SEMIANNUAL REPORT

FRANKLIN TEMPLETON

ETF TRUST

September 30, 2022

 

LOGO

 

LOGO

 

Franklin Emerging Market Core Dividend Tilt

Index ETF

Formerly, Franklin LibertyQ Emerging Markets ETF

Franklin International Core Dividend Tilt

Index ETF

Formerly, Franklin LibertyQ International Equity

Hedged ETF

Franklin U.S. Core Dividend Tilt Index ETF

Formerly, Franklin LibertyQ Global Dividend ETF

Franklin U.S. Large Cap Multifactor Index ETF

Formerly, Franklin LibertyQ U.S. Equity ETF

Franklin U.S. Mid Cap Multifactor Index ETF

Formerly, Franklin LibertyQ U.S. Mid Cap Equity ETF

Franklin U.S. Small Cap Multifactor Index ETF

Formerly, Franklin LibertyQ U.S. Small Cap

Equity ETF


Contents        
Semiannual Report       
Economic and Market Overview      2  
Franklin Emerging Market Core Dividend Tilt Index ETF      3  
Franklin International Core Dividend Tilt Index ETF      8  
Franklin U.S. Core Dividend Tilt Index ETF      14  
Franklin U.S. Large Cap Multifactor Index ETF      19  
Franklin U.S. Mid Cap Multifactor Index ETF      24  
Franklin U.S. Small Cap Multifactor Index ETF      29  
Financial Highlights and Schedules of Investments      34  
Financial Statements      91  
Notes to Financial Statements      98  
Shareholder Information      111  

 

 

Not FDIC Insured   |   May Lose Value   |   No Bank Guarantee

 

Visit franklintempleton.com for fund updates and documents, or to find helpful financial planning tools.

 

           
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             1


SEMIANNUAL REPORT

Economic and Market Overview

 

Global developed and emerging market equities, as measured by the MSCI All Country World Index-NR (net of tax withholding when dividends are paid), posted a -21.41% total return for the six months ended September 30, 2022.1 Supply-chain disruptions and volatile prices for energy and commodities contributed to higher inflation in many countries. This inflationary pressure led many of the world’s central banks to adopt less accommodative stances regarding monetary policy. New lockdowns imposed by China’s government to quell the spread of the Omicron variant of COVID-19 pressured Asian and global emerging market stocks. Geopolitical instability disrupted financial markets amid the ongoing war in Ukraine and international sanctions on Russia, adding to investor uncertainty about the trajectory of the global economy.

U.S. equities, as measured by the Standard & Poor’s® 500 Index, posted a -20.20% total return for the six months ended September 30, 2022.1 Elevated inflation was a major concern for both consumers and investors, as inflation accelerated in June 2022 to the highest rate since 1981. Continued supply-chain disruptions, strong consumer demand, and volatile energy prices drove inflation higher. Russia’s invasion of Ukraine also disrupted financial markets and led to a rise in oil and commodity prices, although much of that increase abated by period-end. The unemployment rate declined marginally from 3.6% in March 2022 to 3.5% in September 2022 as notable employment gains occurred in the leisure and hospitality and health care sectors. Wage growth remained strong throughout the period, adding to some investors’ inflation concerns.

U.S. gross domestic product contracted in the second quarter of 2022, with the economy technically entering a recession, amid lower investments in inventories and fixed assets. An inventory drawdown, declining residential and business investment and lower levels of government spending contributed to the economic slowdown. Rising interest rates translated to higher borrowing costs for individuals and businesses, which dampened economic activity. Mortgage rates reached the highest level since 2007, and new home construction slowed toward period-end. In an effort to control inflation, the U.S. Federal Reserve (Fed) continued to raise the federal funds target rate. The Fed raised the federal funds rate at each of its four meetings during the period to end at a range of 3.00%–3.25%. The Fed noted in its September 2022 meeting that inflation remained elevated amid robust job growth and low unemployment. Furthermore,

the Fed said it would continue to reduce its bond holdings, and Fed Chair Jerome Powell indicated that reducing inflation was likely to require a period of below-trend growth.

Economies in the eurozone maintained a slow growth rate in the second quarter of 2022 as the easing of COVID-related restrictions and a strong start to the summer tourism season increased household spending. The war in Ukraine contributed to record high inflation across the eurozone as commodity and oil prices soared. The European Central Bank raised interest rates in July 2022 for the first time in more than a decade, increasing rates again at its subsequent meeting in September, to fight growing inflation. In this environment, European developed market equities, as measured by the MSCI Europe Index-NR, posted a -23.17% total return for the six months under review.1

Asian developed and emerging market equities, as measured by the MSCI All Country Asia Index-NR, posted a -21.45% total return for the six-month period.1 Japan’s economy expanded in the second quarter of 2022 as private consumption increased following the lifting of COVID-related restrictions and expansion of government spending. For the first time since 2020, China’s economy contracted in the second quarter, pressured by COVID-related restrictions and government measures to limit real estate speculation. Unexpected regulatory changes by China’s government, which negatively impacted technology-related businesses, and investor concerns about the solvency of several large property developers in China further pressured stocks in that country.

Global emerging market stocks, as measured by the MSCI Emerging Markets Index-NR, posted a -21.70% total return for the six months under review.1 Following Russia’s invasion of Ukraine, climbing food and energy prices kindled inflationary pressures, which, combined with a strong U.S. dollar, raised concerns over the possibility of government debt defaults in some countries. Rising U.S. interest rates led investors to sell off many holdings in emerging markets, including the major markets of India, South Korea and Taiwan.

 

 

The foregoing information reflects our analysis and opinions as of September 30, 2022. 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: Morningstar.

See www.franklintempletondatasources.com for additional data provider information.

 

           
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Semiannual Report

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Franklin Emerging Market Core Dividend Tilt Index ETF

Formerly, Franklin LibertyQ Emerging Markets ETF

 

This semiannual report for Franklin Emerging Market Core Dividend Tilt Index ETF covers the period ended September 30, 2022. Effective August 1, 2022, Franklin LibertyQ Emerging Markets ETF changed its name to Franklin Emerging Market Core Dividend Tilt Index ETF. The Fund also changed its ticker symbol, underlying index, investment universe, investment goal and strategy, distribution frequency and reduced its unified management fee.

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 Morningstar® Emerging Markets Dividend Enhanced Select IndexSM (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 is based on the Morningstar® Emerging Markets Target Market Exposure Index (the Parent Index), and is constructed by applying an optimization process to the Parent Index that aims to deliver a higher dividend yield than the Parent Index, while limiting expected tracking error to the Parent Index (i.e., to provide a “dividend tilt” through the selection and weighting of securities from the Parent Index). The Parent Index includes large- and mid-capitalization stocks representing the top 85% of emerging markets equity markets by float-adjusted market capitalization (“float-adjusted” means that only shares that are estimated to be publicly available to investors are included in the calculation of market capitalization).

 

Geographic Composition*       
9/30/22       
      % of Total
Net Assets
 

Asia

     72.6%  

Latin America & Caribbean

     11.9%  

Middle East & Africa

     10.2%  

North America

     2.8%  

Europe

     1.9%  

Other Net Assets

     0.6%  

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of -23.78% based on market price and -23.72% based on net asset value (NAV).

On August 1, 2022, the Fund changed its underlying index from the LibertyQ Emerging Markets Index-NR to the Morningstar® Emerging Markets Dividend Enhanced Select IndexSM, which commenced calculation and publication on June 17, 2022. For the period from June 17, 2022, through September 30, 2022, the new Underlying Index posted a cumulative total return of -15.31%.2 For the six-month period under review, the Blended Morningstar® Emerging Markets Dividend Enhanced Select Index-NR, which measures the performance of the old underlying index through July 31, 2022, followed by the performance of the new Underlying Index, posted a -23.51% cumulative total return.2

The Parent Index posted a cumulative total return of -20.51% for the six-month period.2 The Blended Morningstar® Emerging Markets Target Market Exposure Index-NR, which measures the performance of the old primary benchmark, the MSCI Emerging Markets (EM) Index-NR, through July 31, 2022, followed by the performance of the Parent Index, posted a -20.79% cumulative total return for the same period.2 The MSCI EM Index-NR posted a -21.70% cumulative total return for the six-month period.3 The Underlying Index replaced the MSCI EM Index-NR as the Fund’s primary benchmark effective August 1, 2022 to more accurately reflect the Fund’s new investment strategy.

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 to franklintempleton.com or call (800) 342-5236.

 

1. The Morningstar® Emerging Markets Dividend Enhanced Select IndexSM is a systematic, rules-based proprietary index that is maintained and calculated by Morningstar, Inc.

2. Source: FactSet.

3. Source: Morningstar.

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 Schedule of Investments (SOI). The SOI begins on page 35.

 

           
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FRANKLIN EMERGING MARKET CORE DIVIDEND TILT INDEX ETF

 

Top 10 Sectors/Industries  
9/30/22  
      % of Total
Net Assets
 

Banks

     17.5%  

Semiconductors & Semiconductor Equipment

     9.0%  

Oil, Gas & Consumable Fuels

     7.0%  

Metals & Mining

     5.9%  

Technology Hardware, Storage & Peripherals

     5.5%  

Internet & Catalog Retail

     4.9%  

Insurance

     4.4%  

Interactive Media & Services

     3.8%  

IT Services

     3.6%  

Chemicals

     3.3%  

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 Underlying Index. The Fund may use either a replication strategy or representative sampling strategy. The Fund’s portfolio is generally reconstituted quarterly following the quarterly reconstitution of the Underlying Index.

The Fund may invest in equity futures and equity total return swaps and enter into foreign currency forward contracts and/or currency futures contracts to provide the Fund with additional opportunities to add value and better track the performance of the Fund’s Underlying Index.

 

Top 10 Holdings       
9/30/22       

Company

Sector/Industry, Country

   % of Total
Net Assets
 
Taiwan Semiconductor Manufacturing Co. Ltd.
Semiconductors & Semiconductor Equipment, Taiwan
     4.6%  
Samsung Electronics Co. Ltd.
Technology Hardware, Storage & Peripherals, South Korea
     3.1%  
Tencent Holdings Ltd.
Interactive Media & Services, China
     3.0%  
Alibaba Group Holding Ltd., A
Internet & Catalog Retail, China
     2.4%  
Infosys Ltd.
IT Services, India
     1.6%  
China Construction Bank Corp., H
Banks, China
     1.6%  
Meituan Dianping, B, 144A
Internet & Catalog Retail, China
     1.5%  
Vale SA
Metals & Mining, Brazil
     1.5%  
Petroleo Brasileiro SA, 38.601%, pfd.
Oil, Gas & Consumable Fuels, Brazil
     1.3%  
Industrial and Commercial Bank of China Ltd., H
Banks, China
     1.0%  
Top 10 Countries  
9/30/22  
      % of Total
Net Assets
 

China

     29.9%  

Taiwan

     17.9%  

India

     11.5%  

South Korea

     9.5%  

Brazil

     6.5%  

South Africa

     5.1%  

Saudi Arabia

     2.9%  

Mexico

     2.7%  

Hong Kong

     2.4%  

Malaysia

     2.4%  

As of July 20, 2022, the Franklin Emerging Market Core Dividend Tilt Index ETF held Russian securities that were fair valued at zero. While Russian securities were removed from the Fund’s former underlying index and Russian securities are not included in the Fund’s new Underlying Index, as of July 20, 2022 the Fund has not been able to dispose of all such securities due to ongoing issues related to Russia’s invasion of Ukraine. The Fund will continue to monitor Russian related developments and will seek to dispose of such securities as soon as it is practicable.

Thank you for your participation in Franklin Emerging Market Core Dividend Tilt Index ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Joe Diederich

Basit Amin, CFA

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2022, 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 EMERGING MARKET CORE DIVIDEND TILT INDEX ETF

 

Performance Summary as of September 30, 2022

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. Market Price returns typically are based upon the official closing price of the ETF’s shares. 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 9/30/221

     Cumulative Total Return2      Average Annual Total Return2  
      Based on
NAV3
     Based on
market price4
     Based on
NAV3
     Based on
market price4
 

6-Month

     -23.72%        -23.78%        -23.72%        -23.78%  

1-Year

     -27.49%        +27.80%        -27.49%        +27.80%  

5-Year

     -16.06%        -16.98%        -5.67%        -4.20%  

Since Inception (6/1/16)

     +2.55%        +1.25%        +0.40%        +0.20%  

 

Distribution Rate5    30-Day Standardized Yield6  

12.34%

     6.83%  

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 recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

See page 6 for Performance Summary footnotes.

 

           
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FRANKLIN EMERGING MARKET CORE DIVIDEND TILT INDEX ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/22–9/30/22)

Net Investment

Income

 

$0.988041

Total Annual Operating Expenses7

 

  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 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. Dividends may fluctuate and a company may reduce or eliminate its dividend at any time. The Fund might not always include dividend paying companies, in attempt to reduce tracking error. The Fund may experience tracking error and may not closely track the Underlying Index for various reasons. Performance of the Fund may vary significantly from the performance of an index as a result of transaction costs, expenses and other factors. There can be no assurance that the Underlying Index’s calculation methodology or sources of information will provide an accurate assessment of included issuers or that the included issuers will provide the Fund with the market exposure it seeks. Securities issued by mid capitalization companies may be more volatile in price than those of larger companies, involve substantial risks and should be considered speculative. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. The Fund’s prospectus also includes a description of the main investment risks.

Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict could increase volatility and uncertainty in the financial markets and adversely affect regional and global economies. The United States and other countries have imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response to its invasion of Ukraine. The United States and other countries have also imposed economic sanctions on Belarus and may impose sanctions on other countries that support Russia’s military invasion. These sanctions, as well as any other economic consequences related to the invasion, such as additional sanctions, boycotts or changes in consumer or purchaser preferences or cyberattacks on governments, companies or individuals, may further decrease the value and liquidity of certain Russian securities and securities of issuers in other countries that are subject to economic sanctions related to the invasion. To the extent that the Fund has exposure to Russian investments or investments in countries affected by the invasion, the Fund’s ability to price, buy, sell, receive or deliver such investments may be impaired. The Fund could determine at any time that certain of the most affected securities have zero value. In addition, any exposure that the Fund may have to counterparties in Russia or in countries affected by the invasion could negatively impact the Fund’s portfolio. The extent and duration of Russia’s military actions and the repercussions of such actions (including any retaliatory actions or countermeasures that may be taken by those subject to sanctions) are impossible to predict, but could result in significant market disruptions, including in the oil and natural gas markets, and may negatively affect global supply chains, inflation and global growth. These and any related events could significantly impact the Fund’s performance and the value of an investment in the Fund, even beyond any direct exposure the Fund may have to Russian issuers or issuers in other countries affected by the invasion.

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, excluding: (i) payments under the Fund’s Rule 12b-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) other non-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. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/22.

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. Management fees have been restated to reflect current fiscal year fees as a result of a decrease in the Fund’s contractual management fee rate effective August 1, 2022. If the management fees were not restated to reflect such decrease in fees, the amounts shown above would be greater. Consequently, the Fund’s total annual Fund operating expenses differ from the ratio of expenses to average net assets shown in the Financial Highlights.

See www.franklintempletondatasources.com for additional data provider information.

 

           
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FRANKLIN EMERGING MARKET CORE DIVIDEND TILT INDEX 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 4/1/22
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221,2
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 762.80     $ 1.64     $ 1,023.21     $ 1.88       0.37

1. Expenses are equal to the annualized expense ratio for the six-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 183/365 to reflect the one-half year period.

2. Effective August 1, 2022, the unified management fee was reduced from 0.45% to 0.19%. Had the new unified management fee been in effect for the full period, the expenses paid would have been $0.84 based upon the Fund’s actual performance and $0.96 based upon a hypothetical 5% return.

 

           
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Franklin International Core Dividend Tilt Index ETF

Formerly, Franklin LibertyQ International Equity Hedged ETF

 

This semiannual report for Franklin International Core Dividend Tilt Index ETF covers the period ended September 30, 2022. Effective August 1, 2022, Franklin LibertyQ International Equity Hedged ETF changed its name to Franklin International Core Dividend Tilt Index ETF. The Fund also changed its ticker symbol, underlying index, investment universe, distribution frequency, investment goal and strategy and reduced its unified management fee.

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 Morningstar® Developed Markets ex-North America Dividend Enhanced Select IndexSM (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 is based on the Morningstar® Developed Markets ex-North America Target Market Exposure Index (the Parent Index) and is constructed by applying an optimization process to the Parent Index that aims to deliver a higher dividend yield than the Parent Index, while limiting expected tracking error to the Parent Index (i.e., to provide a “dividend tilt” through the selection and weighting of securities from the Parent Index). The Parent Index includes large- and mid-capitalization stocks representing the top 85% of developed markets equity markets excluding North America by float-adjusted market capitalization (“float-adjusted” means that only shares that are estimated to be publicly available to investors are included in the calculation of market capitalization).

Geographic Composition*  
9/30/22       
      % of Total
Net Assets
 

Europe

     59.0%  

Asia

     28.7%  

Australia & New Zealand

     10.5%  

North America

     0.6%  

Middle East & Africa

     0.5%  

Other Net Assets

     0.7%  

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of -16.72% based on market price and -16.78% based on net asset value (NAV).

On August 1, 2022, the Fund changed its underlying index from the LibertyQ International Equity Hedged Index-NR to the Morningstar® Developed Markets ex-North America Dividend Enhanced Select IndexSM, which commenced calculation and publication on June 17, 2022. For the period from June 17, 2022, through September 30, 2022, the new Underlying Index posted a cumulative total return of -9.57%.2 For the six-month period under review, the Blended Morningstar® Developed Markets ex-North America Dividend Enhanced Select Index-NR, which measures the performance of the old underlying index through July 31, 2022, followed by the performance of the new Underlying Index, posted a -16.48% cumulative total return.2

The Parent Index posted a cumulative total return of -22.51% for the six-month period.2 The Blended Morningstar® Developed Markets ex-North America Target Market Exposure Index-NR, which measures the performance of the old primary benchmark, MSCI Europe, Australasia and the Far East (EAFE) 100% Hedged to USD Index-NR, through July 31, 2022, followed by the performance of the Parent Index,

 

1. The Morningstar® Developed Markets ex-North America Dividend Enhanced Select Index is a systematic, rules-based proprietary index that is maintained and calculated by Morningstar, Inc.

2. Source: FactSet.

3. Source: Morningstar.

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 Schedule of Investments (SOI). The SOI begins on page 48.

 

           
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FRANKLIN INTERNATIONAL CORE DIVIDEND TILT INDEX ETF

 

posted a -15.70% cumulative total return for the same period.2 The MSCI EAFE 100% Hedged to USD Index-NR posted a -9.89% cumulative total return for the six-month period.3 The Underlying Index replaced the MSCI EAFE 100% Hedged to USD Index-NR as the Fund’s primary benchmark to more accurately reflect the Fund’s new investment strategy.

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 recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

 

Top 10 Sectors/Industries  
9/30/22       
      % of Total
Net Assets
 

Pharmaceuticals

     10.8%  

Banks

     10.5%  

Insurance

     6.6%  

Metals & Mining

     5.0%  

Automobiles

     4.2%  

Semiconductors & Semiconductor Equipment

     3.6%  

Oil, Gas & Consumable Fuels

     3.2%  

Electric Utilities

     3.2%  

Food Products

     2.8%  

Textiles, Apparel & Luxury Goods

     2.7%  

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 Underlying Index. The Fund may use either a replication strategy or representative sampling strategy. The Fund’s portfolio is generally reconstituted quarterly following the quarterly reconstitution of the Underlying Index.

The Fund may invest in equity futures and equity total return swaps and enter into foreign currency forward contracts and/or currency futures contracts to provide the Fund with additional opportunities to add value and better track the performance of the Fund’s Underlying Index.

Top 10 Holdings  
9/30/22  
Company
Sector/Industry, Country
   % of Total
Net Assets
 
Nestle SA
Food Products, Switzerland
     2.4%  
Novartis AG
Pharmaceuticals, Switzerland
     1.9%  
BHP Group Ltd.
Metals & Mining, Australia
     1.6%  
ASML Holding NV
Semiconductors & Semiconductor Equipment, Netherlands
     1.6%  
Roche Holding AG, Non-Voting
Pharmaceuticals, Switzerland
     1.5%  
AstraZeneca PLC
Pharmaceuticals, United Kingdom
     1.4%  
Novo Nordisk AS, B
Pharmaceuticals, Denmark
     1.4%  
LVMH Moet Hennessy Louis Vuitton SE
Textiles, Apparel & Luxury Goods, France
     1.3%  
Toyota Motor Corp.
Automobiles, Japan
     1.2%  
British American Tobacco PLC
Tobacco, United Kingdom
     1.1%  

 

Top 10 Countries  
9/30/22       
      % of Total
Net Assets
 

Japan

     24.1%  

United Kingdom

     12.7%  

Switzerland

     10.5%  

Australia

     10.2%  

France

     9.1%  

Germany

     7.9%  

Netherlands

     4.6%  

Hong Kong

     3.0%  

Italy

     2.8%  

Sweden

     2.5%  

 

           
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FRANKLIN INTERNATIONAL CORE DIVIDEND TILT INDEX ETF

 

Thank you for your participation in Franklin International Core Dividend Tilt Index ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Joe Diederich

Basit Amin, CFA

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2022, 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 INTERNATIONAL CORE DIVIDEND TILT INDEX ETF

 

Performance Summary as of September 30, 2022

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. Market Price returns typically are based upon the official closing price of the ETF’s shares. 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 9/30/221

 

     Cumulative Total Return2      Average Annual Total Return2  
      Based on
NAV3
    

Based on

market price4

           Based on
NAV3
    

Based on

market price4

 

6-Month

     -16.78%        -16.72%        -16.78%        -16.72%  

1-Year

     -12.50%        -12.24%        -12.50%        -12.24%  

5-Year

     +16.37%        +15.78%        +3.08%        +2.97%  

Since Inception (6/1/16)

     +32.04%        +31.47%        +4.49%        +4.42%  

 

Distribution Rate5    30-Day Standardized Yield6  

10.18%

     4.48%  

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 to franklintempleton.com or call (800) 342-5236.

See page12 for Performance Summary footnotes.

 

           
franklintempleton.com  

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FRANKLIN INTERNATIONAL CORE DIVIDEND TILT INDEX ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/22–9/30/22)

Net Investment
Income
   Long-Term
Capital Gain
     Total  

$1.139902

     $0.466738        $1.606640  

Total Annual Operating Expenses7

 

  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. 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. Dividends may fluctuate and a company may reduce or eliminate its dividend at any time. The Fund might not always include dividend paying companies, in attempt to reduce tracking error. The Fund may experience tracking error and may not closely track the Underlying Index various reasons. Performance of the Fund may vary significantly from the performance of an index as a result of transaction costs, expenses and other factors. There can be no assurance that the Underlying Index’s calculation methodology or sources of information will provide an accurate assessment of included issuers or that the included issuers will provide the Fund with the market exposure it seeks. Securities issued by mid capitalization companies may be more volatile in price than those of larger companies, involve substantial risks and should be considered speculative. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. The Fund’s prospectus also includes a description of the main investment risks.

Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict could increase volatility and uncertainty in the financial markets and adversely affect regional and global economies. The United States and other countries have imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response to its invasion of Ukraine. The United States and other countries have also imposed economic sanctions on Belarus and may impose sanctions on other countries that support Russia’s military invasion. These sanctions, as well as any other economic consequences related to the invasion, such as additional sanctions, boycotts or changes in consumer or purchaser preferences or cyberattacks on governments, companies or individuals, may further decrease the value and liquidity of certain Russian securities and securities of issuers in other countries that are subject to economic sanctions related to the invasion.

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, excluding: (i) payments under the Fund’s Rule 12b-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) other non-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. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/22.

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. Management fees have been restated to reflect current fiscal year fees as a result of a decrease in the Fund’s contractual management fee rate effective August 1, 2022. If the management fees were not restated to reflect such decrease in fees, the amounts shown above would be greater. Consequently, the Fund’s total annual Fund operating expenses differ from the ratio of expenses to average net assets shown in the Financial Highlights.

See www.franklintempletondatasources.com for additional data provider information.

 

           
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FRANKLIN INTERNATIONAL CORE DIVIDEND TILT INDEX 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 4/1/22
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221,2
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 832.20     $ 1.24     $ 1,023.72     $ 1.37       0.27

1. Expenses are equal to the annualized expense ratio for the six-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 183/365 to reflect the one-half year period.

2. Effective August 1, 2022, the unified management fee was reduced from 0.40% to 0.09%. Had the new unified management fee been in effect for the full period, the expenses paid would have been $0.41 based upon the Fund’s actual performance and $0.46 based upon a hypothetical 5% return.

 

           
franklintempleton.com  

Semiannual Report

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Franklin U.S. Core Dividend Tilt Index ETF

Formerly, Franklin LibertyQ Global Dividend ETF

 

This semiannual report for Franklin U.S. Core Dividend Tilt Index ETF covers the period ended September 30, 2022. Effective August 1, 2022, Franklin LibertyQ Global Dividend ETF changed its name to Franklin U.S. Core Dividend Tilt Index ETF. The Fund also changed its ticker, underlying index, investment universe, investment goal and strategy and reduced its unified management fee.

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 Morningstar® US Dividend Enhanced Select IndexSM (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 is based on the Morningstar® US Target Market Exposure Index (the Parent Index) and is constructed by applying an optimization process to the Parent Index that aims to deliver a higher dividend yield than the Parent Index, while limiting expected tracking error to the Parent Index (i.e., to provide a “dividend tilt” through the selection and weighting of securities from the Parent Index). The Parent Index includes large- and mid-capitalization stocks representing the top 85% of the U.S. equity market by float-adjusted market capitalization (“float-adjusted” means that only shares that are estimated to be publicly available to investors are included in the calculation of market capitalization).

 

Geographic Composition*  
9/30/22       
      % of Total
Net Assets
 

North America

     97.8%  

Europe

     1.7%  

Latin America & Caribbean

     0.2%  

Other Net Assets

     0.3%  

*Figures are stated as a percentage of total and may not equal 100% or may be negative due to rounding, use of any derivatives, unsettled trades or other factors.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of -20.01% based on market price and -20.14% based on net asset value (NAV).2

On August 1, 2022, the Fund changed its underlying index from the LibertyQ Global Dividend Index to the Morningstar® US Dividend Enhanced Select IndexSM, which commenced calculation and publication on June 17, 2022. For the period from June 17, 2022, through September 30, 2022, the new Underlying Index posted a cumulative total return of -3.05%.2 For the six-month period under review, the Blended Morningstar® US Dividend Enhanced Select Index, which measures the performance of the old underlying index through July 31, 2022, followed by the performance of the new Underlying Index, posted a -20.06% cumulative total return.2

The Parent Index posted a cumulative total return of -20.76% for the six-month period.2 The Blended Morningstar® US Target Market Exposure Index, which measures the performance of the old primary benchmark, the MSCI All Country World Index (ACWI) ex REITs Index-NR, through July 31, 2022, followed by the performance of the Parent Index, posted a -21.38% cumulative total return for the same period.2 The MSCI ACWI ex REITs Index-NR posted a -21.34% cumulative total return for the six-month period.2 The Underlying Index replaced the MSCI ACWI ex REITS Index-NR as the Fund’s primary benchmark to more accurately reflect the Fund’s new investment strategy.

You can find more of the Fund’s performance data in the Performance Summary beginning on page 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 recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

 

1. The Morningstar US Dividend Enhanced Select IndexSM is a systematic, rules-based proprietary index that is maintained and calculated by Morningstar, Inc.

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 Schedule of Investments (SOI). The SOI begins on page 61.

 

           
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FRANKLIN U.S. CORE DIVIDEND TILT INDEX ETF

 

Top 10 Sectors/Industries  
9/30/22       
      % of Total
Net Assets
 

Software

     8.8%  

Semiconductors & Semiconductor Equipment

     8.2%  

Technology Hardware, Storage & Peripherals

     7.6%  

Pharmaceuticals

     6.1%  

Banks

     5.4%  

Equity Real Estate Investment Trusts (REITs)

     5.3%  

Oil, Gas & Consumable Fuels

     5.0%  

Interactive Media & Services

     3.9%  

IT Services

     3.9%  

Internet & Direct Marketing Retail

     3.6%  

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 Underlying Index. The Fund may use either a replication strategy or representative sampling strategy. The Fund’s portfolio is generally reconstituted quarterly following the quarterly reconstitution of the Underlying Index.

The Fund may invest in equity futures and equity total return swaps to provide additional opportunities to add value and better track the performance of the Fund’s Underlying Index.

 

Top 10 Holdings  
9/30/22  
Company
Sector/Industry
   % of Total
Net Assets
 
Apple Inc.
Information Technology
     7.1%  
Microsoft Corp.
Information Technology
     5.9%  
Amazon.com Inc.
Consumer Discretionary
     3.2%  
Tesla Inc.
Consumer Discretionary
     2.1%  
Johnson & Johnson
Health Care
     1.9%  
Exxon Mobil Corp.
Energy
     1.6%  
Alphabet Inc., A
Communication Services
     1.4%  
Alphabet Inc., C
Information Technology
     1.3%  
UnitedHealth Group Inc.
Health Care
     1.3%  
AbbVie Inc.
Health Care
     1.3%  

As of July 20, 2022, the Franklin U.S. Core Dividend Tilt Index ETF held Russian securities that were fair valued at zero. While Russian securities were removed from the Fund’s former underlying index and Russian securities are not included in the Fund’s new Underlying Index, as of July 20, 2022 the Fund has not been able to dispose of all such securities due to ongoing issues related to Russia’s invasion of Ukraine. The Fund will continue to monitor Russian related developments and will seek to dispose of such securities as soon as it is practicable.

Thank you for your participation in Franklin U.S. Core Dividend Tilt Index ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Joe Diederich

Basit Amin, CFA

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2022, 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  

Semiannual Report

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FRANKLIN U.S. CORE DIVIDEND TILT INDEX ETF

 

Performance Summary as of September 30, 2022

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. Market Price returns typically are based upon the official closing price of the ETF’s shares. 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 9/30/221

 

     Cumulative Total Return2      Average Annual Total Return2  
      Based on
NAV3
    

Based on

market price4

         Based on
NAV3
    

Based on

market price4

 

6-Month

     -20.14%        -20.01%        -20.14%        -20.01%  

1-Year

     -14.56%        -14.69%        -14.56%        -14.69%  

5-Year

     +18.74%        +18.21%        +3.49%        +3.40%  

Since Inception (6/1/16)

     +37.21%        +37.17%        +5.12%        +5.12%  

 

Distribution Rate5    30-Day Standardized Yield6  

3.15%

     2.62%  

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 to franklintempleton.com or call (800) 342-5236.

See page 17 for Performance Summary footnotes.

 

           
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FRANKLIN U.S. CORE DIVIDEND TILT INDEX ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/22–9/30/22)

Net Investment
Income

$0.524014

Total Annual Operating Expenses7

 

  0.06%

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 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 industries, sectors or investments. Dividends may fluctuate and a company may reduce or eliminate its dividend at any time. The Fund might not always include dividend paying companies, in attempt to reduce tracking error. The Fund may experience tracking error and may not closely track the Underlying Index various reasons. Performance of the Fund may vary significantly from the performance of an index as a result of transaction costs, expenses and other factors. There can be no assurance that the Underlying Index’s calculation methodology or sources of information will provide an accurate assessment of included issuers or that the included issuers will provide the Fund with the market exposure it seeks. Securities issued by mid capitalization companies may be more volatile in price than those of larger companies, involve substantial risks and should be considered speculative. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. The Fund’s prospectus also includes a description of the main investment risks.

Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict could increase volatility and uncertainty in the financial markets and adversely affect regional and global economies. The United States and other countries have imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response to its invasion of Ukraine. The United States and other countries have also imposed economic sanctions on Belarus and may impose sanctions on other countries that support Russia’s military invasion. These sanctions, as well as any other economic consequences related to the invasion, such as additional sanctions, boycotts or changes in consumer or purchaser preferences or cyberattacks on governments, companies or individuals, may further decrease the value and liquidity of certain Russian securities and securities of issuers in other countries that are subject to economic sanctions related to the invasion. To the extent that the Fund has exposure to Russian investments or investments in countries affected by the invasion, the Fund’s ability to price, buy, sell, receive or deliver such investments may be impaired. The Fund could determine at any time that certain of the most affected securities have zero value. In addition, any exposure that the Fund may have to counterparties in Russia or in countries affected by the invasion could negatively impact the Fund’s portfolio. The extent and duration of Russia’s military actions and the repercussions of such actions (including any retaliatory actions or countermeasures that may be taken by those subject to sanctions) are impossible to predict, but could result in significant market disruptions, including in the oil and natural gas markets, and may negatively affect global supply chains, inflation and global growth. These and any related events could significantly impact the Fund’s performance and the value of an investment in the Fund, even beyond any direct exposure the Fund may have to Russian issuers or issuers in other countries affected by the invasion.

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, excluding: (i) payments under the Fund’s Rule 12b-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) other non-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. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/22.

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. Management fees have been restated to reflect current fiscal year fees as a result of a decrease in the Fund’s contractual management fee rate effective August 1, 2022. If the management fees were not restated to reflect such decrease in fees, the amounts shown above would be greater. Consequently, the Fund’s total annual Fund operating expenses differ from the ratio of expenses to average net assets shown in the Financial Highlights.

See www.franklintempletondatasources.com for additional data provider information.

 

           
franklintempleton.com  

Semiannual Report

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FRANKLIN U.S. CORE DIVIDEND TILT INDEX 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 4/1/22
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221,2
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 798.60     $ 1.35     $ 1,023.56     $ 1.52       0.30

1. Expenses are equal to the annualized expense ratio for the six-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 183/365 to reflect the one-half year period.

2. Effective August 1, 2022, the unified management fee was reduced from 0.45% to 0.06%. Had the new unified management fee been in effect for the full period, the expenses paid would have been $0.27 based upon the Fund’s actual performance and $0.30 based upon a hypothetical 5% return.

 

           
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Franklin U.S. Large Cap Multifactor Index ETF

Formerly, Franklin LibertyQ U.S. Equity ETF

 

This semiannual report for Franklin U.S. Large Cap Multifactor Index ETF covers the period ended September 30, 2022. Effective August 1, 2022, Franklin LibertyQ U.S. Equity ETF changed its name to Franklin U.S. Large Cap Multifactor Index ETF.

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 three investment style factors: quality, value and momentum.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of -17.61% based on market price and -17.61% based on net asset value (NAV). In comparison, the LibertyQ U.S. Large Cap Equity Index posted a -17.56% cumulative total return for the same period, while the Russell 1000® Index posted a -20.51% cumulative total return.2

You can find more of the Fund’s performance data in the Performance Summary beginning on page 21.

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 to franklintempleton.com or call (800) 342-5236.

Top 10 Sectors/Industries       
9/30/22       
      % of Total
Net Assets
 

Information Technology

     31.8%  

Health Care

     20.2%  

Consumer Discretionary

     11.6%  

Energy

     7.8%  

Industrials

     7.5%  

Consumer Staples

     5.9%  

Communication Services

     5.2%  

Financials

     4.3%  

Real Estate

     2.6%  

Materials

     1.8%  

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 Underlying Index. The Fund may use either a replication strategy or representative sampling strategy. The Fund’s portfolio is reconstituted quarterly following the quarterly reconstitution of the Underlying Index.

The Fund may invest in equity futures and equity total return swaps to provide additional opportunities to add value and better track the performance of the Fund’s 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 Schedule of Investments (SOI). The SOI begins on page 69.

 

           
franklintempleton.com  

Semiannual Report

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FRANKLIN U.S. LARGE CAP MULTIFACTOR INDEX ETF

 

Top 10 Holdings       
9/30/22       
Company
Sector/Industry
   % of Total
Net Assets
 
Apple Inc.
Information Technology
     7.2%  
Microsoft Corp.
Information Technology
     5.3%  
Amazon.com Inc.
Consumer Discretionary
     2.0%  
Eli Lilly & Co.
Health Care
     1.9%  
Tesla Inc.
Consumer Discretionary
     1.9%  
Chevron Corp.
Energy
     1.8%  
AbbVie Inc.
Health Care
     1.7%  
Pfizer Inc.
Health Care
     1.7%  
Merck & Co. Inc.
Health Care
     1.7%  
UnitedHealth Group Inc.
Health Care
     1.7%  

Thank you for your participation in Franklin U.S. Large Cap Multifactor Index ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Joe Diederich

Basit Amin, CFA

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2022, 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 U.S. LARGE CAP MULTIFACTOR INDEX ETF

 

Performance Summary as of September 30, 2022

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. Market Price returns typically are based upon the official closing price of the ETF’s shares. 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 9/30/221

 

     Cumulative Total Return2      Average Annual Total Return2  
      Based on
NAV3
     Based on
market price4
     Based on
NAV3
     Based on
market price4
 

6-Month

     -17.61%        -17.61%        -17.61%        -17.61%  

1-Year

     -11.53%        -11.42%        -11.53%        -11.42%  

5-Year

     +50.63%        +50.86%        +8.54%        +8.57%  

Since Inception (4/26/17)

     +59.49%        +59.61%        +8.98%        +8.99%  

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 recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

See page 22 for Performance Summary footnotes.

 

           
franklintempleton.com  

Semiannual Report

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FRANKLIN U.S. LARGE CAP MULTIFACTOR INDEX ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/22–9/30/22)

Net Investment
Income

$0.397917

Total Annual Operating Expenses5

 

  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. 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. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. The Fund’s prospectus also includes a description of the main investment risks.

Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict could increase volatility and uncertainty in the financial markets and adversely affect regional and global economies. The United States and other countries have imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response to its invasion of Ukraine. The United States and other countries have also imposed economic sanctions on Belarus and may impose sanctions on other countries that support Russia’s military invasion. These sanctions, as well as any other economic consequences related to the invasion, such as additional sanctions, boycotts or changes in consumer or purchaser preferences or cyberattacks on governments, companies or individuals, may further decrease the value and liquidity of certain Russian securities and securities of issuers in other countries that are subject to economic sanctions related to the invasion.

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, excluding: (i) payments under the Fund’s Rule 12b-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) other non-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. 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.

See www.franklintempletondatasources.com for additional data provider information.

 

           
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FRANKLIN U.S. LARGE CAP MULTIFACTOR INDEX 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 4/1/22
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221
    Net Annualized
Expense Ratio
 
  $1,000.00     $ 823.90     $ 0.69     $ 1,024.32     $ 0.76       0.15

1. Expenses are equal to the annualized expense ratio for the six-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 183/365 to reflect the one-half year period.

 

           
franklintempleton.com  

Semiannual Report

             23


Franklin U.S. Mid Cap Multifactor Index ETF

Formerly, Franklin LibertyQ U.S. Mid Cap Equity ETF

 

This semiannual report for Franklin U.S. Mid Cap Multifactor Index ETF covers the period ended September 30, 2022. Effective August 1, 2022, Franklin LibertyQ U.S. Mid Cap Equity ETF changed its name to Franklin U.S. Mid Cap Multifactor Index ETF.

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).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 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, subject to a maximum 1% per company weighting.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of -16.18% based on market price and -16.04% based on net asset value (NAV). In comparison, the LibertyQ U.S. Mid Cap Equity Index posted a -15.95% cumulative total return for the same period, while the Russell Midcap® Index posted a -19.71% cumulative total return for the same period.2

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 recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Top 10 Sectors/Industries       
9/30/22       
      % of Total
Net Assets
 

Information Technology

     20.0%  

Industrials

     17.7%  

Consumer Discretionary

     16.3%  

Health Care

     9.5%  

Financials

     9.3%  

Consumer Staples

     8.1%  

Materials

     6.3%  

Utilities

     5.6%  

Real Estate

     3.9%  

Communication Services

     2.5%  

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 Underlying Index. The Fund may use either a replication strategy or representative sampling strategy. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.

The Fund may invest in equity futures and equity total return swaps to provide additional opportunities to add value and better track the performance of the Fund’s Underlying Index.

 

1. 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 Schedule of Investments (SOI). The SOI begins on page 75.

 

           
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FRANKLIN U.S. MID CAP MULTIFACTOR INDEX ETF

 

Top 10 Holdings       
9/30/22       
Company
Sector/Industry
   % of Total
Net Assets
 
Arista Networks Inc.
Information Technology
     1.3%  
O’Reilly Automotive Inc.
Consumer Discretionary
     1.3%  
ResMed Inc.
Health Care
     1.2%  
Cadence Design Systems Inc.
Information Technology
     1.2%  
Trane Technologies PLC
Industrials
     1.2%  
AutoZone Inc.
Consumer Discretionary
     1.2%  
The Hershey Co.
Consumer Staples
     1.2%  
Motorola Solutions Inc.
Information Technology
     1.2%  
W.W. Grainger Inc.
Industrials
     1.2%  
Tractor Supply Co.
Consumer Discretionary
     1.1%  

Thank you for your participation in Franklin U.S. Mid Cap Multifactor Index ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Joe Diederich

Basit Amin, CFA

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2022, 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  

Semiannual Report

             25


FRANKLIN U.S. MID CAP MULTIFACTOR INDEX ETF

 

Performance Summary as of September 30, 2022

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. Market Price returns typically are based upon the official closing price of the ETF’s shares. 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 9/30/221

 

     Cumulative Total Return2      Average Annual Total Return2  
      Based on
NAV3
     Based on
market price4
     Based on
NAV3
     Based on
market price4
 

6-Month

     -16.04%        -16.18%        -16.04%        -16.18%  

1-Year

     -13.32%        -13.42%        -13.32%        -13.42%  

5-Year

     +54.90%        +54.79%        +9.15%        +9.13%  

Since Inception (4/26/17)

     +57.79%        +57.79%        +8.75%        +8.76%  

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 to franklintempleton.com or call (800) 342-5236.

See page 27 for Performance Summary footnotes.

 

           
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FRANKLIN U.S. MID CAP MULTIFACTOR INDEX ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/22–9/30/22)

Net Investment
Income

$0.279102

Total Annual Operating Expenses5

 

  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. 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. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. The Fund’s prospectus also includes a description of the main investment risks.

Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict could increase volatility and uncertainty in the financial markets and adversely affect regional and global economies. The United States and other countries have imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response to its invasion of Ukraine. The United States and other countries have also imposed economic sanctions on Belarus and may impose sanctions on other countries that support Russia’s military invasion. These sanctions, as well as any other economic consequences related to the invasion, such as additional sanctions, boycotts or changes in consumer or purchaser preferences or cyberattacks on governments, companies or individuals, may further decrease the value and liquidity of certain Russian securities and securities of issuers in other countries that are subject to economic sanctions related to the invasion.

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, excluding: (i) payments under the Fund’s Rule 12b-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) other non-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. 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.

See www.franklintempletondatasources.com for additional data provider information.

 

           
franklintempleton.com  

Semiannual Report

             27


FRANKLIN U.S. MID CAP MULTIFACTOR INDEX 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 4/1/22
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221
    Net Annualized
Expense Ratio
 
  $1,000.00     $ 839.60     $ 1.38     $ 1,023.56     $ 1.52       0.30

1. Expenses are equal to the annualized expense ratio for the six-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 183/365 to reflect the one-half year period.

 

           
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Franklin U.S. Small Cap Multifactor Index ETF

Formerly, Franklin LibertyQ U.S. Small Cap Equity ETF

 

This semiannual report for Franklin U.S. Small Cap Multifactor Index ETF covers the period ended September 30, 2022. Effective August 1, 2022, Franklin LibertyQ U.S. Small Cap Equity ETF changed its name to Franklin U.S. Small Cap Multifactor Index ETF.

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).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 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, subject to a maximum 1% per company weighting.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of -16.83% based on market price and -16.74% based on net asset value (NAV). In comparison, the LibertyQ U.S. Small Cap Equity Index posted a -16.66% cumulative total return for the same period, while the Russell 2000® Index posted a -19.01% cumulative total return.2

You can find more of the Fund’s performance data in the Performance Summary beginning on page 31.

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 to franklintempleton.com or call (800) 342-5236.

Top 10 Sectors/Industries       
9/30/22       
      % of Total
Net Assets
 

Industrials

     21.4%  

Consumer Discretionary

     18.9%  

Information Technology

     11.8%  

Financials

     10.9%  

Health Care

     9.5%  

Utilities

     7.9%  

Consumer Staples

     6.4%  

Real Estate

     4.5%  

Materials

     3.6%  

Communication Services

     2.9%  

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 Underlying Index. The Fund may use either a replication strategy or representative sampling strategy. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.

The Fund may invest in equity futures and equity total return swaps to provide additional opportunities to add value and better track the performance of the Fund’s Underlying Index.

 

 

1. 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 Schedule of Investments (SOI). The SOI begins on page 81.

 

           
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FRANKLIN U.S. SMALL CAP MULTIFACTOR INDEX ETF

 

Top 10 Holdings       
9/30/22       
Company
Sector/Industry
   % of Total
Net Assets
 
Texas Roadhouse Inc.
Consumer Discretionary
     1.3%  
Murphy USA Inc.
Consumer Discretionary
     1.2%  
Qualys Inc.
Information Technology
     1.1%  
AMN Healthcare Services Inc.
Health Care
     1.0%  
Saia Inc.
Industrials
     0.9%  
Southwest Gas Holdings Inc.
Utilities
     0.9%  
Kinsale Capital Group Inc.
Financials
     0.9%  
Exponent Inc.
Industrials
     0.9%  
SPS Commerce Inc.
Information Technology
     0.8%  
LHC Group Inc.
Health Care
     0.8%  

Thank you for your participation in Franklin U.S. Small Cap Multifactor Index ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Joe Diederich

Basit Amin, CFA

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2022, 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 U.S. SMALL CAP MULTIFACTOR INDEX ETF

 

Performance Summary as of September 30, 2022

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. Market Price returns typically are based upon the official closing price of the ETF’s shares. 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 9/30/221

 

     Cumulative Total Return2      Average Annual Total Return2  
      Based on
NAV3
     Based on
market price4
     Based on
NAV3
     Based on
market price4
 

6-Month

     -16.74%        -16.83%        -16.74%        -16.83%  

1-Year

     -19.61%        -19.71%        -19.61%        -19.71%  

5-Year

     +24.09%        +28.23%        +4.41%        +5.10%  

Since Inception (4/26/17)

     +26.36%        +26.41%        +4.40%        +4.41%  

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 recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

 

See page 32 for Performance Summary footnotes.

 

           
franklintempleton.com  

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FRANKLIN U.S. SMALL CAP MULTIFACTOR INDEX ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/22–9/30/22)

Net Investment
Income

$0.204570

Total Annual Operating Expenses5

 

  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. 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. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. The Fund’s prospectus also includes a description of the main investment risks.

Russia’s military invasion of Ukraine in February 2022, the resulting responses by the United States and other countries, and the potential for wider conflict could increase volatility and uncertainty in the financial markets and adversely affect regional and global economies. The United States and other countries have imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response to its invasion of Ukraine. The United States and other countries have also imposed economic sanctions on Belarus and may impose sanctions on other countries that support Russia’s military invasion. These sanctions, as well as any other economic consequences related to the invasion, such as additional sanctions, boycotts or changes in consumer or purchaser preferences or cyberattacks on governments, companies or individuals, may further decrease the value and liquidity of certain Russian securities and securities of issuers in other countries that are subject to economic sanctions related to the invasion.

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, excluding: (i) payments under the Fund’s Rule 12b-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) other non-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. 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.

See www.franklintempletondatasources.com for additional data provider information.

 

           
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FRANKLIN U.S. SMALL CAP MULTIFACTOR INDEX 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 4/1/22
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221
    Ending
Account
Value 9/30/22
    Expenses
Paid During
Period
4/1/22–9/30/221
    Net Annualized
Expense Ratio
 
  $1,000.00     $ 832.60     $ 1.61     $ 1,023.31     $ 1.78       0.35

1. Expenses are equal to the annualized expense ratio for the six-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 183/365 to reflect the one-half year period.

 

           
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FRANKLIN TEMPLETON ETF TRUST

 

Financial Highlights

 

Franklin Emerging Market Core Dividend Tilt Index ETFa

 

   

Six Months Ended
September 30, 2022

(unaudited)

    Year Ended March 31,  
     2022     2021     2020     2019     2018  
Per share operating performance
(for a share outstanding throughout the period)
           

Net asset value, beginning of period

  $ 28.33     $ 30.78     $ 22.20     $ 29.70     $ 33.41     $ 29.29  
 

 

 

 
Income from investment operationsb:            

Net investment incomec

    1.02       1.32       0.84       1.24       1.14       0.83  

Net realized and unrealized gains (losses)

    (7.65     (2.55     8.55       (6.96     (3.76     4.15  
 

 

 

 

Total from investment operations

    (6.63     (1.23     9.39       (5.72     (2.62     4.98  
 

 

 

 
Less distributions from net investment income     (0.99     (1.22     (0.81     (1.78     (1.09     (0.86
 

 

 

 

Net asset value, end of period

  $ 20.71     $ 28.33     $ 30.78     $ 22.20     $ 29.70     $ 33.41  
 

 

 

 

Total returnd

    (23.72)%       (4.21)%       42.57%       (20.55)%       (7.70)%       17.20%  
Ratios to average net assetse            

Expenses before waiver and payments by affiliates

    0.37%       0.45%       0.45%       0.49%       0.55%       0.69% f  

Expenses net of waiver and payments by affiliates

    0.37%       0.45%       0.45%       0.49%       0.55%       0.54% f  

Net investment income

    8.17%       4.28%       3.15%       4.26%       3.75%       2.61%  
Supplemental data            

Net assets, end of period (000’s)

    $12,427       $17,000       $24,627       $57,711       $344,484       $400,908  

Portfolio turnover rateg

    82.74% h       34.27% h      40.22% h      44.11% h       52.42%       32.87%  

aEffective August 1, 2022, Formerly, Franklin LibertyQ Emerging Markets ETF was renamed Franklin Emerging Market Core Dividend Tilt Index ETF.

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 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 was as follows:     82.74%       34.27%       36.91%       41.78%      

 

           
34             

Semiannual Report   |   The accompanying notes are an integral part of these financial statements.

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FRANKLIN TEMPLETON ETF TRUST

 

Schedule of Investments, September 30, 2022 (unaudited)

 

Franklin Emerging Market Core Dividend Tilt Index ETF

 

           Industry        Shares        Value  
    Common Stocks 97.4%                         
    Brazil 5.2%                         
 

Alupar Investimento SA, UNIT

     Electric Utilities          600        $ 3,017  
 

Ambev SA

     Beverages          27,000          77,573  
 

Americanas SA

     Internet & Catalog Retail          4,200          13,185  
 

B3 SA – Brasil Bolsa Balcao

     Capital Markets          31,800          76,724  
 

Banco Bradesco SA

     Banks          600          1,809  
 

Banco do Brasil SA

     Banks          5,400          38,457  
 

BB Seguridade Participacoes SA

     Insurance          4,200          20,632  
 

Caixa Seguridade Participacoes S/A

     Insurance          4,200          6,608  
 

Cia Energetica de Minas Gerais

     Electric Utilities          1,800          5,391  
 

CPFL Energia SA

     Electric Utilities          1,200          7,490  
 

Energisa SA

     Electric Utilities          1,800          13,941  
 

Engie Brasil Energia SA

     Independent Power Producers & Energy Traders          1,200          8,544  
 

Hypera SA

     Pharmaceuticals          2,400          19,635  
 

Itausa SA

     Banks          600          1,095  
 

Klabin SA

     Containers & Packaging          5,400          18,120  
 

Neoenergia SA

     Electric Utilities          1,200          3,394  
 

Petroleo Brasileiro SA

     Oil, Gas & Consumable Fuels          13,200          80,730  
 

Porto Seguro SA

     Insurance          1,200          4,688  
a  

Rede D’Or Sao Luiz SA, 144A

     Health Care Providers & Services          4,800          26,375  
 

Telefonica Brasil SA

     Diversified Telecommunication Services          3,000          22,458  
 

TIM SA

     Wireless Telecommunication Services          4,800          10,720  
 

Transmissora Alianca de Energia Eletrica SA

     Electric Utilities          1,200          8,641  
 

Vale SA

     Metals & Mining          13,720          182,735  
              

 

 

 
                 651,962  
              

 

 

 
    Chile 0.7%                         
 

Banco de Chile

     Banks          269,028          23,919  
 

Banco Santander Chile

     Banks          383,760          13,549  
 

Cencosud SA

     Food & Staples Retailing          8,148          10,420  
 

Cencosud Shopping SA

     Real Estate Management & Development          3,174          3,346  
 

Cia Cervecerias Unidas SA

     Beverages          822          4,514  
 

Cia Sud Americana de Vapores SA

     Marine          102,078          7,108  
 

Empresas CMPC SA

     Paper & Forest Products          7,242          11,137  
 

Empresas Copec SA

     Oil, Gas & Consumable Fuels          2,190          14,177  
 

Quinenco SA

     Industrial Conglomerates          1,644          3,604  
              

 

 

 
                 91,774  
              

 

 

 
    China 29.9%                         
 

Agricultural Bank of China Ltd., A

     Banks          84,000          33,698  
 

Agricultural Bank of China Ltd., H

     Banks          204,000          61,071  
b  

Alibaba Group Holding Ltd., A

     Internet & Catalog Retail          29,400          291,944  
 

Anhui Conch Cement Co. Ltd., A

     Construction Materials          2,400          9,699  
 

Anhui Conch Cement Co. Ltd., H

     Construction Materials          8,000          25,376  
 

Anta Sports Products Ltd., A

     Textiles, Apparel & Luxury Goods          2,200          23,317  
b  

Baidu Inc.

     Interactive Media & Services          3,300          47,966  
 

Bank of Beijing Co. Ltd., A

     Banks          10,800          6,226  
 

Bank of Changsha Co. Ltd., A

     Banks          2,400          2,229  
 

Bank of Chengdu Co. Ltd., A

     Banks          1,800          4,131  
 

Bank of China Ltd., A

     Banks          28,200          12,223  
 

Bank of China Ltd., H

     Banks          342,000          111,968  
 

Bank of Communications Co. Ltd., A

     Banks          20,400          13,220  
 

Bank of Communications Co. Ltd., H

     Banks          138,000          72,781  
 

Bank of Jiangsu Co. Ltd., A

     Banks          7,200          7,514  
 

Bank of Nanjing Co. Ltd., A

     Banks          4,800          7,083  
 

Bank of Shanghai Co. Ltd., A

     Banks          8,400          6,893  
 

Baoshan Iron & Steel Co. Ltd., A

     Metals & Mining          11,400          8,411  
b  

BeiGene Ltd.

     Biotechnology          1,200          12,390  
 

Beijing Enterprises Holdings Ltd., H

     Industrial Conglomerates          3,000          8,427  

 

           
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FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)

 

           Industry        Shares        Value  
    Common Stocks (continued)                         
    China (continued)                         
b  

Bilibili Inc.

     Entertainment          600        $ 9,142  
a  

Blue Moon Group Holdings Ltd., 144A

     Household Products          9,000          6,352  
 

BOC Hong Kong (Holdings) Ltd.

     Banks          24,000          79,950  
 

BOE Technology Group Co. Ltd., A

     Electronic Equipment, Instruments & Components          20,500          9,403  
 

BOE Technology Group Co. Ltd., B

     Electronic Equipment, Instruments & Components          7,800          3,329  
 

BYD Co. Ltd., A

     Automobiles          100          3,535  
 

BYD Co. Ltd., H

     Automobiles          500          12,382  
 

BYD Electronic International Co. Ltd.

     Communications Equipment          3,000          7,246  
 

Changjiang Securities Co. Ltd., A

     Capital Markets          3,000          2,192  
 

China CITIC Bank Corp. Ltd., H

     Banks          54,000          21,463  
 

China Conch Venture Holdings Ltd.

     Construction & Engineering          12,000          19,139  
 

China Construction Bank Corp., A

     Banks          2,400          1,858  
 

China Construction Bank Corp., H

     Banks          339,000          196,061  
 

China Everbright Bank Co. Ltd., A

     Banks          22,200          8,781  
 

China Everbright Bank Co. Ltd., H

     Banks          18,000          4,953  
a,c  

China Feihe Ltd., 144A, Reg S

     Food Products          18,000          12,612  
 

China Hongqiao Group Ltd.

     Metals & Mining          15,000          12,421  
 

China International Marine Containers (Group) Co. Ltd., H

     Machinery          4,800          3,057  
 

China International Marine Containers Group Co. Ltd., A

     Machinery          1,200          1,163  
 

China Lesso Group Holdings Ltd.

     Building Products          6,000          5,587  
 

China Life Insurance Co. Ltd., H

     Insurance          48,000          61,514  
 

China Longyuan Power Group Corp., A

     Independent Power Producers & Energy Traders          3,000          3,764  
 

China Medical System Holdings Ltd.

     Pharmaceuticals          9,000          10,743  
 

China Merchants Bank Co. Ltd., A

     Banks          5,400          25,488  
 

China Merchants Bank Co. Ltd., H

     Banks          12,500          58,122  
 

China Merchants Expressway Network & Technology Holdings Co. Ltd., A

     Transportation Infrastructure          1,800          1,914  
 

China Merchants Port Holdings Co. Ltd.

     Transportation Infrastructure          8,000          10,059  
a  

China Merchants Securities Co. Ltd., A, 144A

     Capital Markets          1,200          1,039  
 

China Merchants Securities Co. Ltd., A

     Capital Markets          1,800          3,116  
 

China Merchants Shekou Industrial Zone Holdings Co. Ltd., A

     Real Estate Management & Development          4,200          9,626  
 

China Minsheng Banking Corp. Ltd., A

     Banks          18,600          8,845  
 

China Minsheng Banking Corp. Ltd., H

     Banks          42,000          12,038  
 

China National Building Material Co. Ltd., H

     Construction Materials          30,000          22,968  
 

China Pacific Insurance Group Co. Ltd., A

     Insurance          3,000          8,555  
 

China Pacific Insurance Group Co. Ltd., H

     Insurance          13,200          24,315  
 

China Petroleum & Chemical Corp., A

     Oil, Gas & Consumable Fuels          18,600          11,193  
 

China Petroleum & Chemical Corp., H

     Oil, Gas & Consumable Fuels          168,000          72,123  
 

China Resources Cement Holdings Ltd.

     Construction Materials          14,000          6,492  
 

China Resources Power Holdings Co. Ltd.

     Independent Power Producers & Energy Traders          1,000          1,554  
 

China Shenhua Energy Co. Ltd., A

     Oil, Gas & Consumable Fuels          3,600          15,977  
 

China Shenhua Energy Co. Ltd., H

     Oil, Gas & Consumable Fuels          21,000          62,733  
 

China Suntien Green Energy Corp. Ltd.

     Oil, Gas & Consumable Fuels          12,000          4,403  
 

China Taiping Insurance Holdings Co. Ltd.

     Insurance          9,600          8,084  
a,c  

China Tower Corp. Ltd., H, 144A, Reg S

     Diversified Telecommunication Services          276,000          29,534  
 

China Vanke Co. Ltd., A

     Real Estate Management & Development          4,800          12,005  
 

China Vanke Co. Ltd., H

     Real Estate Management & Development          10,200          18,581  
 

China Yangtze Power Co. Ltd., A

     Independent Power Producers & Energy Traders          2,400          7,655  
b  

China Zheshang Bank Co. Ltd., A

     Banks          9,000          3,762  
 

Chongqing Rural Commercial Bank Co. Ltd., A

     Banks          4,800          2,404  
 

Chongqing Rural Commercial Bank Co. Ltd., H

     Banks          12,000          3,898  
 

Chow Tai Fook Jewellery Co. Ltd., A

     Specialty Retail          14,400          27,113  
 

CIFI Holdings Group Co. Ltd., A

     Real Estate Management & Development          36,000          3,669  
 

CITIC Ltd., B

     Industrial Conglomerates          42,000          39,593  
 

Citic Pacific Special Steel Group Co. Ltd., A

     Metals & Mining          1,800          4,449  

 

           
36             

Semiannual Report

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)

 

           Industry        Shares        Value  
    Common Stocks (continued)                         
    China (continued)                         
 

COSCO SHIPPING Holdings Co. Ltd., B

     Marine          24,000        $ 28,158  
 

Country Garden Holdings Co. Ltd.

     Real Estate Management & Development          48,000          11,129  
 

Country Garden Services Holdings Co. Ltd.

     Commercial Services & Supplies          8,000          11,781  
a  

Dali Foods Group Co. Ltd., 144A

     Food Products          15,000          6,459  
b  

Datang International Power Generation Co. Ltd., H

     Independent Power Producers & Energy Traders          12,000          2,293  
 

ENN Energy Holdings Ltd.

     Gas Utilities          700          9,363  
 

Far East Horizon Ltd.

     Diversified Financial Services          12,000          8,102  
 

Faw Jiefang Group Co. Ltd.

     Automobiles          1,200          1,209  
 

Focus Media Information Technology Co. Ltd.

     Technology Hardware, Storage & Peripherals          8,400          6,504  
 

Fosun International Ltd.

     Industrial Conglomerates          18,000          11,167  
 

Foxconn Industrial Internet Co. Ltd., A

     Electronic Equipment, Instruments & Components          5,400          6,453  
b  

GDS Holdings Ltd.

     IT Services          3,000          6,573  
 

Gemdale Corp., A

     Real Estate Management & Development          2,400          3,868  
 

Gree Electric Appliances Inc. of Zhuhai

     Household Durables          3,000          13,647  
 

Guangxi Guiguan Electric Power Co. Ltd., A

     Independent Power Producers & Energy Traders          2,400          1,973  
 

Guangzhou TInc.i Materials Technology Co. Ltd.

     Chemicals          600          3,708  
 

Guangzhou Yuexiu Financial Holdings Group Co. Ltd., A

     Capital Markets          2,400          1,912  
 

Guosen Securities Co. Ltd.

     Capital Markets          4,200          5,067  
a  

Guotai Junan Securities Co. Ltd., 144A

     Capital Markets          6,000          6,375  
 

Guotai Junan Securities Co. Ltd., A

     Capital Markets          4,200          8,053  
 

Guoyuan Securities Co. Ltd.

     Capital Markets          2,400          2,155  
 

Haitian International Holdings Ltd.

     Machinery          5,000          9,503  
 

Henan Shuanghui Investment & Development Co. Ltd.

     Food Products          1,800          6,176  
 

Hengan International Group Co. Ltd.

     Personal Products          4,500          20,121  
 

Hengli Petrochemical Co. Ltd., A

     Chemicals          3,000          7,120  
 

Hopson Development Holdings Ltd.

     Real Estate Management & Development          6,000          6,283  
 

Huadian Power International Corp. Ltd., A

     Independent Power Producers & Energy Traders          3,600          3,005  
 

Huadian Power International Corp. Ltd., H

     Independent Power Producers & Energy Traders          12,000          4,387  
 

Huaxia Bank Co. Ltd., A

     Banks          8,400          5,927  
 

Huaxin Cement Co. Ltd., H

     Construction Materials          2,400          2,473  
 

Huaxin Cement Co. Ltd., A

     Construction Materials          600          1,410  
 

Huayu Automotive Systems Co. Ltd.

     Auto Components          1,800          4,171  
 

Huizhou Desay Sv Automotive Co. Ltd.

     Household Durables          200          3,870  
 

Industrial and Commercial Bank of China Ltd.

     Banks          33,000          20,136  
 

Industrial and Commercial Bank of China Ltd., H .

     Banks          264,000          123,762  
 

Industrial Bank Co. Ltd., A

     Banks          10,200          23,822  
b  

Industrial Securities Co. Ltd., A

     Capital Markets          3,080          2,355  
a,b  

Innovent Biologics Inc., B, 144A

     Biotechnology          3,000          9,344  
 

JA Solar Technology Co. Ltd., A

     Semiconductors & Semiconductor Equipment          600          5,390  
a,b  

JD Health International Inc., 144A

     Internet & Catalog Retail          1,500          8,618  
 

JD.com Inc., A

     Internet & Catalog Retail          4,050          102,464  
 

Jiangsu Expressway Co. Ltd., A

     Transportation Infrastructure          600          605  
 

Jiangsu Expressway Co. Ltd., H

     Transportation Infrastructure          12,000          9,004  
b  

KE Holdings Inc., ADR

     Real Estate Management & Development          1,044          18,291  
 

Kingboard Holdings Ltd.

     Electronic Equipment, Instruments & Components          4,000          11,312  
a,b  

Kuaishou Technology, B, 144A

     Interactive Media & Services          3,000          19,472  
 

Lenovo Group Ltd.

     Technology Hardware, Storage & Peripherals          48,000          33,386  
b  

Li Auto Inc., A

     Automobiles          900          10,387  
 

Li Ning Co. Ltd.

     Textiles, Apparel & Luxury Goods          2,500          19,140  
 

Livzon Pharmaceutical Group Inc., H

     Pharmaceuticals          1,200          3,008  
 

Lomon Billions Group Co. Ltd.

     Chemicals          1,200          2,651  
a,c  

Longfor Group Holdings Ltd., 144A, Reg S

     Real Estate Management & Development          9,500          27,290  
a,b  

Meituan Dianping, B, 144A

     Internet & Catalog Retail          8,700          183,534  
b  

Microport Scientific Corp.

     Health Care Equipment & Supplies          1,800          3,100  
 

Midea Group Co. Ltd., A

     Household Durables          2,400          16,600  

 

           
franklintempleton.com  

Semiannual Report

             37


FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)

 

           Industry        Shares        Value  
    Common Stocks (continued)                         
    China (continued)                         
 

Minth Group Ltd.

     Auto Components          4,000        $ 8,856  
 

NetEase Inc.

     Entertainment          4,100          61,892  
 

New China Life Insurance Co. Ltd., A

     Insurance          1,200          4,535  
 

New China Life Insurance Co. Ltd., H

     Insurance          5,400          10,305  
 

Nine Dragons Paper Holdings Ltd.

     Paper & Forest Products          12,000          7,460  
 

Perfect World Co. Ltd.

     Entertainment          1,200          2,091  
 

PetroChina Co. Ltd., H

     Oil, Gas & Consumable Fuels          132,000          54,146  
 

PICC Property and Casualty Co. Ltd., H

     Insurance          42,000          43,552  
 

Ping An Insurance Group Co. of China Ltd., A

     Insurance          3,000          17,497  
 

Ping An Insurance Group Co. of China Ltd., H

     Insurance          23,000          114,855  
 

Poly Developments and Holdings Group Co. Ltd., A

     Real Estate Management & Development          2,400          6,060  
a  

Pop Mart International Group Ltd., 144A

     Specialty Retail          3,600          6,622  
a  

Postal Savings Bank of China Co. Ltd., 144A

     Banks          60,000          35,389  
 

Postal Savings Bank of China Co. Ltd.

     Banks          19,200          12,012  
 

SAIC Motor Corp Ltd.

     Automobiles          5,400          10,832  
 

Shaanxi Coal Industry Co. Ltd.

     Oil, Gas & Consumable Fuels          4,200          13,414  
 

Shanghai Bairun Investment Holding Group Co. Ltd.

     Beverages          600          2,267  
 

Shanghai Baosight Software Co. Ltd., A

     Software          600          3,096  
 

Shanghai Baosight Software Co. Ltd., B

     Software          3,000          8,730  
 

Shanghai Construction Group Co. Ltd., A

     Construction & Engineering          5,400          1,916  
 

Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., A

     Real Estate Management & Development          1,200          1,621  
 

Shanghai Lujiazui Finance & Trade Zone Development Co. Ltd., B

     Real Estate Management & Development          7,800          6,107  
 

Shanghai Pudong Development Bank Co. Ltd., A

     Banks          15,600          15,405  
 

Shanxi Xishan Coal & Electricity Power Co. Ltd.

     Oil, Gas & Consumable Fuels          1,800          3,782  
 

Shengyi Technology Co. Ltd., A

     Electronic Equipment, Instruments & Components          1,200          2,205  
 

Shenzhen Transsion Holdings Co. Ltd., A

     Technology Hardware, Storage & Peripherals          510          4,161  
 

Shenzhou International Group Holdings Ltd.

     Textiles, Apparel & Luxury Goods          2,400          18,757  
 

Shijiazhuang Yiling Pharmaceutical Co. Ltd.

     Pharmaceuticals          600          1,827  
 

Sichuan Chuantou Energy Co Ltd., A

     Independent Power Producers & Energy Traders          2,400          4,050  
 

Sichuan Road & Bridge Co. Ltd., A

     Construction & Engineering          2,400          3,441  
 

Silergy Corp.

     Semiconductors & Semiconductor Equipment          300          3,978  
 

Sinotruk Hong Kong Ltd.

     Machinery          3,000          2,511  
a  

Smoore International Holdings Ltd., 144A

     Tobacco          12,000          14,354  
 

Sun Art Retail Group Ltd.

     Food & Staples Retailing          12,000          2,568  
 

Sunac China Holdings Ltd.

     Real Estate Management & Development          18,000          2,440  
 

Sunny Optical Technology Group Co. Ltd.

     Electronic Equipment, Instruments & Components          2,400          22,976  
 

Tencent Holdings Ltd.

     Interactive Media & Services          10,800          366,517  
 

The People’s Insurance Co. Group of China Ltd., H

     Insurance          54,000          15,684  
 

Tianshan Aluminum Group Co. Ltd., A

     Machinery          2,400          2,410  
 

Tongwei Co. Ltd., A

     Food Products          1,800          11,857  
a  

Topsports International Holdings Ltd., 144A

     Specialty Retail          18,000          12,680  
 

Uni-President China Holdings Ltd.

     Food Products          6,000          5,037  
 

Universal Scientific Industrial Shanghai Co. Ltd., A

     Electronic Equipment, Instruments & Components          1,200          2,538  
 

Want Want China Holdings Ltd.

     Food Products          18,000          11,763  
 

Weichai Power Co. Ltd., H

     Machinery          1,000          949  
 

Wuhan Guide Infrared Co. Ltd.

     Electronic Equipment, Instruments & Components          1,800          2,934  
 

Wuhu Sanqi Interactive Entertainment NetworkTechnology Group Co. Ltd.

     Entertainment          1,200          2,932  
 

Xiamen C & D Inc., A

     Trading Companies & Distributors          1,200          2,331  
 

Xinyi Solar Holdings Ltd.

     Semiconductors & Semiconductor Equipment          30,000          31,758  
b  

XPeng Inc., A

     Automobiles          1,800          10,548  
 

Youngor Group Co. Ltd., A

     Real Estate Management & Development          2,400          2,128  

 

           
38             

Semiannual Report

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)

 

           Industry        Shares        Value  
    Common Stocks (continued)                         
    China (continued)                         
 

Yunnan Baiyao Group Co. Ltd.

     Pharmaceuticals          600        $ 4,406  
 

Yunnan Energy New Material Co. Ltd.

     Containers & Packaging          500          12,212  
 

Zhuzhou CRRC Times Electric Co. Ltd., H

     Electrical Equipment          1,200          5,045  
 

Zoomlion Heavy Industry Science and Technology Co. Ltd.

     Machinery          4,200          3,264  
 

Zoomlion Heavy Industry Science and Technology Co. Ltd., H

     Machinery          10,800          3,756  
              

 

 

 
                 3,715,046  
              

 

 

 
    Colombia 0.4%                         
 

Banco de Bogota SA

     Banks          642          3,988  
 

Bancolombia SA

     Banks          1,794          12,145  
b  

Corp. Financiera Colombiana SA

     Diversified Financial Services          504          1,832  
 

Ecopetrol SA

     Oil, Gas & Consumable Fuels          32,484          14,665  
 

Grupo Energia Bogota SA ESP

     Gas Utilities          16,662          6,786  
 

Interconexion Electrica SA ESP

     Electric Utilities          3,252          11,680  
              

 

 

 
                 51,096  
              

 

 

 
    Czech Republic 0.4%                         
 

CEZ AS

     Electric Utilities          1,002          34,356  
 

Komercni Banka AS

     Banks          462          11,586  
a  

Moneta Money Bank AS, 144A

     Banks          2,844          8,005  
              

 

 

 
                 53,947  
              

 

 

 
    Greece 0.5%                         
 

Hellenic Petroleum Holdings SA

     Oil, Gas & Consumable Fuels          378          2,318  
 

Hellenic Telecommunications Organization SA

     Diversified Telecommunication Services          1,494          21,734  
 

JUMBO SA

     Specialty Retail          792          10,591  
 

Motor Oil Hellas Corinth Refineries SA

     Oil, Gas & Consumable Fuels          450          7,115  
 

OPAP SA

     Hotels, Restaurants & Leisure          1,320          15,880  
              

 

 

 
                 57,638  
              

 

 

 
    Hong Kong 2.4%                         
 

Beijing Enterprises Water Group Ltd., A

     Water Utilities          24,000          5,534  
 

Bosideng International Holdings Ltd., A

     Household Durables          24,000          11,893  
 

China Everbright Environment Group Ltd., B

     Commercial Services & Supplies          24,000          9,967  
 

China Gas Holdings Ltd., A

     Gas Utilities          15,600          18,700  
 

China Jinmao Holdings Group Ltd., A

     Real Estate Management & Development          24,000          4,892  
 

China Overseas Land & Investment Ltd., A

     Real Estate Management & Development          23,000          59,918  
 

China Resources Gas Group Ltd., A

     Gas Utilities          6,000          19,070  
 

China Resources Land Ltd., H

     Real Estate Management & Development          18,000          70,854  
 

Geely Automobile Holdings Ltd.

     Automobiles          13,000          17,919  
 

Guangdong Investment Ltd.

     Water Utilities          18,000          14,423  
 

Kingboard Laminates Holdings Ltd.

     Electronic Equipment, Instruments & Components          6,000          5,404  
 

Orient Overseas International Ltd.

     Marine          1,700          29,778  
 

Shimao Group Holdings Ltd.

     Real Estate Management & Development          9,000          2,124  
 

Xinyi Glass Holdings Ltd.

     Auto Components          18,000          26,186  
              

 

 

 
                 296,662  
              

 

 

 
    Hungary 0.4%                         
 

MOL Hungarian Oil & Gas PLC

     Oil, Gas & Consumable Fuels          3,828          21,326  
 

OTP Bank Nyrt

     Banks          1,374          25,160  
              

 

 

 
                 46,486  
              

 

 

 
    India 11.5%                         
 

ACC Ltd.

     Construction Materials          510          15,144  
b  

Adani Green Energy Ltd.

     Independent Power Producers & Energy Traders          450          12,506  
 

Ambuja Cements Ltd.

     Construction Materials          3,264          20,687  

 

           
franklintempleton.com  

Semiannual Report

             39


FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)

 

           Industry      Shares        Value  
    Common Stocks (continued)                       
    India (continued)                       
 

Apollo Hospitals Enterprise Ltd.

     Health Care Providers & Services        18        $ 970  
 

Asian Paints Ltd.

     Chemicals        402          16,517  
 

Aurobindo Pharma Ltd.

     Pharmaceuticals        1,848          11,599  
 

Bajaj Auto Ltd.

     Automobiles        450          19,514  
 

Bajaj Holdings & Investment Ltd.

     Diversified Financial Services        144          11,312  
 

Bharat Electronics Ltd.

     Aerospace & Defense        6,588          8,175  
 

Bharat Petroleum Corp. Ltd.

     Oil, Gas & Consumable Fuels        6,270          23,492  
 

Bharti Infratel Ltd.

     Diversified Telecommunication Services        4,950          12,014  
 

Britannia Industries Ltd.

     Food Products        312          14,739  
 

Coal India Ltd.

     Oil, Gas & Consumable Fuels        13,230          34,518  
 

Colgate-Palmolive India Ltd.

     Personal Products        852          17,065  
 

Dr Reddy’s Laboratories Ltd.

     Pharmaceuticals        204          10,872  
 

Embassy Office Parks REIT

     Equity Real Estate Investment Trusts (REITs      3,426          14,565  
 

GAIL India Ltd.

     Gas Utilities        17,316          18,529  
 

HCL Technologies Ltd.

     IT Services        6,954          79,698  
a  

HDFC Asset Management Co. Ltd., 144A

     Capital Markets        222          5,157  
 

Hero MotoCorp Ltd.

     Automobiles        822          25,758  
 

Hindustan Petroleum Corp. Ltd.

     Oil, Gas & Consumable Fuels        4,098          10,896  
 

Hindustan Unilever Ltd.

     Household Products        2,268          75,175  
 

Housing Development Finance Corp. Ltd.

     Thrifts & Mortgage Finance        1,686          47,414  
 

Indian Oil Corp. Ltd.

     Oil, Gas & Consumable Fuels        23,646          19,460  
 

Info Edge India Ltd.

     Interactive Media & Services        384          18,223  
 

Infosys Ltd.

     IT Services        11,490          199,635  
 

ITC Ltd.

     Tobacco        18,228          74,435  
a,c  

Larsen & Toubro Infotech Ltd.,, 144A, Reg S

     IT Services        294          16,110  
 

LIC Housing Finance Ltd.

     Thrifts & Mortgage Finance        1,806          9,187  
 

Mahindra & Mahindra Ltd.

     Automobiles        162          2,525  
 

Marico Ltd.

     Personal Products        3,312          21,897  
 

Mindtree Ltd.

     IT Services        396          15,378  
 

Mphasis Ltd.

     IT Services        534          13,704  
 

NMDC Ltd.

     Metals & Mining        5,952          9,347  
 

NTPC Ltd.

     Independent Power Producers & Energy Traders        29,652          58,191  
 

Oil & Natural Gas Corp. Ltd.

     Oil, Gas & Consumable Fuels        8,556          13,336  
 

Oracle Financial Services Software Ltd.

     Software        162          5,939  
 

Piramal Enterprises Ltd.

     Pharmaceuticals        828          8,796  
 

Power Finance Corp. Ltd.

     Diversified Financial Services        7,506          9,651  
 

Power Grid Corp. of India Ltd.

     Electric Utilities        22,224          57,970  
 

REC Ltd.

     Diversified Financial Services        7,776          8,985  
 

Reliance Industries Ltd.

     Oil, Gas & Consumable Fuels        3,540          103,468  
 

Shriram Transport Finance Co. Ltd.

     Consumer Finance        1,266          18,636  
 

Steel Authority of India Ltd.

     Metals & Mining        9,162          8,644  
 

Tata Consultancy Services Ltd.

     IT Services        2,562          94,623  
 

Tata Consumer Products Ltd.

     Food Products        1,068          10,540  
 

Tata Steel Ltd.

     Metals & Mining        44,532          54,357  
 

Tech Mahindra Ltd.

     IT Services        1,302          16,142  
 

Torrent Pharmaceuticals Ltd.

     Pharmaceuticals        642          12,310  
 

TVS Motor Co. Ltd.

     Automobiles        774          9,821  
 

Vedanta Ltd.

     Metals & Mining        8,508          28,243  
b  

Zomato Ltd.

     Internet & Catalog Retail        10,248          7,854  
            

 

 

 
               1,433,723  
            

 

 

 
    Indonesia 1.0%                       
 

Adaro Energy Tbk PT, B

     Oil, Gas & Consumable Fuels        80,400          20,909  
 

Bank Mandiri Persero Tbk PT, A

     Banks        24,600          15,226  
 

Bank Rakyat Indonesia Persero Tbk PT, A

     Banks        118,200          34,853  
 

Bukit Asam Tbk PT, A

     Oil, Gas & Consumable Fuels        25,800          7,065  
 

Indocement Tunggal Prakarsa Tbk PT

     Construction Materials        10,800          6,738  
 

Indofood Sukses Makmur Tbk PT

     Food Products        27,600          10,920  

 

           
40             

Semiannual Report

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)

 

           Industry      Shares        Value  
    Common Stocks (continued)                       
    Indonesia (continued)                       
 

Perusahaan Perseroan (Persero) PT TelekomunikasiIndonesia Tbk, B

     Diversified Telecommunication Services        67,800        $ 19,858  
 

Unilever Indonesia Tbk PT

     Household Products        37,200          11,799  
            

 

 

 
               127,368  
            

 

 

 
    Kuwait 0.2%                       
 

Mobile Telecommunications Co. KSCP

     Wireless Telecommunication Services        13,848          26,137  
            

 

 

 
    Malaysia 2.4%                       
 

CIMB Group Holdings Bhd., A

     Banks        44,400          49,121  
 

Digi.com Bhd

     Wireless Telecommunication Services        22,200          16,182  
 

HAP Seng Consolidated Bhd

     Industrial Conglomerates        4,200          5,543  
 

Hartalega Holdings Bhd

     Health Care Equipment & Supplies        13,200          4,725  
 

Kuala Lumpur Kepong Bhd

     Food Products        3,600          16,071  
 

Malayan Banking Bhd

     Banks        44,400          82,155  
 

Maxis Bhd

     Wireless Telecommunication Services        15,600          11,808  
 

MISC Bhd

     Marine        8,400          12,246  
 

Petronas Gas Bhd

     Gas Utilities        6,000          21,350  
 

RHB Bank Bhd

     Banks        13,200          15,827  
 

Sime Darby Bhd

     Industrial Conglomerates        15,000          6,923  
 

Sime Darby Plantation Bhd

     Food Products        18,000          15,877  
 

Tenaga Nasional Bhd

     Electric Utilities        18,000          31,249  
 

Top Glove Corp. Bhd

     Health Care Equipment & Supplies        30,600          4,124  
 

Westports Holdings Bhd

     Transportation Infrastructure        5,400          3,564  
 

YTL Corp. Bhd

     Multi-Utilities        39,000          4,878  
            

 

 

 
               301,643  
            

 

 

 
    Mexico 2.7%                       
 

America Movil SAB de CV

     Wireless Telecommunication Services        67,218          55,593  
 

Arca Continental SAB de CV

     Beverages        2,598          18,737  
 

Coca-Cola Femsa SAB de CV

     Beverages        3,276          19,171  
 

Fibra Uno Administracion SA de CV

     Equity Real Estate Investment Trusts (REITs      18,072          18,632  
 

Gruma SAB de CV

     Food Products        1,242          11,915  
 

Grupo Aeroportuario del Pacifico SAB de CV

     Transportation Infrastructure        2,154          27,268  
 

Grupo Aeroportuario del Sureste SAB de CV

     Transportation Infrastructure        1,230          24,265  
 

Grupo Financiero Banorte SAB de CV

     Banks        14,028          90,220  
 

Grupo Mexico SAB de CV, B

     Metals & Mining        18,726          63,440  
            

 

 

 
               329,241  
            

 

 

 
    Pakistan 0.0%                       
 

Oil & Gas Development Co. Ltd.

     Oil, Gas & Consumable Fuels        6,156          2,044  
            

 

 

 
    Peru 0.1%                       
a  

InRetail Peru Corp., 144A

     Food & Staples Retailing        174          5,786  
            

 

 

 
    Philippines 0.3%                       
 

Aboitiz Power Corp., A

     Independent Power Producers & Energy Traders        9,600          5,043  
 

First Gen Corp.

     Independent Power Producers & Energy Traders        6,000          1,666  
 

Globe Telecom Inc.

     Wireless Telecommunication Services        210          7,272  
 

Manila Electric Co.

     Electric Utilities        1,800          8,075  
 

PLDT Inc.

     Wireless Telecommunication Services        570          14,662  
            

 

 

 
               36,718  
            

 

 

 
    Romania 0.1%                       
 

NEPI Rockcastle PLC

     Real Estate Management & Development        3,078          13,883  
            

 

 

 
    Russia 0.0%                       
b,d  

Alrosa PJSC

     Metals & Mining        54,971           
b,d  

Gazprom PJSC

     Oil, Gas & Consumable Fuels        44,709           
b,d  

Inter RAO UES PJSC

     Electric Utilities        811,741           

 

           
franklintempleton.com  

Semiannual Report

             41


FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)

 

           Industry      Shares        Value  
    Common Stocks (continued)                       
    Russia (continued)                       
d  

LUKOIL PJSC

     Oil, Gas & Consumable Fuels        2,268           
d  

MMC Norilsk Nickel PJSC

     Metals & Mining        693           
b,d  

Moscow Exchange MICEX

     Capital Markets        21,224           
b,d  

Novolipetsk Steel PJSC

     Metals & Mining        35,119           
d  

PhosAgro PJSC

     Chemicals        1,073           
d  

PhosAgro PJSC

     Chemicals        21           
d  

PhosAgro PJSC

     Chemicals        1           
b,d  

Polymetal International PLC

     Metals & Mining        7,294           
b,d  

Polyus PJSC

     Metals & Mining        756           
d  

Rosneft Oil Co. PJSC

     Oil, Gas & Consumable Fuels        20,055           
d  

Severstal PAO

     Metals & Mining        6,090           
d  

Surgutneftegas PJSC

     Oil, Gas & Consumable Fuels        132,846           
d  

Tatneft PAO

     Oil, Gas & Consumable Fuels        29,792           
b,d  

TCS Group Holding PLC, GDR

     Banks        1,778           
b,d  

United Co. RUSAL International PJSC

     Metals & Mining        24,749           
            

 

 

 
                
            

 

 

 
    Saudi Arabia 2.9%                       
 

Advanced Petrochemical Co.

     Chemicals        816        $ 9,698  
 

Banque Saudi Fransi

     Banks        1,068          11,939  
 

Jarir Marketing Co.

     Specialty Retail        384          17,069  
 

SABIC Agri-Nutrients Co.

     Chemicals        402          16,906  
 

Sahara International Petrochemical Co.

     Chemicals        2,340          26,066  
a  

Saudi Arabian Oil Co., 144A

     Oil, Gas & Consumable Fuels        9,942          94,868  
 

Saudi Basic Industries Corp.

     Chemicals        450          10,636  
 

Saudi Electricity Co.

     Electric Utilities        2,076          13,560  
 

Saudi Industrial Investment Group

     Chemicals        2,490          15,151  
 

Saudi Investment Bank

     Banks        3,180          14,457  
 

Saudi National Bank

     Banks        198          3,325  
 

Saudi Telecom Co.

     Diversified Telecommunication Services        9,702          101,617  
 

Yanbu National Petrochemical Co.

     Chemicals        1,764          21,739  
            

 

 

 
               357,031  
            

 

 

 
    South Africa 5.1%                       
 

Absa Group Ltd.

     Banks        3,678          36,147  
 

African Rainbow Minerals Ltd.

     Metals & Mining        624          8,490  
 

Anglo American Platinum Ltd.

     Metals & Mining        408          29,245  
 

Exxaro Resources Ltd.

     Oil, Gas & Consumable Fuels        1,602          18,044  
 

FirstRand Ltd.

     Diversified Financial Services        30,846          104,247  
 

Gold Fields Ltd.

     Metals & Mining        3,708          30,421  
 

Growthpoint Properties Ltd.

     Equity Real Estate Investment Trusts (REITs      21,936          14,390  
 

Impala Platinum Holdings Ltd.

     Metals & Mining        5,196          49,053  
 

Kumba Iron Ore Ltd.

     Metals & Mining        360          7,768  
 

Mr Price Group Ltd.

     Specialty Retail        1,656          15,921  
 

MultiChoice Group

     Media        2,976          19,148  
 

Naspers Ltd., N

     Internet & Direct Marketing Retail        378          47,602  
 

Nedbank Group Ltd.

     Banks        2,952          32,807  
 

Old Mutual Ltd.

     Insurance        29,142          15,858  
 

Pick ‘N Pay Stores Ltd.

     Food & Staples Retailing        2,526          7,798  
 

Sanlam Ltd.

     Insurance        11,424          32,793  
 

Santam Ltd.

     Insurance        288          4,007  
 

Sibanye Stillwater Ltd.

     Metals & Mining        16,680          38,989  
 

SPAR Group Ltd.

     Food & Staples Retailing        1,290          10,290  
 

Standard Bank Group Ltd.

     Banks        8,922          71,485  
 

Tiger Brands Ltd.

     Food Products        1,170          11,030  
 

Vodacom Group Ltd.

     Wireless Telecommunication Services        4,542          30,852  
            

 

 

 
               636,385  
            

 

 

 

 

           
42             

Semiannual Report

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)

 

           Industry        Shares        Value  
    Common Stocks (continued)                         
    South Korea 9.1%                         
 

BNK Financial Group Inc., H

     Banks          1,944        $ 8,180  
 

Cheil Worldwide Inc., A

     Media          468          7,425  
 

DB Insurance Co. Ltd., A

     Insurance          324          12,501  
 

GS Retail Co. Ltd.

     Food & Staples Retailing          246          4,402  
 

Hana Financial Group Inc.

     Banks          2,082          51,588  
 

Hanon Systems

     Auto Components          978          5,687  
 

HD Hyundai Co. Ltd.

     Machinery          372          14,067  
b  

HYBE Co. Ltd.

     Entertainment          30          2,831  
 

Hyundai Marine & Fire Insurance Co. Ltd.

     Insurance          78          1,597  
 

Industrial Bank of Korea

     Banks          1,824          12,137  
 

Kakao Corp.

     Interactive Media & Services          558          22,270  
b  

Kakao Games Corp.

     Entertainment          258          7,691  
b  

KakaoBank Corp.

     Banks          150          2,102  
 

KB Financial Group Inc.

     Banks          2,598          79,355  
 

Kia Corp.

     Automobiles          1,284          64,528  
 

Korea Gas Corp..

     Gas Utilities          216          5,103  
 

Korea Investment Holdings Co. Ltd.

     Capital Markets          270          8,964  
 

KT Corp.

     Diversified Telecommunication Services          828          20,950  
 

KT&G Corp.

     Tobacco          744          45,034  
 

Kumho Petrochemical Co. Ltd.

     Chemicals          114          9,203  
b  

L&F Co. Ltd.

     Electronic Equipment, Instruments & Components          12          1,490  
 

LG Chem Ltd.

     Chemicals          48          17,983  
 

LG Corp.

     Industrial Conglomerates          480          24,827  
 

LG Display Co. Ltd.

     Electronic Equipment, Instruments & Components          1,536          12,883  
 

LG Uplus Corp.

     Diversified Telecommunication Services          1,374          10,324  
 

NH Investment & Securities Co. Ltd.

     Capital Markets          960          6,032  
 

POSCO Holdings Inc.

     Metals & Mining          522          76,985  
 

S-1 Corp.

     Commercial Services & Supplies          120          4,856  
 

Samsung Card Co. Ltd.

     Consumer Finance          144          3,040  
 

Samsung Electronics Co. Ltd.

     Technology Hardware, Storage & Peripherals          9,060          336,259  
 

Samsung Fire & Marine Insurance Co. Ltd.

     Insurance          216          27,779  
 

Samsung Securities Co. Ltd.

     Capital Markets          414          8,898  
 

SD Biosensor Inc.

     Health Care Equipment & Supplies          234          4,351  
 

Seegene Inc.

     Biotechnology          306          5,732  
 

Shinhan Financial Group Co. Ltd.

     Banks          3,498          81,906  
b  

SK Biopharmaceuticals Co. Ltd.

     Pharmaceuticals          114          4,534  
b  

SK Bioscience Co. Ltd.

     Biotechnology          54          3,031  
 

SK Hynix Inc.

     Semiconductors & Semiconductor Equipment          870          50,533  
 

SK Telecom Co. Ltd.

     Wireless Telecommunication Services          702          24,926  
 

SSANGYONG C&E Co. Ltd.

     Construction Materials          684          2,806  
 

Wemade Co. Ltd.

     Entertainment          78          2,497  
 

Woori Financial Group Inc.

     Banks          3,990          29,841  
              

 

 

 
                 1,127,128  
              

 

 

 
    Taiwan 17.9%                         
 

Acer Inc., H

     Technology Hardware, Storage & Peripherals          18,000          12,416  
 

ASE Industrial Holding Co. Ltd., A

     Semiconductors & Semiconductor Equipment          24,000          60,550  
 

Asia Cement Corp.

     Construction Materials          18,000          22,338  
 

ASMedia Technology Inc.

     Semiconductors & Semiconductor Equipment          240          5,019  
 

Asustek Computer Inc.

     Technology Hardware, Storage & Peripherals          4,620          34,051  
 

AU Optronics Corp., H

     Electronic Equipment, Instruments & Components          54,000          25,002  
b  

Catcher Technology Co. Ltd.

     Technology Hardware, Storage & Peripherals          5,000          27,166  
 

Cathay Financial Holding Co. Ltd., A

     Insurance          57,000          71,724  
 

Chicony Electronics Co. Ltd.

     Technology Hardware, Storage & Peripherals          4,000          10,381  
 

China Development Financial Holding Corp., A

     Banks          114,000          43,088  
 

China Steel Corp., A

     Metals & Mining          78,000          65,596  
 

Compal Electronics Inc., H

     Technology Hardware, Storage & Peripherals          24,000          16,404  
 

CTBC Financial Holding Co. Ltd., A

     Banks          126,000          78,777  

 

           
franklintempleton.com  

Semiannual Report

             43


FRANKLIN TEMPLETON ETF TRUST

SCHEDULE OF INVESTMENTS (UNAUDITED)

 

Franklin Emerging Market Core Dividend Tilt Index ETF (continued)