SEMIANNUAL REPORT

FRANKLIN TEMPLETON

ETF TRUST

September 30, 2021

 

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Franklin LibertyQ Emerging Markets ETF

 

Franklin LibertyQ U.S. Equity ETF

Franklin LibertyQ Global Dividend ETF

 

Franklin LibertyQ U.S. Mid Cap Equity ETF

Franklin LibertyQ Global Equity ETF

 

Franklin LibertyQ U.S. Small Cap Equity ETF

Franklin LibertyQ International Equity Hedged ETF

 


Contents        
Semiannual Report       
Economic and Market Overview      2  
Franklin LibertyQ Emerging Markets ETF      3  
Franklin LibertyQ Global Dividend ETF      8  
Franklin LibertyQ Global Equity ETF      13  
Franklin LibertyQ International Equity Hedged ETF      18  
Franklin LibertyQ U.S. Equity ETF      23  
Franklin LibertyQ U.S. Mid Cap Equity ETF      28  
Franklin LibertyQ U.S. Small Cap Equity ETF      33  
Financial Highlights and Statements of Investments      38  
Financial Statements      102  
Notes to Financial Statements      110  
Shareholder Information      126  

 

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

 

Not FDIC Insured   |   May Lose Value   |   No Bank Guarantee

 

           
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Semiannual Report

             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 +6.26% total return for the six months ended September 30, 2021.1 Global equities benefited from the continued progress of vaccination programs for COVID-19, solid economic growth and a rebound in global trade. However, the Chinese government’s imposition of additional restrictions on some businesses pressured Asian and global emerging market stocks. The combination of increased consumer demand and persistent supply chain disruptions contributed to higher inflation in many countries. Additionally, the spread of the highly contagious Delta variant, which caused COVID-19 cases to rise even in some intensively vaccinated areas, pressured global equities during the six-month period.

In the U.S., the economy continued to recover amid declining unemployment, solid wage growth and high business confidence. GDP growth was robust, as strong consumer spending, driven by a surge in consumer demand, supported the economy. A rebound in corporate earnings and the U.S. Senate’s passage of a bipartisan infrastructure bill further bolstered investor sentiment. The U.S. Federal Reserve (Fed) kept the federal funds target rate at a record-low range of 0.00%–0.25% and continued its program of open-ended U.S. Treasury and mortgage bond purchases to help keep markets functioning. In its September 2021 meeting statement, the Fed indicated that it plans to soon reduce its purchases of U.S. Treasury and mortgage-backed securities but declined to provide a timetable. The Fed also maintained that it views inflation as partially transitory and that further employment progress was needed before the Fed would consider raising the range for the federal funds target rate.

The eurozone economy showed signs of recovery, as quarter-over-quarter GDP increased in the second quarter of 2021 after contracting for the previous two quarters. Most of the eurozone’s largest economies posted improving growth

rates, as increased vaccination rates helped consumer activity return to pre-pandemic levels. The fastest rate of business activity growth in more than a decade also helped European developed market equities, as measured by the MSCI Europe Index-NR, to post a +5.75% total return for the six months under review.1 However, in September 2021, the annual inflation rate in the eurozone reached the highest level in 13 years, and the prospect of energy shortages as winter approaches tempered investor optimism.

Asian developed and emerging market equities, as measured by the MSCI All Country Asia Index-NR, posted a -2.48% total return for the six-month period.1 Although China continued to grow, its economy was pressured by higher commodity prices, increased fuel costs and production disruption caused by government-mandated suspensions of power use. Asian equity markets experienced heightened volatility due to inflation concerns and rising COVID-19 infection rates in some countries. Unexpected regulatory changes by the Chinese government, which negatively impacted education- and technology-related businesses, and concerns about a large property developer’s solvency pressured Asian stocks late in the six-month period.

Global emerging market stocks, as measured by the MSCI Emerging Markets Index-NR, posted a -3.45% total return for the six months under review.1 Higher COVID-19 cases in some countries, limited vaccine rollouts and concerns about rising interest rates and elevated inflation dampened investor enthusiasm in global emerging market equities. Investor concerns that problems in China’s highly indebted property development sector could affect other emerging markets further hurt returns.

 

 

The foregoing information reflects our analysis and opinions as of September 30, 2021. 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. Morningstar.

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

 

           
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Semiannual Report

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Franklin LibertyQ Emerging Markets ETF

 

This semiannual report for Franklin LibertyQ Emerging Markets ETF covers the period ended September 30, 2021.

Your Fund’s Goal and Main Investments

The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Emerging Markets (EM) Index (the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index and in depositary receipts representing such securities. The Underlying Index includes stocks from emerging market countries that have favorable exposure to four investment-style factors: quality, value, momentum and low volatility, subject to a maximum 1% per company weighting. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the MSCI EM Index over the long term by selecting equity securities from the MSCI EM Index that have exposure to these investment-style factors.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of -0.30% based on market price and +0.78% based on net asset value (NAV). In comparison, the LibertyQ EM Index-NR posted a +1.30% cumulative total return for the same period, while the MSCI EM Index-NR posted a -3.45% cumulative total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 5.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Geographic Composition*       
9/30/21       
      % of Total
Net Assets
 

Asia

     68.1%  

Europe

     13.6%  

Middle East & Africa

     12.1%  

Latin America & Caribbean

     6.2%  

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

Investment Strategy

The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ EM Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.

 

Top 10 Sectors/Industries       
9/30/21       
     

% of Total

Net Assets

 

Banks

     12.4%  

Oil, Gas & Consumable Fuels

     10.5%  

Metals & Mining

     8.8%  

IT Services

     5.6%  

Diversified Telecommunication Services

     5.2%  

Semiconductors & Semiconductor Equipment

     4.7%  

Wireless Telecommunication Services

     4.4%  

Chemicals

     4.0%  

Food Products

     3.9%  

Beverages

     3.4%  

 

1. The LibertyQ EM Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI EM Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EM Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of emerging markets.

2. Source: FactSet.

The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index. Net Returns (NR) include income net of tax withholding when dividends are paid.

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

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 39.

 

           
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Semiannual Report

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FRANKLIN LIBERTYQ EMERGING MARKETS ETF

 

Top 10 Holdings       
9/30/21       

Company

Sector/Industry, Country

  

% of Total

Net Assets

 
Gazprom PJSC
Oil, Gas & Consumable Fuels, Russia
     1.5%  
United Microelectronics Corp.
Semiconductors & Semiconductor Equipment, Taiwan
     1.5%  
HCL Technologies Ltd.
IT Services, India
     1.4%  
Infosys Ltd.
IT Services, India
     1.3%  
Tata Consultancy Services Ltd.
IT Services, India
     1.3%  
Al-Rajhi Bank
Banks, Saudi Arabia
     1.3%  
LUKOIL PJSC
Oil, Gas & Consumable Fuels, Russia
     1.2%  
Perusahaan Perseroan (Persero) PT TelekomunikasiIndonesia Tbk, B
Diversified Telecommunication Services, Indonesia
     1.2%  
Asian Paints Ltd.
Chemicals, India
     1.2%  
Hindustan Unilever Ltd.
Household Products, India
     1.2%  

 

Top 10 Countries  
9/30/21  
      % of Total
Net Assets
 

China

     25.7%  

India

     15.2%  

Taiwan

     13.1%  

Russia

     11.0%  

South Korea

     7.2%  

Saudi Arabia

     4.6%  

South Africa

     4.3%  

Brazil

     3.1%  

Mexico

     2.5%  

Indonesia

     2.2%  

Thank you for your participation in Franklin LibertyQ Emerging Markets ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2021, 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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Semiannual Report

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FRANKLIN LIBERTYQ EMERGING MARKETS ETF

 

Performance Summary as of September 30, 2021

Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (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 9/30/211

 

     Cumulative Total Return2      Average Annual Total Return2  
     

Based on

NAV3

    

Based on

market price4

    

Based on

NAV3

    

Based on

market price4

 

6-Month

     +0.78%        -0.30%        +0.78%        -0.30%  

1-Year

     +23.28%        +21.93%        +23.28%        +21.93%  

5-Year

     +29.67%        +27.33%        +5.33%        +4.95%  

Since Inception (6/1/16)

     +41.44%        +40.23%        +6.72%        +6.55%  

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 LIBERTYQ EMERGING MARKETS ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/219/30/21)

Net Investment
Income

$0.230242

Total Annual Operating Expenses5

 

  0.45%

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. The Fund is designed for the aggressive portion of a well-diversified portfolio. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. 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.

ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.

1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s 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. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

See www.franklintempletondatasources.com for additional provider information.

 

           
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FRANKLIN LIBERTYQ EMERGING MARKETS ETF

 

Your Fund’s Expenses

 

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.

Actual Fund Expenses

The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.

 

     

Actual

(actual return after expenses)

   

Hypothetical

(5% annual return before expenses)

       
Beginning
Account
Value 4/1/21
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 1,007.80     $ 2.26     $ 1,022.81     $ 2.28       0.45

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. Reflects expenses after fee waivers and expense reimbursements.

 

 

           
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Semiannual Report

             7


Franklin LibertyQ Global Dividend ETF

 

This semiannual report for Franklin LibertyQ Global Dividend ETF covers the period ended September 30, 2021.

Your Fund’s Goal and Main Investments

The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Dividend Index (the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index and in depositary receipts representing such securities. The Underlying Index includes stocks from developed and emerging market countries with high and persistent dividend income that have favorable exposure to a quality investment-style factor, subject to a maximum 2% per company weighting. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the MSCI All Country World Index (ACWI) ex REITs Index over the long term by applying dividend persistence and yield screens and the quality factor selection process.

Performance Overview

For the six-month period, the Fund posted cumulative total returns of +4.98% based on market price and +4.82% based on net asset value (NAV). In comparison, the LibertyQ Global Dividend Index-NR posted a +4.83% cumulative total return for the same period, while the MSCI ACWI ex REITs Index-NR posted a +6.17% 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 10.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Geographic Composition*       
9/30/21       
      % of Total
Net Assets
 

North America

     50.2%  

Europe

     21.6%  

Asia

     15.3%  

Middle East & Africa

     6.2%  

Australia & New Zealand

     6.2%  

Short-Term Investments & Other Net Assets

     0.5%  

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

Investment Strategy

The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Dividend Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.

 

Top 10 Sectors/Industries       
9/30/21       
      % of Total
Net Assets
 

Banks

     14.9%  

Pharmaceuticals

     10.1%  

Insurance

     9.2%  

Diversified Telecommunication Services

     5.0%  

Tobacco

     4.6%  

Semiconductors & Semiconductor Equipment

     4.5%  

IT Services

     4.5%  

Capital Markets

     4.2%  

Household Products

     4.1%  

Electrical Equipment

     4.1%  

 

1. The LibertyQ Global Dividend Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI ex REITs Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI ex REITs Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding REIT securities.

2. Source: FactSet.

The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index. Net Returns (NR) include income net of tax withholding when dividends are paid.

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

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 49.

 

           
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FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF

 

Top 10 Holdings       
9/30/21       

Company

Sector/Industry, Country

   % of Total
Net Assets
 
Paychex Inc.
IT Services, United States
     2.3%  
Macquarie Group Ltd.
Capital Markets, Australia
     2.3%  
Target Corp.
Multiline Retail, United States
     2.2%  
Taiwan Semiconductor Manufacturing Co. Ltd.
Semiconductors
 & Semiconductor Equipment, Taiwan
     2.2%  
Roche Holding AG, Non-Voting
Pharmaceuticals, Switzerland
     2.2%  
KDDI Corp.
Wireless Telecommunication Services, Japan
     2.1%  
Cisco Systems Inc.
Communications Equipment, United States
     2.1%  
The Procter & Gamble Co.
Household Products, United States
     2.1%  
Eaton Corp. PLC
Electrical Equipment, United States
     2.1%  
Gilead Sciences Inc.
Biotechnology, United States
     2.1%  

 

Top 10 Countries       
9/30/21       
      % of Total
Net Assets
 

United States

     41.4%  

Japan

     9.3%  

Canada

     8.8%  

Switzerland

     7.8%  

United Kingdom

     6.0%  

Australia

     5.7%  

Saudi Arabia

     3.9%  

Taiwan

     3.0%  

Finland

     2.4%  

Germany

     2.3%  

Thank you for your participation in Franklin LibertyQ Global Dividend ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2021, 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

             9


FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF

 

Performance Summary as of September 30, 2021

Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (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 9/30/211

 

     Cumulative Total Return2      Average Annual Total Return2  
     

Based on

NAV3

    

Based on

market price4

    

Based on

NAV3

    

Based on

market price4

 

6-Month

     +4.82%        +4.98%        +4.82%        +4.98%  

1-Year

     +26.91%        +26.93%        +26.91%        +26.93%  

5-Year

     +55.39%        +54.94%        +9.22%        +9.15%  

Since Inception (6/1/16)

     +60.59%        +60.79%        +9.29%        +9.32%  

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 11 for Performance Summary footnotes.

 

           
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FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/21–9/30/21)

Net Investment
Income

$0.631124

Total Annual Operating Expenses5

 

  0.45%

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Companies that have historically paid regular dividends to shareholders may decrease or eliminate dividend payments in the future. A decrease in dividend payments by an issuer may result in a decrease in the value of the issuer’s stock and less available income for the Fund. There can be no assurance that the Fund’s quality factor stock selection process and dividend screens of the Underlying Index will enhance performance. Exposure to investment factors and the use of dividend screens may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. 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.

ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.

1. Effective December  1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s 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. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

See www.franklintempletondatasources.com for additional provider information.

 

           
franklintempleton.com  

Semiannual Report

             11


FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF

 

Your Fund’s Expenses

 

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.

Actual Fund Expenses

The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.

 

     

Actual

(actual return after expenses)

   

Hypothetical

(5% annual return before expenses)

       
Beginning
Account
Value 4/1/21
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 1,048.20     $ 2.31     $ 1,022.81     $ 2.28       0.45

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. Reflects expenses after fee waivers and expense reimbursements.

 

 

           
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Franklin LibertyQ Global Equity ETF

 

This semiannual report for Franklin LibertyQ Global Equity ETF covers the period ended September 30, 2021.

Your Fund’s Goal and Main Investments

The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Equity Index (the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index and in depositary receipts representing such securities. The Underlying Index includes stocks from developed and emerging market countries that have favorable exposure to four investment-style factors: quality, value, momentum and low volatility, subject to a maximum 1% per company weighting. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the MSCI All Country World Index (ACWI) over the long term by selecting equity securities from the MSCI ACWI that have exposure to these investment-style factors.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of +4.72% based on market price and +5.06% based on net asset value (NAV). In comparison, the LibertyQ Global Equity Index-NR posted a +5.12% cumulative total return for the same period, while the MSCI ACWI-NR posted a +6.26% cumulative total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 15.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Geographic Composition*       
9/30/21       
     

% of Total

Net Assets

 

North America

     58.6%  

Europe

     18.3%  

Asia

     16.6%  

Australia & New Zealand

     4.1%  

Middle East & Africa

     1.2%  

Latin America & Caribbean

     0.9%  

Short-Term Investments & 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.

Investment Strategy

The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.

 

Top 10 Sectors/Industries       
9/30/21       
     

% of Total

Net Assets

 

Pharmaceuticals

     9.7%  

Semiconductors & Semiconductor Equipment

     8.5%  

IT Services

     5.4%  

Software

     5.4%  

Biotechnology

     4.9%  

Metals & Mining

     4.7%  

Diversified Telecommunication Services

     3.8%  

Specialty Retail

     3.3%  

Banks

     3.1%  

Technology Hardware, Storage & Peripherals

     3.1%  

 

1. The LibertyQ Global Equity Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets.

2. Source: FactSet.

The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index. Net Returns (NR) include income net of tax withholding when dividends are paid.

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

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 54.

 

           
franklintempleton.com  

Semiannual Report

             13


FRANKLIN LIBERTYQ GLOBAL EQUITY ETF

 

Top 10 Holdings       
9/30/21       

Company

Sector/Industry, Country

  

% of Total

Net Assets

 
Novo Nordisk AS, B
Pharmaceuticals, Denmark
     1.2%  
Adobe Inc.
Software, United States
     1.2%  
Eli Lilly & Co.
Pharmaceuticals, United States
     1.2%  
Microsoft Corp.
Software, United States
     1.2%  
Alphabet Inc., A, C
Interactive Media & Services, United States
     1.2%  
Apple Inc.
Technology Hardware, Storage & Peripherals, United States
     1.1%  
Accenture PLC, A
IT Services, United States
     1.1%  
Oracle Corp.
Software, United States
     1.1%  
Facebook Inc., A
Interactive Media & Services, United States
     1.1%  
ASML Holding NV
Semiconductors & Semiconductor Equipment, Netherlands
     1.1%  

 

Top 10 Countries  
9/30/21  
      % of Total
Net Assets
 

United States

     55.7%  

Japan

     6.4%  

United Kingdom

     5.0%  

Switzerland

     4.0%  

Australia

     3.9%  

China

     3.1%  

Canada

     2.9%  

Taiwan

     2.2%  

India

     2.1%  

Netherlands

     1.8%  

Thank you for your participation in Franklin LibertyQ Global Equity ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2021, 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 LIBERTYQ GLOBAL EQUITY ETF

 

Performance Summary as of September 30, 2021

Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (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 9/30/211

 

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

Based on

market price4

 

6-Month

     +5.06%        +4.72%        +5.06%        +4.72%  

1-Year

     +22.36%        +21.71%        +22.36%        +21.71%  

5-Year

     +71.69%        +70.08%        +11.42%        +11.21%  

Since Inception (6/1/16)

     +79.42%        +79.21%        +11.59%        +11.56%  

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 16 for Performance Summary footnotes.

 

           
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Semiannual Report

             15


FRANKLIN LIBERTYQ GLOBAL EQUITY ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/21–9/30/21)

Net Investment
Income

$0.371046

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. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. 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.

ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.

1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s 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. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

See www.franklintempletondatasources.com for additional provider information.

 

           
16             

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FRANKLIN LIBERTYQ GLOBAL EQUITY ETF

 

Your Fund’s Expenses

 

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.

Actual Fund Expenses

The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.

 

     

Actual

(actual return after expenses)

   

Hypothetical

(5% annual return before expenses)

       
Beginning
Account
Value 4/1/21
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 1,050.60     $ 1.75     $ 1,023.36     $ 1.72       0.34

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. Reflects expenses after fee waivers and expense reimbursements.

 

 

           
franklintempleton.com  

Semiannual Report

             17


Franklin LibertyQ International Equity Hedged ETF

 

This semiannual report for Franklin LibertyQ International Equity Hedged ETF covers the period ended September 30, 2021.

Your Fund’s Goal and Main Investments

The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ International Equity Hedged Index (the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index and in depositary receipts representing such securities. The Underlying Index includes stocks from developed market countries in Europe, Australasia and the Far East (EAFE) that have favorable exposure to four investment-style factors: quality, value, momentum and low volatility, subject to a maximum 2% per company weighting. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the MSCI EAFE Index over the long term by selecting equity securities from the MSCI EAFE Index that have exposure to these investment-style factors. The Underlying Index incorporates a hedge against non-U.S. currency fluctuations by reflecting the impact of rolling monthly currency forward contracts on the currencies represented in the Underlying Index.

Performance Overview

During the six-month period, the Fund posted cumulative total returns of +3.96% based on market price and +5.70% based on net asset value (NAV). In comparison, LibertyQ International Equity Hedged Index-NR posted a +5.90% cumulative total return for the same period, while the MSCI EAFE 100% Hedged to USD Index-NR posted a +6.48% cumulative total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 20.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Geographic Composition       
9/30/21       
      % of Total
Net Assets
 

Europe

     54.5%  

Asia

     31.1%  

Australia & New Zealand

     12.6%  

North America

     0.6%  

Middle East & Africa

     0.5%  

Short-Term Investments & Other Net Assets

     0.7%  

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 LibertyQ International Equity Hedged Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.

 

Top 10 Sectors/Industries       
9/30/21       
      % of Total
Net Assets
 

Pharmaceuticals

     12.9%  

Metals & Mining

     8.4%  

Semiconductors & Semiconductor Equipment

     5.1%  

Diversified Telecommunication Services

     4.9%  

Automobiles

     3.9%  

Tobacco

     3.5%  

Food & Staples Retailing

     3.5%  

Banks

     3.3%  

Health Care Equipment & Supplies

     3.2%  

Chemicals

     3.0%  

 

1. The LibertyQ International Equity Hedged Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI EAFE Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EAFE Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada.

2. Source: FactSet.

The indexes are unmanaged and include reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index. Net Returns (NR) include income net of tax withholding when dividends are paid.

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

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 71.

 

           
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FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF

 

Top 10 Holdings       
9/30/21       

Company

Sector/Industry, Country

   % of Total
Net Assets
 
Novo Nordisk AS, B
Pharmaceuticals, Denmark
     2.4%  
ASML Holding NV
Semiconductors & Semiconductor Equipment, Netherlands
     2.4%  
Toyota Motor Corp.
Automobiles, Japan
     2.3%  
Roche Holding AG, Non-Voting
Pharmaceuticals, Switzerland
     2.2%  
Nestle SA
Food Products, Switzerland
     2.0%  
CSL Ltd.
Biotechnology, Australia
     2.0%  
GlaxoSmithKline PLC
Pharmaceuticals, United Kingdom
     2.0%  
Tokyo Electron Ltd.
Semiconductors & Semiconductor Equipment, Japan
     1.9%  
Novartis AG
Pharmaceuticals, Switzerland
     1.9%  
Sanofi
Pharmaceuticals, France
     1.8%  

 

Top 10 Countries       
9/30/21       
      % of Total
Net Assets
 

Japan

     28.4%  

United Kingdom

     17.1%  

Australia

     11.9%  

Switzerland

     9.8%  

Spain

     5.3%  

Netherlands

     4.9%  

Denmark

     4.6%  

France

     3.8%  

Sweden

     3.1%  

Hong Kong

     1.9%  

Thank you for your participation in Franklin LibertyQ International Equity Hedged ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2021, 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

             19


FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF

 

Performance Summary as of September 30, 2021

Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (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 9/30/211

 

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

Based on

market price4

 

6-Month

     +5.70%        +3.96%        +5.70%        +3.96%  

1-Year

     +22.04%        +20.37%        +22.04%        +20.37%  

5-Year

     +48.81%        +46.80%        +8.27%        +7.98%  

Since Inception (6/1/16)

     +50.91%        +49.80%        +8.02%        +7.87%  

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 21 for Performance Summary footnotes.

 

           
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FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/219/30/21)

Net Investment
Income

$0.151427

Total Annual Operating Expenses5

 

  0.40%

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. The Fund will attempt to hedge the currency exposure of non-U.S. dollar denominated securities held in its portfolio by investing in foreign currency forward contracts. Foreign currency forward contracts do not eliminate movements in the value of non-U.S. currencies and securities but rather allow the Fund to establish a fixed rate of exchange for a future point in time. Investments in derivatives involve costs and create economic leverage, which may result in significant volatility and cause the Fund to participate in losses (as well as gains) that significantly exceed the Fund’s initial investment. Currency management strategies could result in losses to the Fund if currencies do not perform as the investment manager expects. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. 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.

ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.

1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s 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. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

See www.franklintempletondatasources.com for additional provider information.

 

           
franklintempleton.com  

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FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF

 

Your Fund’s Expenses

 

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.

Actual Fund Expenses

The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.

 

      Actual
(actual return after expenses)
    Hypothetical
(5% annual return before expenses)
       
Beginning
Account
Value 4/1/21
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 1,057.00     $ 2.06     $ 1,023.06     $ 2.03       0.40

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. Reflects expenses after fee waivers and expense reimbursements.

 

           
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Franklin LibertyQ U.S. Equity ETF

 

This semiannual report for Franklin LibertyQ U.S. Equity ETF covers the period ended September 30, 2021.

Your Fund’s Goal and Main Investments

The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ U.S. Large Cap Equity Index (the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the Underlying Index. The Underlying Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the Russell 1000® Index over the long term by applying a multi-factor selection process, which is designed to select equity securities from the Russell 1000® Index that have favorable exposure to four investment style factors: quality, value, momentum and low volatility.

Performance Overview

For the six months under review, the Fund posted cumulative total returns of +6.24% based on market price and +6.35% based on net asset value (NAV). In comparison, the LibertyQ U.S. Large Cap Equity Index posted a +6.42% cumulative total return for the same period, while the Russell 1000® Index posted a +8.76% cumulative total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 25.

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       
9/30/21       
      % of Total
Net Assets
 

Information Technology

     24.9%  

Health Care

     18.1%  

Industrials

     14.8%  

Consumer Staples

     13.4%  

Consumer Discretionary

     8.0%  

Communication Services

     6.3%  

Utilities

     4.5%  

Materials

     3.8%  

Financials

     3.8%  

Real Estate

     2.2%  

Investment Strategy

The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ U.S. Large Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.

 

 

1. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. The LibertyQ U.S. Large Cap Equity Index is a systematic, rules-based proprietary index maintained and calculated by FTSE Russell (Russell) based on the Russell 1000® Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell 1000® Index is market capitalization weighted and measures performance of the largest companies in the Russell 3000® Index, which represents the majority of the U.S. market’s total capitalization.

2. Source: FactSet.

The indexes are unmanaged and include reinvestment of any income or distributions (after the deduction of certain withholding taxes). They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index.

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

The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 79.

 

           
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FRANKLIN LIBERTYQ U.S. EQUITY ETF

 

Top 10 Holdings       
9/30/21       

Company

Sector/Industry

   % of Total
Net Assets
 

NVIDIA Corp.

Information Technology

     1.3%  

Intuit Inc.

Information Technology

     1.2%  

Thermo Fisher Scientific Inc.

Health Care

     1.2%  

Costco Wholesale Corp.

Consumer Staples

     1.2%  

Eli Lilly & Co.

Health Care

     1.2%  

Adobe Inc.

Information Technology

     1.1%  

Accenture PLC, A

Information Technology

     1.1%  

Apple Inc.

Information Technology

     1.1%  

Microsoft Corp.

Information Technology

     1.1%  

S&P Global Inc.

Financials

     1.1%  

Thank you for your participation in Franklin LibertyQ U.S. Equity ETF. We look forward to serving your future investment needs.

Dina Ting, CFA

Hailey Harris

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2021, 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 LIBERTYQ U.S. EQUITY ETF

 

Performance Summary as of September 30, 2021

Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (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 9/30/211

 

     Cumulative Total Return2      Average Annual Total Return2  
     

Based on

NAV3

    

Based on

market price4

    

Based on

NAV3

    

Based on

market price4

 

6-Month

     +6.35%        +6.24%        +6.35%        +6.24%  

1-Year

     +23.98%        +23.63%        +23.98%        +23.63%  

3-Year

     +43.10%        +42.89%        +12.69%        +12.63%  

Since Inception (4/26/17)

     +80.28%        +80.19%        +14.23%        +14.22%  

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 26 for Performance Summary footnotes.

 

           
franklintempleton.com  

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FRANKLIN LIBERTYQ U.S. EQUITY ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/219/30/21)

Net Investment

Income

$0.400638

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. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transactions costs, expenses and other factors. The Fund’s prospectus also includes a description of the main investment risks.

ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.

1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s 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. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

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

 

           
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FRANKLIN LIBERTYQ U.S. EQUITY ETF

 

Your Fund’s Expenses

 

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.

Actual Fund Expenses

The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.

 

     

Actual

(actual return after expenses)

   

Hypothetical

(5% annual return before expenses)

       
Beginning
Account
Value 4/1/21
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 1,063.50     $ 0.78     $ 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.

2. Reflects expenses after fee waivers and expense reimbursements.

 

           
franklintempleton.com  

Semiannual Report

             27


Franklin LibertyQ U.S. Mid Cap Equity ETF

 

This semiannual report for Franklin LibertyQ U.S. Mid Cap Equity ETF covers the period ended September 30, 2021.

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.

Performance Overview

For the six months under review, the Fund posted cumulative total returns of +7.69% based on market price and +7.70% based on net asset value (NAV). In comparison, the LibertyQ U.S. Mid Cap Equity Index posted a +7.85% cumulative total return for the same period, while the Russell Midcap® Index posted a +6.50% 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 30.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Top 10 Sectors/Industries       
9/30/21       
      % of Total
Net Assets
 

Industrials

     20.6%  

Information Technology

     18.3%  

Consumer Discretionary

     14.8%  

Health Care

     11.2%  

Financials

     10.4%  

Consumer Staples

     7.1%  

Real Estate

     7.0%  

Utilities

     4.3%  

Communication Services

     3.0%  

Materials

     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 LibertyQ U.S. Mid Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the 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 Statement of Investments (SOI). The SOI begins on page 86.

 

           
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FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF

 

Top 10 Holdings       
9/30/21       
Company
Sector/Industry
   % of Total
Net Assets
 

Fortinet Inc.

Information Technology

     1.3%  

MSCI Inc.

Financials

     1.3%  

ResMed Inc.

Health Care

     1.2%  

AutoZone Inc.

Consumer Discretionary

     1.2%  

Synopsys Inc.

Information Technology

     1.2%  

O’Reilly Automotive Inc.

Consumer Discretionary

     1.1%  

Carrier Global Corp.

Industrials

     1.1%  

Xilinx Inc.

Information Technology

     1.1%  

Tractor Supply Co.

Consumer Discretionary

     1.1%  

IDEXX Laboratories Inc.

Health Care

     1.1%  

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

Dina Ting, CFA

Hailey Harris

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2021, 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

             29


FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF

 

Performance Summary as of September 30, 2021

Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (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 9/30/211

 

     Cumulative Total Return2      Average Annual Total Return2  
     

Based on

NAV3

    

Based on

market price4

    

Based on

NAV3

    

Based on

market price4

 

6-Month

     +7.70%        +7.69%        +7.70%        +7.69%  

1-Year

     +33.97%        +33.91%        +33.97%        +33.91%  

3-Year

     +49.92%        +50.07%        +14.45%        +14.49%  

Since Inception (4/26/17)

     +81.95%        +82.24%        +14.47%        +14.51%  

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 31 for Performance Summary footnotes.

 

           
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FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/219/30/21)

Net Investment

Income

$0.219504

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. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transactions costs, expenses and other factors. The Fund’s prospectus also includes a description of the main investment risks.

ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.

1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s 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. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

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

 

           
franklintempleton.com  

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FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF

 

Your Fund’s Expenses

 

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.

Actual Fund Expenses

The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.

 

      Actual
(actual return after expenses)
    Hypothetical
(5% annual return before expenses)
       
Beginning
Account
Value 4/1/21
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 1,077.00     $ 1.56     $ 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. Reflects expenses after fee waivers and expense reimbursements.

 

           
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Franklin LibertyQ U.S. Small Cap Equity ETF

 

This semiannual report for Franklin LibertyQ U.S. Small Cap Equity ETF covers the period ended September 30, 2021.

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.

Performance Overview

For the six months under review, the Fund posted cumulative total returns of +3.49% based on market price and +3.58% based on net asset value (NAV). In comparison, the LibertyQ U.S. Small Cap Equity Index posted a +3.73% cumulative total return for the same period, while the Russell 2000® Index posted a -0.25% cumulative total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 35.

Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to franklintempleton.com or call (800) 342-5236.

Top 10 Sectors/Industries       
9/30/21       
      % of Total
Net Assets
 

Consumer Discretionary

     23.1%  

Industrials

     18.8%  

Information Technology

     15.3%  

Health Care

     10.5%  

Financials

     8.8%  

Consumer Staples

     5.7%  

Real Estate

     5.6%  

Utilities

     4.8%  

Communication Services

     3.8%  

Materials

     2.8%  

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 LibertyQ U.S. Small Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the 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 Statement of Investments (SOI). The SOI begins on page 92.

 

           
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             33


FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF

 

Top 10 Holdings       
9/30/21       

Company

Sector/Industry

   % of Total
Net Assets
 
Crocs Inc.
Consumer Discretionary
     1.4%  
SAIA Inc.
Industrials
     1.0%  
Lattice Semiconductor Corp.
Information Technology
     0.9%  
Texas Roadhouse Inc., A
Consumer Discretionary
     0.9%  
Exponent Inc.
Industrials
     0.9%  
Tetra Tech Inc.
Industrials
     0.9%  
J2 Global Inc.
Information Technology
     0.9%  
SPS Commerce Inc.
Information Technology
     0.9%  
AMN Healthcare Services Inc.
Health Care
     0.8%  
Macy’s Inc.
Consumer Discretionary
     0.8%  

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

Dina Ting, CFA

Hailey Harris

Portfolio Management Team

 

 

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2021, 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 LIBERTYQ U.S. SMALL CAP EQUITY ETF

 

Performance Summary as of September 30, 2021

Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (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 9/30/211

 

     Cumulative Total Return2      Average Annual Total Return2  
     

Based on

NAV3

    

Based on

market price4

    

Based on

NAV3

    

Based on

market price4

 

6-month

     +3.58%        +3.49%        +3.58%        +3.49%  

1-Year

     +47.91%        +48.32%        +47.91%        +48.32%  

3-Year

     +30.57%        +31.21%        +9.30%        +9.48%  

Since Inception (4/26/17)

     +57.19%        +57.44%        +10.75%        +10.79%  

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 36 for Performance Summary footnotes.

 

           
franklintempleton.com  

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FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF

PERFORMANCE SUMMARY

 

Distributions (4/1/219/30/21)

Net Investment

Income

$0.129121

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. Events such as the spread of deadly diseases, disasters, and financial, political or social disruptions, may heighten risks and adversely affect performance. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transactions costs, expenses and other factors. The Fund’s prospectus also includes a description of the main investment risks.

ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.

1. Effective December 1, 2017, the Fund adopted a unified fee structure whereby Management has agreed to reimburse the Fund’s acquired fund fees and expenses (if any) and pay all of the ordinary operating expenses of the Fund, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding: (i) payments under the Fund’s 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. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.

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

 

           
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FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF

 

Your Fund’s Expenses

 

As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.

Actual Fund Expenses

The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other Funds

Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.

 

      Actual
(actual return after expenses)
    Hypothetical
(5% annual return before expenses)
       
Beginning
Account
Value 4/1/21
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Ending
Account
Value 9/30/21
    Expenses
Paid During
Period
4/1/21–9/30/211,2
    Net Annualized
Expense Ratio2
 
  $1,000.00     $ 1,035.80     $ 1.79     $ 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.

2. Reflects expenses after fee waivers and expense reimbursements.

 

           
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FRANKLIN TEMPLETON ETF TRUST

 

Financial Highlights

 

Franklin LibertyQ Emerging Markets ETF

 

    Six Months Ended
September 30, 2021
(unaudited)
    Year Ended March 31,  
     2021     2020     2019     2018     2017a  
Per share operating performance
(for a share outstanding throughout the period)
           

Net asset value, beginning of period

  $ 30.78     $ 22.20     $ 29.70     $ 33.41     $ 29.29     $ 25.66  
 

 

 

 
Income from investment operationsb:            

Net investment incomec

    0.85       0.84       1.24       1.14       0.83       0.47  

Net realized and unrealized gains (losses)

    (0.60     8.55       (6.96     (3.76     4.15       3.25  
 

 

 

 

Total from investment operations

    0.25       9.39       (5.72     (2.62     4.98       3.72  
 

 

 

 

Less distributions from net investment income

    (0.23     (0.81     (1.78     (1.09     (0.86     (0.09
 

 

 

 

Net asset value, end of period

  $ 30.80     $ 30.78     $ 22.20     $ 29.70     $ 33.41     $ 29.29  
 

 

 

 

Total returnd

    0.78%       42.57%       (20.55)%       (7.70)%       17.20%       14.55%  
Ratios to average net assetse            

Expenses before waiver and payments by affiliates

    0.45%       0.45%       0.49%       0.55%       0.69% f      0.75%  

Expenses net of waiver and payments by affiliates

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

Net investment income

    5.42%       3.15%       4.26%       3.75%       2.61%       2.09%  
Supplemental data            

Net assets, end of period (000’s)

    $24,641       $24,627       $57,711       $344,484       $400,908       $328,086  

Portfolio turnover rateg

    13.70% h      40.22% h      44.11% h      52.42%       32.87%       31.66%  

aFor the period June 1, 2016 (commencement of operations) to March 31, 2017.

bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.

cBased on average daily shares outstanding.

dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.

eRatios are annualized for periods less than one year.

fEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee. See Note 3(a).

gPortfolio turnover rate includes portfolio 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:     13.70%       36.91%       41.78%       

 

           
38             

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

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

 

Statement of Investments, September 30, 2021 (unaudited)

 

Franklin LibertyQ Emerging Markets ETF

 

      Industry        Shares        Value  
    Common Stocks 99.0%  
    Brazil 2.7%  
 

Ambev SA

     Beverages          76,800        $ 215,647  
 

BB Seguridade Participacoes SA

     Insurance          20,800          76,155  
 

Engie Brasil Energia SA

     Independent Power and Renewable Electricity Producers          4,400          30,249  
 

Petrobras Distribuidora SA

     Specialty Retail          8,000          34,488  
 

Telefonica Brasil SA

     Diversified Telecommunication Services          12,409          97,629  
 

TIM SA

     Wireless Telecommunication Services          17,600          37,953  
 

Vale SA

     Metals & Mining          11,860          165,943  
              

 

 

 
                 658,064  
              

 

 

 
    Chile 0.6%  
 

Colbun SA

     Independent Power and Renewable Electricity Producers          161,524          26,132  
 

Compania Cervecerias Unidas SA

     Beverages          2,872          25,530  
 

Enel Americas SA

     Electric Utilities          546,020          64,498  
 

Enel Chile SA

     Electric Utilities          632,104          29,885  
              

 

 

 
                 146,045  
              

 

 

 
    China 25.7%  
a  

360 DigiTech Inc.

     Consumer Finance          940          19,101  
b  

A-Living Services Co. Ltd., 144A

     Commercial Services & Supplies          8,000          28,466  
 

Agile Group Holdings Ltd.

     Real Estate Management & Development          12,000          11,222  
 

Agricultural Bank of China Ltd., A

     Banks          77,600          35,349  
 

Agricultural Bank of China Ltd., H

     Banks          548,000          188,658  
 

Anhui Conch Cement Co. Ltd., A

     Construction Materials          6,000          37,930  
 

Anhui Conch Cement Co. Ltd., H

     Construction Materials          34,230          184,679  
 

Anhui Kouzi Distillery Co. Ltd., A

     Beverages          800          6,257  
 

Apeloa Pharmaceutical Co. Ltd., A

     Pharmaceuticals          1,200          7,099  
 

Autobio Diagnostics Co. Ltd., A

     Health Care Equipment & Supplies          390          3,221  
 

Bank of Beijing Co. Ltd., A

     Banks          26,400          17,834  
 

Bank of Chengdu Co. Ltd., A

     Banks          3,200          5,880  
 

Bank of China Ltd., A

     Banks          14,000          6,616  
 

Bank of China Ltd., H

     Banks          616,000          218,399  
 

Bank of Communications Co. Ltd., A

     Banks          53,600          37,372  
 

Bank of Communications Co. Ltd., H

     Banks          224,400          133,176  
 

Bank of Hangzhou Co. Ltd., A

     Banks          6,000          13,880  
 

Bank of Jiangsu Co. Ltd., A

     Banks          8,800          7,936  
 

Bank of Nanjing Co. Ltd., A

     Banks          10,800          15,144  
 

Baoshan Iron & Steel Co. Ltd., A

     Metals & Mining          23,200          31,274  
 

Beijing Enterprises Holdings Ltd.

     Gas Utilities          5,000          20,007  
a  

Brilliance China Automotive Holdings Ltd.

     Automobiles          66,000          28,434  
 

By-health Co. Ltd., A

     Personal Products          1,600          7,001  
 

C&S Paper Co. Ltd., A

     Household Products          1,200          3,213  
 

Chaozhou Three-Circle Group Co. Ltd., A

     Electronic Equipment, Instruments & Components          1,600          9,197  
 

China Cinda Asset Management Co. Ltd., H

     Capital Markets          208,000          35,269  
 

China CITIC Bank Corp. Ltd., H

     Banks          236,000          106,713  
 

China Communications Services Corp. Ltd., H

     Construction & Engineering          24,000          13,318  
 

China Conch Venture Holdings Ltd.

     Construction & Engineering          37,000          171,344  
 

China Construction Bank Corp., A

     Banks          800          740  
 

China Construction Bank Corp., H

     Banks          316,000          226,507  
 

China Everbright Bank Co. Ltd., A

     Banks          47,600          25,002  
 

China Everbright Bank Co. Ltd., H

     Banks          80,000          28,261  
b,c  

China Feihe Ltd., 144A, Reg S

     Food Products          52,000          87,773  
 

China Hongqiao Group Ltd.

     Metals & Mining          40,000          51,486  
 

China Lesso Group Holdings Ltd.

     Building Products          20,000          32,063  
 

China Medical System Holdings Ltd.

     Pharmaceuticals          36,000          65,668  
 

China Merchants Port Holdings Co. Ltd.

     Transportation Infrastructure          24,000          41,189  
 

China Minsheng Banking Corp. Ltd., A

     Banks          46,400          28,110  

 

           
franklintempleton.com  

Semiannual Report

             39


FRANKLIN TEMPLETON ETF TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

 

Franklin LibertyQ Emerging Markets ETF (continued)

 

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

China Minsheng Banking Corp. Ltd., H

     Banks          146,000        $ 58,703  
 

China National Building Material Co. Ltd., H

     Construction Materials          72,000          97,484  
 

China Overseas Property Holdings Ltd.

     Real Estate Management & Development          25,000          20,746  
 

China Pacific Insurance Group Co. Ltd., A

     Insurance          6,400          26,913  
 

China Pacific Insurance Group Co. Ltd., H

     Insurance          45,600          135,605  
 

China Petroleum & Chemical Corp., H

     Oil, Gas & Consumable Fuels          264,000          130,904  
 

China Railway Group Ltd., H

     Construction & Engineering          60,000          29,905  
 

China Resources Cement Holdings Ltd.

     Construction Materials          66,000          63,671  
 

China Resources Power Holdings Co. Ltd.

     Independent Power and Renewable Electricity Producers          32,000          92,284  
 

China Shenhua Energy Co. Ltd., A

     Oil, Gas & Consumable Fuels          8,800          30,897  
 

China Shenhua Energy Co. Ltd., H

     Oil, Gas & Consumable Fuels          96,120          224,969  
 

China South Publishing & Media Group Co. Ltd., A

     Media          2,400          3,332  
 

China Taiping Insurance Holdings Co. Ltd.

     Insurance          29,600          45,020  
 

China Yangtze Power Co. Ltd., A

     Independent Power and Renewable Electricity Producers          25,200          85,900  
a  

Chongqing Brewery Co. Ltd., A

     Beverages          600          12,200  
 

Chongqing Rural Commercial Bank Co. Ltd., A

     Banks          5,600          3,349  
 

Chongqing Rural Commercial Bank Co. Ltd., H

     Banks          28,000          10,215  
 

Country Garden Services Holdings Co. Ltd.

     Commercial Services & Supplies          26,400          208,564  
 

Daan Gene Co. Ltd.

     Biotechnology          1,860          5,352  
b  

Dali Foods Group Co. Ltd., 144A

     Food Products          50,000          30,188  
 

Dongfeng Motor Group Co. Ltd., H

     Automobiles          64,000          57,138  
 

Financial Street Holdings Co. Ltd., A

     Real Estate Management & Development          2,000          1,859  
 

Focus Media Information Technology Co. Ltd.

     Media          16,400          18,601  
 

Foshan Haitian Flavouring & Food Co. Ltd.

     Food Products          4,800          81,810  
 

Fujian Sunner Development Co. Ltd.

     Food Products          2,000          6,694  
 

G-bits Network Technology Xiamen Co. Ltd., A

     Entertainment          100          6,063  
 

Greendland Holdings Corp. Ltd., A

     Real Estate Management & Development          5,040          3,670  
 

Guangdong Xinbao Electrical Appliances Holdings Co. Ltd.

     Household Durables          800          2,277  
 

Guangzhou R&F Properties Co. Ltd., H

     Real Estate Management & Development          28,800          22,124  
 

Guangzhou Shiyuan Electronic Technology Co. Ltd., A

     Electronic Equipment, Instruments & Components          800          9,712  
 

Guangzhou Wondfo Biotech Co. Ltd., A

     Health Care Equipment & Supplies          390          2,598  
 

Haitian International Holdings Ltd.

     Machinery          10,000          30,894  
 

Hangzhou Robam Appliances Co. Ltd., A

     Household Durables          1,200          6,284  
 

Heilongjiang Agriculture Co. Ltd., A

     Food Products          2,000          4,695  
 

Henan Shuanghui Investment & Development Co. Ltd.

     Food Products          3,900          16,406  
 

Hengan International Group Co. Ltd.

     Personal Products          10,000          53,567  
 

Hithink RoyalFlush Information Network Co. Ltd., A

     Capital Markets          600          11,146  
 

Hopson Development Holdings Ltd.

     Real Estate Management & Development          10,400          37,006  
 

Huaxia Bank Co. Ltd., A

     Banks          12,400          10,702  
 

Huaxin Cement Co. Ltd., A

     Construction Materials          2,000          6,337  
 

Hunan Valin Steel Co. Ltd., A

     Metals & Mining          8,400          8,629  
 

Industrial and Commercial Bank of China Ltd.

     Banks          18,800          13,574  
 

Industrial and Commercial Bank of China Ltd., H

     Banks          376,000          209,140  
 

Inner Mongolia Junzheng Energy & Chemical Industry Group Co. Ltd., A

     Chemicals          10,000          8,863  

 

           
40             

Semiannual Report

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

 

Franklin LibertyQ Emerging Markets ETF (continued)

 

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

Inner Mongolia Yili Industrial Group Co. Ltd., A

     Food Products          6,400        $ 37,385  
 

Intco Medical Technology Co. Ltd.

     Health Care Equipment & Supplies        600          5,451  
 

Jafron Biomedical Co. Ltd., A

     Health Care Equipment & Supplies          1,070          9,709  
 

Jason Furniture Hangzhou Co. Ltd., A

     Household Durables          400          3,719  
 

Jiangsu Expressway Co. Ltd., H

     Transportation Infrastructure          25,000          25,338  
 

Jiangsu Hengli Hydraulic Co. Ltd., A

     Machinery          1,200          15,726  
 

Jiangsu Yanghe Brewery JST Co. Ltd., A

     Beverages          1,500          38,599  
 

Jiangsu Zhongtian Technology Co. Ltd., A

     Electrical Equipment          3,200          4,512  
 

Jiangxi Zhengbang Technology Co. Ltd., A

     Food Products          3,600          5,260  
 

Juewei Food Co. Ltd., A

     Food Products          800          7,927  
 

Kingboard Holdings Ltd.

     Electronic Equipment, Instruments & Components          8,000          36,225  
 

Kingfa Sci & Tech Co. Ltd., A

     Chemicals          1,600          3,637  
 

Kunlun Tech Co. Ltd.

     Entertainment          1,200          3,152  
 

Kweichow Moutai Co. Ltd., A

     Beverages          790          224,001  
 

Lee & Man Paper Manufacturing Ltd.

     Paper & Forest Products          32,000          23,554  
 

Luzhou Laojiao Co. Ltd., A

     Beverages          1,700          58,365  
 

Maxscend Microelectronics Co. Ltd., A

     Electronic Equipment, Instruments & Components          200          10,908  
 

Muyuan Foods Co. Ltd.

     Food Products          6,720          54,039  
 

NanJi E-Commerce Co. Ltd.

     Media          2,800          2,863  
 

NetEase Inc., ADR

     Entertainment          2,424          207,010  
 

New China Life Insurance Co. Ltd., H

     Insurance          8,800          26,000  
a  

New Hope Liuhe Co. Ltd.

     Food Products          4,800          10,977  
 

Nine Dragons Paper Holdings Ltd.

     Paper & Forest Products          36,000          44,349  
 

Ningxia Baofeng Energy Group Co. Ltd., A

     Chemicals          3,600          8,969  
a  

Offcn Education Technology Co. Ltd., A

     Diversified Consumer Services          2,000          3,359  
 

Ovctek China Inc., A

     Health Care Equipment & Supplies          989          12,513  
 

Perfect World Co. Ltd.

     Entertainment          2,000          4,673  
 

PetroChina Co. Ltd., H

     Oil, Gas & Consumable Fuels          232,000          109,970  
 

PICC Property and Casualty Co. Ltd., H

     Insurance          108,000          104,745  
b  

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

     Banks          164,000          113,341  
 

RiseSun Real Estate Development Co. Ltd.

     Real Estate Management & Development          5,200          3,883  
 

Sany Heavy Industry Co. Ltd., A

     Machinery          9,200          36,264  
 

Seazen Group Ltd.

     Real Estate Management & Development          36,000          28,811  
 

Seazen Holdings Co. Ltd., A

     Real Estate Management & Development          2,400          13,863  
 

Shaanxi Coal Industry Co. Ltd.

     Oil, Gas & Consumable Fuels          12,800          29,352  
 

Shandong Buchang Pharmaceuticals Co. Ltd., A

     Pharmaceuticals          1,600          4,571  
 

Shandong Hualu Hengsheng Chemical Co. Ltd., A

     Chemicals          2,600          13,266  
 

Shandong Sun Paper Industry JSC Ltd., A

     Paper & Forest Products          2,400          4,447  
 

Shanghai Pharmaceuticals Holding Co. Ltd., H

     Health Care Providers & Services          7,600          14,761  
 

Shanghai Pudong Development Bank Co. Ltd., A

     Banks          19,200          26,774  
 

Shanxi Lu’an Environmental Energy Development Co. Ltd., A

     Oil, Gas & Consumable Fuels          3,200          7,442  
 

Shanxi Xinghuacun Fen Wine Factory Co. Ltd., A

     Beverages          1,120          54,751  
 

Shengyi Technology Co. Ltd., A

     Electronic Equipment, Instruments & Components          2,000          6,712  
 

Shenzhen Goodix Technology Co. Ltd., A

     Semiconductors & Semiconductor Equipment          600          10,299  
 

Shenzhen International Holdings Ltd.

     Transportation Infrastructure          18,000          23,169  
 

Shenzhen Investment Ltd.

     Real Estate Management & Development          48,000          12,085  
 

Shenzhen Mindray Bio-Medical Electronics Co. Ltd., A

     Health Care Equipment & Supplies          1,273          76,021  
a  

Shenzhen Salubris Pharmaceuticals Co. Ltd.

     Pharmaceuticals          1,200          5,383  
 

Sichuan Chuantou Energy Co Ltd., A

     Independent Power and Renewable Electricity Producers          4,400          9,797  

 

           
franklintempleton.com  

Semiannual Report

             41


FRANKLIN TEMPLETON ETF TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

 

Franklin LibertyQ Emerging Markets ETF (continued)

 

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

Sichuan Swellfun Co. Ltd., A

     Beverages          600        $ 11,821  
b  

Smoore International Holdings Ltd., 144A

     Tobacco          13,000          60,619  
 

Suofeiya Home Collection Co. Ltd.

     Household Durables          400          1,031  
 

Tangshan Jidong Cement Co. Ltd.

     Construction Materials          1,600          3,191  
 

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

     Insurance          140,000          43,522  
 

Toly Bread Co. Ltd., A

     Food Products          1,120          5,045  
 

Tonghua Dongbao Pharmaceutical Co. Ltd.

     Pharmaceuticals          2,000          3,260  
 

Tongkun Group Co. Ltd., A

     Chemicals          2,000          6,799  
a  

Topchoice Medical Investment Corp., A

     Health Care Providers & Services          400          18,718  
 

Uni-President China Holdings Ltd.

     Food Products          12,000          11,422  
a  

Vipshop Holdings Ltd., ADR

     Internet & Direct Marketing Retail          6,472          72,098  
 

Wanhua Chemical Group Co. Ltd., A

     Chemicals          3,600          59,544  
 

Want Want China Holdings Ltd.

     Food Products          80,000          60,529  
 

Weifu High-Technology Group Co. Ltd., A

     Auto Components          1,200          3,845  
 

Weihai Guangwei Composites Co. Ltd., A

     Chemicals          800          8,121  
 

Wens Foodstuffs Group Co. Ltd.

     Food Products          10,400          23,317  
 

Wuhu Sanqi Interactive Entertainment NetworkTechnology Group Co. Ltd.

     Entertainment          3,200          10,407  
 

Wuliangye Yibin Co. Ltd., A

     Beverages          4,400          149,569  
 

Xiamen C & D Inc., A

     Trading Companies & Distributors          3,200          4,145  
b,c  

Yadea Group Holdings Ltd., 144A, Reg S

     Automobiles          18,000          29,412  
 

Yanzhou Coal Mining Co. Ltd., A

     Oil, Gas & Consumable Fuels          2,400          10,780  
 

Yanzhou Coal Mining Co. Ltd., H

     Oil, Gas & Consumable Fuels          34,000          64,378  
 

Yealink Network Technology Corp. Ltd.

     Communications Equipment          1,000          12,589  
 

Yihai International Holding Ltd.

     Food Products          8,400          46,777  
 

Yuexiu Property Co. Ltd.

     Real Estate Management & Development          28,800          27,081  
 

Yunda Holding Co. Ltd., A

     Air Freight & Logistics          3,050          9,097  
 

Yutong Bus Co. Ltd., A

     Machinery          2,000          3,511  
 

Zhejiang Longsheng Group Co. Ltd., A

     Chemicals          2,800          5,865  
 

Zhejiang NHU Co. Ltd.

     Pharmaceuticals          2,880          11,986  
 

Zhejiang Semir Garment Co. Ltd.

     Textiles, Apparel & Luxury Goods          2,800          3,315  
 

Zhejiang Supor Co. Ltd.

     Household Durables          800          5,790  
 

Zhejiang Weixing New Building Materials Co. Ltd., A

     Building Products          2,000          5,234  
 

Zhejiang Wolwo Bio-Pharmaceutical Co. Ltd., A

     Pharmaceuticals          400          3,632  
 

Zhuzhou Kibing Group Co. Ltd., A

     Building Products          1,600          4,296  
              

 

 

 
                 6,335,451  
              

 

 

 
    Czech Republic 0.2%                         
 

CEZ AS

     Electric Utilities          1,608          52,393  
              

 

 

 
    Egypt 0.1%                         
 

Eastern Co. SAE

     Tobacco          33,544          26,118  
a  

Fawry for Banking & Payment Technology Services SAE

     IT Services          5,024          4,542  
              

 

 

 
                 30,660  
              

 

 

 
    Greece 0.4%                         
 

Hellenic Telecommunications Organization SA

     Diversified Telecommunication Services          4,088          76,847  
 

JUMBO SA

     Specialty Retail          1,584          25,903  
              

 

 

 
                 102,750  
              

 

 

 
    Hong Kong 0.5%  
 

Kingboard Laminates Holdings Ltd.

     Electronic Equipment, Instruments & Components          22,000          36,400  
 

The Wharf Holdings Ltd.

     Real Estate Management & Development          24,000          79,695  
              

 

 

 
                 116,095  
              

 

 

 
    Hungary 0.2%                         
 

Richter Gedeon Nyrt

     Pharmaceuticals          1,408          38,545  
              

 

 

 

 

           
42             

Semiannual Report

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

 

Franklin LibertyQ Emerging Markets ETF (continued)

 

      Industry        Shares        Value  
    Common Stocks (continued)  
    India 15.2%                         
 

Adani Total Gas Ltd

     Gas Utilities          3,096        $ 59,359  
 

Ambuja Cements Ltd.

     Construction Materials          7,492          40,393  
 

Asian Paints Ltd.

     Chemicals          6,608          288,850  
 

Bajaj Auto Ltd.

     Automobiles          1,612          83,234  
 

Bharti Infratel Ltd.

     Diversified Telecommunication Services          10,044          41,771  
 

Britannia Industries Ltd.

     Food Products          2,260          120,233  
 

Coal India Ltd.

     Oil, Gas & Consumable Fuels          41,280          102,939  
 

Colgate-Palmolive (India) Ltd.

     Personal Products          2,876          64,686  
 

Container Corp. of India Ltd.

     Road & Rail          4,016          38,105  
 

Dabur India Ltd.

     Personal Products          11,336          94,236  
 

GAIL India Ltd.

     Gas Utilities          36,516          78,146  
 

HCL Technologies Ltd.

     IT Services          20,204          348,281  
b,c  

HDFC Asset Management Co. Ltd., 144A, Reg S

     Capital Markets          1,216          47,649  
 

Hero Motocorp Ltd.

     Automobiles          2,688          102,573  
 

Hindustan Petroleum Corp. Ltd.

     Oil, Gas & Consumable Fuels          16,052          64,876  
 

Hindustan Unilever Ltd.

     Household Products          7,844          285,513  
 

Indian Oil Corp. Ltd.

     Oil, Gas & Consumable Fuels          19,404          32,755  
 

Indraprastha Gas Ltd.

     Gas Utilities          4,764          34,215  
 

Infosys Ltd.

     IT Services          14,012          316,229  
 

IPCA Laboratories Ltd.

     Pharmaceuticals          1,000          32,486  
 

ITC Ltd.

     Tobacco          77,068          245,187  
b  

Larsen & Toubro Infotech Ltd., 144A

     IT Services          796          61,824  
 

Marico Ltd.

     Personal Products          11,808          87,096  
 

Nestle India Ltd.

     Food Products          768          201,195  
 

Page Industries Ltd.

     Textiles, Apparel & Luxury Goods          124          52,964  
 

Petronet LNG Ltd.

     Oil, Gas & Consumable Fuels          14,908          47,911  
 

Pidilite Industries Ltd.

     Chemicals          2,936          94,216  
 

REC Ltd.

     Diversified Financial Services          16,864          35,863  
 

Tata Consultancy Services Ltd.

     IT Services          6,068          308,646  
 

Tech Mahindra Ltd.

     IT Services          11,728          218,136  
 

Wipro Ltd.

     IT Services          13,680          116,864  
              

 

 

 
                 3,746,431  
              

 

 

 
    Indonesia 2.2%                         
 

Adaro Energy Tbk PT

     Oil, Gas & Consumable Fuels          321,200          39,498  
 

Gudang Garam Tbk PT

     Tobacco          10,000          22,742  
 

Indofood CBP Sukses Makmur Tbk PT

     Food Products          44,400          25,903  
 

Indofood Sukses Makmur Tbk PT

     Food Products          68,000          30,170  
 

Perusahaan Perseroan (Persero) PT TelekomunikasiIndonesia Tbk, B

     Diversified Telecommunication Services          1,140,800          294,117  
 

Unilever Indonesia Tbk PT

     Household Products          203,600          56,190  
 

United Tractors Tbk PT

     Oil, Gas & Consumable Fuels          38,800          70,484  
              

 

 

 
                 539,104  
              

 

 

 
    Kuwait 0.3%                         
 

Mobile Telecommunications Co. KSCP

     Wireless Telecommunication Services          34,108          67,741  
              

 

 

 
    Malaysia 2.0%                         
a  

AMMB Holdings Bhd.

     Banks          26,800          20,357  
 

Digi.com Bhd.

     Wireless Telecommunication Services          76,800          81,634  
 

Hartalega Holdings Bhd.

     Health Care Equipment & Supplies          43,200          63,461  
 

Kossan Rubber Industries

     Health Care Equipment & Supplies          30,400          16,774  
 

MISC Bhd.

     Marine          13,600          22,447  
 

Nestle (Malaysia) Bhd.

     Food Products          1,800          57,227  
 

Petronas Gas Bhd.

     Gas Utilities          17,600          70,711  
 

Sime Darby Bhd.

     Industrial Conglomerates          27,600          14,965  
 

Supermax Corp. Bhd

     Health Care Equipment & Supplies          34,062          19,445  
 

Top Glove Corp. Bhd.

     Health Care Equipment & Supplies          141,200          97,135  

 

           
franklintempleton.com  

Semiannual Report

             43


FRANKLIN TEMPLETON ETF TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

 

Franklin LibertyQ Emerging Markets ETF (continued)

 

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

Westports Holdings Bhd.

     Transportation Infrastructure        21,200        $ 22,788  
            

 

 

 
               486,944  
            

 

 

 
    Mexico 2.5%                       
 

Fibra Uno Administracion SA de CV

     Equity Real Estate Investment Trusts (REITs      56,932          64,845  
 

Grupo Mexico SAB de CV, B

     Metals & Mining        50,136          201,061  
 

Kimberly-Clark de Mexico SAB de CV, A

     Household Products        37,352          61,797  
 

Megacable Holdings SAB de CV

     Media        7,032          21,598  
 

Wal-Mart de Mexico SAB de CV, V

     Food & Staples Retailing        80,852          275,994  
            

 

 

 
               625,295  
            

 

 

 
    Pakistan 0.0%                       
 

MCB Bank Ltd.

     Banks        9,124          8,076  
            

 

 

 
    Philippines 0.6%                       
 

Globe Telecom Inc.

     Wireless Telecommunication Services        720          42,119  
 

Manila Electric Co.

     Electric Utilities        5,320          31,079  
 

Metro Pacific Investments Corp.

     Diversified Financial Services        224,000          16,028  
 

PLDT Inc.

     Wireless Telecommunication Services        1,520          50,061  
            

 

 

 
               139,287  
            

 

 

 
    Poland 0.6%  
 

Polski Koncern Naftowy Orlen SA

     Oil, Gas & Consumable Fuels        4,856          100,293  
 

Polskie Gornictwo Naftowe i Gazownictwo SA

     Oil, Gas & Consumable Fuels        28,232          45,953  
            

 

 

 
               146,246  
            

 

 

 
    Qatar 1.4%                       
 

Industries Qatar QSC

     Industrial Conglomerates        36,564          155,154  
 

Masraf Al Rayan QSC

     Banks        69,184          85,107  
 

Qatar Electricity & Water Co. QSC

     Multi-Utilities        11,088          51,557  
 

Qatar Fuel QSC

     Oil, Gas & Consumable Fuels        9,264          45,646  
            

 

 

 
               337,464  
            

 

 

 
    Russia 10.6%                       
 

Alrosa PJSC

     Metals & Mining        70,872          129,524  
 

Gazprom PJSC

     Oil, Gas & Consumable Fuels        74,932          372,205  
 

Inter RAO UES PJSC

     Electric Utilities        1,069,176          68,262  
 

LUKOIL PJSC

     Oil, Gas & Consumable Fuels        3,168          301,718  
 

MMC Norilsk Nickel PJSC

     Metals & Mining        684          204,866  
 

Mobile TeleSystems PJSC, ADR

     Wireless Telecommunication Services        12,248          118,071  
 

Moscow Exchange MICEX

     Capital Markets        27,504          65,725  
 

NLMK PJSC

     Metals & Mining        41,836          124,706  
c  

PhosAgro PJSC, GDR, Reg S

     Chemicals        3,796          84,575  
 

Polymetal International PLC

     Metals & Mining        8,252          140,415  
 

Polyus Gold OJSC

     Metals & Mining        932          153,146  
 

Rosneft PJSC

     Oil, Gas & Consumable Fuels        25,020          211,751  
 

Severstal PAO

     Metals & Mining        7,756          161,950  
 

Surgutneftegas PJSC

     Oil, Gas & Consumable Fuels        162,924          82,352  
 

Tatneft PAO

     Oil, Gas & Consumable Fuels        37,336          270,998  
 

TCS Group Holding PLC, GDR

     Banks        1,460          133,622  
            

 

 

 
               2,623,886  
            

 

 

 
    Saudi Arabia 4.6%                       
 

Abdullah Al Othaim Markets Co.

     Food & Staples Retailing        836          25,098  
 

Advanced Petrochemical Co.

     Chemicals        2,628          52,550  
 

Al-Rajhi Bank

     Banks        9,432          308,306  
 

Bupa Arabia for Cooperative Insurance Co.

     Insurance        1,052          41,848  
 

Dr Sulaiman Al Habib Medical Services Group Co.

     Health Care Providers & Services        544          25,237  

 

           
44             

Semiannual Report

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

 

Franklin LibertyQ Emerging Markets ETF (continued)

 

      Industry        Shares        Value  
    Common Stocks (continued)  
    Saudi Arabia (continued)                         
 

Jarir Marketing Co.

     Specialty Retail          1,640        $ 91,648  
 

Saudi Arabian Fertilizer Co.

     Chemicals          4,464          205,901  
 

Saudi Cement Co.

     Construction Materials          1,652          27,660  
 

Saudi Telecom Co.

     Diversified Telecommunication Services          7,876          266,684  
 

Yanbu National Petrochemical Co.

     Chemicals          4,912          93,245  
              

 

 

 
                 1,138,177  
              

 

 

 
    South Africa 4.3%                         
 

African Rainbow Minerals Ltd.

     Metals & Mining          2,376          29,944  
 

Anglo American Platinum Ltd.

     Metals & Mining          572          49,593  
 

AngloGold Ashanti Ltd.

     Metals & Mining          8,676          137,086  
 

Clicks Group Ltd.

     Food & Staples Retailing          5,020          92,659  
 

Exxaro Resources Ltd.

     Oil, Gas & Consumable Fuels          7,100          75,993  
 

Gold Fields Ltd.

     Metals & Mining          9,368          76,762  
 

Impala Platinum Holdings Ltd.

     Metals & Mining          13,656          155,821  
 

Kumba Iron Ore Ltd.

     Metals & Mining          2,272          74,895  
 

Mr. Price Group Ltd.

     Specialty Retail          6,124          81,906  
 

Sibanye Stillwater Ltd.

     Metals & Mining          31,568          97,610  
 

Tiger Brands Ltd.

     Food Products          3,316          41,275  
 

Vodacom Group Ltd.

     Wireless Telecommunication Services          15,676          150,081  
              

 

 

 
                 1,063,625  
              

 

 

 
    South Korea 7.0%                         
 

Coway Co. Ltd.

     Household Durables          1,192          74,701  
 

Hana Financial Group Inc.

     Banks          6,236          244,384  
 

Industrial Bank of Korea

     Banks          6,236          55,302  
 

KB Financial Group Inc.

     Banks          4,992          233,157  
 

Korea Zinc Co. Ltd.

     Metals & Mining          156          66,274  
 

KT&G Corp.

     Tobacco          2,768          189,833  
 

Kumho Petrochemical Co. Ltd.

     Chemicals          372          59,382  
 

NCSoft Corp.

     Entertainment          312          158,899  
a  

Pearl Abyss Corp.

     Entertainment          572          38,842  
 

S-1 Corp.

     Commercial Services & Supplies          352          24,854  
 

Samsung Electronics Co. Ltd.

     Technology Hardware, Storage & Peripherals          3,104          194,262  
 

Seegene Inc.

     Biotechnology          724          37,117  
 

Shinhan Financial Group Co. Ltd.

     Banks          7,024          239,670  
 

Woori Financial Group Inc.

     Banks          10,504          103,354  
              

 

 

 
                 1,720,031  
              

 

 

 
    Taiwan 13.1%                         
 

Accton Technology Corp.

     Communications Equipment          10,260          96,853  
 

Acer Inc.

     Technology Hardware, Storage & Peripherals          32,000          28,427  
 

Advantech Co. Ltd.

     Technology Hardware, Storage & Peripherals          7,435          97,406  
 

Asia Cement Corp.

     Construction Materials          44,000          72,016  
 

Asustek Computer Inc.

     Technology Hardware, Storage & Peripherals          13,000          151,882  
 

Chunghwa Telecom Co. Ltd.

     Diversified Telecommunication Services          63,880          253,360  
 

Compal Electronics Inc.

     Technology Hardware, Storage & Peripherals          44,000          37,271  
 

Eclat Textile Co. Ltd.

     Textiles, Apparel & Luxury Goods          3,480          75,819  
 

Far EasTone Telecommunications Co. Ltd.

     Wireless Telecommunication Services          30,000          66,223  
 

Feng Tay Enterprise Co. Ltd.

     Textiles, Apparel & Luxury Goods          8,576          66,181  
 

Fubon Financial Holding Co. Ltd.

     Insurance          70,500          194,087  
 

Globalwafers Co. Ltd.

     Semiconductors & Semiconductor Equipment          4,580          130,690  
 

Largan Precision Co. Ltd.

     Electronic Equipment, Instruments & Components          1,920          150,923  
 

Lite-On Technology Corp.

     Technology Hardware, Storage & Peripherals          48,000          107,679  
 

Micro-Star International Co. Ltd.

     Technology Hardware, Storage & Peripherals          13,000          60,426  
 

Nien Made Enterprise Co. Ltd.

     Household Durables          4,000          56,855  
 

Novatek Microelectronics Corp. Ltd.

     Semiconductors & Semiconductor Equipment          14,380          211,619  

 

           
franklintempleton.com  

Semiannual Report

             45


FRANKLIN TEMPLETON ETF TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

 

Franklin LibertyQ Emerging Markets ETF (continued)

 

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

Pegatron Corp.

     Technology Hardware, Storage & Peripherals          28,000        $ 67,336  
 

Powertech Technology Inc.

     Semiconductors & Semiconductor Equipment          13,600          51,011  
 

Ruentex Development Co. Ltd.

     Real Estate Management & Development          21,000          43,266  
 

Synnex Technology International Corp.

     Electronic Equipment, Instruments & Components          24,000          44,967  
 

Taiwan Cement Corp.

     Construction Materials          96,201          176,101  
 

Taiwan Mobile Co. Ltd.

     Wireless Telecommunication Services          33,400          118,564  
 

Taiwan Semiconductor Manufacturing Co. Ltd.

     Semiconductors & Semiconductor Equipment          13,100          272,716  
 

United Microelectronics Corp.

     Semiconductors & Semiconductor Equipment          162,000          372,140  
 

Vanguard International Semiconductor Corp.

     Semiconductors & Semiconductor Equipment          20,000          108,756  
 

Wan Hai Lines Ltd.

     Marine          6,600          48,208  
 

Wiwynn Corp.

     Technology Hardware, Storage & Peripherals          1,480          46,216  
 

WPG Holdings Ltd.

     Electronic Equipment, Instruments & Components          16,000          27,853  
              

 

 

 
                 3,234,851  
              

 

 

 
    Thailand 1.6%                         
 

Advanced Info Service PCL, NVDR

     Wireless Telecommunication Services          28,800          166,833  
 

Bumrungrad Hospital PCL

     Health Care Providers & Services          400          1,673  
 

Bumrungrad Hospital PCL, NVDR

     Health Care Providers & Services          8,800          36,802  
 

Carabao Group PCL, NVDR

     Beverages          3,200          11,349  
 

Intouch Holdings PCL, NVDR

     Wireless Telecommunication Services          54,800          130,380  
 

Krung Thai Bank PCL, NVDR

     Banks          48,800          15,865  
 

Osotspa PCL, NVDR

     Beverages          18,000          18,088  
 

Sri Trang Gloves Thailand PCL, NVDR

     Health Care Equipment & Supplies          15,200          14,039  
              

 

 

 
                 395,029  
              

 

 

 
    Turkey 1.2%                         
 

Aselsan Elektronik Sanayi Ve Ticaret A/S

     Aerospace & Defense          12,428          21,179  
 

BIM Birlesik Magazalar A/S

     Food & Staples Retailing          11,624          83,605  
 

Eregli Demir ve Celik Fabrikalari TAS

     Metals & Mining          38,500          72,153  
 

Ford Otomotiv Sanayi AS

     Automobiles          2,064          38,821  
 

Turkcell Iletisim Hizmetleri A/S

     Wireless Telecommunication Services          30,000          51,766  
 

Turkiye Is Bankasi A/S, C

     Banks          33,844          19,771  
              

 

 

 
                 287,295  
              

 

 

 
    United Arab Emirates 1.4%                         
 

Abu Dhabi National Oil Co. for Distribution PJSC

     Specialty Retail          31,264          35,408  
 

Dubai Islamic Bank PJSC

     Banks          34,632          46,671  
 

Emirates Telecommunications Group Co. PJSC

     Diversified Telecommunication Services          39,804          260,292  
              

 

 

 
                 342,371  
              

 

 

 
 

Total Common Stocks
(Cost $20,895,987)

               24,381,856  
              

 

 

 
    Preferred Stocks 1.0%                         
    Brazil 0.4%                         
d  

Bradespar SA, 10.306%, pfd.

     Metals & Mining          3,614          34,671  
d  

Companhia Energetica de Minas Gerais, 5.738%, pfd.

     Electric Utilities          11,200          28,838  
d  

Companhia Paranaense de Energia, 13.297%, pfd.

     Electric Utilities          18,000          24,049  
              

 

 

 
                 87,558  
              

 

 

 
    Russia 0.4%                         
d  

Surgutneftegas PJSC, 16.675%, pfd.

     Oil, Gas & Consumable Fuels          190,396          105,419  
              

 

 

 
    South Korea 0.2%                         
d  

LG Household & Health Care Ltd., 1.721%, pfd.

     Personal Products          40          21,689  

 

           
46             

Semiannual Report

  franklintempleton.com


FRANKLIN TEMPLETON ETF TRUST

STATEMENT OF INVESTMENTS (UNAUDITED)

 

Franklin LibertyQ Emerging Markets ETF (continued)

 

      Industry        Shares        Value  
    Preferred Stocks (continued)                         
    South Korea (continued)                         
d  

Samsung Electronics Co. Ltd., 4.323%, pfd.

     Technology Hardware, Storage & Peripherals          572        $ 33,625  
              

 

 

 
                 55,314  
              

 

 

 
 

Total Preferred Stocks (Cost $243,582)

               248,291  
              

 

 

 
 

Total Investments
(Cost $21,139,569) 100.0%

               24,630,147  
 

Other Assets, less Liabilities 0.0%

               10,650  
              

 

 

 
 

Net Assets 100.0%

             $ 24,640,797  
              

 

 

 

Rounds to less than 0.1% of net assets.

aNon-income producing.

bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. At September 30, 2021, the aggregate value of these securities was $459,272, representing 1.9% of net assets.

cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. At September 30, 2021, the aggregate value of these securities was $249,408, representing 1.0% of net assets.

dVariable rate security. The rate shown represents the yield at period end.

At September 30, 2021, the Fund had the following futures contracts outstanding. See Note 1(c).

 

Futures Contracts                                   
Description    Type      Number of
Contracts
     Notional
Amount*
     Expiration
Date
     Value/Unrealized
Appreciation
(Depreciation)
 
Equity Contracts                                   

MSCI Emerging Markets Index

     Long        2      $ 124,560        12/17/21      $ (5,444

*As of period end

See Note 8 regarding other derivative information.

See abbreviations on page 124.