| Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
Since Inception (2/25/20) | -17.32% | -17.52% | -17.32% | -17.52% | ||||||||||||
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 recentmonth-end performance, go to franklintempleton.com or call(800)342-5236.
See page 16 for Performance Summary footnotes.
| franklintempleton.com | Annual Report | 15 | ||||
FRANKLIN INTELLIGENT MACHINES ETF
PERFORMANCE SUMMARY
Total Annual Operating Expenses5
| With Fee Waiver | Without Fee Waiver | |||
0.50% | 0.77% | |||
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. The Fund’s 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. The Fund has significant exposure to the technology sector. 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. 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. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. As anon-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to greater risk of loss with respect to its portfolio securities. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental orman-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.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/21. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
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.
| 16 | Annual Report | franklintempleton.com | ||
FRANKLIN INTELLIGENT MACHINES ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All 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 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.” 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 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 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.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
| Beginning Account Value 2/25/201 | Ending Account Value 3/31/20 | Expenses Paid During 2/25/20–3/31/202,3 | Ending Account Value 3/31/20 | Expenses Paid During 10/1/19–3/31/202,3 | Net Annualized Expense Ratio3 | |||||||||||||||||
| $1,000.00 | $ | 826.80 | $ | 0.44 | $ | 1,004.30 | $ | 0.48 | 0.50 | % | ||||||||||||
1. 2/25/20 for Actual; 2/25/20 for Hypothetical
2. Expenses are equal to annualized expense ratio for the six-month period as indicated above—in the far right column—multipied by the simple average account value over the period indicated, and then multiplied by 183/366 to reflect the one-half year period. For Actual expenses, the multiplier is 35/366 to reflect the number of days since commencement of operations.
3. Reflects expenses after fee waivers and expense reimbursements.
| franklintempleton.com | Annual Report | 17 | ||||
FRANKLIN TEMPLETON ETF TRUST
Franklin Disruptive Commerce ETF
| Year Ended March 31, 2020a | ||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||
Net asset value, beginning of year | $ | 25.00 | ||
|
| |||
| Income from investment operationsb: |
| |||
Net investment lossc | (0.01 | ) | ||
Net realized and unrealized gains (losses) | (3.67 | ) | ||
|
| |||
Total from investment operations | (3.68 | ) | ||
|
| |||
Net asset value, end of year | $ | 21.32 | ||
|
| |||
Total returnd | (14.72)% | |||
| Ratios to average net assetse |
| |||
Expenses before waiver and payments by affiliates | 12.59% | |||
Expenses net of waiver and payments by affiliates | 0.50% | |||
Net investment loss | (0.32)% | |||
| Supplemental data |
| |||
Net assets, end of year (000’s) | $2,132 | |||
Portfolio turnover ratef | 0.94% | g | ||
aFor the period February 25, 2020 (commencement of operations) to March 31, 2020.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 0.94%.
| 18 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Disruptive Commerce ETF
| Country | Shares | Value | ||||||||||||
| Common Stocks 99.1% | ||||||||||||||
| Aerospace & Defense 1.0% | ||||||||||||||
| a | Kratos Defence & Security Solutions Inc. | United States | 1,542 | $ | 21,341 | |||||||||
|
| |||||||||||||
| Air Freight & Logistics 0.4% | ||||||||||||||
| a | XPO Logistics Inc. | United States | 169 | 8,239 | ||||||||||
|
| |||||||||||||
| Capital Markets 0.3% | ||||||||||||||
| a | XP Inc., A | Brazil | 344 | 6,636 | ||||||||||
|
| |||||||||||||
| Consumer Finance 0.4% | ||||||||||||||
| a | LendingClub Corp. | United States | 1,198 | 9,404 | ||||||||||
|
| |||||||||||||
| Diversified Consumer Services 3.3% | ||||||||||||||
| a | Bright Horizons Family Solutions Inc. | United States | 161 | 16,422 | ||||||||||
| a | Chegg Inc. | United States | 955 | 34,170 | ||||||||||
| a | New Oriental Education & Technology Group Inc., ADR | China | 188 | 20,349 | ||||||||||
|
| |||||||||||||
| 70,941 | ||||||||||||||
|
| |||||||||||||
| Entertainment 6.4% | ||||||||||||||
| a | Activision Blizzard Inc. | United States | 420 | 24,982 | ||||||||||
| a | Netflix Inc. | United States | 66 | 24,783 | ||||||||||
| a | Sea Ltd., ADR | Taiwan | 1,929 | 85,474 | ||||||||||
|
| |||||||||||||
| 135,239 | ||||||||||||||
|
| |||||||||||||
| Equity Real Estate Investment Trusts (REITs) 0.5% | ||||||||||||||
Prologis Inc. | United States | 136 | �� | 10,930 | ||||||||||
|
| |||||||||||||
| Health Care Technology 2.2% | ||||||||||||||
| a | Teladoc Inc. | United States | 304 | 47,123 | ||||||||||
|
| |||||||||||||
| Interactive Media & Services 7.5% | ||||||||||||||
| a | Facebook Inc., A | United States | 396 | 66,053 | ||||||||||
| a | Match Group Inc. | United States | 332 | 21,925 | ||||||||||
Tencent Holdings Ltd. | China | 1,461 | 71,665 | |||||||||||
|
| |||||||||||||
| 159,643 | ||||||||||||||
|
| |||||||||||||
| Internet & Direct Marketing Retail 27.0% | ||||||||||||||
| a | Alibaba Group Holding Ltd., ADR | China | 717 | 139,442 | ||||||||||
| a | Amazon.com Inc. | United States | 77 | 150,128 | ||||||||||
| a | boohoo Group PLC | United Kingdom | 3,191 | 7,549 | ||||||||||
| a | Chewy Inc., A | United States | 812 | 30,442 | ||||||||||
| a | Delivery Hero SE | Germany | 159 | 11,857 | ||||||||||
| a | Etsy Inc. | United States | 492 | 18,912 | ||||||||||
| a | Fiverr International Ltd. | Israel | 759 | 19,104 | ||||||||||
| a | JD.com Inc., ADR | China | 1,251 | 50,666 | ||||||||||
| a,b | Meituan Dianping, B, Reg S | China | 1,908 | 23,053 | ||||||||||
| a | MercadoLibre Inc. | Argentina | 138 | 67,424 | ||||||||||
| a | Pinduoduo Inc., ADR | China | 723 | 26,050 | ||||||||||
| a | Zalando SE | Germany | 506 | 19,427 | ||||||||||
Zozo Inc. | Japan | 900 | 12,097 | |||||||||||
|
| |||||||||||||
| 576,151 | ||||||||||||||
|
| |||||||||||||
| IT Services 24.5% | ||||||||||||||
| a | Adyen NV, ADR | Netherlands | 2,761 | 47,296 | ||||||||||
| a | Afterpay Ltd. | Australia | 1,055 | 12,140 | ||||||||||
| a | FleetCor Technologies Inc. | United States | 87 | 16,229 | ||||||||||
Jack Henry & Associates Inc. | United States | 77 | 11,954 | |||||||||||
Mastercard Inc., A | United States | 293 | 70,777 | |||||||||||
| a | Network International Holdings Ltd. | United Arab Emirates | 1,666 | 8,046 | ||||||||||
| a | Okta Inc., A | United States | 195 | 23,841 | ||||||||||
| a | PagSeguro Digital Ltd., A | Brazil | 361 | 6,978 | ||||||||||
| a | PayPal Holdings Inc. | United States | 714 | 68,358 | ||||||||||
| a | Shopify Inc., A | Canada | 238 | 99,229 | ||||||||||
| franklintempleton.com | Annual Report | 19 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Disruptive Commerce ETF(continued)
| Country | Shares | Value | ||||||||||||
| Common Stocks (continued) | ||||||||||||||
| IT Services (continued) | ||||||||||||||
| a | Square Inc., A | United States | 639 | $ | 33,471 | |||||||||
| a | StoneCo. Ltd., A | Brazil | 300 | 6,531 | ||||||||||
| a | Tyro Payments Ltd. | Australia | 4,997 | 5,780 | ||||||||||
Visa Inc., A | United States | 468 | 75,404 | |||||||||||
| a | Wix.com Ltd. | Israel | 356 | 35,892 | ||||||||||
|
| |||||||||||||
| 521,926 | ||||||||||||||
|
| |||||||||||||
| Leisure Equipment & Products 0.6% | ||||||||||||||
| a | Peloton Interactive Inc., A | United States | 478 | 12,691 | ||||||||||
|
| |||||||||||||
| Professional Services 3.2% | ||||||||||||||
| a | CoStar Group Inc. | United States | 86 | 50,500 | ||||||||||
TransUnion | United States | 265 | 17,538 | |||||||||||
|
| |||||||||||||
| 68,038 | ||||||||||||||
|
| |||||||||||||
| Real Estate Management & Development 0.6% | ||||||||||||||
| a | Redfin Corp. | United States | 853 | 13,153 | ||||||||||
|
| |||||||||||||
| Road & Rail 3.2% | ||||||||||||||
| a | Lyft Inc., A | United States | 629 | 16,889 | ||||||||||
| a | Uber Technologies Inc. | United States | 1,834 | 51,205 | ||||||||||
|
| |||||||||||||
| 68,094 | ||||||||||||||
|
| |||||||||||||
| Software 14.9% | ||||||||||||||
| a | Avalara Inc. | United States | 903 | 67,364 | ||||||||||
| a | Bill.Com Holdings Inc. | United States | 434 | 14,843 | ||||||||||
| a | Coupa Software Inc. | United States | 495 | 69,166 | ||||||||||
| a | DocuSign Inc. | United States | 597 | 55,163 | ||||||||||
| a | Lightspeed POS Inc. | Canada | 998 | 13,350 | ||||||||||
| a | Manhattan Associates Inc. | United States | 368 | 18,334 | ||||||||||
| a | Q2 Holdings Inc. | United States | 332 | 19,608 | ||||||||||
| a | salesforce.com Inc. | United States | 288 | 41,466 | ||||||||||
| a | Zendesk Inc. | United States | 300 | 19,203 | ||||||||||
|
| |||||||||||||
| 318,497 | ||||||||||||||
|
| |||||||||||||
| Specialty Retail 1.2% | ||||||||||||||
| a | Carvana Co. | United States | 444 | 24,460 | ||||||||||
|
| |||||||||||||
| Textiles, Apparel & Luxury Goods 1.9% | ||||||||||||||
NIKE Inc., B | United States | 486 | 40,212 | |||||||||||
|
| |||||||||||||
Total Investments (Cost $2,475,790) 99.1% | 2,112,718 | |||||||||||||
Other Assets, less Liabilities 0.9% | 19,255 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 2,131,973 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 36.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security 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 March 31, 2020, the value of this security was $23,053, representing 1.1% of net assets.
| 20 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Genomic Advancements ETF
| Year Ended March 31, 2020a | ||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||
Net asset value, beginning of year | $ | 25.00 | ||
|
| |||
| Income from investment operationsb: |
| |||
Net investment lossc | (0.01 | ) | ||
Net realized and unrealized gains (losses) | (2.41 | ) | ||
|
| |||
Total from investment operations | (2.42 | ) | ||
|
| |||
Net asset value, end of year | $ | 22.58 | ||
|
| |||
Total returnd | (9.68)% | |||
| Ratios to average net assetse |
| |||
Expenses before waiver and payments by affiliates | 12.22% | |||
Expenses net of waiver and payments by affiliates | 0.50% | |||
Net investment loss | (0.37)% | |||
| Supplemental data |
| |||
Net assets, end of year (000’s) | $ 2,258 | |||
Portfolio turnover ratef | 2.20% | g | ||
aFor the period February 25, 2020 (commencement of operations) to March 31, 2020.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 2.20%.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 21 | ||||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Genomic Advancements ETF
| Country | Shares | Value | ||||||||||||
| Common Stocks 99.1% | ||||||||||||||
| Biotechnology 33.3% | ||||||||||||||
| a | Alnylam Pharmaceuticals Inc. | United States | 210 | $ | 22,859 | |||||||||
| a | Amicus Therapeutics Inc. | United States | 2,527 | 23,350 | ||||||||||
| a | Arrowhead Pharmaceuticals Inc. | United States | 345 | 9,926 | ||||||||||
| a | Beam Therapeutics Inc. | United States | 509 | 9,162 | ||||||||||
| a | BioNTech SE, ADR | Germany | 378 | 22,075 | ||||||||||
| a | Bluebird Bio Inc. | United States | 684 | 31,437 | ||||||||||
| a | Cellectis SA, ADR | France | 1,487 | 13,680 | ||||||||||
| a | CRISPR Therapeutics AG | Switzerland | 1,467 | 62,215 | ||||||||||
| a | Editas Medicine Inc. | United States | 2,221 | 44,042 | ||||||||||
| a | Exact Sciences Corp. | United States | 308 | 17,864 | ||||||||||
| a | Fate Therapeutics Inc. | United States | 788 | 17,501 | ||||||||||
| a | Homology Medicines Inc. | United States | 1,550 | 24,087 | ||||||||||
| a | Intellia Therapeutics Inc. | United States | 4,049 | 49,519 | ||||||||||
| a | Ionis Pharmaceuticals Inc. | United States | 888 | 41,985 | ||||||||||
| a | Iovance Biotherapeutics Inc. | United States | 739 | 22,122 | ||||||||||
| a | Krystal Biotech Inc. | United States | 452 | 19,544 | ||||||||||
| a | Natera Inc. | United States | 1,431 | 42,730 | ||||||||||
| a | Precision BioSciences Inc. | United States | 3,088 | 18,621 | ||||||||||
| a | Prevail Therapeutics Inc. | United States | 1,536 | 18,724 | ||||||||||
| a | REGENXBIO Inc. | United States | 262 | 8,484 | ||||||||||
| a | Rocket Pharmaceuticals Inc. | United States | 1,226 | 17,103 | ||||||||||
| a | Sarepta Therapeutics Inc. | United States | 109 | 10,662 | ||||||||||
| a | Ultragenyx Pharmaceutical Inc. | United States | 223 | 9,908 | ||||||||||
| a | uniQure N.V. | Netherlands | 1,394 | 66,145 | ||||||||||
| a | Veracyte Inc. | United States | 2,140 | 52,023 | ||||||||||
| a | Vertex Pharmaceuticals Inc. | United States | 321 | 76,382 | ||||||||||
|
| |||||||||||||
| 752,150 | ||||||||||||||
|
| |||||||||||||
| Health Care Equipment & Supplies 1.1% | ||||||||||||||
| a | CryoPort Inc. | United States | 1,475 | 25,178 | ||||||||||
|
| |||||||||||||
| Health Care Providers & Services 1.9% | ||||||||||||||
| a | Guardant Health Inc. | United States | 610 | 42,456 | ||||||||||
|
| |||||||||||||
| Health Care Technology 7.7% | ||||||||||||||
| a | Livongo Health Inc. | United States | 978 | 27,903 | ||||||||||
| a | Teladoc Inc. | United States | 426 | 66,034 | ||||||||||
| a | Veeva Systems Inc. | United States | 506 | 79,123 | ||||||||||
|
| |||||||||||||
| 173,060 | ||||||||||||||
|
| |||||||||||||
| Life Sciences Tools & Services 48.1% | ||||||||||||||
| a | 10X Genomics Inc., A | United States | 331 | 20,628 | ||||||||||
Agilent Technologies Inc. | United States | 956 | 68,468 | |||||||||||
Bruker Corp. | United States | 1,077 | 38,621 | |||||||||||
| a | Charles River Laboratories International Inc. | United States | 463 | 58,435 | ||||||||||
| a | Compugen Ltd. | Israel | 3,208 | 23,878 | ||||||||||
| a | Evotec SE | Germany | 2,989 | 67,004 | ||||||||||
| a | ICON PLC | Ireland | 311 | 42,296 | ||||||||||
| a | Illumina Inc. | United States | 362 | 98,869 | ||||||||||
| a | IQVIA Holdings Inc. | United States | 666 | 71,835 | ||||||||||
Lonza Group AG | Switzerland | 242 | 100,597 | |||||||||||
| a | Medpace Holdings Inc. | United States | 990 | 72,646 | ||||||||||
| a | NanoString Technologies Inc. | United States | 759 | 18,254 | ||||||||||
| a | Pacific Biosciences of California Inc. | United States | 7,364 | 22,534 | ||||||||||
| a | PRA Health Sciences Inc. | United States | 456 | 37,866 | ||||||||||
| a | QIAGEN N.V. | Netherlands | 1,958 | 81,453 | ||||||||||
| a | Repligen Corp. | United States | 994 | 95,961 | ||||||||||
Thermo Fisher Scientific Inc. | United States | 218 | 61,825 | |||||||||||
| a | Wuxi Biologics Cayman Inc. | China | 8,000 | 103,730 | ||||||||||
|
| |||||||||||||
| 1,084,900 | ||||||||||||||
|
| |||||||||||||
| 22 | Annual Report | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Genomic Advancements ETF(continued)
| Country | Shares | Value | ||||||||||||
| Pharmaceuticals 3.6% | ||||||||||||||
Bayer AG | Germany | 304 | $ | 17,629 | ||||||||||
| a | Catalent Inc. | United States | 1,242 | 64,522 | ||||||||||
|
| |||||||||||||
| 82,151 | ||||||||||||||
|
| |||||||||||||
| Semiconductors & Semiconductor Equipment 1.9% | ||||||||||||||
NVIDIA Corp. | United States | 166 | 43,758 | |||||||||||
|
| |||||||||||||
| Software 1.5% | ||||||||||||||
| a | Model N Inc. | United States | 1,512 | 33,581 | ||||||||||
|
| |||||||||||||
Total Investments (Cost $2,476,736) 99.1% | 2,237,234 | |||||||||||||
Other Assets, less Liabilities 0.9% | 20,954 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 2,258,188 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 36.
aNon-income producing.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 23 | ||||
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Intelligent Machines ETF
| Year Ended March 31, 2020a | ||||
| Per share operating performance (for a share outstanding throughout the year) |
| |||
Net asset value, beginning of year | $ | 25.00 | ||
|
| |||
| Income from investment operationsb: |
| |||
Net investment incomec | — | |||
Net realized and unrealized gains (losses) | (4.33 | ) | ||
|
| |||
Total from investment operations | (4.33 | ) | ||
|
| |||
Net asset value, end of year | $ | 20.67 | ||
|
| |||
Total returnd | (17.32)% | |||
| Ratios to average net assetse |
| |||
Expenses before waiver and payments by affiliates | 12.91% | |||
Expenses net of waiver and payments by affiliates | 0.50% | |||
Net investment income | 0.20% | |||
| Supplemental data |
| |||
Net assets, end of year (000’s) | $2,067 | |||
Portfolio turnover ratef | —% | g | ||
aFor the period February 25, 2020 (commencement of operations) to March 31, 2020.
bThe 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 Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).
gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 0.0%.
| 24 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, March 31, 2020
Franklin Intelligent Machines ETF
| Country | Shares | Value | ||||||||||||
| Common Stocks 99.7% | ||||||||||||||
| Aerospace & Defense 6.4% | ||||||||||||||
| a | Aerovironment Inc. | United States | 382 | $ | 23,287 | |||||||||
| a | Axon Enterprise Inc. | United States | 934 | 66,099 | ||||||||||
Hexcel Corp. | United States | 354 | 13,165 | |||||||||||
| a | Kratos Defence & Security Solutions Inc. | United States | 1,543 | 21,355 | ||||||||||
United Technologies Corp. | United States | 90 | 8,490 | |||||||||||
|
| |||||||||||||
| 132,396 | ||||||||||||||
|
| |||||||||||||
| Air Freight & Logistics 0.7% | ||||||||||||||
| a | XPO Logistics Inc. | United States | 300 | 14,625 | ||||||||||
|
| |||||||||||||
| Auto Components 0.7% | ||||||||||||||
Aptiv PLC | United States | 308 | 15,166 | |||||||||||
|
| |||||||||||||
| Automobiles 4.3% | ||||||||||||||
| a | Tesla Inc. | United States | 167 | 87,508 | ||||||||||
|
| |||||||||||||
| Building Products 2.6% | ||||||||||||||
Allegion PLC | United States | 404 | 37,176 | |||||||||||
Johnson Controls International PLC | United States | 635 | 17,120 | |||||||||||
|
| |||||||||||||
| 54,296 | ||||||||||||||
|
| |||||||||||||
| Electrical Equipment 4.6% | ||||||||||||||
Eaton Corp., PLC | United States | 517 | 40,166 | |||||||||||
Emerson Electric Co. | United States | 187 | 8,911 | |||||||||||
Rockwell Automation Inc. | United States | 64 | 9,658 | |||||||||||
Schneider Electric SE | France | 234 | 20,176 | |||||||||||
| a | Sensata Technologies Holding PLC | United States | 579 | 16,750 | ||||||||||
|
| |||||||||||||
| 95,661 | ||||||||||||||
|
| |||||||||||||
| Electronic Equipment, Instruments & Components 9.5% | ||||||||||||||
Amphenol Corp. , A | United States | 261 | 19,022 | |||||||||||
Cognex Corp. | United States | 267 | 11,273 | |||||||||||
Keyence Corp. | Japan | 142 | 45,814 | |||||||||||
| a | Keysight Technologies Inc. | United States | 512 | 42,844 | ||||||||||
TE Connectivity Ltd. | Switzerland | 289 | 18,201 | |||||||||||
| a | Zebra Technologies Corp., A | United States | 321 | 58,935 | ||||||||||
|
| |||||||||||||
| 196,089 | ||||||||||||||
|
| |||||||||||||
| Health Care Equipment & Supplies 18.7% | ||||||||||||||
| a | Align Technology Inc. | United States | 109 | 18,961 | ||||||||||
| a | DexCom Inc. | United States | 179 | 48,199 | ||||||||||
| a | Insulet Corp. | United States | 277 | 45,893 | ||||||||||
| a | Intuitive Surgical Inc. | United States | 223 | 110,432 | ||||||||||
| a | iRhythm Technologies Inc. | United States | 924 | 75,167 | ||||||||||
| a | Nevro Corp. | United States | 359 | 35,893 | ||||||||||
ResMed Inc. | United States | 150 | 22,094 | |||||||||||
| a | SmileDirectClub Inc., A | United States | 2,030 | 9,480 | ||||||||||
Stryker Corp. | United States | 126 | 20,978 | |||||||||||
|
| |||||||||||||
| 387,097 | ||||||||||||||
|
| |||||||||||||
| Health Care Technology 2.7% | ||||||||||||||
| a | Inspire Medical Systems Inc. | United States | 927 | 55,879 | ||||||||||
|
| |||||||||||||
| Industrial Conglomerates 1.5% | ||||||||||||||
Honeywell International Inc. | United States | 74 | 9,900 | |||||||||||
Roper Technologies Inc. | United States | 34 | 10,602 | |||||||||||
Siemens AG | Germany | 115 | 9,775 | |||||||||||
|
| |||||||||||||
| 30,277 | ||||||||||||||
|
| |||||||||||||
| franklintempleton.com | Annual Report | 25 | ||||
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS
Franklin Intelligent Machines ETF(continued)
| Country | Shares | Value | ||||||||||||
| Machinery 3.7% | ||||||||||||||
Fortive Corp. | United States | 176 | $ | 9,713 | ||||||||||
Harmonic Drive Systems Inc. | Japan | 300 | 13,130 | |||||||||||
| a | Proto Labs Inc. | United States | 558 | 42,481 | ||||||||||
YASKAWA Electric Corp. | Japan | 400 | 11,027 | |||||||||||
|
| |||||||||||||
| 76,351 | ||||||||||||||
|
| |||||||||||||
| Semiconductors & Semiconductor Equipment 16.0% | ||||||||||||||
Analog Devices Inc. | United States | 217 | 19,454 | |||||||||||
Applied Materials Inc. | United States | 417 | 19,107 | |||||||||||
ASML Holding N.V. | Netherlands | 87 | 22,763 | |||||||||||
Brooks Automation Inc. | United States | 714 | 21,777 | |||||||||||
Entegris Inc. | United States | 471 | 21,087 | |||||||||||
Infineon Technologies AG | Germany | 3,321 | 48,939 | |||||||||||
KLA Corp. | United States | 169 | 24,292 | |||||||||||
Lam Research Corp. | United States | 84 | 20,160 | |||||||||||
MKS Instruments Inc. | United States | 121 | 9,855 | |||||||||||
NVIDIA Corp. | United States | 220 | 57,992 | |||||||||||
Teradyne Inc. | United States | 813 | 44,040 | |||||||||||
Texas Instruments Inc. | United States | 210 | 20,985 | |||||||||||
|
| |||||||||||||
| 330,451 | ||||||||||||||
|
| |||||||||||||
| Software 23.9% | ||||||||||||||
| a | Altair Engineering Inc. | United States | 1,435 | 38,028 | ||||||||||
| a | ANSYS Inc. | United States | 340 | 79,040 | ||||||||||
| a | Aspen Technology Inc. | United States | 227 | 21,581 | ||||||||||
| a | Autodesk Inc. | United States | 484 | 75,552 | ||||||||||
| a | Cadence Design Systems Inc. | United States | 654 | 43,190 | ||||||||||
Dassault Systemes | France | 582 | 86,211 | |||||||||||
| a | PTC Inc. | United States | 826 | 50,560 | ||||||||||
| a | Synopsys Inc. | United States | 351 | 45,205 | ||||||||||
| a | The Descartes Systems Group Inc. | Canada | 1,624 | 55,234 | ||||||||||
|
| |||||||||||||
| 494,601 | ||||||||||||||
|
| |||||||||||||
| Technology Hardware, Storage & Peripherals 4.4% | ||||||||||||||
Apple Inc. | United States | 312 | 79,339 | |||||||||||
| a | Stratasys Ltd. | United States | 716 | 11,420 | ||||||||||
|
| |||||||||||||
| 90,759 | ||||||||||||||
|
| |||||||||||||
Total Investments (Cost $2,494,762) 99.7% | 2,061,156 | |||||||||||||
Other Assets, less Liabilities 0.3% | 5,672 | |||||||||||||
| �� |
|
| ||||||||||||
Net Assets 100.0% | $ | 2,066,828 | ||||||||||||
|
| |||||||||||||
See Abbreviations on page 36.
aNon-income producing.
| 26 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
March 31, 2020
| Franklin Disruptive Commerce ETF | Franklin Genomic Advancements ETF | Franklin Intelligent Machines ETF | ||||||||||
Assets: | ||||||||||||
Investments in securities: | ||||||||||||
Cost – Unaffiliated issuers | $ | 2,475,790 | $ | 2,476,736 | $ | 2,494,762 | ||||||
|
| |||||||||||
Value – Unaffiliated issuers | $ | 2,112,718 | $ | 2,237,234 | $ | 2,061,156 | ||||||
Cash | 22,837 | 24,603 | 8,852 | |||||||||
Receivables: | ||||||||||||
Dividends | 254 | 220 | 629 | |||||||||
Affiliates | 21,676 | 21,643 | 21,702 | |||||||||
|
| |||||||||||
Total assets | 2,157,485 | 2,283,700 | 2,092,339 | |||||||||
|
| |||||||||||
Liabilities: | ||||||||||||
Payables: | ||||||||||||
Transfer agent fees | 1,492 | 1,492 | 1,492 | |||||||||
Trustees’ fees and expenses | 216 | 216 | 216 | |||||||||
Custodian fees | 127 | 127 | 127 | |||||||||
Professional fees | 21,478 | 21,478 | 21,478 | |||||||||
Reports to shareholders | 574 | 574 | 574 | |||||||||
Registration and filing fees | 478 | 478 | 477 | |||||||||
Accrued expenses and other liabilities | 1,147 | 1,147 | 1,147 | |||||||||
|
| |||||||||||
Total liabilities | 25,512 | 25,512 | 25,511 | |||||||||
|
| |||||||||||
Net assets, at value | $ | 2,131,973 | $ | 2,258,188 | $ | 2,066,828 | ||||||
|
| |||||||||||
Net assets consist of: | ||||||||||||
Paid-in capital | $ | 2,499,277 | $ | 2,499,274 | $ | 2,500,000 | ||||||
Total distributable earnings (loss) | (367,304 | ) | (241,086 | ) | (433,172 | ) | ||||||
|
| |||||||||||
Net assets, at value | $ | 2,131,973 | $ | 2,258,188 | $ | 2,066,828 | ||||||
|
| |||||||||||
Shares outstanding | 100,000 | 100,000 | 100,000 | |||||||||
|
| |||||||||||
Net asset value per share | $ | 21.32 | $ | 22.58 | $ | 20.67 | ||||||
|
| |||||||||||
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 27 | ||||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the year ended March 31, 2020
| Franklin Disruptive Commerce ETF | Franklin Genomic Advancements ETF | Franklin Intelligent Machines ETF | ||||||||||
Investment income: | ||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||
Unaffiliated issuers | $ | 383 | $ | 290 | $ | 1,440 | ||||||
|
| |||||||||||
Total investment income | 383 | 290 | 1,440 | |||||||||
|
| |||||||||||
Expenses: | ||||||||||||
Management fees (Note 3a) | 1,055 | 1,088 | 1,028 | |||||||||
Transfer agent fees | 1,492 | 1,492 | 1,492 | |||||||||
Custodian fees | 127 | 127 | 127 | |||||||||
Reports to shareholders | 574 | 574 | 574 | |||||||||
Registration and filing fees | 478 | 478 | 478 | |||||||||
Professional fees | 21,478 | 21,478 | 21,478 | |||||||||
Trustee fees and expenses (Note 3a) | 216 | 215 | 215 | |||||||||
Other | 1,147 | 1,147 | 1,147 | |||||||||
|
| |||||||||||
Total expenses | 26,567 | 26,599 | 26,539 | |||||||||
Expenses waived/paid by affiliates (Note 3c) | (25,512 | ) | (25,511 | ) | (25,512 | ) | ||||||
|
| |||||||||||
Net expenses | 1,055 | 1,088 | 1,027 | |||||||||
|
| |||||||||||
Net investment income | (672 | ) | (798 | ) | 413 | |||||||
|
| |||||||||||
Realized and unrealized gains (losses): | ||||||||||||
Net realized gain (loss) from: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (4,232 | ) | (1,584 | ) | — | |||||||
Foreign currency transactions | (51 | ) | 72 | 19 | ||||||||
|
| |||||||||||
Net realized gain (loss) | (4,283 | ) | (1,512 | ) | 19 | |||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (363,072 | ) | (239,502 | ) | (433,606 | ) | ||||||
Translation of other assets and liabilities denominated in foreign currencies | — | — | 2 | |||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) | (363,072 | ) | (239,502 | ) | (433,604 | ) | ||||||
|
| |||||||||||
Net realized and unrealized gain (loss) | (367,355 | ) | (241,014 | ) | (433,585 | ) | ||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (368,027 | ) | $ | (241,812 | ) | $ | (433,172 | ) | |||
|
| |||||||||||
aForeign taxes withheld on dividends | $15 | $— | $25 | |||||||||
|
| |||||||||||
| 28 | Annual Report | The accompanying notes are an integral part of these financial statements. | franklintempleton.com | ||
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
| Franklin Disruptive Commerce ETF | Franklin Genomic Advancements ETF | Franklin Intelligent Machines ETF | ||||||||||
Year Ended March 31, 2020a | ||||||||||||
Increase (decrease) in net assets: | ||||||||||||
Operations: | ||||||||||||
Net investment income | $ | (672 | ) | $ | (798 | ) | $ | 413 | ||||
Net realized gain (loss) | (4,283 | ) | (1,512 | ) | 19 | |||||||
Net change in unrealized appreciation (depreciation) | (363,072 | ) | (239,502 | ) | (433,604 | ) | ||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations (Note 1e) | (368,027 | ) | (241,812 | ) | (433,172 | ) | ||||||
|
| |||||||||||
Capital share transactions: (Note 2) | 2,500,000 | 2,500,000 | 2,500,000 | |||||||||
|
| |||||||||||
Net increase (decrease) in net assets | 2,131,973 | 2,258,188 | 2,066,828 | |||||||||
Net assets: | ||||||||||||
Beginning of year | — | — | — | |||||||||
|
| |||||||||||
End of year (Note 1e) | $ | 2,131,973 | $ | 2,258,188 | $ | 2,066,828 | ||||||
|
| |||||||||||
aFor the period February 25, 2020 (commencement of operations) to March 31, 2020.
| franklintempleton.com | The accompanying notes are an integral part of these financial statements. | Annual Report | 29 | ||||
FRANKLIN TEMPLETON ETF TRUST
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as anopen-end management investment company, consisting offorty-two 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). Each of the Funds are an exchange traded fund (ETF) and are actively managed, thus they are not designed to track an index.
The Funds commenced operations on February 25, 2020.
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 as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. 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. London 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 inopen-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. 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 anon-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 significant security valuation changes due to an open foreign market are adjusted and reflected by the Funds for financial reporting purposes
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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. 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 March 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.
d. 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. Estimated expenses are accrued daily. Dividend income is recorded on theex-dividend date. Distributions to shareholders are recorded on theex-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. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense. These expenses are paid by the Funds or by the investment manager, as applicable, according to the terms of the unified management fee agreement.
e. 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.
| franklintempleton.com | Annual Report | 31 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies(continued)
f. 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
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specified number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one
Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
Authorized participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At March 31, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
| Franklin Disruptive Commerce ETF | Franklin Genomic Advancements ETF | |||||||||||||||||||
| Year Ended March 31, 2020a | Year Ended March 31, 2020a | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 100,001 | $ | 2,500,025 | 100,001 | $ | 2,500,025 | ||||||||||||||
Shares redeemed | (1 | ) | (25 | ) | (1 | ) | (25 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 100,000 | $ | 2,500,000 | 100,000 | $ | 2,500,000 | ||||||||||||||
|
| |||||||||||||||||||
| Franklin Intelligent Machines ETF | ||||||||||||||||||||
| Year Ended March 31, 2020a | ||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||
Shares sold | 100,001 | $ | 2,500,025 | |||||||||||||||||
Shares redeemed | (1 | ) | (25 | ) | ||||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 100,000 | $ | 2,500,000 | |||||||||||||||||
|
| |||||||||||||||||||
a For the period February 25, 2020 (commencement of operations) to March 31, 2020.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
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 Funds are also officers and/or directors of the following subsidiaries:
| Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Advisory Services, LLC (FASL) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter | |
a. Management Fees
The Funds pay a unified management fee to Advisers whereby Advisers has agreed to reimburse the Funds’ acquired fund fee and expenses (if any) and pay all of the ordinary operating expenses of the Funds, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding payments under the Funds’ Rule12b-1 plan (if any), brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments), taxes, interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto), and other nonroutine or extraordinary expenses. The fees are based on the average daily net assets of each of the Funds as follows:
| Annualized Fee Rate | ||||
Franklin Disruptive Commerce ETF | 0.50% | |||
Franklin Genomic Advancements ETF | 0.50% | |||
Franklin Intelligent Machines ETF | 0.50% | |||
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. Waiver and Expense Reimbursements
The Adviser has contractually agreed to waive or assume certain expenses so that total annual Fund operating
expenses (including acquired fund fees and expenses, but excluding certainnon-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.
d. 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 March 31, 2020, investments in affiliated management investment companies were as follows:
| franklintempleton.com | Annual Report | 33 | ||||
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
3. Transactions with Affiliates(continued)
e. Other Affiliated Transactions
At March 31, 2020, the shares of Franklin Disruptive Commerce ETF, Franklin Genomic Advancements ETF and Franklin Intelligent Machines ETF were owned by the following entities:
| Fund | Shares | Percentage of Outstanding Sharesa | ||||||
Franklin Disruptive Commerce ETF | ||||||||
Franklin Resources Inc. | 70,000.00 | 70.0% | ||||||
Franklin Genomic Advancements ETF | ||||||||
Franklin Resources Inc. | 75,000.00 | 75.0% | ||||||
Franklin Intelligent Machines ETF | ||||||||
Franklin Resources Inc. | 85,000.00 | 85.0% | ||||||
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2020, the capital loss carryforwards were as follows:
| Franklin Disruptive Commerce ETF | Franklin Genomic Advancements ETF | Franklin Intelligent Machines ETF | ||||||||||
| Capital loss carryforwards not subject to expiration: | ||||||||||||
Short term | $ | 4,232 | $ | 1,584 | $ | — | ||||||
|
| |||||||||||
Total capital loss carryforwards | $ | 4,232 | $ | 1,584 | $ | — | ||||||
|
| |||||||||||
At March 31, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
| Franklin Disruptive Commerce ETF | Franklin Genomic Advancements ETF | Franklin Intelligent Machines ETF | ||||||||||
Cost of investments | $ | 2,475,790 | $ | 2,476,736 | $ | 2,494,762 | ||||||
|
| |||||||||||
Unrealized appreciation | $ | 26,122 | $ | 60,259 | $ | 588 | ||||||
Unrealized depreciation | (389,194 | ) | (299,761 | ) | (434,194 | ) | ||||||
|
| |||||||||||
Net unrealized appreciation (depreciation) | $ | (363,072 | ) | $ | (239,502 | ) | $ | (433,606 | ) | |||
|
| |||||||||||
Distributable earnings—undistributed ordinary income | $ | — | $ | — | $ | 432 | ||||||
|
| |||||||||||
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of corporate actions, passive foreign investment company shares and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities andin-kind transactions, if any) for the year ended March 31, 2020, were as follows:
| Franklin Disruptive Commerce ETF | Franklin Genomic Advancements ETF | Franklin Intelligent Machines ETF | ||||||||||
Purchases | $ | 2,500,926 | $ | 2,530,160 | $ | 2,494,762 | ||||||
Sales | $ | 20,903 | $ | 51,841 | $ | — | ||||||
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS
In-kind transactions associated with creation and redemptions for the year ended March 31, 2020, were as follows:
| Franklin Disruptive Commerce ETF | Franklin Genomic Advancements ETF | Franklin Intelligent Machines ETF | ||||||||||
Cost of Securities Received | $ | 2,188,098 | $ | 2,206,196 | $ | 2,270,560 | ||||||
Value of Securities Delivereda | $ | — | $ | — | $ | — | ||||||
aRealized gains and losses fromin-kind redemptions, as shown on the Statement of Operations, are not recognized by the Funds for tax purposes.
6. 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.
7. Novel Coronavirus Pandemic
The global outbreak of the novel coronavirus disease, known asCOVID-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. 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) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
At March 31, 2020, all of the Funds’ investments in financial instruments carried at fair value were valued using Level 1 inputs.
9. 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 | |
| REIT | Real Estate Investment Trust | |
| franklintempleton.com | Annual Report | 35 | ||||
FRANKLIN TEMPLETON ETF TRUST
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Franklin Templeton ETF Trust and Shareholders of Franklin Disruptive Commerce ETF, Franklin Genomic Advancements ETF, and Franklin Intelligent Machines ETF
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the statements of investments, of Shareholders of Franklin Disruptive Commerce ETF, Franklin Genomic Advancements ETF, and Franklin Intelligent Machines ETF(the “Funds”) as ofMarch 31, 2020, the related statementsof operationsand of changes in net assets, including the related notes, and the financial highlights for the period February 25, 2020 (commencement of operations) through March 31, 2020. In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of March 31, 2020, and the results of each of their operations, the changes in each of their net assets, and each of the financial highlights for the period February 25, 2020 (commencement of operations) through March 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditsof these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of March 31, 2020 by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinions.
PricewaterhouseCoopers LLP
San Francisco, California
May 19, 2020
We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.
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FRANKLIN TEMPLETON ETF TRUST
The name, year of birth and address of the officers and board members, as well as their affiliations, positions held with the Trust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in the Franklin Templeton fund complex, are shown below. Generally, each board member serves until that person’s successor is elected and qualified.
Independent Board Members
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| Rohit Bhagat (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Lead Independent Trustee and Trustee | Since 2016 | 44 | Axis Bank (2013-present), AssetMark Financial Holdings, Inc. (investment solutions) (2018-present) and FlipKart Limited (2019-present) (eCommerce company);formerly, CapFloat Financial Services Pvt., Ltd.(non-banking finance company) (2018) and Zentific Investment Management (hedge fund) (2015-2018). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Managing Member, Mukt Capital, LLC (private investment firm) (2014-present); Advisor, Optimal Asset Management (investment technology and advisory services company) (2015-present); andformerly, Chairman, Asia Pacific, BlackRock (2009-2012); Global Chief Operating Officer, Barclays Global Investors (investment management) (2005-2009); and Senior Partner, The Boston Consulting Group (management consulting) (1992-2005). | ||||||||
| Deborah D. McWhinney (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since January 2020 | 44 | Fluor Corporation (construction and engineering) (2014-present), IHS Markit (information services)(2015-present), Borg Warner (automotive) (2018-present) and Focus Financial Partner, LLC (financial services) (2018-present). | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Director of various companies; andformerly, Board Member, Lloyds Banking Group (2015-2018) (financial institution) and Fresenius Medical Group (2016-2018) (healthcare); Chief Executive Officer (2013-2014) and Chief Operating Officer (2011-2013), CitiGroup Global Enterprise Payments (financial services); and President, Citi’s Personal Banking and Wealth Management (2009-2011). | ||||||||
| Anantha K. Pradeep (1963) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee | Since 2016 | 44 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, Smilable, Inc. (technology company) (2014-present); Chief Executive Officer, MachineVantage (technology company) (2018-present); Founder and Managing Partner, Consult Meridian, LLC (consulting company) (2009-present); andformerly, Founder, BoardVantage (board portal solutions provider delivering paperless process for boards and leadership) (2000-2002). | ||||||||
| franklintempleton.com | Annual Report | 37 | ||||
FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
| **Jennifer M. Johnson (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Trustee and Chairperson of the Board | Since 2016 | 49 | None | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Executive Officer, President and Director, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of four of the investment companies in Franklin Templeton; andformerly, Chief Operating Officer and Executive Vice President, Franklin Resources, Inc. (1994-2015); Executive Vice President of Operations and Technology, Franklin Resources, Inc. (2005-2010); and Senior Vice President, Franklin Resources, Inc. (2003-2005). | ||||||||
| Alison E. Baur (1964) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
Breda M. Beckerle (1958) 280 Park Avenue New York, NY 10017 | Interim Chief Compliance Officer | Since January 2020 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Chief Compliance Officer, Fiduciary Investment Management International, Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Steven J. Gray (1955) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Matthew T. Hinkle (1971) One Franklin Parkway San Mateo, CA 94403-1906 | Chief Executive Officer – Finance and Administration | Since 2017 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; andformerly, Vice President, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017). | ||||||||
| Robert Lim (1948) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President – AML Compliance | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin Templeton Investor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Patrick O’Connor (1967) One Franklin Parkway San Mateo, CA 94403-1906 | President and Chief Executive Officer – Investment Management | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| President and Chief Investment Officer, Franklin Advisory Services, LLC; Senior Vice President, Franklin Advisers, Inc.; officer of two of the investment companies in Franklin Templeton; andformerly, Managing Director, Head of iShares Product Canada, BlackRock (1998-2014). | ||||||||
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FRANKLIN TEMPLETON ETF TRUST
Interested Board Members and Officers(continued)
| Name, Year of Birth and Address | Position | Length of Time Served | Number of Portfolios in Fund Complex Overseen by Board Member* | Other Directorships Held During at Least the Past 5 Years | ||||
Vivek Pai (1970) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Treasurer, Chief Financial Officer and Chief Accounting Officer | Since May 2019 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Treasurer, U.S. Fund Administration & Reporting and officer of two of the investment companies in Franklin Templeton. | ||||||||
| Navid J. Tofigh (1972) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President and Secretary | Since 2015 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
| Craig S. Tyle (1960) One Franklin Parkway San Mateo, CA 94403-1906 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of the investment companies in Franklin Templeton. | ||||||||
| Lori A. Weber (1964) 300 S.E. 2nd Street Fort Lauderdale, FL 33301-1923 | Vice President | Since 2016 | Not Applicable | Not Applicable | ||||
| Principal Occupation During at Least the Past 5 Years: | ||||||||
| Senior Associate General Counsel, Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary, Templeton Investment Counsel, LLC; and officer of 41 of the investment companies in Franklin Templeton. | ||||||||
*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton fund complex. These portfolios have a common investment manager or affiliated investment managers.
**Jennifer M. Johnson is considered to be an interested person of the Fund under the federal securities laws due to her position as an officer and director of Franklin Resources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor.
Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.
The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Committee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined that there is at least one such financial expert on the Audit Committee and has designated Rohit Bhagat as its audit committee financial expert. The Board believes that Mr. Bhagat qualifies as such an expert in view of his extensive business background and experience, including extensive experience in the asset management and financial services industries. Mr. Bhagat has been a Member and Chairman of the Fund’s Audit Committee since 2016. As a result of such background and experience, the Board believes that Mr. Bhagat has acquired an understanding of generally accepted accounting principles and financial statements, the general application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls and procedures for financial reporting and an understanding of audit committee functions. Mr. Bhagat is an independent Board member as that term is defined under the relevant Securities and Exchange Commission Rules and Releases.
The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request.
Shareholders may call (800) DIALBEN/342-5236 to request the SAI.
| franklintempleton.com | Annual Report | 39 | ||||
FRANKLIN TEMPLETON ETF TRUST
Board Approval of Investment Management Agreements
FRANKLIN TEMPLETON ETF TRUST
Franklin Disruptive Commerce ETF
Franklin Genomic Advancements ETF
Franklin Intelligent Machines ETF
(each a Fund)
At an in-person meeting held on November 21, 2019 (Meeting), the Board of Trustees (Board) of Franklin Templeton ETF Trust (Trust), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved an investment management agreement between Franklin Advisers, Inc. (Manager) and the Trust, on behalf of each Fund (each a Management Agreement) for an initial two-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate.
In considering the approval of each Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board reviewed and considered all of the factors it deemed relevant in approving each Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services to be provided by the Manager; (ii) the costs of the services to be provided by the Manager; and (iii) the extent to which economies of scale may be realized as each Fund grows. The Board also reviewed and considered the form of Management Agreement and the terms of each Management Agreement which were explained at the Meeting, noting that the form of Management Agreement was substantially the same as the standard forms of investment management agreement (that include administration services) for the other funds in the Franklin Templeton family of funds, including other series of the Trust.
In approving each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the terms of each proposed Management Agreement are fair and reasonable and that such Management Agreement is
in the best interests of the respective Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
Nature, Extent and Quality of Services
The Board reviewed and considered information regarding the nature, extent and quality of investment management services to be provided by the Manager and its affiliates to each Fund and its shareholders. This information included, among other things, each Fund’s proposed investment strategies and the ability of the Manager to implement such investment strategies; the qualifications, background and experience of the investment personnel that will be responsible for the day-to-day portfolio management of each Fund; the Manager’s experience as the manager of other funds and accounts, including other series of the Trust and other funds in the Franklin Templeton family of funds; the Manager’s strength and reputation within the industry; the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the Manager; and the Manager’s compliance capabilities, as demonstrated by, among other things, its policies and procedures reasonably designed to prevent violations of the Federal Securities Laws (as defined in Rule 38a-1 of the Investment Company Act of 1940). Following consideration of such information, the Board was satisfied with the nature, extent and quality of services to be provided by the Manager and its affiliates to each Fund and its shareholders.
Fund Performance
The Board noted that, as each Fund had not yet commenced investment operations, there was no investment performance for the Funds. The Board also considered the proposed performance benchmark for each Fund and how such benchmark would be utilized to measure performance of the Manager.
Comparative Fees and Expenses
The Board reviewed and considered information regarding each Fund’s proposed total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board considered the proposed total expense ratio and, separately, the proposed contractual management fee rate, without the effect of fee waivers, if any (Management Rate) of each Fund in comparison to the
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FRANKLIN TEMPLETON ETF TRUST
median expense ratio and median Management Rate, respectively, of other exchange-traded funds deemed comparable to and with a similar expense structure as the Fund (Expense Group) as selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent organization. Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report (excluding each Fund), which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges. The Board received a description of the methodology used by Broadridge to select the exchange-traded funds included in an Expense Group.
The Expense Group for the Franklin Disruptive Commerce ETF was comprised of institutional funds and actively managed exchange-traded funds, which included the Fund and three financial services funds. The Expense Group for the Franklin Genomic Advancements ETF was comprised of institutional funds and actively managed exchange-traded funds, which included the Fund and two other global health/biotechnology funds. The Expense Group for the Franklin Intelligent Machines ETF was comprised of institutional funds and actively managed exchange-traded funds, which included the Fund, one global health/biotechnology fund and two science & technology funds. The Board noted that the proposed Management Rate and proposed total expense ratio for each Fund were below the medians of its respective Expense Group. The Board concluded that the Management Rate to be charged to each Fund is reasonable. In doing so, the Board noted the small size of each Fund’s Expense Group and that each Fund’s proposed total expense ratio reflected a fee waiver from management.
Profitability
The Board then noted that the Manager (and its affiliates) could not report any financial results from their relationships with any Fund because the Funds have not yet commenced investment operations, and thus, the Board could not evaluate the Manager’s (or its affiliates’) profitability with respect to the Funds.
Economies of Scale
The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as each Fund grows larger and whether each Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. With respect to possible economies of scale in the future, the Board noted that it is not anticipated that any Fund will generate significant, if any, profit for the Manager and/or its affiliates for some time.
Conclusion
Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved each Management Agreement for the respective Fund for an initial two-year period.
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 libertyshares.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 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 recent12-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 FormN-PORT. Shareholders may view the filed FormN-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.
| franklintempleton.com | Annual Report | 41 | ||||
FRANKLIN TEMPLETON ETF TRUST
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at libertyshares.com.
| 42 | Annual Report | franklintempleton.com | ||
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.
 | Annual Report Franklin Templeton ETF Trust | |||||
| Investment Manager | Distributor | Investor Services | ||||
| Franklin Advisors, Inc. | Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 franklintempleton.com | Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 | ||||
| © 2020 Franklin Templeton Investments. All rights reserved. | ETF7 A 05/20 | |||||
| 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 Rohit Baghat and he is “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases.
| Item 4. | Principal Accountant Fees and Services. |
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements were $914,721 for the fiscal year ended March 31, 2020 and $827,925 for the fiscal year ended March 31, 2019.
(b) Audit-Related Fees
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of Item 4.
There were no fees paid to the principal accountant for assurance and related services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant that are reasonably related to the performance of the audit of their financial statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant for tax compliance, tax advice and tax planning.
The aggregate fees paid to the principal accountant for professional services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant for tax compliance, tax advice and tax planning were $232,351 for the fiscal year ended March 31, 2020 and $204,500 for the fiscal year ended March 31, 2019. The services for which these fees were paid included tax compliance services related toyear-end, professional fees in connection with tax treatment of equipment lease transactions, professional fees in connection with an Indonesia withholding tax refund claim and tax consulting services related to the operating agreement and term sheet for the launch of a new fund.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant not reported in paragraphs (a)-(c) of Item 4 were $1,038 for the fiscal year ended March 31, 2020 and $0 for the fiscal year ended March 31, 2019. The services for which these fees were paid included review of materials provided to the fund Board in connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services rendered by the principal accountant to the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant not reported in paragraphs (a)-(c) of Item 4 were $208,155 for the fiscal year ended March 31, 2020 and $66,500 for the fiscal year ended March 31, 2019. The services for which these fees were paid included compliance examination for Investment Advisor Act rule204-2 and206(4)-2, professional fees in connection with determining the feasibility of a U.S. direct lending structure, valuation services related to a fair value engagement, the issuance of an Auditor’s Certificate for South Korean regulatory shareholders disclosures, account maintenance project and assets under management certification.
(e) (1) The registrant’s audit committee is directly responsible for approving the services to be provided by the auditors, including:
(i)pre-approval of all audit and audit related services;
(ii)pre-approval of allnon-audit related services to be provided to the Fund by the auditors;
(iii)pre-approval of allnon-audit related services to be provided to the registrant by the auditors to the registrant’s investment adviser or to any entity that controls, is controlled by or is under common control with the registrant’s investment adviser and that provides ongoing services to the registrant where thenon-audit services relate directly to the operations or financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or appropriate, as an alternative to committeepre-approval of services to be provided by the auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to bepre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of audit committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs (b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule2-01 of regulationS-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregatenon-audit fees paid to the principal accountant for services rendered by the principal accountant to the registrant and the registrant’s investment adviser and any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the registrant were $441,544 for the fiscal year ended March 31, 2020 and $271,000 for the fiscal year ended March 31, 2019.
(h) The registrant’s audit committee of the board has considered whether the provision ofnon-audit services that were rendered to the registrant’s investment adviser (not including anysub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were notpre-approved pursuant to paragraph (c)(7)(ii) of Rule2-01 of RegulationS-X is compatible with maintaining the principal accountant’s independence.
| 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 forClosed-End Management Investment Companies. N/A |
| Item 8. | Portfolio Managers ofClosed-End Management Investment Companies. N/A |
| Item 9. | Purchases of Equity Securities byClosed-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 onForm 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. There have been no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.
| Item 12. | Disclosure of Securities Lending Activities forClosed-End Management Investment Company. N/A |
| Item 13. | Exhibits. |
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 TEMPLETON ETF TRUST | ||
| By | S\MATTHEW T. HINKLE | |
| Matthew T. Hinkle | ||
| Chief Executive Officer – Finance and Administration | ||
| Date | May 29, 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 | May 29, 2020 |
| By | S\VIVEK PAI | |
Vivek Pai | ||
Chief Financial Officer and Chief Accounting Officer | ||
| Date | May 29, 2020 |