UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-23124
Franklin Templeton ETF Trust
(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
(Address of principal executive offices) (Zip code)
Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906
(Name and address of agent for service)
Registrant’s telephone number, including area code: 650 312-2000
Date of fiscal year end: 3/31
Date of reporting period: 09/30/18
Item 1. | Reports to Stockholders. |
Franklin Templeton
ETF Trust
Semiannual Report
September 30, 2018
Franklin LibertyQ Emerging Markets ETF |
Franklin LibertyQ Global Dividend ETF |
Franklin LibertyQ Global Equity ETF |
Franklin LibertyQ International Equity Hedged ETF |
Franklin Templeton Investments
Why Choose Franklin Templeton Investments?
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visit libertyshares.com for fund updates and documents.
Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
libertyshares.com | Not part of the semiannual report | 1 |
SEMIANNUAL REPORT
The global economy expanded during the six-month period under review amid generally upbeat economic data across regions. In this environment, the MSCI All Country World Index, which measures performance of global developed and emerging market stocks, generated a +5.15% total return for the six months ended September 30, 2018.1 Global markets were aided by higher crude oil prices and encouraging corporate earnings reports.
However, at certain times during the period, global markets reflected investor concerns about tensions in the Korean peninsula and political uncertainties in the U.S. and the European Union (EU), as well as worries that strong economic growth and rising inflation in the U.S. and other countries would lead central banks to increase interest rates sooner than expected. Markets were further pressured by the Trump administration’s protectionist trade policies, U.S. trade disputes with its allies and China, and fears of tighter regulation of information technology and technology-related companies. The Turkish lira’s and Argentine peso’s rapid deterioration and accompanying fears of a contagion effect also hurt investor confidence, particularly in emerging markets. However, investors were encouraged by an overall easing of tensions in the Korean peninsula, a U.S.-EU agreement to try to reduce trade barriers and a trade deal between the U.S. and Mexico, which Canada joined at period-end.
The U.S. economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The unemployment rate declined from 4.1% in March 2018, as reported at the beginning of the six-month period, to a nearly 49-year low of 3.7% at period-end.2 Annual inflation, as measured by the Consumer Price Index, decreased from 2.4% in March 2018, as reported at the beginning of the period, to 2.3% at period-end.2 The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate in June and September 2018 and continued reducing its balance sheet as part of an ongoing plan to normalize monetary policy. In September 2018, the Fed raised its forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018.
In Europe, the U.K.’s quarterly economic growth accelerated in 2018’s second quarter amid growth in the services sector. The Bank of England raised its key policy rate once during the review period. The eurozone’s quarterly growth remained stable in 2018’s second quarter but moderated in the third quarter. The bloc’s annual inflation rate ended the period higher than in March 2018. The European Central Bank (ECB) kept its benchmark interest rate unchanged during the period. In September 2018, the ECB confirmed it would further reduce its monthly bond purchases beginning in October 2018, as previously announced in June, and reiterated its plan to conclude the program at the end of 2018, while keeping interest rates unchanged through at least the summer of 2019.
In Asia, Japan’s quarterly gross domestic product (GDP) expanded in 2018’s second quarter, mainly due to growth in business spending and household consumption. The Bank of Japan left its benchmark interest rate unchanged during the period and continued its monetary stimulus measures.
In emerging markets, Brazil’s quarterly GDP growth accelerated in 2018’s second quarter. Russia’s annual GDP growth rate accelerated in 2018’s second quarter. The Bank of Russia kept its key rate unchanged through most of the period but raised it near period-end. China’s GDP continued to grow in 2018’s third quarter, though at the slowest annual rate since 2009. The People’s Bank of China left its benchmark interest rate unchanged during the period, but it took measures to improve financial liquidity to mitigate the negative effects of the U.S.-China trade dispute and support economic growth. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, declined during the period.
The foregoing information reflects our analysis and opinions as of September 30, 2018. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: Morningstar.
2. Source: U.S. Bureau of Labor Statistics.
See www.franklintempletondatasources.com for additional data provider information.
2 | Semiannual Report | libertyshares.com |
Franklin LibertyQ Emerging Markets ETF
This semiannual report for Franklin LibertyQ Emerging Markets ETF covers the period ended September 30, 2018.
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 had cumulative total returns of -8.75% based on market price and -6.95% based on net asset value (NAV). In comparison, the LibertyQ EM Index generated a -6.75% total return for the same period, while the MSCI EM Index (Net Returns) produced a -8.97% 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 libertyshares.com or call (800) 342-5236.
Geographic Composition* |
Based on Total Net Assets as of 9/30/18 |
*Figures are stated as a percentage of total net assets 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 intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. The LibertyQ EM Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI EM Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EM Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of emerging markets.
2. Source: Factset.
The indexes are unmanaged and include reinvestment of any income or distributions (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 25.
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FRANKLIN LIBERTYQ EMERGING MARKETS ETF
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Oil, Gas & Consumable Fuels | 16.7% | |||
Banks | 8.5% | |||
Wireless Telecommunication Services | 7.8% | |||
Chemicals | 7.2% | |||
IT Services | 5.1% | |||
Metals & Mining | 5.1% | |||
Automobiles | 4.1% | |||
Diversified Telecommunication Services | 3.9% | |||
Semiconductors & Semiconductor Equipment | 3.5% | |||
Food & Staples Retailing | 3.3% |
Top 10 Countries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
South Korea | 13.6% | |||
Russia | 13.4% | |||
Taiwan | 13.2% | |||
India | 12.7% | |||
China | 11.6% | |||
Thailand | 6.4% | |||
Brazil | 4.8% | |||
South Africa | 4.3% | |||
Indonesia | 3.8% | |||
Malaysia | 3.6% |
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
Novatek PJSC, GDR Oil, Gas & Consumable Fuels, Russia | | 1.4% | | |
Rosneft PJSC Oil, Gas & Consumable Fuels, Russia | | 1.4% | | |
Wal-Mart de Mexico SAB de CV Food & Staples Retailing, Mexico | | 1.3% | | |
Infosys Ltd. IT Services, India | | 1.2% | | |
Tata Consultancy Services Ltd. IT Services, India | | 1.2% | | |
Tatneft PAO Oil, Gas & Consumable Fuels, Russia | | 1.2% | | |
HCL Technologies Ltd. IT Services, India | | 1.2% | | |
Shenzhou International Group Holdings Ltd. Textiles, Apparel & Luxury Goods, China | | 1.2% | | |
President Chain Store Corp. Food & Staples Retailing, Taiwan | | 1.1% | | |
Alrosa PJSC Metals & Mining, Russia | | 1.2% | |
Thank you for your participation in Franklin LibertyQ Emerging Markets ETF. We look forward to serving your future investment needs.
Dina Ting, CFA
| ||
Louis Hsu, CFA
| ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
CFA® is a trademark owned by CFA Institute.
4 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ EMERGING MARKETS ETF
Performance Summary as of September 30, 2018
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 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | -6.95% | 5 | -8.75% | -6.95% | 5 | -8.75% | ||||||||||
1-Year | -0.34% | -1.29% | -0.34% | -1.29% | ||||||||||||
Since Inception (6/1/16) | +24.67% | +23.88% | +9.92% | +9.62% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.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 (4/1/18–9/30/18)
Net Investment Income |
$0.302336 |
Total Annual Operating Expenses6
0.55% |
All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. 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. 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. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
6 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ EMERGING MARKETS ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 930.50 | $ | 2.61 | $ | 1,022.36 | $ | 2.74 | 0.54 | % |
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 Dividend ETF
This semiannual report for Franklin LibertyQ Global Dividend ETF covers the period ended September 30, 2018.
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 +0.98% based on market price and +1.84% based on net asset value (NAV). In comparison, the LibertyQ Global Dividend Index delivered a +1.79% total return for the same period, while the MSCI ACWI ex REITs Index (Net Returns) produced a +4.84% 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 libertyshares.com or call (800) 342-5236.
Geographic Composition* |
Based on Total Net Assets as of 9/30/18 |
*Figures are stated as a percentage of total net assets and may not equal 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Dividend Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. The LibertyQ Global Dividend Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI ex REITs Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI ex REITs Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding REIT securities.
2. Source: Factset.
The indexes are unmanaged and include reinvestment of any income or distributions (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 32.
8 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 16.5% | |||
Pharmaceuticals | 13.9% | |||
Household Products | 6.1% | |||
Hotels, Restaurants & Leisure | 5.1% | |||
Diversified Telecommunication Services | 4.9% | |||
Insurance | 4.3% | |||
Food & Staples Retailing | 4.2% | |||
Tobacco | 4.2% | |||
Personal Products | 3.9% | |||
IT Services | 3.8% |
Top 10 Countries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
U.S. | 42.1% | |||
Australia | 9.9% | |||
Canada | 8.9% | |||
U.K. | 8.2% | |||
Switzerland | 7.0% | |||
Sweden | 3.3% | |||
Japan | 3.2% | |||
Germany | 2.7% | |||
South Africa | 2.6% | |||
France | 2.3% |
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
Eli Lilly & Co. Pharmaceuticals, U.S. | | 2.6% | | |
Merck & Co. Inc. Pharmaceuticals, U.S. | | 2.4% | | |
Sanofi Pharmaceuticals, France | | 2.3% | | |
The Procter & Gamble Co. Household Products, U.S. | | 2.2% | | |
Novartis AG Pharmaceuticals, Switzerland | | 2.2% | | |
Johnson & Johnson Pharmaceuticals, U.S. | | 2.2% | | |
Kimberly-Clark Corp. Household Products, U.S. | | 2.2% | | |
Altria Group Inc. Tobacco, U.S. | | 2.2% | | |
Roche Holding AG Pharmaceuticals, Switzerland | | 2.2% | | |
Lockheed Martin Corp. Aerospace & Defense, U.S. | | 2.1% | |
Thank you for your participation in Franklin LibertyQ Global Dividend ETF. We look forward to serving your future investment needs.
Dina Ting, CFA
| ||
Louis Hsu, CFA
| ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 9 |
FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF
Performance Summary as of September 30, 2018
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 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | +1.84% | +0.98% | +1.84% | +0.98% | ||||||||||||
1-Year | +3.45% | +2.75% | +3.45% | +2.75% | ||||||||||||
Since Inception (6/1/16) | +19.54% | +19.23% | +7.96% | +7.83% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.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 (4/1/18–9/30/18)
Net Investment Income |
$0.539288 |
Total Annual Operating Expenses5
0.45% |
All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. 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 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. 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.
libertyshares.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” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,018.40 | $ | 2.28 | $ | 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.
12 | Semiannual Report | libertyshares.com |
Franklin LibertyQ Global Equity ETF
This semiannual report for Franklin LibertyQ Global Equity ETF covers the period ended September 30, 2018.
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 +5.17% based on market price and +4.86% based on net asset value (NAV). In comparison, the LibertyQ Global Equity Index delivered a +4.89% total return for the same period, while the MSCI ACWI (Net Returns) produced a +4.83% 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 libertyshares.com or call (800) 342-5236.
Geographic Composition* |
Based on Total Net Assets as of 9/30/18 |
*Figures are stated as a percentage of total net assets and may not equal 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. The LibertyQ Global Equity Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets.
2. Source: Factset.
The indexes are unmanaged and include reinvestment of any income or distributions (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 36.
libertyshares.com | Semiannual Report | 13 |
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Pharmaceuticals | 8.2% | |||
Semiconductors & Semiconductor Equipment | 5.9% | |||
Specialty Retail | 5.2% | |||
IT Services | 4.8% | |||
Biotechnology | 4.5% | |||
Banks | 4.4% | |||
Diversified Telecommunication Services | 4.2% | |||
Aerospace & Defense | 3.4% | |||
Food & Staples Retailing | 3.1% | |||
Tobacco | 3.0% |
Top 10 Countries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
U.S. | 56.6% | |||
U.K. | 7.6% | |||
Japan | 5.2% | |||
Australia | 4.0% | |||
China | 3.3% | |||
South Korea | 2.7% | |||
Taiwan | 2.4% | |||
Canada | 2.2% | |||
Russia | 1.8% | |||
Switzerland | 1.5% |
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
iShares MSCI India ETF Diversified Financial Services, India | | 1.2% | | |
Pfizer Inc. Pharmaceuticals, U.S. | | 1.2% | | |
Apple Inc. Technology Hardware, Storage & Peripherals, U.S. | | 1.2% | | |
Mastercard Inc. IT Services, U.S. | | 1.2% | | |
Microsoft Corp. Software, U.S. | | 1.1% | | |
Gilead Sciences Inc. Biotechnology, U.S. | | 1.1% | | |
Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan | | 1.1% | | |
PepsiCo Inc. Beverages, U.S. | | 1.1% | | |
The Procter & Gamble Co. Household Products, U.S. | | 1.1% | | |
Walmart Inc. Food & Staples Retailing, U.S. | | 1.1% | |
Thank you for your participation in Franklin LibertyQ Global Equity ETF. We look forward to serving your future investment needs.
Dina Ting, CFA
| ||
Louis Hsu, CFA
| ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
14 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
Performance Summary as of September 30, 2018
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 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | +4.86% | 5 | +5.17% | +4.86% | 5 | +5.17% | ||||||||||
1-Year | +9.83% | +9.46% | +9.83% | +9.46% | ||||||||||||
Since Inception (6/1/16) | +31.24% | +31.26% | +12.37% | +12.37% |
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 libertyshares.com or call (800) 342-5236.
See page 16 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 15 |
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.320456 |
Total Annual Operating Expenses6
0.35% |
All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. 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. Performance of the Fund may vary significantly from the performance of an index, as a result of transaction costs, expenses and other factors. There can be no assurance that the 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. 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. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
16 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ GLOBAL EQUITY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,048.60 | $ | 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.
libertyshares.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, 2018.
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 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. In order to replicate the hedge impact incorporated in the calculation of the Underlying Index, the Fund intends to enter into monthly foreign currency forward contracts designed to offset the Fund’s exposure to the component currencies of the Underlying Index.
What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.
Geographic Composition* |
Based on Total Net Assets as of 9/30/18 |
*Figures are stated as a percentage of total net assets and may not equal 100% or may be negative due to rounding, use of derivatives, unsettled trades or other factors.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +5.99% based on market price and +6.72% based on net asset value (NAV). In comparison, LibertyQ International Equity Hedged Index had a +6.97% total return for the same period, while the MSCI EAFE 100% Hedged to USD Index (Net Returns) produced a +6.97% total return.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 21.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
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 (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 50.
18 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
Investment Strategy
The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ International Equity Hedged Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Pharmaceuticals | 10.2% | |||
Banks | 8.6% | |||
Insurance | 5.6% | |||
Personal Products | 5.2% | |||
Metals & Mining | 5.1% | |||
Diversified Telecommunication Services | 5.0% | |||
Automobiles | 5.0% | |||
Hotels, Restaurants & Leisure | 3.4% | |||
Wireless Telecommunication Services | 3.1% | |||
Food & Staples Retailing | 3.0% |
Top 10 Countries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
U.K. | 24.5% | |||
Japan | 21.9% | |||
Australia | 17.5% | |||
Switzerland | 6.5% | |||
Hong Kong | 5.4% | |||
Singapore | 3.4% | |||
Denmark | 3.3% | |||
Spain | 2.9% | |||
Germany | 2.2% | |||
Sweden | 1.9% |
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
Roche Holding AG Pharmaceuticals, Switzerland | | 2.2% | | |
AstraZeneca PLC Pharmaceuticals, U.K. | | 2.2% | | |
CSL Ltd. Biotechnology, Australia | | 2.1% | | |
GlaxoSmithKline PLC Pharmaceuticals, U.K. | | 2.0% | | |
Unilever NV Personal Products, U.K. | | 2.0% | | |
Unilever PLC Personal Products, U.K. | | 2.0% | | |
Novo Nordisk AS Pharmaceuticals, Denmark | | 2.0% | | |
Commonwealth Bank of Australia Banks, Australia | | 2.0% | | |
Westpac Banking Corp. Banks, Australia | | 1.8% | | |
Toyota Motor Corp. Automobiles, Japan | | 1.8% | |
libertyshares.com | Semiannual Report | 19 |
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
Thank you for your participation in Franklin LibertyQ International Equity Hedged ETF. We look forward to serving your future investment needs.
Dina Ting, CFA
| ||
Louis Hsu, CFA
| ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
20 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
Performance Summary as of September 30, 2018
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 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | +6.72% | 5 | +5.99% | +6.72% | 5 | +5.99% | ||||||||||
1-Year | +5.26% | +4.81% | +5.26% | +4.81% | ||||||||||||
Since Inception (6/1/16) | +19.44% | +19.00% | +7.92% | +7.75% |
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 libertyshares.com or call (800) 342-5236.
See page 22 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 21 |
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.300911 |
Total Annual Operating Expenses6
0.40% |
All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. 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. 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. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
22 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value” for each class of shares. You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row for your class of shares under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,067.20 | $ | 2.07 | $ | 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.
libertyshares.com | Semiannual Report | 23 |
FRANKLIN TEMPLETON ETF TRUST
Franklin LibertyQ Emerging Markets ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, | |||||||||||
2018 | 2017a | |||||||||||
Per share operating performance (for a share outstanding throughout the period) |
| |||||||||||
Net asset value, beginning of period | $ | 33.41 | $ | 29.29 | $ | 25.66 | ||||||
|
| |||||||||||
Income from investment operations:b |
| |||||||||||
Net investment incomec | 0.71 | 0.83 | 0.47 | |||||||||
Net realized and unrealized gains (losses) | (3.10 | ) | 4.15 | 3.25 | ||||||||
|
| |||||||||||
Total from investment operations | (2.39 | ) | 4.98 | 3.72 | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.30 | ) | (0.86 | ) | (0.09 | ) | ||||||
|
| |||||||||||
Net asset value, end of period | $ | 30.72 | $ | 33.41 | $ | 29.29 | ||||||
|
| |||||||||||
Total returnd | (7.08)% | 17.20% | 14.55% | |||||||||
Ratios to average net assetse |
| |||||||||||
Expenses before waiver and payments by affiliates | 0.55% | 0.69% | f | 0.75% | ||||||||
Expenses net of waiver and payments by affiliates | 0.54% | 0.54% | f | 0.55% | ||||||||
Net investment income | 4.52% | 2.61% | 2.09% | |||||||||
Supplemental data |
| |||||||||||
Net assets, end of period (000’s) | $301,024 | $400,890 | $328,086 | |||||||||
Portfolio turnover rateg | 31.11% | 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 of 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.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
24 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin LibertyQ Emerging Markets ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 97.1% | ||||||||||||||
Brazil 3.5% | ||||||||||||||
Ambev SA | Beverages | 568,400 | $ | 2,610,323 | ||||||||||
BB Seguridade Participacoes SA | Insurance | 436,100 | 2,631,746 | |||||||||||
Cielo SA | IT Services | 632,100 | 1,938,933 | |||||||||||
Companhia de Saneamento Basico do | Water Utilities | 147,000 | 868,333 | |||||||||||
Engie Brasil SA | Independent Power and Renewable Electricity Producers | 102,900 | 914,197 | |||||||||||
IRB Brasil Resseguros SA | Insurance | 34,300 | 570,729 | |||||||||||
M. Dias Branco SA | Food Products | 44,100 | 434,976 | |||||||||||
Odontoprev SA | Health Care Providers & Services | 176,400 | 565,834 | |||||||||||
|
| |||||||||||||
10,535,071 | ||||||||||||||
|
| |||||||||||||
Chile 0.7% | ||||||||||||||
Aguas Andinas SA, A | Water Utilities | 1,393,266 | 769,021 | |||||||||||
Enel Chile SA | Electric Utilities | 13,218,436 | 1,327,455 | |||||||||||
|
| |||||||||||||
2,096,476 | ||||||||||||||
|
| |||||||||||||
China 11.6% | ||||||||||||||
AAC Technologies Holdings Inc. | Electronic Equipment, Instruments & Components | 196,000 | 2,036,422 | |||||||||||
Agricultural Bank of China Ltd., H | Banks | 5,782,000 | 2,837,465 | |||||||||||
Anhui Conch Cement Co. Ltd., A | Construction Materials | 14,700 | 78,600 | |||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 539,000 | 2,586,544 | |||||||||||
Bank of Communications Co. Ltd., A | Banks | 78,400 | 66,543 | |||||||||||
Bank of Communications Co. Ltd., H | Banks | 2,450,000 | 1,837,915 | |||||||||||
Bank of Guiyang Co. Ltd. | Banks | 4,900 | 8,710 | |||||||||||
China CITIC Bank Corp. Ltd., A | Banks | 24,500 | 21,578 | |||||||||||
China CITIC Bank Corp. Ltd., H | Banks | 4,116,000 | 2,635,326 | |||||||||||
China Everbright Bank Co. Ltd., H | Banks | 1,421,000 | 630,151 | |||||||||||
China Medical System Holdings Ltd. | Pharmaceuticals | 392,000 | 545,050 | |||||||||||
China Minsheng Banking Corp. Ltd., H | Banks | 1,813,000 | 1,346,155 | |||||||||||
China Mobile Ltd. | Wireless Telecommunication Services | 343,000 | 3,381,826 | |||||||||||
China Shenhua Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 980,000 | 2,239,313 | |||||||||||
China Yangtze Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 39,200 | 93,320 | |||||||||||
China Zhongwang Holdings Ltd. | Metals & Mining | 450,800 | 220,650 | |||||||||||
Chongqing Changan Automobile | Automobiles | 9,800 | 10,369 | |||||||||||
Chongqing Changan Automobile | Automobiles | 254,800 | 205,796 | |||||||||||
Dali Foods Group Co. Ltd. | Food Products | 588,000 | 423,065 | |||||||||||
Dongfeng Motor Group Co. Ltd., H | Automobiles | 1,666,000 | 1,716,055 | |||||||||||
Focus Media Information Technology | Technology Hardware, Storage & Peripherals | 29,400 | 36,362 | |||||||||||
Foshan Haitian Flavouring & Food | Food Products | 9,800 | 112,804 | |||||||||||
Guangzhou Automobile Group Co. | Automobiles | 1,568,000 | 1,737,346 | |||||||||||
Heilan Home Co. Ltd., A | Textiles, Apparel & Luxury Goods | 4,900 | 7,328 | |||||||||||
Henan Shuanghui Investment & | Food Products | 4,900 | 18,623 | |||||||||||
Industrial Bank Co. Ltd., A | Banks | 44,100 | 102,229 | |||||||||||
Inner Mongolia Yili Industrial Group Co. Ltd., A | Food Products | 19,600 | 73,152 | |||||||||||
Jiangsu Expressway Co. Ltd., H | Transportation Infrastructure | 588,000 | 754,453 | |||||||||||
Longfor Group Holdings Ltd. | Real Estate Management & Development | 759,500 | 1,960,651 | |||||||||||
New Hope Liuhe Co. Ltd. | Food Products | 9,800 | 8,731 | |||||||||||
Nine Dragons Paper Holdings Ltd. | Paper & Forest Products | 441,000 | 476,793 | |||||||||||
Shenzhou International Group Holdings Ltd. | Textiles, Apparel & Luxury Goods | 274,400 | 3,520,781 |
libertyshares.com | Semiannual Report | 25 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Emerging Markets ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
Sihuan Pharmaceutical Holdings Group Ltd. | Pharmaceuticals | 1,813,000 | $ | 370,714 | ||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., A | Chemicals | 9,800 | 8,346 | |||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., H | Chemicals | 2,254,000 | 1,376,902 | |||||||||||
a | YY Inc., ADR | Interactive Media & Services | 19,306 | 1,446,406 | ||||||||||
|
| |||||||||||||
34,932,474 | ||||||||||||||
|
| |||||||||||||
Czech Republic 0.5% | ||||||||||||||
Moneta Money Bank AS | Banks | 251,419 | 925,403 | |||||||||||
O2 Czech Republic AS | Diversified Telecommunication Services | 43,218 | 504,284 | |||||||||||
|
| |||||||||||||
1,429,687 | ||||||||||||||
|
| |||||||||||||
Egypt 0.2% | ||||||||||||||
Eastern Tobacco | Tobacco | 342,265 | 361,747 | |||||||||||
ElSewedy Electric Co. | Electrical Equipment | 318,500 | 316,900 | |||||||||||
|
| |||||||||||||
678,647 | ||||||||||||||
|
| |||||||||||||
Hong Kong 0.3% | ||||||||||||||
Kingboard Laminates Holdings Ltd. | Electronic Equipment, Instruments & Components | 343,000 | 304,211 | |||||||||||
Lee & Man Paper Manufacturing Ltd. | Paper & Forest Products | 637,000 | 591,013 | |||||||||||
|
| |||||||||||||
895,224 | ||||||||||||||
|
| |||||||||||||
Hungary 0.7% | ||||||||||||||
MOL Hungarian Oil and Gas PLC | Oil, Gas & Consumable Fuels | 196,784 | 2,119,970 | |||||||||||
|
| |||||||||||||
India 12.7% | ||||||||||||||
Bajaj Auto Ltd. | Automobiles | 41,846 | 1,551,373 | |||||||||||
Bharat Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 379,897 | 1,960,801 | |||||||||||
Coal India Ltd. | Oil, Gas & Consumable Fuels | 440,657 | 1,618,498 | |||||||||||
Dabur India Ltd. | Personal Products | 265,139 | 1,561,427 | |||||||||||
Eicher Motors Ltd. | Automobiles | 7,203 | 2,403,193 | |||||||||||
HCL Technologies Ltd. | IT Services | 238,679 | 3,581,667 | |||||||||||
Hero Motocorp Ltd. | Automobiles | 32,291 | 1,306,629 | |||||||||||
Hindustan Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 394,891 | 1,369,780 | |||||||||||
Hindustan Unilever Ltd. | Household Products | 135,289 | 3,001,777 | |||||||||||
Indian Oil Corp. Ltd. | Oil, Gas & Consumable Fuels | 702,807 | 1,486,763 | |||||||||||
Infosys Ltd. | IT Services | 362,747 | 3,653,241 | |||||||||||
b | InterGlobe Aviation Ltd., Reg S | Airlines | 31,360 | 357,380 | ||||||||||
ITC Ltd. | Tobacco | 756,217 | 3,106,133 | |||||||||||
Marico Ltd. | Personal Products | 237,356 | 1,090,515 | |||||||||||
Maruti Suzuki India Ltd. | Automobiles | 25,284 | 2,562,913 | |||||||||||
Nestle India Ltd. | Food Products | 7,546 | 1,009,706 | |||||||||||
Pidilite Industries Ltd. | Chemicals | 34,153 | 492,743 | |||||||||||
Tata Consultancy Services Ltd. | IT Services | 120,344 | 3,625,261 | |||||||||||
Tech Mahindra Ltd. | IT Services | 249,606 | 2,566,992 | |||||||||||
|
| |||||||||||||
38,306,792 | ||||||||||||||
|
| |||||||||||||
Indonesia 3.8% | ||||||||||||||
Adaro Energy Tbk PT | Oil, Gas & Consumable Fuels | 4,091,500 | 503,835 | |||||||||||
Hanjaya Mandala Sampoerna Tbk PT | Tobacco | 5,914,300 | 1,528,038 | |||||||||||
Matahari Department Store Tbk PT | Multiline Retail | 1,768,900 | 822,040 | |||||||||||
PT Telkom Indonesia (Persero) Tbk | Diversified Telecommunication Services | 13,034,000 | 3,183,825 | |||||||||||
Surya Citra Media Tbk PT | Media | 3,802,400 | 478,442 | |||||||||||
Unilever Indonesia Tbk PT | Household Products | 965,300 | 3,046,219 | |||||||||||
United Tractors Tbk PT | Oil, Gas & Consumable Fuels | 828,100 | 1,833,862 | |||||||||||
|
| |||||||||||||
11,396,261 | ||||||||||||||
|
| |||||||||||||
Malaysia 3.6% | ||||||||||||||
AirAsia Group Bhd. | Airlines | 641,900 | 490,130 | |||||||||||
Astro Malaysia Holdings Bhd. | Media | 916,300 | 325,471 |
26 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Emerging Markets ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Malaysia (continued) | ||||||||||||||
British American Tobacco Malaysia Bhd. | Tobacco | 112,700 | $ | 863,802 | ||||||||||
Digi.com Bhd. | Wireless Telecommunication Services | 2,043,300 | 2,379,777 | |||||||||||
Fraser & Neave Holdings Bhd. | Beverages | 39,200 | 357,285 | |||||||||||
Hartalega Holdings Bhd. | Health Care Equipment & Supplies | 671,300 | 1,073,820 | |||||||||||
Nestle (Malaysia) Bhd. | Food Products | 34,300 | 1,213,367 | |||||||||||
Petronas Chemicals Group Bhd. | Chemicals | 1,347,500 | 3,047,626 | |||||||||||
Petronas Dagangan Bhd. | Oil, Gas & Consumable Fuels | 102,900 | 652,931 | |||||||||||
Westports Holdings Bhd. | Transportation Infrastructure | 563,500 | 517,410 | |||||||||||
|
| |||||||||||||
10,921,619 | ||||||||||||||
|
| |||||||||||||
Mexico 2.4% | ||||||||||||||
Grupo Aeroportuario del Pacifico SAB de CV | Transportation Infrastructure | 178,654 | 1,954,572 | |||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 798,406 | 1,421,818 | |||||||||||
Wal-Mart de Mexico SAB de CV, V | Food & Staples Retailing | 1,276,450 | 3,892,987 | |||||||||||
|
| |||||||||||||
7,269,377 | ||||||||||||||
|
| |||||||||||||
Pakistan 0.3% | ||||||||||||||
Lucky Cement Ltd. | Construction Materials | 61,250 | 253,000 | |||||||||||
MCB Bank Ltd. | Banks | 200,900 | 325,520 | |||||||||||
Oil & Gas Development Co. Ltd. | Oil, Gas & Consumable Fuels | 338,100 | 416,540 | |||||||||||
|
| |||||||||||||
995,060 | ||||||||||||||
|
| |||||||||||||
Philippines 0.6% | ||||||||||||||
DMCI Holdings Inc. | Industrial Conglomerates | 1,930,600 | 406,630 | |||||||||||
Globe Telecom Inc. | Wireless Telecommunication Services | 15,680 | 638,460 | |||||||||||
Manila Electric Co. | Electric Utilities | 103,390 | 650,613 | |||||||||||
|
| |||||||||||||
1,695,703 | ||||||||||||||
|
| |||||||||||||
Poland 0.2% | ||||||||||||||
a | Jastrzebska Spolka Weglowa SA | Metals & Mining | 22,785 | 409,204 | ||||||||||
|
| |||||||||||||
Qatar 1.5% | ||||||||||||||
Barwa Real Estate Co. | Real Estate Management & Development | 27,489 | 267,077 | |||||||||||
Doha Bank QSC | Banks | 83,251 | 480,096 | |||||||||||
Industries Qatar QSC | Industrial Conglomerates | 80,801 | 2,766,960 | |||||||||||
Qatar Electricity & Water Co. QSC | Multi-Utilities | 19,306 | 1,015,268 | |||||||||||
The Commercial Bank PQSC | Banks | 742 | 8,233 | |||||||||||
|
| |||||||||||||
4,537,634 | ||||||||||||||
|
| |||||||||||||
Russia 12.6% | ||||||||||||||
Alrosa PJSC | Metals & Mining | 2,122,729 | 3,461,120 | |||||||||||
Federal Hydrogenerating Co. | Electric Utilities | 57,592,689 | 545,721 | |||||||||||
Gazprom PJSC | Oil, Gas & Consumable Fuels | 1,317,218 | 3,270,366 | |||||||||||
Inter RAO UES PJSC | Electric Utilities | 21,293,440 | 1,335,086 | |||||||||||
LUKOIL PJSC | Oil, Gas & Consumable Fuels | 44,002 | 3,373,966 | |||||||||||
Magnitogorsk Iron & Steel Works | Metals & Mining | 950,943 | 757,690 | |||||||||||
MMC Norilsk Nickel PJSC | Metals & Mining | 17,787 | 3,092,728 | |||||||||||
Mobile TeleSystems PJSC, ADR | Wireless Telecommunication Services | 299,341 | 2,553,379 | |||||||||||
NLMK PJSC | Metals & Mining | 687,372 | 1,867,064 | |||||||||||
b | Novatek PJSC, GDR, Reg S | Oil, Gas & Consumable Fuels | 24,059 | 4,426,856 | ||||||||||
b | PhosAgro PJSC, GDR, Reg S | Chemicals | 71,589 | 972,178 | ||||||||||
Polyus Gold OJSC | Metals & Mining | 8,134 | 512,667 | |||||||||||
Rosneft PJSC | Oil, Gas & Consumable Fuels | 564,186 | 4,246,790 | |||||||||||
Severstal PJSC | Metals & Mining | 160,426 | 2,673,071 | |||||||||||
Surgutneftegas PJSC | Oil, Gas & Consumable Fuels | 3,073,035 | 1,286,784 | |||||||||||
Tatneft PAO | Oil, Gas & Consumable Fuels | 283,073 | 3,610,642 | |||||||||||
|
| |||||||||||||
37,986,108 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 27 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Emerging Markets ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
South Africa 4.3% | ||||||||||||||
Clicks Group Ltd. | Food & Staples Retailing | 70,805 | $ | 875,603 | ||||||||||
Exxaro Resources Ltd. | Oil, Gas & Consumable Fuels | 109,172 | 1,121,402 | |||||||||||
Fortress REIT Ltd., A | Equity Real Estate Investment Trusts (REITs) | 562,373 | 673,199 | |||||||||||
Kumba Iron Ore Ltd. | Metals & Mining | 33,173 | 752,386 | |||||||||||
Mr. Price Group Ltd. | Specialty Retail | 157,143 | 2,534,720 | |||||||||||
RMB Holdings Ltd. | Diversified Financial Services | 196,441 | 1,098,723 | |||||||||||
Telkom SA SOC Ltd. | Diversified Telecommunication Services | 112,553 | 410,882 | |||||||||||
Tiger Brands Ltd. | Food Products | 82,173 | 1,538,909 | |||||||||||
Truworths International Ltd. | Specialty Retail | 264,110 | 1,558,391 | |||||||||||
Vodacom Group Ltd. | Wireless Telecommunication Services | 273,812 | 2,436,615 | |||||||||||
|
| |||||||||||||
13,000,830 | ||||||||||||||
|
| |||||||||||||
South Korea 13.2% | ||||||||||||||
BNK Financial Group Inc. | Banks | 124,754 | 967,216 | |||||||||||
Coway Co. Ltd. | Household Durables | 30,625 | 2,396,439 | |||||||||||
DGB Financial Group Inc. | Banks | 93,541 | 855,931 | |||||||||||
Hana Financial Group Inc. | Banks | 75,068 | 3,014,902 | |||||||||||
Hankook Tire Co. Ltd. | Auto Components | 37,534 | 1,695,248 | |||||||||||
Hanwha Chemical Corp. | Chemicals | 41,307 | 718,706 | |||||||||||
Hanwha Life Insurance Co. Ltd. | Insurance | 135,975 | 648,463 | |||||||||||
Hyundai Glovis Co. Ltd. | Air Freight & Logistics | 5,145 | 602,975 | |||||||||||
Hyundai Marine & Fire Insurance Co. Ltd. | Insurance | 30,821 | 1,165,599 | |||||||||||
Industrial Bank of Korea | Banks | 144,795 | 1,990,646 | |||||||||||
Kangwon Land Inc. | Hotels, Restaurants & Leisure | 60,270 | 1,559,386 | |||||||||||
KB Financial Group Inc. | Banks | 60,711 | 2,966,451 | |||||||||||
KT&G Corp. | Tobacco | 34,153 | 3,202,084 | |||||||||||
LG Corp. | Industrial Conglomerates | 37,779 | 2,472,622 | |||||||||||
LG Display Co. Ltd. | Electronic Equipment, Instruments & Components | 110,054 | 1,895,002 | |||||||||||
Lotte Chemical Corp. | Chemicals | 8,722 | 2,185,906 | |||||||||||
S-1 Corp. | Commercial Services & Supplies | 9,261 | 763,088 | |||||||||||
S-Oil Corp. | Oil, Gas & Consumable Fuels | 19,845 | 2,450,994 | |||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 59,339 | 2,484,829 | |||||||||||
SK Hynix Inc. | Semiconductors & Semiconductor Equipment | 38,416 | 2,531,629 | |||||||||||
SK Telecom Co. Ltd. | Wireless Telecommunication Services | 12,005 | 3,051,981 | |||||||||||
|
| |||||||||||||
39,620,097 | ||||||||||||||
|
| |||||||||||||
Taiwan 13.2% | ||||||||||||||
AU Optronics Corp. | Electronic Equipment, Instruments & Components | 2,450,000 | 1,035,110 | |||||||||||
Catcher Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 264,600 | 2,911,787 | |||||||||||
Chicony Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 295,530 | 598,164 | |||||||||||
Chunghwa Telecom Co. Ltd. | Diversified Telecommunication Services | 833,000 | 3,001,015 | |||||||||||
Far EasTone Telecommunications Co. Ltd. | Wireless Telecommunication Services | 833,000 | 1,986,127 | |||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 196,000 | 1,206,825 | |||||||||||
Formosa Chemicals & Fibre Corp. | Chemicals | 784,000 | 3,286,674 | |||||||||||
Formosa Petrochemical Corp. | Oil, Gas & Consumable Fuels | 686,000 | 3,325,189 | |||||||||||
Formosa Plastics Corp. | Chemicals | 833,000 | 3,191,989 | |||||||||||
Micro-Star International Co. Ltd. | Technology Hardware, Storage & Peripherals | 343,000 | 926,784 | |||||||||||
Nan Ya Plastics Corp. | Chemicals | 1,078,000 | 2,993,954 | |||||||||||
Nanya Technology Corp. | Semiconductors & Semiconductor Equipment | 539,000 | 1,025,641 | |||||||||||
Nien Made Enterprise Co. Ltd. | Household Durables | 98,000 | 767,105 | |||||||||||
Novatek Microelectronics Corp. Ltd. | Semiconductors & Semiconductor Equipment | 343,000 | 1,696,296 | |||||||||||
Phison Electronics Corp. | Semiconductors & Semiconductor Equipment | 98,000 | 779,943 | |||||||||||
President Chain Store Corp. | Food & Staples Retailing | 295,470 | 3,469,230 | |||||||||||
Taiwan Mobile Co. Ltd. | Wireless Telecommunication Services | 882,000 | 3,163,102 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 392,000 | 3,370,124 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 490,000 | 1,091,278 | |||||||||||
|
| |||||||||||||
39,826,337 | ||||||||||||||
|
|
28 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Emerging Markets ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Thailand 6.4% | ||||||||||||||
Advanced Info Service PCL | Wireless Telecommunication Services | 524,300 | $ | 3,258,636 | ||||||||||
Airports of Thailand Public Co. Ltd., NVDR | Transportation Infrastructure | 1,460,200 | 2,957,424 | |||||||||||
Bumrungrad Hospital PCL | Health Care Providers & Services | 186,200 | 1,070,909 | |||||||||||
Central Pattana PCL | Real Estate Management & Development | 725,200 | 1,861,212 | |||||||||||
Delta Electronics Thailand PCL | Electronic Equipment, Instruments & Components | 264,600 | 570,682 | |||||||||||
Glow Energy PCL | Independent Power and Renewable Electricity Producers | 245,000 | 666,667 | |||||||||||
PTT Global Chemical PCL, NVDR | Chemicals | 965,300 | 2,425,189 | |||||||||||
PTT PCL | Oil, Gas & Consumable Fuels | 1,768,900 | 2,967,311 | |||||||||||
Thai Oil PCL | Oil, Gas & Consumable Fuels | 592,900 | 1,622,500 | |||||||||||
The Siam Cement PCL | Construction Materials | 137,200 | 1,892,121 | |||||||||||
|
| |||||||||||||
19,292,651 | ||||||||||||||
|
| |||||||||||||
Turkey 2.9% | ||||||||||||||
Aselsan Elektronik Sanayi ve Ticaret AS | Aerospace & Defense | 81,487 | 374,113 | |||||||||||
BIM Birlesik Magazalar AS | Food & Staples Retailing | 124,607 | 1,687,410 | |||||||||||
Eregli Demir ve Celik Fabrikalari AS | Metals & Mining | 853,580 | 1,567,258 | |||||||||||
Ford Otomotiv Sanayi AS | Automobiles | 46,550 | 509,878 | |||||||||||
Petkim Petrokimya Holding AS | Chemicals | 400,103 | 356,325 | |||||||||||
TAV Havalimanlari Holding AS | Transportation Infrastructure | 105,350 | 548,557 | |||||||||||
Tofas Turk Otomobil Fabrikasi AS | Automobiles | 68,306 | 243,101 | |||||||||||
Tupras-Turkiye Petrol Rafinerileri AS | Oil, Gas & Consumable Fuels | 83,937 | 1,875,110 | |||||||||||
Turkcell Iletisim Hizmetleri AS | Wireless Telecommunication Services | 305,074 | 586,046 | |||||||||||
Turkiye Halk Bankasi AS | Banks | 267,981 | 298,436 | |||||||||||
Turkiye Is Bankasi AS, C | Banks | 708,197 | 521,071 | |||||||||||
|
| |||||||||||||
8,567,305 | ||||||||||||||
|
| |||||||||||||
United Arab Emirates 1.9% | ||||||||||||||
Aldar Properties PJSC | Real Estate Management & Development | 1,906,345 | 949,786 | |||||||||||
Dubai Islamic Bank PJSC | Banks | 722,015 | 1,059,517 | |||||||||||
a | Emaar Development PJSC | Real Estate Management & Development | 252,203 | 359,795 | ||||||||||
Emirates Telecommunications Group Co. PJSC | Diversified Telecommunication Services | 720,104 | 3,274,047 | |||||||||||
|
| |||||||||||||
5,643,145 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks | 292,155,672 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 2.5% | ||||||||||||||
Brazil 1.3% | ||||||||||||||
c | Itausa-Investimentos Itau SA, 5.515%, pfd. | Banks | 1,107,400 | 2,800,701 | ||||||||||
c | Telefonica Brasil SA, 11.194%, pfd. | Diversified Telecommunication Services | 127,400 | 1,250,537 | ||||||||||
|
| |||||||||||||
4,051,238 | ||||||||||||||
|
| |||||||||||||
Russia 0.8% | ||||||||||||||
c | Surgutneftegas PJSC, 3.625%, pfd. | Oil, Gas & Consumable Fuels | 3,193,134 | 1,856,058 | ||||||||||
c | Transneft PJSC, 6.910%, pfd. | Oil, Gas & Consumable Fuels | 245 | 620,028 | ||||||||||
|
| |||||||||||||
2,476,086 | ||||||||||||||
|
| |||||||||||||
South Korea 0.4% | ||||||||||||||
c | LG Chem Ltd., 2.966%, pfd. | Chemicals | 3,822 | 702,896 | ||||||||||
c | Samsung Electronics Co. Ltd., 3.009%, pfd. | Technology Hardware, Storage & Peripherals | 11,515 | 392,917 | ||||||||||
|
| |||||||||||||
1,095,813 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 29 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Emerging Markets ETF (continued)
Value | ||||||||||||||
Total Preferred Stocks | $ | 7,623,137 | ||||||||||||
|
| |||||||||||||
Total Investments | 299,778,809 | |||||||||||||
Other Assets, less Liabilities 0.4% | 1,244,856 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 301,023,665 | ||||||||||||
|
|
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $5,756,414, representing 1.9% of net assets.
cVariable rate security. The rate shown represents the yield at period end.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/ Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
MSCI Emerging Markets Index | Long | 22 | $ | 1,154,670 | 12/21/18 | $ | 22,704 |
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 72.
30 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ Global Dividend ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, | |||||||||||
2018 | 2017a | |||||||||||
Per share operating performance (for a share outstanding throughout the period) |
| |||||||||||
Net asset value, beginning of period | $ | 28.22 | $ | 27.31 | $ | 25.43 | ||||||
|
| |||||||||||
Income from investment operations:b |
| |||||||||||
Net investment incomec | 0.50 | 0.86 | 0.67 | |||||||||
Net realized and unrealized gains (losses) | (— | )d | 1.03 | 1.79 | ||||||||
|
| |||||||||||
Total from investment operations | 0.50 | 1.89 | 2.46 | |||||||||
|
| |||||||||||
Less distributions from net investment income | (0.54 | ) | (0.98 | ) | (0.58 | ) | ||||||
|
| |||||||||||
Net asset value, end of period | $ | 28.18 | $ | 28.22 | $ | 27.31 | ||||||
|
| |||||||||||
Total returne | 1.84% | 6.91% | 9.79% | |||||||||
Ratios to average net assetsf |
| |||||||||||
Expenses before waiver and payments by affiliates | 0.45% | 0.75% | g | 0.98% | ||||||||
Expenses net of waiver and payments by affiliates | 0.45% | 0.45% | g | 0.45% | ||||||||
Net investment income | 3.57% | 3.05% | 3.11% | |||||||||
Supplemental data |
| |||||||||||
Net assets, end of period (000’s) | $16,907 | $16,933 | $27,306 | |||||||||
Portfolio turnover rateh | 14.03% | 43.32% | 13.38% |
aFor the period June 1, 2016 (commencement of operations) to March 31, 2017.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
d Amount rounds to less than $0.01 per share.
eTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gEffective December 1, 2017, the Fund replaced the prior fee structure with a unified management fee.
hPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 31 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin LibertyQ Global Dividend ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 97.8% | ||||||||||||||
Australia 9.9% | ||||||||||||||
Amcor Ltd. | Containers & Packaging | 11,415 | $ | 112,988 | ||||||||||
Brambles Ltd. | Commercial Services & Supplies | 17,199 | 135,643 | |||||||||||
Challenger Ltd. | Diversified Financial Services | 5,541 | 44,903 | |||||||||||
Commonwealth Bank of Australia | Banks | 6,345 | 327,838 | |||||||||||
Flight Centre Travel Group Ltd. | Hotels, Restaurants & Leisure | 549 | 21,117 | |||||||||||
National Australia Bank Ltd. | Banks | 12,786 | 257,279 | |||||||||||
Telstra Corp. Ltd. | Diversified Telecommunication Services | 47,406 | 109,419 | |||||||||||
Wesfarmers Ltd. | Food & Staples Retailing | 9,867 | 355,893 | |||||||||||
Westpac Banking Corp. | Banks | 15,513 | 313,498 | |||||||||||
|
| |||||||||||||
1,678,578 | ||||||||||||||
|
| |||||||||||||
Belgium 0.2% | ||||||||||||||
Proximus SADP | Diversified Telecommunication Services | 1,605 | 38,365 | |||||||||||
|
| |||||||||||||
Canada 8.9% | ||||||||||||||
Bank of Nova Scotia | Banks | 5,373 | 320,027 | |||||||||||
Canadian Imperial Bank of Commerce | Banks | 3,711 | 347,472 | |||||||||||
CI Financial Corp. | Capital Markets | 2,433 | 38,605 | |||||||||||
IGM Financial Inc. | Capital Markets | 957 | 26,283 | |||||||||||
Royal Bank of Canada | Banks | 4,290 | 343,638 | |||||||||||
TELUS Corp. | Diversified Telecommunication Services | 1,407 | 51,824 | |||||||||||
The Toronto-Dominion Bank | Banks | 5,709 | 346,665 | |||||||||||
Vermilion Energy Inc. | Oil, Gas & Consumable Fuels | 765 | 25,189 | |||||||||||
|
| |||||||||||||
1,499,703 | ||||||||||||||
|
| |||||||||||||
China 0.4% | ||||||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 6,000 | 28,793 | |||||||||||
China Vanke Co. Ltd. | Real Estate Management & Development | 300 | 1,060 | |||||||||||
China Vanke Co. Ltd., H | Real Estate Management & Development | 9,900 | 32,768 | |||||||||||
Henan Shuanghui Investment & Development Co. Ltd. | Food Products | 300 | 1,140 | |||||||||||
|
| |||||||||||||
63,761 | ||||||||||||||
|
| |||||||||||||
Denmark 0.2% | ||||||||||||||
Tryg AS | Insurance | 1,500 | 37,358 | |||||||||||
|
| |||||||||||||
Finland 1.6% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 1,374 | �� | 58,298 | ||||||||||
Kone OYJ, B | Machinery | 3,234 | 172,864 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 1,143 | 46,851 | |||||||||||
|
| |||||||||||||
278,013 | ||||||||||||||
|
| |||||||||||||
France 2.3% | ||||||||||||||
Sanofi | Pharmaceuticals | 4,323 | 384,420 | |||||||||||
|
| |||||||||||||
Germany 2.7% | ||||||||||||||
Deutsche Boerse AG | Capital Markets | 1,761 | 236,039 | |||||||||||
Hannover Rueck SE | Insurance | 513 | 72,515 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 879 | 67,710 | |||||||||||
ProSiebenSat.1 Media SE | Media | 2,802 | 72,804 | |||||||||||
|
| |||||||||||||
449,068 | ||||||||||||||
|
| |||||||||||||
Hong Kong 0.7% | ||||||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 25,200 | 114,166 | |||||||||||
|
| |||||||||||||
Indonesia 0.4% | ||||||||||||||
PT Telkom Indonesia (Persero) Tbk | Diversified Telecommunication Services | 255,100 | 62,313 | |||||||||||
|
| |||||||||||||
Japan 3.2% | ||||||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 1,270 | 163,411 | |||||||||||
Lawson Inc. | Food & Staples Retailing | 400 | 24,370 | |||||||||||
NTT DoCoMo Inc. | Wireless Telecommunication Services | 13,200 | 355,029 | |||||||||||
|
| |||||||||||||
542,810 | ||||||||||||||
|
|
32 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Dividend ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Malaysia 0.1% | ||||||||||||||
Nestle (Malaysia) Bhd. | Food Products | 600 | $ | 21,225 | ||||||||||
|
| |||||||||||||
Mexico 0.2% | ||||||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 14,754 | 26,274 | |||||||||||
|
| |||||||||||||
Norway 0.6% | ||||||||||||||
Telenor ASA | Diversified Telecommunication Services | 5,238 | 102,338 | |||||||||||
|
| |||||||||||||
Qatar 1.1% | ||||||||||||||
Qatar National Bank SAQ | Banks | 3,729 | 181,253 | |||||||||||
|
| |||||||||||||
Singapore 1.5% | ||||||||||||||
ComfortDelGro Corp. Ltd. | Road & Rail | 21,000 | 37,348 | |||||||||||
SATS Ltd. | Transportation Infrastructure | 6,900 | 26,361 | |||||||||||
Singapore Telecommunications Ltd. | Diversified Telecommunication Services | 70,200 | 166,453 | |||||||||||
Venture Corp. Ltd. | Electronic Equipment, Instruments & Components | 1,500 | 19,354 | |||||||||||
|
| |||||||||||||
249,516 | ||||||||||||||
|
| |||||||||||||
South Africa 2.6% | ||||||||||||||
Absa Group Ltd. | Banks | 4,821 | 51,742 | |||||||||||
FirstRand Ltd. | Diversified Financial Services | 33,573 | 161,018 | |||||||||||
Mr. Price Group Ltd. | Specialty Retail | 2,595 | 41,857 | |||||||||||
Rand Merchant Investment Holdings Ltd. | Insurance | 6,498 | 17,729 | |||||||||||
RMB Holdings Ltd. | Diversified Financial Services | 9,159 | 51,228 | |||||||||||
Sanlam Ltd. | Insurance | 14,379 | 80,383 | |||||||||||
The Spar Group Ltd. | Food & Staples Retailing | 1,311 | 17,058 | |||||||||||
Truworths International Ltd. | Specialty Retail | 4,347 | 25,650 | |||||||||||
|
| |||||||||||||
446,665 | ||||||||||||||
|
| |||||||||||||
Spain 0.4% | ||||||||||||||
Red Electrica Corp. SA | Electric Utilities | 3,120 | 65,375 | |||||||||||
|
| |||||||||||||
Sweden 3.3% | ||||||||||||||
Atlas Copco AB | Machinery | 4,452 | 118,719 | |||||||||||
a | Epiroc AB, B | Machinery | 4,464 | 45,929 | ||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 13,287 | 245,385 | |||||||||||
Investor AB, B | Diversified Financial Services | 3,285 | 151,706 | |||||||||||
|
| |||||||||||||
561,739 | ||||||||||||||
|
| |||||||||||||
Switzerland 7.0% | ||||||||||||||
Novartis AG | Pharmaceuticals | 4,359 | 376,638 | |||||||||||
Roche Holding AG | Pharmaceuticals | 1,494 | 363,635 | |||||||||||
SGS SA | Professional Services | 39 | 103,169 | |||||||||||
Zurich Insurance Group AG | Insurance | 1,065 | 338,209 | |||||||||||
|
| |||||||||||||
1,181,651 | ||||||||||||||
|
| |||||||||||||
Taiwan 0.2% | ||||||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 3,000 | 18,472 | |||||||||||
Phison Electronics Corp. | Semiconductors & Semiconductor Equipment | 1,000 | 7,958 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 7,000 | 15,590 | |||||||||||
|
| |||||||||||||
42,020 | ||||||||||||||
|
| |||||||||||||
United Kingdom 8.2% | ||||||||||||||
BAE Systems PLC | Aerospace & Defense | 24,831 | 203,935 | |||||||||||
BT Group PLC | Diversified Telecommunication Services | 80,928 | 237,768 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 9,108 | 38,470 | |||||||||||
Legal & General Group PLC | Insurance | 41,901 | 143,269 | |||||||||||
Marks & Spencer Group PLC | Multiline Retail | 12,936 | 48,718 | |||||||||||
Smiths Group PLC | Industrial Conglomerates | 2,946 | 57,453 | |||||||||||
Unilever NV, IDR | Personal Products | 5,940 | 330,925 | |||||||||||
Unilever PLC | Personal Products | 5,991 | 329,378 | |||||||||||
|
| |||||||||||||
1,389,916 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 33 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Dividend ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United States 42.1% | ||||||||||||||
AbbVie Inc. | Biotechnology | 3,165 | $ | 299,346 | ||||||||||
Altria Group Inc. | Tobacco | 6,039 | 364,212 | |||||||||||
Clorox Co. | Household Products | 1,788 | 268,933 | |||||||||||
Darden Restaurants Inc. | Hotels, Restaurants & Leisure | 1,317 | 146,437 | |||||||||||
Eli Lilly & Co. | Pharmaceuticals | 4,107 | 440,722 | |||||||||||
Emerson Electric Co. | Electrical Equipment | 4,164 | 318,879 | |||||||||||
Garmin Ltd. | Household Durables | 1,164 | 81,538 | |||||||||||
General Mills Inc. | Food Products | 4,188 | 179,749 | |||||||||||
H&R Block Inc. | Diversified Consumer Services | 1,758 | 45,268 | |||||||||||
Hasbro Inc. | Leisure Products | 1,155 | 121,414 | |||||||||||
Intel Corp. | Semiconductors & Semiconductor Equipment | 6,189 | 292,678 | |||||||||||
International Business Machines Corp. | IT Services | 2,310 | 349,295 | |||||||||||
Johnson & Johnson | Pharmaceuticals | 2,718 | 375,546 | |||||||||||
Kimberly-Clark Corp. | Household Products | 3,210 | 364,784 | |||||||||||
Las Vegas Sands Corp. | Hotels, Restaurants & Leisure | 3,966 | 235,303 | |||||||||||
Leggett & Platt Inc. | Household Durables | 1,323 | 57,934 | |||||||||||
Lockheed Martin Corp. | Aerospace & Defense | 1,038 | 359,106 | |||||||||||
LyondellBasell Industries NV, A | Chemicals | 2,859 | 293,076 | |||||||||||
Maxim Integrated Products Inc. | Semiconductors & Semiconductor Equipment | 3,222 | 181,689 | |||||||||||
McDonald’s Corp. | Hotels, Restaurants & Leisure | 2,082 | 348,298 | |||||||||||
Merck & Co. Inc. | Pharmaceuticals | 5,736 | 406,912 | |||||||||||
Paychex Inc. | IT Services | 3,981 | 293,201 | |||||||||||
Philip Morris International Inc. | Tobacco | 4,194 | 341,979 | |||||||||||
Seagate Technology PLC | Technology Hardware, Storage & Peripherals | 2,820 | 133,527 | |||||||||||
Sysco Corp. | Food & Staples Retailing | 4,302 | 315,121 | |||||||||||
Tapestry Inc. | Textiles, Apparel & Luxury Goods | 2,466 | 123,966 | |||||||||||
The Procter & Gamble Co. | Household Products | 4,539 | 377,781 | |||||||||||
|
| |||||||||||||
7,116,694 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks (Cost $15,565,123) | 16,533,221 | |||||||||||||
|
| |||||||||||||
Preferred Stocks (Cost $216,704) 1.8% | ||||||||||||||
Brazil 1.8% | ||||||||||||||
b | Itau Unibanco Holding SA, 7.482%, pfd. | Banks | 27,900 | 308,304 | ||||||||||
|
| |||||||||||||
Total Investments | 16,841,525 | |||||||||||||
Other Assets, less Liabilities 0.4% | 65,882 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 16,907,407 | ||||||||||||
|
|
aNon-income producing.
bVariable rate security. The rate shown represents the yield at period end.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/ Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
MSCI All Country World Index | Long | 1 | $ | 25,730 | 12/21/18 | $ | (83 | ) |
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 72.
34 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ Global Equity ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, | |||||||||||
2018 | 2017a | |||||||||||
Per share operating performance (for a share outstanding throughout the period) |
| |||||||||||
Net asset value, beginning of period | $ | 30.14 | $ | 27.18 | $ | 25.32 | ||||||
|
| |||||||||||
Income from investment operations:b |
| |||||||||||
Net investment incomec | 0.46 | 0.74 | 0.56 | |||||||||
Net realized and unrealized gains (losses) | 0.97 | 3.01 | 1.92 | |||||||||
|
| |||||||||||
Total from investment operations | 1.43 | 3.75 | 2.48 | |||||||||
|
| |||||||||||
Less distributions from net investment income | (0.32 | ) | (0.79 | ) | (0.62 | ) | ||||||
|
| |||||||||||
Net asset value, end of period | $ | 31.25 | $ | 30.14 | $ | 27.18 | ||||||
|
| |||||||||||
Total returnd | 4.80% | 13.91% | 9.95% | |||||||||
Ratios to average net assetse |
| |||||||||||
Expenses before waiver and payments by affiliates | 0.35% | 0.90% | f | 1.04% | ||||||||
Expenses net of waiver and payments by affiliates | 0.34% | 0.35% | f | 0.35% | ||||||||
Net investment income | 2.99% | 2.53% | 2.60% | |||||||||
Supplemental data |
| |||||||||||
Net assets, end of period (000’s) | $18,752 | $18,082 | $21,744 | |||||||||
Portfolio turnover rateg | 20.66% | 35.01% | 13.84% |
aFor the period June 1, 2016 (commencement of operations) to March 31, 2017.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of 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.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 35 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin LibertyQ Global Equity ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 97.8% | ||||||||||||||
Australia 4.0% | ||||||||||||||
Alumina Ltd. | Metals & Mining | 2,661 | $ | 5,333 | ||||||||||
Amcor Ltd. | Containers & Packaging | 2,262 | 22,390 | |||||||||||
Aristocrat Leisure Ltd. | Hotels, Restaurants & Leisure | 1,287 | 26,484 | |||||||||||
Aurizon Holdings Ltd. | Road & Rail | 3,507 | 10,429 | |||||||||||
Bendigo and Adelaide Bank Ltd. | Banks | 324 | 2,520 | |||||||||||
BHP Billiton Ltd. | Metals & Mining | 3,117 | 78,101 | |||||||||||
Bluescope Steel Ltd. | Metals & Mining | 906 | 11,131 | |||||||||||
Brambles Ltd. | Commercial Services & Supplies | 1,689 | 13,321 | |||||||||||
Cimic Group Ltd. | Construction & Engineering | 177 | 6,578 | |||||||||||
Coca-Cola Amatil Ltd. | Beverages | 1,080 | 7,627 | |||||||||||
Cochlear Ltd. | Health Care Equipment & Supplies | 156 | 22,647 | |||||||||||
Crown Resorts Ltd. | Hotels, Restaurants & Leisure | 732 | 7,251 | |||||||||||
CSL Ltd. | Biotechnology | 942 | 137,073 | |||||||||||
Dexus | Equity Real Estate Investment Trusts (REITs) | 1,914 | 14,624 | |||||||||||
Flight Centre Travel Group Ltd. | Hotels, Restaurants & Leisure | 129 | 4,962 | |||||||||||
Fortescue Metals Group Ltd. | Metals & Mining | 3,855 | 10,934 | |||||||||||
GPT Group | Equity Real Estate Investment Trusts (REITs) | 3,606 | 13,593 | |||||||||||
Harvey Norman Holdings Ltd. | Multiline Retail | 1,470 | 3,744 | |||||||||||
Medibank Private Ltd. | Insurance | 6,564 | 13,821 | |||||||||||
National Australia Bank Ltd. | Banks | 4,194 | 84,391 | |||||||||||
REA Group Ltd. | Interactive Media & Services | 120 | 7,461 | |||||||||||
Rio Tinto Ltd. | Metals & Mining | 687 | 39,150 | |||||||||||
Sonic Healthcare Ltd. | Health Care Providers & Services | 705 | 12,707 | |||||||||||
South32 Ltd. | Metals & Mining | 8,103 | 22,983 | |||||||||||
Telstra Corp. Ltd. | Diversified Telecommunication Services | 10,488 | 24,208 | |||||||||||
TPG Telecom Ltd. | Diversified Telecommunication Services | 588 | 3,633 | |||||||||||
Vicinity Centres | Equity Real Estate Investment Trusts (REITs) | 5,781 | 10,959 | |||||||||||
Wesfarmers Ltd. | Food & Staples Retailing | 2,319 | 83,644 | |||||||||||
Woolworths Group Ltd. | Food & Staples Retailing | 2,532 | 51,443 | |||||||||||
|
| |||||||||||||
753,142 | ||||||||||||||
|
| |||||||||||||
Austria 0.1% | ||||||||||||||
OMV AG | Oil, Gas & Consumable Fuels | 237 | 13,321 | |||||||||||
|
| |||||||||||||
Belgium 0.1% | ||||||||||||||
Colruyt SA | Food & Staples Retailing | 144 | 8,154 | |||||||||||
Proximus SADP | Diversified Telecommunication Services | 315 | 7,529 | |||||||||||
|
| |||||||||||||
15,683 | ||||||||||||||
|
| |||||||||||||
Brazil 0.4% | ||||||||||||||
Ambev SA | Beverages | 9,300 | 42,710 | |||||||||||
Banco Santander Brasil SA | Banks | 300 | 2,683 | |||||||||||
BB Seguridade Participacoes SA | Insurance | 1,680 | 10,138 | |||||||||||
Cielo SA | IT Services | 2,152 | 6,601 | |||||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | Water Utilities | 300 | 1,772 | |||||||||||
Engie Brasil SA | Independent Power and Renewable Electricity Producers | 309 | 2,745 | |||||||||||
Kroton Educacional SA | Diversified Consumer Services | 1,800 | 5,138 | |||||||||||
M. Dias Branco SA | Food Products | 300 | 2,959 | |||||||||||
Odontoprev SA | Health Care Providers & Services | 816 | 2,618 | |||||||||||
|
| |||||||||||||
77,364 | ||||||||||||||
|
| |||||||||||||
Canada 2.2% | ||||||||||||||
BCE Inc. | Diversified Telecommunication Services | 297 | 12,024 | |||||||||||
Canadian Imperial Bank of Commerce | Banks | 714 | 66,854 | |||||||||||
Canadian National Railway Co. | Road & Rail | 1,347 | 120,778 | |||||||||||
CI Financial Corp. | Capital Markets | 588 | 9,330 | |||||||||||
Constellation Software Inc. | Software | 42 | 30,864 | |||||||||||
First Capital Realty Inc. | Real Estate Management & Development | 216 | 3,259 |
36 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Canada (continued) | ||||||||||||||
Gildan Activewear Inc. | Textiles, Apparel & Luxury Goods | 414 | $ | 12,587 | ||||||||||
H&R Real Estate Investment Trust | Equity Real Estate Investment Trusts (REITs) | 321 | 4,934 | |||||||||||
Linamar Corp. | Auto Components | 93 | 4,282 | |||||||||||
Magna International Inc. | Auto Components | 789 | 41,415 | |||||||||||
Metro Inc., A | Food & Staples Retailing | 471 | 14,641 | |||||||||||
RioCan REIT | Equity Real Estate Investment Trusts (REITs) | 312 | 5,957 | |||||||||||
Rogers Communications Inc., B | Wireless Telecommunication Services | 570 | 29,294 | |||||||||||
Saputo Inc. | Food Products | 435 | 12,930 | |||||||||||
Shaw Communications Inc. | Media | 762 | 14,838 | |||||||||||
SmartCentres REIT | Equity Real Estate Investment Trusts (REITs) | 138 | 3,257 | |||||||||||
Teck Resources Ltd., B | Metals & Mining | 498 | 11,993 | |||||||||||
TELUS Corp. | Diversified Telecommunication Services | 336 | 12,376 | |||||||||||
West Fraser Timber Co. Ltd. | Paper & Forest Products | 60 | 3,412 | |||||||||||
|
| |||||||||||||
415,025 | ||||||||||||||
|
| |||||||||||||
Chile 0.0%† | ||||||||||||||
Aguas Andinas SA, A | Water Utilities | 3,456 | 1,907 | |||||||||||
Enel Chile SA | Electric Utilities | 45,534 | 4,573 | |||||||||||
|
| |||||||||||||
6,480 | ||||||||||||||
|
| |||||||||||||
China 3.3% | ||||||||||||||
AAC Technologies Holdings Inc. | Electronic Equipment, Instruments & Components | 1,500 | 15,585 | |||||||||||
Agricultural Bank of China Ltd., A | Banks | 900 | 509 | |||||||||||
Agricultural Bank of China Ltd., H | Banks | 51,000 | 25,028 | |||||||||||
Anhui Conch Cement Co. Ltd., A | Construction Materials | 300 | 1,604 | |||||||||||
Anhui Conch Cement Co. Ltd., H | Construction Materials | 1,500 | 9,058 | |||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 2,000 | 9,598 | |||||||||||
Bank of China Ltd., A | Banks | 600 | 324 | |||||||||||
Bank of China Ltd., H | Banks | 147,000 | 65,376 | |||||||||||
Bank of Communications Co. Ltd., A | Banks | 100 | 85 | |||||||||||
Bank of Communications Co. Ltd., H | Banks | 15,000 | 11,253 | |||||||||||
China Cinda Asset Management Co. Ltd., H | Capital Markets | 12,000 | 3,036 | |||||||||||
China CITIC Bank Corp. Ltd., H | Banks | 15,000 | 9,604 | |||||||||||
China Conch Venture Holdings Ltd. | Machinery | 1,500 | 5,233 | |||||||||||
China Construction Bank Corp., H | Banks | 156,000 | 136,365 | |||||||||||
China Everbright Bank Co. Ltd., H | Banks | 6,000 | 2,661 | |||||||||||
China Medical System Holdings Ltd. | Pharmaceuticals | 3,000 | 4,171 | |||||||||||
China Minsheng Banking Corp. Ltd., H | Banks | 10,800 | 8,019 | |||||||||||
China Mobile Ltd. | Wireless Telecommunication Services | 12,000 | 118,315 | |||||||||||
China Shenhua Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 4,500 | 10,283 | |||||||||||
China Yangtze Power Co. Ltd., A | Independent Power and Renewable Electricity Producers | 300 | 714 | |||||||||||
China Zhongwang Holdings Ltd. | Metals & Mining | 1,200 | 587 | |||||||||||
Chongqing Changan Automobile Co. Ltd., B | Automobiles | 900 | 727 | |||||||||||
Chongqing Rural Commercial Bank Co. Ltd., H | Banks | 6,000 | 3,282 | |||||||||||
CSPC Pharmaceutical Group Ltd. | Pharmaceuticals | 6,000 | 12,744 | |||||||||||
Dali Foods Group Co. Ltd. | Food Products | 3,000 | 2,158 | |||||||||||
Dongfeng Motor Group Co. Ltd., H | Automobiles | 6,000 | 6,180 | |||||||||||
Focus Media Information Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 360 | 445 | |||||||||||
Fuyao Group Glass Industries Co. Ltd., H | Auto Components | 1,200 | 4,363 | |||||||||||
Guangdong Investment Ltd. | Water Utilities | 6,000 | 10,658 | |||||||||||
Guangzhou Automobile Group Co. Ltd., H | Automobiles | 5,600 | 6,205 | |||||||||||
Industrial and Commercial Bank of China Ltd., H | Banks | 126,000 | 92,106 | |||||||||||
Inner Mongolia Yili Industrial Group Co. Ltd., A | Food Products | 300 | 1,120 | |||||||||||
Longfor Group Holdings Ltd. | Real Estate Management & Development | 1,500 | 3,872 | |||||||||||
Nexteer Automotive Group Ltd. | Auto Components | 1,000 | 1,585 | |||||||||||
SAIC Motor Corp. Ltd. | Automobiles | 300 | 1,451 | |||||||||||
Shenzhou International Group Holdings Ltd. | Textiles, Apparel & Luxury Goods | 1,200 | 15,397 |
libertyshares.com | Semiannual Report | 37 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Canada (continued) | ||||||||||||||
Sihuan Pharmaceutical Holdings Group Ltd. | Pharmaceuticals | 6,000 | $ | 1,227 | ||||||||||
Sino-Ocean Land Holdings Ltd. | Real Estate Management & Development | 4,500 | 1,984 | |||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., H | Chemicals | 12,000 | 7,330 | |||||||||||
Yuzhou Properties Co. | Real Estate Management & Development | 3,000 | 1,219 | |||||||||||
a | YY Inc., ADR | Interactive Media & Services | 69 | 5,169 | ||||||||||
|
| |||||||||||||
616,630 | ||||||||||||||
|
| |||||||||||||
Colombia 0.0%† | ||||||||||||||
Ecopetrol SA | Oil, Gas & Consumable Fuels | 4,752 | 6,449 | |||||||||||
|
| |||||||||||||
Czech Republic 0.0%† | ||||||||||||||
Moneta Money Bank AS | Banks | 798 | 2,937 | |||||||||||
O2 Czech Republic AS | Diversified Telecommunication Services | 159 | 1,855 | |||||||||||
|
| |||||||||||||
4,792 | ||||||||||||||
|
| |||||||||||||
Denmark 1.3% | ||||||||||||||
Coloplast AS, B | Health Care Equipment & Supplies | 285 | 29,155 | |||||||||||
Novo Nordisk AS, B | Pharmaceuticals | 3,759 | 177,050 | |||||||||||
Novozymes AS | Chemicals | 273 | 14,993 | |||||||||||
Pandora AS | Textiles, Apparel & Luxury Goods | 306 | 19,117 | |||||||||||
|
| |||||||||||||
240,315 | ||||||||||||||
|
| |||||||||||||
Egypt 0.0%† | ||||||||||||||
Eastern Tobacco | Tobacco | 1,485 | 1,570 | |||||||||||
ElSewedy Electric Co. | Electrical Equipment | 1,380 | 1,373 | |||||||||||
|
| |||||||||||||
2,943 | ||||||||||||||
|
| |||||||||||||
Finland 0.3% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 297 | 12,601 | |||||||||||
Neste Oil OYJ | Oil, Gas & Consumable Fuels | 237 | 19,600 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 213 | 8,731 | |||||||||||
Orion OYJ | Pharmaceuticals | 168 | 6,365 | |||||||||||
|
| |||||||||||||
47,297 | ||||||||||||||
|
| |||||||||||||
France 0.6% | ||||||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 321 | 38,384 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs) | 45 | 4,691 | |||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 63 | 41,753 | |||||||||||
Peugeot SA | Automobiles | 795 | 21,450 | |||||||||||
Societe BIC SA | Commercial Services & Supplies | 30 | 2,748 | |||||||||||
|
| |||||||||||||
109,026 | ||||||||||||||
|
| |||||||||||||
Germany 0.4% | ||||||||||||||
Covestro AG | Chemicals | 354 | 28,724 | |||||||||||
Deutsche Lufthansa AG | Airlines | 486 | 11,945 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 147 | 11,324 | |||||||||||
ProSiebenSat.1 Media SE | Media | 495 | 12,861 | |||||||||||
TUI AG | Hotels, Restaurants & Leisure | 798 | 15,328 | |||||||||||
|
| |||||||||||||
80,182 | ||||||||||||||
|
| |||||||||||||
Hong Kong 1.1% | ||||||||||||||
CLP Holdings Ltd. | Electric Utilities | 3,000 | 35,138 | |||||||||||
Galaxy Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 3,000 | 19,035 | |||||||||||
HKT Trust and HKT Ltd. | Diversified Telecommunication Services | 9,000 | 12,376 | |||||||||||
Hongkong Land Holdings Ltd. | Real Estate Management & Development | 2,400 | 15,888 | |||||||||||
Jardine Matheson Holdings Ltd. | Industrial Conglomerates | 300 | 18,825 | |||||||||||
Kerry Properties Ltd. | Real Estate Management & Development | 1,500 | 5,090 | |||||||||||
Kingboard Holdings Ltd. | Electronic Equipment, Instruments & Components | 1,500 | 4,898 | |||||||||||
Kingboard Laminates Holdings Ltd. | Electronic Equipment, Instruments & Components | 1,500 | 1,330 |
38 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Hong Kong (continued) | ||||||||||||||
Lee & Man Paper Manufacturing Ltd. | Paper & Forest Products | 3,000 | $ | 2,784 | ||||||||||
Link REIT | Equity Real Estate Investment Trusts (REITs) | 4,000 | 39,387 | |||||||||||
NWS Holdings Ltd. | Industrial Conglomerates | 3,000 | 5,935 | |||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 4,800 | 21,746 | |||||||||||
Swire Properties Ltd. | Real Estate Management & Development | 1,200 | 4,547 | |||||||||||
b | WH Group Ltd., Reg S | Food Products | 12,000 | 8,450 | ||||||||||
Yue Yuen Industrial Holdings Ltd. | Textiles, Apparel & Luxury Goods | 1,500 | 4,169 | |||||||||||
|
| |||||||||||||
199,598 | ||||||||||||||
|
| |||||||||||||
Hungary 0.0%† | ||||||||||||||
MOL Hungarian Oil and Gas PLC | Oil, Gas & Consumable Fuels | 699 | 7,530 | |||||||||||
|
| |||||||||||||
India 0.3% | ||||||||||||||
Infosys Ltd., ADR | IT Services | 5,400 | 54,918 | |||||||||||
|
| |||||||||||||
Indonesia 0.4% | ||||||||||||||
Adaro Energy Tbk PT | Oil, Gas & Consumable Fuels | 13,500 | 1,663 | |||||||||||
Bank Rakyat Indonesia Persero Tbk PT | Banks | 69,900 | 14,776 | |||||||||||
Hanjaya Mandala Sampoerna Tbk PT | Tobacco | 22,800 | 5,891 | |||||||||||
Matahari Department Store Tbk PT | Multiline Retail | 6,300 | 2,928 | |||||||||||
PT Telkom Indonesia (Persero) Tbk | Diversified Telecommunication Services | 105,600 | 25,795 | |||||||||||
Surya Citra Media Tbk PT | Media | 13,800 | 1,736 | |||||||||||
Unilever Indonesia Tbk PT | Household Products | 3,900 | 12,307 | |||||||||||
United Tractors Tbk PT | Oil, Gas & Consumable Fuels | 3,300 | 7,308 | |||||||||||
|
| |||||||||||||
72,404 | ||||||||||||||
|
| |||||||||||||
Israel 0.3% | ||||||||||||||
Bank Leumi Le-Israel BM | Banks | 2,055 | 13,558 | |||||||||||
Bezeq Israeli Telecommunication Corp. Ltd. | Diversified Telecommunication Services | 5,004 | 5,756 | |||||||||||
a | Check Point Software Technologies Ltd. | Software | 240 | 28,241 | ||||||||||
Mizrahi Tefahot Bank Ltd. | Banks | 255 | 4,469 | |||||||||||
|
| |||||||||||||
52,024 | ||||||||||||||
|
| |||||||||||||
Italy 0.3% | ||||||||||||||
Intesa Sanpaolo SpA | Banks | 18,720 | 47,857 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 231 | 9,954 | |||||||||||
b | Poste Italiane SpA, Reg S | Insurance | 954 | 7,626 | ||||||||||
|
| |||||||||||||
65,437 | ||||||||||||||
|
| |||||||||||||
Japan 5.2% | ||||||||||||||
ABC-Mart Inc. | Specialty Retail | 100 | 5,564 | |||||||||||
ANA Holdings Inc. | Airlines | 300 | 10,486 | |||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 3,900 | 68,053 | |||||||||||
Bandai Namco Holdings Inc. | Leisure Products | 300 | 11,661 | |||||||||||
Bridgestone Corp. | Auto Components | 1,200 | 45,355 | |||||||||||
CANON Inc. | Technology Hardware, Storage & Peripherals | 1,800 | 57,208 | |||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 180 | 23,161 | |||||||||||
Hoya Corp. | Health Care Equipment & Supplies | 600 | 35,656 | |||||||||||
Idemitsu Kosan Co. Ltd. | Oil, Gas & Consumable Fuels | 300 | 15,874 | |||||||||||
Iida Group Holdings Co. Ltd. | Household Durables | 300 | 5,338 | |||||||||||
ITOCHU Corp. | Trading Companies & Distributors | 1,800 | 32,962 | |||||||||||
Japan Airlines Co. Ltd. | Airlines | 300 | 10,787 | |||||||||||
Japan Post Bank Co. Ltd. | Banks | 600 | 7,094 | |||||||||||
Japan Tobacco Inc. | Tobacco | 2,100 | 54,836 | |||||||||||
JXTG Holdings Inc. | Oil, Gas & Consumable Fuels | 3,000 | 22,669 | |||||||||||
Kajima Corp. | Construction & Engineering | 750 | 10,902 | |||||||||||
Kakaku.com Inc. | Interactive Media & Services | 300 | 5,869 | |||||||||||
KAO Corp. | Personal Products | 480 | 38,769 | |||||||||||
KDDI Corp. | Wireless Telecommunication Services | 3,900 | 107,779 |
libertyshares.com | Semiannual Report | 39 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Lawson Inc. | Food & Staples Retailing | 100 | $ | 6,092 | ||||||||||
Marubeni Corp. | Trading Companies & Distributors | 1,500 | 13,734 | |||||||||||
McDonald’s Holdings Co. Japan Ltd. | Hotels, Restaurants & Leisure | 100 | 4,393 | |||||||||||
Mebuki Financial Group Inc. | Banks | 900 | 3,114 | |||||||||||
Mitsubishi Gas Chemical Co. Inc. | Chemicals | 300 | 6,389 | |||||||||||
MS&AD Insurance Group Holdings Inc. | Insurance | 600 | 20,041 | |||||||||||
Nippon Telegraph & Telephone Corp. | Diversified Telecommunication Services | 1,400 | 63,255 | |||||||||||
Nissan Motor Co. Ltd. | Automobiles | 3,900 | 36,516 | |||||||||||
Nitori Co. Ltd. | Specialty Retail | 150 | 21,519 | |||||||||||
NTT DoCoMo Inc. | Wireless Telecommunication Services | 3,000 | 80,688 | |||||||||||
Obayashi Corp. | Construction & Engineering | 1,200 | 11,368 | |||||||||||
Oracle Corp. Japan | Software | 100 | 8,064 | |||||||||||
Otsuka Corp. | IT Services | 300 | 11,199 | |||||||||||
Park24 Co. Ltd. | Commercial Services & Supplies | 300 | 9,073 | |||||||||||
Start Today Co. Ltd. | Internet & Direct Marketing Retail | 400 | 12,114 | |||||||||||
Subaru Corp. | Automobiles | 1,500 | 45,957 | |||||||||||
Sumitomo Rubber Industries Ltd. | Auto Components | 300 | 4,503 | |||||||||||
Sundrug Co. Ltd. | Food & Staples Retailing | 100 | 3,570 | |||||||||||
Taisei Corp. | Construction & Engineering | 300 | 13,681 | |||||||||||
Tokyo Electron Ltd. | Semiconductors & Semiconductor Equipment | 200 | 27,486 | |||||||||||
Tosoh Corp. | Chemicals | 600 | 9,244 | |||||||||||
|
| |||||||||||||
982,023 | ||||||||||||||
|
| |||||||||||||
Luxembourg 0.0%† | ||||||||||||||
RTL Group SA | Media | 99 | 7,066 | |||||||||||
|
| |||||||||||||
Macau 0.0%† | ||||||||||||||
Wynn Macau Ltd. | Hotels, Restaurants & Leisure | 2,400 | 5,521 | |||||||||||
|
| |||||||||||||
Malaysia 0.4% | ||||||||||||||
AirAsia Group Bhd. | Airlines | 1,800 | 1,374 | |||||||||||
Astro Malaysia Holdings Bhd. | Media | 2,100 | 746 | |||||||||||
British American Tobacco Malaysia Bhd. | Tobacco | 600 | 4,599 | |||||||||||
Digi.com Bhd. | Wireless Telecommunication Services | 7,500 | 8,735 | |||||||||||
Fraser & Neave Holdings Bhd. | Beverages | 300 | 2,734 | |||||||||||
Hartalega Holdings Bhd. | Health Care Equipment & Supplies | 2,700 | 4,319 | |||||||||||
Malayan Banking Bhd. | Banks | 6,000 | 14,194 | |||||||||||
Nestle (Malaysia) Bhd. | Food Products | 100 | 3,538 | |||||||||||
Petronas Chemicals Group Bhd. | Chemicals | 4,800 | 10,856 | |||||||||||
Petronas Dagangan Bhd. | Oil, Gas & Consumable Fuels | 300 | 1,904 | |||||||||||
Petronas Gas Bhd. | Gas Utilities | 300 | 1,370 | |||||||||||
Tenaga Nasional Bhd. | Electric Utilities | 2,700 | 10,086 | |||||||||||
Top Glove Corp. Bhd. | Health Care Equipment & Supplies | 900 | 2,318 | |||||||||||
Westports Holdings Bhd. | Transportation Infrastructure | 1,800 | 1,653 | |||||||||||
|
| |||||||||||||
68,426 | ||||||||||||||
|
| |||||||||||||
Mexico 0.3% | ||||||||||||||
Fibra Uno Administracion SA de CV | Equity Real Estate Investment Trusts (REITs) | 3,642 | 4,793 | |||||||||||
Grupo Aeroportuario del Pacifico SAB de CV | Transportation Infrastructure | 633 | 6,926 | |||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 3,120 | 5,556 | |||||||||||
Wal-Mart de Mexico SAB de CV, V | Food & Staples Retailing | 10,512 | 32,060 | |||||||||||
|
| |||||||||||||
49,335 | ||||||||||||||
|
| |||||||||||||
Netherlands 0.5% | ||||||||||||||
Aegon NV | Insurance | 3,393 | 22,022 | |||||||||||
Koninklijke Ahold Delhaize NV | Food & Staples Retailing | 1,299 | 29,799 | |||||||||||
Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs) | 171 | 34,404 | |||||||||||
|
| |||||||||||||
86,225 | ||||||||||||||
|
|
40 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
New Zealand 0.1% | ||||||||||||||
Fisher & Paykel Healthcare Corp. Ltd. | Health Care Equipment & Supplies | 996 | $ | 9,937 | ||||||||||
Spark New Zealand Ltd. | Diversified Telecommunication Services | 4,803 | 12,896 | |||||||||||
|
| |||||||||||||
22,833 | ||||||||||||||
|
| |||||||||||||
Norway 0.3% | ||||||||||||||
Marine Harvest ASA | Food Products | 948 | 21,950 | |||||||||||
Telenor ASA | Diversified Telecommunication Services | 1,476 | 28,837 | |||||||||||
|
| |||||||||||||
50,787 | ||||||||||||||
|
| |||||||||||||
Pakistan 0.0%† | ||||||||||||||
Lucky Cement Ltd. | Construction Materials | 150 | 620 | |||||||||||
MCB Bank Ltd. | Banks | 900 | 1,458 | |||||||||||
Oil & Gas Development Co. Ltd. | Oil, Gas & Consumable Fuels | 2,100 | 2,587 | |||||||||||
United Bank Ltd. | Banks | 900 | 1,116 | |||||||||||
|
| |||||||||||||
5,781 | ||||||||||||||
|
| |||||||||||||
Philippines 0.0%† | ||||||||||||||
DMCI Holdings Inc. | Industrial Conglomerates | 6,900 | 1,454 | |||||||||||
Globe Telecom Inc. | Wireless Telecommunication Services | 60 | 2,443 | |||||||||||
Manila Electric Co. | Electric Utilities | 540 | 3,398 | |||||||||||
|
| |||||||||||||
7,295 | ||||||||||||||
|
| |||||||||||||
Poland 0.0%† | ||||||||||||||
a | Jastrzebska Spolka Weglowa SA | Metals & Mining | 66 | 1,186 | ||||||||||
a | PGE Polska Grupa Energetyczna SA | Electric Utilities | 1,260 | 3,254 | ||||||||||
a | Polskie Gornictwo Naftowe i Gazownictwo SA | Oil, Gas & Consumable Fuels | 2,193 | 3,849 | ||||||||||
|
| |||||||||||||
8,289 | ||||||||||||||
|
| |||||||||||||
Portugal 0.0%† | ||||||||||||||
Jeronimo Martins SGPS SA | Food & Staples Retailing | 342 | 5,039 | |||||||||||
|
| |||||||||||||
Qatar 0.1% | ||||||||||||||
Barwa Real Estate Co. | Real Estate Management & Development | 57 | 554 | |||||||||||
Doha Bank QSC | Banks | 339 | 1,955 | |||||||||||
Industries Qatar QSC | Industrial Conglomerates | 294 | 10,068 | |||||||||||
Qatar Electricity & Water Co. QSC | Multi-Utilities | 69 | 3,628 | |||||||||||
The Commercial Bank PQSC | Banks | 2 | 26 | |||||||||||
|
| |||||||||||||
16,231 | ||||||||||||||
|
| |||||||||||||
Russia 1.7% | ||||||||||||||
Alrosa PJSC | Metals & Mining | 7,770 | 12,669 | |||||||||||
Federal Hydrogenerating Co. | Electric Utilities | 112,488 | 1,066 | |||||||||||
Gazprom PJSC | Oil, Gas & Consumable Fuels | 24,585 | 61,039 | |||||||||||
Inter RAO UES PJSC | Electric Utilities | 63,657 | 3,991 | |||||||||||
LUKOIL PJSC | Oil, Gas & Consumable Fuels | 1,071 | 82,122 | |||||||||||
Magnitogorsk Iron & Steel Works | Metals & Mining | 3,369 | 2,684 | |||||||||||
MMC Norilsk Nickel PJSC | Metals & Mining | 138 | 23,995 | |||||||||||
Mobile TeleSystems PJSC, ADR | Wireless Telecommunication Services | 1,242 | 10,594 | |||||||||||
NLMK PJSC | Metals & Mining | 2,580 | 7,008 | |||||||||||
b | Novatek PJSC, GDR, Reg S | Oil, Gas & Consumable Fuels | 150 | 27,600 | ||||||||||
b | PhosAgro PJSC, GDR, Reg S | Chemicals | 150 | 2,037 | ||||||||||
Polyus Gold OJSC | Metals & Mining | 27 | 1,702 | |||||||||||
Rosneft PJSC | Oil, Gas & Consumable Fuels | 2,334 | 17,569 | |||||||||||
Severstal PJSC | Metals & Mining | 594 | 9,898 | |||||||||||
Surgutneftegas PJSC | Oil, Gas & Consumable Fuels | 14,640 | 6,130 | |||||||||||
Tatneft PAO | Oil, Gas & Consumable Fuels | 3,651 | 46,569 | |||||||||||
|
| |||||||||||||
316,673 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 41 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Singapore 0.9% | ||||||||||||||
CapitaLand Mall Trust | Equity Real Estate Investment Trusts (REITs) | 5,700 | $ | 9,261 | ||||||||||
ComfortDelGro Corp. Ltd. | Road & Rail | 4,500 | 8,003 | |||||||||||
DBS Group Holdings Ltd. | Banks | 2,400 | 45,827 | |||||||||||
SATS Ltd. | Transportation Infrastructure | 1,500 | 5,731 | |||||||||||
Singapore Exchange Ltd. | Capital Markets | 2,100 | 11,327 | |||||||||||
Singapore Technologies Engineering Ltd. | Aerospace & Defense | 3,000 | 7,817 | |||||||||||
Singapore Telecommunications Ltd. | Diversified Telecommunication Services | 15,900 | 37,703 | |||||||||||
United Overseas Bank Ltd. | Banks | 1,800 | 35,675 | |||||||||||
Venture Corp. Ltd. | Electronic Equipment, Instruments & Components | 300 | 3,871 | |||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | Machinery | 3,900 | 3,539 | |||||||||||
|
| |||||||||||||
168,754 | ||||||||||||||
|
| |||||||||||||
South Africa 0.3% | ||||||||||||||
Clicks Group Ltd. | Food & Staples Retailing | 261 | 3,228 | |||||||||||
Coronation Fund Managers Ltd. | Capital Markets | 219 | 834 | |||||||||||
Exxaro Resources Ltd. | Oil, Gas & Consumable Fuels | 381 | 3,914 | |||||||||||
Fortress REIT Ltd., A | Equity Real Estate Investment Trusts (REITs) | 1,533 | 1,835 | |||||||||||
Kumba Iron Ore Ltd. | Metals & Mining | 123 | 2,790 | |||||||||||
Mr. Price Group Ltd. | Specialty Retail | 585 | 9,436 | |||||||||||
Resilient REIT Ltd. | Equity Real Estate Investment Trusts (REITs) | 210 | 863 | |||||||||||
RMB Holdings Ltd. | Diversified Financial Services | 582 | 3,255 | |||||||||||
Telkom SA SOC Ltd. | Diversified Telecommunication Services | 342 | 1,248 | |||||||||||
Tiger Brands Ltd. | Food Products | 297 | 5,562 | |||||||||||
Truworths International Ltd. | Specialty Retail | 948 | 5,594 | |||||||||||
Vodacom Group Ltd. | Wireless Telecommunication Services | 1,272 | 11,319 | |||||||||||
|
| |||||||||||||
49,878 | ||||||||||||||
|
| |||||||||||||
South Korea 2.5% | ||||||||||||||
BNK Financial Group Inc. | Banks | 360 | 2,791 | |||||||||||
Coway Co. Ltd. | Household Durables | 111 | 8,686 | |||||||||||
DB Insurance Co. Ltd. | Insurance | 81 | 5,316 | |||||||||||
DGB Financial Group Inc. | Banks | 318 | 2,910 | |||||||||||
Hana Financial Group Inc. | Banks | 525 | 21,085 | |||||||||||
Hankook Tire Co. Ltd. | Auto Components | 141 | 6,368 | |||||||||||
Hanon Systems | Auto Components | 366 | 4,174 | |||||||||||
Hanwha Chemical Corp. | Chemicals | 117 | 2,036 | |||||||||||
Hanwha Life Insurance Co. Ltd. | Insurance | 396 | 1,889 | |||||||||||
Hyundai Glovis Co. Ltd. | Air Freight & Logistics | 21 | 2,461 | |||||||||||
Hyundai Marine & Fire Insurance Co. Ltd. | Insurance | 114 | 4,311 | |||||||||||
Hyundai Mobis Co. Ltd. | Auto Components | 126 | 25,899 | |||||||||||
Industrial Bank of Korea | Banks | 525 | 7,218 | |||||||||||
Kangwon Land Inc. | Hotels, Restaurants & Leisure | 225 | 5,822 | |||||||||||
KB Financial Group Inc. | Banks | 684 | 33,421 | |||||||||||
Kia Motors Corp. | Automobiles | 522 | 16,518 | |||||||||||
Korea Zinc Co. Ltd. | Metals & Mining | 9 | 3,538 | |||||||||||
KT&G Corp. | Tobacco | 255 | 23,908 | |||||||||||
LG Corp. | Industrial Conglomerates | 141 | 9,228 | |||||||||||
LG Display Co. Ltd. | Electronic Equipment, Instruments & Components | 462 | 7,955 | |||||||||||
Lotte Chemical Corp. | Chemicals | 33 | 8,270 | |||||||||||
S-1 Corp. | Commercial Services & Supplies | 39 | 3,214 | |||||||||||
S-Oil Corp. | Oil, Gas & Consumable Fuels | 84 | 10,375 | |||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 3,432 | 143,715 | |||||||||||
SK Hynix Inc. | Semiconductors & Semiconductor Equipment | 1,521 | 100,234 | |||||||||||
SK Telecom Co. Ltd. | Wireless Telecommunication Services | 45 | 11,440 | |||||||||||
|
| |||||||||||||
472,782 | ||||||||||||||
|
| |||||||||||||
Spain 0.9% | ||||||||||||||
Amadeus IT Group SA, A | IT Services | 819 | 76,120 |
42 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Spain (continued) | ||||||||||||||
Banco de Sabadell SA | Banks | 4,440 | $ | 6,905 | ||||||||||
Enagas SA | Oil, Gas & Consumable Fuels | 189 | 5,104 | |||||||||||
Endesa SA | Electric Utilities | 726 | 15,693 | |||||||||||
Industria de Diseno Textil SA | Specialty Retail | 1,986 | 60,229 | |||||||||||
|
| |||||||||||||
164,051 | ||||||||||||||
|
| |||||||||||||
Sweden 0.5% | ||||||||||||||
Boliden AB | Metals & Mining | 276 | 7,694 | |||||||||||
Electrolux AB, B | Household Durables | 366 | 8,066 | |||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 2,106 | 38,894 | |||||||||||
Swedish Match AB | Tobacco | 378 | 19,339 | |||||||||||
Telia Co. AB | Diversified Telecommunication Services | 2,598 | 11,925 | |||||||||||
|
| |||||||||||||
85,918 | ||||||||||||||
|
| |||||||||||||
Switzerland 1.5% | ||||||||||||||
EMS-Chemie Holding AG | Chemicals | 21 | 12,577 | |||||||||||
Partners Group Holding AG | Capital Markets | 42 | 33,473 | |||||||||||
Roche Holding AG | Pharmaceuticals | 810 | 197,151 | |||||||||||
a | Swiss Life Holding AG | Insurance | 57 | 21,708 | ||||||||||
Swisscom AG | Diversified Telecommunication Services | 48 | 21,887 | |||||||||||
|
| |||||||||||||
286,796 | ||||||||||||||
|
| |||||||||||||
Taiwan 2.4% | ||||||||||||||
Asustek Computer Inc. | Technology Hardware, Storage & Peripherals | 1,000 | 8,646 | |||||||||||
AU Optronics Corp. | Electronic Equipment, Instruments & Components | 9,000 | 3,802 | |||||||||||
Catcher Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 1,200 | 13,205 | |||||||||||
Chicony Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 3,015 | 6,102 | |||||||||||
China Development Financial Holding Corp. | Banks | 12,000 | 4,480 | |||||||||||
China Life Insurance Co. Ltd. | Insurance | 3,180 | 3,197 | |||||||||||
Chunghwa Telecom Co. Ltd. | Diversified Telecommunication Services | 9,000 | 32,424 | |||||||||||
Far EasTone Telecommunications Co. Ltd. | Wireless Telecommunication Services | 3,000 | 7,153 | |||||||||||
First Financial Holding Co. Ltd. | Banks | 15,210 | 10,362 | |||||||||||
Formosa Chemicals & Fibre Corp. | Chemicals | 3,000 | 12,577 | |||||||||||
Formosa Petrochemical Corp. | Oil, Gas & Consumable Fuels | 3,000 | 14,542 | |||||||||||
Formosa Plastics Corp. | Chemicals | 3,000 | 11,496 | |||||||||||
Largan Precision Co. Ltd. | Electronic Equipment, Instruments & Components | 180 | 21,429 | |||||||||||
Lite-On Technology Corp. | Technology Hardware, Storage & Peripherals | 6,049 | 7,608 | |||||||||||
Micro-Star International Co. Ltd. | Technology Hardware, Storage & Peripherals | 1,000 | 2,702 | |||||||||||
Nan Ya Plastics Corp. | Chemicals | 6,000 | 16,664 | |||||||||||
Nanya Technology Corp. | Semiconductors & Semiconductor Equipment | 3,000 | 5,709 | |||||||||||
Novatek Microelectronics Corp. Ltd. | Semiconductors & Semiconductor Equipment | 2,000 | 9,891 | |||||||||||
Powertech Technology Inc. | Semiconductors & Semiconductor Equipment | 3,000 | 8,185 | |||||||||||
President Chain Store Corp. | Food & Staples Retailing | 1,330 | 15,616 | |||||||||||
Taiwan Mobile Co. Ltd. | Wireless Telecommunication Services | 3,000 | 10,759 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 24,000 | 206,334 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 3,000 | 6,681 | |||||||||||
WPG Holdings Ltd. | Electronic Equipment, Instruments & Components | 3,000 | 3,724 | |||||||||||
Yageo Corp. | Electronic Equipment, Instruments & Components | 359 | 5,397 | |||||||||||
|
| |||||||||||||
448,685 | ||||||||||||||
|
| |||||||||||||
Thailand 0.5% | ||||||||||||||
Advanced Info Service PCL | Wireless Telecommunication Services | 2,700 | 16,781 | |||||||||||
Airports of Thailand Public Co. Ltd., NVDR | Transportation Infrastructure | 6,300 | 12,760 | |||||||||||
Bumrungrad Hospital PCL | Health Care Providers & Services | 600 | 3,451 | |||||||||||
Central Pattana PCL | Real Estate Management & Development | 2,700 | 6,929 | |||||||||||
Delta Electronics Thailand PCL | Electronic Equipment, Instruments & Components | 1,200 | 2,588 | |||||||||||
Glow Energy PCL | | Independent Power and Renewable Electricity Producers | | 300 | 816 |
libertyshares.com | Semiannual Report | 43 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Thailand (continued) | ||||||||||||||
Home Product Center PCL, NVDR | Specialty Retail | 6,000 | $ | 2,931 | ||||||||||
PTT Exploration and Production PCL, NVDR | Oil, Gas & Consumable Fuels | 1,200 | 5,751 | |||||||||||
PTT Global Chemical PCL, NVDR | Chemicals | 3,600 | 9,045 | |||||||||||
PTT PCL | Oil, Gas & Consumable Fuels | 11,100 | 18,620 | |||||||||||
Thai Oil PCL | Oil, Gas & Consumable Fuels | 1,800 | 4,926 | |||||||||||
The Siam Cement PCL | Construction Materials | 600 | 8,275 | |||||||||||
|
| |||||||||||||
92,873 | ||||||||||||||
|
| |||||||||||||
Turkey 0.2% | ||||||||||||||
Aselsan Elektronik Sanayi ve Ticaret AS | Aerospace & Defense | 282 | 1,295 | |||||||||||
BIM Birlesik Magazalar AS | Food & Staples Retailing | 456 | 6,175 | |||||||||||
Eregli Demir ve Celik Fabrikalari AS | Metals & Mining | 3,093 | 5,679 | |||||||||||
Ford Otomotiv Sanayi AS | Automobiles | 213 | 2,333 | |||||||||||
Petkim Petrokimya Holding AS | Chemicals | 1,548 | 1,379 | |||||||||||
TAV Havalimanlari Holding AS | Transportation Infrastructure | 423 | 2,202 | |||||||||||
Tofas Turk Otomobil Fabrikasi AS | Automobiles | 225 | 801 | |||||||||||
Tupras-Turkiye Petrol Rafinerileri AS | Oil, Gas & Consumable Fuels | 318 | 7,104 | |||||||||||
Turkcell Iletisim Hizmetleri AS | Wireless Telecommunication Services | 1,644 | 3,158 | |||||||||||
Turkiye Halk Bankasi AS | Banks | 333 | 371 | |||||||||||
Turkiye Is Bankasi AS, C | Banks | 2,433 | 1,790 | |||||||||||
Turkiye Sise Ve Cam Fabrikalari AS | Industrial Conglomerates | 306 | 297 | |||||||||||
|
| |||||||||||||
32,584 | ||||||||||||||
|
| |||||||||||||
United Arab Emirates 0.2% | ||||||||||||||
Aldar Properties PJSC | Real Estate Management & Development | 8,016 | 3,994 | |||||||||||
Dubai Islamic Bank PJSC | Banks | 2,861 | 4,198 | |||||||||||
a | Emaar Development PJSC | Real Estate Management & Development | 411 | 586 | ||||||||||
Emirates Telecommunications Group Co. PJSC | Diversified Telecommunication Services | 3,498 | 15,904 | |||||||||||
First Abu Dhabi Bank PJSC | Banks | 2,400 | 9,344 | |||||||||||
|
| |||||||||||||
34,026 | ||||||||||||||
|
| |||||||||||||
United Kingdom 7.6% | ||||||||||||||
Admiral Group PLC | Insurance | 495 | 13,427 | |||||||||||
Anglo American PLC | Metals & Mining | 1,005 | 22,581 | |||||||||||
AstraZeneca PLC | Pharmaceuticals | 2,283 | 177,527 | |||||||||||
BAE Systems PLC | Aerospace & Defense | 5,778 | 47,454 | |||||||||||
Barratt Developments PLC | Household Durables | 2,199 | 16,259 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs) | 1,275 | 10,255 | |||||||||||
BT Group PLC | Diversified Telecommunication Services | 18,495 | 54,339 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 903 | 23,728 | |||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 2,688 | 59,800 | |||||||||||
Croda International PLC | Chemicals | 225 | 15,263 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 2,820 | 11,911 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 9,024 | 180,847 | |||||||||||
Hammerson PLC | Equity Real Estate Investment Trusts (REITs) | 726 | 4,324 | |||||||||||
Hargreaves Lansdown PLC | Capital Markets | 591 | 17,225 | |||||||||||
Imperial Brands PLC | Tobacco | 1,833 | 63,846 | |||||||||||
International Consolidated Airlines Group SA | Airlines | 1,335 | 11,478 | |||||||||||
Intertek Group PLC | Professional Services | 288 | 18,748 | |||||||||||
ITV PLC | Media | 9,600 | 19,761 | |||||||||||
Kingfisher PLC | Specialty Retail | 2,808 | 9,447 | |||||||||||
Marks & Spencer Group PLC | Multiline Retail | 3,489 | 13,140 | |||||||||||
Mondi PLC | Paper & Forest Products | 585 | 16,051 | |||||||||||
Next PLC | Multiline Retail | 396 | 28,371 | |||||||||||
Persimmon PLC | Household Durables | 852 | 26,276 | |||||||||||
RELX PLC (EUR Traded) | Professional Services | 1,911 | 40,164 | |||||||||||
RELX PLC (GBP Traded) | Professional Services | 2,205 | 46,467 | |||||||||||
Rio Tinto PLC | Metals & Mining | 1,944 | 98,361 |
44 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
Royal Mail PLC | Air Freight & Logistics | 2,163 | $ | 13,457 | ||||||||||
SSE PLC | Electric Utilities | 1,926 | 28,783 | |||||||||||
Taylor Wimpey PLC | Household Durables | 6,870 | 15,391 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 324 | 15,544 | |||||||||||
Unilever NV, IDR | Personal Products | 2,826 | 157,440 | |||||||||||
Unilever PLC | Personal Products | 2,331 | 128,156 | |||||||||||
Whitbread PLC | Hotels, Restaurants & Leisure | 252 | 15,501 | |||||||||||
|
| |||||||||||||
1,421,322 | ||||||||||||||
|
| |||||||||||||
United States 56.6% | ||||||||||||||
3M Co. | Industrial Conglomerates | 894 | 188,375 | |||||||||||
AbbVie Inc. | Biotechnology | 1,725 | 163,151 | |||||||||||
Accenture PLC, A | IT Services | 1,167 | 198,623 | |||||||||||
AGNC Investment Corp. | Mortgage Real Estate Investment Trusts (REITs) | 813 | 15,146 | |||||||||||
Altria Group Inc. | Tobacco | 3,300 | 199,023 | |||||||||||
American Electric Power Co. Inc. | Electric Utilities | 813 | 57,625 | |||||||||||
Amgen Inc. | Biotechnology | 945 | 195,889 | |||||||||||
Annaly Capital Management Inc. | Mortgage Real Estate Investment Trusts (REITs) | 2,583 | 26,424 | |||||||||||
Apple Inc. | Technology Hardware, Storage & Peripherals | 978 | 220,774 | |||||||||||
Applied Materials Inc. | Semiconductors & Semiconductor Equipment | 1,686 | 65,164 | |||||||||||
a | Arista Networks Inc. | Communications Equipment | 48 | 12,761 | ||||||||||
AT&T Inc. | Diversified Telecommunication Services | 5,586 | 187,578 | |||||||||||
Best Buy Co. Inc. | Specialty Retail | 573 | 45,473 | |||||||||||
a | Biogen Inc. | Biotechnology | 384 | 135,671 | ||||||||||
Bristol-Myers Squibb Co. | Pharmaceuticals | 1,515 | 94,051 | |||||||||||
Broadridge Financial Solutions Inc. | IT Services | 246 | 32,460 | |||||||||||
Brown-Forman Corp., B | Beverages | 390 | 19,715 | |||||||||||
C.H. Robinson Worldwide Inc. | Air Freight & Logistics | 285 | 27,907 | |||||||||||
CA Inc. | Software | 609 | 26,887 | |||||||||||
Campbell Soup Co. | Food Products | 402 | 14,725 | |||||||||||
Carnival Corp. | Hotels, Restaurants & Leisure | 642 | 40,940 | |||||||||||
Cisco Systems Inc. | Communications Equipment | 4,179 | 203,308 | |||||||||||
Clorox Co. | Household Products | 300 | 45,123 | |||||||||||
Cognizant Technology Solutions Corp., A | IT Services | 582 | 44,901 | |||||||||||
Consolidated Edison Inc. | Multi-Utilities | 510 | 38,857 | |||||||||||
a | Copart Inc. | Commercial Services & Supplies | 207 | 10,667 | ||||||||||
Cummins Inc. | Machinery | 285 | 41,630 | |||||||||||
CVS Health Corp. | Health Care Providers & Services | 1,320 | 103,910 | |||||||||||
Darden Restaurants Inc. | Hotels, Restaurants & Leisure | 246 | 27,353 | |||||||||||
Delta Air Lines Inc. | Airlines | 336 | 19,431 | |||||||||||
Dollar General Corp. | Multiline Retail | 501 | 54,759 | |||||||||||
Eli Lilly & Co. | Pharmaceuticals | 1,779 | 190,905 | |||||||||||
Estee Lauder Cos. Inc., A | Personal Products | 426 | 61,906 | |||||||||||
Everest Re Group Ltd. | Insurance | 72 | 16,450 | |||||||||||
Expeditors International of Washington Inc. | Air Freight & Logistics | 339 | 24,927 | |||||||||||
a | Express Scripts Holding Co. | Health Care Providers & Services | 771 | 73,253 | ||||||||||
Extra Space Storage Inc. | Equity Real Estate Investment Trusts (REITs) | 114 | 9,877 | |||||||||||
a | F5 Networks Inc. | Communications Equipment | 153 | 30,511 | ||||||||||
a | Facebook Inc., A | Interactive Media & Services | 999 | 164,296 | ||||||||||
Fastenal Co. | Trading Companies & Distributors | 588 | 34,116 | |||||||||||
Ford Motor Co. | Automobiles | 3,675 | 33,994 | |||||||||||
Garmin Ltd. | Household Durables | 240 | 16,812 | |||||||||||
General Dynamics Corp. | Aerospace & Defense | 438 | 89,667 | |||||||||||
General Mills Inc. | Food Products | 1,044 | 44,809 | |||||||||||
General Motors Co. | Automobiles | 2,499 | 84,141 | |||||||||||
Gilead Sciences Inc. | Biotechnology | 2,691 | 207,772 | |||||||||||
H&R Block Inc. | Diversified Consumer Services | 396 | 10,197 | |||||||||||
Hanesbrands Inc. | Textiles, Apparel & Luxury Goods | 318 | 5,861 |
libertyshares.com | Semiannual Report | 45 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United States (continued) | ||||||||||||||
Hasbro Inc. | Leisure Products | 210 | $ | 22,075 | ||||||||||
HollyFrontier Corp. | Oil, Gas & Consumable Fuels | 159 | 11,114 | |||||||||||
Hormel Foods Corp. | Food Products | 606 | 23,876 | |||||||||||
Huntington Ingalls Industries Inc. | Aerospace & Defense | 72 | 18,438 | |||||||||||
Ingredion Inc. | Food Products | 120 | 12,595 | |||||||||||
Intel Corp. | Semiconductors & Semiconductor Equipment | 3,360 | 158,894 | |||||||||||
International Business Machines Corp. | IT Services | 1,260 | 190,525 | |||||||||||
Intuit Inc. | Software | 615 | 139,851 | |||||||||||
a | Intuitive Surgical Inc. | Health Care Equipment & Supplies | 204 | 117,096 | ||||||||||
J.B. Hunt Transport Services Inc. | Road & Rail | 159 | 18,911 | |||||||||||
Jack Henry & Associates Inc. | IT Services | 144 | 23,052 | |||||||||||
Johnson & Johnson | Pharmaceuticals | 1,470 | 203,110 | |||||||||||
Kimberly-Clark Corp. | Household Products | 768 | 87,276 | |||||||||||
KLA-Tencor Corp. | Semiconductors & Semiconductor Equipment | 342 | 34,785 | |||||||||||
Kohl’s Corp. | Multiline Retail | 363 | 27,062 | |||||||||||
L Brands Inc. | Specialty Retail | 228 | 6,908 | |||||||||||
Las Vegas Sands Corp. | Hotels, Restaurants & Leisure | 777 | 46,099 | |||||||||||
Lear Corp. | Auto Components | 138 | 20,010 | |||||||||||
Leggett & Platt Inc. | Household Durables | 219 | 9,590 | |||||||||||
Lennox International Inc. | Building Products | 60 | 13,104 | |||||||||||
Lockheed Martin Corp. | Aerospace & Defense | 495 | 171,250 | |||||||||||
Lowe’s Cos. Inc. | Specialty Retail | 1,506 | 172,919 | |||||||||||
a | Lululemon Athletica Inc. | Textiles, Apparel & Luxury Goods | 114 | 18,524 | ||||||||||
LyondellBasell Industries NV, A | Chemicals | 873 | 89,491 | |||||||||||
Macy’s Inc. | Multiline Retail | 627 | 21,776 | |||||||||||
Marsh & McLennan Cos. Inc. | Insurance | 867 | 71,718 | |||||||||||
Mastercard Inc., A | IT Services | 975 | 217,045 | |||||||||||
Maxim Integrated Products Inc. | Semiconductors & Semiconductor Equipment | 534 | 30,112 | |||||||||||
a | Michael Kors Holdings Ltd. | Textiles, Apparel & Luxury Goods | 402 | 27,561 | ||||||||||
a | Micron Technology Inc. | Semiconductors & Semiconductor Equipment | 1,668 | 75,444 | ||||||||||
Microsoft Corp. | Software | 1,884 | 215,473 | |||||||||||
MSCI Inc. | Capital Markets | 177 | 31,402 | |||||||||||
NIKE Inc., B | Textiles, Apparel & Luxury Goods | 1,266 | 107,256 | |||||||||||
Nordstrom Inc. | Multiline Retail | 243 | 14,534 | |||||||||||
NVIDIA Corp. | Semiconductors & Semiconductor Equipment | 552 | 155,123 | |||||||||||
a | NVR Inc. | Household Durables | 6 | 14,825 | ||||||||||
a | O’Reilly Automotive Inc. | Specialty Retail | 180 | 62,518 | ||||||||||
Old Dominion Freight Line Inc. | Road & Rail | 81 | 13,062 | |||||||||||
Omnicom Group Inc. | Media | 402 | 27,344 | |||||||||||
Paychex Inc. | IT Services | 654 | 48,167 | |||||||||||
PepsiCo Inc. | Beverages | 1,845 | 206,271 | |||||||||||
Pfizer Inc. | Pharmaceuticals | 5,109 | 225,154 | |||||||||||
Philip Morris International Inc. | Tobacco | 2,289 | 186,645 | |||||||||||
Public Service Enterprise Group Inc. | Multi-Utilities | 855 | 45,135 | |||||||||||
Public Storage | Equity Real Estate Investment Trusts (REITs) | 375 | 75,611 | |||||||||||
Ralph Lauren Corp. | Textiles, Apparel & Luxury Goods | 51 | 7,015 | |||||||||||
Raytheon Co. | Aerospace & Defense | 531 | 109,736 | |||||||||||
Reinsurance Group of America Inc. | Insurance | 90 | 13,010 | |||||||||||
Robert Half International Inc. | Professional Services | 267 | 18,791 | |||||||||||
Rollins Inc. | Commercial Services & Supplies | 165 | 10,014 | |||||||||||
Ross Stores Inc. | Specialty Retail | 936 | 92,758 | |||||||||||
S&P Global Inc. | Capital Markets | 375 | 73,271 | |||||||||||
SCANA Corp. | Multi-Utilities | 114 | 4,433 | |||||||||||
Seagate Technology PLC | Technology Hardware, Storage & Peripherals | 624 | 29,546 | |||||||||||
SEI Investments Co. | Capital Markets | 231 | 14,114 | |||||||||||
Simon Property Group Inc. | Equity Real Estate Investment Trusts (REITs) | 702 | 124,079 | |||||||||||
Skyworks Solutions Inc. | Semiconductors & Semiconductor Equipment | 396 | 35,921 |
46 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United States (continued) | ||||||||||||||
Southwest Airlines Co. | Airlines | 285 | $ | 17,798 | ||||||||||
Starbucks Corp. | Hotels, Restaurants & Leisure | 3,171 | 180,240 | |||||||||||
Sysco Corp. | Food & Staples Retailing | 930 | 68,123 | |||||||||||
Tapestry Inc. | Textiles, Apparel & Luxury Goods | 564 | 28,352 | |||||||||||
Target Corp. | Multiline Retail | 1,053 | 92,885 | |||||||||||
Texas Instruments Inc. | Semiconductors & Semiconductor Equipment | 1,659 | 177,994 | |||||||||||
The Boeing Co. | Aerospace & Defense | 498 | 185,206 | |||||||||||
The Gap Inc. | Specialty Retail | 546 | 15,752 | |||||||||||
The Hershey Co. | Food Products | 327 | 33,354 | |||||||||||
The Home Depot Inc. | Specialty Retail | 960 | 198,864 | |||||||||||
The Kroger Co. | Food & Staples Retailing | 1,569 | 45,674 | |||||||||||
The Procter & Gamble Co. | Household Products | 2,463 | 204,996 | |||||||||||
The Progressive Corp. | Insurance | 588 | 41,772 | |||||||||||
The TJX Cos. Inc. | Specialty Retail | 1,497 | 167,694 | |||||||||||
The Walt Disney Co. | Media | 1,398 | 163,482 | |||||||||||
Tractor Supply Co. | Specialty Retail | 225 | 20,448 | |||||||||||
Tyson Foods Inc. | Food Products | 531 | 31,610 | |||||||||||
a | Ulta Beauty Inc. | Specialty Retail | 111 | 31,315 | ||||||||||
Union Pacific Corp. | Road & Rail | 1,242 | 202,235 | |||||||||||
United Parcel Service Inc., B | Air Freight & Logistics | 1,263 | 147,455 | |||||||||||
a | United Therapeutics Corp. | Biotechnology | 93 | 11,893 | ||||||||||
UnitedHealth Group Inc. | Health Care Providers & Services | 732 | 194,741 | |||||||||||
Valero Energy Corp. | Oil, Gas & Consumable Fuels | 864 | 98,280 | |||||||||||
VEREIT Inc. | Equity Real Estate Investment Trusts (REITs) | 1,548 | 11,238 | |||||||||||
Verizon Communications Inc. | Diversified Telecommunication Services | 3,741 | 199,732 | |||||||||||
VF Corp. | Textiles, Apparel & Luxury Goods | 663 | 61,957 | |||||||||||
Viacom Inc., B | Media | 360 | 12,154 | |||||||||||
W.W. Grainger Inc. | Trading Companies & Distributors | 99 | 35,384 | |||||||||||
Walmart Inc. | Food & Staples Retailing | 2,178 | 204,536 | |||||||||||
WEC Energy Group Inc. | Multi-Utilities | 510 | 34,048 | |||||||||||
|
| |||||||||||||
10,618,426 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks | 18,348,179 | |||||||||||||
|
| |||||||||||||
Management Investment Companies (Cost $216,885) 1.2% | ||||||||||||||
India 1.2% | ||||||||||||||
iShares MSCI India ETF | Diversified Financial Services | 7,052 | 228,978 | |||||||||||
|
| |||||||||||||
Preferred Stocks 0.5% | ||||||||||||||
Brazil 0.1% | ||||||||||||||
c | Itausa-Investimentos Itau SA, 5.515%, pfd. | Banks | 8,430 | 21,320 | ||||||||||
c | Telefonica Brasil SA, 11.194%, pfd. | Diversified Telecommunication Services | 600 | 5,890 | ||||||||||
|
| |||||||||||||
27,210 | ||||||||||||||
|
| |||||||||||||
Germany 0.1% | ||||||||||||||
c | Bayerische Motoren Werke AG, 5.938%, pfd. | Automobiles | 60 | 4,718 | ||||||||||
c | Porsche Automobil Holding SE, 3.034%, pfd. | Automobiles | 144 | 9,701 | ||||||||||
c | Schaeffler AG, 4.995%, pfd. | Auto Components | 276 | 3,529 | ||||||||||
|
| |||||||||||||
17,948 | ||||||||||||||
|
| |||||||||||||
Russia 0.1% | ||||||||||||||
c | Surgutneftegas PJSC, 3.625%, pfd. | Oil, Gas & Consumable Fuels | 16,221 | 9,429 | ||||||||||
c | Transneft PJSC, 6.910%, pfd. | Oil, Gas & Consumable Fuels | 1 | 2,531 | ||||||||||
|
| |||||||||||||
11,960 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 47 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ Global Equity ETF (continued)
Industry | Shares | Value | ||||||||||||
Preferred Stocks (continued) | ||||||||||||||
South Korea 0.2% | ||||||||||||||
c | Hyundai Motor Co., 5.172%, pfd. | Automobiles | 51 | $ | 3,600 | |||||||||
c | LG Chem Ltd., 2.966%, pfd. | Chemicals | 6 | 1,103 | ||||||||||
c | LG Household & Health Care Ltd., 1.126%, pfd. | Personal Products | 6 | 4,349 | ||||||||||
c | Samsung Electronics Co. Ltd., 3.009%, pfd. | Technology Hardware, Storage & Peripherals | 663 | 22,623 | ||||||||||
|
| |||||||||||||
31,675 | ||||||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $79,502) | 88,793 | |||||||||||||
|
| |||||||||||||
Total Investments | 18,665,950 | |||||||||||||
Other Assets, less Liabilities 0.5% | 85,676 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 18,751,626 | ||||||||||||
|
|
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $45,713, representing 0.2% of net assets.
cVariable rate security. The rate shown represents the yield at period end.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contract | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
MSCI All Country World Index | Long | 3 | $ | 77,190 | 12/21/18 | $ | 690 |
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 72.
48 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ International Equity Hedged ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, | |||||||||||
2018 | 2017a | |||||||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||||||
Net asset value, beginning of period | $ | 24.25 | $ | 24.70 | $ | 25.45 | ||||||
|
| |||||||||||
Income from investment operations:b | ||||||||||||
Net investment incomec | 0.49 | 0.77 | 0.52 | |||||||||
Net realized and unrealized gains (losses) | 1.10 | 0.10 | 1.45 | |||||||||
|
| |||||||||||
Total from investment operations | 1.59 | 0.87 | 1.97 | |||||||||
|
| |||||||||||
Less distributions from net investment income and net foreign currency gains | (0.30 | ) | (1.32 | ) | (2.72 | ) | ||||||
|
| |||||||||||
Net asset value, end of period | $ | 25.54 | $ | 24.25 | $ | 24.70 | ||||||
|
| |||||||||||
Total returnd | 6.56% | 3.47% | 8.30% | |||||||||
Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 0.40% | 1.42% | f | 1.25% | ||||||||
Expenses net of waiver and payments by affiliates | 0.40% | 0.40% | f | 0.40% | ||||||||
Net investment income | 3.87% | 3.07% | 2.47% | |||||||||
Supplemental data | ||||||||||||
Net assets, end of period (000’s) | $ 5,107 | $ 9,702 | $ 9,880 | |||||||||
Portfolio turnover rateg | 19.93% | 32.55% | 19.09% |
aFor the period June 1, 2016 (commencement of operations) to March 31, 2017.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of 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.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 49 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin LibertyQ International Equity Hedged ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 98.4% | ||||||||||||||
Australia 17.5% | ||||||||||||||
AGL Energy Ltd. | Multi-Utilities | 914 | $ | 12,896 | ||||||||||
Alumina Ltd. | Metals & Mining | 1,894 | 3,796 | |||||||||||
Amcor Ltd. | Containers & Packaging | 1,898 | 18,787 | |||||||||||
Aristocrat Leisure Ltd. | Hotels, Restaurants & Leisure | 1,060 | 21,812 | |||||||||||
Aurizon Holdings Ltd. | Road & Rail | 2,920 | 8,683 | |||||||||||
Australian Stock Exchange Ltd. | Capital Markets | 254 | 11,699 | |||||||||||
Bendigo and Adelaide Bank Ltd. | Banks | 334 | 2,598 | |||||||||||
BHP Billiton Ltd. | Metals & Mining | 2,392 | 59,935 | |||||||||||
Bluescope Steel Ltd. | Metals & Mining | 736 | 9,042 | |||||||||||
Brambles Ltd. | Commercial Services & Supplies | 2,622 | 20,679 | |||||||||||
Caltex Australia Ltd. | Oil, Gas & Consumable Fuels | 378 | 8,178 | |||||||||||
Challenger Ltd. | Diversified Financial Services | 680 | 5,511 | |||||||||||
Cimic Group Ltd. | Construction & Engineering | 146 | 5,426 | |||||||||||
Coca-Cola Amatil Ltd. | Beverages | 850 | 6,003 | |||||||||||
Cochlear Ltd. | Health Care Equipment & Supplies | 122 | 17,711 | |||||||||||
Commonwealth Bank of Australia | Banks | 1,956 | 101,064 | |||||||||||
Computershare Ltd. | IT Services | 526 | 7,593 | |||||||||||
Crown Resorts Ltd. | Hotels, Restaurants & Leisure | 542 | 5,369 | |||||||||||
CSL Ltd. | Biotechnology | 740 | 107,680 | |||||||||||
Dexus | Equity Real Estate Investment Trusts (REITs) | 1,632 | 12,470 | |||||||||||
Domino’s Pizza Enterprises Ltd. | Hotels, Restaurants & Leisure | 42 | 1,617 | |||||||||||
Flight Centre Travel Group Ltd. | Hotels, Restaurants & Leisure | 102 | 3,923 | |||||||||||
Fortescue Metals Group Ltd. | Metals & Mining | 3,246 | 9,207 | |||||||||||
GPT Group | Equity Real Estate Investment Trusts (REITs) | 2,834 | 10,683 | |||||||||||
Harvey Norman Holdings Ltd. | Multiline Retail | 1,136 | 2,893 | |||||||||||
Insurance Australia Group Ltd. | Insurance | 2,480 | 13,135 | |||||||||||
Medibank Private Ltd. | Insurance | 5,168 | 10,881 | |||||||||||
Mirvac Group | Equity Real Estate Investment Trusts (REITs) | 4,734 | 8,255 | |||||||||||
National Australia Bank Ltd. | Banks | 3,338 | 67,167 | |||||||||||
REA Group Ltd. | Interactive Media & Services | 86 | 5,347 | |||||||||||
Rio Tinto Ltd. | Metals & Mining | 638 | 36,358 | |||||||||||
Scentre Group | Equity Real Estate Investment Trusts (REITs) | 3,588 | 10,306 | |||||||||||
Sonic Healthcare Ltd. | Health Care Providers & Services | 580 | 10,454 | |||||||||||
South32 Ltd. | Metals & Mining | 6,198 | 17,579 | |||||||||||
Telstra Corp. Ltd. | Diversified Telecommunication Services | 9,104 | 21,013 | |||||||||||
TPG Telecom Ltd. | Diversified Telecommunication Services | 562 | 3,473 | |||||||||||
Vicinity Centres | Equity Real Estate Investment Trusts (REITs) | 4,646 | 8,807 | |||||||||||
Wesfarmers Ltd. | Food & Staples Retailing | 1,874 | 67,593 | |||||||||||
Westpac Banking Corp. | Banks | 4,680 | 94,577 | |||||||||||
Woolworths Group Ltd. | Food & Staples Retailing | 2,036 | 41,366 | |||||||||||
|
| |||||||||||||
891,566 | ||||||||||||||
|
| |||||||||||||
Austria 0.2% | ||||||||||||||
OMV AG | Oil, Gas & Consumable Fuels | 206 | 11,578 | |||||||||||
|
| |||||||||||||
Belgium 0.2% | ||||||||||||||
Colruyt SA | Food & Staples Retailing | 104 | 5,889 | |||||||||||
Proximus SADP | Diversified Telecommunication Services | 262 | 6,263 | |||||||||||
|
| |||||||||||||
12,152 | ||||||||||||||
|
| |||||||||||||
Denmark 3.3% | ||||||||||||||
Coloplast AS, B | Health Care Equipment & Supplies | 230 | 23,529 | |||||||||||
Novo Nordisk AS, B | Pharmaceuticals | 2,150 | 101,265 | |||||||||||
Novozymes AS | Chemicals | 238 | 13,071 | |||||||||||
Orsted AS | Electric Utilities | 190 | 12,912 | |||||||||||
Pandora AS | Textiles, Apparel & Luxury Goods | 248 | 15,493 | |||||||||||
Tryg AS | Insurance | 160 | 3,985 | |||||||||||
|
| |||||||||||||
170,255 | ||||||||||||||
|
|
50 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ International Equity Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Finland 1.6% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 248 | $ | 10,523 | ||||||||||
Kone OYJ, B | Machinery | 514 | 27,475 | |||||||||||
Neste Oil OYJ | Oil, Gas & Consumable Fuels | 186 | 15,382 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 168 | 6,886 | |||||||||||
Orion OYJ | Pharmaceuticals | 178 | 6,744 | |||||||||||
UPM-Kymmene OYJ | Paper & Forest Products | 372 | 14,604 | |||||||||||
|
| |||||||||||||
81,614 | ||||||||||||||
|
| |||||||||||||
France 1.8% | ||||||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 262 | 31,329 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 32 | 3,336 | ||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 50 | 33,138 | |||||||||||
Peugeot SA | Automobiles | 734 | 19,804 | |||||||||||
Societe BIC SA | Commercial Services & Supplies | 42 | 3,847 | |||||||||||
|
| |||||||||||||
91,454 | ||||||||||||||
|
| |||||||||||||
Germany 1.8% | ||||||||||||||
Continental AG | Auto Components | 138 | 24,035 | |||||||||||
Covestro AG | Chemicals | 316 | 25,641 | |||||||||||
Deutsche Lufthansa AG | Airlines | 388 | 9,536 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 118 | 9,089 | |||||||||||
ProSiebenSat.1 Media SE | Media | 426 | 11,069 | |||||||||||
TUI AG | Hotels, Restaurants & Leisure | 652 | 12,524 | |||||||||||
|
| |||||||||||||
91,894 | ||||||||||||||
|
| |||||||||||||
Hong Kong 5.4% | ||||||||||||||
AIA Group Ltd. | Insurance | 8,400 | 75,037 | |||||||||||
ASM Pacific Technology Ltd. | Semiconductors & Semiconductor Equipment | 400 | 4,074 | |||||||||||
CK Asset Holdings Ltd. | Real Estate Management & Development | 3,000 | 22,524 | |||||||||||
CK Infrastructure Holdings Ltd. | Electric Utilities | 1,000 | 7,924 | |||||||||||
CLP Holdings Ltd. | Electric Utilities | 2,000 | 23,425 | |||||||||||
Galaxy Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 3,000 | 19,036 | |||||||||||
HKT Trust and HKT Ltd. | Diversified Telecommunication Services | 8,000 | 11,001 | |||||||||||
Hongkong Land Holdings Ltd. | Real Estate Management & Development | 1,800 | 11,916 | |||||||||||
Hysan Development Co. Ltd. | Real Estate Management & Development | 1,000 | 5,054 | |||||||||||
Jardine Matheson Holdings Ltd. | Industrial Conglomerates | 200 | 12,550 | |||||||||||
Kerry Properties Ltd. | Real Estate Management & Development | 1,000 | 3,393 | |||||||||||
Link REIT | Equity Real Estate Investment Trusts (REITs) | 3,000 | 29,540 | |||||||||||
NWS Holdings Ltd. | Industrial Conglomerates | 2,000 | 3,957 | |||||||||||
PCCW Ltd. | Diversified Telecommunication Services | 8,000 | 4,662 | |||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 4,000 | 18,122 | |||||||||||
Sino Land Co. Ltd. | Real Estate Management & Development | 4,000 | 6,860 | |||||||||||
Swire Properties Ltd. | Real Estate Management & Development | 2,000 | 7,578 | |||||||||||
a | WH Group Ltd., Reg S | Food Products | 11,000 | 7,746 | ||||||||||
Yue Yuen Industrial Holdings Ltd. | Textiles, Apparel & Luxury Goods | 1,000 | 2,780 | |||||||||||
|
| |||||||||||||
277,179 | ||||||||||||||
|
| |||||||||||||
Ireland 0.1% | ||||||||||||||
b | Ryanair Holdings PLC | Airlines | 206 | 3,139 | ||||||||||
|
| |||||||||||||
Israel 1.0% | ||||||||||||||
Bank Hapoalim BM | Banks | 1,466 | 10,740 | |||||||||||
Bank Leumi Le-Israel BM | Banks | 1,576 | 10,398 | |||||||||||
Bezeq Israeli Telecommunication Corp. Ltd. | Diversified Telecommunication Services | 4,380 | 5,038 | |||||||||||
b | Check Point Software Technologies Ltd. | Software | 176 | 20,710 | ||||||||||
Mizrahi Tefahot Bank Ltd. | Banks | 198 | 3,470 | |||||||||||
|
| |||||||||||||
50,356 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 51 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ International Equity Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Italy 1.6% | ||||||||||||||
Ferrari NV | Automobiles | 152 | ||||||||||||
$ | 20,938 | |||||||||||||
Intesa Sanpaolo SpA | Banks | 14,670 | 37,503 | |||||||||||
Luxottica Group SpA | Textiles, Apparel & Luxury Goods | 116 | 7,885 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 162 | 6,981 | |||||||||||
a | Poste Italiane SpA, Reg S | Insurance | 772 | 6,171 | ||||||||||
|
| |||||||||||||
79,478 | ||||||||||||||
|
| |||||||||||||
Japan 21.9% | ||||||||||||||
Aisin Seiki Co. Ltd. | Auto Components | 100 | 4,869 | |||||||||||
ANA Holdings Inc. | Airlines | 200 | 6,990 | |||||||||||
Asahi Kasei Corp. | Chemicals | 1,600 | 24,271 | |||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 3,400 | 59,328 | |||||||||||
Bandai Namco Holdings Inc. | Leisure Products | 200 | 7,774 | |||||||||||
Bridgestone Corp. | Auto Components | 1,000 | 37,796 | |||||||||||
CANON Inc. | Technology Hardware, Storage & Peripherals | 1,400 | 44,495 | |||||||||||
Daicel Corp. | Chemicals | 200 | 2,324 | |||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 140 | 18,014 | |||||||||||
Disco Corp. | Semiconductors & Semiconductor Equipment | 30 | 5,024 | |||||||||||
Hoya Corp. | Health Care Equipment & Supplies | 600 | 35,656 | |||||||||||
Idemitsu Kosan Co. Ltd. | Oil, Gas & Consumable Fuels | 100 | 5,291 | |||||||||||
Iida Group Holdings Co. Ltd. | Household Durables | 200 | 3,559 | |||||||||||
Isuzu Motors Ltd. | Automobiles | 800 | 12,614 | |||||||||||
ITOCHU Corp. | Trading Companies & Distributors | 1,600 | 29,300 | |||||||||||
Japan Airlines Co. Ltd. | Airlines | 200 | 7,191 | |||||||||||
Japan Post Bank Co. Ltd. | Banks | 600 | 7,094 | |||||||||||
Japan Tobacco Inc. | Tobacco | 1,600 | 41,780 | |||||||||||
JXTG Holdings Inc. | Oil, Gas & Consumable Fuels | 2,200 | 16,624 | |||||||||||
Kajima Corp. | Construction & Engineering | 600 | 8,721 | |||||||||||
Kakaku.com Inc. | Interactive Media & Services | 200 | 3,913 | |||||||||||
KAO Corp. | Personal Products | 700 | 56,538 | |||||||||||
KDDI Corp. | Wireless Telecommunication Services | 3,200 | 88,434 | |||||||||||
Koito Manufacturing Co. Ltd. | Auto Components | 100 | 6,568 | |||||||||||
Kuraray Co. Ltd. | Chemicals | 400 | 6,015 | |||||||||||
Lawson Inc. | Food & Staples Retailing | 100 | 6,092 | |||||||||||
Marubeni Corp. | Trading Companies & Distributors | 1,200 | 10,987 | |||||||||||
Mebuki Financial Group Inc. | Banks | 1,200 | 4,152 | |||||||||||
Mitsubishi Chemical Holdings Corp. | Chemicals | 1,400 | 13,404 | |||||||||||
Mitsubishi Gas Chemical Co. Inc. | Chemicals | 200 | 4,259 | |||||||||||
MS&AD Insurance Group Holdings Inc. | Insurance | 400 | 13,361 | |||||||||||
Nippon Telegraph & Telephone Corp. | Diversified Telecommunication Services | 1,100 | 49,700 | |||||||||||
Nissan Motor Co. Ltd. | Automobiles | 3,400 | 31,834 | |||||||||||
Nitori Co. Ltd. | Specialty Retail | 120 | 17,215 | |||||||||||
NTT DoCoMo Inc. | Wireless Telecommunication Services | 2,600 | 69,930 | |||||||||||
Obayashi Corp. | Construction & Engineering | 1,000 | 9,473 | |||||||||||
Oracle Corp. Japan | Software | 100 | 8,065 | |||||||||||
Oriental Land Co. Ltd. | Hotels, Restaurants & Leisure | 200 | 20,918 | |||||||||||
Otsuka Corp. | IT Services | 200 | 7,466 | |||||||||||
Park24 Co. Ltd. | Commercial Services & Supplies | 200 | 6,048 | |||||||||||
Pola Orbis Holdings Inc. | Personal Products | 100 | 3,654 | |||||||||||
Sekisui Chemical Co. Ltd. | Household Durables | 400 | 7,381 | |||||||||||
Sekisui House Ltd. | Household Durables | 800 | 12,202 | |||||||||||
Shionogi & Co. Ltd. | Pharmaceuticals | 400 | 26,144 | |||||||||||
Showa Shell Sekiyu K.K. | Oil, Gas & Consumable Fuels | 200 | 4,238 | |||||||||||
Start Today Co. Ltd. | Internet & Direct Marketing Retail | 400 | 12,114 | |||||||||||
Subaru Corp. | Automobiles | 1,200 | 36,766 | |||||||||||
Sumitomo Rubber Industries Ltd. | Auto Components | 200 | 3,002 | |||||||||||
Sundrug Co. Ltd. | Food & Staples Retailing | 100 | 3,570 | |||||||||||
Suzuki Motor Corp. | Automobiles | 400 | 22,919 |
52 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ International Equity Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Taisei Corp. | Construction & Engineering | 300 | $ | 13,682 | ||||||||||
Teijin Ltd. | Chemicals | 300 | 5,755 | |||||||||||
Tokyo Electron Ltd. | Semiconductors & Semiconductor Equipment | 200 | 27,486 | |||||||||||
Tosoh Corp. | Chemicals | 400 | 6,163 | |||||||||||
Toyota Motor Corp. | Automobiles | 1,500 | 93,696 | |||||||||||
Trend Micro Inc. | Software | 200 | 12,872 | |||||||||||
USS Co. Ltd. | Specialty Retail | 300 | 5,570 | |||||||||||
Yamaha Motor Co. Ltd. | Automobiles | 200 | 5,608 | |||||||||||
|
| |||||||||||||
1,115,909 | ||||||||||||||
|
| |||||||||||||
Luxembourg 0.1% | ||||||||||||||
RTL Group SA | Media | 74 | 5,282 | |||||||||||
|
| |||||||||||||
Macau 0.0%† | ||||||||||||||
Wynn Macau Ltd. | Hotels, Restaurants & Leisure | 800 | 1,840 | |||||||||||
|
| |||||||||||||
Netherlands 1.3% | ||||||||||||||
Aegon NV | Insurance | 2,783 | 18,063 | |||||||||||
Koninklijke Ahold Delhaize NV | Food & Staples Retailing | 970 | 22,251 | |||||||||||
b | Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs) | 16 | 3,219 | ||||||||||
Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs) | 122 | 24,546 | |||||||||||
|
| |||||||||||||
68,079 | ||||||||||||||
|
| |||||||||||||
New Zealand 0.5% | ||||||||||||||
b | a2 Milk Co. Ltd. | Food Products | 516 | 3,852 | ||||||||||
Fisher & Paykel Healthcare Corp. Ltd. | Health Care Equipment & Supplies | 770 | 7,683 | |||||||||||
Ryman Healthcare Ltd. | Health Care Providers & Services | 528 | 4,900 | |||||||||||
Spark New Zealand Ltd. | Diversified Telecommunication Services | 4,076 | 10,944 | |||||||||||
|
| |||||||||||||
27,379 | ||||||||||||||
|
| |||||||||||||
Norway 0.8% | ||||||||||||||
Marine Harvest ASA | Food Products | 726 | 16,810 | |||||||||||
Telenor ASA | Diversified Telecommunication Services | 1,216 | 23,757 | |||||||||||
|
| |||||||||||||
40,567 | ||||||||||||||
|
| |||||||||||||
Portugal 0.1% | ||||||||||||||
Jeronimo Martins SGPS SA | Food & Staples Retailing | 364 | 5,363 | |||||||||||
|
| |||||||||||||
Singapore 3.4% | ||||||||||||||
CapitaLand Commercial Trust | Equity Real Estate Investment Trusts (REITs) | 3,262 | 4,250 | |||||||||||
CapitaLand Mall Trust | Equity Real Estate Investment Trusts (REITs) | 4,000 | 6,499 | |||||||||||
ComfortDelGro Corp. Ltd. | Road & Rail | 3,400 | 6,047 | |||||||||||
DBS Group Holdings Ltd. | Banks | 2,200 | 42,008 | |||||||||||
Jardine Cycle & Carriage Ltd. | Distributors | 200 | 4,683 | |||||||||||
Oversea-Chinese Banking Corp. Ltd. | Banks | 3,000 | 25,118 | |||||||||||
SATS Ltd. | Transportation Infrastructure | 1,200 | 4,584 | |||||||||||
Singapore Exchange Ltd. | Capital Markets | 1,800 | 9,709 | |||||||||||
Singapore Technologies Engineering Ltd. | Aerospace & Defense | 2,200 | 5,732 | |||||||||||
Singapore Telecommunications Ltd. | Diversified Telecommunication Services | 13,000 | 30,825 | |||||||||||
United Overseas Bank Ltd. | Banks | 1,400 | 27,747 | |||||||||||
Venture Corp. Ltd. | Electronic Equipment, Instruments & Components | 200 | 2,581 | |||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | Machinery | 3,600 | 3,267 | |||||||||||
|
| |||||||||||||
173,050 | ||||||||||||||
|
| |||||||||||||
Spain 2.9% | ||||||||||||||
Amadeus IT Group SA, A | IT Services | 688 | 63,945 | |||||||||||
Banco de Sabadell SA | Banks | 3,962 | 6,162 | |||||||||||
Enagas SA | Oil, Gas & Consumable Fuels | 168 | 4,537 | |||||||||||
Endesa SA | Electric Utilities | 532 | 11,499 |
libertyshares.com | Semiannual Report | 53 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ International Equity Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Spain (continued) | ||||||||||||||
Industria de Diseno Textil SA | Specialty Retail | 1,664 | $ | 50,464 | ||||||||||
Red Electrica Corp. SA | Electric Utilities | 636 | 13,326 | |||||||||||
|
| |||||||||||||
149,933 | ||||||||||||||
|
| |||||||||||||
Sweden 1.9% | ||||||||||||||
Atlas Copco AB | Machinery | 540 | 14,400 | |||||||||||
Boliden AB | Metals & Mining | 238 | 6,634 | |||||||||||
Electrolux AB, B | Household Durables | 324 | 7,141 | |||||||||||
b | Epiroc AB, B | Machinery | 570 | 5,865 | ||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 1,764 | 32,578 | |||||||||||
ICA Gruppen AB | Food & Staples Retailing | 102 | 3,234 | |||||||||||
Swedish Match AB | Tobacco | 278 | 14,223 | |||||||||||
Telia Co. AB | Diversified Telecommunication Services | 2,932 | 13,458 | |||||||||||
|
| |||||||||||||
97,533 | ||||||||||||||
|
| |||||||||||||
Switzerland 6.5% | ||||||||||||||
EMS-Chemie Holding AG | Chemicals | 14 | 8,385 | |||||||||||
Geberit AG | Building Products | 52 | 24,233 | |||||||||||
Kuehne + Nagel International AG | Marine | 80 | 12,735 | |||||||||||
Partners Group Holding AG | Capital Markets | 36 | 28,692 | |||||||||||
Roche Holding AG | Pharmaceuticals | 464 | 112,936 | |||||||||||
b | Swiss Life Holding AG | Insurance | 46 | 17,518 | ||||||||||
Swiss Re AG | Insurance | 440 | 40,811 | |||||||||||
Swisscom AG | Diversified Telecommunication Services | 42 | 19,151 | |||||||||||
Zurich Insurance Group AG | Insurance | 212 | 67,324 | |||||||||||
|
| |||||||||||||
331,785 | ||||||||||||||
|
| |||||||||||||
United Kingdom 24.5% | ||||||||||||||
3i Group PLC | Capital Markets | 1,272 | 15,612 | |||||||||||
Admiral Group PLC | Insurance | 414 | 11,229 | |||||||||||
Anglo American PLC | Metals & Mining | 804 | 18,065 | |||||||||||
AstraZeneca PLC | Pharmaceuticals | 1,442 | 112,131 | |||||||||||
BAE Systems PLC | Aerospace & Defense | 4,834 | 39,701 | |||||||||||
Barratt Developments PLC | Household Durables | 1,912 | 14,137 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs) | 994 | 7,995 | |||||||||||
BT Group PLC | Diversified Telecommunication Services | 15,952 | 46,867 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 740 | 19,445 | |||||||||||
Centrica PLC | Multi-Utilities | 6,020 | 12,160 | |||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 2,406 | 53,527 | |||||||||||
Croda International PLC | Chemicals | 206 | 13,974 | |||||||||||
Diageo PLC | Beverages | 1,712 | 60,703 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 2,236 | 9,444 | |||||||||||
easyJet PLC | Airlines | 236 | 4,044 | |||||||||||
Experian PLC | Professional Services | 1,288 | 33,097 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 5,214 | 104,492 | |||||||||||
Hammerson PLC | Equity Real Estate Investment Trusts (REITs) | 558 | 3,323 | |||||||||||
Hargreaves Lansdown PLC | Capital Markets | 484 | 14,106 | |||||||||||
Imperial Brands PLC | Tobacco | 1,548 | 53,919 | |||||||||||
International Consolidated Airlines Group SA | Airlines | 1,044 | 8,976 | |||||||||||
Intertek Group PLC | Professional Services | 254 | 16,535 | |||||||||||
ITV PLC | Media | 7,634 | 15,714 | |||||||||||
Johnson Matthey PLC | Chemicals | 240 | 11,148 | |||||||||||
Kingfisher PLC | Specialty Retail | 3,076 | 10,349 | |||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs) | 896 | 10,322 | |||||||||||
Marks & Spencer Group PLC | Multiline Retail | 2,686 | 10,116 | |||||||||||
Mondi PLC | Paper & Forest Products | 550 | 15,090 | |||||||||||
Next PLC | Multiline Retail | 322 | 23,070 | |||||||||||
Pearson PLC | Media | 526 | 6,105 |
54 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ International Equity Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
Persimmon PLC | Household Durables | 700 | $ | 21,589 | ||||||||||
Randgold Resources Ltd. | Metals & Mining | 120 | 8,528 | |||||||||||
RELX PLC (EUR Traded) | Professional Services | 1,550 | 32,577 | |||||||||||
RELX PLC (GBP Traded) | Professional Services | 1,814 | 38,227 | |||||||||||
Rio Tinto PLC | Metals & Mining | 1,776 | 89,861 | |||||||||||
Royal Mail PLC | Air Freight & Logistics | 1,702 | 10,589 | |||||||||||
SSE PLC | Electric Utilities | 1,642 | 24,539 | |||||||||||
Taylor Wimpey PLC | Household Durables | 6,238 | 13,975 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 264 | 12,666 | |||||||||||
Unilever NV, IDR | Personal Products | 1,852 | 103,177 | |||||||||||
Unilever PLC | Personal Products | 1,868 | 102,700 | |||||||||||
Whitbread PLC | Hotels, Restaurants & Leisure | 240 | 14,763 | |||||||||||
|
| |||||||||||||
1,248,587 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks (Cost $4,874,926) | 5,025,972 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 0.4% | ||||||||||||||
Germany 0.4% | ||||||||||||||
c | Bayerische Motoren Werke AG, 5.938%, pfd. | Automobiles | 42 | 3,303 | ||||||||||
c | Fuchs Petrolub SE, 1.891%, pfd. | Chemicals | 98 | 5,477 | ||||||||||
c | Porsche Automobil Holding SE, 3.034%, pfd. | Automobiles | 108 | 7,276 | ||||||||||
c | Schaeffler AG, 4.995%, pfd. | Auto Components | 268 | 3,427 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $20,291) | 19,483 | |||||||||||||
|
| |||||||||||||
Total Investments (Cost $4,895,217) 98.8% | 5,045,455 | |||||||||||||
Other Assets, less Liabilities 1.2% | 61,778 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 5,107,233 | ||||||||||||
|
|
†Rounds to less than 0.1% of net assets.
aSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $13,917, representing 0.3% of net assets.
bNon-income producing.
cVariable rate security. The rate shown represents the yield at period end.
At September 30, 2018 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
Forward Exchange Contracts | ||||||||||||||||||||||||||||
Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
OTC Forward Exchange Contracts |
| |||||||||||||||||||||||||||
Australian Dollar | BOFA | Buy | 1,271,441 | $ | 919,985 | 10/02/18 | $ | — | $ | (33 | ) | |||||||||||||||||
Australian Dollar | BOFA | Sell | 1,271,441 | 919,177 | 10/02/18 | — | (775 | ) | ||||||||||||||||||||
Danish Krone | BOFA | Buy | 1,127,475 | 175,618 | 10/02/18 | — | (9 | ) | ||||||||||||||||||||
Danish Krone | BOFA | Sell | 1,127,475 | 176,337 | 10/02/18 | 727 | — | |||||||||||||||||||||
Euro | BOFA | Buy | 663,678 | 770,885 | 10/02/18 | — | (23 | ) | ||||||||||||||||||||
Euro | BOFA | Sell | 663,678 | 773,669 | 10/02/18 | 2,808 | — | |||||||||||||||||||||
Great British Pound | BOFA | Buy | 860,169 | 1,121,670 | 10/02/18 | 33 | — | |||||||||||||||||||||
Great British Pound | BOFA | Sell | 860,169 | 1,119,114 | 10/02/18 | — | (2,589 | ) | ||||||||||||||||||||
Hong Kong Dollar | MSCO | Buy | 2,025,584 | 258,890 | 10/02/18 | — | (26 | ) | ||||||||||||||||||||
Hong Kong Dollar | MSCO | Sell | 2,025,584 | 258,211 | 10/02/18 | — | (653 | ) | ||||||||||||||||||||
Israeli Shekel | BOFA | Buy | 110,133 | 30,286 | 10/02/18 | 2 | — | |||||||||||||||||||||
Israeli Shekel | BOFA | Sell | 110,133 | 30,654 | 10/02/18 | 366 | — | |||||||||||||||||||||
Japanese Yen | BOFA | Buy | 123,582,033 | 1,087,981 | 10/02/18 | 33 | — | |||||||||||||||||||||
Japanese Yen | BOFA | Sell | 123,582,033 | 1,116,500 | 10/02/18 | 28,486 | — |
libertyshares.com | Semiannual Report | 55 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ International Equity Hedged ETF (continued)
Forward Exchange Contracts (continued) | ||||||||||||||||||||||||||||
Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
OTC Forward Exchange Contracts (continued) |
| |||||||||||||||||||||||||||
New Zealand Dollar | BOFA | Buy | 43,400 | $ | 28,773 | 10/02/18 | $ | — | $ | (1 | ) | |||||||||||||||||
New Zealand Dollar | BOFA | Sell | 43,400 | 28,794 | 10/02/18 | 22 | — | |||||||||||||||||||||
Norwegian Krone | BOFA | Buy | 326,833 | 40,133 | 10/02/18 | 2 | — | |||||||||||||||||||||
Norwegian Krone | BOFA | Sell | 326,833 | 39,124 | 10/02/18 | — | (1,011 | ) | ||||||||||||||||||||
Singapore Dollar | BOFA | Buy | 231,249 | 169,237 | 10/02/18 | 8 | — | |||||||||||||||||||||
Singapore Dollar | BOFA | Sell | 231,249 | 168,837 | 10/02/18 | — | (408 | ) | ||||||||||||||||||||
Swedish Krona | BOFA | Buy | 813,014 | 91,415 | 10/02/18 | 5 | — | |||||||||||||||||||||
Swedish Krona | BOFA | Sell | 813,014 | 89,173 | 10/02/18 | — | (2,246 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Buy | 319,590 | 327,197 | 10/02/18 | — | (17 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 319,590 | 331,263 | 10/02/18 | 4,083 | — | |||||||||||||||||||||
Australian Dollar | BOFA | Sell | 1,245,490 | 901,108 | 11/02/18 | — | (245 | ) | ||||||||||||||||||||
Danish Krone | BOFA | Sell | 1,100,485 | 171,861 | 11/02/18 | 8 | — | |||||||||||||||||||||
Euro | BOFA | Sell | 629,700 | 733,058 | 11/02/18 | — | (108 | ) | ||||||||||||||||||||
Great British Pound | BOFA | Sell | 881,287 | 1,150,596 | 11/02/18 | — | (215 | ) | ||||||||||||||||||||
Hong Kong Dollar | MSCO | Sell | 2,012,501 | 257,310 | 11/02/18 | 11 | — | |||||||||||||||||||||
Israeli Shekel | BOFA | Sell | 111,128 | 30,636 | 11/02/18 | 3 | — | |||||||||||||||||||||
Japanese Yen | BOFA | Sell | 128,174,188 | 1,130,720 | 11/02/18 | — | (249 | ) | ||||||||||||||||||||
New Zealand Dollar | BOFA | Sell | 41,974 | 27,832 | 11/02/18 | — | — | |||||||||||||||||||||
Norwegian Krone | BOFA | Sell | 339,545 | 41,746 | 11/02/18 | — | (2 | ) | ||||||||||||||||||||
Singapore Dollar | BOFA | Sell | 234,337 | 171,610 | 11/02/18 | — | (14 | ) | ||||||||||||||||||||
Swedish Krona | BOFA | Sell | 839,784 | 94,663 | 11/02/18 | — | (5 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 326,767 | 335,445 | 11/02/18 | — | (7 | ) | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total Forward Exchange Contracts |
| $ | 36,597 | $ | (8,636 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) |
| $ | 27,961 | |||||||||||||||||||||||||
|
|
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
See Note 7 regarding other derivative information.
See Abbreviations on page 72.
56 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
September 30, 2018 (unaudited)
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 287,523,162 | $ | 15,781,827 | $ | 16,541,343 | $ | 4,895,217 | ||||||||
Value – Unaffiliated issuers | $ | 299,778,809 | $ | 16,841,525 | $ | 18,665,950 | $ | 5,045,455 | ||||||||
Cash | 197,412 | 5,475 | 33,538 | 1,714 | ||||||||||||
Foreign currency, at value (cost $1,029,333, $4,678, $45,823 and $16,741, respectively) | 1,037,780 | 4,663 | 45,620 | 16,682 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 6,103,937 | — | 25,767 | — | ||||||||||||
Dividends | 585,333 | 61,040 | 38,925 | 31,022 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | 57,200 | 1,039 | 3,289 | — | ||||||||||||
Unrealized appreciation on OTC forward exchange contracts | — | — | — | 36,597 | ||||||||||||
|
| |||||||||||||||
Total assets | 307,760,471 | 16,913,742 | 18,813,089 | 5,131,470 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | — | — | 56,010 | 13,947 | ||||||||||||
Capital shares redeemed | 6,136,857 | — | — | — | ||||||||||||
Management fees | 135,996 | 6,256 | 5,213 | 1,654 | ||||||||||||
Variation margin on futures contracts | 7,590 | 79 | 240 | — | ||||||||||||
Deferred tax | 456,363 | — | — | — | ||||||||||||
Unrealized depreciation on OTC forward exchange contracts | — | — | — | 8,636 | ||||||||||||
|
| |||||||||||||||
Total liabilities | 6,736,806 | 6,335 | 61,463 | 24,237 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 301,023,665 | $ | 16,907,407 | $ | 18,751,626 | $ | 5,107,233 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 275,619,169 | $ | 15,871,033 | $ | 15,516,069 | $ | 4,342,235 | ||||||||
Total distributable earnings (loss) | 25,404,496 | 1,036,374 | 3,235,557 | 764,998 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 301,023,665 | $ | 16,907,407 | $ | 18,751,626 | $ | 5,107,233 | ||||||||
|
| |||||||||||||||
Shares outstanding | 9,800,000 | 600,000 | 600,000 | 200,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 30.72 | $ | 28.18 | $ | 31.25 | $ | 25.54 | ||||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 57 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the six months ended September 30, 2018 (unaudited)
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 8,874,093 | $ | 338,401 | $ | 306,491 | $ | 164,043 | ||||||||
Income from securities loaned (net of fees and rebates) | 155 | 71 | — | — | ||||||||||||
|
| |||||||||||||||
Total investment income | 8,874,248 | 338,472 | 306,491 | 164,043 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 964,113 | 37,877 | 32,158 | 15,363 | ||||||||||||
Other | 5,022 | 24 | 11 | — | ||||||||||||
|
| |||||||||||||||
Total expenses | 969,135 | 37,901 | 32,169 | 15,363 | ||||||||||||
Expenses waived/paid by affiliates (Note 3c) | (11,942 | ) | (56 | ) | (725 | ) | — | |||||||||
|
| |||||||||||||||
Net expenses | 957,193 | 37,845 | 31,444 | 15,363 | ||||||||||||
|
| |||||||||||||||
Net investment income | 7,917,055 | 300,627 | 275,047 | 148,680 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (5,842,167 | ) | 3,011 | (142,419 | ) | (40,337 | ) | |||||||||
In-kind redemptions | 15,270,416 | — | 1,103,795 | 515,523 | ||||||||||||
Foreign currency transactions | (160,428 | ) | (4,276 | ) | (4,324 | ) | (3,148 | ) | ||||||||
Forward exchange contracts | — | — | — | 512,216 | ||||||||||||
Futures contracts | (138,412 | ) | 862 | 232 | — | |||||||||||
|
| |||||||||||||||
Net realized gain (loss) | 9,129,409 | (403 | ) | 957,284 | 984,254 | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (46,619,793 | ) | (2,044 | ) | (397,111 | ) | (608,442 | ) | ||||||||
Translation of other assets and liabilities denominated in foreign currencies | (3,522 | ) | (170 | ) | (237 | ) | (7 | ) | ||||||||
Futures contracts | 22,704 | (83 | ) | 690 | — | |||||||||||
Forward exchange contracts | — | — | — | 42,491 | ||||||||||||
Change in deferred taxes on unrealized appreciation | (251,165 | ) | — | — | — | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (46,851,776 | ) | (2,297 | ) | (396,658 | ) | (565,958 | ) | ||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (37,722,367 | ) | (2,700 | ) | 560,626 | 418,296 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (29,805,312 | ) | $ | 297,927 | $ | 835,673 | $ | 566,976 | |||||||
|
| |||||||||||||||
aForeign taxes withheld on dividends | $ | 1,051,585 | $ | 22,865 | $ | 17,567 | $ | 13,195 |
58 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018 | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018 | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 7,917,055 | $ | 10,087,219 | $ | 300,627 | $ | 636,274 | ||||||||
Net realized gain (loss) | 9,129,409 | 13,064,209 | (403 | ) | 1,741,940 | |||||||||||
Net change in unrealized appreciation (depreciation) | (46,851,776 | ) | 37,377,161 | (2,297 | ) | (799,825 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (29,805,312 | ) | 60,528,589 | 297,927 | 1,578,389 | |||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (3,628,032 | ) | (10,215,291 | ) | (323,573 | ) | (703,577 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | (66,432,497 | ) | 22,490,658 | — | (11,247,987 | ) | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (99,865,841 | ) | 72,803,956 | (25,646 | ) | (10,373,175 | ) | |||||||||
Net assets: | ||||||||||||||||
Beginning of period | 400,889,506 | 328,085,550 | 16,933,053 | 27,306,228 | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 301,023,665 | $ | 400,889,506 | $ | 16,907,407 | $ | 16,933,053 | ||||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 59 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018 | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018 | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 275,047 | $ | 446,902 | $ | 148,680 | $ | 304,432 | ||||||||
Net realized gain (loss) | 957,284 | 463,478 | 984,254 | (483,664 | ) | |||||||||||
Net change in unrealized appreciation (depreciation) | (396,658 | ) | 1,333,208 | (565,958 | ) | 530,205 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | 835,673 | 2,243,588 | 566,976 | 350,973 | ||||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1f) | (192,274 | ) | (476,289 | ) | (90,273 | ) | (529,464 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 26,429 | (5,429,739 | ) | (5,071,388 | ) | — | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 669,828 | (3,662,440 | ) | (4,594,685 | ) | (178,491 | ) | |||||||||
Net assets: | ||||||||||||||||
Beginning of period | 18,081,798 | 21,744,238 | 9,701,918 | 9,880,409 | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 18,751,626 | $ | 18,081,798 | $ | 5,107,233 | $ | 9,701,918 | ||||||||
|
|
60 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of thirty-five separate funds, four of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Each of the Funds are an exchange traded fund (ETF) and seek to provide the investment results that closely correspond, before fees and expenses, to the performance of each Fund’s corresponding underlying index.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Equity securities and exchange traded funds listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. London time on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued
based upon fundamental characteristics or relationships to similar securities.
Investments in open-end mutual funds are valued at the closing NAV.
Certain derivative financial instruments (derivatives) trade in the OTC market. The Funds’ pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Funds’ business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security held by the Funds. As a result, differences may arise between the value of the Funds’ portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. The VC monitors price movements for significant events following the close of trading in foreign stock markets through a series of country specific
libertyshares.com | Semiannual Report | 61 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Funds. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.
When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Funds’ NAV is not calculated, which could result in differences between the value of the Funds’ portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Funds for financial reporting purposes.
b. Foreign Currency Translation
Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.
The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statements of Operations.
Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.
c. Derivative Financial Instruments
Certain or all Funds invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/ or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. Certain or all Funds attempt to reduce their exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Funds include failure of the Funds to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement.
62 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty within a few business days. Collateral pledged and/or received by the Fund, if any, is held in segregated accounts with the Fund’s custodian/ counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Funds’ investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.
Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to equity price risk. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statements of Assets and Liabilities.
Certain or all Funds entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.
See Note 7 regarding other derivative information.
d. Securities Lending
Certain or all Funds participate in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business
day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statements of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower. At September 30, 2018, the funds had no securities on loan.
e. Income and Deferred Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which the Funds invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, certain or all Funds record an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of September 30, 2018, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.
libertyshares.com | Semiannual Report | 63 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
f. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.*
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Certain Fund specific expenses are allocated directly to the Fund that
incurred the expense. These expenses are paid by the Funds or by Franklin Advisers Inc., as applicable, according to the terms of the unified management fee agreement.
g. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
h. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
*Effective with the current reporting period, it is no longer required to present certain line items on the Statements of Changes in Net Assets. Such disclosure changes are included in the Statements of Changes in Net Assets, therefore prior period amounts are presented below.
For the year ended March 31, 2018, distributions to shareholders were as follows:
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Distributions from net investment income: | $ | (10,215,291 | ) | $ | (703,577 | ) | $ | (476,289 | ) | $ | (529,464 | ) |
For the year ended March 31, 2018, undistributed net investment income and distribution in excess of net investment income included in net assets were as follows:
Fund | Undistributed Net Investment Income | Distribution in Excess of Net Investment Income | ||||||
Franklin LibertyQ Emerging Markets ETF | $ | 1,259,012 | $ | — | ||||
Franklin LibertyQ Global Dividend ETF | 66,523 | — | ||||||
Franklin LibertyQ Global Equity ETF | 86,314 | — | ||||||
Franklin LibertyQ International Equity Hedged ETF | — | (335,926 | ) |
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specific number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market
64 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At September 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
Franklin LibertyQ Emerging Markets ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 1,200,000 | $ | 37,968,655 | 2,400,000 | $ | 74,304,093 | ||||||||||||||
Shares redeemed | (3,400,000 | ) | (104,401,152 | ) | (1,600,000 | ) | (51,813,435 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (2,200,000 | ) | $ | (66,432,497 | ) | 800,000 | $ | 22,490,658 | ||||||||||||
|
| |||||||||||||||||||
Franklin LibertyQ Global Dividend ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 200,000 | $ | 5,648,090 | ||||||||||||||
Shares redeemed | — | — | (600,000 | ) | (16,896,077 | ) | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | (400,000 | ) | $ | (11,247,987 | ) | ||||||||||||
|
| |||||||||||||||||||
Franklin LibertyQ Global Equity ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 6,080,098 | — | $ | — | ||||||||||||||
Shares redeemed | (200,000 | ) | (6,053,669 | ) | (200,000 | ) | (5,429,739 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | 26,429 | (200,000 | ) | $ | (5,429,739 | ) | ||||||||||||
|
| |||||||||||||||||||
Franklin LibertyQ International Equity Hedged ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares redeemed | (200,000 | ) | $ | (5,071,388 | ) | — | $ | — | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (200,000 | ) | $ | (5,071,388 | ) | — | $ | — | ||||||||||||
|
|
libertyshares.com | Semiannual Report | 65 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers and/or directors of the following subsidiaries:
Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter |
a. Management Fees
The Funds pay a unified management fee to Advisers whereby Advisers has agreed to reimburse the Funds’ acquired fund fee and expenses (if any) and pay all of the ordinary operating expenses of the Funds, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding payments under the Funds’ Rule 12b-1 plan (if any), brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments), taxes, interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto), and other nonroutine or extraordinary expenses. The fees are based on the average daily net assets of each of the Funds as follows:
Annualized Fee Rate | ||
Franklin LibertyQ Emerging Markets ETF | 0.55% | |
Franklin LibertyQ Global Dividend ETF | 0.45% | |
Franklin LibertyQ Global Equity ETF | 0.35% | |
Franklin LibertyQ International Equity Hedged ETF | 0.40% |
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.
c. Investments in Affiliated Management Investment Companies
Certain or all Funds invest in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Funds are waived on assets invested in the affiliated management investment companies, as noted in the Statements of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended September 30, 2018, the Funds held investments in affiliated management investment companies as follows:
Number of Shares Held at Beginning of Period | Gross Additions | Gross Reductions | Number of Shares Held at End of Period | Value at End of Period | Dividend Income | Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||
Franklin LibertyQ Emerging Markets ETF | ||||||||||||||||||||||||||||||||
Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 1.69% | — | 8,147,475 | (8,147,475 | ) | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Franklin LibertyQ Global Dividend ETF | ||||||||||||||||||||||||||||||||
Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 1.69% | 27,000 | 227,699 | (254,699 | ) | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
|
|
66 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Number of Shares Held at Beginning of Period | Gross Additions | Gross Reductions | Number of Shares Held at End of Period | Value at End of Period | Dividend Income | Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||
Franklin LibertyQ Global Equity ETF | ||||||||||||||||||||||||||||||||
Controlled Affiliates | ||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 1.69% | — | 16,200 | (16,200 | ) | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
|
|
d. Other Affiliated Transactions
At September 30, 2018, the shares of Franklin LibertyQ Emerging Markets ETF were owned by the following entities:
Fund | Shares | Percentage of Outstanding Sharesa | ||||||
Franklin 529 Portfolios | 1,915,300 | 19.5% | ||||||
Franklin Conservative Allocation Fund | 1,118,349 | 11.4% | ||||||
Franklin Growth Allocation Fund | 2,331,755 | 23.8% | ||||||
Franklin LifeSmart™ 2020 – 2055 Retirement Target Funds | 786,973 | 8.0% | ||||||
Franklin Moderate Allocation Fund | 2,598,040 | 26.5% | ||||||
|
| |||||||
8,750,417 | 89.2% | |||||||
|
|
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2018, the capital loss carryforwards were as follows:
Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | ||||||||||
Capital loss carryforwards: | ||||||||||||
Short term | $ | — | $ | — | $ | 69,934 | ||||||
Long term | 30,054 | 10,893 | — | |||||||||
|
| |||||||||||
Total capital loss carryforwards | $ | 30,054 | $ | 10,893 | $ | 69,934 | ||||||
|
|
For tax purposes, the Funds may elect to defer any portion of a late-year ordinary loss to the first day of the following fiscal year. At March 31, 2018, Franklin LibertyQ International Equity Hedged ETF deferred late-year ordinary losses of $317,157.
At September 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Cost of investments | $ | 288,999,735 | $ | 15,818,305 | $ | 16,556,962 | $ | 4,963,969 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 36,959,711 | $ | 1,766,813 | $ | 2,577,012 | $ | 553,126 | ||||||||
Unrealized depreciation | (26,180,637 | ) | (743,593 | ) | (468,024 | ) | (443,679 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | 10,779,074 | $ | 1,023,220 | $ | 2,108,988 | $ | 109,447 | ||||||||
|
|
libertyshares.com | Semiannual Report | 67 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
4. Income Taxes (continued)
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of corporate actions, foreign currency transactions, passive foreign investment company shares and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities and in-kind transactions, if any) for the period ended September 30, 2018, were as follows:
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Purchases | $ | 108,579,228 | $ | 2,343,910 | $ | 4,337,500 | $ | 1,936,623 | ||||||||
Sales | $ | 114,501,598 | $ | 2,341,582 | $ | 3,754,629 | $ | 1,487,440 |
In-kind transactions associated with creation and redemptions for the period ended September 30, 2018, were as follows:
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Cost of Securities Received | $ | 5,966,614 | $ | — | $ | 4,623,022 | $ | — | ||||||||
Value of Securities Delivereda | $ | 61,665,161 | $ | — | $ | 5,040,428 | $ | 4,874,548 |
aRealized gains and losses from in-kind redemptions, as shown on the Statement of Operations, are not recognized by the Funds for tax purposes.
6. Concentration of Risk
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.
The United States and other nations have imposed and could impose additional sanctions on certain issuers in Russia due to regional conflicts. These sanctions could result in the devaluation of Russia’s currency, a downgrade in Russian issuers’ credit ratings, or a decline in the value and liquidity of Russian stocks or other securities. Such sanctions could also adversely affect Russia’s economy, possibly forcing the economy into a recession. Certain or all Funds may be prohibited from investing in securities issued by companies subject to such sanctions. In addition, if the Fund holds the securities of an issuer that is subject to such sanctions, an immediate freeze of that issuer’s securities could result, impairing the ability of the Fund to buy, sell, receive or deliver those securities. There is also the risk that countermeasures could be taken by Russia’s government, which could involve the seizure of the Fund’s assets. These risks could affect the value of the Funds’ portfolio. While the Funds hold securities of certain issuers recently impacted by the sanctions, existing investments do not presently violate the applicable terms and conditions of the sanctions. The sanctions currently do not affect the Fund’s ability to sell these securities. At September 30, 2018, Franklin LibertyQ Emerging Markets ETF had 13.4% of its net assets invested in Russia. The remaining Funds in the Trust did not have significant investment in Russia.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
7. Other Derivative Information
At September 30, 2018, the Funds’ investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
Asset Derivatives | Liability Derivatives | |||||||||||
Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||
Franklin LibertyQ Emerging Markets ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 22,704 | a | Variation margin on futures contracts | $ | — | |||||
Franklin LibertyQ Global Dividend ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | — | Variation margin on futures contracts | $ | 83 | a | |||||
Franklin LibertyQ Global Equity ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 690 | a | Variation margin on futures contracts | $ | — | |||||
Franklin LibertyQ International Equity Hedged ETF | ||||||||||||
Foreign exchange contracts | Unrealized appreciation on OTC forward exchange contracts | $ | 36,597 | Unrealized depreciation on OTC forward exchange contracts | $ | 8,636 |
aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.
For the period ended September 30, 2018, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:
Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
Franklin LibertyQ Emerging Markets ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | (138,412 | ) | Futures contracts | $ | 22,704 | |||||
Franklin LibertyQ Global Dividend ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | 862 | Futures contracts | $ | (83 | ) | |||||
Franklin LibertyQ Global Equity ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | 232 | Futures contracts | $ | 690 |
libertyshares.com | Semiannual Report | 69 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
7. Other Derivative Information (continued)
For the period ended September 30, the average month end contract value of futures contracts was $21,919.
Franklin LibertyQ International Equity Hedged ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Foreign exchange contracts | Forward exchange contracts | $ | 512,216 | Forward exchange contracts | $ | 42,491 |
For the year ended September 20, 2018, the average month end notional amount of futures contracts and average month end contract value for forward exchange contracts were as follows:
Franklin LibertyQ Emerging Markets ETF | Franklin LibertyQ Global Dividend ETF | Franklin LibertyQ Global Equity ETF | Franklin LibertyQ International Equity Hedged ETF | |||||||||||||
Futures contracts | $ | 511,563 | $ | 14,568 | $ | 21,919 | $ | — | ||||||||
Foreign exchange contracts | $ | — | $ | — | $ | — | $ | 22,830,579 |
At September 30, 2018, Funds’ OTC derivative assets and liabilities were as follows:
Gross and Net Amounts of Assets and Liabilities Presented in the Statements of Assets and Liabilities | ||||||||
Assetsa | Liabilitiesa | |||||||
Franklin LibertyQ International Equity Hedged ETF | ||||||||
Derivatives | ||||||||
Forward Exchange Contracts | $ | 36,597 | $ | 8,636 |
aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.
At September 30, 2018, the Funds’ OTC derivative assets, which may be offset against the Funds’ OTC derivative liabilities and collateral received from the counterparty, are as follows:
Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
Gross and Net Amounts of Assets Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Received | Cash Collateral Received | Net Amount (Not less than zero) | ||||||||||||||||
Franklin LibertyQ International Equity Hedged ETF | ||||||||||||||||||||
Counterparty | ||||||||||||||||||||
BOFA | $ | 32,503 | $ | (7,933 | ) | $ | — | $ | — | $ | 27,961 | |||||||||
MSCO | 4,094 | (703 | ) | — | — | 3,391 | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 36,597 | $ | (8,636 | ) | $ | — | $ | — | $ | 27,961 | |||||||||
|
|
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
At September 30, 2018, the Funds’ OTC derivative liabilities, which may be offset against the Funds’ OTC derivative assets and collateral received from the counterparty, are as follows:
Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
Gross and Net Amounts of Liabilities Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Pledged | Cash Collateral Pledged | Net Amount (Not less than zero) | ||||||||||||||||
Franklin LibertyQ International Equity Hedged ETF | ||||||||||||||||||||
Counterparty | ||||||||||||||||||||
BOFA | $ | 7,933 | $ | (7,933 | ) | $ | — | $ | — | $ | — | |||||||||
MSCO | 703 | (703 | ) | — | — | — | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 8,636 | $ | (8,636 | ) | $ | — | $ | — | $ | — | |||||||||
|
|
See note 1(c) regarding derivative financial instruments.
See Abbreviations on page 72.
8. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
• | Level 1 – quoted prices in active markets for identical financial instruments |
• | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
A summary of inputs used as of September 30, 2018, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Franklin LibertyQ Emerging Markets ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 299,778,809 | $ | — | $ | — | $ | 299,778,809 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 22,704 | $ | — | $ | — | $ | 22,704 | ||||||||
|
|
libertyshares.com | Semiannual Report | 71 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
8. Fair Value Measurements (continued)
Level 1 | �� | Level 2 | Level 3 | Total | ||||||||||||
Franklin LibertyQ Global Dividend ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 16,841,525 | $ | — | $ | — | $ | 16,841,525 | ||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 83 | $ | — | $ | — | $ | 83 | ||||||||
|
| |||||||||||||||
Franklin LibertyQ Global Equity ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Taiwan | $ | 444,961 | $ | 3,724 | $ | — | $ | 448,685 | ||||||||
Other Equity Investmentsb | 18,217,265 | — | — | 18,217,265 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 18,662,226 | $ | 3,724 | $ | — | $ | 18,665,950 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 690 | $ | — | $ | — | $ | 690 | ||||||||
|
| |||||||||||||||
Franklin LibertyQ International Equity Hedged ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 5,045,455 | $ | — | $ | — | $ | 5,045,455 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 36,597 | $ | — | $ | 36,597 | ||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 8,636 | $ | — | $ | 8,636 | ||||||||
|
|
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common and preferred stocks, as well as other equity interests.
10. New Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in the ASU modify the disclosure requirements on fair value measurements. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Management is currently evaluating the impact, if any, of applying this provision.
11. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Counterparty | ||
BOFA | Bank of America Corp. | |
MSCO | Morgan Stanley |
Selected Portfolio | ||
ADR | American Depositary Receipt | |
ETF | Exchange Traded Fund | |
GDR | Global Depositary Receipt | |
IDR | International Depositary Receipt | |
NVDR | Non-Voting Depositary Receipt | |
REIT | Real Estate Investment Trust |
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FRANKLIN TEMPLETON ETF TRUST
At March 31, 2018, more than 50% of Franklin LibertyQ Emerging Markets ETF, Franklin LibertyQ Global Dividend ETF, and Franklin LibertyQ International Equity Hedged ETF total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Funds on these investments. As shown in the table below, the Funds hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This written statement will allow shareholders of record on June 21, 2018, to treat their proportionate share of foreign taxes paid by the Funds as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.
The following tables provides a detailed analysis of foreign tax paid, foreign source income, and foreign source qualified dividends as reported by the Funds to shareholders of record.
Fund | Foreign Tax Paid Per Share | Foreign Source Income Per Share | Foreign Source Qualified Dividends Per Share | |||||||||
Franklin LibertyQ Emerging Markets ETF | $ | 0.1299 | $ | 0.9605 | $ | 0.7171 | ||||||
Franklin LibertyQ Global Dividend ETF | $ | 0.0613 | $ | 0.8101 | $ | 0.8043 | ||||||
Franklin LibertyQ International Equity Hedged ETF | $ | 0.0761 | $ | 0.5145 | $ | 0.1453 |
Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.
Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends. The amounts reported include foreign source qualified dividends that have not been adjusted for the rate differential applicable to such dividend income.1
Foreign Source Qualified Dividends Per Share (Column 3) is the amount per share of foreign source qualified dividends, plus any foreign taxes withheld on these dividends. These amounts represent the portion of the Foreign Source Income reported to you in column 2 that were derived from qualified foreign securities held by the Fund.1
By mid-February 2019, shareholders will receive Form 1099-DIV which will include their share of taxes paid and foreign source income distributed during the calendar year 2018. The Foreign Source Income reported on Form 1099-DIV has not been adjusted for the rate differential on foreign source qualified dividend income. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their 2017 individual income tax returns.
1. Qualified dividends are taxed at reduced long term capital gains tax rates. In determining the amount of foreign tax credit that may be applied against the U.S. tax liability of individuals receiving foreign source qualified dividends, adjustments may be required to the foreign tax credit limitation calculation to reflect the rate differential applicable to such dividend income. The rules however permit certain individuals to elect not to apply the rate differential adjustments for capital gains and/or dividends for any taxable year. Please consult your tax advisor and the instructions to Form 1116 for more information.
libertyshares.com | Semiannual Report | 73 |
FRANKLIN TEMPLETON ETF TRUST
BOARD APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS
FRANKLIN TEMPLETON ETF TRUST
Franklin LibertyQ Emerging Markets ETF
Franklin LibertyQ Global Dividend ETF
Franklin LibertyQ Global Equity ETF
Franklin LibertyQ International Equity Hedged ETF
(each a Fund)
At in-person meetings held on April 9, 2018 (April Meeting) and May 16, 2018 (May Meeting, and collectively with the April Meeting, the Meetings), the Board of Trustees (Board) of Franklin Templeton ETF Trust (Trust), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (Manager) and the Trust, on behalf of each Fund (each a Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate.
In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by the Manager at the Meetings and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to the Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meetings, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services provided by the Manager; (ii) the investment performance of each Fund, as well as each Fund’s tracking error against a specified benchmark index as of a recent period; (iii) the costs of the services provided and profits realized by the Manager and its affiliates from the relationship
with each Fund; (iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.
In approving the continuance of each Management Agreement at the Meetings, the Board, including a majority of the Independent Trustees, determined that the terms of the Management Agreement are fair and reasonable and that the continuance of such Management Agreement is in the best interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of the Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for each Fund; reports on expenses; legal and compliance matters; risk controls; pricing and other services provided by the Manager and its affiliates; and management fees charged by the Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the registered fund industry, such as cybersecurity and liquidity risk management.
The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Manager’s parent, and its commitment to the registered fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Funds by the FTI organization.
Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by the Manager and its affiliates to the Funds and their shareholders.
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FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
FUND PERFORMANCE. The Board reviewed and considered the performance results of each Fund for the one-year periods ended December 31, 2017 at the April Meeting and March 31, 2018 at the May Meeting. The Board considered the performance returns for each Fund in comparison to the performance returns of funds deemed comparable to the Fund included in a universe (Performance Universe) selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent provider of investment company data. The Board received a description of the methodology used by Broadridge to select the funds included in a Performance Universe. The Board also reviewed and considered Fund performance reports provided and discussions that occurred with portfolio managers at Board meetings throughout the year. A summary of each Fund’s performance results is below.
The Performance Universe for the Franklin LibertyQ Emerging Markets ETF included the Fund and all retail and institutional emerging markets funds. The Performance Universe for the Franklin LibertyQ Global Dividend ETF included the Fund and all retail and institutional global equity income funds. The Performance Universe for the Franklin LibertyQ Global Equity ETF included the Fund and all retail and institutional global multi-cap growth funds. The Performance Universe for the Franklin LibertyQ International Equity Hedged ETF included the Fund and all retail and institutional international multi-cap growth funds. The Funds commenced
operations on June 1, 2016, and thus have been in operation for less than three years. The Board noted that the Funds’ annualized total returns for the one-year periods ended December 31, 2017 and March 31, 2018 were below the medians of their respective Performance Universes. The Board also noted its ongoing discussions with the Manager about the performance of the Funds to date and the importance of performance to asset growth. The Board concluded that the Funds’ performance was acceptable given their short period of operation. The Board further noted that, in light of the Funds’ use of a “passive” or indexing investment approach, management evaluates the Funds based on their tracking error against a specified benchmark. The Board noted that for the one-year periods ended December 31, 2017 and March 31, 2018, each Fund’s tracking error was within the tolerance anticipated for such Fund.
COMPARATIVE FEES AND EXPENSES. The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and
non-Rule 12b-1 service fees; and other non-management fees. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers (Management Rate), if any, of each Fund in comparison to the median expense ratio and median Management Rate, respectively, of other exchange-traded funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges. The Board received a description of the methodology used by Broadridge to select the exchange-traded funds included in an Expense Group.
The Expense Group for the Franklin LibertyQ Emerging Markets ETF was comprised of pure-index exchange-traded funds, which included the Fund and 14 other emerging markets funds. The Expense Group for the Franklin LibertyQ Global Dividend ETF was comprised of pure-index exchange-traded funds, which included the Fund and seven other global equity income funds. The Expense Group for the Franklin LibertyQ Global Equity ETF was comprised of pure-index exchange-traded funds, which included the Fund, one other global multi-cap growth fund and four global multi-cap core funds. The Expense Group for the Franklin LibertyQ International Equity Hedged ETF was comprised of pure-index exchange-traded funds, which included the Fund and eight other international multi-cap growth funds. The Board noted that the Management Rates and actual total expense ratios for these Funds were below the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are reasonable. In doing so, the Board noted that effective December 1, 2017, each Fund implemented a unified management fee (Unified Fee). The Board further noted that pursuant to the Unified Fee arrangement the Manager reimburses each Fund for all of its acquired fund fees and expenses (if any) and pays all of the ordinary operating expenses of the Fund, except for (i) the Fund’s investment management fee, (ii) payments under the Fund’s Rule 12b-1 plan (if any), (iii) brokerage expenses, (iv) taxes, (v) interest (including
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FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
borrowing costs and dividend expenses on securities sold short and overdraft charges), (vi) 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 (vii) other non-routine or extraordinary expenses.
PROFITABILITY. The Board reviewed and considered information regarding the profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis provided by the Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2017, being the most recent fiscal
year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product-related changes, the overall methodology has remained consistent with that used in the profitability report presentations from prior years. Additionally, PricewaterhouseCoopers LLP, auditor to Franklin Resources, Inc. and certain Franklin Templeton funds, has been engaged by the Manager to periodically review and assess the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.
The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.
The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by the Manager and its affiliates from providing services to each Fund was
not excessive in view of the nature, extent and quality of services provided to each Fund.
ECONOMIES OF SCALE. The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. The Board considered that each Fund would likely experience benefits from the Unified Fee at the Fund’s projected asset levels because of the
Manager’s contractual requirement to bear most of the Fund’s ordinary operating expenses. The Board noted that, under the Unified Fee, it is not anticipated that any of the Funds will generate significant, if any, profit for the Manager and/or its affiliates for some time. The Board also considered the Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Manager incurs across the Franklin Templeton family of funds as a whole. The Board also noted that the Funds commenced operations on June 1, 2016 and that, as of December 31, 2017, each Fund’s net assets (except those of the Franklin LibertyQ Emerging Markets ETF) were approximately $22 million or below. The Board recognized that there would not likely be any economies of scale for these Funds until each Fund’s assets grow.
CONCLUSION. Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the continuation of each Management Agreement for an additional one-year period.
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
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FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Funds and the Funds’ net asset value may be found on the Funds’ website at libertyshares.com.
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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
Semiannual Report | ||||||
Franklin Templeton ETF Trust | ||||||
Investment Manager Franklin Advisers, Inc. | Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 libertyshares.com | Investor Services Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 |
© 2018 Franklin Templeton Investments. All rights reserved. | ETF S 11/18 |
Franklin Templeton
ETF Trust
Semiannual Report
September 30, 2018
Franklin Liberty International Opportunities ETF |
Franklin Liberty Investment Grade Corporate ETF |
Franklin Liberty U.S. Low Volatility ETF |
Franklin Templeton Investments
Why choose Franklin Templeton Investments?
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visit libertyshares.com for fund updates and documents.
Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
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SEMIANNUAL REPORT
Franklin Liberty International Opportunities ETF
This semiannual report for Franklin Liberty International Opportunities ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks long-term capital appreciation. Under normal market conditions, the Fund invests predominantly in equity securities in developed, developing and frontier markets outside of the U.S. across the entire market capitalization spectrum, including small- and mid-capitalization companies.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -2.98% based on market price and -1.79% based on net asset value (NAV). In comparison, the MSCI All Country World Index (ACWI) ex USA Index, which measures stock performance in global developed and emerging markets excluding the U.S., had a -1.61% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 5.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Economic and Market Overview
The global economy expanded during the six-month period under review amid generally upbeat economic data across regions. In this environment, the MSCI ACWI, which measures performance of global developed and emerging market stocks, generated a +5.15% total return for the six months ended September 30, 2018.1 Global markets were aided by higher crude oil prices and encouraging corporate earnings reports.
However, at certain times during the period, global markets reflected investor concerns about tensions in the Korean peninsula and political uncertainties in the U.S. and the European Union (EU), as well as worries that strong economic growth and rising inflation in the U.S. and other countries would lead central banks to increase interest rates
Geographic Composition |
Based on Total Net Assets as of 9/30/18 |
sooner than expected. Markets were further pressured by the Trump administration’s protectionist trade policies, U.S. trade disputes with its allies and China, and fears of tighter regulation of information technology and technology-related companies. The Turkish lira’s and Argentine peso’s rapid deterioration and accompanying fears of a contagion effect also hurt investor confidence, particularly in emerging markets. However, investors were encouraged by an overall easing of tensions in the Korean peninsula, a U.S.-EU agreement to try to reduce trade barriers and a trade deal between the U.S. and Mexico, which Canada joined at period-end.
The U.S. economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The unemployment rate declined from 4.1% in March 2018, as reported at the beginning of the six-month period, to a nearly 49-year low of 3.7% at period-end.2 Annual inflation, as measured by the Consumer Price Index, decreased from 2.4% in March 2018, as reported at the beginning of the period, to 2.3% at period-end.2 The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate in June and September 2018 and continued reducing its balance sheet as part of an ongoing plan to normalize monetary policy. In September 2018, the Fed raised its
1. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
2. Source: U.S. Bureau of Labor Statistics.
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 21.
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FRANKLIN LIBERTY INTERNATIONAL OPPORTUNITIES ETF
forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018.
In Europe, the U.K.’s quarterly economic growth accelerated in 2018’s second quarter amid growth in the services sector. The Bank of England raised its key policy rate once during the review period. The eurozone’s quarterly growth remained stable in 2018’s second quarter but moderated in the third quarter. The bloc’s annual inflation rate ended the period higher than in March 2018. The European Central Bank (ECB) kept its benchmark interest rate unchanged during the period. In September 2018, the ECB confirmed it would further reduce its monthly bond purchases beginning in October 2018, as previously announced in June, and reiterated its plan to conclude the program at the end of 2018, while keeping interest rates unchanged through at least the summer of 2019.
In Asia, Japan’s quarterly gross domestic product (GDP) expanded in 2018’s second quarter, mainly due to growth in business spending and household consumption. The Bank of Japan left its benchmark interest rate unchanged during the period and continued its monetary stimulus measures.
In emerging markets, Brazil’s quarterly GDP growth accelerated in 2018’s second quarter. Russia’s annual GDP growth rate accelerated in 2018’s second quarter. The Bank of Russia kept its key rate unchanged through most of the period but raised it near period-end. China’s GDP continued to grow in 2018’s third quarter, though at the slowest annual rate since 2009. The People’s Bank of China left its benchmark interest rate unchanged during the period, but it took measures to improve financial liquidity to mitigate the negative effects of the U.S.-China trade dispute and support economic growth. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, declined during the period.
Investment Strategy
The Fund’s individual country and sector weightings may vary significantly from its benchmark index, and investments will not necessarily be in the securities that comprise its benchmark index. The Fund’s exposure to various regions and markets will vary from time to time according to the investment manager’s opinions as to the prevailing conditions and prospects for these markets. In seeking to outperform the relevant market of each region, the investment manager consults with various local asset managers based in certain regions around the world (Sub-Advisors). Although the Sub-Advisors assist the investment manager in the selection of local securities, the investment manager retains the sole discretion with respect to portfolio security selection. The Fund may enter into certain derivative transactions to seek to enhance Fund returns, increase liquidity, gain exposure to certain instruments or markets in a more efficient or less expensive way and/or hedge risks associated with its other portfolio investments.
Top 10 Countries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Japan | 15.8% | |||
U.K. | 12.0% | |||
China | 9.8% | |||
France | 6.7% | |||
Canada | 6.0% | |||
Spain | 5.7% | |||
Italy | 4.7% | |||
Switzerland | 4.5% | |||
Australia | 3.4% | |||
Netherlands | 2.8% |
When choosing equity investments for the Fund, we apply a research-driven, bottom-up, fundamental long-term approach, focusing on the market price of a company’s securities relative to our evaluation of the company’s long-term earnings, asset value and cash flow potential. We seek to invest in companies that we consider to be financially strong with favorable growth potential and sustainable competitive advantages. We may also consider, among other factors, a company’s price/earnings ratio, profit margins and liquidation value.
Manager’s Discussion
During the reporting period, Franklin Liberty International Opportunities ETF underperformed its benchmark, the MSCI ACWI ex USA Index. The Fund’s positions in the consumer discretionary, materials and communications services sectors curbed relative performance, while its financials, energy and health care positions contributed.
A number of our emerging-markets holdings curbed relative performance as a falloff in emerging-market currencies, given the strength of the U.S. dollar and economic-based investor concerns about countries including Argentina and Turkey (where we had no holdings), had a negative impact. Investor fears of a trade war and slowing growth in China also weighed on a number of companies during the period.
Individual detractors included China-based online travel company Ctrip.com International and Taiwan-based computer hardware manufacturer Ennoconn. We believe that as investor fears abate, the stocks could better reflect what we view as the companies’ strong fundamentals and robust underlying growth trends, as consumer trends in China have remained strong and the growing Indian middle class has continued to demand greater access to financial services.
Conversely, with energy prices rising during the period, TGS-Nopec Geophysical, a Norway-based provider of
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FRANKLIN LIBERTY INTERNATIONAL OPPORTUNITIES ETF
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 11.1% | |||
Pharmaceuticals | 6.9% | |||
Insurance | 6.0% | |||
Internet & Direct Marketing Retail | 4.5% | |||
Electrical Equipment | 4.2% | |||
Oil, Gas & Consumable Fuels | 4.1% | |||
Semiconductors & Semiconductor Equipment | 4.0% | |||
IT Services | 3.5% | |||
Interactive Media & Services | 3.1% | |||
Capital Markets | 2.9% |
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
Alibaba Group Holding Ltd., ADR Internet & Direct Marketing Retail, China | 2.7% | |||
Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan | 2.2% | |||
Novartis AG Pharmaceuticals, Switzerland | 1.9% | |||
Roche Holding AG Pharmaceuticals, Switzerland | 1.9% | |||
Tencent Holdings Ltd. Interactive Media & Services, China | 1.8% | |||
ASR Nederland NV Insurance, Netherlands | 1.7% | |||
CSL Ltd. Biotechnology, Australia | 1.6% | |||
Sanofi Pharmaceuticals, France | 1.6% | |||
JXTG Holdings Inc. Oil, Gas & Consumable Fuels, Japan | 1.5% | |||
Ctrip.com International Ltd., ADR Internet & Direct Marketing Retail, China | 1.5% |
geosciences data, contributed to relative performance due to growing investor optimism that higher crude oil prices could lead to a pickup in oil and gas exploration and production activity.3 Similarly, JXTG Holdings, a Japan-based oil and metals conglomerate, also contributed.
A number of European financials stocks aided relative returns over the period. Dutch insurer ASR Nederland and Italian multi-channel lender FinecoBank climbed over the period. FinecoBank rose despite an uncertain Italian political environment during the period.
The ETF did not use derivatives during the period.
Thank you for your participation in Franklin Liberty International Opportunities ETF. We look forward to serving your future investment needs.
Stephen H. Dover, CFA |
Purav A. Jhaveri, CFA, FRM | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
CFA® is a trademark owned by CFA Institute.
3. Not held at period-end.
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FRANKLIN LIBERTY INTERNATIONAL OPPORTUNITIES ETF
Performance Summary as of September 30, 2018
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 (1/27/17), 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 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | -1.79% | 5 | -2.98% | -1.79% | 5 | -2.98% | ||||||||||
1-Year | +1.66% | +0.98% | +1.66% | +0.98% | ||||||||||||
Since Inception (1/25/17) | +20.28% | +20.14% | +11.62% | +11.54% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 6 for Performance Summary footnotes.
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FRANKLIN LIBERTY INTERNATIONAL OPPORTUNITIES ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.224000 |
Total Annual Operating Expenses6
With Waiver | Without Waiver | |||
0.60% | 3.39% |
All investments involve risks, including possible loss of principal. The market values of stocks owned by the Fund will go up or down, sometimes rapidly or unpredictably. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent the Fund focuses on particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks or adverse developments in such areas of focus than a fund that invests in a wider variety of countries, regions, industries or sectors, or investments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. Smaller and midsize-company stocks have historically experienced more price volatility than larger-company stocks, especially over the short term. 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. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has an expense reduction contractually guaranteed through 7/31/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN LIBERTY INTERNATIONAL OPPORTUNITIES ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $ 7.50, then 8.6 × $ 7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During 4/1/18-9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 982.10 | $ | 2.98 | $ | 1,022.06 | $ | 3.04 | 0.60 | % |
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 Liberty Investment Grade Corporate ETF
We are pleased to bring you Franklin Liberty Investment Grade Corporate ETF’s semiannual report for the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks a high level of current income as is consistent with prudent investing, while seeking preservation of capital. Under normal market conditions, the Fund invests at least 80% of its net assets in investment-grade corporate debt securities and investments.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +0.30% based on market price and +0.13% based on net asset value (NAV).1 In comparison, the Bloomberg Barclays U.S. Corporate Investment Grade Index had a -0.02% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 11.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Economic and Market Overview
The U.S. economy grew during the six months under review. The economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The manufacturing and services sectors expanded during the period. The unemployment rate declined from 4.1% in March 2018, as reported at the beginning of the six-month period, to a nearly 49-year low of 3.7% at period-end.2 Annual inflation, as measured by the Consumer Price Index, decreased from 2.4% in March 2018, as reported at the beginning of the period, to 2.3% at period-end.2
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 24.2% | |||
Oil, Gas & Consumable Fuels | 10.6% | |||
Electric Utilities | 4.8% | |||
Capital Markets | 4.7% | |||
Diversified Telecommunication Services | 4.2% | |||
Media | 4.1% | |||
Insurance | 4.1% | |||
Diversified Financial Services | 3.8% | |||
Health Care Providers & Services | 3.0% | |||
Food Products | 2.8% |
The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate 0.25% at its June 2018 meeting, and continued reducing its balance sheet as part of an ongoing plan to normalize monetary policy. In his congressional testimony in July 2018 and at the Fed symposium in August, Fed Chair Jerome Powell reiterated the Fed’s intention to gradually raise interest rates. At its September 2018 meeting, the Fed raised its target range for the federal funds rate 0.25% to 2.00%–2.25%, as widely expected. Furthermore, the Fed raised its forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018.
The 10-year Treasury yield, which moves inversely to its price, increased during the period. The yield rose to multi-year highs in April and May 2018 amid indications of higher inflation. Expectations that global central banks might scale back monetary stimulus and better-than-expected U.S. economic reports also pushed the yield higher. However, some factors weighed on the Treasury yield at certain points during the period, including concerns about political turmoil in Italy, political uncertainties in the U.S., tensions between the U.S. and North Korea, the Trump administration’s protectionist trade policies, U.S. trade disputes with its allies and China, and economic turmoil in Turkey. Overall, the 10-year Treasury yield rose from 2.74% at the beginning of the period to 3.05% at period-end.
1. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
2. Source: U.S. Bureau of Labor Statistics.
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 26.
8 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
Investment Strategy
The Fund invests primarily in U.S. dollar-denominated corporate debt securities issued by U.S. and foreign companies. The Fund may invest in debt securities of any maturity or duration.
The Fund’s focus on the credit quality of its portfolio is intended to reduce credit risk and help to preserve the Fund’s capital. The Fund may also invest a portion of its assets in convertible securities, preferred securities and U.S. Treasury securities, and generally expects to invest a portion of its assets in cash, cash equivalents and high quality money market securities, including commercial paper, repurchase agreements and affiliated or unaffiliated money market funds. The Fund may invest up to 40% of its net assets in foreign securities, including those in developing markets, and up to 15% of its net assets in non-U.S. dollar-denominated securities. The Fund may enter into certain derivative transactions to seek to enhance Fund returns, increase liquidity, gain exposure to certain instruments or markets in a more efficient or less expensive way and/or hedge risks associated with its other portfolio investments.
In choosing investments, we select securities in various market sectors based on our assessment of changing economic, market, industry and issuer conditions. We use a top-down analysis of macroeconomic trends, combined with a bottom-up fundamental analysis of market sectors, industries and issuers, to try to take advantage of varying sector reactions to economic events. The Fund’s portfolio is constructed by taking into account our desired duration and yield curve exposure, total return potential, as well as the appropriate diversification and risk profile at the issue, company and industry level.
Manager’s Discussion
The investment-grade corporate bond market, as measured by the Bloomberg Barclays U.S. Corporate Investment Grade Index, changed little during the six-month period. However, corporate bond spreads experienced some volatility and reached year-to-date wide levels in late June before ending the period slightly tighter than their ending levels in March.
Increased threats of a global trade war, political volatility in Italy and concerns about emerging markets drove the market during the period. However, corporate earnings were supportive as global economic conditions remained mostly strong. Muted new corporate bond issuance also helped to stabilize the market’s technical backdrop.
Government bond yields rose during the period and the yield curve flattened, as shorter yields increased more than longer-
Top 10 Holdings | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
JPMorgan Chase & Co., sub. note, 3.375%, 5/01/23 | 3.0% | |||
FHLB, 10/01/18 | 2.9% | |||
The Goldman Sachs Group Inc., sub. note, | 2.6% | |||
Bank of America Corp., sub. bond, | 2.5% | |||
HSBC USA Inc., sub. note, 5.00%, 9/27/20 | 2.5% | |||
Citigroup Inc., sub. note, 4.05%, 7/30/22 | 2.3% | |||
Alibaba Group Holding Ltd., senior note, | 2.3% | |||
Verizon Communications Inc., senior bond, | 2.2% | |||
Ford Motor Credit Co. LLC, senior note, | 2.2% | |||
ANZ New Zealand International Ltd. of London, senior note, 144A 2.875%, 1/25/22 | 2.2% |
term yields. Investors closely watched the Fed’s pace of monetary policy normalization as inflation pressures remained mostly muted despite a strong U.S. labor market and healthy consumer spending.
The Fund outperformed its benchmark during the period. Our industry allocation was the biggest contributor to positive performance. The Fund’s performance was also helped by security selection, duration/yield curve positioning and quality allocation.
Industry outperformance was driven by our holdings of government-related bonds. Contributors on an individual company basis included Verizon, 21st Century Fox and Walgreen Boots. Detractors included CK Hutchison,3 Georgia Power and AT&T.
News coverage about some individual issuers held in the Fund continued to create volatility for their bond prices. For example, the battle between Walt Disney Company4 and Comcast4 to purchase certain 21st Century Fox assets resulted in significant spread moves for all of the issuers involved.
The Fund’s overweighted position in BBB rated bonds helped performance. This position was based on our view that these bonds offered attractive yields in an environment of continued strong economic growth.
Duration/yield curve positioning was also a positive contributor as the Fund was generally short duration relative to its benchmark during the period as U.S. Treasury yields moved
3. Not held at period-end.
4. Not a Fund holding.
libertyshares.com | Semiannual Report | 9 |
FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
higher. Duration remained a key component of any investment-grade credit strategy.
What is duration?
Duration is a measure of a bond’s price sensitivity to interest-rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest-rate changes than a portfolio with a higher duration.
The Fund held only cash bonds during the period and had no exposure to derivatives.
Thank you for your participation in Franklin Liberty Investment Grade Corporate ETF. We look forward to serving your future investment needs.
Marc Kremer, CFA |
Shawn Lyons, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
10 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
Performance Summary as of September 30, 2018
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (10/5/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | +0.13% | +0.30% | +0.13% | +0.30% | ||||||||||||
1-Year | -1.22% | -1.50% | -1.22% | -1.50% | ||||||||||||
Since Inception (10/3/16) | +0.64% | +0.59% | +0.32% | +0.30% |
30-Day Standardized Yield6 | ||||||||||||||||
Distribution Rate5 | (with waiver) | (without waiver) | ||||||||||||||
3.36% | 3.86% | 2.93% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 12 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 11 |
FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.449342 |
Total Annual Operating Expenses7
With Waiver | Without Waiver | |||
0.35% | 1.04% |
All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Distributions to shareholders may decline when prevailing interest rates fall or when the Fund experiences defaults on debt securities it holds. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund’s investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. Investing in derivative securities and the use of foreign currency techniques involve special risks as such may not achieve the anticipated benefits and/or may result in losses to the Fund. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has an expense reduction contractually guaranteed through 7/31/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/18.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. 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.
12 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During | Ending Account Value 9/30/18 | Expenses Paid During | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,001.30 | $ | 1.76 | $ | 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.
libertyshares.com | Semiannual Report | 13 |
Franklin Liberty U.S. Low Volatility ETF
This semiannual report for Franklin Liberty U.S. Low Volatility ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks capital appreciation with an emphasis on lower volatility. Under normal market conditions, the Fund invests at least 80% of its net assets in U.S. investments.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +10.76% based on market price and +10.90% based on net asset value (NAV). In comparison, the Russell 1000® Index produced a +11.25% total return for the same period.1 You can find more of the Fund’s performance data in the Performance Summary beginning on page 17.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Economic and Market Overview
The U.S. economy grew during the six months under review. The economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The manufacturing and services sectors expanded during the period. The unemployment rate declined from 4.1% in March 2018, as reported at the beginning of the six-month period, to a nearly 49-year low of 3.7% at period-end.2 Annual inflation, as measured by the Consumer Price Index, decreased from 2.4% in March 2018, as reported at the beginning of the period, to 2.3% at period-end.2
The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate 0.25% at its June 2018 meeting and continued reducing its balance sheet as part of an ongoing plan to normalize monetary policy. In his congressional testimony in July 2018 and at the Fed symposium in August, Fed Chair Jerome Powell reiterated the Fed’s intention to
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Information Technology | 24.6% | |||
Health Care | 14.5% | |||
Financials | 13.6% | |||
Consumer Discretionary | 13.4% | |||
Industrials | 10.1% | |||
Consumer Staples | 6.3% | |||
Energy | 5.9% | |||
Real Estate | 3.3% | |||
Communication Services | 3.0% | |||
Materials | 2.8% |
gradually raise interest rates. At its September 2018 meeting, the Fed raised its target range for the federal funds rate 0.25% to 2.00%–2.25%, as widely expected. Furthermore, the Fed raised its forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018.
U.S. equity markets rose overall during the period, benefiting from mostly upbeat economic data, better U.S. corporate earnings and expectations of gradual rate increases. However, markets were pressured at certain times during the period by fears of tighter regulation of information technology and technology-related companies, as well as concerns that strong economic growth and rising inflation would lead the Fed to increase its target rate faster than expected. Other factors that curbed investor sentiment included tensions between the U.S. and North Korea earlier in the period, political uncertainties in the U.S., the Trump administration’s protectionist policies and escalating trade tensions between the U.S. and China. Partially offsetting these concerns were an overall easing of tensions in the Korean peninsula in the latter part of the period, intermittent U.S.-China trade negotiations, an agreement between the U.S. and the European Union to try to reduce trade barriers and a trade deal between the U.S. and Mexico that Canada joined at period-end. In this environment, the broad U.S. stock market, as measured by the Standard & Poor’s® 500 Index, reached a new all-time high and generated a +11.41% total return for the period.3
1. Source: Morningstar. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
2. Source: U.S. Bureau of Labor Statistics.
3. Source: Morningstar.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 30.
14 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
Investment Strategy
The Fund invests primarily in equity securities (principally common stocks) of U.S. companies.4 The Fund seeks capital appreciation, while providing a lower level of volatility than the broader equity market as measured by the Russell 1000® Index, meaning the Fund seeks returns that fluctuate less than the returns of the Russell 1000® Index. We apply a fundamentally driven “bottom-up” research process to create a starting universe of eligible securities across a large number of sectors derived from the holdings of a number of Franklin Templeton equity funds. The investment manager screens that universe on a quarterly basis in order to identify those securities with the lowest realized volatility relative to their corresponding sectors. The Fund’s sector weightings generally are based on the current sector weightings within the Russell 1000® Index. Individual securities in the Fund’s portfolio are generally weighted equally within each sector. The investment manager may, from time to time, make adjustments to the Fund’s portfolio as a result of corporate actions, changes to the volatility profile of the Fund’s holdings, or for risk management related purposes.
Manager’s Discussion
During the period under review, Franklin Liberty U.S. Low Volatility ETF trailed the Russell 1000® Index benchmark. The consumer discretionary and industrials sectors were leading detractors from relative performance largely due to stock selection. Conversely, the Fund benefited from stock selection in the financials, consumer staples, materials and health care sectors, as well as an overweighting in the information technology (IT) sector.
A relative lack of exposure in the internet and direct marketing retail industry resulted in underperformance for the consumer discretionary sector. In the sector, Ford Motor shares declined as the automaker faced several challenges, including slowing sales, rising raw materials costs and the potential impact of tariffs on its bottom line.5 In contrast, a top contributor in the sector was off-price retailer TJX, which reported consecutive quarters of strong growth helped by improved traffic trends and increases in comparable-store sales. Improved traffic and sales trends also benefited home improvement retailer Lowe’s and added to the Fund’s results.
Stock selection in the aerospace and defense industry weighed on relative performance in the industrials sector.
The IT sector, overall, has been buoyed by accelerated earnings growth and expectations for continued economic expansion. Contributors in the sector included Automatic Data Processing, Intuit and Motorola Solutions. Conversely, underweightings in Apple, whose shares rallied to a record high, and Microsoft curbed relative performance.
Rising interest rates, tax reform and a strong economy have been supportive for the financials sector. However, our position in investment management company BlackRock curbed the Fund’s relative results. Although consumer staples was an overall contributor at the sector level, the Fund’s investment in consumer products company Colgate-Palmolive dampened returns.
Thank you for your participation in Franklin Liberty U.S. Low Volatility ETF. We look forward to serving your future investment needs.
4. “U.S. companies” are those that (i) are organized under the laws of, or have a principal office in, or for whose securities the principal trading market is, the U.S.; (ii) derive 50% or more of their total revenue or profit from either goods or services produced, or sales made, in the U.S.; or (iii) have 50% or more of their assets in the U.S.
See www.franklintempletondatasources.com for additional data provider information.
5. Not held at period-end.
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Alphabet Inc., A, C Information Technology | 3.0% | |||
The Walt Disney Co. Consumer Discretionary | 1.6% | |||
McDonald’s Corp. Consumer Discretionary | 1.5% | |||
Yum! Brands Inc. Consumer Discretionary | 1.5% | |||
Starbucks Corp. Consumer Discretionary | 1.5% | |||
The TJX Cos. Inc. Consumer Discretionary | 1.5% | |||
AT&T Inc. Communication Services | 1.5% | |||
Marriott International Inc., A Consumer Discretionary | 1.5% | |||
Verizon Communications Inc. Communication Services | 1.5% | |||
Lowe’s Cos. Inc. Consumer Discretionary | 1.5% |
libertyshares.com | Semiannual Report | 15 |
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
Todd Brighton, CFA | ||
Portfolio Manager |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
16 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/22/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | +10.90% | +10.76% | +10.90% | +10.76% | ||||||||||||
1-Year | +17.98% | +18.29% | +17.98% | +18.29% | ||||||||||||
Since Inception (9/20/16) | +35.94% | +35.86% | +16.35% | +16.32% |
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 libertyshares.com or call (800) 342-5236.
See page 18 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 17 |
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.220574 |
Total Annual Operating Expenses5
With Waiver | Without Waiver | |||
0.50% | 2.11% |
All investments involve risks, including possible loss of principal. The market values of stocks owned by the Fund will go up or down, sometimes rapidly or unpredictably. There can be no guarantee that the Fund’s volatility strategy will be successful, and achieving the Fund’s volatility strategy does not mean the Fund will achieve a positive or competitive return. The volatility strategy can also be expected to limit the Fund’s participation in market price appreciation when compared to similar funds that do not attempt this strategy. Smaller and midsize-company stocks have historically experienced more price volatility than larger company stocks, especially over the short term. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has an expense reduction contractually guaranteed through 7/31/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. 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.
18 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $ 7.50, then 8.6 x $ 7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period | Ending Account Value 9/30/18 | Expenses Paid During Period | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,109.00 | $ | 2.64 | $ | 1,022.56 | $ | 2.54 | 0.50 | % |
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.
libertyshares.com | Semiannual Report | 19 |
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty International Opportunities ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, | |||||||||||
2018 | 2017a | |||||||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||||||
Net asset value, beginning of period | $ | 28.89 | $ | 25.58 | $ | 24.50 | ||||||
|
| |||||||||||
Income from investment operations:b | ||||||||||||
Net investment incomec | 0.35 | 0.45 | 0.09 | |||||||||
Net realized and unrealized gains (losses) | (0.92 | ) | 4.00 | 0.99 | ||||||||
|
| |||||||||||
Total from investment operations | (0.57 | ) | 4.45 | 1.08 | ||||||||
|
| |||||||||||
Less distributions from: | ||||||||||||
Net investment income | (0.22 | ) | (0.74 | ) | — | |||||||
Net realized gains | — | (0.40 | ) | — | ||||||||
|
| |||||||||||
Total distributions | (0.22 | ) | (1.14 | ) | — | |||||||
|
| |||||||||||
Net asset value, end of period | $ | 28.10 | $ | 28.89 | $ | 25.58 | ||||||
|
| |||||||||||
Total returnd | (1.96)% | 17.50% | 4.41% | |||||||||
Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 2.35% | 3.38% | 8.50% | |||||||||
Expenses net of waiver and payments by affiliates | 0.60% | 0.59% | 0.60% | |||||||||
Net investment income | 2.43% | 1.60% | 1.98% | |||||||||
Supplemental data | ||||||||||||
Net assets, end of period (000’s) | $11,241 | $5,778 | $5,116 | |||||||||
Portfolio turnover ratef | 13.85% | 34.08% | 2.32% |
aFor the period January 25, 2017 (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 of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
20 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin Liberty International Opportunities ETF
Industry | Shares/Units | Value | ||||||||||||
Common Stocks 98.9% | ||||||||||||||
Australia 3.4% | ||||||||||||||
�� | Amcor Ltd. | Containers & Packaging | 5,097 | $ | 50,451 | |||||||||
BHP Billiton Ltd. | Metals & Mining | 911 | 22,827 | |||||||||||
Commonwealth Bank of Australia | Banks | 458 | 23,664 | |||||||||||
CSL Ltd. | Biotechnology | 1,265 | 184,074 | |||||||||||
Ramsay Health Care Ltd. | Health Care Providers & Services | 781 | 31,041 | |||||||||||
Rio Tinto Ltd. | Metals & Mining | 1,213 | 69,125 | |||||||||||
|
| |||||||||||||
381,182 | ||||||||||||||
|
| |||||||||||||
Brazil 0.9% | ||||||||||||||
B3 SA—Brasil Bolsa Balcao | Capital Markets | 2,900 | 16,992 | |||||||||||
CCR SA | Transportation Infrastructure | 5,700 | 12,075 | |||||||||||
Companhia Energetica de Minas Gerais | Electric Utilities | 6,800 | 11,153 | |||||||||||
Energisa SA | Electric Utilities | 2,400 | 18,504 | |||||||||||
Tim Participacoes SA | Wireless Telecommunication Services | 2,800 | 8,224 | |||||||||||
Vale SA | Metals & Mining | 2,500 | 37,448 | |||||||||||
|
| |||||||||||||
104,396 | ||||||||||||||
|
| |||||||||||||
Canada 6.0% | ||||||||||||||
Alimentation Couche-Tard Inc., B | Food & Staples Retailing | 1,000 | 49,984 | |||||||||||
Brookfield Asset Management Inc., A | Capital Markets | 2,600 | 115,638 | |||||||||||
Canadian National Railway Co. | Road & Rail | 1,400 | 125,530 | |||||||||||
Enbridge Inc. | Oil, Gas & Consumable Fuels | 1,800 | 58,041 | |||||||||||
Nutrien Ltd. | Chemicals | 600 | 34,619 | |||||||||||
Peyto Exploration & Development Corp. | Oil, Gas & Consumable Fuels | 3,400 | 29,276 | |||||||||||
Restaurant Brands International Inc. | Hotels, Restaurants & Leisure | 1,000 | 59,168 | |||||||||||
Royal Bank of Canada | Banks | 1,215 | 97,324 | |||||||||||
TELUS Corp. | Diversified Telecommunication Services | 800 | 29,472 | |||||||||||
The Toronto-Dominion Bank | Banks | 1,313 | 79,729 | |||||||||||
|
| |||||||||||||
678,781 | ||||||||||||||
|
| |||||||||||||
China 9.8% | ||||||||||||||
a | Alibaba Group Holding Ltd., ADR | Internet & Direct Marketing Retail | 1,820 | 299,863 | ||||||||||
Brilliance China Automotive Holdings Ltd. | Automobiles | 54,000 | 87,367 | |||||||||||
China Merchants Bank Co. Ltd., H | Banks | 17,500 | 71,119 | |||||||||||
a | Ctrip.com International Ltd., ADR | Internet & Direct Marketing Retail | 4,580 | 170,239 | ||||||||||
Ping An Insurance (Group) Co. of China Ltd., H | Insurance | 15,500 | 157,478 | |||||||||||
Silergy Corp. | Semiconductors & Semiconductor Equipment | 5,000 | 90,067 | |||||||||||
Sunny Optical Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 2,000 | 23,080 | |||||||||||
Tencent Holdings Ltd. | Interactive Media & Services | 4,900 | 202,390 | |||||||||||
|
| |||||||||||||
1,101,603 | ||||||||||||||
|
| |||||||||||||
Denmark 0.7% | ||||||||||||||
ISS AS | Commercial Services & Supplies | 2,101 | 73,956 | |||||||||||
|
| |||||||||||||
Egypt 0.8% | ||||||||||||||
a | Ezz Steel | Metals & Mining | 77,099 | 95,126 | ||||||||||
|
| |||||||||||||
Finland 0.8% | ||||||||||||||
Tieto OYJ | IT Services | 3,089 | 95,581 | |||||||||||
|
| |||||||||||||
France 6.7% | ||||||||||||||
Capgemini SE | IT Services | 888 | 111,805 | |||||||||||
Maisons du Monde SA | Specialty Retail | 3,892 | 113,647 | |||||||||||
Sanofi | Pharmaceuticals | 2,012 | 178,916 | |||||||||||
Schneider Electric SE | Electrical Equipment | 1,389 | 111,803 | |||||||||||
SEB SA | Household Durables | 605 | 103,017 | |||||||||||
Vinci SA | Construction & Engineering | 1,437 | 136,897 | |||||||||||
|
| |||||||||||||
756,085 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 21 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty International Opportunities ETF (continued)
Industry | Shares/Units | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Germany 1.5% | ||||||||||||||
1&1 Drillisch AG | Wireless Telecommunication Services | 1,216 | $ | 59,179 | ||||||||||
Draegerwerk AG & Co. KGAA | Health Care Equipment & Supplies | 1,742 | 104,202 | |||||||||||
|
| |||||||||||||
163,381 | ||||||||||||||
|
| |||||||||||||
Hong Kong 2.4% | ||||||||||||||
AIA Group Ltd. | Insurance | 16,000 | 142,928 | |||||||||||
IMAX China Holding Inc. | Media | 10,100 | 25,712 | |||||||||||
a | Samsonite International SA | Textiles, Apparel & Luxury Goods | 26,400 | 97,842 | ||||||||||
|
| |||||||||||||
266,482 | ||||||||||||||
|
| |||||||||||||
India 2.7% | ||||||||||||||
Bharti Airtel Ltd. | Wireless Telecommunication Services | 10,245 | 47,847 | |||||||||||
HDFC Bank Ltd. | Banks | 5,480 | 151,651 | |||||||||||
Infosys Ltd. | IT Services | 4,634 | 46,669 | |||||||||||
Kotak Mahindra Bank Ltd. | Banks | 919 | 14,473 | |||||||||||
a | MakeMyTrip Ltd. | Internet & Direct Marketing Retail | 1,400 | 38,430 | ||||||||||
|
| |||||||||||||
299,070 | ||||||||||||||
|
| |||||||||||||
Indonesia 0.6% | ||||||||||||||
Bank Central Asia Tbk PT | Banks | 39,700 | 64,340 | |||||||||||
|
| |||||||||||||
Ireland 1.1% | ||||||||||||||
Glanbia PLC | Food Products | 6,898 | 118,898 | |||||||||||
|
| |||||||||||||
Italy 4.7% | ||||||||||||||
Banca Generali SpA | Capital Markets | 4,664 | 120,696 | |||||||||||
FinecoBank Banca Fineco SpA | Banks | 12,296 | 164,455 | |||||||||||
Italgas Reti SpA | Gas Utilities | 17,125 | 92,969 | |||||||||||
Prysmian SpA | Electrical Equipment | 5,108 | 119,015 | |||||||||||
Snam SpA | Oil, Gas & Consumable Fuels | 7,748 | 32,298 | |||||||||||
|
| |||||||||||||
529,433 | ||||||||||||||
|
| |||||||||||||
Japan 15.8% | ||||||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 2,500 | 43,624 | |||||||||||
Bridgestone Corp. | Auto Components | 900 | 34,016 | |||||||||||
Daikin Industries Ltd. | Building Products | 900 | 119,844 | |||||||||||
Denso Corp. | Auto Components | 2,500 | 132,038 | |||||||||||
FUJIFILM Holdings Corp. | Technology Hardware, Storage & Peripherals | 900 | 40,529 | |||||||||||
Honda Motor Co. Ltd. | Automobiles | 4,400 | 133,218 | |||||||||||
JXTG Holdings Inc. | Oil, Gas & Consumable Fuels | 22,900 | 173,043 | |||||||||||
Mitsubishi Electric Corp. | Electrical Equipment | 8,000 | 109,627 | |||||||||||
Mitsubishi UFJ Financial Group Inc. | Banks | 16,000 | 99,886 | |||||||||||
Murata Manufacturing Co. Ltd. | Electronic Equipment, Instruments & Components | 400 | 61,505 | |||||||||||
Nidec Corp. | Electrical Equipment | 900 | 129,511 | |||||||||||
Otsuka Holdings Co. Ltd. | Pharmaceuticals | 900 | 45,378 | |||||||||||
Panasonic Corp. | Household Durables | 1,600 | 18,643 | |||||||||||
Pigeon Corp. | Household Products | 1,200 | 67,615 | |||||||||||
SCSK Corp. | IT Services | 900 | 42,550 | |||||||||||
SoftBank Group Corp. | Wireless Telecommunication Services | 1,300 | 131,276 | |||||||||||
Sony Corp. | Household Durables | 1,200 | 73,594 | |||||||||||
Sumitomo Chemical Co. Ltd. | Chemicals | 17,000 | 99,529 | |||||||||||
Sumitomo Electric Industries Ltd. | Auto Components | 3,600 | 56,479 | |||||||||||
Suntory Beverage & Food Ltd. | Beverages | 500 | 21,174 | |||||||||||
The Dai-ichi Life Holdings Inc. | Insurance | 5,600 | 116,625 | |||||||||||
Toyota Motor Corp. | Automobiles | 500 | 31,232 | |||||||||||
|
| |||||||||||||
1,780,936 | ||||||||||||||
|
| |||||||||||||
Mexico 1.2% | ||||||||||||||
America Movil SAB de CV, L | Wireless Telecommunication Services | 80,000 | 64,345 | |||||||||||
Fomento Economico Mexicano SAB de CV | Beverages | 7,600 | 75,263 | |||||||||||
|
| |||||||||||||
139,608 | ||||||||||||||
|
|
22 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty International Opportunities ETF (continued)
Industry | Shares/Units | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Netherlands 2.8% | ||||||||||||||
ASML Holding NV | Semiconductors & Semiconductor Equipment | 663 | $ | 123,905 | ||||||||||
ASR Nederland NV | Insurance | 4,056 | 193,435 | |||||||||||
|
| |||||||||||||
317,340 | ||||||||||||||
|
| |||||||||||||
Norway 2.3% | ||||||||||||||
a | Atea ASA | IT Services | 5,959 | 96,593 | ||||||||||
Sbanken ASA | Banks | 14,880 | 162,079 | |||||||||||
|
| |||||||||||||
258,672 | ||||||||||||||
|
| |||||||||||||
Philippines 0.5% | ||||||||||||||
BDO Unibank Inc. | Banks | 13,400 | 29,711 | |||||||||||
Security Bank Corp. | Banks | 9,920 | 28,275 | |||||||||||
|
| |||||||||||||
57,986 | ||||||||||||||
|
| |||||||||||||
Portugal 1.0% | ||||||||||||||
Corticeira Amorim SGPS SA | Paper & Forest Products | 8,747 | 116,836 | |||||||||||
|
| |||||||||||||
Russia 1.0% | ||||||||||||||
Gazprom PJSC | Oil, Gas & Consumable Fuels | 23,680 | 58,792 | |||||||||||
a,b | Mail.Ru Group Ltd., GDR, Reg S | Interactive Media & Services | 2,100 | 56,742 | ||||||||||
|
| |||||||||||||
115,534 | ||||||||||||||
|
| |||||||||||||
Singapore 1.0% | ||||||||||||||
DBS Group Holdings Ltd. | Banks | 5,600 | 106,930 | |||||||||||
|
| |||||||||||||
South Africa 1.4% | ||||||||||||||
Naspers Ltd., N | Media | 640 | 138,012 | |||||||||||
Redefine Properties Ltd. | Equity Real Estate Investment Trusts (REITs | ) | 24,352 | 17,243 | ||||||||||
|
| |||||||||||||
155,255 | ||||||||||||||
|
| |||||||||||||
South Korea 2.7% | ||||||||||||||
Lotte Chemical Corp. | Chemicals | 340 | 85,211 | |||||||||||
Naver Corp. | Interactive Media & Services | 132 | 85,204 | |||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 3,200 | 134,000 | |||||||||||
|
| |||||||||||||
304,415 | ||||||||||||||
|
| |||||||||||||
Spain 5.7% | ||||||||||||||
Applus Services SA | Professional Services | 10,132 | 144,280 | |||||||||||
Cia de Distribucion Integral Logista Holdings SA | Air Freight & Logistics | 5,669 | 145,650 | |||||||||||
Ebro Foods SA | Food Products | 5,361 | 117,126 | |||||||||||
Merlin Properties Socimi SA | Equity Real Estate Investment Trusts (REITs | ) | 10,605 | 143,932 | ||||||||||
Tecnicas Reunidas SA | Energy Equipment & Services | 2,825 | 86,986 | |||||||||||
|
| |||||||||||||
637,974 | ||||||||||||||
|
| |||||||||||||
Sweden 0.5% | ||||||||||||||
Dometic Group AB | Auto Components | 5,821 | 51,022 | |||||||||||
|
| |||||||||||||
Switzerland 4.5% | ||||||||||||||
Ferguson PLC | Trading Companies & Distributors | 909 | 77,227 | |||||||||||
Novartis AG | Pharmaceuticals | 2,516 | 217,394 | |||||||||||
Roche Holding AG | Pharmaceuticals | 861 | 209,565 | |||||||||||
|
| |||||||||||||
504,186 | ||||||||||||||
|
| |||||||||||||
Taiwan 2.5% | ||||||||||||||
Ennoconn Corp. | Technology Hardware, Storage & Peripherals | 4,000 | 36,616 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 28,000 | 240,723 | |||||||||||
|
| |||||||||||||
277,339 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 23 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty International Opportunities ETF (continued)
Industry | Shares/Units | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Thailand 1.5% | ||||||||||||||
Kasikornbank PCL, fgn | Banks | 9,300 | $ | 62,690 | ||||||||||
Minor International PCL, fgn | Hotels, Restaurants & Leisure | 44,000 | 55,782 | |||||||||||
The Siam Cement PCL, fgn | Construction Materials | 3,700 | 53,773 | |||||||||||
|
| |||||||||||||
172,245 | ||||||||||||||
|
| |||||||||||||
United Arab Emirates 0.4% | ||||||||||||||
Emirates NBD PJSC | Banks | 17,244 | 44,600 | |||||||||||
|
| |||||||||||||
United Kingdom 12.0% | ||||||||||||||
Associated British Foods PLC | Food Products | 2,257 | 67,400 | |||||||||||
AstraZeneca PLC | Pharmaceuticals | 1,040 | 80,871 | |||||||||||
Bodycote PLC | Machinery | 6,664 | 78,733 | |||||||||||
BP PLC | Oil, Gas & Consumable Fuels | 12,093 | 92,932 | |||||||||||
British American Tobacco PLC | Tobacco | 1,364 | 63,758 | |||||||||||
Bunzl PLC | Trading Companies & Distributors | 2,291 | 72,090 | |||||||||||
Close Brothers Group PLC | Capital Markets | 3,485 | 71,896 | |||||||||||
Derwent London PLC | Equity Real Estate Investment Trusts (REITs | ) | 1,860 | 69,297 | ||||||||||
DS Smith PLC | Containers & Packaging | 15,121 | 94,314 | |||||||||||
Howden Joinery Group PLC | Trading Companies & Distributors | 13,249 | 81,014 | |||||||||||
b | Ibstock PLC, Reg S | Construction Materials | 20,968 | 64,421 | ||||||||||
Imperial Brands PLC | Tobacco | 2,101 | 73,180 | |||||||||||
National Grid PLC | Multi-Utilities | 4,852 | 50,074 | |||||||||||
Prudential PLC | Insurance | 2,702 | 61,997 | |||||||||||
Reckitt Benckiser Group PLC | Household Products | 645 | 59,012 | |||||||||||
RELX PLC | Professional Services | 3,106 | 65,454 | |||||||||||
Restore PLC | Commercial Services & Supplies | 8,448 | 54,422 | |||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 3,440 | 62,781 | |||||||||||
Unite Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 7,456 | 86,826 | ||||||||||
|
| |||||||||||||
1,350,472 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks | 11,119,664 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 0.6% | ||||||||||||||
Brazil 0.6% | ||||||||||||||
c | Banco Bradesco SA, 4.053%, pfd. | Banks | 3,250 | 23,332 | ||||||||||
c | Itau Unibanco Holding SA, 7.482%, pfd. | Banks | 2,000 | 22,101 | ||||||||||
c | Petroleo Brasileiro SA, 0.474%, pfd. | Oil, Gas & Consumable Fuels | 2,600 | 13,731 | ||||||||||
c | Usinas Siderurgicas de Minas Gerais SA, | Metals & Mining | 5,200 | 10,833 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks | 69,997 | |||||||||||||
|
| |||||||||||||
Total Investments | 11,189,661 | |||||||||||||
Other Assets, less Liabilities 0.5% | 50,857 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 11,240,518 | ||||||||||||
|
|
See Abbreviations on page 43.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $121,163, representing 1.1% of net assets.
cVariable rate security. The rate shown represents the yield at period end.
24 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty Investment Grade Corporate ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, | |||||||||||
2018 | 2017a | |||||||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||||||
Net asset value, beginning of period | $ | 23.97 | $ | 24.21 | $ | 25.00 | ||||||
|
| |||||||||||
Income from investment operations:b | ||||||||||||
Net investment incomec | 0.50 | 0.80 | 0.32 | |||||||||
Net realized and unrealized gains (losses) | (0.47 | ) | (0.22 | ) | (0.78 | ) | ||||||
|
| |||||||||||
Total from investment operations | 0.03 | 0.58 | (0.46 | ) | ||||||||
|
| |||||||||||
Less distributions from net investment income | (0.45 | ) | (0.82 | ) | (0.33 | ) | ||||||
|
| |||||||||||
Net asset value, end of period | $ | 23.55 | $ | 23.97 | $ | 24.21 | ||||||
|
| |||||||||||
Total returnd | 0.13% | 2.38% | (1.83)% | |||||||||
Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 1.08% | 1.04% | 1.06% | |||||||||
Expenses net of waiver and payments by affiliates | 0.35% | 0.37% | 0.40% | |||||||||
Net investment income | 4.16% | 3.27% | 2.76% | |||||||||
Supplemental data | ||||||||||||
Net assets, end of period (000’s) | $27,081 | $39,554 | $53,268 | |||||||||
Portfolio turnover ratef | 9.17% | 63.14% | 17.85% |
aFor the period October 3, 2016 (commencement of operations) to March 31, 2017.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 25 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin Liberty Investment Grade Corporate ETF
Country | Principal Amount* | Value | ||||||||||||
Corporate Bonds & Notes 93.7% | ||||||||||||||
Air Freight & Logistics 1.3% | ||||||||||||||
FedEx Corp., senior bond, 4.75%, 11/15/45 | United States | $ | 350,000 | $ | 351,785 | |||||||||
|
| |||||||||||||
Automobiles 2.2% | ||||||||||||||
Ford Motor Credit Co. LLC, senior note, 2.343%, 11/02/20 | United States | 600,000 | 583,492 | |||||||||||
|
| |||||||||||||
Banks 24.2% | ||||||||||||||
a | ABN AMRO Bank NV, senior note, 144A, 2.65%, 1/19/21 | Netherlands | 520,000 | 511,238 | ||||||||||
a | ANZ New Zealand International Ltd. of London, senior note, 144A, | New Zealand | 600,000 | 583,311 | ||||||||||
Bank of America Corp., sub. bond, 4.183%, 11/25/27 | United States | 695,000 | 679,616 | |||||||||||
a | BPCE SA, sub. note, 144A, 5.15%, 7/21/24 | France | 400,000 | 407,318 | ||||||||||
Citigroup Inc., sub. note, 4.05%, 7/30/22 | United States | 620,000 | 625,794 | |||||||||||
a | Commonwealth Bank of Australia, sub. note, 144A, 4.50%, 12/09/25 | Australia | 390,000 | 387,002 | ||||||||||
b | HSBC Holdings PLC, junior sub. bond, 6.25% to 3/23/23, FRN thereafter, Perpetual | United Kingdom | 200,000 | 199,500 | ||||||||||
HSBC USA Inc., sub. note, 5.00%, 9/27/20 | United States | 644,000 | 662,767 | |||||||||||
JPMorgan Chase & Co., sub. note, 3.375%, 5/01/23 | United States | 820,000 | 805,421 | |||||||||||
Santander UK Group Holdings PLC, senior note, 2.875%, 8/05/21 | United Kingdom | 430,000 | 418,986 | |||||||||||
a | Standard Chartered PLC, senior note, 144A, 3.885% to 3/15/23, FRN thereafter, 3/15/24 | United Kingdom | 525,000 | 513,502 | ||||||||||
Sumitomo Mitsui Banking Corp., senior note, 2.514%, 1/17/20 | Japan | 450,000 | 446,513 | |||||||||||
Wells Fargo & Co., sub. bond, 4.75%, 12/07/46 | United States | 300,000 | 299,542 | |||||||||||
|
| |||||||||||||
6,540,510 | ||||||||||||||
|
| |||||||||||||
Beverages 1.6% | ||||||||||||||
Anheuser-Busch InBev Finance Inc., senior bond, 4.70%, 2/01/36 | Belgium | 440,000 | 441,865 | |||||||||||
|
| |||||||||||||
Biotechnology 1.2% | ||||||||||||||
Biogen Inc., senior bond, 5.20%, 9/15/45 | United States | 310,000 | 330,115 | |||||||||||
|
| |||||||||||||
Capital Markets 4.7% | ||||||||||||||
Morgan Stanley, sub. bond, 3.95%, 4/23/27 | United States | 595,000 | 572,111 | |||||||||||
The Goldman Sachs Group Inc., sub. note, 4.25%, 10/21/25 | United States | 700,000 | 694,248 | |||||||||||
|
| |||||||||||||
1,266,359 | ||||||||||||||
|
| |||||||||||||
Diversified Financial Services 3.8% | ||||||||||||||
AerCap Ireland Capital Ltd./AerCap Global Aviation Trust, senior note, 5.00%, 10/01/21 | Netherlands | 365,000 | 375,694 | |||||||||||
a | Ashtead Capital Inc., second lien, 144A, 4.125%, 8/15/25 | United Kingdom | 220,000 | 210,100 | ||||||||||
GE Capital International Funding Co., senior bond, 4.418%, 11/15/35 | United States | 475,000 | 447,835 | |||||||||||
|
| |||||||||||||
1,033,629 | ||||||||||||||
|
| |||||||||||||
Diversified Telecommunication Services 4.2% | ||||||||||||||
AT&T Inc., senior note, 5.35%, 9/01/40 | United States | 200,000 | 198,981 | |||||||||||
Telefonica Emisiones S.A.U., senior bond, 7.045%, 6/20/36 | Spain | 285,000 | 344,753 | |||||||||||
Verizon Communications Inc., senior bond, 5.50%, 3/16/47 | United States | 540,000 | 593,498 | |||||||||||
|
| |||||||||||||
1,137,232 | ||||||||||||||
|
| |||||||||||||
Electric Utilities 4.8% | ||||||||||||||
Duke Energy Corp., senior bond, 4.80%, 12/15/45 | United States | 365,000 | 377,526 | |||||||||||
Georgia Power Co., senior bond, 4.30%, 3/15/42 | United States | 455,000 | 433,655 | |||||||||||
a | Saudi Electricity Global Sukuk Co. 2, senior bond, 144A, 5.06%, 4/08/43 | Saudi Arabia | 500,000 | 492,760 | ||||||||||
|
| |||||||||||||
1,303,941 | ||||||||||||||
|
| |||||||||||||
Equity Real Estate Investment Trusts (REITs) 1.7% | ||||||||||||||
Realty Income Corp., senior bond, 3.00%, 1/15/27 | United States | 500,000 | 461,555 | |||||||||||
|
| |||||||||||||
Food & Staples Retailing 2.3% | ||||||||||||||
The Kroger Co., senior note, 4.00%, 2/01/24 | United States | 355,000 | 355,559 | |||||||||||
Walgreens Boots Alliance Inc., senior bond, 4.80%, 11/18/44 | United States | 285,000 | 277,687 | |||||||||||
|
| |||||||||||||
633,246 | ||||||||||||||
|
|
26 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty Investment Grade Corporate ETF (continued)
Country | Principal Amount* | Value | ||||||||||||
Corporate Bonds & Notes (continued) | ||||||||||||||
Food Products 2.8% | ||||||||||||||
Kraft Heinz Foods Co., senior bond, 5.20%, 7/15/45 | United States | $ | 310,000 | $ | 304,107 | |||||||||
a | Mondelez International Holdings Netherlands B.V., senior note, 144A, | United States | 485,000 | 463,639 | ||||||||||
|
| |||||||||||||
767,746 | ||||||||||||||
|
| |||||||||||||
Health Care Providers & Services 3.0% | ||||||||||||||
Anthem Inc., senior note, 4.101%, 3/01/28 | United States | 450,000 | 444,067 | |||||||||||
HCA Inc., senior secured note, 6.50%, 2/15/20 | United States | 365,000 | 380,695 | |||||||||||
|
| |||||||||||||
824,762 | ||||||||||||||
|
| |||||||||||||
Insurance 4.1% | ||||||||||||||
a | AIA Group Ltd., senior note, 144A, 2.25%, 3/11/19 | Hong Kong | 400,000 | 397,859 | ||||||||||
MetLife Inc., junior sub. bond, 6.40% to 12/15/36, FRN thereafter, 12/15/66 | United States | 325,000 | 345,313 | |||||||||||
Prudential Financial Inc., junior sub. bond, 5.20% to 3/15/24, FRN | United States | 355,000 | 353,669 | |||||||||||
|
| |||||||||||||
1,096,841 | ||||||||||||||
|
| |||||||||||||
Internet Software & Services 2.3% | ||||||||||||||
Alibaba Group Holding Ltd., senior note, 2.50%, 11/28/19 | China | 615,000 | 611,904 | |||||||||||
|
| |||||||||||||
Machinery 1.5% | ||||||||||||||
CNH Industrial NV, senior note, 4.50%, 8/15/23 | Netherlands | 400,000 | 407,160 | |||||||||||
|
| |||||||||||||
Media 4.1% | ||||||||||||||
21st Century Fox America Inc., senior bond, 6.40%, 12/15/35 | United States | 250,000 | 319,511 | |||||||||||
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., senior secured note, first lien, | United States | 340,000 | 345,981 | |||||||||||
NBCUniversal Media LLC, senior note, 4.375%, 4/01/21 | United States | 430,000 | 440,701 | |||||||||||
|
| |||||||||||||
1,106,193 | ||||||||||||||
|
| |||||||||||||
Metals & Mining 1.8% | ||||||||||||||
a | Glencore Funding LLC, senior note, 144A, 4.125%, 5/30/23 | Switzerland | 475,000 | 474,919 | ||||||||||
|
|
|
| |||||||||||
Multiline Retail 1.2% | ||||||||||||||
Dollar Tree Inc., senior note, 3.70%, 5/15/23 | United States | 325,000 | 321,066 | |||||||||||
|
| |||||||||||||
Oil, Gas & Consumable Fuels 10.6% | ||||||||||||||
Anadarko Petroleum Corp., senior note, 6.20%, 3/15/40 | United States | 295,000 | 328,126 | |||||||||||
Chevron Corp., senior note, 2.954%, 5/16/26 | United States | 545,000 | 520,976 | |||||||||||
Ecopetrol SA, senior bond, 5.875%, 5/28/45 | Colombia | 205,000 | 203,514 | |||||||||||
Energy Transfer Partners LP, senior bond, 6.50%, 2/01/42 | United States | 200,000 | 220,327 | |||||||||||
Enterprise Products Operating LLC, senior bond, 5.10%, 2/15/45 | United States | 395,000 | 417,618 | |||||||||||
MPLX LP, senior bond, 4.125%, 3/01/27 | United States | 300,000 | 292,717 | |||||||||||
Sabine Pass Liquefaction LLC, senior secured bond, first lien, | United States | 400,000 | 388,776 | |||||||||||
Shell International Finance BV, senior note, 2.125%, 5/11/20 | Netherlands | 500,000 | 493,511 | |||||||||||
|
| |||||||||||||
2,865,565 | ||||||||||||||
|
| |||||||||||||
Road & Rail 1.9% | ||||||||||||||
Burlington Northern Santa Fe LLC, senior bond, 3.25%, 6/15/27 | United States | 535,000 | 522,899 | |||||||||||
|
| |||||||||||||
Software 2.1% | ||||||||||||||
Microsoft Corp., senior bond, 4.45%, 11/03/45 | United States | 530,000 | 569,823 | |||||||||||
|
| |||||||||||||
Specialty Retail 2.8% | ||||||||||||||
a | Michael Kors USA Inc., senior note, 144A, 4.00%, 11/01/24 | United States | 290,000 | 277,447 | ||||||||||
The Home Depot Inc., senior bond, 3.00%, 4/01/26 | United States | 500,000 | 480,535 | |||||||||||
|
| |||||||||||||
757,982 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 27 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty Investment Grade Corporate ETF (continued)
Country | Principal Amount* | Value | ||||||||||||
Corporate Bonds & Notes (continued) | ||||||||||||||
Technology Hardware, Storage & Peripherals 1.3% | ||||||||||||||
a | Dell International LLC/EMC Corp., senior secured note, first lien, 144A, 4.42%, 6/15/21 | United States | $ | 345,000 | $ | 350,417 | ||||||||
|
| |||||||||||||
Tobacco 1.1% | ||||||||||||||
Reynolds American Inc., senior bond, 5.85%, 8/15/45 | United States | 280,000 | 305,554 | |||||||||||
|
| |||||||||||||
Transportation Infrastructure 1.1% | ||||||||||||||
a | Mexico City Airport Trust, secured bond, 144A, 5.50%, 7/31/47 | Mexico | 335,000 | 300,666 | ||||||||||
|
| |||||||||||||
Total Corporate Bonds & Notes | 25,367,226 | |||||||||||||
|
| |||||||||||||
U.S. Government & Agency Securities 2.7% | ||||||||||||||
U.S. Treasury Bond, 2.75%, 11/15/47 | United States | 150,000 | 137,347 | |||||||||||
U.S. Treasury Note, | 450,000 | 438,811 | ||||||||||||
2.75%, 8/31/23 | 160,000 | 158,616 | ||||||||||||
|
| |||||||||||||
Total U.S. Government & Agency Securities | 734,774 | |||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 26,102,000 | |||||||||||||
|
| |||||||||||||
Short-Term Investments 2.9% | ||||||||||||||
U.S. Government & Agency Securities | ||||||||||||||
c | FHLB, 10/01/18 | United States | 785,000 | 785,000 | ||||||||||
|
| |||||||||||||
Total Investments (Cost $27,508,997) 99.3% | 26,887,000 | |||||||||||||
Other Assets, less Liabilities 0.7% | 193,677 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 27,080,677 | ||||||||||||
|
|
See Abbreviations on page 43.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $5,370,178, representing 19.8% of net assets.
bPerpetual security with no stated maturity date.
cThe security was issued on a discount basis with no stated coupon rate.
28 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty U.S. Low Volatility ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, | |||||||||||
2018 | 2017a | |||||||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||||||
Net asset value, beginning of period | $ | 30.03 | $ | 26.97 | $ | 25.05 | ||||||
|
| |||||||||||
Income from investment operations:b | ||||||||||||
Net investment incomec | 0.25 | 0.45 | 0.23 | |||||||||
Net realized and unrealized gains (losses) | 3.02 | 3.06 | 1.87 | |||||||||
|
| |||||||||||
Total from investment operations | 3.27 | 3.51 | 2.10 | |||||||||
|
| |||||||||||
Less distributions from net investment income | (0.22 | ) | (0.45 | ) | (0.18 | ) | ||||||
|
| |||||||||||
Net asset value, end of period | $ | 33.08 | $ | 30.03 | $ | 26.97 | ||||||
|
| |||||||||||
Total returnd | 10.90% | 13.08% | 8.40% | |||||||||
Ratios to average net assetse | ||||||||||||
Expenses before waiver and payments by affiliates | 1.13% | 2.11% | 2.96% | |||||||||
Expenses net of waiver and payments by affiliates | 0.50% | 0.50% | 0.50% | |||||||||
Net investment income | 1.60% | 1.56% | 1.69% | |||||||||
Supplemental data | ||||||||||||
Net assets, end of period (000’s) | $11,577 | $6,005 | $5,393 | |||||||||
Portfolio turnover ratef | 18.51% | 65.68% | 12.55% |
aFor the period September 20, 2016 (commencement of operations) to March 31, 2017.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 29 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin Liberty U.S. Low Volatility ETF
Shares | Value | |||||||||
Common Stocks 100.2% | ||||||||||
Communication Services 3.0% | ||||||||||
AT&T Inc. | 5,108 | $ | 171,527 | |||||||
Verizon Communications Inc. | 3,186 | 170,100 | ||||||||
|
| |||||||||
341,627 | ||||||||||
|
| |||||||||
Consumer Discretionary 13.4% | ||||||||||
Comcast Corp., A | 4,567 | 161,717 | ||||||||
Lowe’s Cos. Inc. | 1,466 | 168,326 | ||||||||
Marriott International Inc., A | 1,299 | 171,507 | ||||||||
McDonald’s Corp. | 1,070 | 179,000 | ||||||||
Starbucks Corp. | 3,075 | 174,783 | ||||||||
The Home Depot Inc. | 805 | 166,756 | ||||||||
The TJX Cos. Inc. | 1,558 | 174,527 | ||||||||
The Walt Disney Co. | 1,552 | 181,491 | ||||||||
Yum! Brands Inc. | 1,925 | 175,002 | ||||||||
|
| |||||||||
1,553,109 | ||||||||||
|
| |||||||||
Consumer Staples 6.3% | ||||||||||
Church & Dwight Co. Inc. | 2,496 | 148,187 | ||||||||
Colgate-Palmolive Co. | 2,168 | 145,148 | ||||||||
PepsiCo Inc. | 1,294 | 144,669 | ||||||||
The Coca-Cola Co. | 3,204 | 147,993 | ||||||||
The Procter & Gamble Co. | 1,753 | 145,902 | ||||||||
|
| |||||||||
731,899 | ||||||||||
|
| |||||||||
Energy 5.9% | ||||||||||
Chevron Corp. | 1,106 | 135,242 | ||||||||
EOG Resources Inc. | 1,100 | 140,327 | ||||||||
Exxon Mobil Corp. | 1,562 | 132,801 | ||||||||
Occidental Petroleum Corp. | 1,665 | 136,813 | ||||||||
Valero Energy Corp. | 1,205 | 137,069 | ||||||||
|
| |||||||||
682,252 | ||||||||||
|
| |||||||||
Financials 13.6% | ||||||||||
Arthur J. Gallagher & Co. | 1,653 | 123,049 | ||||||||
BB&T Corp. | 2,457 | 119,263 | ||||||||
BlackRock Inc. | 259 | 122,075 | ||||||||
Chubb Ltd. | 893 | 119,341 | ||||||||
Intercontinental Exchange Inc. | 1,614 | 120,872 | ||||||||
JPMorgan Chase & Co. | 1,064 | 120,062 | ||||||||
S&P Global Inc. | 588 | 114,889 | ||||||||
The Progressive Corp. | 1,792 | 127,304 | ||||||||
The Travelers Cos. Inc. | 945 | 122,576 | ||||||||
U.S. Bancorp | 2,280 | 120,407 | ||||||||
W.R. Berkley Corp. | 1,600 | 127,888 | ||||||||
Wells Fargo & Co. | 2,268 | 119,206 | ||||||||
Willis Towers Watson PLC | 844 | 118,953 | ||||||||
|
| |||||||||
1,575,885 | ||||||||||
|
| |||||||||
Health Care 14.5% | ||||||||||
Abbott Laboratories | 2,200 | 161,392 | ||||||||
Baxter International Inc. | 1,941 | 149,632 | ||||||||
Becton Dickinson and Co. | 579 | 151,119 | ||||||||
Danaher Corp. | 1,402 | 152,341 | ||||||||
Johnson & Johnson | 1,073 | 148,256 | ||||||||
a | Laboratory Corp. of America Holdings | 881 | 153,012 | |||||||
Medtronic PLC | 1,562 | 153,654 | ||||||||
Merck & Co. Inc. | 2,154 | 152,805 | ||||||||
Pfizer Inc. | 3,484 | 153,540 | ||||||||
Stryker Corp. | 868 | 154,226 | ||||||||
UnitedHealth Group Inc. | 568 | 151,111 | ||||||||
|
| |||||||||
1,681,088 | ||||||||||
|
|
30 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty U.S. Low Volatility ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Industrials 10.1% | ||||||||||
Fortive Corp. | 1,146 | $ | 96,493 | |||||||
General Dynamics Corp. | 483 | 98,880 | ||||||||
Honeywell International Inc. | 594 | 98,842 | ||||||||
Illinois Tool Works Inc. | 671 | 94,691 | ||||||||
Lockheed Martin Corp. | 290 | 100,328 | ||||||||
Northrop Grumman Corp. | 315 | 99,972 | ||||||||
Raytheon Co. | 480 | 99,197 | ||||||||
Republic Services Inc. | 1,319 | 95,838 | ||||||||
Roper Technologies Inc. | 319 | 94,491 | ||||||||
United Parcel Service Inc., B | 833 | 97,253 | ||||||||
United Technologies Corp. | 701 | 98,007 | ||||||||
a | Verisk Analytics Inc. | 822 | 99,092 | |||||||
|
| |||||||||
1,173,084 | ||||||||||
|
| |||||||||
Information Technology 24.6% | ||||||||||
Accenture PLC, A | 890 | 151,478 | ||||||||
a | Alphabet Inc., A | 143 | 172,613 | |||||||
a | Alphabet Inc., C | 143 | 170,666 | |||||||
Amphenol Corp., A | 1,617 | 152,030 | ||||||||
Analog Devices Inc. | 1,628 | 150,525 | ||||||||
Apple Inc. | 706 | 159,373 | ||||||||
Automatic Data Processing Inc. | 1,049 | 158,042 | ||||||||
Cisco Systems Inc. | 3,262 | 158,696 | ||||||||
Fidelity National Information Services Inc. | 1,418 | 154,661 | ||||||||
a | Fiserv Inc. | 1,942 | 159,982 | |||||||
Intuit Inc. | 698 | 158,725 | ||||||||
Mastercard Inc., A | 706 | 157,163 | ||||||||
Microsoft Corp. | 1,380 | 157,831 | ||||||||
Motorola Solutions Inc. | 1,238 | 161,113 | ||||||||
a | Synopsys Inc. | 1,558 | 153,634 | |||||||
Texas Instruments Inc. | 1,436 | 154,069 | ||||||||
Total System Services Inc. | 1,588 | 156,799 | ||||||||
Visa Inc., A | 1,046 | 156,994 | ||||||||
|
| |||||||||
2,844,394 | ||||||||||
|
| |||||||||
Materials 2.8% | ||||||||||
Air Products and Chemicals Inc. | 486 | 81,186 | ||||||||
DowDuPont Inc. | 1,197 | 76,979 | ||||||||
Ecolab Inc. | 521 | 81,683 | ||||||||
Praxair Inc. | 500 | 80,365 | ||||||||
|
| |||||||||
320,213 | ||||||||||
|
| |||||||||
Real Estate 3.3% | ||||||||||
Alexandria Real Estate Equities Inc. | 767 | 96,481 | ||||||||
American Tower Corp. | 652 | 94,736 | ||||||||
Equity Residential | 1,436 | 95,149 | ||||||||
UDR Inc. | 2,401 | 97,072 | ||||||||
|
| |||||||||
383,438 | ||||||||||
|
| |||||||||
Utilities 2.7% | ||||||||||
Consolidated Edison Inc. | 1,021 | 77,790 | ||||||||
DTE Energy Co. | 733 | 79,992 | ||||||||
Duke Energy Corp. | 999 | 79,940 | ||||||||
Xcel Energy Inc. | 1,695 | 80,021 | ||||||||
|
| |||||||||
317,743 | ||||||||||
|
| |||||||||
Total Investments (Cost $10,000,062) 100.2% | 11,604,732 | |||||||||
Other Assets, less Liabilities (0.2)% | (28,176 | ) | ||||||||
|
| |||||||||
Net Assets 100.0% | $ | 11,576,556 | ||||||||
|
|
aNon-income producing.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 31 |
FRANKLIN TEMPLETON ETF TRUST
Statements of Assets and Liabilities
September 30, 2018 (unaudited)
Franklin Liberty International Opportunities ETF | Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | ||||||||||
Assets: | ||||||||||||
Investments in securities: | ||||||||||||
Cost – Unaffiliated issuers | $ | 10,775,943 | $ | 27,508,997 | $ | 10,000,062 | ||||||
|
| |||||||||||
Value – Unaffiliated issuers | $ | 11,189,661 | $ | 26,887,000 | $ | 11,604,732 | ||||||
Cash | 102,838 | 120,938 | 21,470 | |||||||||
Foreign currency, at value (cost $1,335, $— and $—, respectively) | 1,338 | — | — | |||||||||
Receivables: | ||||||||||||
Investment securities sold | 222,629 | — | — | |||||||||
Dividends and interest | 26,059 | 264,204 | 15,501 | |||||||||
Affiliates | 9,688 | 915 | — | |||||||||
|
| |||||||||||
Total assets | 11,552,213 | 27,273,057 | 11,641,703 | |||||||||
|
| |||||||||||
Liabilities: | ||||||||||||
Payables: | ||||||||||||
Investment securities purchased | 194,332 | — | — | |||||||||
Management fees | — | — | 9,508 | |||||||||
Transfer agent fees | 19,521 | 19,521 | 19,521 | |||||||||
Distributions to shareholders | — | 75,939 | — | |||||||||
Custodian fees | 27,979 | 27,892 | 1,522 | |||||||||
Professional fees | 41,153 | 41,059 | 23,784 | |||||||||
Reports to shareholders | 1,901 | 10,304 | 3,388 | |||||||||
Registration and filing fees | 6,041 | 3,809 | 3,814 | |||||||||
Pricing fees | 15,342 | 7,128 | 2,076 | |||||||||
Accrued expenses and other liabilities | 5,426 | 6,728 | 1,534 | |||||||||
|
| |||||||||||
Total liabilities | 311,695 | 192,380 | 65,147 | |||||||||
|
| |||||||||||
Net assets, at value | $ | 11,240,518 | $ | 27,080,677 | $ | 11,576,556 | ||||||
|
| |||||||||||
Net assets consist of: | ||||||||||||
Paid-in capital | $ | 10,755,331 | $ | 28,128,803 | $ | 9,471,598 | ||||||
Total distributable earnings (loss) | 485,187 | (1,048,126 | ) | 2,104,958 | ||||||||
|
| |||||||||||
Net assets, at value | $ | 11,240,518 | $ | 27,080,677 | $ | 11,576,556 | ||||||
|
| |||||||||||
Shares outstanding | 400,000 | 1,150,000 | 350,000 | |||||||||
|
| |||||||||||
Net asset value per share | $ | 28.10 | $ | 23.55 | $ | 33.08 | ||||||
|
|
32 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the six months ended September 30, 2018 (unaudited)
Franklin Liberty International Opportunities ETF | Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | ||||||||||
Investment income: | ||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||
Unaffiliated issuers | $ | 153,459 | $ | — | $ | 112,900 | ||||||
Interest: | ||||||||||||
Unaffiliated issuers | — | 795,991 | — | |||||||||
|
| |||||||||||
Total investment income | 153,459 | 795,991 | 112,900 | |||||||||
|
| |||||||||||
Expenses: | ||||||||||||
Management fees (Note 3a) | 30,352 | 110,246 | 26,896 | |||||||||
Transfer agent fees | 7,822 | 7,821 | 7,821 | |||||||||
Custodian fees | 13,148 | 12,615 | 610 | |||||||||
Reports to shareholders | 2,165 | 5,944 | 1,803 | |||||||||
Registration and filing fees | 5,794 | 3,789 | 3,818 | |||||||||
Professional fees | 39,793 | 32,128 | 13,154 | |||||||||
Trustees’ fees and expenses | 580 | 5,612 | 615 | |||||||||
Pricing fees | 15,599 | 10,306 | 3,814 | |||||||||
Other | 3,444 | 2,773 | 2,479 | |||||||||
|
| |||||||||||
Total expenses | 118,697 | 191,234 | 61,010 | |||||||||
Expenses waived/paid by affiliates (Note 3c) | (88,349 | ) | (129,497 | ) | (34,115 | ) | ||||||
|
| |||||||||||
Net expenses | 30,348 | 61,737 | 26,895 | |||||||||
|
| |||||||||||
Net investment income | 123,111 | 734,254 | 86,005 | |||||||||
|
| |||||||||||
Realized and unrealized gains (losses): | ||||||||||||
Net realized gain (loss) from: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (12,467 | ) | (333,271 | ) | 47,306 | |||||||
In-kind redemptions | — | — | 304,968 | |||||||||
Foreign currency transactions | (2,273 | ) | — | — | ||||||||
|
| |||||||||||
Net realized gain (loss) | (14,740 | ) | (333,271 | ) | 352,274 | |||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||
Investments: | ||||||||||||
Unaffiliated issuers | (408,582 | ) | (413,335 | ) | 752,256 | |||||||
Translation of other assets and liabilities denominated in foreign currencies | (169 | ) | — | — | ||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) | (408,751 | ) | (413,335 | ) | 752,256 | |||||||
|
| |||||||||||
Net realized and unrealized gain (loss) | (423,491 | ) | (746,606 | ) | 1,104,530 | |||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (300,380 | ) | $ | (12,352 | ) | $ | 1,190,535 | ||||
|
|
aForeign taxes withheld on dividends | $ | 17,298 | $ | — | $ | — | ||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 33 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Franklin Liberty International Opportunities ETF | Franklin Liberty Investment Grade Corporate ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018 | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018 | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 123,111 | $ | 90,666 | $ | 734,254 | $ | 1,488,244 | ||||||||
Net realized gain (loss) | (14,740 | ) | 170,722 | (333,271 | ) | 30,394 | ||||||||||
Net change in unrealized appreciation (depreciation) | (408,751 | ) | 627,771 | (413,335 | ) | (129,279 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (300,380 | ) | 889,159 | (12,352 | ) | 1,389,359 | ||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1d) | (89,600 | ) | (227,066 | ) | (648,419 | ) | (1,520,545 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 5,852,625 | — | (11,812,101 | ) | (13,583,504 | ) | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 5,462,645 | 662,093 | (12,472,872 | ) | (13,714,690 | ) | ||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 5,777,873 | 5,115,780 | 39,553,549 | 53,268,239 | ||||||||||||
|
| |||||||||||||||
End of period (Note 1d) | $ | 11,240,518 | $ | 5,777,873 | $ | 27,080,677 | $ | 39,553,549 | ||||||||
|
|
34 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin Liberty U.S. Low Volatility ETF | ||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018 | |||||||
Increase (decrease) in net assets: | ||||||||
Operations: | ||||||||
Net investment income | $ | 86,005 | $ | 89,984 | ||||
Net realized gain (loss) | 352,274 | 135,509 | ||||||
Net change in unrealized appreciation (depreciation) | 752,256 | 476,798 | ||||||
|
| |||||||
Net increase (decrease) in net assets resulting from operations | 1,190,535 | 702,291 | ||||||
|
| |||||||
Distributions to shareholders (Note 1d) | (80,047 | ) | (90,569 | ) | ||||
|
| |||||||
Capital share transactions: (Note 2) | 4,461,048 | — | ||||||
|
| |||||||
Net increase (decrease) in net assets | 5,571,536 | 611,722 | ||||||
Net assets: | ||||||||
Beginning of period | 6,005,020 | 5,393,298 | ||||||
|
| |||||||
End of period (Note 1d) | $ | 11,576,556 | $ | 6,005,020 | ||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 35 |
FRANKLIN TEMPLETON ETF TRUST
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of thirty-five separate funds, three of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Each of the Funds are an exchange traded fund (ETF) and are actively managed, thus they are not designed to track an index.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Equity securities and exchange traded funds listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of 4 p.m. Eastern time, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. London time on the day that the value of the security is determined, for all funds except Franklin Liberty Investment Grade Corporate ETF which uses the foreign exchange rate in effect at 4 p.m. Eastern time. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the
broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.
Debt securities generally trade in the OTC market rather than on a securities exchange. The Funds’ pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.
The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Funds’ business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security
36 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
held by the Funds. As a result, differences may arise between the value of the Funds’ portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. The VC monitors price movements for significant events following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Funds. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.
When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Funds’ NAV is not calculated, which could result in differences between the value of the Funds’ portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Funds for financial reporting purposes.
b. Foreign Currency Translation
Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.
The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statements of Operations.
Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized
between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.
c. Income and Deferred Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which the Funds invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, certain or all Funds record an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of September 30, 2018, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.
d. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income and capital gain distributions are recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is
libertyshares.com | Semiannual Report | 37 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
d. Security Transactions, Investment Income, Expenses and Distributions (continued)
not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.*
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
e. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
f. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
*Effective with the current reporting period, it is no longer required to present certain line items on the Statements of Changes in Net Assets. Such disclosure changes are included in the Statement of Changes in Net Assets, therefore prior period amounts are presented below.
For the year ended March 31, 2018, distributions to shareholders were as follows:
Franklin Liberty International Opportunities ETF | Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | ||||||||||
Distributions from net investment income: | $ | (147,219 | ) | $ | (1,520,545 | ) | $ | (90,569 | ) | |||
Distributions from net realized gains: | $ | (79,847 | ) | $ | — | $ | — |
For the year ended March 31, 2018, undistributed net investment income/distribution in excess of net investment income included in net asset were as follows:
Funds | Undistributed net investment income | Distribution in excess of net investment income | ||||||
Franklin Liberty International Opportunities ETF | $ | — | $ | (18,841 | ) | |||
Franklin Liberty Investment Grade Corporate ETF | 12,565 | — | ||||||
Franklin Liberty U.S. Low Volatility ETF | 9,716 | — |
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specified number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
38 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At September 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
Franklin Liberty International Opportunities ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 5,852,625 | — | $ | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 200,000 | $ | 5,852,625 | — | $ | — | ||||||||||||||
|
|
Franklin Liberty Investment Grade Corporate ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 50,000 | $ | 1,200,485 | 400,000 | $ | 9,845,321 | ||||||||||||||
Shares redeemed | (550,000 | ) | (13,012,586 | ) | (950,000 | ) | (23,428,825 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (500,000 | ) | $ | (11,812,101 | ) | (550,000 | ) | $ | (13,583,504 | ) | ||||||||||
|
|
Franklin Liberty U.S. Low Volatility ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 6,049,155 | — | $ | — | ||||||||||||||
Shares redeemed | (50,000 | ) | (1,588,107 | ) | — | — | ||||||||||||||
|
|
|
| |||||||||||||||||
Net increase (decrease) | 150,000 | $ | 4,461,048 | — | $ | — | ||||||||||||||
|
|
|
|
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers and/or directors of the following subsidiaries:
Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Institutional, LLC (FT Institutional) | Investment manager | |
Franklin Templeton Investimentos (Brasil) Ltda. (FTI Brasil) | Investment manager | |
Franklin Templeton Investment Management Limited (FTIML) | Investment manager | |
Franklin Templeton Investment Trust Management Co., Ltd. (FT Korea) | Investment manager |
libertyshares.com | Semiannual Report | 39 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
Subsidiary | Affiliation | |
Franklin Templeton Investments (ME) Limited (FTIME) | Investment manager | |
Franklin Templeton Investments Corp. (FTIC) | Investment manager | |
Templeton Asset Management Ltd. (TAML) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter |
a. Management Fees
Franklin Liberty International Opportunities ETF and Franklin Liberty U.S. Low Volatility ETF pay an investment management fee to Advisers of 0.600% and 0.500%, respectively, per year of the average daily net assets of each of the Funds.
Franklin Liberty Investment Grade Corporate ETF pays an investment management fee to Advisers based on the average daily net assets of the fund as follows:
Annualized Fee Rate | Net Assets | |
0.625% | Up to and including $100 million | |
0.500% | Over $100 million, up to and including $250 million | |
0.450% | Over $250 million, up to and including $7.5 billion | |
0.440% | Over $7.5 billion, up to and including $10 billion | |
0.430% | Over $10 billion, up to and including $12.5 billion | |
0.420% | Over $12.5 billion, up to and including $15 billion | |
0.400% | Over $15 billion, up to and including $17.5 billion | |
0.380% | Over $17.5 billion, up to and including $20 billion | |
0.360% | Over $20 billion, up to and including $35 billion | |
0.355% | Over $35 billion, up to and including $50 billion | |
0.350% | In excess of $50 billion |
For the period ended September 30, 2018, the gross effective investment management fee rate was 0.625% of the Franklin Liberty Investment Grade Corporate ETF’s average daily net assets.
Under a subadvisory agreement, FTI Brasil, FTIML, FT Korea, FTIME, FTIC and TAML, affiliates of Advisers, provide subadvisory services to Franklin Liberty International Opportunities ETF. FT Institutional, an affiliate of Advisers, provides subadvisory services to Franklin Liberty Investment Grade Corporate ETF. The subadvisory fee is paid by Advisers based on each Fund’s average daily net assets, and is not an additional expense of the Funds.
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on the Funds’ average daily net assets, and is not an additional expense of the Funds.
c. Waiver and Expense Reimbursements
Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by Franklin Liberty International Opportunities ETF, Franklin Liberty Investment Grade Corporate ETF, and Franklin Liberty U.S. Low Volatility ETF so that the expenses (including acquired fund fees and expenses) of the Funds do not exceed 0.60%, 0.35%, and 0.50%, respectively, based on the average net assets (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until July 31, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.
40 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
d. Other Affiliated Transactions
At September 30, 2018, the shares of Franklin Liberty Investment Grade Corporate ETF were owned by the following investment companies.
Fund | Shares | Percentage of Outstanding Sharesa | ||||||
Franklin Total Return Fund | 400,000 | 34.8% | ||||||
Franklin Balanced Fund | 300,000 | 26.1% | ||||||
|
| |||||||
700,000 | 60.9% | |||||||
|
|
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. At September 30, 2018, the capital loss carryforwards were as follows:
Franklin Liberty Investment Grade Corporate ETF | ||||
Capital loss carryforwards not subject to expiration: | ||||
Short term | $ | 86,020 | ||
Long term | — | |||
|
| |||
Total capital loss carryforwards | $ | 86,020 | ||
|
|
At September 30, 2018, the cost of investments, net unrealized appreciation (depreciation) and undistributed ordinary income for income tax purposes were as follows:
Franklin Liberty International Opportunities ETF | Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | ||||||||||
Cost of investments | $ | 10,826,110 | $ | 27,610,161 | $ | 10,008,320 | ||||||
|
| |||||||||||
Unrealized appreciation | $ | 1,005,739 | $ | 102,455 | $ | 1,630,822 | ||||||
Unrealized depreciation | (642,188 | ) | (825,616 | ) | (34,410 | ) | ||||||
|
| |||||||||||
Net unrealized appreciation (depreciation) | $ | 363,551 | $ | (723,161 | ) | $ | 1,596,412 | |||||
|
|
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of passive foreign investment company shares, bond discounts and premiums and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities and in-kind transactions, if any) for the period ended September 30, 2018, were as follows:
Franklin Liberty International Opportunities ETF | Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | ||||||||||
Purchases | $ | 2,062,833 | $ | 3,111,871 | $ | 1,900,578 | ||||||
Sales | $ | 1,336,699 | $ | 14,970,169 | $ | 1,875,717 |
libertyshares.com | Semiannual Report | 41 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. Investment Transactions (continued)
In-kind transactions associated with creation and redemptions for the period ended September 30, 2018, were as follows:
Franklin Liberty International Opportunities ETF | Franklin Liberty Investment Grade Corporate ETF | Franklin Liberty U.S. Low Volatility ETF | ||||||||||
Cost of Securities Received | $ | 5,082,467 | $ | — | $ | 6,040,374 | ||||||
Value of Securities Delivereda | $ | — | $ | — | $ | 1,582,844 |
aRealized gains and losses from in-kind redemptions, as shown on the Statements of Operations, are not recognized by the Funds for tax purposes.
6. Concentration of Risk
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.
7. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
• | Level 1 – quoted prices in active markets for identical financial instruments |
• | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
A summary of inputs used as of September 30, 2018, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Franklin Liberty International Opportunities ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a,b | ||||||||||||||||
Equity Investments | $ | 11,189,661 | $ | — | $ | — | $ | 11,189,661 | ||||||||
|
| |||||||||||||||
Franklin Liberty Investment Grade Corporate ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:b | ||||||||||||||||
Corporate Bonds | $ | — | $ | 26,102,000 | $ | — | $ | 26,102,000 | ||||||||
Short Term Investments | — | 785,000 | — | 785,000 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | — | $ | 26,887,000 | $ | — | $ | 26,887,000 | ||||||||
|
| |||||||||||||||
Franklin Liberty U.S. Low Volatility ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:b | ||||||||||||||||
Equity Investments | $ | 11,604,732 | $ | — | $ | — | $ | 11,604,732 | ||||||||
|
|
aIncludes common and preferred stocks.
bFor detail categories, see the accompanying Statement of Investments.
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
8. New Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management is currently evaluating the impact, if any, of applying this provision.
In August 2018, FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in the ASU modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Management is currently evaluating the impact, if any, of applying this provision.
9. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
ADR | American Depositary Receipt | |
FHLB | Federal Home Loan Bank | |
FRN | Floating Rate Note | |
GDR | Global Depositary Receipt | |
REIT | Real Estate Investment Trust |
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FRANKLIN TEMPLETON ETF TRUST
At September 30, 2018, more than 50% of Franklin Liberty International Opportunities ETF total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Fund on these investments. As shown in the table below, the Fund hereby reports to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This written statement will allow shareholders of record on June 21, 2018, to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.
The following table provides a detailed analysis of foreign tax paid, and foreign source income, and foreign source qualified dividends as reported by the Fund to shareholders of record.
Fund | Foreign Tax Paid Per Share | Foreign Source Income Per Share | Foreign Source Qualified Dividends Per Share | |||||||||
Franklin Liberty International Opportunities ETF | $ | 0.0329 | $ | 0.3084 | $ | 0.1492 |
Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.
Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends. The amounts reported include foreign source qualified dividends that have not been adjusted for the rate differential applicable to such dividend income.1
Foreign Source Qualified Dividends Per Share (Column 3) is the amount per share of foreign source qualified dividends, plus any foreign taxes withheld on these dividends. These amounts represent the portion of the Foreign Source Income reported to you in column 2 that were derived from qualified foreign securities held by the Fund.1
By mid-February 2019, shareholders will receive Form 1099-DIV which will include their share of taxes paid and foreign source income distributed during the calendar year 2018. The Foreign Source Income reported on Form 1099-DIV has not been adjusted for the rate differential on foreign source qualified dividend income. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their 2018 individual income tax returns.
1. Qualified dividends are taxed at reduced long term capital gains tax rates. In determining the amount of foreign tax credit that may be applied against the U.S. tax liability of individuals receiving foreign source qualified dividends, adjustments may be required to the foreign tax credit limitation calculation to reflect the rate differential applicable to such dividend income. The rules however permit certain individuals to elect not to apply the rate differential adjustments for capital gains and/or dividends for any taxable year. Please consult your tax advisor and the instructions to Form 1116 for more information.
44 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Board Approval of Investment Management Agreements
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty International Opportunities ETF
Franklin Liberty Investment Grade Corporate ETF
Franklin Liberty U.S. Low Volatility ETF
(each a Fund)
At in-person meetings held on April 9, 2018 (April Meeting) and May 16, 2018 (May Meeting, and collectively with the April Meeting, the Meetings), the Board of Trustees (Board) of Franklin Templeton ETF Trust (Trust), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (FAI) and the Trust, on behalf of each Fund, the investment sub-advisory agreements between FAI and each of Templeton Asset Management Ltd. (TAML), Franklin Templeton Investment Management Limited (FTIML), Franklin Templeton Investimentos (Brasil) Ltda. (FTI Brasil), Franklin Templeton Investment Trust Management Co., Ltd. (FT Korea), Franklin Templeton Investments Corp. (FTIC) and Franklin Templeton Investments (ME) Limited (FTIME), affiliates of FAI, on behalf of the Franklin Liberty International Opportunities ETF and the investment sub-advisory agreement between FAI and Franklin Templeton Institutional, LLC (FTIL), an affiliate of FAI, on behalf of the Franklin Liberty Investment Grade Corporate ETF (each a Management Agreement) for an additional one-year period. TAML, FTIML, FTI Brasil, FT Korea, FTIC, FTIME and FTIL are referred to herein individually, as a Sub-Adviser and collectively, as the Sub-Advisers. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate. FAI and the Sub-Advisers are each referred to herein as a Manager.
In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by each Manager at the Meetings and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to FAI by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract
renewal process. In addition, prior to the Meetings, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services provided by each Manager; (ii) the investment performance of each Fund; (iii) the costs of the services provided and profits realized by each Manager and its affiliates from the relationship with each Fund; (iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.
In approving the continuance of each Management Agreement at the Meetings, the Board, including a majority of the Independent Trustees, determined that the terms of the Management Agreement are fair and reasonable and that the continuance of such Management Agreement is in the best interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by each Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of each Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for each Fund; reports on expenses; legal and compliance matters; risk controls; pricing and other services provided by each Manager and its affiliates; and management fees charged by each Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the registered fund industry, such as cybersecurity and liquidity risk management.
The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Managers’ parent, and its commitment to the registered fund
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FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Funds by the FTI organization.
Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by each Manager and its affiliates to the Funds and their shareholders.
FUND PERFORMANCE. The Board reviewed and considered the performance results of each Fund, as applicable, for the one-year periods ended December 31, 2017 at the April Meeting and March 31, 2018 at the May Meeting. The Board considered the performance returns for each Fund in comparison to the performance returns of registered funds deemed comparable to the Fund included in a universe (Performance Universe) selected by Broadridge Financial Solutions, Inc. (Broadridge), an independent provider of investment company data. The Board received a description of the methodology used by Broadridge to select the registered funds included in a Performance Universe. The Board also reviewed and considered Fund performance reports provided and discussions that occurred with portfolio managers at Board meetings throughout the year. The Board noted its ongoing discussions with the Manager about the performance of the Funds to date and the importance of performance to asset growth. A summary of each Fund’s performance results is below.
Franklin Liberty International Opportunities ETF – The Board noted that the Fund commenced operations on January 25, 2017, and thus the Fund did not have investment performance for the Board to review and consider for the one-year period ended December 31, 2017. With respect to the period ended March 31, 2018, the Fund’s Performance Universe included the Fund and all retail and institutional international multi-cap core funds. The Board noted that the Fund’s annualized total return for the one-year period ended March 31, 2018 was above the median of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.
Franklin Liberty Investment Grade Corporate ETF – The Performance Universe for this Fund included the Fund and all retail and institutional BBB-rated corporate debt funds. The Fund commenced operations on October 3, 2016, and thus has been in operation for less than three years. The Board noted that the Fund’s annualized total returns for the one-year periods ended December 31, 2017 and March 31, 2018 were above the medians of its Performance Universe. The Board concluded that the Fund’s performance was satisfactory.
Franklin Liberty U.S. Low Volatility ETF – The Performance Universe for this Fund included the Fund and all retail and institutional large-cap core funds. The Fund commenced operations on September 20, 2016, and thus has been in operation for less than three years. The Board noted that the Fund’s annualized total returns for the one-year periods ended December 31, 2017 and March 31, 2018 were below the medians of its Performance Universe. The Board concluded that the Fund’s performance was acceptable given its short period of operation. In doing so, the Board noted management’s explanation that while the Fund underperformed its broadly defined Performance Universe, it performed strongly over the one-year period ended March 31, 2018 against a more meaningful and more appropriately defined subset of the Performance Universe that was comprised of low volatility exchange-traded funds and mutual funds that are more comparable to its strategy.
COMPARATIVE FEES AND EXPENSES. The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers (Management Rate), if any, of each Fund in comparison to the median expense ratio and median Management Rate, respectively, of other exchange-traded funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges. The Board received a description of the methodology used by Broadridge to select the exchange-traded funds included in an Expense Group.
Franklin Liberty International Opportunities ETF and Franklin Liberty U.S. Low Volatility ETF – The Expense Group for the Franklin Liberty International Opportunities ETF was comprised of actively managed exchange-traded funds, which included the Fund, one other international multi-cap core fund and one international multi-cap growth fund. The Expense Group for the Franklin Liberty U.S. Low Volatility ETF included
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FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
the Fund, one other large-cap core fund and one multi-cap core fund. The Board noted that the Management Rates and actual total expense ratios for these Funds were below the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are reasonable. In doing so, the Board noted the small size of each Fund’s Expense Group and that each Fund’s actual total expense ratio reflected a fee waiver from management. The Board also noted that the Sub-Advisers to the Franklin Liberty International Opportunities ETF are paid by FAI out of the management fee FAI receives from the Fund.
Franklin Liberty Investment Grade Corporate ETF – The Expense Group for this Fund was comprised of actively managed exchange-traded funds, which included the Fund, one other BBB-rated corporate debt fund, one short-intermediate investment-grade debt fund, one short investment-grade debt fund and one core bond fund. The Board noted that the Management Rate for the Fund was slightly above the median of its Expense Group, but its actual total expense ratio was below the median of its Expense Group. The Board concluded that the Management Rate charged to the Fund is reasonable. In doing so, the Board noted the small size of the Expense Group and that the Fund’s actual total expense ratio reflected a fee waiver from management. The Board also noted that the Sub-Adviser to the Fund is paid by FAI out of the management fee FAI receives from the Fund.
PROFITABILITY. The Board reviewed and considered information regarding the profits realized by each Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2017, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product-related changes, the overall methodology has remained consistent with that used in the Funds’ profitability report presentations from prior years. Additionally, PricewaterhouseCoopers LLP, auditor to Franklin Resources, Inc. and certain Franklin Templeton funds, has been engaged to periodically review and assess the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.
The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of fund operations conducted by each Manager and its affiliates may
not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.
The Board also considered the extent to which each Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by each Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, extent and quality of services provided to each Fund.
ECONOMIES OF SCALE. The Board reviewed and considered the extent to which each Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. With respect to possible economies of scale, the Board noted the existence of management fee breakpoints for the Franklin Investment Grade Corporate ETF, which operates generally to share any economies of scale with the Fund’s shareholders by reducing the Fund’s effective management fees as the Fund grows in size. The Board considered the Managers’ view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Managers incur across the Franklin Templeton family of funds as a whole. The Board concluded that to the extent economies of scale may be realized by a Manager and its affiliates, the Franklin Investment Grade Corporate ETF’s management fee structure provided a sharing of benefits with the Fund and its shareholders as the Fund grows. The Board noted that at the end of 2017, the net assets of each of the Franklin Liberty International Opportunities ETF and the Franklin Liberty U.S. Low Volatility ETF were approximately $6 million. The Board recognized that there would not likely be any economies of scale until these Funds’ assets grow.
CONCLUSION. Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board
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FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
unanimously approved the continuation of each Management Agreement for an additional one-year period.
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at libertyshares.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at libertyshares.com.
48 | Semiannual Report | libertyshares.com |
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
Semiannual Report | ||||||
Franklin Templeton ETF Trust | ||||||
Investment Manager Franklin Advisers, Inc. | Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 libertyshares.com | Investor Services Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 |
© 2018 Franklin Templeton Investments. All rights reserved. | ETF2 S 11/18 |
Franklin Templeton
ETF Trust
Semiannual Report
September 30, 2018
Franklin LibertyQ U.S. Equity ETF |
Franklin LibertyQ U.S. Mid Cap Equity ETF |
Franklin LibertyQ U.S. Small Cap Equity ETF |
Franklin Templeton Investments
Why choose Franklin Templeton Investments?
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visit libertyshares.com for fund
updates and documents.
Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
libertyshares.com | Not part of the semiannual report | 1 |
SEMIANNUAL REPORT
The U.S. economy grew during the six months under review. The economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The manufacturing and services sectors expanded during the period. The unemployment rate declined from 4.1% in March 2018, as reported at the beginning of the six-month period, to a nearly 49-year low of 3.7% at period-end.1 Annual inflation, as measured by the Consumer Price Index, decreased from 2.4% in March 2018, as reported at the beginning of the period, to 2.3% at period-end.1
The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate 0.25% at its June 2018 meeting and continued reducing its balance sheet as part of an ongoing plan to normalize monetary policy. In his congressional testimony in July 2018 and at the Fed symposium in August, Fed Chair Jerome Powell reiterated the Fed’s intention to gradually raise interest rates. At its September 2018 meeting, the Fed raised its target range for the federal funds rate 0.25% to 2.00%–2.25%, as widely expected. Furthermore, the Fed raised its forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018.
U.S. equity markets rose overall during the period, benefiting from mostly upbeat economic data, better U.S. corporate earnings and expectations of gradual rate increases.
However, markets were pressured at certain times during the period by fears of tighter regulation of information technology and technology-related companies, as well as concerns that strong economic growth and rising inflation would lead the Fed to increase its target rate faster than expected. Other factors that curbed investor sentiment included tensions between the U.S. and North Korea earlier in the period, political uncertainties in the U.S., the Trump administration’s protectionist policies and escalating trade tensions between the U.S. and China. Partially offsetting these concerns were an overall easing of tensions in the Korean peninsula in the latter part of the period, intermittent U.S.-China trade negotiations, an agreement between the U.S. and the European Union to try to reduce trade barriers and a trade deal between the U.S. and Mexico that Canada joined at period-end. In this environment, the broad U.S. stock market, as measured by the Standard & Poor’s® 500 Index, reached a new all-time high and generated a +11.41% total return for the period.2
The foregoing information reflects our analysis and opinions as of September 30, 2018. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: U.S. Bureau of Labor Statistics.
2. Source: Morningstar.
See www.franklintempletondatasources.com for additional data provider information.
2 | Semiannual Report | libertyshares.com |
Franklin LibertyQ U.S. Equity ETF
This semiannual report for Franklin LibertyQ U.S. Equity ETF covers the period ended September 30, 2018.
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 +10.31% based on market price and +10.66% based on net asset value (NAV). In comparison, the LibertyQ U.S. Large Cap Equity Index generated a +10.85% total return for the same period, while the Russell 1000® Index produced a +11.25% 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 libertyshares.com or call (800) 342-5236.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Information Technology | 21.1% | |||
Consumer Discretionary | 21.1% | |||
Consumer Staples | 14.4% | |||
Industrials | 12.2% | |||
Health Care | 12.1% | |||
Utilities | 7.2% | |||
Financials | 4.7% | |||
Communication Services | 2.2% | |||
Materials | 1.9% | |||
Real Estate | 1.7% |
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 U.S. Large Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. The LibertyQ U.S. Large Cap Equity Index is a systematic, rules-based proprietary index maintained and calculated by FTSE Russell (Russell) based on the Russell 1000® Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell 1000® Index is market capitalization weighted and measures performance of the largest companies in the Russell 3000® Index, which represents the majority of the U.S. market’s total capitalization.
2. Source: Factset.
The indexes are unmanaged and include reinvestment of any income or distributions (after the deduction of certain withholding taxes). They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 19.
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FRANKLIN LIBERTYQ U.S. EQUITY ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
AT&T Inc. Communication Services | 1.2% | |||
Eli Lilly & Co. Health Care | 1.2% | |||
The TJX Cos. Inc. Consumer Discretionary | 1.2% | |||
CVS Health Corp. Consumer Staples | 1.1% | |||
Pfizer Inc. Health Care | 1.1% | |||
Biogen Inc. Health Care | 1.1% | |||
Apple Inc. Information Technology | 1.1% | |||
NIKE Inc., B Consumer Discretionary | 1.1% | |||
Mastercard Inc., A Information Technology | 1.1% | |||
The Walt Disney Co. Consumer Discretionary | 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 |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
CFA® is a trademark owned by CFA Institute.
4 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ U.S. EQUITY ETF
Performance Summary as of September 30, 2018
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 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | +10.66% | +10.31% | +10.66% | +10.31% | ||||||||||||
1-Year | +18.99% | +19.19% | +18.99% | +19.19% | ||||||||||||
Since Inception (4/26/17) | +25.98% | +26.11% | +17.53% | +17.61% |
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 libertyshares.com or call (800) 342-5236.
See page 6 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 5 |
FRANKLIN LIBERTYQ U.S. EQUITY ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.204408 |
Total Annual Operating Expenses5
0.25% |
All investments involve risks, including possible loss of principal. 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.
6 | Semiannual Report | libertyshares.com |
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 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,106.60 | $ | 1.32 | $ | 1,023.82 | $ | 1.27 | 0.25 | % |
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.
libertyshares.com | Semiannual Report | 7 |
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, 2018.
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 +9.83% based on market price and +10.24% based on net asset value (NAV). In comparison, the LibertyQ U.S. Mid Cap Equity Index delivered a +10.44% total return for the same period, while the Russell Midcap® Index produced a +7.96% 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 libertyshares.com or call (800) 342-5236.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Consumer Discretionary | 28.4% | |||
Industrials | 18.4% | |||
Information Technology | 14.3% | |||
Financials | 11.7% | |||
Health Care | 9.6% | |||
Consumer Staples | 8.8% | |||
Real Estate | 5.0% | |||
Materials | 2.0% | |||
Utilities | 1.5% | |||
Energy | 0.2% |
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. Mid Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. The LibertyQ U.S. Mid Cap Equity Index is a systematic, rules-based proprietary index that is maintained and calculated by FTSE Russell (Russell). It is based on the Russell Midcap® Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell Midcap® Index is market capitalization weighted and measures performance of the smallest companies in the Russell 1000® Index, which represents a modest amount of the Russell 1000® Index’s total market capitalization.
2. Source: Factset.
The indexes are unmanaged and include reinvestment of any income or distributions (after the deduction of certain withholding taxes). They do not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 26.
8 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
O’Reilly Automotive Inc. Consumer Discretionary | 1.2% | |||
Edwards Lifesciences Corp. Health Care | 1.2% | |||
NetApp Inc. Information Technology | 1.2% | |||
Ross Stores Inc. Consumer Discretionary | 1.2% | |||
Dollar General Corp. Consumer Discretionary | 1.2% | |||
Clorox Co. Consumer Staples | 1.2% | |||
AutoZone Inc. Consumer Discretionary | 1.1% | |||
IDEXX Laboratories Inc. Health Care | 1.1% | |||
Align Technology Inc. Health Care | 1.1% | |||
Best Buy Co. Inc. Consumer Discretionary | 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 |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 9 |
FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF
Performance Summary as of September 30, 2018
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 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | +10.24% | +9.83% | +10.24% | +9.83% | ||||||||||||
1-Year | +19.20% | +19.13% | +19.20% | +19.13% | ||||||||||||
Since Inception (4/26/17) | +21.37% | +21.43% | +14.50% | +14.54% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 11 for Performance Summary footnotes.
10 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ U.S. MID CAP EQUITY ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.185086 |
Total Annual Operating Expenses5
0.30% |
All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Historically, mid-size company securities have been more volatile in price than larger company securities, especially over the short term. Mid-size companies may be more susceptible to particular economic events or competitive factors than are larger, more broadly diversified companies. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transactions costs, expenses and other factors. 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.
libertyshares.com | Semiannual Report | 11 |
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 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,102.40 | $ | 1.58 | $ | 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.
12 | Semiannual Report | libertyshares.com |
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, 2018.
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-month period, the Fund had a cumulative total return of +12.88% based on market price and posted a cumulative total return of +13.22% based on net asset value (NAV). In comparison, the LibertyQ U.S. Small Cap Equity Index delivered a +13.45% total return for the same period, while the Russell 2000® Index produced a +11.61% 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 libertyshares.com or call (800) 342-5236.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Consumer Discretionary | 29.2% | |||
Industrials | 16.8% | |||
Information Technology | 15.8% | |||
Health Care | 10.9% | |||
Financials | 8.1% | |||
Consumer Staples | 5.9% | |||
Utilities | 5.9% | |||
Real Estate | 4.8% | |||
Materials | 1.3% | |||
Communication Services | 0.9% |
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. Small Cap Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the Underlying Index as closely as possible. However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the Underlying Index.
1. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. The LibertyQ U.S. Small Cap Equity Index is a systematic, rules-based proprietary index that is maintained and calculated by FTSE Russell (Russell). It is based on the Russell 2000® Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. Russell 2000® Index is market capitalization weighted and measures performance of the 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 32.
libertyshares.com | Semiannual Report | 13 |
FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Five Below Inc. Consumer Discretionary | 1.4% | |||
Texas Roadhouse Inc., A Consumer Discretionary | 1.0% | |||
Insperity Inc. Industrials | 0.9% | |||
Globus Medical Inc., A Health Care | 0.8% | |||
American Eagle Outfitters Inc. Consumer Discretionary | 0.8% | |||
Ollie’s Bargain Outlet Holdings Inc. Consumer Discretionary | 0.8% | |||
Trex Co. Inc. Industrials | 0.7% | |||
Essent Group Ltd. Financials | 0.7% | |||
Amedisys Inc. Health Care | 0.7% | |||
IDACORP Inc. Utilities | 0.7% |
Thank you for your participation in Franklin LibertyQ U.S. Small Cap Equity ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
14 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF
Performance Summary as of September 30, 2018
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 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | +13.22% | +12.88% | +13.22% | +12.88% | ||||||||||||
1-Year | +18.22% | +21.73% | +18.22% | +21.73% | ||||||||||||
Since Inception (4/26/17) | +20.39% | +20.00% | +13.85% | +13.59% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 16 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 15 |
FRANKLIN LIBERTYQ U.S. SMALL CAP EQUITY ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.143472 |
Total Annual Operating Expenses5
0.35% |
All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. Stock prices fluctuate, sometime rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Smaller, mid-sized and relative new or unseasoned companies can be particularly sensitive to changing economic conditions, and their prospects for growth are less certain than those of larger, more established companies. Historically, these securities have experienced more price volatility than larger company stocks, especially over the short term. Smaller companies may be more susceptible to particular events or economic conditions, less certain growth prospects, lack of depth of management and funds for growth and development and limited or less developed product lines and markets. There can be no assurance that the Fund’s multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. Performance of the Fund may vary significantly from the performance of an index, as a result of transactions costs, expenses and other factors. 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.
16 | Semiannual Report | libertyshares.com |
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 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,132.20 | $ | 1.87 | $ | 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.
libertyshares.com | Semiannual Report | 17 |
FRANKLIN TEMPLETON ETF TRUST
Franklin LibertyQ U.S. Equity ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) |
| |||||||
Net asset value, beginning of period | $ | 28.51 | $ | 25.44 | ||||
|
| |||||||
Income from investment operationsb: |
| |||||||
Net investment incomec | 0.31 | 0.53 | ||||||
Net realized and unrealized gains (losses) | 2.72 | 2.98 | ||||||
|
| |||||||
Total from investment operations | 3.03 | 3.51 | ||||||
|
| |||||||
Less distributions from net investment income | (0.20 | ) | (0.44 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 31.34 | $ | 28.51 | ||||
|
| |||||||
Total returnd | 10.66% | 13.84% | ||||||
Ratios to average net assetse |
| |||||||
Expenses before waiver and payments by affiliates | 0.25% | 0.32% | f | |||||
Expenses net of waiver and payments by affiliates | 0.25% | 0.25% | f | |||||
Net investment income | 2.08% | 2.10% | ||||||
Supplemental data |
| |||||||
Net assets, end of period (000’s) | $385,467 | $108,326 | ||||||
Portfolio turnover rateg | 8.23% | 20.80% |
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of 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.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
18 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin LibertyQ U.S. Equity ETF
Shares | Value | |||||||||
Common Stocks 99.8% | ||||||||||
Communication Services 2.2% | ||||||||||
AT&T Inc. | 138,498 | $ | 4,650,763 | |||||||
Verizon Communications Inc. | 75,276 | 4,018,985 | ||||||||
|
| |||||||||
8,669,748 | ||||||||||
|
| |||||||||
Consumer Discretionary 21.1% | ||||||||||
a | AMC Networks Inc., A | 2,214 | 146,877 | |||||||
Aptiv PLC | 12,792 | 1,073,249 | ||||||||
a | AutoZone Inc. | 738 | 572,467 | |||||||
Best Buy Co. Inc. | 22,632 | 1,796,076 | ||||||||
Carnival Corp. | 25,338 | 1,615,804 | ||||||||
Carter’s Inc. | 3,690 | 363,834 | ||||||||
Choice Hotels International Inc. | 2,952 | 245,902 | ||||||||
Comcast Corp., A | 108,978 | 3,858,911 | ||||||||
Darden Restaurants Inc. | 11,808 | 1,312,932 | ||||||||
Dick’s Sporting Goods Inc. | 7,134 | 253,114 | ||||||||
Dollar General Corp. | 11,070 | 1,209,951 | ||||||||
Domino’s Pizza Inc. | 3,690 | 1,087,812 | ||||||||
Foot Locker Inc. | 13,038 | 664,677 | ||||||||
Ford Motor Co. | 97,170 | 898,823 | ||||||||
Garmin Ltd. | 11,070 | 775,454 | ||||||||
Gentex Corp. | 20,664 | 443,449 | ||||||||
Genuine Parts Co. | 12,546 | 1,247,072 | ||||||||
a | Grand Canyon Education Inc. | 1,230 | 138,744 | |||||||
H&R Block Inc. | 21,648 | 557,436 | ||||||||
Hasbro Inc. | 10,086 | 1,060,240 | ||||||||
John Wiley & Sons Inc., A | 984 | 59,630 | ||||||||
Kohl’s Corp. | 16,236 | 1,210,394 | ||||||||
L Brands Inc. | 22,140 | 670,842 | ||||||||
Las Vegas Sands Corp. | 15,990 | 948,687 | ||||||||
Lear Corp. | 4,674 | 677,730 | ||||||||
Leggett & Platt Inc. | 11,070 | 484,755 | ||||||||
Lowe’s Cos. Inc. | 33,456 | 3,841,418 | ||||||||
a | Lululemon Athletica Inc. | 8,364 | 1,359,066 | |||||||
Macy’s Inc. | 23,124 | 803,097 | ||||||||
McDonald’s Corp. | 22,386 | 3,744,954 | ||||||||
a | Michael Kors Holdings Ltd. | 15,006 | 1,028,811 | |||||||
Newell Brands Inc. | 10,824 | 219,727 | ||||||||
NIKE Inc., B | 49,938 | 4,230,747 | ||||||||
Nordstrom Inc. | 10,578 | 632,670 | ||||||||
a | NVR Inc. | 178 | 439,802 | |||||||
a | O’Reilly Automotive Inc. | 7,626 | 2,648,662 | |||||||
Omnicom Group Inc. | 15,498 | 1,054,174 | ||||||||
Penske Automotive Group Inc. | 984 | 46,632 | ||||||||
Polaris Industries Inc. | 5,658 | 571,175 | ||||||||
Pool Corp. | 2,706 | 451,577 | ||||||||
Ralph Lauren Corp. | 1,230 | 169,187 | ||||||||
Ross Stores Inc. | 40,098 | 3,973,712 | ||||||||
b | Sirius XM Holdings Inc. | 30,258 | 191,231 | |||||||
Six Flags Entertainment Corp. | 1,968 | 137,406 | ||||||||
Starbucks Corp. | 63,222 | 3,593,538 | ||||||||
Tapestry Inc. | 26,814 | 1,347,940 | ||||||||
Target Corp. | 36,408 | 3,211,550 | ||||||||
�� | The Gap Inc. | 24,108 | 695,516 | |||||||
The Home Depot Inc. | 19,188 | 3,974,794 | ||||||||
The Interpublic Group of Cos. Inc. | 9,348 | 213,789 | ||||||||
a | The Michaels Cos. Inc. | 7,626 | 123,770 | |||||||
The TJX Cos. Inc. | 39,606 | 4,436,664 | ||||||||
The Walt Disney Co. | 35,670 | 4,171,250 |
libertyshares.com | Semiannual Report | 19 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Consumer Discretionary (continued) | ||||||||||
Thor Industries Inc. | 3,690 | $ | 308,853 | |||||||
Tiffany & Co. | 7,134 | 920,072 | ||||||||
Tractor Supply Co. | 10,332 | 938,972 | ||||||||
a | Ulta Beauty Inc. | 4,920 | 1,388,030 | |||||||
a | Urban Outfitters Inc. | 6,150 | 251,535 | |||||||
VF Corp. | 29,028 | 2,712,667 | ||||||||
Viacom Inc., B | 9,348 | 315,588 | ||||||||
Williams-Sonoma Inc. | 8,364 | 549,682 | ||||||||
Yum! Brands Inc. | 35,178 | 3,198,032 | ||||||||
|
| |||||||||
81,271,152 | ||||||||||
|
| |||||||||
Consumer Staples 14.4% | ||||||||||
Altria Group Inc. | 64,452 | 3,887,100 | ||||||||
Archer-Daniels-Midland Co. | 13,038 | 655,420 | ||||||||
Brown-Forman Corp., A | 4,674 | 237,439 | ||||||||
Brown-Forman Corp., B | 15,252 | 770,989 | ||||||||
Campbell Soup Co. | 16,236 | 594,725 | ||||||||
Casey’s General Stores Inc. | 2,460 | 317,611 | ||||||||
Church & Dwight Co. Inc. | 21,894 | 1,299,847 | ||||||||
Clorox Co. | 13,284 | 1,998,046 | ||||||||
Colgate-Palmolive Co. | 54,858 | 3,672,743 | ||||||||
Costco Wholesale Corp. | 17,220 | 4,044,634 | ||||||||
CVS Health Corp. | 55,842 | 4,395,882 | ||||||||
Estee Lauder Cos. Inc., A | 20,172 | 2,931,395 | ||||||||
Flowers Foods Inc. | 12,792 | 238,699 | ||||||||
General Mills Inc. | 47,970 | 2,058,872 | ||||||||
Hormel Foods Corp. | 24,354 | 959,548 | ||||||||
Ingredion Inc. | 4,920 | 516,403 | ||||||||
Lamb Weston Holdings Inc. | 9,348 | 622,577 | ||||||||
McCormick & Co. Inc. | 10,086 | 1,328,830 | ||||||||
a | Monster Beverage Corp. | 16,236 | 946,234 | |||||||
Nu Skin Enterprises Inc., A | 4,182 | 344,680 | ||||||||
PepsiCo Inc. | 35,670 | 3,987,906 | ||||||||
Philip Morris International Inc. | 45,018 | 3,670,768 | ||||||||
a | Pilgrim’s Pride Corp. | 5,166 | 93,453 | |||||||
a | Sprouts Farmers Market Inc. | 3,198 | 87,657 | |||||||
Sysco Corp. | 41,820 | 3,063,315 | ||||||||
The Hershey Co. | 14,022 | 1,430,244 | ||||||||
The J. M. Smucker Co. | 2,706 | 277,663 | ||||||||
The Procter & Gamble Co. | 48,954 | 4,074,441 | ||||||||
Tyson Foods Inc. | 21,156 | 1,259,417 | ||||||||
Walgreens Boots Alliance Inc. | 20,418 | 1,488,472 | ||||||||
Walmart Inc. | 43,542 | 4,089,029 | ||||||||
|
| |||||||||
55,344,039 | ||||||||||
|
| |||||||||
Energy 1.2% | ||||||||||
Phillips 66 | 10,086 | 1,136,894 | ||||||||
Valero Energy Corp. | 29,766 | 3,385,882 | ||||||||
|
| |||||||||
4,522,776 | ||||||||||
|
| |||||||||
Financials 4.7% | ||||||||||
AGNC Investment Corp. | 23,616 | 439,966 | ||||||||
American National Insurance Co. | 984 | 127,221 | ||||||||
Annaly Capital Management Inc. | 47,970 | 490,733 | ||||||||
Chimera Investment Corp. | 13,284 | 240,839 | ||||||||
Erie Indemnity Co., A | 1,722 | 219,607 | ||||||||
Evercore Inc. | 984 | 98,941 | ||||||||
Everest Re Group Ltd. | 984 | 224,814 |
20 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Financials (continued) | ||||||||||
FactSet Research Systems Inc. | 2,460 | $ | 550,327 | |||||||
Fidelity National Financial Inc. | 13,776 | 542,086 | ||||||||
Lazard Ltd., A | 10,578 | 509,119 | ||||||||
MarketAxess Holdings Inc. | 2,460 | 439,085 | ||||||||
Marsh & McLennan Cos. Inc. | 34,686 | 2,869,226 | ||||||||
Mercury General Corp. | 2,460 | 123,394 | ||||||||
Morningstar Inc. | 1,476 | 185,828 | ||||||||
MSCI Inc. | 5,412 | 960,143 | ||||||||
People’s United Financial Inc. | 25,338 | 433,787 | ||||||||
Realty Income Corp. | 24,354 | 1,385,499 | ||||||||
S&P Global Inc. | 14,760 | 2,883,956 | ||||||||
Santander Consumer USA Holdings Inc. | 7,380 | 147,895 | ||||||||
SEI Investments Co. | 5,412 | 330,673 | ||||||||
Simon Property Group Inc. | 12,546 | 2,217,506 | ||||||||
The Progressive Corp. | 30,504 | 2,167,004 | ||||||||
VEREIT Inc. | 81,672 | 592,939 | ||||||||
|
| |||||||||
18,180,588 | ||||||||||
|
| |||||||||
Health Care 12.1% | ||||||||||
AbbVie Inc. | 36,162 | 3,420,202 | ||||||||
Amgen Inc. | 19,926 | 4,130,461 | ||||||||
a | Biogen Inc. | 12,300 | 4,345,713 | |||||||
Bristol-Myers Squibb Co. | 39,606 | 2,458,741 | ||||||||
a | Cerner Corp. | 15,006 | 966,536 | |||||||
Chemed Corp. | 492 | 157,233 | ||||||||
Eli Lilly & Co. | 42,066 | 4,514,102 | ||||||||
Encompass Health Corp. | 2,214 | 172,581 | ||||||||
a | Exelixis Inc. | 11,808 | 209,238 | |||||||
a | Express Scripts Holding Co. | 14,514 | 1,378,975 | |||||||
Gilead Sciences Inc. | 53,136 | 4,102,631 | ||||||||
HCA Holdings Inc. | 6,396 | 889,812 | ||||||||
a | Intuitive Surgical Inc. | 5,904 | 3,388,896 | |||||||
Johnson & Johnson | 30,012 | 4,146,758 | ||||||||
a | Mettler-Toledo International Inc. | 1,968 | 1,198,473 | |||||||
Pfizer Inc. | 99,630 | 4,390,694 | ||||||||
ResMed Inc. | 12,054 | 1,390,308 | ||||||||
a | United Therapeutics Corp. | 4,428 | 566,253 | |||||||
UnitedHealth Group Inc. | 14,760 | 3,926,750 | ||||||||
a | Varian Medical Systems Inc. | 7,872 | 881,113 | |||||||
|
| |||||||||
46,635,470 | ||||||||||
|
| |||||||||
Industrials 12.2% | ||||||||||
3M Co. | 18,204 | 3,835,765 | ||||||||
Alaska Air Group Inc. | 11,808 | 813,099 | ||||||||
BWX Technologies Inc. | 6,888 | 430,776 | ||||||||
C.H. Robinson Worldwide Inc. | 13,776 | 1,348,946 | ||||||||
Cintas Corp. | 6,888 | 1,362,515 | ||||||||
Copa Holdings SA | 1,722 | 137,485 | ||||||||
a | Copart Inc. | 15,006 | 773,259 | |||||||
Cummins Inc. | 11,316 | 1,652,928 | ||||||||
Delta Air Lines Inc. | 45,264 | 2,617,617 | ||||||||
Emerson Electric Co. | 50,184 | 3,843,091 | ||||||||
Expeditors International of Washington Inc. | 14,268 | 1,049,126 | ||||||||
Fastenal Co. | 26,814 | 1,555,748 | ||||||||
Graco Inc. | 12,546 | 581,382 | ||||||||
HEICO Corp., A | 4,674 | 352,887 | ||||||||
Huntington Ingalls Industries Inc. | 3,198 | 818,944 | ||||||||
J.B. Hunt Transport Services Inc. | 8,364 | 994,814 |
libertyshares.com | Semiannual Report | 21 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Industrials (continued) | ||||||||||
Landstar System Inc. | 2,952 | $ | 360,144 | |||||||
Lockheed Martin Corp. | 11,316 | 3,914,883 | ||||||||
MSC Industrial Direct Co. Inc., A | 2,952 | 260,101 | ||||||||
Northrop Grumman Corp. | 11,070 | 3,513,286 | ||||||||
Old Dominion Freight Line Inc. | 4,674 | 753,729 | ||||||||
Raytheon Co. | 17,220 | 3,558,685 | ||||||||
Robert Half International Inc. | 12,546 | 882,988 | ||||||||
Rockwell Automation Inc. | 10,824 | 2,029,717 | ||||||||
Rollins Inc. | 9,348 | 567,330 | ||||||||
Schneider National Inc., B | 1,230 | 30,725 | ||||||||
Southwest Airlines Co. | 38,622 | 2,411,944 | ||||||||
Toro Co. | 10,824 | 649,115 | ||||||||
Union Pacific Corp. | 25,092 | 4,085,730 | ||||||||
W.W. Grainger Inc. | 4,674 | 1,670,534 | ||||||||
Watsco Inc. | 1,968 | 350,501 | ||||||||
|
| |||||||||
47,207,794 | ||||||||||
|
| |||||||||
Information Technology 21.1% | ||||||||||
Accenture PLC, A | 23,124 | 3,935,705 | ||||||||
a | Adobe Systems Inc. | 12,054 | 3,253,977 | |||||||
Amdocs Ltd. | 13,038 | 860,247 | ||||||||
Apple Inc. | 19,188 | 4,331,499 | ||||||||
Applied Materials Inc. | 68,880 | 2,662,212 | ||||||||
a | Arista Networks Inc. | 1,476 | 392,409 | |||||||
Automatic Data Processing Inc. | 27,552 | 4,150,984 | ||||||||
Broadridge Financial Solutions Inc. | 11,070 | 1,460,687 | ||||||||
CA Inc. | 26,814 | 1,183,838 | ||||||||
Cisco Systems Inc. | 83,886 | 4,081,054 | ||||||||
Cognizant Technology Solutions Corp., A | 13,530 | 1,043,840 | ||||||||
a | F5 Networks Inc. | 6,150 | 1,226,433 | |||||||
FLIR Systems Inc. | 9,102 | 559,500 | ||||||||
a | Fortinet Inc. | 3,198 | 295,080 | |||||||
Genpact Ltd. | 5,412 | 165,661 | ||||||||
Hewlett Packard Enterprise Co. | 36,408 | 593,815 | ||||||||
HP Inc. | 155,718 | 4,012,853 | ||||||||
Intel Corp. | 64,944 | 3,071,202 | ||||||||
International Business Machines Corp. | 25,338 | 3,831,359 | ||||||||
Intuit Inc. | 17,712 | 4,027,709 | ||||||||
a | IPG Photonics Corp. | 1,476 | 230,359 | |||||||
Jack Henry & Associates Inc. | 6,888 | 1,102,631 | ||||||||
KLA-Tencor Corp. | 9,840 | 1,000,826 | ||||||||
Lam Research Corp. | 8,610 | 1,306,137 | ||||||||
Mastercard Inc., A | 18,942 | 4,216,679 | ||||||||
a,b | Match Group Inc. | 1,968 | 113,967 | |||||||
Maxim Integrated Products Inc. | 21,402 | 1,206,859 | ||||||||
Microchip Technology Inc. | 17,466 | 1,378,242 | ||||||||
a | Micron Technology Inc. | 49,692 | 2,247,569 | |||||||
Microsoft Corp. | 36,162 | 4,135,848 | ||||||||
Motorola Solutions Inc. | 11,316 | 1,472,664 | ||||||||
NetApp Inc. | 16,236 | 1,394,510 | ||||||||
NVIDIA Corp. | 14,268 | 4,009,593 | ||||||||
Paychex Inc. | 31,242 | 2,300,973 | ||||||||
a | Red Hat Inc. | 4,182 | 569,923 | |||||||
Skyworks Solutions Inc. | 17,712 | 1,606,656 | ||||||||
Texas Instruments Inc. | 31,980 | 3,431,134 | ||||||||
Ubiquiti Networks Inc. | 492 | 48,639 | ||||||||
a | VeriSign Inc. | 8,856 | 1,418,023 | |||||||
a | VMware Inc., A | 6,396 | 998,160 |
22 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Information Technology (continued) | ||||||||||
Western Union Co. | 11,070 | $ | 210,994 | |||||||
Xilinx Inc. | 22,632 | 1,814,407 | ||||||||
|
| |||||||||
81,354,857 | ||||||||||
|
| |||||||||
Materials 1.9% | ||||||||||
Avery Dennison Corp. | 4,674 | 506,428 | ||||||||
Eastman Chemical Co. | 3,444 | 329,660 | ||||||||
LyondellBasell Industries NV, A | 31,980 | 3,278,270 | ||||||||
NewMarket Corp. | 738 | 299,266 | ||||||||
Packaging Corp. of America | 3,690 | 404,756 | ||||||||
Praxair Inc. | 10,824 | 1,739,742 | ||||||||
Sealed Air Corp. | 3,936 | 158,030 | ||||||||
Sonoco Products Co. | 7,872 | 436,896 | ||||||||
|
| |||||||||
7,153,048 | ||||||||||
|
| |||||||||
Real Estate 1.7% | ||||||||||
EPR Properties | 4,920 | 336,577 | ||||||||
Gaming and Leisure Properties Inc. | 12,546 | 442,247 | ||||||||
Kimco Realty Corp. | 21,402 | 358,270 | ||||||||
National Retail Properties Inc. | 13,776 | 617,440 | ||||||||
OMEGA Healthcare Investors Inc. | 17,712 | 580,422 | ||||||||
Public Storage | 14,268 | 2,876,857 | ||||||||
Senior Housing Properties Trust | 20,664 | 362,860 | ||||||||
Spirit Realty Capital Inc. | 43,788 | 352,931 | ||||||||
STORE Capital Corp. | 11,808 | 328,144 | ||||||||
WP Carey Inc. | 5,904 | 379,686 | ||||||||
|
| |||||||||
6,635,434 | ||||||||||
|
| |||||||||
Utilities 7.2% | ||||||||||
Alliant Energy Corp. | 15,252 | 649,278 | ||||||||
American Electric Power Co. Inc. | 38,622 | 2,737,527 | ||||||||
Atmos Energy Corp. | 7,380 | 693,056 | ||||||||
Consolidated Edison Inc. | 22,632 | 1,724,332 | ||||||||
DTE Energy Co. | 15,006 | 1,637,605 | ||||||||
Duke Energy Corp. | 43,050 | 3,444,861 | ||||||||
Eversource Energy | 15,498 | 952,197 | ||||||||
Exelon Corp. | 79,458 | 3,469,136 | ||||||||
Hawaiian Electric Industries Inc. | 8,364 | 297,675 | ||||||||
NextEra Energy Inc. | 21,648 | 3,628,205 | ||||||||
OGE Energy Corp. | 12,300 | 446,736 | ||||||||
PG&E Corp. | 39,360 | 1,810,954 | ||||||||
Pinnacle West Capital Corp. | 9,348 | 740,175 | ||||||||
Public Service Enterprise Group Inc. | 46,494 | 2,454,418 | ||||||||
Vectren Corp. | 6,888 | 492,423 | ||||||||
WEC Energy Group Inc. | 12,054 | 804,725 | ||||||||
Xcel Energy Inc. | 39,606 | 1,869,799 | ||||||||
|
| |||||||||
27,853,102 | ||||||||||
|
| |||||||||
Total Investments before Short Term Investments | 384,828,008 | |||||||||
|
|
libertyshares.com | Semiannual Report | 23 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Equity ETF (continued)
Shares | Value | |||||||||
Short-Term Investments (Cost $153,935) 0.1% | ||||||||||
Investments from Cash Collateral Received for Loaned Securities 0.1% | ||||||||||
Money Market Funds 0.1% | ||||||||||
c,d | Institutional Fiduciary Trust Money Market Portfolio, 1.69% | 153,935 | $ | 153,935 | ||||||
|
| |||||||||
Total Investments (Cost $364,096,495) 99.9% | 384,981,943 | |||||||||
Other Assets, less Liabilities 0.1% | 485,339 | |||||||||
|
| |||||||||
Net Assets 100.0% | $ | 385,467,282 | ||||||||
|
|
aNon-income producing.
bA portion or all of the security is on loan at September 30, 2018. See Note 1(c).
cSee Note 3(c) regarding investments in affiliated management investment companies.
dThe rate shown is the annualized seven-day yield at period end.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(b).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
S&P 500 E-Mini | Long | 3 | $ | 437,850 | 12/21/18 | $ | 1,528 | |||||||||||||
|
|
|
|
*As of period end.
See Note 6 regarding other derivative information..
See Abbreviations on page 53.
24 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ U.S. Mid Cap Equity ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) |
| |||||||
Net asset value, beginning of period | $ | 27.70 | $ | 25.51 | ||||
|
| |||||||
Income from investment operationsb: |
| |||||||
Net investment incomec | 0.24 | 0.38 | ||||||
Net realized and unrealized gains (losses) | 2.60 | 2.18 | ||||||
|
| |||||||
Total from investment operations | 2.84 | 2.56 | ||||||
|
| |||||||
Less distributions from net investment income | (0.19 | ) | (0.37 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 30.35 | $ | 27.70 | ||||
|
| |||||||
Total returnd | 10.24% | 10.09% | ||||||
Ratios to average net assetse |
| |||||||
Expenses before waiver and payments by affiliates | 0.30% | 0.99% | f | |||||
Expenses net of waiver and payments by affiliates | 0.30% | 0.30% | f | |||||
Net investment income | 1.63% | 1.58% | ||||||
Supplemental data |
| |||||||
Net assets, end of period (000’s) | $7,589 | $2,770 | ||||||
Portfolio turnover rateg | 15.30% | 36.21% |
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of 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.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 25 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin LibertyQ U.S. Mid Cap Equity ETF
Shares | Value | |||||||||
Common Stocks 99.9% | ||||||||||
Consumer Discretionary 28.4% | ||||||||||
a | AMC Networks Inc., A | 150 | $ | 9,951 | ||||||
a | AutoZone Inc. | 110 | 85,327 | |||||||
Best Buy Co. Inc. | 1,040 | 82,534 | ||||||||
BorgWarner Inc. | 450 | 19,251 | ||||||||
a | Burlington Stores Inc. | 305 | 49,691 | |||||||
Carter’s Inc. | 235 | 23,171 | ||||||||
CBS Corp., B | 750 | 43,087 | ||||||||
Choice Hotels International Inc. | 150 | 12,495 | ||||||||
Cinemark Holdings Inc. | 265 | 10,653 | ||||||||
D.R. Horton Inc. | 995 | 41,969 | ||||||||
Dick’s Sporting Goods Inc. | 430 | 15,256 | ||||||||
Dollar General Corp. | 810 | 88,533 | ||||||||
Domino’s Pizza Inc. | 235 | 69,278 | ||||||||
Foot Locker Inc. | 680 | 34,666 | ||||||||
Garmin Ltd. | 515 | 36,076 | ||||||||
a | GCI Liberty Inc. | 205 | 10,455 | |||||||
Genuine Parts Co. | 765 | 76,041 | ||||||||
a | Grand Canyon Education Inc. | 110 | 12,408 | |||||||
H&R Block Inc. | 1,085 | 27,939 | ||||||||
Hanesbrands Inc. | 1,275 | 23,498 | ||||||||
Hasbro Inc. | 555 | 58,342 | ||||||||
a | Hilton Grand Vacations Inc. | 305 | 10,096 | |||||||
John Wiley & Sons Inc., A | 210 | 12,726 | ||||||||
Kohl’s Corp. | 970 | 72,313 | ||||||||
L Brands Inc. | 1,190 | 36,057 | ||||||||
a | Lululemon Athletica Inc. | 225 | 36,560 | |||||||
Macy’s Inc. | 1,805 | 62,688 | ||||||||
a | Michael Kors Holdings Ltd. | 805 | 55,191 | |||||||
Nordstrom Inc. | 685 | 40,970 | ||||||||
a | NVR Inc. | 14 | 34,591 | |||||||
a | O’Reilly Automotive Inc. | 265 | 92,040 | |||||||
Omnicom Group Inc. | 475 | 32,310 | ||||||||
Penske Automotive Group Inc. | 80 | 3,791 | ||||||||
Pool Corp. | 235 | 39,217 | ||||||||
Ralph Lauren Corp. | 250 | 34,388 | ||||||||
Ross Stores Inc. | 895 | 88,694 | ||||||||
a | ServiceMaster Global Holdings Inc. | 280 | 17,368 | |||||||
Six Flags Entertainment Corp. | 345 | 24,088 | ||||||||
a | Skechers USA. Inc., A | 510 | 14,244 | |||||||
Tapestry Inc. | 1,375 | 69,121 | ||||||||
a | Tempur Sealy International Inc. | 150 | 7,935 | |||||||
The Gap Inc. | 1,300 | 37,505 | ||||||||
The Interpublic Group of Cos. Inc. | 1,935 | 44,253 | ||||||||
a | The Michaels Cos. Inc. | 650 | 10,550 | |||||||
Tiffany & Co. | 525 | 67,709 | ||||||||
Tractor Supply Co. | 755 | 68,614 | ||||||||
a | Ulta Beauty Inc. | 280 | 78,994 | |||||||
a | Urban Outfitters Inc. | 350 | 14,315 | |||||||
VF Corp. | 875 | 81,769 | ||||||||
Viacom Inc., B | 735 | 24,814 | ||||||||
Williams-Sonoma Inc. | 475 | 31,217 | ||||||||
Wyndham Destinations Inc. | 635 | 27,534 | ||||||||
Yum China Holdings Inc. | 1,530 | 53,718 | ||||||||
|
| |||||||||
2,156,001 | ||||||||||
|
| |||||||||
Consumer Staples 8.8% | ||||||||||
Brown-Forman Corp., A | 200 | 10,160 | ||||||||
Brown-Forman Corp., B | 1,050 | 53,078 |
26 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Mid Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Consumer Staples (continued) | ||||||||||
Campbell Soup Co. | 880 | $ | 32,234 | |||||||
Church & Dwight Co. Inc. | 1,125 | 66,791 | ||||||||
Clorox Co. | 585 | 87,990 | ||||||||
Coty Inc., A | 2,020 | 25,371 | ||||||||
Energizer Holdings Inc. | 215 | 12,610 | ||||||||
Flowers Foods Inc. | 1,045 | 19,500 | ||||||||
a | Herbalife Nutrition Ltd. | 520 | 28,366 | |||||||
Kellogg Co. | 1,095 | 76,672 | ||||||||
McCormick & Co. Inc. | 560 | 73,780 | ||||||||
Nu Skin Enterprises Inc., A | 295 | 24,314 | ||||||||
a | Pilgrim’s Pride Corp. | 255 | 4,613 | |||||||
a | Sprouts Farmers Market Inc. | 610 | 16,720 | |||||||
The Hershey Co. | 725 | 73,950 | ||||||||
The Kroger Co. | 1,965 | 57,201 | ||||||||
|
| |||||||||
663,350 | ||||||||||
|
| |||||||||
Energy 0.2% | ||||||||||
PBF Energy Inc. | 355 | 17,718 | ||||||||
|
| |||||||||
Financials 11.7% | ||||||||||
Ally Financial Inc. | 925 | 24,466 | ||||||||
American National Insurance Co. | 40 | 5,172 | ||||||||
Annaly Capital Management Inc. | 4,200 | 42,966 | ||||||||
a | Arch Capital Group Ltd. | 1,790 | 53,360 | |||||||
Axis Capital Holdings Ltd. | 355 | 20,487 | ||||||||
BGC Partners Inc., A | 550 | 6,501 | ||||||||
a | Brighthouse Financial Inc. | 240 | 10,618 | |||||||
Cincinnati Financial Corp. | 355 | 27,267 | ||||||||
CNA Financial Corp. | 130 | 5,934 | ||||||||
a | Credit Acceptance Corp. | 55 | 24,094 | |||||||
Discover Financial Services | 955 | 73,010 | ||||||||
Evercore Inc. | 85 | 8,547 | ||||||||
Everest Re Group Ltd. | 210 | 47,979 | ||||||||
FactSet Research Systems Inc. | 175 | 39,149 | ||||||||
Fidelity National Financial Inc. | 990 | 38,956 | ||||||||
First American Financial Corp. | 440 | 22,699 | ||||||||
Lazard Ltd., A | 525 | 25,268 | ||||||||
Legg Mason Inc. | 265 | 8,276 | ||||||||
MarketAxess Holdings Inc. | 75 | 13,387 | ||||||||
Mercury General Corp. | 125 | 6,270 | ||||||||
MSCI Inc. | 380 | 67,416 | ||||||||
Nasdaq Inc. | 525 | 45,045 | ||||||||
Navient Corp. | 520 | 7,010 | ||||||||
Prosperity Bancshares Inc. | 265 | 18,378 | ||||||||
Realty Income Corp. | 1,230 | 69,975 | ||||||||
Santander Consumer USA Holdings Inc. | 530 | 10,621 | ||||||||
SEI Investments Co. | 780 | 47,658 | ||||||||
Torchmark Corp. | 475 | 41,178 | ||||||||
Unum Group | 1,080 | 42,195 | ||||||||
W.R. Berkley Corp. | 425 | 33,970 | ||||||||
|
| |||||||||
887,852 | ||||||||||
|
| |||||||||
Health Care 9.6% | ||||||||||
a | Acadia Healthcare Co. Inc. | 315 | 11,088 | |||||||
a | Align Technology Inc. | 215 | 84,112 | |||||||
a | Cerner Corp. | 1,185 | 76,326 | |||||||
a | Edwards Lifesciences Corp. | 515 | 89,661 | |||||||
Encompass Health Corp. | 280 | 21,826 |
libertyshares.com | Semiannual Report | 27 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Mid Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Health Care (continued) | ||||||||||
a | Henry Schein Inc. | 720 | $ | 61,222 | ||||||
a | IDEXX Laboratories Inc. | 340 | 84,884 | |||||||
a | Masimo Corp. | 100 | 12,454 | |||||||
a | Mednax Inc. | 405 | 18,897 | |||||||
a | Mettler-Toledo International Inc. | 120 | 73,078 | |||||||
a | Premier Inc., A | 225 | 10,301 | |||||||
a | United Therapeutics Corp. | 220 | 28,134 | |||||||
Universal Health Services Inc., B | 440 | 56,250 | ||||||||
a | Varian Medical Systems Inc. | 395 | 44,212 | |||||||
a | Waters Corp. | 300 | 58,404 | |||||||
|
| |||||||||
730,849 | ||||||||||
|
| |||||||||
Industrials 18.4% | ||||||||||
Air Lease Corp. | 385 | 17,664 | ||||||||
Allegion PLC | 385 | 34,869 | ||||||||
Allison Transmission Holdings Inc. | 250 | 13,003 | ||||||||
American Airlines Group Inc. | 1,630 | 67,368 | ||||||||
BWX Technologies Inc. | 365 | 22,827 | ||||||||
C.H. Robinson Worldwide Inc. | 690 | 67,565 | ||||||||
Cintas Corp. | 385 | 76,157 | ||||||||
Copa Holdings SA | 140 | 11,178 | ||||||||
Cummins Inc. | 495 | 72,305 | ||||||||
Donaldson Co. Inc. | 565 | 32,917 | ||||||||
Dun & Bradstreet Corp. | 190 | 27,077 | ||||||||
Equifax Inc. | 495 | 64,632 | ||||||||
Expeditors International of Washington Inc. | 815 | 59,927 | ||||||||
Fastenal Co. | 1,325 | 76,876 | ||||||||
Fortive Corp. | 975 | 82,095 | ||||||||
Graco Inc. | 835 | 38,694 | ||||||||
HEICO Corp., A | 275 | 20,763 | ||||||||
Hubbell Inc., B | 210 | 28,050 | ||||||||
a | JetBlue Airways Corp. | 1,215 | 23,522 | |||||||
KAR Auction Services Inc. | 415 | 24,771 | ||||||||
Landstar System Inc. | 85 | 10,370 | ||||||||
Lennox International Inc. | 160 | 34,944 | ||||||||
ManpowerGroup Inc. | 315 | 27,077 | ||||||||
MSC Industrial Direct Co. Inc., A | 235 | 20,706 | ||||||||
Nielsen Holdings PLC | 1,650 | 45,639 | ||||||||
Old Dominion Freight Line Inc. | 315 | 50,797 | ||||||||
Robert Half International Inc. | 675 | 47,506 | ||||||||
Rockwell Automation Inc. | 405 | 75,946 | ||||||||
Rollins Inc. | 525 | 31,862 | ||||||||
Schneider National Inc., B | 120 | 2,998 | ||||||||
Toro Co. | 540 | 32,384 | ||||||||
W.W. Grainger Inc. | 230 | 82,204 | ||||||||
Watsco Inc. | 155 | 27,605 | ||||||||
Xylem Inc. | 555 | 44,328 | ||||||||
|
| |||||||||
1,396,626 | ||||||||||
|
| |||||||||
Information Technology 14.3% | ||||||||||
a | Black Knight Inc. | 355 | 18,442 | |||||||
Booz Allen Hamilton Holding Corp. | 770 | 38,215 | ||||||||
Broadridge Financial Solutions Inc. | 240 | 31,668 | ||||||||
CA Inc. | 1,585 | 69,978 | ||||||||
a | Cadence Design Systems Inc. | 1,365 | 61,862 | |||||||
CDW Corp. of Delaware | 735 | 65,356 | ||||||||
a | F5 Networks Inc. | 370 | 73,785 | |||||||
a | Fair Isaac Corp. | 60 | 13,713 |
28 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Mid Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Information Technology (continued) | ||||||||||
Genpact Ltd. | 610 | $ | 18,672 | |||||||
Jack Henry & Associates Inc. | 385 | 61,631 | ||||||||
Juniper Networks Inc. | 1,365 | 40,909 | ||||||||
KLA-Tencor Corp. | 625 | 63,569 | ||||||||
a | Manhattan Associates Inc. | 345 | 18,837 | |||||||
a,b | Match Group Inc. | 190 | 11,003 | |||||||
Monolithic Power Systems | 90 | 11,298 | ||||||||
National Instruments Corp. | 510 | 24,648 | ||||||||
NetApp Inc. | 1,035 | 88,896 | ||||||||
Paychex Inc. | 1,080 | 79,542 | ||||||||
Pegasystems Inc. | 75 | 4,695 | ||||||||
a | Red Hat Inc. | 435 | 59,282 | |||||||
a | Synopsys Inc. | 655 | 64,589 | |||||||
Ubiquiti Networks Inc. | 45 | 4,449 | ||||||||
a | VeriSign Inc. | 365 | 58,444 | |||||||
Western Union Co. | 2,200 | 41,932 | ||||||||
Xerox Corp. | 445 | 12,006 | ||||||||
Xilinx Inc. | 575 | 46,098 | ||||||||
|
| |||||||||
1,083,519 | ||||||||||
|
| |||||||||
Materials 2.0% | ||||||||||
Ardagh Group SA | 60 | 1,002 | ||||||||
Avery Dennison Corp. | 415 | 44,965 | ||||||||
a | Crown Holdings Inc. | 555 | 26,640 | |||||||
NewMarket Corp. | 30 | 12,165 | ||||||||
RPM International Inc. | 565 | 36,691 | ||||||||
Sealed Air Corp. | 335 | 13,450 | ||||||||
The Scotts Miracle-Gro Co., A | 195 | 15,353 | ||||||||
|
| |||||||||
150,266 | ||||||||||
|
| |||||||||
Real Estate 5.0% | ||||||||||
Alexandria Real Estate Equities Inc. | 410 | 51,574 | ||||||||
Apple Hospitality REIT Inc. | 970 | 16,965 | ||||||||
Coresite Realty Corp. | 105 | 11,670 | ||||||||
EPR Properties | 335 | 22,917 | ||||||||
Equity Lifestyle Properties Inc. | 175 | 16,879 | ||||||||
Essex Property Trust Inc. | 295 | 72,779 | ||||||||
Federal Realty Investment Trust | 160 | 20,235 | ||||||||
Highwoods Properties Inc. | 435 | 20,558 | ||||||||
Hospitality Properties Trust | 735 | 21,197 | ||||||||
Host Hotels & Resorts Inc. | 1,515 | 31,966 | ||||||||
Lamar Advertising Co., A | 405 | 31,509 | ||||||||
National Retail Properties Inc. | 780 | 34,960 | ||||||||
Retail Properties of America Inc., A | 450 | 5,486 | ||||||||
Senior Housing Properties Trust | 1,310 | 23,004 | ||||||||
|
| |||||||||
381,699 | ||||||||||
|
| |||||||||
Utilities 1.5% | ||||||||||
Consolidated Edison Inc. | 635 | 48,380 | ||||||||
Entergy Corp. | 775 | 62,876 | ||||||||
|
| |||||||||
111,256 | ||||||||||
|
| |||||||||
Total Investments before Short Term Investments | 7,579,136 | |||||||||
|
|
libertyshares.com | Semiannual Report | 29 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Mid Cap Equity ETF (continued)
Shares | Value | |||||||||
Short-Term Investments (Cost $6,075) 0.1% | ||||||||||
Investments from Cash Collateral Received for Loaned Securities 0.1% |
| |||||||||
Money Market Funds 0.1% | ||||||||||
c,d | Institutional Fiduciary Trust Money Market Portfolio, 1.69% | 6,075 | $ | 6,075 | ||||||
|
| |||||||||
Total Investments (Cost $6,902,014) 100.0% | 7,585,211 | |||||||||
Other Assets, less Liabilities 0.0%† | 3,460 | |||||||||
|
| |||||||||
Net Assets 100.0% | $ | 7,588,671 | ||||||||
|
|
†Rounds to less than 0.1% of net assets.
See Abbreviations on page 53.
aNon-income producing.
bA portion or all of the security is on loan at September 30, 2018. See Note 1(c).
cSee Note 3(c) regarding investments in affiliated management investment companies.
dThe rate shown is the annualized seven-day yield at period end.
30 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin LibertyQ U.S. Small Cap Equity ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) |
| |||||||
Net asset value, beginning of period | $ | 26.66 | $ | 25.36 | ||||
|
| |||||||
Income from investment operationsb: |
| |||||||
Net investment incomec | 0.21 | 0.33 | ||||||
Net realized and unrealized gains (losses) | 3.31 | 1.27 | ||||||
|
| |||||||
Total from investment operations | 3.52 | 1.60 | ||||||
|
| |||||||
Less distributions from net investment income | (0.14 | ) | (0.30 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 30.04 | $ | 26.66 | ||||
|
| |||||||
Total returnd | 13.22% | 6.34% | ||||||
Ratios to average net assetse |
| |||||||
Expenses before waiver and payments by affiliates | 0.35% | 1.15% | f | |||||
Expenses net of waiver and payments by affiliates | 0.35% | 0.35% | f | |||||
Net investment income | 1.42% | 1.40% | ||||||
Supplemental data |
| |||||||
Net assets, end of period (000’s) | $9,013 | $2,666 | ||||||
Portfolio turnover rateg | 18.02% | 23.99% |
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of 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.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 31 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin LibertyQ U.S. Small Cap Equity ETF
Shares | Value | |||||||||
Common Stocks 99.9% | ||||||||||
Communication Services 0.9% | ||||||||||
Cogent Communications Holdings Inc. | 594 | $ | 33,145 | |||||||
Spok Holdings Inc. | 276 | 4,251 | ||||||||
a | Vonage Holdings Corp. | 3,162 | 44,774 | |||||||
|
| |||||||||
82,170 | ||||||||||
|
| |||||||||
Consumer Discretionary 29.2% | ||||||||||
Dine Brands Global Inc. | 270 | 21,954 | ||||||||
a | 1-800-FLOWERS.Com Inc. | 462 | 5,452 | |||||||
Abercrombie & Fitch Co., A | 1,356 | 28,639 | ||||||||
Acushnet Holdings Corp. | 390 | 10,698 | ||||||||
a | Adtalem Global Education Inc. | 834 | 40,199 | |||||||
AMC Entertainment Holdings Inc., A | 438 | 8,979 | ||||||||
a | America’s Car-Mart Inc. | 96 | 7,507 | |||||||
American Eagle Outfitters Inc. | 2,892 | 71,808 | ||||||||
a | American Outdoor Brands Corp. | 744 | 11,554 | |||||||
a | American Public Education Inc. | 240 | 7,932 | |||||||
a | Asbury Automotive Group Inc. | 366 | 25,162 | |||||||
a | Ascena Retail Group Inc. | 2,586 | 11,818 | |||||||
a | At Home Group Inc. | 180 | 5,675 | |||||||
Barnes & Noble Inc. | 846 | 4,907 | ||||||||
Bassett Furniture Industries Inc. | 168 | 3,570 | ||||||||
Bed Bath & Beyond Inc. | 1,224 | 18,360 | ||||||||
a | Belmond Ltd., A | 1,092 | 19,929 | |||||||
b | Big 5 Sporting Goods Corp. | 384 | 1,958 | |||||||
Big Lots Inc. | 882 | 36,859 | ||||||||
BJ’s Restaurants Inc. | 336 | 24,259 | ||||||||
Bloomin’ Brands Inc. | 1,764 | 34,910 | ||||||||
Brinker International Inc. | 342 | 15,982 | ||||||||
b | Buckle Inc. | 546 | 12,585 | |||||||
Caleres Inc. | 750 | 26,895 | ||||||||
Callaway Golf Co. | 702 | 17,052 | ||||||||
a | Cambium Learning Group Inc. | 126 | 1,492 | |||||||
b | Camping World Holdings Inc., A | 462 | 9,850 | |||||||
a | Career Education Corp. | 948 | 14,154 | |||||||
Chico’s FAS Inc. | 2,274 | 19,716 | ||||||||
Churchill Downs Inc. | 126 | 34,990 | ||||||||
a | Chuy’s Holdings Inc. | 312 | 8,190 | |||||||
Citi Trends Inc. | 222 | 6,387 | ||||||||
Cooper Tire & Rubber Co. | 708 | 20,036 | ||||||||
a | Cooper-Standard Holding Inc. | 228 | 27,355 | |||||||
b | Cracker Barrel Old Country Store Inc. | 384 | 56,498 | |||||||
a | Crocs Inc. | 816 | 17,373 | |||||||
Dana Inc. | 1,476 | 27,557 | ||||||||
Dave & Buster’s Entertainment Inc. | 666 | 44,103 | ||||||||
a | Deckers Outdoor Corp. | 516 | 61,187 | |||||||
a | Del Frisco’s Restaurant Group Inc. | 318 | 2,639 | |||||||
a | Denny’s Corp. | 1,146 | 16,869 | |||||||
b | Dillard’s Inc., A | 174 | 13,283 | |||||||
a | Dorman Products Inc. | 426 | 32,768 | |||||||
DSW Inc., A | 1,134 | 38,420 | ||||||||
a | Duluth Holdings Inc. | 150 | 4,719 | |||||||
a | El Pollo Loco Holdings Inc. | 312 | 3,916 | |||||||
Entravision Communications Corp., A | 774 | 3,793 | ||||||||
Escalade Inc. | 156 | 2,005 | ||||||||
Ethan Allen Interiors Inc. | 474 | 9,836 | ||||||||
a | Express Inc. | 816 | 9,025 | |||||||
a | Fiesta Restaurant Group Inc. | 408 | 10,914 | |||||||
a | Five Below Inc. | 984 | 127,979 |
32 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Consumer Discretionary (continued) | ||||||||||
Flexsteel Industries Inc. | 120 | $ | 3,569 | |||||||
a | Francesca’s Holdings Corp. | 654 | 2,426 | |||||||
Gannett Co. Inc. | 1,968 | 19,700 | ||||||||
a | Genesco Inc. | 372 | 17,521 | |||||||
Group 1 Automotive Inc. | 294 | 19,081 | ||||||||
Guess? Inc. | 984 | 22,238 | ||||||||
Hamilton Beach Brands Holding Co., A | 72 | 1,580 | ||||||||
Haverty Furniture Cos. Inc. | 366 | 8,089 | ||||||||
a | Helen of Troy Ltd. | 192 | 25,133 | |||||||
a | Hibbett Sports Inc. | 330 | 6,204 | |||||||
Hooker Furniture Corp. | 162 | 5,476 | ||||||||
International Speedway Corp., A | 186 | 8,147 | ||||||||
a,b | iRobot Corp. | 366 | 40,231 | |||||||
a | J. Jill Inc. | 234 | 1,446 | |||||||
Jack in the Box Inc. | 462 | 38,729 | ||||||||
Johnson Outdoors Inc., A | 84 | 7,811 | ||||||||
a | Kirkland’s Inc. | 258 | 2,603 | |||||||
La-Z-Boy Inc. | 756 | 23,890 | ||||||||
a | Lands’ End Inc. | 78 | 1,369 | |||||||
LCI Industries | 360 | 29,808 | ||||||||
a | LGI Homes Inc. | 144 | 6,831 | |||||||
a | Liberty Latin America Ltd. | 888 | 18,319 | |||||||
a | Liberty Latin America Ltd., A | 342 | 7,127 | |||||||
Lifetime Brands Inc. | 198 | 2,158 | ||||||||
Lithia Motors Inc. | 174 | 14,209 | ||||||||
a | Malibu Boats Inc., A | 252 | 13,789 | |||||||
Marcus Corp. | 300 | 12,615 | ||||||||
Marine Products Corp. | 126 | 2,884 | ||||||||
Marriott Vacations Worldwide Corp. | 493 | 55,093 | ||||||||
a | MCBC Holdings Inc. | 222 | 7,965 | |||||||
Meredith Corp. | 642 | 32,774 | ||||||||
a | Monarch Casino & Resort Inc. | 114 | 5,181 | |||||||
Monro Inc. | 474 | 32,990 | ||||||||
Movado Group Inc. | 276 | 11,564 | ||||||||
National CineMedia Inc. | 978 | 10,357 | ||||||||
a | Nautilus Inc. | 462 | 6,445 | |||||||
New Media Investment Group Inc. | 1,122 | 17,604 | ||||||||
a | New York & Co. Inc. | 264 | 1,019 | |||||||
Nutrisystem Inc. | 426 | 15,783 | ||||||||
Office Depot Inc. | 7,776 | 24,961 | ||||||||
a | Ollie’s Bargain Outlet Holdings Inc. | 738 | 70,922 | |||||||
Oxford Industries Inc. | 312 | 28,142 | ||||||||
b | Papa John’s International Inc. | 348 | 17,845 | |||||||
PetMed Express Inc. | 372 | 12,280 | ||||||||
a | Potbelly Corp. | 342 | 4,207 | |||||||
Red Rock Resorts Inc., A | 522 | 13,911 | ||||||||
a | Regis Corp. | 408 | 8,335 | |||||||
a | Rent-A-Center Inc. | 696 | 10,008 | |||||||
Rocky Brands Inc. | 54 | 1,528 | ||||||||
Ruth’s Hospitality Group Inc. | 468 | 14,765 | ||||||||
a | Sally Beauty Holdings Inc. | 960 | 17,654 | |||||||
Scholastic Corp. | 498 | 23,252 | ||||||||
Shoe Carnival Inc. | 210 | 8,085 | ||||||||
a | Shutterfly Inc. | 246 | 16,209 | |||||||
Signet Jewelers Ltd. | 480 | 31,646 | ||||||||
Sinclair Broadcast Group Inc., A | 522 | 14,799 | ||||||||
a | Sleep Number Corp. | 642 | 23,613 |
libertyshares.com | Semiannual Report | 33 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Consumer Discretionary (continued) | ||||||||||
Sonic Automotive Inc. | 426 | $ | 8,243 | |||||||
a | Sportsman’s Warehouse Holdings Inc. | 636 | 3,721 | |||||||
Standard Motor Products Inc. | 342 | 16,833 | ||||||||
Steven Madden Ltd. | 930 | 49,197 | ||||||||
Strategic Education Inc. | 403 | 55,223 | ||||||||
Sturm Ruger & Co. Inc. | 288 | 19,886 | ||||||||
Superior Group of Cos. Inc. | 138 | 2,625 | ||||||||
Tailored Brands Inc. | 786 | 19,799 | ||||||||
Tenneco Inc. | 780 | 32,869 | ||||||||
Texas Roadhouse Inc., A | 1,332 | 92,294 | ||||||||
The Cato Corp., A | 402 | 8,450 | ||||||||
The Cheesecake Factory Inc. | 900 | 48,186 | ||||||||
The Children’s Place Inc. | 300 | 38,340 | ||||||||
a | The Container Store Group Inc. | 276 | 3,064 | |||||||
a | The Habit Restaurants Inc., A | 360 | 5,742 | |||||||
The New York Times Co., A | 2,064 | 47,782 | ||||||||
Tile Shop Holdings Inc. | 726 | 5,191 | ||||||||
Tilly’s Inc., A | 234 | 4,434 | ||||||||
a | Town Sports International Holdings Inc. | 120 | 1,038 | |||||||
Tupperware Brands Corp. | 468 | 15,655 | ||||||||
a | Vera Bradley Inc. | 354 | 5,402 | |||||||
Weyco Group Inc. | 114 | 4,011 | ||||||||
a | WideOpenWest Inc. | 294 | 3,296 | |||||||
Winmark Corp. | 36 | 5,976 | ||||||||
Wolverine World Wide Inc. | 1,614 | 63,027 | ||||||||
World Wrestling Entertainment Inc. | 588 | 56,877 | ||||||||
a,b | Zoe’s Kitchen Inc. | 294 | 3,740 | |||||||
a | Zumiez Inc. | 288 | 7,589 | |||||||
|
| |||||||||
2,630,107 | ||||||||||
|
| |||||||||
Consumer Staples 5.9% | ||||||||||
b | B&G Foods Inc., A | 894 | 24,540 | |||||||
a | Boston Beer Inc., A | 156 | 44,850 | |||||||
a | Central Garden & Pet Co. | 138 | 4,974 | |||||||
a | Central Garden & Pet Co., A | 462 | 15,311 | |||||||
Coca-Cola Bottling Co. Consolidated | 72 | 13,124 | ||||||||
Dean Foods Co. | 1,572 | 11,161 | ||||||||
a | Farmer Brothers Co. | 144 | 3,802 | |||||||
Ingles Markets Inc., A | 234 | 8,015 | ||||||||
Inter Parfums Inc. | 264 | 17,015 | ||||||||
J & J Snack Foods Corp. | 270 | 40,740 | ||||||||
John B. Sanfilippo & Son Inc. | 138 | 9,850 | ||||||||
Lancaster Colony Corp. | 282 | 42,077 | ||||||||
Medifast Inc. | 198 | 43,867 | ||||||||
a | National Beverage Corp. | 216 | 25,190 | |||||||
a | Natural Grocers by Vitamin Cottage Inc. | 138 | 2,331 | |||||||
Natural Health Trends Corp. | 72 | 1,676 | ||||||||
a | Natures Sunshine Products Inc. | 150 | 1,313 | |||||||
a | Performance Food Group Co. | 1,428 | 47,552 | |||||||
PriceSmart Inc. | 390 | 31,570 | ||||||||
Sanderson Farms Inc. | 300 | 31,011 | ||||||||
a | Smart & Final Stores Inc. | 300 | 1,710 | |||||||
a | The Chefs’ Warehouse Inc. | 246 | 8,942 | |||||||
Turning Point Brands Inc. | 60 | 2,488 | ||||||||
Universal Corp. | 366 | 23,790 | ||||||||
Vector Group Ltd. | 1,562 | 21,530 | ||||||||
Village Super Market Inc., A | 168 | 4,570 | ||||||||
WD-40 Co. | 234 | 40,271 |
34 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Consumer Staples (continued) | ||||||||||
Weis Markets Inc. | 180 | $ | 7,812 | |||||||
|
| |||||||||
531,082 | ||||||||||
|
| |||||||||
Energy 0.3% | ||||||||||
a | CONSOL Mining Corp. | 228 | 9,305 | |||||||
a | FTS International Inc. | 162 | 1,910 | |||||||
Liberty Oilfield Services Inc., A | 108 | 2,329 | ||||||||
a | Renewable Energy Group Inc. | 282 | 8,122 | |||||||
a | Rosehill Resources Inc. | 6 | 37 | |||||||
a | SilverBow Resources Inc. | 54 | 1,440 | |||||||
|
| |||||||||
23,143 | ||||||||||
|
| |||||||||
Financials 8.1% | ||||||||||
1st Source Corp. | 228 | 11,997 | ||||||||
Ames National Corp. | 132 | 3,597 | ||||||||
AmTrust Financial Services Inc. | 1,242 | 18,034 | ||||||||
Apollo Commercial Finance Inc. | 1,566 | 29,550 | ||||||||
Arbor Realty Trust Inc. | 468 | 5,373 | ||||||||
Auburn National Bancorp Inc. | 18 | 690 | ||||||||
BancFirst Corp. | 264 | 15,827 | ||||||||
Bank of Marin Bancorp | 54 | 4,531 | ||||||||
Capitol Federal Financial Inc. | 1,548 | 19,721 | ||||||||
Capstead Mortgage Corp. | 1,368 | 10,821 | ||||||||
Citizens & Northern Corp. | 162 | 4,236 | ||||||||
a,b | Citizens Inc., A | 744 | 6,250 | |||||||
Cohen & Steers Inc. | 324 | 13,158 | ||||||||
b | Colony Credit Real Estate Inc., A | 690 | 15,173 | |||||||
Community Bank System Inc. | 780 | 47,635 | ||||||||
Crawford & Co., B | 186 | 1,713 | ||||||||
Diamond Hill Investment Group Inc. | 42 | 6,946 | ||||||||
Donegal Group Inc. | 114 | 1,620 | ||||||||
Dynex Capital Inc. | 768 | 4,900 | ||||||||
EMC Insurance Group Inc. | 120 | 2,966 | ||||||||
a | Essent Group Ltd. | 1,470 | 65,047 | |||||||
Exantas Capital Corp. | 240 | 2,635 | ||||||||
FBL Financial Group Inc., A | 144 | 10,836 | ||||||||
Federated Investors Inc., B | 894 | 21,563 | ||||||||
Financial Institutions Inc. | 264 | 8,290 | ||||||||
First Bancorp Inc. | 138 | 3,998 | ||||||||
First Citizens Bancorp | 144 | 3,469 | ||||||||
First Commonwealth Financial Corp. | 1,602 | 25,856 | ||||||||
First Financial Northwest Inc. | 114 | 1,889 | ||||||||
FirstCash Inc. | 330 | 27,060 | ||||||||
Greene County Bancorp Inc. | 36 | 1,156 | ||||||||
Heritage Commerce Corp. | 474 | 7,072 | ||||||||
Heritage Financial Corp. | 438 | 15,396 | ||||||||
Horace Mann Educators Corp. | 720 | 32,328 | ||||||||
Invesco Mortgage Capital | 1,662 | 26,293 | ||||||||
James River Group Holdings Ltd. | 222 | 9,462 | ||||||||
Kingstone Cos. Inc. | 120 | 2,280 | ||||||||
LCNB Corp. | 126 | 2,350 | ||||||||
Macatawa Bancorp | 360 | 4,216 | ||||||||
Maiden Holdings Ltd. | 1,146 | 3,266 | ||||||||
MBT Financial Corp. | 240 | 2,712 | ||||||||
Middlefield Banc Corp. | 24 | 1,130 | ||||||||
Midwestone Financial Group Inc. | 150 | 4,996 | ||||||||
National Western Life Group Inc., A | 42 | 13,406 | ||||||||
Nelnet Inc., A | 294 | 16,808 |
libertyshares.com | Semiannual Report | 35 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Financials (continued) | ||||||||||
Northfield Bancorp Inc. | 690 | $ | 10,985 | |||||||
Northwest Bancshares Inc. | 1,458 | 25,252 | ||||||||
Norwood Financial Corp. | 42 | 1,645 | ||||||||
Ohio Valley Banc Corp. | 60 | 2,199 | ||||||||
a | On Deck Capital Inc. | 396 | 2,998 | |||||||
Penns Woods Bancorp Inc. | 66 | 2,868 | ||||||||
People’s Utah Bancorp | 120 | 4,074 | ||||||||
Premier Financial Bancorp Inc. | 204 | 3,772 | ||||||||
Protective Insurance Corp., B | 144 | 3,305 | ||||||||
Provident Financial Services Inc. | 1,080 | 26,514 | ||||||||
Pzena Investment Management Inc., A | 234 | 2,232 | ||||||||
a | Regional Management Corp. | 192 | 5,535 | |||||||
Shore Bancshares Inc. | 168 | 2,994 | ||||||||
Silvercrest Asset Management Group Inc., A | 126 | 1,745 | ||||||||
Stewart Information Services Corp. | 174 | 7,832 | ||||||||
Territorial Bancorp Inc. | 126 | 3,723 | ||||||||
Tompkins Financial Corp. | 180 | 14,614 | ||||||||
TrustCo Bank Corp. NY | 1,404 | 11,934 | ||||||||
United Fire Group Inc. | 300 | 15,231 | ||||||||
Universal Insurance Holdings Inc. | 456 | 22,139 | ||||||||
Value Line Inc. | 18 | 448 | ||||||||
West Bancorp | 120 | 2,820 | ||||||||
Westwood Holdings Group Inc. | 138 | 7,140 | ||||||||
a | World Acceptance Corp. | 96 | 10,979 | |||||||
|
| |||||||||
731,230 | ||||||||||
|
| |||||||||
Health Care 10.9% | ||||||||||
a | AAC Holdings Inc. | 204 | 1,557 | |||||||
a | Addus Homecare Corp. | 96 | 6,734 | |||||||
a | Amedisys Inc. | 510 | 63,730 | |||||||
a | AMN Healthcare Services Inc. | 702 | 38,399 | |||||||
a | AngioDynamics Inc. | 270 | 5,870 | |||||||
a | AtriCure Inc. | 414 | 14,502 | |||||||
Atrion Corp. | 24 | 16,675 | ||||||||
a | Biospecifics Technologies Corp. | 78 | 4,562 | |||||||
a | Cardiovascular Systems Inc. | 444 | 17,378 | |||||||
a | Community Health Systems Inc. | 1,266 | 4,380 | |||||||
Computer Programs and Systems Inc. | 174 | 4,672 | ||||||||
a | Concert Pharmaceuticals Inc. | 162 | 2,404 | |||||||
CONMED Corp. | 408 | 32,322 | ||||||||
a | Corcept Therapeutics Inc. | 1,710 | 23,974 | |||||||
a | CorVel Corp. | 126 | 7,592 | |||||||
a | Cross Country Healthcare Inc. | 258 | 2,252 | |||||||
a | Cutera Inc. | 228 | 7,421 | |||||||
a | Eagle Pharmaceuticals Inc. | 102 | 7,072 | |||||||
a | Enanta Pharmaceuticals Inc. | 150 | 12,819 | |||||||
a | Fonar Corp. | 78 | 1,942 | |||||||
a | Genomic Health Inc. | 360 | 25,279 | |||||||
a | Globus Medical Inc., A | 1,272 | 72,199 | |||||||
a | Haemonetics Corp. | 396 | 45,374 | |||||||
a | Harvard Bioscience Inc. | 264 | 1,386 | |||||||
a | Heska Corp. | 90 | 10,198 | |||||||
a | Inogen Inc. | 222 | 54,195 | |||||||
a | iRadimed Corp. | 24 | 892 | |||||||
LeMaitre Vascular Inc. | 246 | 9,530 | ||||||||
a | LHC Group Inc. | 420 | 43,256 | |||||||
Luminex Corp. | 582 | 17,640 | ||||||||
a | Medidata Solutions Inc. | 426 | 31,230 |
36 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Health Care (continued) | ||||||||||
Meridian Bioscience Inc. | 744 | $ | 11,086 | |||||||
a | Merit Medical Systems Inc. | 636 | 39,082 | |||||||
a,b | MiMedx Group Inc. | 1,566 | 9,678 | |||||||
a | Myriad Genetics Inc. | 996 | 45,816 | |||||||
National Healthcare Corp. | 186 | 14,019 | ||||||||
National Research Corp., A | 168 | 6,485 | ||||||||
a | NextGen Healthcare Inc. | 774 | 15,542 | |||||||
a | NuVasive Inc. | 588 | 41,736 | |||||||
a | Orthofix International NV | 294 | 16,996 | |||||||
Owens & Minor Inc. | 1,002 | 16,553 | ||||||||
Patterson Cos. Inc. | 672 | 16,430 | ||||||||
Phibro Animal Health Corp. | 300 | 12,870 | ||||||||
a | Prestige Consumer Healthcare Inc. | 648 | 24,553 | |||||||
Simulations Plus Inc. | 156 | 3,151 | ||||||||
a | STAAR Surgical Co. | 480 | 23,040 | |||||||
a | Supernus Pharmaceuticals Inc. | 774 | 38,971 | |||||||
a | Tactile Systems Technology Inc. | 192 | 13,642 | |||||||
a | Triple-S Management Corp., B | 162 | 3,060 | |||||||
U.S. Physical Therapy Inc. | 168 | 19,925 | ||||||||
Utah Medical Products Inc. | 60 | 5,652 | ||||||||
a | Vocera Communications Inc. | 390 | 14,266 | |||||||
a | XOMA Corp. | 48 | 843 | |||||||
|
| |||||||||
980,832 | ||||||||||
|
| |||||||||
Industrials 16.8% | ||||||||||
ABM Industries Inc. | 978 | 31,540 | ||||||||
Aircastle Ltd. | 708 | 15,512 | ||||||||
Alamo Group Inc. | 132 | 12,093 | ||||||||
Allegiant Travel Co. | 204 | 25,867 | ||||||||
Allied Motion Technologies Inc. | 60 | 3,266 | ||||||||
b | Altra Industrial Motion Corp. | 420 | 17,346 | |||||||
Applied Industrial Technologies Inc. | 720 | 56,340 | ||||||||
a | Axon Enterprise Inc. | 384 | 26,277 | |||||||
BG Staffing Inc. | 108 | 2,938 | ||||||||
Brady Corp., A | 744 | 32,550 | ||||||||
Briggs & Stratton Corp. | 540 | 10,384 | ||||||||
CompX International Inc. | 12 | 163 | ||||||||
a | Covenant Transportation Group Inc., A | 172 | 4,998 | |||||||
Deluxe Corp. | 924 | 52,613 | ||||||||
Douglas Dynamics Inc. | 300 | 13,170 | ||||||||
Ennis Inc. | 390 | 7,976 | ||||||||
EnPro Industries Inc. | 294 | 21,441 | ||||||||
Exponent Inc. | 780 | 41,808 | ||||||||
Forward Air Corp. | 528 | 37,858 | ||||||||
a | Foundation Building Materials Inc. | 168 | 2,095 | |||||||
a | Franklin Covey Co. | 156 | 3,689 | |||||||
a | General Finance Corp. | 78 | 1,244 | |||||||
Global Brass & Copper Holdings Inc. | 276 | 10,184 | ||||||||
Hawaiian Holdings Inc. | 732 | 29,353 | ||||||||
Healthcare Services Group Inc. | 996 | 40,458 | ||||||||
Heidrick & Struggles International Inc. | 336 | 11,374 | ||||||||
a | Heritage-Crystal Clean Inc. | 192 | 4,099 | |||||||
Herman Miller Inc. | 978 | 37,555 | ||||||||
Hillenbrand Inc. | 966 | 50,522 | ||||||||
HNI Corp. | 708 | 31,322 | ||||||||
Hyster-Yale Materials Handling Inc. | 144 | 8,860 | ||||||||
ICF International Inc. | 324 | 24,446 | ||||||||
Insperity Inc. | 654 | 77,139 |
libertyshares.com | Semiannual Report | 37 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Industrials (continued) | ||||||||||
Interface Inc. | 876 | $ | 20,455 | |||||||
Kadant Inc. | 180 | 19,413 | ||||||||
Kaman Corp., A | 438 | 29,250 | ||||||||
Kelly Services Inc., A | 510 | 12,255 | ||||||||
Kforce Inc. | 456 | 17,146 | ||||||||
Kimball International Inc., B | 552 | 9,246 | ||||||||
Knoll Inc. | 744 | 17,447 | ||||||||
Korn/Ferry International | 978 | 48,157 | ||||||||
a | Lawson Products Inc. | 108 | 3,661 | |||||||
Lindsay Corp. | 156 | 15,637 | ||||||||
LSC Communications Inc. | 474 | 5,242 | ||||||||
McGrath RentCorp | 378 | 20,590 | ||||||||
Miller Industries Inc. | 90 | 2,421 | ||||||||
Mobile Mini Inc. | 738 | 32,361 | ||||||||
Moog Inc., A | 414 | 35,592 | ||||||||
MSA Safety Inc. | 474 | 50,453 | ||||||||
National Presto Industries Inc. | 72 | 9,335 | ||||||||
a | Nexeo Solutions Inc. | 264 | 3,234 | |||||||
Omega Flex Inc. | 48 | 3,416 | ||||||||
a | P.A.M. Transportation Services Inc. | 18 | 1,172 | |||||||
Pitney Bowes Inc. | 1,356 | 9,600 | ||||||||
Preformed Line Products Co. | 42 | 2,952 | ||||||||
Quad/Graphics Inc. | 432 | 9,003 | ||||||||
Resources Connection Inc. | 576 | 9,562 | ||||||||
Rush Enterprises Inc., B | 54 | 2,154 | ||||||||
a | SAIA Inc. | 444 | 33,944 | |||||||
Simpson Manufacturing Co. Inc. | 642 | 46,519 | ||||||||
Standex International Corp. | 186 | 19,390 | ||||||||
Steelcase Inc., A | 1,476 | 27,306 | ||||||||
Systemax Inc. | 96 | 3,162 | ||||||||
Tennant Co. | 294 | 22,329 | ||||||||
The Brink’s Co. | 678 | 47,290 | ||||||||
a | Trex Co. Inc. | 852 | 65,587 | |||||||
UniFirst Corp. | 228 | 39,592 | ||||||||
Universal Logistics Holdings Inc. | 126 | 4,637 | ||||||||
a | USA Truck Inc. | 66 | 1,335 | |||||||
a | Vicor Corp. | 132 | 6,072 | |||||||
Watts Water Technologies Inc., A | 378 | 31,374 | ||||||||
Werner Enterprises Inc. | 792 | 27,997 | ||||||||
a | Willdan Group Inc. | 96 | 3,260 | |||||||
|
| |||||||||
1,516,028 | ||||||||||
|
| |||||||||
Information Technology 15.8% | ||||||||||
ADTRAN Inc. | 516 | 9,107 | ||||||||
a | Advanced Energy Industries Inc. | 450 | 23,243 | |||||||
a | Alarm.com Holdings Inc. | 222 | 12,743 | |||||||
a | Altair Engineering Inc. | 222 | 9,646 | |||||||
American Software Inc., A | 432 | 5,240 | ||||||||
a | Avid Technology Inc. | 480 | 2,846 | |||||||
Badger Meter Inc. | 390 | 20,651 | ||||||||
Blackbaud Inc. | 588 | 59,670 | ||||||||
Cabot Microelectronics Corp. | 354 | 36,522 | ||||||||
a | Carbonite Inc. | 372 | 13,262 | |||||||
a | Care.com Inc. | 216 | 4,776 | |||||||
a | CarGurus Inc. | 366 | 20,383 | |||||||
a | Casa Systems Inc. | 54 | 797 | |||||||
a | CEVA Inc. | 276 | 7,935 | |||||||
a | ChannelAdvisor Corp. | 186 | 2,316 |
38 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Information Technology (continued) | ||||||||||
a | Ciena Corp. | 1,104 | $ | 34,489 | ||||||
a | Cimpress NV | 360 | 49,180 | |||||||
a | Cirrus Logic Inc. | 978 | 37,751 | |||||||
a | CommVault Systems Inc. | 696 | 48,720 | |||||||
a | Control4 Corp. | 354 | 12,153 | |||||||
Convergys Corp. | 1,464 | 34,755 | ||||||||
CSG Systems International Inc. | 558 | 22,398 | ||||||||
Daktronics Inc. | 510 | 3,998 | ||||||||
a | eGain Corp. | 132 | 1,069 | |||||||
a | Electro Scientific Industries Inc. | 234 | 4,083 | |||||||
a | ePlus Inc. | 192 | 17,798 | |||||||
a | Etsy Inc. | 960 | 49,325 | |||||||
EVERTEC Inc. | 882 | 21,256 | ||||||||
a | Five9 Inc. | 468 | 20,447 | |||||||
Forrester Research Inc. | 180 | 8,262 | ||||||||
Hackett Group Inc. | 384 | 7,738 | ||||||||
a | Immersion Corp. | 306 | 3,234 | |||||||
a | Imperva Inc. | 456 | 21,181 | |||||||
a | Information Services Group Inc. | 246 | 1,176 | |||||||
a | Insight Enterprises Inc. | 612 | 33,103 | |||||||
InterDigital Inc. | 588 | 47,040 | ||||||||
a | Iteris Inc. | 300 | 1,614 | |||||||
J2 Global Inc. | 714 | 59,155 | ||||||||
ManTech International Corp., A | 354 | 22,408 | ||||||||
a | MicroStrategy Inc. | 132 | 18,562 | |||||||
a | Mitek Systems Inc. | 522 | 3,680 | |||||||
Monotype Imaging Holdings Inc. | 702 | 14,180 | ||||||||
a | Napco Security Technologies Inc. | 84 | 1,256 | |||||||
a | New Relic Inc. | 384 | 36,184 | |||||||
NIC Inc. | 1,026 | 15,185 | ||||||||
a | Novanta Inc. | 360 | 24,624 | |||||||
NVE Corp. | 72 | 7,623 | ||||||||
a | PAR Technology Corp. | 84 | 1,866 | |||||||
PC Connection Inc. | 186 | 7,234 | ||||||||
Plantronics Inc. | 540 | 32,562 | ||||||||
QAD Inc., A | 150 | 8,498 | ||||||||
a | Qualys Inc. | 486 | 43,303 | |||||||
Reis Inc. | 72 | 1,656 | ||||||||
a | Rosetta Stone Inc. | 222 | 4,416 | |||||||
a | Rudolph Technologies Inc. | 444 | 10,856 | |||||||
a | ScanSource Inc. | 408 | 16,279 | |||||||
Science Applications International Corp. | 546 | 44,008 | ||||||||
Shutterstock Inc. | 138 | 7,532 | ||||||||
a | Silicon Laboratories Inc. | 630 | 57,834 | |||||||
a | SMART Global Holdings Inc. | 72 | 2,069 | |||||||
a | SPS Commerce Inc. | 126 | 12,504 | |||||||
a | Stamps.com Inc. | 264 | 59,717 | |||||||
a | Syntel Inc. | 486 | 19,916 | |||||||
Travelport Worldwide Ltd. | 1,686 | 28,443 | ||||||||
a | Travelzoo | 42 | 498 | |||||||
a | Varonis Systems Inc. | 330 | 24,172 | |||||||
Vishay Intertechnology Inc. | 1,680 | 34,188 | ||||||||
a | Vishay Precision Group Inc. | 114 | 4,264 | |||||||
a | Workiva Inc. | 246 | 9,717 | |||||||
a | XO Group Inc. | 390 | 13,447 | |||||||
a | Yelp Inc. | 1,152 | 56,678 |
libertyshares.com | Semiannual Report | 39 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Information Technology (continued) | ||||||||||
a | Zix Corp. | 948 | $ | 5,261 | ||||||
|
| |||||||||
1,419,682 | ||||||||||
|
| |||||||||
Materials 1.3% | ||||||||||
Advanced Emissions Solutions Inc. | 144 | 1,722 | ||||||||
Greif Inc., A | 372 | 19,962 | ||||||||
Greif Inc., B | 84 | 4,843 | ||||||||
Innophos Holdings Inc. | 282 | 12,521 | ||||||||
Myers Industries Inc. | 384 | 8,928 | ||||||||
Schweitzer-Mauduit International Inc. | 450 | 17,239 | ||||||||
Sensient Technologies Corp. | 618 | 47,283 | ||||||||
Valhi Inc. | 186 | 424 | ||||||||
Warrior Met Coal Inc. | 282 | 7,625 | ||||||||
|
| |||||||||
120,547 | ||||||||||
|
| |||||||||
Real Estate 4.8% | ||||||||||
Agree Realty Corp. | 252 | 13,386 | ||||||||
a,b | Altisource Portfolio Solutions SA | 144 | 4,641 | |||||||
Cedar Realty Trust Inc. | 924 | 4,306 | ||||||||
Chesapeake Lodging Trust | 876 | 28,093 | ||||||||
CoreCivic Inc. | 870 | 21,167 | ||||||||
First Industrial Realty Trust Inc. | 1,248 | 39,187 | ||||||||
Franklin Street Properties Corp. | 1,800 | 14,382 | ||||||||
Hersha Hospitality Trust | 264 | 5,985 | ||||||||
LaSalle Hotel Properties | 1,764 | 61,017 | ||||||||
Lexington Realty Trust | 3,366 | 27,938 | ||||||||
LTC Properties Inc. | 570 | 25,143 | ||||||||
Monmouth Real Estate Investment Corp., A | 810 | 13,543 | ||||||||
National Health Investors Inc. | 330 | 24,945 | ||||||||
One Liberty Properties Inc. | 222 | 6,167 | ||||||||
PotlatchDeltic Corp. | 456 | 18,673 | ||||||||
Preferred Apartment Communities Inc., A | 654 | 11,497 | ||||||||
PS Business Parks Inc. | 336 | 42,702 | ||||||||
Ramco-Gershenson Properties Trust | 1,326 | 18,034 | ||||||||
RE/MAX Holdings Inc., A | 312 | 13,837 | ||||||||
Select Income REIT | 924 | 20,273 | ||||||||
Sutherland Asset Management Corp. | 156 | 2,597 | ||||||||
The RMR Group Inc., A | 66 | 6,125 | ||||||||
Urstadt Biddle Properties, A | 420 | 8,942 | ||||||||
Whitestone REIT | 282 | 3,914 | ||||||||
|
| |||||||||
436,494 | ||||||||||
|
| |||||||||
Utilities 5.9% | ||||||||||
ALLETE Inc. | 690 | 51,757 | ||||||||
American States Water Co. | 600 | 36,684 | ||||||||
Artesian Resources Corp., A | 102 | 3,752 | ||||||||
Avista Corp. | 984 | 49,751 | ||||||||
Black Hills Corp. | 402 | 23,352 | ||||||||
California Water Service Group | 708 | 30,373 | ||||||||
Clearway Energy Inc., A | 474 | 9,025 | ||||||||
Clearway Energy Inc., C | 492 | 9,471 | ||||||||
El Paso Electric Co. | 618 | 35,350 | ||||||||
Global Water Resources Inc. | 72 | 762 | ||||||||
IDACORP Inc. | 642 | 63,706 | ||||||||
MGE Energy Inc. | 486 | 31,031 | ||||||||
New Jersey Resources Corp. | 1,200 | 55,320 | ||||||||
NorthWestern Corp. | 366 | 21,470 | ||||||||
PNM Resources Inc. | 630 | 24,853 |
40 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin LibertyQ U.S. Small Cap Equity ETF (continued)
Shares | Value | |||||||||
Common Stocks (continued) | ||||||||||
Utilities (continued) | ||||||||||
SJW Group | 216 | $ | 13,208 | |||||||
Southwest Gas Holdings Inc. | 696 | 55,005 | ||||||||
Spark Energy Inc., A | 204 | 1,683 | ||||||||
Unitil Corp. | 216 | 10,994 | ||||||||
|
| |||||||||
527,547 | ||||||||||
|
| |||||||||
Total Investments before Short Term Investments | 8,998,862 | |||||||||
|
| |||||||||
Short-Term Investments (Cost $145,180) 1.6% | ||||||||||
Investments from Cash Collateral Received for Loaned Securities 1.6% | ||||||||||
Money Market Funds 1.6% | ||||||||||
c,d | Institutional Fiduciary Trust Money Market Portfolio, 1.69% | 145,180 | 145,180 | |||||||
|
| |||||||||
Total Investments (Cost $8,477,677) 101.5% | 9,144,042 | |||||||||
Other Assets, less Liabilities (1.5)% | (131,117 | ) | ||||||||
�� |
|
| ||||||||
Net Assets 100.0% | $ | 9,012,925 | ||||||||
|
|
See Abbreviations on page 53
aNon-income producing.
bA portion or all of the security is on loan at September 30, 2018. See Note 1(c).
cSee Note 3(c) regarding investments in affiliated management investment companies.
dThe rate shown is the annualized seven-day yield at period end.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 41 |
FRANKLIN TEMPLETON ETF TRUST
Statements of Assets and Liabilities
September 30, 2018 (unaudited)
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Assets: |
| |||||||||||
Investments in securities: |
| |||||||||||
Cost – Unaffiliated issuers | $ | 363,942,560 | $ | 6,895,939 | $ | 8,332,497 | ||||||
Cost – Non-controlled affiliates (Note 3c) | 153,935 | 6,075 | 145,180 | |||||||||
|
| |||||||||||
Value – Unaffiliated issuers+ | $ | 384,828,008 | $ | 7,579,136 | $ | 8,998,862 | ||||||
Value – Non-controlled affiliates (Note 3c) | 153,935 | 6,075 | 145,180 | |||||||||
Cash | 373,861 | 3,984 | 4,824 | |||||||||
Receivables: |
| |||||||||||
Dividends | 326,469 | 7,429 | 11,832 | |||||||||
Deposits with brokers for: | ||||||||||||
Futures contracts | 18,000 | — | — | |||||||||
|
| |||||||||||
Total assets | 385,700,273 | 7,596,624 | 9,160,698 | |||||||||
|
| |||||||||||
Liabilities: |
| |||||||||||
Payables: |
| |||||||||||
Management fees | 78,934 | 1,878 | 2,593 | |||||||||
Variation margin on futures contracts | 122 | — | — | |||||||||
Payable upon return of securities loaned | 153,935 | 6,075 | 145,180 | |||||||||
|
| |||||||||||
Total liabilities | 232,991 | 7,953 | 147,773 | |||||||||
|
| |||||||||||
Net assets, at value | $ | 385,467,282 | $ | 7,588,671 | $ | 9,012,925 | ||||||
|
| |||||||||||
Net assets consist of: |
| |||||||||||
Paid-in capital | $ | 359,818,173 | $ | 6,725,873 | $ | 8,233,972 | ||||||
Total distributable earnings (loss) | 25,649,109 | 862,798 | 778,953 | |||||||||
|
| |||||||||||
Net assets, at value | $ | 385,467,282 | $ | 7,588,671 | $ | 9,012,925 | ||||||
|
| |||||||||||
Shares outstanding | 12,300,000 | 250,000 | 300,000 | |||||||||
|
| |||||||||||
Net asset value per share | $ | 31.34 | $ | 30.35 | $ | 30.04 | ||||||
|
|
+Includes securities loaned | 150,548 | 5,938 | 141,866 | |||||||||
|
|
42 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the period ended September 30, 2018 (unaudited)
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Investment income: |
| |||||||||||
Dividends: |
| |||||||||||
Unaffiliated issuers | $ | 2,149,474 | $ | 62,264 | $ | 58,814 | ||||||
Income from securities loaned (net of fees and rebates) | 704 | 23 | 1,548 | |||||||||
|
| |||||||||||
Total investment income | 2,150,178 | 62,287 | 60,362 | |||||||||
|
| |||||||||||
Expenses: |
| |||||||||||
Management fees (Note 3a) | 230,365 | 9,662 | 11,924 | |||||||||
|
| |||||||||||
Total expenses | 230,365 | 9,662 | 11,924 | |||||||||
Expenses waived/paid by affiliates (Note 3c) | (258 | ) | (10 | ) | (97 | ) | ||||||
|
| |||||||||||
Net expenses | 230,107 | 9,652 | 11,827 | |||||||||
|
| |||||||||||
Net investment income | 1,920,071 | 52,635 | 48,535 | |||||||||
|
| |||||||||||
Realized and unrealized gains (losses): |
| |||||||||||
Net realized gain (loss) from: |
| |||||||||||
Investments: |
| |||||||||||
Unaffiliated issuers | (383,757 | ) | (19,822 | ) | (51,636 | ) | ||||||
In-kind redemptions | 4,681,108 | 202,792 | 165,989 | |||||||||
Futures contracts | 18,851 | — | — | |||||||||
|
| |||||||||||
Net realized gain (loss) | 4,316,202 | 182,970 | 114,353 | |||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) on: |
| |||||||||||
Investments: |
| |||||||||||
Unaffiliated issuers | 11,780,221 | 503,486 | 540,725 | |||||||||
Futures contracts | 1,528 | — | — | |||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) | 11,781,749 | 503,486 | 540,725 | |||||||||
|
| |||||||||||
Net realized and unrealized gain (loss) | 16,097,951 | 686,456 | 655,078 | |||||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 18,018,022 | $ | 739,091 | $ | 703,613 | ||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 43 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | |||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||||||||
Increase (decrease) in net assets: |
| |||||||||||||||
Operations: |
| |||||||||||||||
Net investment income | $ | 1,920,071 | $ | 1,994,532 | $ | 52,635 | $ | 56,207 | ||||||||
Net realized gain (loss) | 4,316,202 | 2,689,148 | 182,970 | 110,228 | ||||||||||||
Net change in unrealized appreciation (depreciation) | 11,781,749 | 9,105,227 | 503,486 | 179,711 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | 18,018,022 | 13,788,907 | 739,091 | 346,146 | ||||||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1e) | (1,614,961 | ) | (1,783,204 | ) | (46,272 | ) | (51,110 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 260,738,643 | 96,319,875 | 4,125,891 | 2,474,925 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 277,141,704 | 108,325,578 | 4,818,710 | 2,769,961 | ||||||||||||
Net assets: |
| |||||||||||||||
Beginning of period | 108,325,578 | — | 2,769,961 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1e) | $ | 385,467,282 | $ | 108,325,578 | $ | 7,588,671 | $ | 2,769,961 | ||||||||
|
|
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
44 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||
Increase (decrease) in net assets: |
| |||||||
Operations: |
| |||||||
Net investment income | $ | 48,535 | $ | 42,157 | ||||
Net realized gain (loss) | 114,353 | 31,351 | ||||||
Net change in unrealized appreciation (depreciation) | 540,725 | 125,640 | ||||||
|
| |||||||
Net increase (decrease) in net assets resulting from operations | 703,613 | 199,148 | ||||||
|
| |||||||
Distributions to shareholders (Note 1e) | (41,217 | ) | (36,568 | ) | ||||
|
| |||||||
Capital share transactions: (Note 2) | 5,684,336 | 2,503,613 | ||||||
|
| |||||||
Net increase (decrease) in net assets | 6,346,732 | 2,666,193 | ||||||
Net assets: |
| |||||||
Beginning of period | 2,666,193 | — | ||||||
|
| |||||||
End of period (Note 1e) | $ | 9,012,925 | $ | 2,666,193 | ||||
|
|
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 45 |
FRANKLIN TEMPLETON ETF TRUST
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of thirty-five separate funds, three of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Each of the Funds are an exchange traded fund (ETF) and seek to provide the investment results that closely correspond, before fees and expenses, to the performance of each Fund’s corresponding underlying index .
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.
Certain derivative financial instruments trade in the OTC market. The Funds’ pricing services use various techniques including industry standard option pricing models and
proprietary discounted cash flow models to determine the fair value of those instruments. The Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
Investments in open-end mutual funds are valued at the closing NAV.
The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
b. Derivative Financial Instruments
Certain or all Funds invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.
46 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. Certain or all Funds attempt to reduce their exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Funds include failure of the Fund to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the nondefaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Fund of any net liability owed to that counterparty under the ISDA agreement.
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty within a few business days. Collateral pledged and/or received by the Fund, if any, is held in segregated accounts with the Fund’s custodian/ counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Funds’ investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.
Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to equity price risk. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statements of Assets and Liabilities.
See Note 6 regarding other derivative information.
c. Securities Lending
Certain or all Funds participate in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statements of Operations. The Fund bears the market risk with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.
d. Income Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain
libertyshares.com | Semiannual Report | 47 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
d. Income Taxes (continued)
tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of September 30, 2018, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.
e. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.*
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense. These expenses are paid by the Funds or by Franklin Advisers, Inc., as applicable, according to the terms of the unified management fee agreement.
f. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
g. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
*Effective with the current reporting period, it is no longer required to present certain line items on the Statements of Changes in Net Assets. Such disclosure changes are included in the Statements of Changes in Net Assets, therefore prior period amounts are presented below.
For the year ended March 31, 2018, distributions to shareholders were as follows:
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Distributions from net investment income: | $ | (1,783,204 | ) | $ | (51,110 | ) | $ | (36,568 | ) |
For the year ended March 31, 2018, undistributed net investment income in net assets were as follows:
Fund | Undistributed Net Investment Income | |||
Franklin LibertyQ U.S. Equity ETF | $ | 199,982 | ||
Franklin LibertyQ U.S. Mid Cap Equity ETF | 4,790 | |||
Franklin LibertyQ U.S. Small Cap Equity ETF | 4,101 |
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specific number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At September 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
Franklin LibertyQ U.S. Equity ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Period Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 9,300,000 | $ | 284,854,778 | 4,650,000 | $ | 120,156,252 | ||||||||||||||
Shares redeemed | (800,000 | ) | (24,116,135 | ) | (850,000 | ) | (23,836,377 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 8,500,000 | $ | 260,738,643 | 3,800,000 | $ | 96,319,875 | ||||||||||||||
|
|
Franklin LibertyQ U.S. Mid Cap Equity ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Period Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 5,567,177 | 200,000 | $ | 5,110,349 | ||||||||||||||
Shares redeemed | (50,000 | ) | (1,441,286 | ) | (100,000 | ) | (2,635,424 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 150,000 | $ | 4,125,891 | 100,000 | $ | 2,474,925 | ||||||||||||||
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Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Period Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 250,000 | $ | 7,162,174 | 150,000 | $ | 3,803,994 | ||||||||||||||
Shares redeemed | (50,000 | ) | (1,477,838 | ) | (50,000 | ) | (1,300,381 | ) | ||||||||||||
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| |||||||||||||||||||
Net increase (decrease) | 200,000 | $ | 5,684,336 | 100,000 | $ | 2,503,613 | ||||||||||||||
|
|
aFor the period April 26, 2017 (commencement of operations) to March 31, 2018.
libertyshares.com | Semiannual Report | 49 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers and/or directors of the following subsidiaries:
Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter |
a. Management Fees
The Funds pay a unified management fee to Advisers whereby Advisers has agreed to reimburse the Funds’ acquired fund fee and expenses (if any) and pay all of the ordinary operating expenses of the Funds, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding payments under the Funds’ Rule 12b-1 plan (if any), brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments), taxes, interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto), and other nonroutine or extraordinary expenses. The fees are based on the average daily net assets of each of the Funds as follows:
Annualized Fee Rate | ||
Franklin LibertyQ U.S. Equity ETF | 0.25% | |
Franklin LibertyQ U.S. Mid Cap Equity ETF | 0.30% | |
Franklin LibertyQ U.S. Small Cap Equity ETF | 0.35% |
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.
c. Investments in Affiliated Management Investment Companies
Certain or all Funds invest in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Funds are waived on assets invested in the affiliated management investment companies, as noted in the Statements of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended September 30, 2018, the Funds held investments in affiliated management investment companies as follows:
Number of Shares Held at Beginning of Period | Gross Additions | Gross Reductions | Number of Shares Held at End of Period | Value at End of Period | Dividend Income | Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||
Franklin LibertyQ U.S. Equity ETF | ||||||||||||||||||||||||||||||||
Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 1.69% | 5,200 | 653,855 | (505,120 | ) | 153,935 | $ | 153,935 | $ | — | $ | — | $ | — | |||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Franklin LibertyQ U.S. Mid Cap Equity ETF | ||||||||||||||||||||||||||||||||
Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 1.69% | 305,850 | 894,225 | (1,194,000 | ) | 6,075 | $ | 6,075 | $ | — | $ | — | $ | — | |||||||||||||||||||
|
|
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Number of Shares Held at Beginning of Period | Gross Additions | Gross Reductions | Number of Shares Held at End of Period | Value at End of Period | Dividend Income | Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||
Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||||||||||||||||||||||||
Controlled Affiliates | ||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 1.69% | 12,950 | 607,025 | (474,795 | ) | 145,180 | $ | 145,180 | $ | — | $ | — | $ | — | |||||||||||||||||||
|
|
d. Other Affiliated Transactions
At September 30, 2018, the shares of Franklin LibertyQ U.S. Equity ETF were owned by the following entities.
Fund | Shares | Outstanding Sharesa | ||||||
Franklin Conservative Allocation Fund | 1,857,838 | 15.1% | ||||||
Franklin Growth Allocation Fund | 3,689,331 | 30.0% | ||||||
Franklin LifeSmart™ 2020 – 2055 Retirement Target Funds | 1,719,774 | 14.0% | ||||||
Franklin Moderate Allocation Fund | 4,344,029 | 35.3% | ||||||
|
| |||||||
11,610,972 | 94.4% | |||||||
|
|
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains. At March 31, 2018, the capital loss carryforwards were as follows:
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Capital loss carryforwards: | ||||||||||||
Short term | $ | 53,369 | $ | 9,533 | $ | 13,671 |
At September 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Cost of investments | $ | 364,102,287 | $ | 6,907,002 | $ | 8,478,217 | ||||||
|
| |||||||||||
Unrealized appreciation | $ | 26,029,138 | $ | 814,137 | $ | 943,436 | ||||||
Unrealized depreciation | (5,147,954 | ) | (135,928 | ) | (277,611 | ) | ||||||
|
| |||||||||||
Net unrealized appreciation (depreciation) | $ | 20,881,184 | $ | 678,209 | $ | 665,825 | ||||||
|
|
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of corporate actions and wash sales.
libertyshares.com | Semiannual Report | 51 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. Investment Transactions
Purchases and sales of investments (excluding short term securities and in-kind transactions, if any) for the period ended September 30, 2018, were as follows:
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Purchases | $ | 16,846,365 | $ | 930,983 | $ | 1,191,462 | ||||||
Sales | $ | 16,145,736 | $ | 920,202 | $ | 1,164,022 |
In-kind transactions associated with creation and redemptions for the period ended September 30, 2018, were as follows:
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Cost of Securities Received | $ | 283,699,395 | $ | 5,551,359 | $ | 7,150,171 | ||||||
Value of Securities Delivered | $ | 23,813,567 | $ | 1,423,667 | $ | 1,446,184 |
At September 30, 2018, in connection with securities lending transactions, certain or all Funds loaned investments and received cash collateral as follows:
Franklin LibertyQ U.S. Equity ETF | Franklin LibertyQ U.S. Mid Cap Equity ETF | Franklin LibertyQ U.S. Small Cap Equity ETF | ||||||||||
Securities lending transactionsa: | ||||||||||||
Equity investmentsb | $ | 153,935 | $ | 6,075 | $ | 145,180 |
a The agreements can be terminated at any time.
b The gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statements of Assets and Liabilities
6. Other Derivative Information
At September 30, 2018, the Funds’ investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
Asset Derivatives | Liability Derivatives | |||||||||||||||
Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||||||
Franklin LibertyQ U.S. Equity ETF | ||||||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 1,528a | Variation margin on futures contracts | $ | — |
a This amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/at year end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.
For the period ended September 30, 2018, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:
Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||||||
Franklin LibertyQ U.S. Equity ETF | ||||||||||||||||
Net realized gain (loss) from: | | Net change in unrealized appreciation (depreciation) on: | | |||||||||||||
Equity contracts | Futures contracts | $ | 18,851 | Futures contracts | $ | 1,528 |
52 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the period ended September 30, 2018, the average month end notional amount of futures contracts was $228,384.
See Note 1(b) regarding derivative financial instruments.
7. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
• | Level 1 – quoted prices in active markets for identical financial instruments |
• | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
At September 30, 2018, all of the Funds’ investments in financial instruments carried at fair value were valued using Level 1 inputs.
8. New Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in the ASU modify the disclosure requirements on fair value measurements. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Management is currently evaluating the impact, if any, of applying this provision.
9. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Abbreviations
Selected Portfolio | ||
REIT | - Real Estate Investment Trust |
libertyshares.com | Semiannual Report | 53 |
FRANKLIN TEMPLETON ETF TRUST
Board Approval of Investment Management Agreements
FRANKLIN TEMPLETON ETF TRUST
Franklin LibertyQ U.S. Equity ETF
Franklin LibertyQ U.S. Mid Cap Equity ETF
Franklin LibertyQ U.S. Small Cap Equity ETF
(each a Fund)
At an in-person meeting held on May 16, 2018 (Meeting), the Board of Trustees (Board) of Franklin Templeton ETF Trust (Trust), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (Manager) and the Trust, on behalf of each Fund (each a Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate.
In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to the Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meeting, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services provided by the Manager; (ii) each Fund’s tracking error against a specified benchmark index as of a recent period; (iii) the costs of the services provided and profits realized by the Manager and its affiliates from the relationship with each Fund; (iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.
In approving the continuance of each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the terms of the Management Agreement are fair and reasonable and that the continuance of such Management Agreement is in the best interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of the Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for each Fund; reports on expenses; legal and compliance matters; risk controls; pricing and other services provided by the Manager and its affiliates; and management fees charged by the Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the registered fund industry, such as cybersecurity and liquidity risk management.
The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Manager’s parent, and its commitment to the registered fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Funds by the FTI organization.
Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by the Manager and its affiliates to the Funds and their shareholders.
FUND PERFORMANCE. The Board noted that the Funds commenced operations on April 26, 2017, and thus the Funds did not have investment performance for the Board to review and consider for the one-year period ended March 31, 2018. The Board further noted that, in light of the Funds’ use
54 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
of a “passive” or indexing investment approach, management evaluates the Funds based on their tracking error against a specified benchmark. The Board also noted that for the quarter ended March 31, 2018, each Fund’s tracking error was within the tolerance anticipated for such Fund. In addition, the Board noted its ongoing discussions with the Manager about the performance of the Funds to date and the importance of performance to asset growth.
COMPARATIVE FEES AND EXPENSES. The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers (Management Rate), if any, of each Fund in comparison to the median expense ratio and median Management Rate, respectively, of other exchange-traded funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges. The Board received a description of the methodology used by Broadridge to select the exchange-traded funds included in an Expense Group.
Franklin LibertyQ U.S. Equity ETF and Franklin LibertyQ U.S. Small Cap Equity ETF – The Expense Group for the Franklin LibertyQ U.S. Equity ETF was comprised of pure-index exchange-traded funds, which included the Fund and eight other large-cap core funds. The Expense Group for the Franklin LibertyQ U.S. Small Cap Equity ETF was comprised of pure-index exchange-traded funds, which included the Fund and 13 other small-cap core funds. The Board noted that the Management Rates and actual total expense ratios for these Funds were below the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are reasonable. In doing so, the Board noted that effective December 1, 2017, each Fund implemented a unified management fee (Unified Fee).
The Board further noted that pursuant to the Unified Fee arrangement the Manager reimburses each Fund for all of its acquired fund fees and expenses (if any) and pays all of the ordinary operating expenses of the Fund, except for (i) the Fund’s investment management fee, (ii) payments under the Fund’s Rule 12b-1 plan (if any), (iii) brokerage expenses, (iv) taxes, (v) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), (vi) 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 (vii) other non-routine or extraordinary expenses (Unified Fee Arrangement).
Franklin LibertyQ U.S. Mid Cap Equity ETF – The Expense Group for the Franklin LibertyQ U.S. Mid Cap Equity ETF was comprised of pure-index exchange-traded funds, which included the Fund and seven other mid-cap core funds. The Board noted that the Management Rate for the Fund was equal to the median of its Expense Group, but its actual total expense ratio was slightly above the median of its Expense Group. The Board concluded that the Management Rate charged to the Fund is reasonable. In doing so, the Board noted that effective December 1, 2017, the Fund implemented a Unified Fee. The Board further noted the terms of the Unified Fee Arrangement.
PROFITABILITY. The Board reviewed and considered information regarding the profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis provided by the Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2017, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product-related changes, the overall methodology has remained consistent with that used in the profitability report presentations from prior years. Additionally, PricewaterhouseCoopers LLP, auditor to Franklin Resources, Inc. and certain Franklin Templeton funds, has been engaged by the Manager to periodically review and assess the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.
The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund
libertyshares.com | Semiannual Report | 55 |
FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.
The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by the Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, extent and quality of services provided to each Fund.
ECONOMIES OF SCALE. The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. The Board considered that each Fund would likely experience benefits from the Unified Fee at the Fund’s projected asset levels because of the Manager’s contractual requirement to bear most of the Fund’s ordinary operating expenses. The Board noted that, under the Unified Fee, it is not anticipated that any of the Funds will generate significant, if any, profit for the Manager and/or its affiliates for some time. The Board also considered the Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Manager incurs across the Franklin Templeton family of funds as a whole. The Board also noted that the Funds commenced operations on April 26, 2017 and that, as of December 31, 2017, the net assets of the Franklin LibertyQ U.S. Mid Cap Equity ETF and the Franklin LibertyQ U.S. Small Cap Equity ETF were approximately $3 million, while the net assets of the Franklin LibertyQ U.S. Equity ETF were approximately $117 million. The Board recognized that there would not likely be any economies of scale for these Funds until each Fund’s assets grow.
CONCLUSION. Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the continuation of each Management Agreement for an additional one-year period.
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Funds and the Funds’ net asset value may be found on the Funds’ website at libertyshares.com.
56 | Semiannual Report | libertyshares.com |
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
Semiannual Report | ||||||
Franklin Templeton ETF Trust | ||||||
Investment Manager Franklin Advisers, Inc. | Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 libertyshares.com | Investor Services Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 |
© 2018 Franklin Templeton Investments. All rights reserved. | ETF3 S 11/18 |
Franklin Templeton
ETF Trust
Semiannual Report
September 30, 2018
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Franklin Templeton Investments
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SEMIANNUAL REPORT
Municipal Bond Market Overview
The municipal bond market outperformed the U.S. Treasury and corporate bond markets but underperformed U.S. equity markets during the six-month period ended September 30, 2018. Investment-grade municipal bonds, as measured by the Bloomberg Barclays Municipal Bond Index, generated a +0.72% total return for the period, while U.S. Treasuries, as measured by the Bloomberg Barclays U.S. Treasury Index, had a -0.49% total return and investment-grade corporate bonds, as measured by the Bloomberg Barclays U.S. Corporate Bond Index, had a -0.02% return.1 U.S. stocks, as represented by the Standard & Poor’s® 500 Index, outperformed the fixed income markets with a +11.41% total return for the reporting period.1 Following a volatile March, U.S. stocks posted positive monthly total returns in each of the six months of the reporting period.
Investors continued to favor risky assets through most of the period. Municipal bonds with longer maturities generally performed better than bonds with shorter maturities, and high yield tax-exempt bonds outperformed their investment-grade counterparts. In fact, both high-yield corporate bonds and high-yield municipal bonds outperformed their investment-grade counterparts, reflecting the risk-on sentiment that prevailed across asset classes during the period. The Bloomberg Barclays U.S. Corporate High Yield Index returned +3.46%, a number that was exceeded by the Bloomberg Barclays High Yield Municipal Bond Index, which returned +3.84%.1 The strong demand for higher-yielding municipal securities is reflective of the healthy underlying economic activity and growth, as measured by gross domestic product.
Municipal issuance during the reporting period totaled $184 billion, approximately a 12% decline from total issuance in the preceding six-month period (ended March 31, 2018).2 May had the greatest volume of gross issuance during the period, with $35 billion in new issue transactions clearing the market. Overall, primary market activity picked up in April through August after a relatively quiet first quarter, before declining in September. However, diminished issuance ($249 billion in the year-to-date 2018, a 15% decline from the same time period in 2017),2 heavy dealer inventories and selling pressures in 2018 led municipals to have a -0.40% total return year-to-date in 2018, as measured by the Bloomberg Barclays Municipal Bond Index.1 Municipals performed slightly better than U.S. Treasuries year-to-date, which had a total return of -1.67% during the same period, as measured by the Bloomberg Barclays U.S. Treasury Index.
The technical environment remained supportive for municipal bonds during the period. After accounting for redemptions (bonds that matured or were called out of the market), net issuance turned negative in the first three quarters of 2018, standing at -$40 billion at period-end.3 According to the Investment Company Institute, municipal bond funds reported net inflows in four of the six months during the period, with net outflows in April and September. In aggregate, investors placed approximately $7.6 billion into municipal bond funds during the reporting period.4 The combination of net negative supply and continued demand contributed positively to performance over the period.
The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate 0.25% at both its June and September 2018 meetings. The target range stood at 2.00%–2.25% at period-end. The Fed also increased the discount rate 0.25% at both the June and September 2018 meetings, to finish the period at 2.75%. After the Fed’s anticipated September rate hike, it noted in its press release that “the labor market has continued to strengthen and that economic activity has been rising at a strong rate.” In total, the Fed raised the target range three times in 2017 (March, June and December), as well as three times so far in 2018 (March, June and September).
At period-end, we maintained our positive view of the municipal bond market. We believe municipal bonds continue to be an attractive asset class among fixed income securities, and we intend to follow our solid discipline of investing to maximize income, while seeking value in the municipal bond market.
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, state, industry, security or fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
1. Source: Morningstar. Treasuries, if held to maturity, offer a fixed rate of return and a fixed principal value; their interest payments and principal are guaranteed.
2. The Bond Buyer, Thomson Reuters.
3. Source: Barclays Municipal Credit Research.
4. Source: Investment Company Institute.
See www.franklintempletondatasources.com for additional data provider information.
2 | Semiannual Report | libertyshares.com |
Franklin Liberty Intermediate Municipal Opportunities ETF
This semiannual report for Franklin Liberty Intermediate Municipal Opportunities ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide a high level of current income that is exempt from federal income taxes by investing at least 80% of its net assets in municipal securities that pay interest free from such taxes.1 The Fund seeks to maintain a dollar-weighted average portfolio maturity (the time in which the debt must be repaid) of three to 10 years.
Credit Quality Composition* | ||||
9/30/18 | ||||
Ratings | % of Total Investments | |||
AAA | 7.80% | |||
AA | 37.55% | |||
A | 10.68% | |||
BBB | 25.16% | |||
Below Investment Grade | 2.90% | |||
Not Rated | 15.91% |
*Securities, except for those labeled Not Rated, are assigned ratings by one or more Nationally Recognized Statistical Credit Rating Organizations (NRSROs), such as Standard & Poor’s, Moody’s and Fitch, that can be considered by the investment manager as part of its independent securities analysis. When ratings from multiple agencies are available, the highest is used, consistent with the portfolio investment process. Ratings reflect an NRSRO’s opinion of an issuer’s creditworthiness and typically range from AAA (highest) to D (lowest). The Below Investment Grade category consists of bonds rated below BBB-. The Refunded category generally consists of refunded bonds secured by US government or other high-quality securities and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
For the six months under review, the Fund posted cumulative total returns of +0.34% based on market price and +0.67% based on net asset value (NAV). In comparison, the Bloomberg
Barclays Municipal 1-15 Year Index posted a +0.78% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 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 libertyshares.com or call (800) 342-5236.
Investment Strategy
We select securities that we believe will provide the best balance between risk and return within the Fund’s range of allowable investments and we typically use a buy-and-hold strategy. The Fund is an actively managed exchange-traded fund (ETF) that does not seek to replicate the performance of a specified index.
Portfolio Composition | ||||
9/30/18 | ||||
% of Total Investments* | ||||
General Obligation | 23.46% | |||
Hospital & Health Care | 18.94% | |||
Tax-Supported | 13.44% | |||
Utilities | 10.99% | |||
Higher Education | 9.75% | |||
Other Revenue | 7.83% | |||
Housing | 5.85% | |||
Transportation | 4.84% | |||
Subject to Government Appropriations | 3.50% | |||
Corporate-Backed | 1.40% |
*Does not include cash and cash equivalents.
1. Dividends are generally subject to state and local taxes, if any. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on Form W-9 and non-U.S. investors on Form W-8BEN.
2. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page x.
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FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
Manager’s Discussion
During the six-month reporting period, we found value in securities in the seven- to 11-year maturity range. Given the Fund’s average maturity cannot exceed 10 years, this represented the longer end of our target universe. The municipal yield curve remains positively sloped and we believe focusing on longer maturities provides us with the best opportunities to achieve our objective of maximizing after tax income for investors. In addition, we were able to find attractive opportunities in the high yield space; therefore, we selectively added higher-yielding securities to the portfolio while selling existing positions with lower yields. Similarly, we also improved the earnings potential of the high grade portion of the portfolio. The Fund will continue to look for opportunities to add high yielding names with a focus on the seven- to 15-year part of the yield curve. The Fund does not use leverage or derivatives. We believe our consistent, disciplined strategy can help our investors achieve high, tax-free income over the long term.
Thank you for your participation in Franklin Liberty Intermediate Municipal Opportunities ETF. We look forward to serving your future investment needs.
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, state, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
4 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
Performance Summary as of September 30, 2018
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/5/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-month | +0.67% | +0.34% | +0.67% | +0.34% | ||||||||||||
1-Year | -0.43% | -0.75% | -0.43% | -0.75% | ||||||||||||
Since Inception (8/31/17) | -0.87% | -0.83% | -0.80% | -0.77% |
30-Day Standardized Yield6 | Taxable Equivalent 30-Day Standardized Yield7 | |||||||||||||||
Distribution Rate5 | (with waiver) | (without waiver) | (with waiver) | (without waiver) | ||||||||||||
2.26% | 2.78% | 1.03% | 4.70% | 1.74% |
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 libertyshares.com or call (800) 342-5236.
See page 6 for Performance Summary footnotes.
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FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.293265 |
Total Annual Operating Expenses8
With Waiver | Without Waiver | |||
0.30% | 1.48% |
All investments involve risks, including possible loss of principal. Because municipal bonds are sensitive to interest rate movements, the Fund’s yield and share price will fluctuate with market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. The Fund may invest a significant part of its assets in municipal securities that finance similar types of projects, such as utilities, hospitals, higher education and transportation. A change that affects one project would likely affect all similar projects, thereby increasing market risk. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has an expense reduction contractually guaranteed through 7/31/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/18.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Taxable equivalent yield assumes the 2018 maximum federal income tax rate of 37.00% plus 3.80% Medicare tax.
8. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN LIBERTY INTERMEDIATE MUNICIPAL OPPORTUNITIES ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 × $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18-9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18-9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,006.70 | $ | 1.51 | $ | 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 Liberty Municipal Bond ETF
This semiannual report for Franklin Liberty Municipal Bond ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide a high level of current income that is exempt from federal income taxes by investing at least 80% of its net assets in municipal securities that pay interest free from such taxes.1 The Fund seeks to maintain a dollar-weighted average portfolio maturity (the time in which the debt must be repaid) of five to 15 years, and only buys securities rated, at the time of purchase, in one of the top four ratings categories by one or more U.S. nationally recognized rating services (or comparable unrated or short-term rated securities).
Credit Quality Composition* | ||||
9/30/18 | ||||
Ratings | % of Total Investments | |||
AAA | 20.23% | |||
AA | 68.84% | |||
A | 9.39% | |||
Not Rated | 1.54% |
*Securities, except for those labeled Not Rated, are assigned ratings by one or more Nationally Recognized Statistical Credit Rating Organizations (NRSROs), such as Standard & Poor’s, Moody’s and Fitch, that can be considered by the investment manager as part of its independent securities analysis. When ratings from multiple agencies are available, the highest is used, consistent with the portfolio investment process. Ratings reflect an NRSRO’s opinion of an issuer’s creditworthiness and typically range from AAA (highest) to D (lowest). The Below Investment Grade category consists of bonds rated below BBB-. The Refunded category generally consists of refunded bonds secured by U.S. government or other high-quality securities and not rerated by an NRSRO. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. Cash and equivalents are excluded from this composition.
Performance Overview
For the six months under review, the Fund had cumulative total returns of -0.27% based on market price and -0.02%
based on net asset value (NAV). In comparison, the Bloomberg Barclays Municipal Bond Index had a +0.72% 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 libertyshares.com or call (800) 342-5236.
Investment Strategy
We select securities that we believe will provide the best balance between risk and return within the Fund’s range of allowable investments and we typically use a buy-and-hold strategy. The Fund is an actively managed exchange-traded fund (ETF) that does not seek to replicate the performance of a specified index.
Portfolio Composition | ||||
9/30/18 | ||||
% of Total Investments* | ||||
General Obligation | 39.44% | |||
Utilities | 19.82% | |||
Higher Education | 12.87% | |||
Transportation | 8.08% | |||
Tax-Supported | 7.71% | |||
Hospital & Health Care | 3.97% | |||
Subject to Government Appropriations | 3.52% | |||
Other Revenue | 3.26% | |||
Housing | 1.33% |
*Does not include cash and cash equivalents.
1. Dividends are generally subject to state and local taxes, if any. For investors subject to alternative minimum tax, a small portion of Fund dividends may be taxable. Distributions of capital gains are generally taxable. To avoid imposition of 28% backup withholding on all Fund distributions and redemption proceeds, U.S. investors must be properly certified on Form W-9 and non-U.S. investors on Form W-8BEN.
2. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page x.
8 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY MUNICIPAL BOND ETF
Manager’s Discussion
During the six-month reporting period, the Fund maintained its average maturity close to 13 years, on the longer end of the target five-15 year range. The municipal yield curve remains positively sloped and we believe focusing on longer maturities provides us with the best opportunities to achieve our objective of maximizing after-tax income for investors. We selectively added higher-yielding securities to the portfolio while selling existing positions with lower yields, improving the earnings potential of the portfolio. The Fund will continue to look for opportunities to improve the income profile of the Fund, with a focus on the 10- to 15-year part of the yield curve for new purchases. The Fund does not use leverage or derivatives. We believe our consistent, disciplined strategy can help our investors achieve high, tax-free income over the long term.
Thank you for your participation in Franklin Liberty Municipal Bond ETF. We look forward to serving your future investment needs.
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, state, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
libertyshares.com | Semiannual Report | 9 |
FRANKLIN LIBERTY MUNICIPAL BOND ETF
Performance Summary as of September 30, 2018
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/5/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
6-Month | -0.02% | -0.27% | -0.02% | -0.27% | ||||||||||||
1-Year | -0.96% | -1.09% | -0.96% | -1.09% | ||||||||||||
Since Inception (8/31/17) | -1.47% | -1.40% | -1.36% | -1.29% |
30-Day Standardized Yield6 | Taxable Equivalent 30-Day Standardized Yield7 | |||||||||||||||
Distribution Rate5 | (with waiver) | (without waiver) | (with waiver) | (without waiver) | ||||||||||||
2.46% | 2.75% | 1.00% | 4.65% | 1.69% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 11 for Performance Summary footnotes.
10 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY MUNICIPAL BOND ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.326005 |
Total Annual Operating Expenses8
With Waiver | Without Waiver | |||
0.30% | 1.48% |
All investments involve risks, including possible loss of principal. Because municipal bonds are sensitive to interest rate movements, the Fund’s yield and share price will fluctuate with market conditions. Bond prices generally move in the opposite direction of interest rates. Thus, as prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the credit rating of a bond, or in the credit rating or financial strength of a bond’s issuer, insurer or guarantor, may affect the bond’s value. The Fund may invest a significant part of its assets in municipal securities that finance similar types of projects, such as utilities, hospitals, higher education and transportation. A change that affects one project would likely affect all similar projects, thereby increasing market risk. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has an expense reduction contractually guaranteed through 7/31/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/18.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Taxable equivalent yield assumes the 2018 maximum federal income tax rate of 37.00% plus 3.80% Medicare tax.
8. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN LIBERTY MUNICIPAL BOND ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 999.80 | $ | 1.50 | $ | 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.
12 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty Intermediate Municipal Opportunities ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 24.40 | $ | 25.00 | ||||
|
| |||||||
Income from investment operations:b | ||||||||
Net investment incomec | 0.30 | 0.22 | ||||||
Net realized and unrealized gains (losses) | (0.14 | ) | (0.60 | ) | ||||
|
| |||||||
Total from investment operations | 0.16 | (0.38 | ) | |||||
|
| |||||||
Less distributions from net investment income | (0.29 | ) | (0.22 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 24.27 | $ | 24.40 | ||||
|
| |||||||
Total returnd | 0.67% | (1.53)% | ||||||
Ratios to average net assetse | ||||||||
Expenses before waiver and payments by affiliates | 2.04% | 1.71% | ||||||
Expenses net of waiver and payments by affiliates | 0.30% | 0.30% | ||||||
Net investment income | 2.42% | 1.55% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $7,281 | $7,319 | ||||||
Portfolio turnover ratef | 11.97% | 17.49% |
aFor the period August 31, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 13 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Statement of Investments, September 30, 2018 (unaudited)
Franklin Liberty Intermediate Municipal Opportunities ETF
Principal Amount | Value | |||||||||
Municipal Bonds 98.4% | ||||||||||
Alaska 2.1% | ||||||||||
Matanuska-Susitna Borough Lease Revenue, Goose Creek Correctional Center Project, Refunding, 4.00%, 9/01/30 | $ | 150,000 | $ | 155,126 | ||||||
Arizona 4.7% | ||||||||||
La Paz County IDA Education Facility Lease Revenue, Chartered School Solutions-Harmony Public Schools Project, Series A, 5.00%, 2/15/28 | 100,000 | 110,165 | ||||||||
Phoenix Civic Improvement Corp. Wastewater System Revenue, junior lien, Series A, 5.00%, 7/01/25 | 100,000 | 115,766 | ||||||||
Salt River Project Agricultural Improvement and Power District Electric System Revenue, Salt River Project, Refunding, Series A, 5.00%, 1/01/24 | 100,000 | 113,482 | ||||||||
|
| |||||||||
339,413 | ||||||||||
|
| |||||||||
Arkansas 1.4% | ||||||||||
Little Rock School District GO, Pulaski County, Construction, 3.00%, 2/01/25 | 100,000 | 101,119 | ||||||||
|
| |||||||||
California 7.5% | ||||||||||
California School Finance Authority Charter School Revenue, Summit Public Schools-Obligated Group, 5.00%, 6/01/27 | 100,000 | 112,075 | ||||||||
California Statewide CDA Revenue, California Baptist University, Refunding, Series A, 3.00%, 11/01/22 | 100,000 | 100,335 | ||||||||
California Statewide CDA Special Tax Revenue, CFD No. 2015-01, Improvement Area No. 2, University District, 5.00%, 9/01/27 | 100,000 | 109,805 | ||||||||
Orange County CFD No. 2017-1 Special Tax, Esencia Village Improvement Area No. 1, Series A, 5.00%, 8/15/28 | 100,000 | 114,307 | ||||||||
Perris Joint Powers Authority Local Agency Revenue, CFD No. 2001-1, Improvement Area Nos. 4 and 5, CFD No. 2005-1, Improvement Area 4, Refunding, Series B, 5.00%, 9/01/25 | 100,000 | 111,608 | ||||||||
|
| |||||||||
548,130 | ||||||||||
|
| |||||||||
Colorado 2.8% | ||||||||||
Southglenn Metropolitan District Special Revenue, In the City of Centennial Colorado, Refunding, 5.00%, 12/01/30 | 100,000 | 102,929 | ||||||||
Southlands Metropolitan District No. 1 GO, Aurora, Arapahoe County, Refunding, Series A-1, 3.50%, 12/01/27 | 100,000 | 98,301 | ||||||||
|
| |||||||||
201,230 | ||||||||||
|
| |||||||||
Delaware 1.5% | ||||||||||
Kent County Student Housing and Dining Facility Revenue, CHF-Dover LLC- Delaware State University Project, Series A, 5.00%, 7/01/29 | 100,000 | 109,850 | ||||||||
|
| |||||||||
Florida 3.9% | ||||||||||
Jacksonville Health Care Facilities Revenue, Brooks Rehabilitation, Genesis Health Inc. Obligated Group, Refunding, 5.00%, 11/01/27 | 100,000 | 113,747 | ||||||||
Miami Health Facilities Authority Revenue, Miami Jewish Health Systems Inc. Project, Refunding, 5.00%, 7/01/28 | 150,000 | 167,059 | ||||||||
|
| |||||||||
280,806 | ||||||||||
|
| |||||||||
Illinois 7.0% | ||||||||||
Illinois State Finance Authority MFHR, Better Housing Foundation Blue Station Project, Series A-1, 4.25%, 12/01/28 | 100,000 | 97,973 | ||||||||
Illinois State Finance Authority MFHR, Better Housing Foundation ERNST Portfolio Project, Series A-1, 4.375%, 12/01/28 | 100,000 | 100,798 | ||||||||
Railsplitter Tobacco Settlement Authority Revenue, 5.00%, 6/01/27 | 100,000 | 112,941 | ||||||||
Southwestern Illinois Development Authority Revenue, Capital Appreciation, Local Government Program, AGMC Insured, zero cpn., 12/01/24 | 245,000 | 197,825 | ||||||||
|
| |||||||||
509,537 | ||||||||||
|
| |||||||||
Kentucky 1.4% | ||||||||||
Louisville/Jefferson County Metro Government Revenue, College, Bellarmine University Project, Refunding and Improvement, Series A, 4.00%, 5/01/29 | 100,000 | 100,214 | ||||||||
|
|
14 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty Intermediate Municipal Opportunities ETF (continued)
Principal Amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
Maine 1.6% | ||||||||||
Maine Municipal Bond Bank Revenue, Series C, 5.00%, 11/01/25 | $ | 100,000 | $ | 116,270 | ||||||
|
| |||||||||
Maryland 1.6% | ||||||||||
Maryland EDC Revenue, Economic Development, Transportation Facilities Project, Refunding, Series A, 5.00%, 6/01/27 | 100,000 | 113,198 | ||||||||
|
| |||||||||
Massachusetts 1.5% | ||||||||||
Massachusetts State Development Finance Agency Revenue, Foxborough Regional Charter, Series B, 5.00%, 7/01/27 | 100,000 | 109,712 | ||||||||
|
| |||||||||
Michigan 1.4% | ||||||||||
Grand Rapids EDC, EDR, Beacon Hill Eastgate Project, Refunding, Series A, 4.00%, 11/01/27 | 100,000 | 100,148 | ||||||||
|
| |||||||||
Minnesota 3.6% | ||||||||||
Minnesota State Higher Education Facilities Authority Revenue, Macalester College, Refunding, 3.00%, 3/01/22 | 150,000 | 154,024 | ||||||||
Northern Municipal Power Agency Electric System Revenue, Refunding, 5.00%, 1/01/36 | 100,000 | 111,038 | ||||||||
|
| |||||||||
265,062 | ||||||||||
|
| |||||||||
Missouri 1.5% | ||||||||||
St. Louis County IDA Senior Living Facilities Revenue, Friendship Village, St. Louis Obligated Group, Refunding, 5.00%, 9/01/27 | 100,000 | 111,398 | ||||||||
|
| |||||||||
Montana 1.6% | ||||||||||
Cascade County High School District No. 1 Great Falls GO, School Building, 5.00%, 7/01/25 | 100,000 | 114,761 | ||||||||
|
| |||||||||
Nevada 6.1% | ||||||||||
Carson City Hospital Revenue, Carson Tahoe Regional Healthcare Project, Refunding, Series A, 5.00%, 9/01/28 | 100,000 | 113,033 | ||||||||
Clark County School District GO, Building, Refunding, Series A, 5.00%, 6/15/26 | 100,000 | 114,251 | ||||||||
Las Vegas Special ID No. 812 Special Assessment, Local Improvement, Summerlin Village 24, 4.00%, 12/01/22 | 100,000 | 102,738 | ||||||||
Washoe County School District GO, School Improvement, Series C, 5.00%, 10/01/26 | 100,000 | 116,522 | ||||||||
|
| |||||||||
446,544 | ||||||||||
|
| |||||||||
New Jersey 1.4% | ||||||||||
Pinelands Regional School District GO, Refunding, AGMC Insured, 3.00%, 8/01/27 | 100,000 | 99,154 | ||||||||
|
| |||||||||
New York 4.7% | ||||||||||
MTA Revenue, Transportation, Green Bonds, Climate Bond Certified, Refunding, Series B, 5.00%, 11/15/28 | 100,000 | 117,532 | ||||||||
New York City GO, Fiscal 2018, Series 1, 5.00%, 8/01/26 | 100,000 | 116,747 | ||||||||
New York City Transitional Finance Authority Revenue, Future Tax Secured, Subordinate, Fiscal 2018, Series B, Subseries B-1, 4.00%, 8/01/24 | 100,000 | 108,655 | ||||||||
|
| |||||||||
342,934 | ||||||||||
|
| |||||||||
North Carolina 3.1% | ||||||||||
North Carolina State Medical Care Commission Retirement Facilities Revenue, The United Methodist Retirement Homes, first mortgage, Refunding, Series A, 5.00%, 10/01/27 | 100,000 | 111,405 | ||||||||
Winston-Salem City Water and Sewer System Revenue, 5.00%, 6/01/24 | 100,000 | 114,544 | ||||||||
|
| |||||||||
225,949 | ||||||||||
|
| |||||||||
Ohio 7.7% | ||||||||||
Cleveland Water Revenue, second lien, Refunding, Series B, 5.00%, 1/01/27 | 100,000 | 117,060 | ||||||||
Columbus GO, Refunding, Series 2017-1, 5.00%, 4/01/24 | 100,000 | 114,034 | ||||||||
Franklin County Hospital Facilities Revenue, Nationwide Children’s Hospital Project, Refunding, Series A, 5.00%, 11/01/28 | 100,000 | 117,442 | ||||||||
Ohio State Air Quality Development Authority Exempt Facilities Revenue, Pratt Paper LLC Project, 3.75%, 1/15/28 | 100,000 | 100,230 | ||||||||
Ohio State Water Development Authority Revenue, Community Assistance, Refunding, 4.00%, 12/01/25 | 100,000 | 109,780 | ||||||||
|
| |||||||||
558,546 | ||||||||||
|
|
libertyshares.com | Semiannual Report | 15 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty Intermediate Municipal Opportunities ETF (continued)
Principal Amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
Oregon 3.2% | ||||||||||
Oregon State Facilities Authority Revenue, Reed College Project, Refunding, Series A, 5.00%, 7/01/26 | $ | 100,000 | $ | 116,891 | ||||||
Portland Community College District GO, Multnomah Washington Yamhill Clackamas and Columbia Counties, Refunding, 5.00%, 6/15/25 | 100,000 | 116,073 | ||||||||
|
| |||||||||
232,964 | ||||||||||
|
| |||||||||
Pennsylvania 8.5% | ||||||||||
Allegheny County Higher Education Building Authority University Revenue, Robert Morris University, UPMC Events Center Project, 5.00%, 10/15/26 | 100,000 | 110,944 | ||||||||
Allentown Neighborhood Improvement Zone Development Authority Tax Revenue, City Center Project, 5.00%, 5/01/28 | 100,000 | 109,222 | ||||||||
Franklin County IDAR, Menno Haven Inc. Project, Refunding, 5.00%, 12/01/28 | 100,000 | 106,387 | ||||||||
Pennsylvania State Economic Development Financing Authority Revenue, UPMC, Refunding, Series A, 3.375%, 11/15/33 | 125,000 | 118,239 | ||||||||
Pennsylvania State GO, First Series, Refunding, 5.00%, 1/01/26 | 150,000 | 171,504 | ||||||||
|
| |||||||||
616,296 | ||||||||||
|
| |||||||||
Tennessee 2.8% | ||||||||||
Johnson City GO, Refunding, Series A, 5.00%, 6/01/22 | 100,000 | 109,876 | ||||||||
Lawrenceburg GO, Refunding, 2.50%, 6/01/27 | 100,000 | 97,612 | ||||||||
|
| |||||||||
207,488 | ||||||||||
|
| |||||||||
Texas 3.0% | ||||||||||
New Hope Cultural Education Facilities Finance Corp. Student Housing Revenue, CHF-Collegiate Housing Island Campus LLC, Series A, 5.00%, 4/01/29 | 100,000 | 110,325 | ||||||||
Rockwall ISD, GO, Refunding, PSF Guarantee, 5.00%, 2/15/23 | 100,000 | 111,425 | ||||||||
|
| |||||||||
221,750 | ||||||||||
|
| |||||||||
Utah 2.8% | ||||||||||
South Jordan Water Revenue, Refunding, 4.00%, 11/01/22 | 100,000 | 107,027 | ||||||||
Utah State Building Ownership Authority Lease Revenue, State Facilities Master Lease Program, 2.50%, 5/15/27 | 100,000 | 95,713 | ||||||||
|
| |||||||||
202,740 | ||||||||||
|
| |||||||||
Vermont 1.6% | ||||||||||
Vermont State Public Power Supply Authority Revenue, Swanton Peaking Facility Project, Refunding, Series A, 5.00%, 7/01/28 | 100,000 | 114,126 | ||||||||
|
| |||||||||
Virginia 1.4% | ||||||||||
Peninsula Town Center CDA Special Obligation Revenue, Refunding, 4.50%, 9/01/28 | 100,000 | 105,147 | ||||||||
|
| |||||||||
Washington 3.1% | ||||||||||
Skagit County Public Hospital District No. 1 Revenue, Improvement, Skagit Regional Health, Refunding, 5.00%, 12/01/29 | 100,000 | 109,010 | ||||||||
Spokane County School District No. 356 Central Valley GO, 5.00%, 12/01/26 | 100,000 | 117,467 | ||||||||
|
| |||||||||
226,477 | ||||||||||
|
| |||||||||
Wisconsin 3.9% | ||||||||||
Fond Du Lac GO, Fond Du Lac County, Refunding, Series B, 2.00%, 4/01/22 | 100,000 | 98,764 | ||||||||
PFA Retirement Facilities Revenue, Whitestone Retirement Facilities, first mortgage, Refunding, 4.00%, 3/01/27 | 85,000 | 87,013 | ||||||||
Wisconsin Health and Educational Facilities Authority Revenue, St. Johns Communities Inc. Project, Series A, 4.00%, 9/15/27 | 100,000 | 102,117 | ||||||||
|
| |||||||||
287,894 | ||||||||||
|
| |||||||||
Total Investments (Cost $7,324,633) 98.4% | 7,163,983 | |||||||||
Other Assets, less Liabilities 1.6% | 117,287 | |||||||||
|
| |||||||||
Net Assets 100.0% | $ | 7,281,270 | ||||||||
|
|
See Abbreviations on page 29.
16 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty Municipal Bond ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 24.34 | $ | 25.00 | ||||
|
| |||||||
Income from investment operations:b | ||||||||
Net investment incomec | 0.33 | 0.30 | ||||||
Net realized and unrealized gains (losses) | (0.33 | ) | (0.66 | ) | ||||
|
| |||||||
Total from investment operations | — | d | (0.36 | ) | ||||
|
| |||||||
Less distributions from net investment income | (0.33 | ) | (0.30 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 24.01 | $ | 24.34 | ||||
|
| |||||||
Total returne | (0.02)% | (1.45)% | ||||||
Ratios to average net assetsf | ||||||||
Expenses before waiver and payments by affiliates | 1.90% | 1.71% | ||||||
Expenses net of waiver and payments by affiliates | 0.30% | 0.30% | ||||||
Net investment income | 2.70% | 2.11% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $7,202 | $7,302 | ||||||
Portfolio turnover rateg | 4.77% | 5.00% |
aFor the period August 31, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 17 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin Liberty Municipal Bond ETF
Principal Amount | Value | |||||||||
Municipal Bonds 98.9% | ||||||||||
Alaska 2.2% | ||||||||||
Matanuska-Susitna Borough Lease Revenue, Goose Creek Correctional Center Project, Refunding, 4.00%, 9/01/30 | $ | 150,000 | $ | 155,126 | ||||||
|
| |||||||||
Arizona 1.6% | ||||||||||
Phoenix Civic Improvement Corp. Wastewater System Revenue, junior lien, Series A, 5.00%, 7/01/25 | 100,000 | 115,766 | ||||||||
|
| |||||||||
Arkansas 1.4% | ||||||||||
Little Rock School District GO, Pulaski County, Construction, 3.00%, 2/01/25 | 100,000 | 101,119 | ||||||||
|
| |||||||||
California 9.0% | ||||||||||
Burbank RDA Successor Agency Tax Allocation Revenue, Los Angeles County, Refunding, 3.00%, 12/01/32 | 100,000 | 94,396 | ||||||||
Clovis USD, GO, Capital Appreciation, Refunding, zero cpn., 8/01/35 | 200,000 | 104,746 | ||||||||
Konocti USD, GO, Capital Appreciation, Election of 2004, Series C, AGMC Insured, zero cpn., 8/01/28 | 150,000 | 106,545 | ||||||||
Perris Joint Powers Authority Local Agency Revenue, CFD No. 2001-1, Improvement Area Nos. 4 and 5, CFD No. 2005-1, Improvement Area 4, Refunding, Series B, 5.00%, 9/01/37 | 100,000 | 109,473 | ||||||||
South Tahoe Joint Powers Financing Authority Lease Revenue, Redevelopment Project Area No. 1, Series A, BAM Insured, 5.00%, 10/01/30 | 100,000 | 114,312 | ||||||||
University of California Revenue, Limited Project, Series M, 5.00%, 5/15/34 | 100,000 | 115,499 | ||||||||
|
| |||||||||
644,971 | ||||||||||
|
| |||||||||
Colorado 6.1% | ||||||||||
Adams and Weld Counties School District No. 27J Brighton GO, The City and County of Broomfield, 5.00%, 12/01/42 | 100,000 | 112,923 | ||||||||
Cherry Creek School District No. 5 GO, Arapahoe County, Refunding, Series C, 5.00%, 12/15/35 | 100,000 | 115,714 | ||||||||
Colorado Springs Utilities System Revenue, Refunding, Series A, 4.00%, 11/15/33 | 100,000 | 105,632 | ||||||||
Colorado State Board of Governors University Enterprise System Revenue, Refunding, Series A, 4.00%, 3/01/35 | 100,000 | 103,798 | ||||||||
|
| |||||||||
438,067 | ||||||||||
|
| |||||||||
Connecticut 1.5% | ||||||||||
Connecticut State Special Tax Obligation Revenue, Series A, 5.00%, 8/01/31 | 100,000 | 109,931 | ||||||||
|
| |||||||||
Florida 1.6% | ||||||||||
Gainesville Utilities System Revenue, Series A, 5.00%, 10/01/36 | 100,000 | 114,312 | ||||||||
|
| |||||||||
Hawaii 1.5% | ||||||||||
Hawaii State GO, Refunding, Series FH, 4.00%, 10/01/30 | 100,000 | 106,404 | ||||||||
|
| |||||||||
Kansas 3.0% | ||||||||||
Douglas County USD No. 497 GO, Series A, 3.50%, 9/01/32 | 100,000 | 101,609 | ||||||||
Kansas State Department of Transportation Highway Revenue, Series A, 5.00%, 9/01/31 | 100,000 | 117,246 | ||||||||
|
| |||||||||
218,855 | ||||||||||
|
| |||||||||
Louisiana 1.4% | ||||||||||
Louisiana GO, Series B, 4.00%, 10/01/34 | 100,000 | 103,518 | ||||||||
|
| |||||||||
Maine 1.6% | ||||||||||
Maine Municipal Bond Bank Revenue, Series C, 5.00%, 11/01/31 | 100,000 | 116,397 | ||||||||
|
| |||||||||
Maryland 1.3% | ||||||||||
Prince George’s County GO, Consolidated Public Improvement, Series A, 3.00%, 9/15/32 | 100,000 | 95,951 | ||||||||
|
| |||||||||
Massachusetts 1.6% | ||||||||||
Massachusetts Bay Transportation Authority Sales Tax Revenue, Sustainability Bonds, Subordinate, Series A, Subseries A-1, 5.00%, 7/01/33 | 100,000 | 114,951 | ||||||||
|
| |||||||||
Minnesota 6.6% | ||||||||||
Minnesota State Higher Education Facilities Authority Revenue, Macalester College, Refunding, 3.00%, 3/01/35 | 150,000 | 137,095 | ||||||||
Northern Municipal Power Agency Electric System Revenue, Refunding, 5.00%, 1/01/36 | 100,000 | 111,038 |
18 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty Municipal Bond ETF (continued)
Principal Amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
Minnesota (continued) | ||||||||||
Southern Minnesota Municipal Power Agency Power Supply System Revenue, Series A, 5.00%, 1/01/31 | $ | 100,000 | $ | 116,305 | ||||||
University of Minnesota GO, Series A, 5.00%, 9/01/42 | 100,000 | 113,529 | ||||||||
|
| |||||||||
477,967 | ||||||||||
|
| |||||||||
Missouri 1.3% | ||||||||||
Platte County School District Park Hill GO, Direct Deposit Program, 3.00%, 3/01/33 | 100,000 | 93,160 | ||||||||
|
| |||||||||
Montana 1.6% | ||||||||||
Cascade County High School District No. 1 Great Falls GO, School Building, 5.00%, 7/01/25 | 100,000 | 114,761 | ||||||||
|
| |||||||||
Nevada 3.1% | ||||||||||
Clark County School District GO, Building, Refunding, Series A, 5.00%, 6/15/26 | 100,000 | 114,251 | ||||||||
Lyon County School District GO, Refunding, Series A, PSF Guarantee, 4.00%, 6/01/28 | 100,000 | 108,690 | ||||||||
|
| |||||||||
222,941 | ||||||||||
|
| |||||||||
New Jersey 1.4% | ||||||||||
Pinelands Regional School District GO, Refunding, AGMC Insured, 3.00%, 8/01/27 | 100,000 | 99,154 | ||||||||
|
| |||||||||
New York 7.5% | ||||||||||
MTA Revenue, Transportation, Green Bonds, Climate Bond Certified, Refunding, Series B, 5.00%, 11/15/28 | 100,000 | 117,532 | ||||||||
New York City GO, Fiscal 2018, Series B, Subseries B-1, 4.00%, 10/01/36 | 100,000 | 103,440 | ||||||||
New York City Transitional Finance Authority Revenue, Future Tax Secured, Subordinate, Fiscal 2018, Series B, Subseries B-1, 5.00%, 8/01/34 | 100,000 | 114,575 | ||||||||
New York State Dormitory Authority Revenues, Non-State Supported Debt, School Districts, Financing Program, Refunding, Series G, BAM Insured, 3.00%, 10/01/33 | 100,000 | 91,455 | ||||||||
New York State Dormitory Authority Sales Tax Revenue, Series A, 5.00%, 3/15/33 | 100,000 | 115,819 | ||||||||
|
| |||||||||
542,821 | ||||||||||
|
| |||||||||
North Carolina 2.9% | ||||||||||
University of North Carolina at Charlotte Revenue, General, Board of Governors, Refunding, 4.00%, 10/01/34 | 100,000 | 104,775 | ||||||||
Winston-Salem City Water and Sewer System Revenue, 4.00%, 6/01/33 | 100,000 | 106,554 | ||||||||
|
| |||||||||
211,329 | ||||||||||
|
| |||||||||
Ohio 8.3% | ||||||||||
Cleveland Water Revenue, second lien, Refunding, Series B, 5.00%, 1/01/27 | 100,000 | 117,060 | ||||||||
Columbus GO, Series A, 3.00%, 4/01/28 | 100,000 | 99,836 | ||||||||
Franklin County Hospital Facilities Revenue, Nationwide Children’s Hospital Project, Refunding, Series A, 3.125%, 11/01/33 | 50,000 | 48,502 | ||||||||
Licking Heights Local School District GO, School Facilities Construction and Improvement, Series B, 5.00%, 10/01/30 | 100,000 | 114,480 | ||||||||
Northeast Regional Sewer District Revenue, Wastewater Improvement, Refunding, 4.00%, 11/15/34 | 100,000 | 105,305 | ||||||||
Ohio State Water Development Authority Revenue, Community Assistance, Refunding, 4.00%, 12/01/30 | 100,000 | 110,125 | ||||||||
|
| |||||||||
595,308 | ||||||||||
|
| |||||||||
Oregon 6.6% | ||||||||||
Metro Dedicated Tax Revenue, Oregon Convention Center Hotel Project, 5.00%, 6/15/29 | 100,000 | 115,796 | ||||||||
Oregon State Housing and Community Services Department Mortgage Revenue, Series D, 3.15%, 7/01/32 | 100,000 | 94,883 | ||||||||
Portland Community College District GO, Multnomah Washington Yamhill Clackamas and Columbia Counties, Refunding, 5.00%, 6/15/25 | 100,000 | 116,073 | ||||||||
Washington County GO, Full Faith and Credit Obligations, Series B, 5.00%, 3/01/25 | 125,000 | 144,614 | ||||||||
|
| |||||||||
471,366 | ||||||||||
|
| |||||||||
Pennsylvania 1.7% | ||||||||||
Pennsylvania State Economic Development Financing Authority Revenue, UPMC, Refunding, Series A, 3.375%, 11/15/33 | 125,000 | 118,239 | ||||||||
|
|
libertyshares.com | Semiannual Report | 19 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty Municipal Bond ETF (continued)
Principal Amount | Value | |||||||||
Municipal Bonds (continued) | ||||||||||
Tennessee 7.7% | ||||||||||
Johnson City GO, Refunding, Series A, 5.00%, 6/01/22 | $ | 100,000 | $ | 109,876 | ||||||
Kingsport GO, Series B, 3.00%, 3/01/35 | 130,000 | 118,457 | ||||||||
Lawrenceburg GO, Refunding, 2.50%, 6/01/27 | 100,000 | 97,612 | ||||||||
Metropolitan Government of Nashville and Davidson County Water and Sewer Revenue, Green Bonds, Subordinate, Refunding, Series A, 5.00%, 7/01/36 | 100,000 | 115,034 | ||||||||
Tennessee State School Bond Authority Revenue, Higher Educational Facilities Second Program, Series A, 5.00%, 11/01/37 | 100,000 | 114,849 | ||||||||
|
| |||||||||
555,828 | ||||||||||
|
| |||||||||
Texas 7.4% | ||||||||||
El Paso Water and Sewer Revenue, Refunding and Improvement, 4.00%, 3/01/33 | 100,000 | 105,631 | ||||||||
Rockwall ISD, GO, Refunding, PSF Guarantee, 5.00%, 2/15/31 | 100,000 | 116,879 | ||||||||
Round Rock Utility Revenue, Refunding, 2.75%, 8/01/29 | 100,000 | 94,440 | ||||||||
Texas State Water Development Board Revenue, State Water Implementation, Master Trust, Series A, 4.00%, 10/15/33 | 100,000 | 105,350 | ||||||||
University of Texas System Revenue, Financing System, Refunding, Series A, 5.00%, 8/15/22 | 100,000 | 110,486 | ||||||||
|
| |||||||||
532,786 | ||||||||||
|
| |||||||||
Utah 1.3% | ||||||||||
Utah State Building Ownership Authority Lease Revenue, State Facilities Master Lease Program, 2.50%, 5/15/27 | 100,000 | 95,713 | ||||||||
|
| |||||||||
Washington 6.3% | ||||||||||
Seattle Municipal Light and Power Revenue, Improvement and Refunding, Series C, 4.00%, 9/01/35 | 100,000 | 104,343 | ||||||||
Spokane County School District No. 356 Central Valley GO, 5.00%, 12/01/26 | 100,000 | 117,467 | ||||||||
Washington Health Care Facilities Authority Revenue, MultiCare Health System, Refunding, Series B, 5.00%, 8/15/29 | 100,000 | 116,227 | ||||||||
Washington State GO, Various Purpose, Series A, 5.00%, 8/01/30 | 100,000 | 116,677 | ||||||||
|
| |||||||||
454,714 | ||||||||||
|
| |||||||||
Wisconsin 1.4% | ||||||||||
Fond Du Lac GO, Fond Du Lac County, Refunding, Series B, 2.00%, 4/01/22 | 100,000 | 98,764 | ||||||||
|
| |||||||||
Total Investments (Cost $7,393,241) 98.9% | 7,120,219 | |||||||||
Other Assets, less Liabilities 1.1% | 82,174 | |||||||||
|
| |||||||||
Net Assets 100.0% | $ | 7,202,393 | ||||||||
|
|
See Abbreviations on page 29.
20 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
September 30, 2018 (unaudited)
Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Assets: | ||||||||
Investments in securities: | ||||||||
Cost — Unaffiliated issuers | $ | 7,324,633 | $ | 7,393,241 | ||||
|
| |||||||
Value — Unaffiliated issuers | $ | 7,163,983 | $ | 7,120,219 | ||||
Cash | 70,323 | 51,250 | ||||||
Receivables: | ||||||||
Interest | 82,973 | 75,253 | ||||||
Affiliates | 11,969 | 6,730 | ||||||
|
| |||||||
Total assets | 7,329,248 | 7,253,452 | ||||||
Liabilities: | ||||||||
Payables: | ||||||||
Transfer agent fees | 16,921 | 16,921 | ||||||
Distributions to shareholders | 13,709 | 14,751 | ||||||
Custodian fees | 1,356 | 1,356 | ||||||
Professional fees | 9,726 | 11,695 | ||||||
Reports to shareholders | 3,008 | 3,008 | ||||||
Registration and filing fees | 3,067 | 3,117 | ||||||
Accrued expenses and other liabilities | 191 | 211 | ||||||
|
| |||||||
Total liabilities | 47,978 | 51,059 | ||||||
|
| |||||||
Net assets, at value | $ | 7,281,270 | $ | 7,202,393 | ||||
|
| |||||||
Net assets consist of: | ||||||||
Paid-in capital | $ | 7,500,000 | $ | 7,500,000 | ||||
Total distributable earnings (loss) | (218,730 | ) | (297,607 | ) | ||||
|
| |||||||
Net assets, at value | $ | 7,281,270 | $ | 7,202,393 | ||||
|
| |||||||
Shares outstanding | 300,000 | 300,000 | ||||||
|
| |||||||
Net asset value per share | $ | 24.27 | $ | 24.01 | ||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 21 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the period ended September 30, 2018 (unaudited)
Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Investment income: | ||||||||
Interest: | ||||||||
Unaffiliated issuers | $ | 100,014 | $ | 109,573 | ||||
|
| |||||||
Total investment income | 100,014 | 109,573 | ||||||
|
| |||||||
Expenses: | ||||||||
Management fees (Note 3a) | 22,961 | 22,835 | ||||||
Transfer agent fees | 7,821 | 7,821 | ||||||
Custodian fees | 627 | 627 | ||||||
Reports to shareholders | 2,890 | 2,884 | ||||||
Registration and filing fees | 4,245 | 4,144 | ||||||
Professional fees | 21,010 | 15,733 | ||||||
Trustees’ fees and expenses | 422 | 412 | ||||||
Pricing fees | 10,874 | 10,873 | ||||||
Other | 3,961 | 3,960 | ||||||
|
| |||||||
Total expenses | 74,811 | 69,289 | ||||||
Expenses waived/paid by affiliates (Note 3c) | (63,790 | ) | (58,329 | ) | ||||
|
| |||||||
Net expenses | 11,021 | 10,960 | ||||||
|
| |||||||
Net investment income | 88,993 | 98,613 | ||||||
|
| |||||||
Realized and unrealized gains (losses): | ||||||||
Net realized gain (loss) from: | ||||||||
Investments: | ||||||||
Unaffiliated issuers | (33,575 | ) | (13,336 | ) | ||||
|
| |||||||
Net realized gain (loss) | (33,575 | ) | (13,336 | ) | ||||
|
| |||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Investments: | ||||||||
Unaffiliated issuers | (4,902 | ) | (86,906 | ) | ||||
|
| |||||||
Net change in unrealized appreciation (depreciation) | (4,902 | ) | (86,906 | ) | ||||
|
| |||||||
Net realized and unrealized gain (loss) | (38,477 | ) | (100,242 | ) | ||||
|
| |||||||
Net increase (decrease) in net assets resulting from operations | $ | 50,516 | $ | (1,629 | ) | |||
|
|
22 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 88,993 | $ | 66,889 | $ | 98,613 | $ | 90,991 | ||||||||
Net realized gain (loss) | (33,575 | ) | (26,590 | ) | (13,336 | ) | (13,465 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (4,902 | ) | (155,748 | ) | (86,906 | ) | (186,116 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | 50,516 | (115,449 | ) | (1,629 | ) | (108,590 | ) | |||||||||
|
| |||||||||||||||
Distributions to shareholders (Note 1c) | (87,980 | ) | (65,817 | ) | (97,802 | ) | (89,586 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | 7,500,000 | — | 7,500,000 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (37,464 | ) | 7,318,734 | (99,431 | ) | 7,301,824 | ||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 7,318,734 | — | 7,301,824 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1c) | $ | 7,281,270 | $ | 7,318,734 | $ | 7,202,393 | $ | 7,301,824 | ||||||||
|
|
aFor the period August 31, 2017 (commencement of operations) to March 31, 2018.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 23 |
FRANKLIN TEMPLETON ETF TRUST
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of thirty-five separate funds, two of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Each of the Funds are an exchange traded fund (ETF) and are actively managed, thus they are not designed to track an index.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Debt securities generally trade in the over-the-counter (OTC) market rather than on a securities exchange. The Funds’ pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value.
The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
b. Income Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of September 30, 2018, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.
c. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of
24 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
premium and accretion of discount on debt securities are included in interest income. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.*
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
d. Insurance
The scheduled payments of interest and principal for each insured municipal security in the Trust are insured by either a new issue insurance policy or a secondary insurance policy. Some municipal securities in the Funds are secured by collateral guaranteed by an agency of the U.S. government. Depending on the type of coverage, premiums for insurance are either added to the cost basis of the security or paid by a third party.
Insurance companies typically insure municipal bonds that tend to be of very high quality, with the majority of underlying
municipal bonds rated A or better. However, an event involving an insurer could have an adverse effect on the value of the securities insured by that insurance company. There can be no assurance the insurer will be able to fulfill its obligations under the terms of the policy.
e. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
f. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
*Effective with the current reporting period, it is no longer required to present certain line items on the Statements of Changes in Net Assets. Such disclosure changes are included in the Statement of Changes in Net Assets, therefore prior period amounts are presented below.
For the year ended March 31, 2018, distributions to shareholders were as follows:
Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Distributions from net investment income: | $ | (65,817 | ) | $ | (89,586 | ) |
For the year ended March 31, 2018, undistributed net investment income included in net assets were as follows:
Funds | Undistributed net investment income | |||||||
Franklin Liberty Intermediate Municipal Opportunities ETF | $ | 1,072 | ||||||
Franklin Liberty Municipal Bond ETF | 1,405 |
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specified number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or
libertyshares.com | Semiannual Report | 25 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities). For the period ended September 30, 2018, all Creation Unit transactions were made in cash.
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At September 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
Franklin Liberty Intermediate Municipal Opportunities ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 4,872,980 | 300,000 | $ | 7,500,000 | ||||||||||||||
Shares redeemed | (200,000 | ) | (4,872,980 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | — | 300,000 | $ | 7,500,000 | ||||||||||||||
|
| |||||||||||||||||||
Franklin Liberty Municipal Bond ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 300,000 | $ | 7,500,000 |
aFor the period August 31, 2017 (commencement of operations) to March 31, 2018.
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers and/or directors of the following subsidiaries:
Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter |
26 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
a. Management Fees
The Funds pay an investment management fee to Advisers based on the average daily net assets of each of the Funds as follows:
Annualized Fee Rate | Net Assets | |
0.625% | Up to and including $100 million | |
0.500% | Over $100 million, up to and including $250 million | |
0.450% | Over $250 million, up to and including $7.5 billion | |
0.440% | Over $7.5 billion, up to and including $10 billion | |
0.430% | Over $10 billion, up to and including $12.5 billion | |
0.420% | Over $12.5 billion, up to and including $15 billion | |
0.400% | Over $15 billion, up to and including $17.5 billion | |
0.380% | Over $17.5 billion, up to and including $20 billion | |
0.360% | In excess of $20 billion |
For the period ended September 30, 2018, each Fund’s annualized gross effective investment management fee rate based on average daily net assets was as follows:
Annualized Fee Rate | ||
Franklin Liberty Intermediate Municipal Opportunities ETF | 0.625% | |
Franklin Liberty Municipal Bond ETF | 0.625% |
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on the Funds’ average daily net assets, and is not an additional expense of the Funds.
c. Waiver and Expense Reimbursements
Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Funds so that the expenses (including acquired fund fees and expenses) for each of the Funds does not exceed 0.30%, based on the average net assets (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until July 31, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.
d. Other Affiliated Transactions
At September 30, 2018, the shares of the Funds were owned by the following entities.
Fund | Shares | Percentage of Outstanding Sharesa | ||||||
Franklin Liberty Intermediate Municipal Opportunities ETF | ||||||||
Franklin Resources Inc. | 105,000 | 35.0% | ||||||
|
| |||||||
Franklin Liberty Municipal Bond ETF | ||||||||
Franklin Federal Limited-Term Tax-Free Income Fund | 75,000 | 25.0% | ||||||
Franklin Resources Inc. | 65,000 | 21.7% | ||||||
|
| |||||||
140,000 | 46.7% | |||||||
|
|
aInvestment activities of significant shareholders could have a material impact on the Funds.
libertyshares.com | Semiannual Report | 27 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2018, the capital loss carryforwards were as follows:
Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Capital loss carryforwards not subject to expiration: | ||||||||
Short term | $ | 26,590 | $ | 13,465 | ||||
Long term | — | — | ||||||
|
| |||||||
Total capital loss carryforwards | $ | 26,590 | $ | 13,465 | ||||
|
|
At September 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Cost of investments | $ | 7,324,633 | $ | 7,393,241 | ||||
|
| |||||||
Unrealized appreciation | $ | 6,127 | $ | 962 | ||||
Unrealized depreciation | (166,777 | ) | (273,984 | ) | ||||
|
| |||||||
Net unrealized appreciation (depreciation) | $ | (160,650 | ) | $ | (273,022 | ) | ||
|
|
5. Investment Transactions
Purchases and sales of investments (excluding short term securities and in-kind transactions, if any) for the Period ended September 30, 2018, were as follows:
Franklin Liberty Intermediate Municipal Opportunities ETF | Franklin Liberty Municipal Bond ETF | |||||||
Purchases | $ | 874,214 | $ | 380,074 | ||||
Sales | $ | 1,011,591 | $ | 345,348 |
6. Credit Risk
At September 30, 2018, Franklin Intermediate Municipal Opportunities ETF had 15.83% of its portfolio invested in high yield securities, or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.
7. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
• | Level 1 – quoted prices in active markets for identical financial instruments |
• | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
28 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
7. Fair Value Measurements (continued)
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement. At September 30, 2018, all of the Funds’ investments in financial instruments carried at fair value were valued using Level 2 inputs.
8. New Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities acquired at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities acquired at a discount, which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management is currently evaluating the impact, if any, of applying this provision.
In August 2018, FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in the ASU modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Management is currently evaluating the impact, if any, of applying this provision.
9. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
Abbreviations
Selected Portfolio | ||
AGMC | Assured Guaranty Municipal Corp. | |
BAM | Build America Mutual Assurance Co. | |
CDA | Community Development Authority/Agency | |
CFD | Community Facilities District | |
EDC | Economic Development Corp. | |
EDR | Economic Development Revenue | |
GO | General Obligation | |
ID | Improvement District | |
IDA | Industrial Development Authority/Agency | |
IDAR | Industrial Development Authority Revenue | |
ISD | Independent School District | |
MFHR | Multi-Family Housing Revenue | |
MTA | Metropolitan Transit Authority | |
PFA | Public Financing Authority | |
PSF | Permanent School Fund | |
RDA | Redevelopment Agency/Authority | |
USD | Unified/Union School District |
libertyshares.com | Semiannual Report | 29 |
FRANKLIN TEMPLETON ETF TRUST
Board Approval of Investment Management Agreements
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty Intermediate Municipal Opportunities ETF
Franklin Liberty Municipal Bond ETF
(each a Fund)
At an in-person meeting held on May 16, 2018 (Meeting), the Board of Trustees (Board) of Franklin Templeton ETF Trust (Trust), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved the continuance of the investment management agreement between Franklin Advisers, Inc. (Manager) and the Trust, on behalf of each Fund (each a Management Agreement) for an additional one-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate.
In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by the Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information provided in response to a detailed set of requests for information submitted to the Manager by Independent Trustee counsel on behalf of the Independent Trustees in connection with the annual contract renewal process. In addition, prior to the Meeting, the Independent Trustees held a telephonic contract renewal meeting at which the Independent Trustees conferred amongst themselves and Independent Trustee counsel about contract renewal matters. The Board reviewed and considered all of the factors it deemed relevant in approving the continuance of each Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services provided by the Manager; (ii) the investment performance of each Fund; (iii) the costs of the services provided and profits realized by the Manager and its affiliates from the relationship with each Fund; (iv) the extent to which economies of scale are realized as each Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund investors.
In approving the continuance of each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the terms of the Management Agreement are fair and reasonable and that the continuance of such Management Agreement is in the best interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager and its affiliates to the Fund and its shareholders. This information included, among other things, the qualifications, background and experience of the senior management and investment personnel of the Manager; the structure of investment personnel compensation; oversight of third-party service providers; investment performance reports and related financial information for the Fund; reports on expenses; legal and compliance matters; risk controls; pricing and other services provided by the Manager and its affiliates; and management fees charged by the Manager and its affiliates to U.S. funds and other accounts, including management’s explanation of differences among accounts where relevant. The Board noted management’s continuing efforts and expenditures in establishing effective business continuity plans and developing strategies to address areas of heightened concern in the registered fund industry, such as cybersecurity and liquidity risk management.
The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the Franklin Templeton family of funds. The Board noted the financial position of Franklin Resources, Inc. (FRI), the Manager’s parent, and its commitment to the registered fund business as evidenced by its continued introduction of new funds, reassessment of the fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Fund by the FTI organization.
Following consideration of such information, the Board was satisfied with the nature, extent and quality of services provided by the Manager and its affiliates to the Funds and their shareholders.
FUND PERFORMANCE. The Board noted that the Funds commenced operations on August 31, 2017, and thus the Funds did not have investment performance for the Board to review and consider for the one-year period ended March 31, 2018. The Board also noted its ongoing discussions with the
30 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
Manager about the performance of the Funds to date and the importance of performance to asset growth.
COMPARATIVE FEES AND EXPENSES. The Board reviewed and considered information regarding each Fund’s actual total expense ratio and its various components, including, as applicable, management fees; transfer agent expenses; underlying fund expenses; Rule 12b-1 and non-Rule 12b-1 service fees; and other non-management fees. The Board considered the actual total expense ratio and, separately, the contractual management fee rate, without the effect of fee waivers (Management Rate), if any, of each Fund in comparison to the median expense ratio and median Management Rate, respectively, of other exchange-traded funds deemed comparable to and with a similar expense structure as the Fund selected by Broadridge (Expense Group). Broadridge fee and expense data is based upon information taken from each fund’s most recent annual report, which reflects historical asset levels that may be quite different from those currently existing, particularly in a period of market volatility. While recognizing such inherent limitation and the fact that expense ratios and Management Rates generally increase as assets decline and decrease as assets grow, the Board believed the independent analysis conducted by Broadridge to be an appropriate measure of comparative fees and expenses. The Broadridge Management Rate includes administrative charges. The Board received a description of the methodology used by Broadridge to select the exchange-traded funds included in an Expense Group.
The Expense Group for the Franklin Liberty Intermediate Municipal Opportunities ETF was comprised of actively managed exchange-traded funds, which included the Fund and four other intermediate municipal debt funds. The Expense Group for the Franklin Liberty Municipal Bond ETF was comprised of actively managed exchange-traded funds, which included the Fund and three other general and insured municipal debt funds. The Board noted that the Management Rates for these Funds were slightly above the medians of their respective Expense Groups, but their actual total expense ratios were below the medians of their respective Expense Groups. The Board concluded that the Management Rates charged to these Funds are reasonable. In doing so, the Board noted the small size of the Expense Groups and that each Fund’s actual total expense ratio reflected a fee waiver from management.
PROFITABILITY. The Board reviewed and considered information regarding the profits realized by the Manager and its affiliates in connection with the operation of each Fund. In this respect, the Board considered the Fund profitability analysis provided by the Manager that addresses the overall profitability of FTI’s U.S. fund business, as well as its profits in providing investment management and other services to each of the individual funds during the 12-month period ended September 30, 2017, being the most recent fiscal year-end for FRI. The Board noted that although management continually makes refinements to its methodologies used in calculating profitability in response to organizational and product-related changes, the overall methodology has remained consistent with that used in the Funds’ profitability report presentations from prior years. Additionally, PricewaterhouseCoopers LLP, auditor to Franklin Resources, Inc. and certain Franklin Templeton funds, has been engaged by the Manager to periodically review and assess the allocation methodologies to be used solely by the Funds’ Board with respect to the profitability analysis.
The Board noted management’s belief that costs incurred in establishing the infrastructure necessary for the type of fund operations conducted by the Manager and its affiliates may not be fully reflected in the expenses allocated to each Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also noted management’s expenditures in improving shareholder services provided to the Funds, as well as the need to implement systems and meet additional regulatory and compliance requirements resulting from recent SEC and other regulatory requirements.
The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including revenues generated from transfer agent services, potential benefits resulting from personnel and systems enhancements necessitated by fund growth, as well as increased leverage with service providers and counterparties. Based upon its consideration of all these factors, the Board concluded that the level of profits realized by the Manager and its affiliates from providing services to each Fund was not excessive in view of the nature, extent and quality of services provided to each Fund.
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FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
ECONOMIES OF SCALE. The Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of shareholders. The Board considered the Manager’s view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments the Manager incurs across the Franklin Templeton family of funds as a whole. The Board noted that the Funds commenced operations on August 31, 2017 and that, as of December 31, 2017, each Fund’s net assets were approximately $7 million. The Board recognized that there would not likely be any economies of scale until each Fund’s assets grow.
CONCLUSION. Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the continuation of each Management Agreement for an additional one-year period.
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at libertyshares.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at libertyshares.com.
32 | Semiannual Report | libertyshares.com |
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
Semiannual Report | ||||||
Franklin Templeton ETF Trust | ||||||
Investment Manager Franklin Advisers, Inc. | Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 libertyshares.com | Investor Services Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 |
© 2018 Franklin Templeton Investments. All rights reserved. | ETF4 S 11/18 |
Franklin Templeton
ETF Trust
Semiannual Report
September 30, 2018
Franklin FTSE Asia ex Japan ETF | Franklin FTSE India ETF | |
Franklin FTSE Australia ETF | Franklin FTSE Italy ETF | |
Franklin FTSE Brazil ETF | Franklin FTSE Japan ETF | |
Franklin FTSE Canada ETF | Franklin FTSE Japan Hedged ETF | |
Franklin FTSE China ETF | Franklin FTSE Mexico ETF | |
Franklin FTSE Europe ETF | Franklin FTSE Russia ETF | |
Franklin FTSE Europe Hedged ETF | Franklin FTSE South Korea ETF | |
Franklin FTSE France ETF | Franklin FTSE Switzerland ETF | |
Franklin FTSE Germany ETF | Franklin FTSE Taiwan ETF | |
Franklin FTSE Hong Kong ETF | Franklin FTSE United Kingdom ETF |
Franklin Templeton Investments
Why choose Franklin Templeton Investments?
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visit libertyshares.com for fund
updates and documents.
Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
libertyshares.com | Not part of the semiannual report | 1 |
SEMIANNUAL REPORT
The global economy expanded during the six-month period under review amid generally upbeat economic data across regions. In this environment, the FTSE All-World Index, which measures performance of global developed and emerging market stocks, generated a positive total return for the six months ended September 30, 2018. Global markets were aided by higher crude oil prices and encouraging corporate earnings reports.
However, at certain times during the period, global markets reflected investor concerns about tensions in the Korean peninsula and political uncertainties in the U.S. and the European Union (EU), as well as worries that strong economic growth and rising inflation in the U.S. and other countries would lead central banks to increase interest rates sooner than expected. Markets were further pressured by the Trump administration’s protectionist trade policies, U.S. trade disputes with its allies and China, and fears of tighter regulation of information technology and technology-related companies. The Turkish lira’s and Argentine peso’s rapid deterioration and accompanying fears of a contagion effect also hurt investor confidence, particularly in emerging markets. However, investors were encouraged by an overall easing of tensions in the Korean peninsula, a U.S.-EU agreement to try to reduce trade barriers and a trade deal between the U.S. and Mexico, which Canada joined at period-end.
The U.S. economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The unemployment rate declined from 4.1% in March 2018, as reported at the beginning of the six-month period, to a nearly 49-year low of 3.7% at period-end.1 Annual inflation, as measured by the Consumer Price Index, decreased from 2.4% in March 2018, as reported at the beginning of the period, to 2.3% at period-end.1 The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate in June and September 2018 and continued reducing its balance sheet as part of an ongoing plan to normalize monetary policy. In September 2018, the Fed raised its forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018.
In Europe, the U.K.’s quarterly economic growth accelerated in 2018’s second quarter amid growth in the services sector. The Bank of England raised its key policy rate once during the review period. The eurozone’s quarterly growth remained stable in 2018’s second quarter but moderated in the third quarter. The bloc’s annual inflation rate ended the period higher than in March 2018. The European Central Bank (ECB) kept its benchmark interest rate unchanged during the period. In September 2018, the ECB confirmed it would further reduce its monthly bond purchases beginning in October 2018, as previously announced in June, and reiterated its plan to conclude the program at the end of 2018, while keeping interest rates unchanged through at least the summer of 2019.
In Asia, Japan’s quarterly gross domestic product (GDP) expanded in 2018’s second quarter, mainly due to growth in business spending and household consumption. The Bank of Japan left its benchmark interest rate unchanged during the period and continued its monetary stimulus measures.
In emerging markets, Brazil’s quarterly GDP growth accelerated in 2018’s second quarter. Russia’s annual GDP growth rate accelerated in 2018’s second quarter. The Bank of Russia kept its key rate unchanged through most of the period but raised it near period-end. China’s GDP continued to grow in 2018’s third quarter, though at the slowest annual rate since 2009. The People’s Bank of China left its benchmark interest rate unchanged during the period, but it took measures to improve financial liquidity to mitigate the negative effects of the U.S.-China trade dispute and support economic growth. Overall, emerging market stocks, as measured by the FTSE Emerging Index, declined during
the period.
The foregoing information reflects our analysis and opinions as of September 30, 2018. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: U.S. Bureau of Labor Statistics.
2 | Semiannual Report | libertyshares.com |
Franklin FTSE Asia ex Japan ETF
This semiannual report for Franklin FTSE Asia ex Japan ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Asia ex Japan RIC Capped Index (the FTSE Asia ex Japan Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Asia ex Japan Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -8.60% based on market price and -6.59% based on net asset value. In comparison, the FTSE Asia ex Japan Capped Index had a -6.63% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 5 .
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Asia ex Japan Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 14.1% | |||
Interactive Media & Services | 7.5% | |||
Semiconductors & Semiconductor Equipment | 6.3% | |||
Technology Hardware, Storage & Peripherals | 6.0% | |||
Insurance | 5.5% | |||
Oil, Gas & Consumable Fuels | 5.4% | |||
Real Estate Management & Development | 4.9% | |||
Internet & Direct Marketing Retail | 4.9% | |||
Electronic Equipment, Instruments & Components | 2.8% | |||
Industrial Conglomerates | 2.8% |
intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Asia ex Japan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Asia ex Japan Capped Index is based on the FTSE Asia ex Japan Index and is designed to measure the performance of large- and mid-capitalization stocks from developed and emerging Asian countries, excluding Japan. The Chinese constituents in the FTSE Asia ex Japan Capped Index are represented by H-shares, B-shares, N-shares, Red Chips, P-Chips and S-Chips.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 104.
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FRANKLIN FTSE ASIA EX JAPAN ETF
Thank you for your participation in Franklin FTSE Asia ex Japan ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
Tencent Holdings Ltd. Interactive Media & Services, China | 5.1% | |||
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals, South Korea | 4.9% | |||
Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment, Taiwan | 4.4% | |||
Alibaba Group Holding Ltd., ADR Internet & Direct Marketing Retail, China | 3.9% | |||
AIA Group Ltd. Insurance, Hong Kong | 2.3% | |||
China Construction Bank Corp., H Banks, China | 1.7% | |||
Baidu Inc., ADR Interactive Media & Services, China | 1.4% | |||
Industrial and Commercial Bank of China Ltd., H Banks, China | 1.3% | |||
Reliance Industries Ltd. Oil, Gas & Consumable Fuels, India | 1.2% | |||
China Mobile Ltd. Wireless Telecommunication Services, China | 1.1% |
Top 10 Countries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
China | 33.3% | |||
South Korea | 16.2% | |||
Taiwan | 13.7% | |||
Hong Kong | 11.4% | |||
India | 10.7% | |||
Singapore | 4.0% | |||
Thailand | 3.7% | |||
Malaysia | 3.2% | |||
Indonesia | 2.1% | |||
Philippines | 1.2% |
CFA® is a trademark owned by CFA Institute.
4 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE ASIA EX JAPAN ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/9/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -6.59% | 4 | -8.60% | -6.59% | 4 | -8.60% | ||||||||||
Since Inception (2/6/18) | -6.79% | -6.75% | -6.79% | -6.75% |
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 libertyshares.com or call (800) 342-5236.
See page 6 for Performance Summary footnotes.
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FRANKLIN FTSE ASIA EX JAPAN ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.088988 |
Total Annual Operating Expenses5
0.19% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Asian issuers involve risks that are specific to Asia, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Total return information is based on net asset value calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
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.
6 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE ASIA EX JAPAN ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 934.10 | $ | 0.92 | $ | 1,024.12 | $ | 0.96 | 0.19 | % |
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.
libertyshares.com | Semiannual Report | 7 |
This semiannual report for Franklin FTSE Australia ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Australia RIC Capped Index (the FTSE Australia Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Australia Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +2.25% based on market price and +4.08% based on net asset value. In comparison, the FTSE Australia Capped Index posted a +4.10% 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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Australia Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 26.9% | |||
Metals & Mining | 14.8% | |||
Food & Staples Retailing | 6.7% | |||
Biotechnology | 6.3% | |||
Equity Real Estate Investment Trusts (REITs) | 6.1% | |||
Oil, Gas & Consumable Fuels | 6.0% | |||
Capital Markets | 4.2% | |||
Insurance | 4.1% | |||
Hotels, Restaurants & Leisure | 3.0% | |||
Transportation Infrastructure | 2.9% |
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
1. The FTSE Australia Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Australia Capped Index is based on the FTSE Australia Index and is designed to measure the performance of Australian large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 123.
8 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE AUSTRALIA ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Commonwealth Bank of Australia Banks | 8.7% | |||
BHP Billiton Ltd. Metals & Mining | 7.7% | |||
Westpac Banking Corp. Banks | 6.6% | |||
CSL Ltd. Biotechnology | 6.3% | |||
Australia & New Zealand Banking Group Ltd. Banks | 5.7% | |||
National Australia Bank Ltd. Banks | 5.3% | |||
Wesfarmers Ltd. Food & Staples Retailing | 3.9% | |||
Macquarie Group Ltd. Capital Markets | 2.7% | |||
Woolworths Group Ltd. Food & Staples Retailing | 2.6% | |||
Woodside Petroleum Ltd. Oil, Gas & Consumable Fuels | 2.5% |
Thank you for your participation in Franklin FTSE Australia ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 9 |
FRANKLIN FTSE AUSTRALIA ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +4.08% | +2.25% | +4.08% | +2.25% | ||||||||||||
Since Inception (11/2/17) | +1.95% | +1.18% | +1.95% | +1.18% |
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 libertyshares.com or call (800) 342-5236.
See page 11 for Performance Summary footnotes.
10 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE AUSTRALIA ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.464601 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Australian issuers involve risks that are specific to Australia, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 11 |
FRANKLIN FTSE AUSTRALIA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,040.80 | $ | 0.46 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
12 | Semiannual Report | libertyshares.com |
This semiannual report for Franklin FTSE Brazil ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Brazil RIC Capped Index (the FTSE Brazil Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Brazil Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -23.92% based on market price and -22.18% based on net asset value. In comparison, the FTSE Brazil Capped Index had a -22.11% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Brazil Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 25.4% | |||
Metals & Mining | 16.7% | |||
Oil, Gas & Consumable Fuels | 12.2% | |||
Beverages | 5.6% | |||
Capital Markets | 4.9% | |||
Multiline Retail | 3.3% | |||
Electric Utilities | 3.3% | |||
Paper & Forest Products | 2.9% | |||
Insurance | 2.6% | |||
Food & Staples Retailing | 2.6% |
1. The FTSE Brazil Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Brazil Capped Index is based on the FTSE Brazil Index and is designed to measure the performance of Brazilian large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 126.
libertyshares.com | Semiannual Report | 13 |
FRANKLIN FTSE BRAZIL ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Vale SA Metals & Mining | 14.1% | |||
Petroleo Brasileiro SA Oil, Gas & Consumable Fuels | 10.6% | |||
Itau Unibanco Holding SA Banks | 9.4% | |||
Banco Bradesco SA Banks | 8.1% | |||
Ambev SA Beverages | 5.6% | |||
B3 SA - Brasil Bolsa Balcao Capital Markets | 4.6% | |||
Itausa-Investimentos Itau SA Banks | 4.3% | |||
Banco do Brasil SA Banks | 2.3% | |||
Suzano Papel e Celulose SA Paper & Forest Products | 1.6% | |||
Lojas Renner SA Multiline Retail | 1.6% |
Thank you for your participation in Franklin FTSE Brazil ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
14 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE BRAZIL ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/7/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -22.18% | -23.92% | -22.18% | -23.92% | ||||||||||||
Since Inception (11/3/17) | -10.62% | -11.73% | -10.62% | -11.73% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 16 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 15 |
FRANKLIN FTSE BRAZIL ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.363332 |
Total Annual Operating Expenses4
0.19% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Brazilian issuers involve risks that are specific to Brazil, including certain legal, regulatory, political and economic risks. The Brazilian economy has experienced in the past, and may continue to experience, periods of high inflation rates and political unrest. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
16 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE BRAZIL ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 778.20 | $ | 0.85 | $ | 1,024.12 | $ | 0.96 | 0.19 | % |
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.
libertyshares.com | Semiannual Report | 17 |
This semiannual report for Franklin FTSE Canada ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Canada RIC Capped Index (the FTSE Canada Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Canada Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +5.77% based on market price and +5.91% based on net asset value. In comparison, the FTSE Canada Capped Index posted a +5.82% total return for the same period.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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Canada Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 32.4% | |||
Oil, Gas & Consumable Fuels | 20.3% | |||
Insurance | 8.3% | |||
Road & Rail | 7.5% | |||
Metals & Mining | 4.9% | |||
Capital Markets | 4.4% | |||
Food & Staples Retailing | 3.3% | |||
Chemicals | 2.8% | |||
Commercial Services & Supplies | 1.6% | |||
Software | 1.6% |
1. The FTSE Canada Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Canada Capped Index is based on the FTSE Canada Index and is designed to measure the performance of Canadian large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 129.
18 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE CANADA ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Royal Bank of Canada Banks | 9.1% | |||
The Toronto-Dominion Bank Banks | 8.8% | |||
Bank of Nova Scotia Banks | 5.8% | |||
Canadian National Railway Co. Road & Rail | 5.2% | |||
Suncor Energy Inc. Oil, Gas & Consumable Fuels | 5.0% | |||
Enbridge Inc. Oil, Gas & Consumable Fuels | 4.3% | |||
Bank of Montreal Banks | 4.2% | |||
Canadian Imperial Bank of Commerce Banks | 3.3% | |||
Canadian Natural Resources Ltd. Oil, Gas & Consumable Fuels | 3.1% | |||
Brookfield Asset Management Inc., A Capital Markets | 3.0% |
Thank you for your participation in Franklin FTSE Canada ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 19 |
FRANKLIN FTSE CANADA ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +5.91% | +5.77% | +5.91% | +5.77% | ||||||||||||
Since Inception (11/2/17) | +1.61% | +1.69% | +1.61% | +1.69% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 21 for Performance Summary footnotes.
20 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE CANADA ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.181406 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Canadian issuers involve risks that are specific to Canada, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 21 |
FRANKLIN FTSE CANADA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,059.10 | $ | 0.46 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
22 | Semiannual Report | libertyshares.com |
This semiannual report for Franklin FTSE China ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE China RIC Capped Index (the FTSE China Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE China Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -12.40% based on market price and -10.43% based on net asset value. In comparison, the FTSE China Capped Index had a -10.37% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE China Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Interactive Media & Services | 21.4% | |||
Internet & Direct Marketing Retail | 14.7% | |||
Banks | 14.6% | |||
Insurance | 6.6% | |||
Oil, Gas & Consumable Fuels | 5.9% | |||
Real Estate Management & Development | 5.3% | |||
Wireless Telecommunication Services | 3.4% | |||
Automobiles | 1.9% | |||
Pharmaceuticals | 1.8% | |||
Capital Markets | 1.6% |
1. The FTSE China Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE China Capped Index is based on the FTSE China Index and is designed to measure the performance of Chinese large- and mid-capitalization stocks, as represented by H-shares, B-shares, N-shares, Red Chips, P-Chips and S-Chips.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 132.
libertyshares.com | Semiannual Report | 23 |
FRANKLIN FTSE CHINA ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Tencent Holdings Ltd. Interactive Media & Services | 15.5% | |||
Alibaba Group Holding Ltd., ADR Internet & Direct Marketing Retail | 11.8% | |||
China Construction Bank Corp., H Banks | 5.1% | |||
Baidu Inc., ADR Interactive Media & Services | 4.2% | |||
Industrial and Commercial Bank of China Ltd., H Banks | 3.8% | |||
China Mobile Ltd. Wireless Telecommunication Services | 3.4% | |||
Ping An Insurance (Group) Co. of China Ltd., H Insurance | 3.3% | |||
Bank of China Ltd., H Banks | 2.2% | |||
CNOOC Ltd. Oil, Gas & Consumable Fuels | 2.1% | |||
China Petroleum & Chemical Corp., H Oil, Gas & Consumable Fuels | 1.7% |
Thank you for your participation in Franklin FTSE China ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
24 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE CHINA ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -10.43% | -12.40% | -10.43% | -12.40% | ||||||||||||
Since Inception (11/2/17) | -6.69% | -7.06% | -6.69% | -7.06% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 26 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 25 |
FRANKLIN FTSE CHINA ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.100711 |
Total Annual Operating Expenses4
0.19% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Chinese issuers involve risks that are specific to China, including certain legal, regulatory, political and economic risks. China may be subject to considerable degrees of economic, political and social instability. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
26 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE CHINA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 895.70 | $ | 0.90 | $ | 1,024.12 | $ | 0.96 | 0.19 | % |
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.
libertyshares.com | Semiannual Report | 27 |
This semiannual report for Franklin FTSE Europe ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Developed Europe RIC Capped Index (the FTSE Developed Europe Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Developed Europe Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -1.08% based on market price and -0.35% based on net asset value. In comparison, the FTSE Developed Europe Capped Index had a -0.45% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Developed Europe Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation.
Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 10.1% | |||
Pharmaceuticals | 9.2% | |||
Oil, Gas & Consumable Fuels | 8.2% | |||
Insurance | 5.8% | |||
Chemicals | 4.3% | |||
Food Products | 3.9% | |||
Textiles, Apparel & Luxury Goods | 3.1% | |||
Metals & Mining | 2.7% | |||
Beverages | 2.6% | |||
Capital Markets | 2.5% |
1. The FTSE Developed Europe Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Developed Europe Capped Index is based on the FTSE Developed Europe Index and is designed to measure the performance of large- and mid-capitalization stocks from developed European countries.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 140.
28 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE EUROPE ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
Royal Dutch Shell PLC, A, B Oil, Gas & Consumable Fuels, United Kingdom | 3.1% | |||
Nestle SA Food Products, Switzerland | 2.7% | |||
Novartis AG Pharmaceuticals, Switzerland | 2.0% | |||
HSBC Holdings PLC Banks, United Kingdom | 1.9% | |||
Roche Holding AG Pharmaceuticals, Switzerland | 1.9% | |||
Total SA Oil, Gas & Consumable Fuels, France | 1.7% | |||
BP PLC Oil, Gas & Consumable Fuels, United Kingdom | 1.6% | |||
SAP SE Software, Germany | 1.3% | |||
British American Tobacco PLC Tobacco, United Kingdom | 1.1% | |||
Siemens AG Industrial Conglomerates, Germany | 1.0% |
Thank you for your participation in Franklin FTSE Europe ETF. We look forward to serving your future investment needs.
Top 10 Countries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
United Kingdom | 28.3% | |||
France | 16.3% | |||
Germany | 14.7% | |||
Switzerland | 13.6% | |||
Spain | 4.7% | |||
Sweden | 4.5% | |||
Netherlands | 4.3% | |||
Italy | 3.4% | |||
Denmark | 2.6% | |||
Finland | 1.8% |
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 29 |
FRANKLIN FTSE EUROPE ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -0.35% | -1.08% | -0.35% | -1.08% | ||||||||||||
Since Inception (11/2/17) | -0.61% | -0.78% | -0.61% | -0.78% |
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 libertyshares.com or call (800) 342-5236.
See page 31 for Performance Summary footnotes.
30 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE EUROPE ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.559514 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of European issuers involve risks that are specific to Europe, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 31 |
FRANKLIN FTSE EUROPE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 996.50 | $ | 0.45 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
32 | Semiannual Report | libertyshares.com |
Franklin FTSE Europe Hedged ETF
This semiannual report for Franklin FTSE Europe Hedged ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Developed Europe RIC Capped Hedged to USD Index (the FTSE Developed Europe Capped Hedged Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Developed Europe Capped Hedged Index and in depositary receipts representing such securities, including indirectly through Franklin FTSE Europe ETF (Underlying Fund).
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +4.44% based on market price and +6.54% based on net asset value. In comparison, the FTSE Developed Europe Capped Hedged Index posted a +6.62% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 35.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Developed Europe Capped Hedged Index. We seek to achieve, over time, a correlation between the Fund’s
performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. We intend to enter into monthly foreign currency forward contracts and/or currency futures contracts designed to offset the Fund’s exposure to
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 10.0% | |||
Pharmaceuticals | 9.2% | |||
Oil, Gas & Consumable Fuels | 8.1% | |||
Insurance | 5.7% | |||
Chemicals | 4.3% | |||
Food Products | 3.8% | |||
Textiles, Apparel & Luxury Goods | 3.1% | |||
Metals & Mining | 2.7% | |||
Beverages | 2.6% | |||
Capital Markets | 2.5% |
1. The FTSE Developed Europe Capped Hedged Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Developed Europe Capped Hedged Index is based on the FTSE Developed Europe Hedged to USD Index and is designed to measure the performance of large- and mid-capitalization stocks from developed European countries. The FTSE Developed Europe Capped Hedged 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 FTSE Developed Europe Capped Hedged Index.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 154.
libertyshares.com | Semiannual Report | 33 |
FRANKLIN FTSE EUROPE HEDGED ETF
the component currencies, in order to replicate the hedge impact incorporated in the calculation of the Underlying Index. The Fund’s exposure to foreign currency forward contracts and currency futures contracts is based on the aggregate exposure of the Fund to the component currencies. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.
What is a futures contract?
A futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.
Thank you for your participation in Franklin FTSE Europe Hedged ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry, Country | % of Total Net Assets | |||
Royal Dutch Shell PLC, A, B Oil, Gas & Consumable Fuels, United Kingdom | 3.1% | |||
Nestle SA Food Products, Switzerland | 2.6% | |||
Novartis AG Pharmaceuticals, Switzerland | 2.0% | |||
HSBC Holdings PLC Banks, United Kingdom | 1.8% | |||
Roche Holding AG Pharmaceuticals, Switzerland | 1.9% | |||
Total SA Oil, Gas & Consumable Fuels, France | 1.7% | |||
BP PLC Oil, Gas & Consumable Fuels, United Kingdom | 1.6% | |||
SAP SE Software, Germany | 1.3% | |||
British American Tobacco PLC Tobacco, United Kingdom | 1.1% | |||
AstraZeneca PLC Pharmaceuticals, United Kingdom | 1.0% |
Top 10 Countries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
United Kingdom | 28.1% | |||
France | 16.2% | |||
Germany | 14.6% | |||
Switzerland | 13.5% | |||
Spain | 4.6% | |||
Sweden | 4.5% | |||
Netherlands | 4.3% | |||
Italy | 3.4% | |||
Denmark | 2.6% | |||
Finland | 1.7% |
34 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE EUROPE HEDGED ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +6.54% | +4.44% | +6.54% | +4.44% | ||||||||||||
Since Inception (11/2/17) | +1.63% | +1.34% | +1.63% | +1.34% |
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 libertyshares.com or call (800) 342-5236.
See page 36 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 35 |
FRANKLIN FTSE EUROPE HEDGED ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.377191 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of European issuers involve risks that are specific to Europe, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the Fund to participate in losses on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. While the Fund’s use of foreign currency forward contracts and/or currency futures contracts is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate the Fund’s exposure to the component currencies. The return of these currency hedging instruments will not perfectly offset the actual fluctuations between the component currencies and the U.S. dollar. Currency hedges are sometimes subject to imperfect matching between the derivative instruments and the currencies that the derivative instruments intend to hedge, and there can be no assurance that the Fund’s hedging transactions will be effective. The Fund’s exposure to the component currencies may not be fully hedged at all times. Because the Fund’s currency hedge is generally reset on a monthly basis, currency risk can develop or increase intra-month. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
36 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE EUROPE HEDGED ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,065.40 | $ | 0.47 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
libertyshares.com | Semiannual Report | 37 |
This semiannual report for Franklin FTSE France ETF’s covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE France RIC Capped Index (the FTSE France Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE France Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +1.42% based on market price and +2.96% based on net asset value. In comparison, the FTSE France Capped Index posted a +2.64% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 40.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE France Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Oil, Gas & Consumable Fuels | 10.3% | |||
Textiles, Apparel & Luxury Goods | 9.4% | |||
Aerospace & Defense | 8.4% | |||
Banks | 7.2% | |||
Pharmaceuticals | 6.5% | |||
Chemicals | 4.1% | |||
Insurance | 4.0% | |||
Construction & Engineering | 3.9% | |||
Electrical Equipment | 3.9% | |||
Personal Products | 3.7% |
1. The FTSE France Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE France Capped Index is based on the FTSE France Index and is designed to measure the performance of French large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 168.
38 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE FRANCE ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Total SA Oil, Gas & Consumable Fuels | 10.3% | |||
Sanofi Pharmaceuticals | 6.1% | |||
LVMH Moet Hennessy Louis Vuitton SE Textiles, Apparel & Luxury Goods | 5.6% | |||
Airbus SE Aerospace & Defense | 4.4% | |||
BNP Paribas SA Banks | 4.2% | |||
L’Oreal SA Personal Products | 3.7% | |||
Air Liquide SA Chemicals | 3.5% | |||
AXA SA Insurance | 3.3% | |||
Danone SA Food Products | 2.9% | |||
Safran SA Aerospace & Defense | 2.9% |
Thank you for your participation in Franklin FTSE France ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 39 |
FRANKLIN FTSE FRANCE ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +2.96% | +1.42% | +2.96% | +1.42% | ||||||||||||
Since Inception (11/2/17) | +3.22% | +3.17% | +3.22% | +3.17% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 41 for Performance Summary footnotes.
40 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE FRANCE ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.512772 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of French issuers involve risks that are specific to France, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 41 |
FRANKLIN FTSE FRANCE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,029.60 | $ | 0.46 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
42 | Semiannual Report | libertyshares.com |
This semiannual report for Franklin FTSE Germany ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Germany RIC Capped Index (the FTSE Germany Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Germany Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -5.33% based on market price and -4.80% based on net asset value. In comparison, the FTSE Germany Capped Index had a -4.69% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 45 .
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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Germany Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Chemicals | 12.5% | |||
Insurance | 9.9% | |||
Automobiles | 9.7% | |||
Software | 8.5% | |||
Industrial Conglomerates | 7.4% | |||
Pharmaceuticals | 7.1% | |||
Diversified Telecommunication Services | 4.3% | |||
Textiles, Apparel & Luxury Goods | 4.1% | |||
Real Estate Management & Development | 4.0% | |||
Health Care Providers & Services | 3.7% |
1. The FTSE Germany Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Germany Capped Index is based on the FTSE Germany Index and is designed to measure the performance of German large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 171.
libertyshares.com | Semiannual Report | 43 |
FRANKLIN FTSE GERMANY ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
SAP SE Software | 8.5% | |||
Siemens AG Industrial Conglomerates | 7.0% | |||
Allianz SE Insurance | 6.8% | |||
Bayer AG Pharmaceuticals | 5.9% | |||
BASF SE Chemicals | 5.8% | |||
Daimler AG Automobiles | 3.9% | |||
Deutsche Telekom AG Diversified Telecommunication Services | 3.7% | |||
Adidas AG Textiles, Apparel & Luxury Goods | 3.5% | |||
Linde AG Chemicals | 3.1% | |||
Volkswagen AG Automobiles | 2.7% |
Thank you for your participation in Franklin FTSE Germany ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
44 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE GERMANY ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -4.80% | -5.33% | -4.80% | -5.33% | ||||||||||||
Since Inception (11/2/17) | -8.34% | -8.59% | -8.34% | -8.59% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 46 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 45 |
FRANKLIN FTSE GERMANY ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.596692 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of German issuers involve risks that are specific to Germany, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
46 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE GERMANY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 952.00 | $ | 0.44 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
libertyshares.com | Semiannual Report | 47 |
This semiannual report for Franklin FTSE Hong Kong ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Hong Kong RIC Capped Index (the FTSE Hong Kong Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Hong Kong Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -4.87% based on market price and -3.20% based on net asset value. In comparison, the FTSE Hong Kong Capped Index had a -3.28% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 50 .
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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Hong Kong Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Real Estate Management & Development | 19.4% | |||
Insurance | 19.3% | |||
Industrial Conglomerates | 10.0% | |||
Banks | 7.6% | |||
Capital Markets | 6.6% | |||
Hotels, Restaurants & Leisure | 6.3% | |||
Electric Utilities | 5.9% | |||
Food Products | 4.3% | |||
Equity Real Estate Investment Trusts (REITs) | 4.1% | |||
Gas Utilities | 3.4% |
1. The FTSE Hong Kong Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Hong Kong Capped Index is based on the FTSE Hong Kong Index and is designed to measure the performance of Hong Kong large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 174.
48 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE HONG KONG ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
AIA Group Ltd. Insurance | 19.3% | |||
Hong Kong Exchanges and Clearing Ltd. Capital Markets | 6.3% | |||
CK Hutchison Holdings Ltd. Industrial Conglomerates | 5.5% | |||
Link REIT Equity Real Estate Investment Trusts (REITs) | 3.8% | |||
Sun Hung Kai Properties Ltd. Real Estate Management & Development | 3.7% | |||
CK Asset Holdings Ltd. Real Estate Management & Development | 3.6% | |||
Hang Seng Bank Ltd. Banks | 3.5% | |||
CLP Holdings Ltd. Electric Utilities | 3.4% | |||
Hong Kong and China Gas Co. Ltd. Gas Utilities | 3.2% | |||
BOC Hong Kong (Holdings) Ltd. Banks | 3.0% |
Thank you for your participation in Franklin FTSE Hong Kong ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 49 |
FRANKLIN FTSE HONG KONG ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -3.20% | -4.87% | -3.20% | -4.87% | ||||||||||||
Since Inception (11/2/17) | +0.38% | +0.57% | +0.38% | +0.57% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 51 for Performance Summary footnotes.
50 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE HONG KONG ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.396320 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Hong Kong issuers involve risks that are specific to Hong Kong, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 51 |
FRANKLIN FTSE HONG KONG ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 968.00 | $ | 0.44 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
52 | Semiannual Report | libertyshares.com |
This semiannual report for Franklin FTSE India ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE India RIC Capped Index (the FTSE India Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE India Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -6.16% based on market price and -4.56% based on net asset value. In comparison, the FTSE India Capped Index had a -4.09% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE India Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
IT Services | 17.4% | |||
Oil, Gas & Consumable Fuels | 16.1% | |||
Thrifts & Mortgage Finance | 9.2% | |||
Automobiles | 7.0% | |||
Banks | 6.1% | |||
Pharmaceuticals | 5.4% | |||
Metals & Mining | 4.2% | |||
Construction Materials | 3.3% | |||
Household Products | 3.2% | |||
Chemicals | 2.5% |
1. The FTSE India Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE India Capped Index is based on the FTSE India Index and is designed to measure the performance of Indian large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 178.
libertyshares.com | Semiannual Report | 53 |
FRANKLIN FTSE INDIA ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Reliance Industries Ltd. Oil, Gas & Consumable Fuels | 10.9% | |||
Housing Development Finance Corp. Ltd. Thrifts & Mortgage Finance | 8.2% | |||
Infosys Ltd. IT Services | 7.7% | |||
Tata Consultancy Services Ltd. IT Services | 5.6% | |||
Hindustan Unilever Ltd. Household Products | 3.2% | |||
Axis Bank Ltd. Banks | 3.1% | |||
Maruti Suzuki India Ltd. Automobiles | 2.5% | |||
ITC Ltd. Tobacco | 2.4% | |||
Sun Pharmaceutical Industries Ltd. Pharmaceuticals | 1.9% | |||
HCL Technologies Ltd. IT Services | 1.7% |
Thank you for your participation in Franklin FTSE India ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
54 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE INDIA ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/9/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -4.56% | -6.16% | -4.56% | -6.16% | ||||||||||||
Since Inception (2/6/18) | -8.50% | -8.42% | -8.50% | -8.42% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 56 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 55 |
FRANKLIN FTSE INDIA ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.066497 |
Total Annual Operating Expenses4
0.19% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Indian issuers involve risks that are specific to India, including certain legal, regulatory, political and economic risks. There are special risks associated with investments in India, including exposure to currency fluctuations, less liquidity, expropriation, confiscatory taxation, and exchange control regulations (including currency blockage). Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
56 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE INDIA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account | Expenses Paid During Period 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 954.40 | $ | 0.93 | $ | 1,024.12 | $ | 0.96 | 0.19 | % |
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.
libertyshares.com | Semiannual Report | 57 |
This semiannual report for Franklin FTSE Italy ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Italy RIC Capped Index (the FTSE Italy Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Italy Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -8.76% based on market price and -10.16% based on net asset value. In comparison, the FTSE Italy Capped Index had a -10.42% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 60 .
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Italy Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 24.5% | |||
Oil, Gas & Consumable Fuels | 15.0% | |||
Electric Utilities | 12.6% | |||
Automobiles | 8.8% | |||
Insurance | 7.6% | |||
Textiles, Apparel & Luxury Goods | 5.7% | |||
Energy Equipment & Services | 3.4% | |||
Machinery | 3.3% | |||
Transportation Infrastructure | 3.1% | |||
Diversified Telecommunication Services | 2.9% |
1. The FTSE Italy Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Italy Capped Index is based on the FTSE Italy Index and is designed to measure the performance of Italian large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 182.
58 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE ITALY ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Eni SpA Oil, Gas & Consumable Fuels | 12.2% | |||
Enel SpA Electric Utilities | 10.3% | |||
Intesa Sanpaolo SpA Banks | 10.0% | |||
UniCredit SpA Banks | 8.7% | |||
Assicurazioni Generali SpA Insurance | �� | 6.0% | ||
Fiat Chrysler Automobiles NV Automobiles, United Kingdom | 4.6% | |||
Ferrari NV Automobiles | 4.2% | |||
CNH Industrial NV Machinery, United Kingdom | 3.3% | |||
Atlantia SpA Transportation Infrastructure | 3.1% | |||
Luxottica Group SpA Textiles, Apparel & Luxury Goods | 3.1% |
Thank you for your participation in Franklin FTSE Italy ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 59 |
FRANKLIN FTSE ITALY ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -10.16% | -8.76% | -10.16% | -8.76% | ||||||||||||
Since Inception (11/2/17) | -7.30% | -7.51% | -7.30% | -7.51% |
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 libertyshares.com or call (800) 342-5236.
See page 61 for Performance Summary footnotes.
60 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE ITALY ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.525402 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Italian issuers involve risks that are specific to Italy, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 61 |
FRANKLIN FTSE ITALY ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 898.40 | $ | 0.43 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
62 | Semiannual Report | libertyshares.com |
This semiannual report for Franklin FTSE Japan ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Japan RIC Capped Index (the FTSE Japan Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Japan Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +0.01% based on market price and +1.44% based on net asset value. In comparison, the FTSE Japan Capped Index posted a +0.58% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 65.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Japan Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Automobiles | 7.5% | |||
Banks | 6.8% | |||
Pharmaceuticals | 5.8% | |||
Machinery | 5.3% | |||
Electronic Equipment, Instruments & Components | 5.2% | |||
Chemicals | 4.7% | |||
Wireless Telecommunication Services | 4.2% | |||
Road & Rail | 4.1% | |||
Trading Companies & Distributors | 3.7% | |||
Household Durables | 3.6% |
1. The FTSE Japan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Japan Capped Index is based on the FTSE Japan Index and is designed to measure the performance of Japanese large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 184.
libertyshares.com | Semiannual Report | 63 |
FRANKLIN FTSE JAPAN ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Toyota Motor Corp. Automobiles | 4.0% | |||
SoftBank Group Corp. Wireless Telecommunication Services | 2.1% | |||
Mitsubishi UFJ Financial Group Inc. Banks | 2.0% | |||
Sony Corp. Household Durables | 1.9% | |||
Sumitomo Mitsui Financial Group Inc. Banks | 1.3% | |||
Honda Motor Co. Ltd. Automobiles | 1.3% | |||
Keyence Corp. Electronic Equipment, Instruments & Components | 1.3% | |||
KDDI Corp. Wireless Telecommunication Services | 1.2% | |||
Mizuho Financial Group Inc. Banks | 1.1% | |||
Mitsubishi Corp. Trading Companies & Distributors | 1.0% |
Thank you for your participation in Franklin FTSE Japan ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
64 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE JAPAN ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +1.44% | 4 | +0.01% | +1.44% | 4 | +0.01% | ||||||||||
Since Inception (11/2/17) | +3.81% | +3.81% | +3.81% | +3.81% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 66 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 65 |
FRANKLIN FTSE JAPAN ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.099821 |
Total Annual Operating Expenses5
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Japanese issuers involve risks that are specific to Japan, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
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.
66 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE JAPAN ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,014.40 | $ | 0.45 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
libertyshares.com | Semiannual Report | 67 |
Franklin FTSE Japan Hedged ETF
We are pleased to bring you Franklin FTSE Japan Hedged ETF’s semiannual report for the period ended on September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Japan RIC Capped Hedged to USD Index (the FTSE Japan Capped Hedged Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Japan Capped Hedged Index and in depositary receipts representing such securities, including indirectly through Franklin FTSE Japan ETF (Underlying Fund).
Performance Overview
During the six-month, the Fund posted cumulative total returns of +9.67% based on market price and +9.16% based on net asset value. In comparison, the FTSE Japan Capped Hedged Index posted a +8.46% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 70.
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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Japan Capped Hedged Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95
or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. We intend to enter into monthly foreign currency forward contracts and/or currency futures contracts designed to offset the Fund’s exposure to the Japanese yen, in order to replicate the hedge impact incorporated in the calculation of the
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Automobiles | 7.4% | |||
Banks | 6.8% | |||
Pharmaceuticals | 5.8% | |||
Machinery | 5.3% | |||
Electronic Equipment, Instruments & Components | 5.2% | |||
Chemicals | 4.7% | |||
Wireless Telecommunication Services | 4.2% | |||
Road & Rail | 4.1% | |||
Trading Companies & Distributors | 3.7% | |||
Household Durables | 3.6% |
1. The FTSE Japan Capped Hedged Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Japan Capped Hedged Index is based on the FTSE Japan Hedged to USD Index and is designed to measure the performance of Japanese large- and mid-capitalization stocks. The FTSE Japan Capped Hedged Index incorporates a hedge against fluctuations of the Japanese yen by reflecting the impact of rolling monthly currency forward contracts on the Japanese yen.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 195.
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FRANKLIN FTSE JAPAN HEDGED ETF
Underlying Index. The Fund’s exposure to foreign currency forward contracts and currency futures contracts is based on the aggregate exposure of the Fund to the Japanese yen. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
What is a currency forward contract?
A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date. Currency forward contracts are privately traded in the interbank market, not on a centralized exchange.
What is a futures contract?
A futures contract is an agreement between the Fund and a counterparty made through a U.S. or foreign futures exchange to buy or sell an underlying instrument or asset at a specific price on a future date.
Thank you for your participation in Franklin FTSE Japan Hedged ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Toyota Motor Corp. Automobiles | 3.9% | |||
SoftBank Group Corp. Wireless Telecommunication Services | 2.2% | |||
Mitsubishi UFJ Financial Group Inc. Banks | 2.0% | |||
Sony Corp. Household Durables | 1.9% | |||
Sumitomo Mitsui Financial Group Inc. Banks | 1.3% | |||
Keyence Corp. Electronic Equipment, Instruments & Components | 1.3% | |||
Honda Motor Co. Ltd. Automobiles | 1.3% | |||
KDDI Corp. Wireless Telecommunication Services | 1.2% | |||
Mizuho Financial Group Inc. Banks | 1.1% | |||
Recruit Holdings Co. Ltd. Professional Services | 1.0% |
libertyshares.com | Semiannual Report | 69 |
FRANKLIN FTSE JAPAN HEDGED ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +9.16% | 4 | +9.67% | +9.16% | 4 | +9.67% | ||||||||||
Since Inception (11/2/17) | +5.04% | +5.23% | +5.04% | +5.23% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 71 for Performance Summary footnotes.
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FRANKLIN FTSE JAPAN HEDGED ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.011378 |
Total Annual Operating Expenses5
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Japanese issuers involve risks that are specific to Japan, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio, which may result in significant volatility and cause the Fund to participate in losses on an amount that exceeds the Fund’s initial investment. The Fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. While the Fund’s use of foreign currency forward contracts and/or currency futures contracts is designed to minimize the impact of currency fluctuations on Fund returns, it does not necessarily eliminate the Fund’s exposure to the Japanese yen. The return of these currency hedging instruments will not perfectly offset the actual fluctuations between the Japanese yen and the U.S. dollar. Currency hedges are sometimes subject to imperfect matching between the derivative instruments and the currencies that the derivative instruments intend to hedge, and there can be no assurance that the Fund’s hedging transactions will be effective. The Fund’s exposure to the Japanese yen may not be fully hedged at all times. Because the Fund’s currency hedge is generally reset on a monthly basis, currency risk can develop or increase intra-month. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
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.
libertyshares.com | Semiannual Report | 71 |
FRANKLIN FTSE JAPAN HEDGED ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,091.60 | $ | 0.47 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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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This semiannual report for Franklin FTSE Mexico ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Mexico RIC Capped Index (the FTSE Mexico Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Mexico Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +3.20% based on market price and +4.98% based on net asset value. In comparison, the FTSE Mexico Capped Index posted a +5.00% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 75.
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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Mexico Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Banks | 18.6% | |||
Beverages | 15.2% | |||
Wireless Telecommunication Services | 11.7% | |||
Food & Staples Retailing | 9.2% | |||
Transportation Infrastructure | 7.9% | |||
Metals & Mining | 5.9% | |||
Construction Materials | 5.8% | |||
Food Products | 5.6% | |||
Media | 5.0% | |||
Industrial Conglomerates | 3.5% |
1. The FTSE Mexico Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Mexico Capped Index is based on the FTSE Mexico Index and is designed to measure the performance of Mexican large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 206.
libertyshares.com | Semiannual Report | 73 |
FRANKLIN FTSE MEXICO ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
America Movil SAB de CV, L Wireless Telecommunication Services | 11.7% | |||
Fomento Economico Mexicano SAB de CV Beverages | 11.1% | |||
Grupo Financiero Banorte SAB de CV Banks | 10.9% | |||
Wal-Mart de Mexico SAB de CV, V Food & Staples Retailing | 8.5% | |||
Cemex SAB de CV Construction Materials | 5.8% | |||
Grupo Mexico SAB de CV, B Metals & Mining | 4.6% | |||
Grupo Televisa SA Media | 4.1% | |||
Grupo Bimbo SAB de CV, A Food Products | 3.0% | |||
Grupo Aeroportuario del Sureste SAB de CV, B Transportation Infrastructure | 2.6% | |||
Fibra Uno Administracion SA de CV Equity Real Estate Investment Trusts (REITs) | 2.5% |
Thank you for your participation in Franklin FTSE Mexico ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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FRANKLIN FTSE MEXICO ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/7/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +4.98% | +3.20% | +4.98% | +3.20% | ||||||||||||
Since Inception (11/3/17) | +5.65% | +5.73% | +5.65% | +5.73% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 76 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 75 |
FRANKLIN FTSE MEXICO ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.142809 |
Total Annual Operating Expenses4
0.19% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risk related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Mexican issuers involve risks that are specific to Mexico, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN FTSE MEXICO ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,049.80 | $ | 0.98 | $ | 1,024.12 | $ | 0.96 | 0.19 | % |
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.
libertyshares.com | Semiannual Report | 77 |
This semiannual report for Franklin FTSE Russia ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Russia RIC Capped Index (the FTSE Russia Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Russia Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -3.12% based on market price and -2.03% based on net asset value. In comparison, the FTSE Russia Capped Index had a -2.08% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 80.
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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Russia Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Oil, Gas & Consumable Fuels | 50.3% | |||
Banks | 16.2% | |||
Metals & Mining | 14.1% | |||
Electric Utilities | 5.1% | |||
Wireless Telecommunication Services | 3.1% | |||
Food & Staples Retailing | 2.5% | |||
Capital Markets | 2.4% | |||
Chemicals | 1.9% | |||
Diversified Telecommunication Services | 1.0% | |||
Airlines | 1.0% |
1. The FTSE Russia Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Russia Capped Index is based on the FTSE Russia Index and is designed to measure the performance of Russian large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 208.
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FRANKLIN FTSE RUSSIA ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
LUKOIL PJSC Oil, Gas & Consumable Fuels | 15.1% | |||
Sberbank of Russia PJSC Banks | 13.6% | |||
Gazprom PJSC Oil, Gas & Consumable Fuels | 11.3% | |||
Tatneft PAO Oil, Gas & Consumable Fuels | 8.4% | |||
NovaTek PJSC Oil, Gas & Consumable Fuels | 4.6% | |||
Rosneft PJSC Oil, Gas & Consumable Fuels | 3.5% | |||
MMC Norilsk Nickel PJSC Metals & Mining | 3.1% | |||
Surgutneftegas PJSC Oil, Gas & Consumable Fuels | 3.1% | |||
Transneft PJSC Oil, Gas & Consumable Fuels | 2.7% | |||
Mobile TeleSystems PJSC Wireless Telecommunication Services | 2.7% |
Thank you for your participation in Franklin FTSE Russia ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 79 |
FRANKLIN FTSE RUSSIA ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/9/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -2.03% | -3.12% | -2.03% | -3.12% | ||||||||||||
Since Inception (2/6/18) | -0.63% | -0.97% | -0.63% | -0.97% |
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 libertyshares.com or call (800) 342-5236.
See page 81 for Performance Summary footnotes.
80 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE RUSSIA ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.035273 |
Total Annual Operating Expenses4
0.19% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Russian issuers involve significant risks that are specific to Russia, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 81 |
FRANKLIN FTSE RUSSIA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 979.70 | $ | 0.94 | $ | 1,024.12 | $ | 0.96 | 0.19 | % |
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.
82 | Semiannual Report | libertyshares.com |
This semiannual report for Franklin FTSE South Korea ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE South Korea RIC Capped Index (the FTSE South Korea Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE South Korea Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund had cumulative total returns of -10.66% based on market price and -8.48% based on net asset value. In comparison, the FTSE South Korea Capped Index had a -8.54% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 85.
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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE South Korea Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to
replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Technology Hardware, Storage & Peripherals | 20.0% | |||
Banks | 9.8% | |||
Semiconductors & Semiconductor Equipment | 5.3% | |||
Industrial Conglomerates | 4.8% | |||
Automobiles | 4.3% | |||
Chemicals | 4.1% | |||
Metals & Mining | 3.9% | |||
Biotechnology | 3.9% | |||
Electronic Equipment, Instruments & Components | 3.5% | |||
Interactive Media & Services | 3.5% |
1. The FTSE South Korea Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE South Korea Capped Index is based on the FTSE South Korea Index and is designed to measure the performance of South Korean large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 210.
libertyshares.com | Semiannual Report | 83 |
FRANKLIN FTSE SOUTH KOREA ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Samsung Electronics Co. Ltd. Technology Hardware, Storage & Peripherals | 20.0% | |||
SK Hynix Inc. Semiconductors & Semiconductor Equipment | 5.3% | |||
Celltrion Inc. Biotechnology | 3.2% | |||
Hyundai Motor Co. Automobiles | 3.0% | |||
KB Financial Group Inc. Banks | 2.9% | |||
Shinhan Financial Group Co. Ltd. Banks | 2.8% | |||
POSCO Metals & Mining | 2.7% | |||
Naver Corp. Interactive Media & Services | 2.6% | |||
LG Chem Ltd. Chemicals | 2.5% | |||
Hyundai Mobis Co. Ltd. Auto Components | 2.0% |
Thank you for your participation in Franklin FTSE South Korea ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
84 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE SOUTH KOREA ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | -8.48% | 4 | -10.66% | -8.48% | 4 | -10.66% | ||||||||||
Since Inception (11/2/17) | -6.80% | -7.31% | -6.80% | -7.31% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 86 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 85 |
FRANKLIN FTSE SOUTH KOREA ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.000492 |
Total Annual Operating Expenses5
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of South Korean issuers involve risks that are specific to South Korea, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
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.
86 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE SOUTH KOREA ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 915.20 | $ | 0.43 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
libertyshares.com | Semiannual Report | 87 |
We are pleased to bring you Franklin FTSE Switzerland ETF’s semiannual report for the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Switzerland RIC Capped Index (the FTSE Switzerland Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Switzerland Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +3.78% based on market price and +4.00% based on net asset value. In comparison, the FTSE Switzerland Capped Index posted a +3.76% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 90.
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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Switzerland Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better.
A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Pharmaceuticals | 29.0% | |||
Food Products | 21.3% | |||
Capital Markets | 10.0% | |||
Insurance | 8.7% | |||
Textiles, Apparel & Luxury Goods | 4.9% | |||
Chemicals | 4.7% | |||
Electrical Equipment | 3.5% | |||
Life Sciences Tools & Services | 2.3% | |||
Professional Services | 2.1% | |||
Construction Materials | 2.1% |
1. The FTSE Switzerland Capped Index is a free float-adjusted market-capitalization weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Switzerland Capped Index is based on the FTSE Switzerland Index and is designed to measure the performance of Swiss large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 214.
88 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE SWITZERLAND ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Nestle SA Food Products | 19.5% | |||
Novartis AG Pharmaceuticals | 14.6% | |||
Roche Holding AG Pharmaceuticals | 13.7% | |||
UBS Group AG Capital Markets | 4.6% | |||
Zurich Insurance Group AG Insurance | 4.0% | |||
ABB Ltd. Electrical Equipment | 3.5% | |||
Compagnie Financiere Richemont SA Textiles, Apparel & Luxury Goods | 3.5% | |||
Credit Suisse Group AG Capital Markets | 3.3% | |||
Swiss Re AG Insurance | 2.5% | |||
Lonza Group AG Life Sciences Tools & Services | 2.3% |
Thank you for your participation in Franklin FTSE Switzerland ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 89 |
FRANKLIN FTSE SWITZERLAND ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (2/9/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +4.00% | +3.78% | +4.00% | +3.78% | ||||||||||||
Since Inception (2/6/18) | +2.01% | +1.62% | +2.01% | +1.62% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 91 for Performance Summary footnotes.
90 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE SWITZERLAND ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.609373 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of Swiss issuers involve risks that are specific to Switzerland, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 91 |
FRANKLIN FTSE SWITZERLAND ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,040.00 | $ | 0.46 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
92 | Semiannual Report | libertyshares.com |
This semiannual report for Franklin FTSE Taiwan ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE Taiwan RIC Capped Index (the FTSE Taiwan Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE Taiwan Capped Index and in depositary receipts representing such securities.
Performance Overview
During the six-month period, the Fund posted cumulative total returns of +0.72% based on market price and +1.68% based on net asset value. In comparison, the FTSE Taiwan Capped Index posted a +1.12% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 95.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE Taiwan Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Semiconductors & Semiconductor Equipment | 27.1% | |||
Electronic Equipment, Instruments & Components | 15.5% | |||
Banks | 12.9% | |||
Chemicals | 9.8% | |||
Technology Hardware, Storage & Peripherals | 7.7% | |||
Insurance | 3.7% | |||
Diversified Financial Services | 3.1% | |||
Diversified Telecommunication Services | 2.6% | |||
Food Products | 2.4% | |||
Metals & Mining | 2.1% |
1. The FTSE Taiwan Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE Taiwan Capped Index is based on the FTSE Taiwan Index and is designed to measure the performance of Taiwanese large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 216.
libertyshares.com | Semiannual Report | 93 |
FRANKLIN FTSE TAIWAN ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Taiwan Semiconductor Manufacturing Co. Ltd. Semiconductors & Semiconductor Equipment | 19.8% | |||
Hon Hai Precision Industry Co. Ltd. Electronic Equipment, Instruments & Components | 7.3% | |||
Formosa Plastics Corp. Chemicals | 3.5% | |||
Nan Ya Plastics Corp. Chemicals | 3.0% | |||
Formosa Chemicals & Fibre Corp. Chemicals | 2.8% | |||
CTBC Financial Holding Co. Ltd. Banks | 2.6% | |||
Chunghwa Telecom Co. Ltd. Diversified Telecommunication Services | 2.6% | |||
Cathay Financial Holding Co. Ltd. Insurance | 2.5% | |||
Fubon Financial Holding Co. Ltd. Diversified Financial Services | 2.4% | |||
Uni-President Enterprises Corp. Food Products | 2.4% |
Thank you for your participation in Franklin FTSE Taiwan ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
94 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE TAIWAN ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +1.68% | 4 | +0.72% | +1.68% | 4 | +0.72% | ||||||||||
Since Inception (11/2/17) | +3.99% | +4.10% | +3.99% | +4.10% |
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 libertyshares.com or call (800) 342-5236.
See page 96 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 95 |
FRANKLIN FTSE TAIWAN ETF
PERFORMANCE SUMMARY
Total Annual Operating Expenses5
0.19% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Investments in securities of Taiwanese issuers involve risks that are specific to Taiwan, including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a Fund that is more broadly diversified geographically. As a non-diversified Fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. Total return information is based on net asset values calculated for shareholder transactions. Certain adjustments were made to net assets of the Fund at 3/31/18 for financial reporting purposes, and as a result, the total returns based on those net asset values differ from the adjusted total returns reported in the Financial Highlights.
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.
96 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE TAIWAN ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,016.80 | $ | 0.96 | $ | 1,024.12 | $ | 0.96 | 0.19 | % |
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.
libertyshares.com | Semiannual Report | 97 |
Franklin FTSE United Kingdom ETF
This semiannual report for Franklin FTSE United Kingdom ETF covers the period ended September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the FTSE UK RIC Capped Index (the FTSE UK Capped Index or the Underlying Index).1 Under normal market conditions, the Fund invests at least 80% of its assets in the component securities of the FTSE UK Capped Index and in depositary receipts representing such securities.
Performance Overview
For the six-month period, the Fund posted cumulative total returns of +0.36% based on market price and +0.93% based on net asset value. In comparison, the FTSE UK Capped Index posted a +1.09% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 100.
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 libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund, using a “passive” or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the FTSE UK Capped Index. We seek to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the Underlying Index of 0.95 or better. A figure of 1.00 would indicate perfect correlation. Our intention is to replicate the component securities of the Underlying
Index as closely as possible (i.e., invest in all of the component securities in their respective weightings in the Underlying Index). However, under various circumstances, it may not be possible or practicable to replicate the Underlying Index. In these circumstances, we may use a “representative sampling” strategy whereby we would invest in what we believe to be a representative sample of the component securities of the Underlying Index, but may not track the Underlying Index with the same degree of accuracy as would an investment vehicle replicating the entire Underlying Index. Under the representative sampling technique, we will select securities that collectively have an investment profile similar to that of the Underlying Index, including securities that resemble those included in the Underlying Index in terms of risk factors, performance attributes and other characteristics, such as market capitalization and industry weightings. The Fund will concentrate its investments (i.e., hold 25% or more of its net assets) in a particular industry or group of industries to approximately the same extent that the Underlying Index is concentrated.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Oil, Gas & Consumable Fuels | 16.2% | |||
Banks | 11.4% | |||
Pharmaceuticals | 7.3% | |||
Metals & Mining | 7.2% | |||
Tobacco | 5.1% | |||
Insurance | 5.0% | |||
Hotels, Restaurants & Leisure | 3.6% | |||
Beverages | 3.4% | |||
Professional Services | 2.8% | |||
Media | 2.7% |
1. The FTSE UK Capped Index is a free float-adjusted market capitalization-weighted index maintained and calculated by FTSE Russell with a capping methodology applied quarterly to issuer weights so that no single issuer of a component exceeds 25% of the index weight, and all issuers with weights above 5% do not cumulatively exceed 50% of the index’s weight. The FTSE UK Capped Index is based on the FTSE UK Index and is designed to measure the performance of U.K. large- and mid-capitalization stocks.
2. Source: FactSet.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 219.
98 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE UNITED KINGDOM ETF
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Royal Dutch Shell PLC, A, B Oil, Gas & Consumable Fuels | 10.6% | |||
HSBC Holdings PLC Banks | 6.5% | |||
BP PLC Oil, Gas & Consumable Fuels | 5.5% | |||
British American Tobacco PLC Tobacco | 3.9% | |||
AstraZeneca PLC Pharmaceuticals | 3.6% | |||
GlaxoSmithKline PLC Pharmaceuticals | 3.6% | |||
Diageo PLC Beverages | 3.1% | |||
Unilever PLC Personal Products | 2.3% | |||
Prudential PLC Insurance | 2.2% | |||
Rio Tinto PLC Metals & Mining | 2.1% |
Thank you for your participation in Franklin FTSE United Kingdom ETF. We look forward to serving your future investment needs.
Dina Ting, CFA |
Louis Hsu, CFA | ||
Portfolio Management Team |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, 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.
libertyshares.com | Semiannual Report | 99 |
FRANKLIN FTSE UNITED KINGDOM ETF
Performance Summary as of September 30, 2018
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 or redemption of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (11/6/17), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/18
Cumulative Total Return1 | Average Annual Total Return1 | |||||||||||||||
Based on NAV2 | Based on market price3 | Based on NAV2 | Based on market price3 | |||||||||||||
6-Month | +0.93% | +0.36% | +0.93% | +0.36% | ||||||||||||
Since Inception (11/2/17) | +2.75% | +2.67% | +2.75% | +2.67% |
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 libertyshares.com or call (800) 342-5236.
See page 101 for Performance Summary footnotes.
100 | Semiannual Report | libertyshares.com |
FRANKLIN FTSE UNITED KINGDOM ETF
PERFORMANCE SUMMARY
Distributions (4/1/18–9/30/18)
Net Investment Income |
$0.523640 |
Total Annual Operating Expenses4
0.09% |
All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in securities of U.K. issuers involve risks that are specific to the U.K., including certain legal, regulatory, political and economic risks. Because the Fund invests its assets primarily in companies in a specific country or region, the Fund may also experience greater volatility than a fund that is more broadly diversified geographically. As a non-diversified fund, the Fund may invest in a relatively small number of issuers and, as a result, be subject to a greater risk of loss with respect to its portfolio securities. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
2. Assumes reinvestment of distributions based on net asset value.
3. Assumes reinvestment of distributions based on market price.
4. 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.
libertyshares.com | Semiannual Report | 101 |
FRANKLIN FTSE UNITED KINGDOM ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value 4/1/18 | Ending Account Value 9/30/18 | Expenses 4/1/18–9/30/181,2 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/181,2 | Net Annualized Expense Ratio2 | |||||||||||||||||
$1,000.00 | $ | 1,009.30 | $ | 0.45 | $ | 1,024.62 | $ | 0.46 | 0.09 | % |
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.
102 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Franklin FTSE Asia ex Japan ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 23.63 | $ | 23.64 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.42 | 0.04 | ||||||
Net realized and unrealized gains (losses) | (2.01 | ) | (0.05 | ) | ||||
|
| |||||||
Total from investment operations | (1.59 | ) | (0.01 | ) | ||||
|
| |||||||
Less distributions from net investment income | (0.09 | ) | — | |||||
|
| |||||||
Net asset value, end of period | $ | 21.95 | $ | 23.63 | ||||
|
| |||||||
Total returnd | (6.74)% | (0.04)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.19% | 0.19% | ||||||
Net investment income | 3.71% | 1.06% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $17,557 | $9,451 | ||||||
Portfolio turnover ratef | 2.35% | 0.96% |
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 103 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Asia ex Japan ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 98.9% | ||||||||||||||
China 33.3% | ||||||||||||||
3SBio Inc. | Biotechnology | 4,000 | $ | 6,727 | ||||||||||
a | 51job Inc., ADR | Professional Services | 94 | 7,237 | ||||||||||
a | 58.com Inc., ADR | Interactive Media & Services | 366 | 26,938 | ||||||||||
AAC Technologies Holdings Inc. | Electronic Equipment, Instruments & Components | 3,000 | 31,170 | |||||||||||
Agile Group Holdings Ltd. | Real Estate Management & Development | 4,000 | 5,654 | |||||||||||
Agricultural Bank of China Ltd., H | Banks | 116,000 | 56,926 | |||||||||||
Air China Ltd., H | Airlines | 8,000 | 7,729 | |||||||||||
a | Alibaba Group Holding Ltd., ADR | Internet & Direct Marketing Retail | 4,112 | 677,493 | ||||||||||
a | Alibaba Health Information Technology Ltd. | Health Care Technology | 12,000 | 11,762 | ||||||||||
a | Aluminum Corp. of China Ltd., H | Metals & Mining | 16,000 | 7,116 | ||||||||||
Angang Steel Co. Ltd., H | Metals & Mining | 4,000 | 3,578 | |||||||||||
Anhui Conch Cement Co. Ltd., H | Construction Materials | 4,000 | 24,154 | |||||||||||
Anhui Gujing Distillery Co. Ltd., B | Beverages | 400 | 2,587 | |||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 4,000 | 19,195 | |||||||||||
Autohome Inc., ADR | Interactive Media & Services | 210 | 16,256 | |||||||||||
AviChina Industry & Technology Co. Ltd., H | Aerospace & Defense | 10,000 | 6,594 | |||||||||||
BAIC Motor Corp. Ltd., H | Automobiles | 5,000 | 4,006 | |||||||||||
a | Baidu Inc., ADR | Interactive Media & Services | 1,050 | 240,114 | ||||||||||
Bank of China Ltd., H | Banks | 290,000 | 128,973 | |||||||||||
Bank of Communications Co. Ltd., H | Banks | 30,000 | 22,505 | |||||||||||
BBMG Corp., H | Construction Materials | 10,000 | 3,425 | |||||||||||
a | BeiGene Ltd., ADR | Biotechnology | 124 | 21,355 | ||||||||||
Beijing Capital International Airport Co. Ltd. | Transportation Infrastructure | 8,000 | 9,723 | |||||||||||
Beijing Enterprises Holdings Ltd. | Gas Utilities | 2,000 | 11,221 | |||||||||||
a | Beijing Enterprises Water Group Ltd. | Water Utilities | 16,000 | 8,527 | ||||||||||
Beijing North Star Co. Ltd., H | Real Estate Management & Development | 8,000 | 2,392 | |||||||||||
Bengang Steel Plates Co. Ltd., B | Metals & Mining | 1,600 | 556 | |||||||||||
BOE Technology Group Co. Ltd. | Technology Hardware, Storage & Peripherals | 3,600 | 1,366 | |||||||||||
Brilliance China Automotive Holdings Ltd. | Automobiles | 12,000 | 19,415 | |||||||||||
BYD Co. Ltd., H | Automobiles | 3,000 | 21,547 | |||||||||||
BYD Electronic International Co. Ltd. | Communications Equipment | 3,000 | 4,417 | |||||||||||
a | CAR Inc. | Road & Rail | 2,000 | 1,582 | ||||||||||
Central China Securities Co. Ltd., H | Capital Markets | 4,000 | 1,007 | |||||||||||
CGN Power Co. Ltd., H | Independent Power and Renewable Electricity Producers | 44,000 | 10,459 | |||||||||||
China Agri-Industries Holdings Ltd. | Food Products | 8,000 | 3,088 | |||||||||||
China Bluechemical Ltd. | Chemicals | 8,000 | 3,241 | |||||||||||
China Cinda Asset Management Co. Ltd., H | Capital Markets | 36,000 | 9,109 | |||||||||||
China CITIC Bank Corp. Ltd., H | Banks | 30,000 | 19,208 | |||||||||||
China Coal Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 8,000 | 3,374 | |||||||||||
China Communications Construction Co. Ltd., H | Construction & Engineering | 18,000 | 18,403 | |||||||||||
China Communications Services Corp. Ltd. | Diversified Telecommunication Services | 8,000 | 7,371 | |||||||||||
China Conch Venture Holdings Ltd. | Machinery | 6,000 | 20,933 | |||||||||||
China Construction Bank Corp., H | Banks | 340,000 | 297,205 | |||||||||||
China Dongxiang Group Co. Ltd. | Textiles, Apparel & Luxury Goods | 12,000 | 2,009 | |||||||||||
China Eastern Airlines Corp. Ltd., H | Airlines | 4,000 | 2,566 | |||||||||||
China Everbright Bank Co. Ltd., H | Banks | 12,000 | 5,321 | |||||||||||
China Everbright International Ltd. | Commercial Services & Supplies | 13,703 | 11,838 | |||||||||||
China Everbright Ltd. | Capital Markets | 4,000 | 7,167 | |||||||||||
China Evergrande Group | Real Estate Management & Development | 12,000 | 33,662 | |||||||||||
China Foods Ltd. | Food Products | 4,000 | 2,035 | |||||||||||
China Galaxy Securities Co. Ltd., H | Capital Markets | 14,000 | 6,530 |
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
China Huarong Asset Management Co. Ltd., H | Capital Markets | 38,000 | $ | 6,993 | ||||||||||
China International Capital Corp. Ltd., H | Capital Markets | 2,400 | 4,435 | |||||||||||
China International Marine Containers (Group) Co. Ltd. | Machinery | 1,600 | 1,697 | |||||||||||
China Jinmao Holdings Group Ltd. | Real Estate Management & Development | 16,000 | 7,279 | |||||||||||
China Life Insurance Co. Ltd., H | Insurance | 28,000 | 63,623 | |||||||||||
a | China Literature Ltd. | Media | 400 | 2,515 | ||||||||||
China Longyuan Power Group Corp. | Independent Power and Renewable Electricity Producers | 14,000 | 11,773 | |||||||||||
China Machinery Engineering Corp., H | Construction & Engineering | 4,000 | 1,958 | |||||||||||
China Medical System Holdings Ltd. | Pharmaceuticals | 4,000 | 5,562 | |||||||||||
a | China Mengniu Dairy Co. Ltd. | Food Products | 10,000 | 33,291 | ||||||||||
China Merchants Bank Co. Ltd., H | Banks | 14,000 | 56,895 | |||||||||||
China Merchants Port Holdings Co. Ltd. | Transportation Infrastructure | 4,000 | 7,658 | |||||||||||
China Merchants Securities Co. Ltd. | Capital Markets | 3,600 | 4,343 | |||||||||||
China Minsheng Banking Corp. Ltd., H | Banks | 24,000 | 17,820 | |||||||||||
China Mobile Ltd. | Wireless Telecommunication Services | 20,000 | 197,191 | |||||||||||
China Molybdenum Co. Ltd., H | Metals & Mining | 18,000 | 7,545 | |||||||||||
China National Building Material Co. Ltd., H | Construction Materials | 13,700 | 12,168 | |||||||||||
China Oilfield Services Ltd., H | Energy Equipment & Services | 8,000 | 8,680 | |||||||||||
China Overseas Land & Investment Ltd. | Real Estate Management & Development | 16,000 | 50,096 | |||||||||||
China Pacific Insurance Group Co. Ltd., H | Insurance | 10,000 | 38,595 | |||||||||||
China Petroleum & Chemical Corp., H | Oil, Gas & Consumable Fuels | 96,000 | 96,185 | |||||||||||
China Power International Development Ltd. | Independent Power and Renewable Electricity Producers | 18,000 | 4,003 | |||||||||||
China Railway Construction Corp. Ltd., H | Construction & Engineering | 7,000 | 9,447 | |||||||||||
China Railway Group Ltd., H | Construction & Engineering | 14,000 | 13,884 | |||||||||||
b | China Railway Signal & Communication Corp. Ltd., H, Reg S | Electronic Equipment, Instruments & Components | 6,000 | 4,248 | ||||||||||
China Reinsurance Group Corp., H | Insurance | 26,000 | 5,150 | |||||||||||
China Resources Beer Holdings Co. Ltd. | Beverages | 6,000 | 24,115 | |||||||||||
China Resources Cement Holdings Ltd. | Construction Materials | 8,000 | 9,314 | |||||||||||
China Resources Gas Group Ltd. | Gas Utilities | 3,000 | 12,211 | |||||||||||
China Resources Land Ltd. | Real Estate Management & Development | 12,000 | 42,020 | |||||||||||
China Resources Pharmaceutical Group Ltd. | Pharmaceuticals | 6,000 | 9,523 | |||||||||||
China Resources Power Holdings Co. Ltd. | Independent Power and Renewable Electricity Producers | 8,000 | 14,150 | |||||||||||
China Shenhua Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 13,000 | 29,705 | |||||||||||
China South City Holdings Ltd. | Real Estate Management & Development | 16,000 | 2,617 | |||||||||||
China Southern Airlines Co. Ltd., H | Airlines | 8,000 | 5,122 | |||||||||||
China State Construction International Holdings Ltd. | Construction & Engineering | 8,000 | 8,455 | |||||||||||
China Taiping Insurance Holdings Co. Ltd. | Insurance | 5,600 | 19,645 | |||||||||||
China Telecom Corp. Ltd., H | Diversified Telecommunication Services | 52,000 | 25,851 | |||||||||||
a | China Tower Corp. Ltd., H | Diversified Telecommunication Services | 140,000 | 20,396 | ||||||||||
China Traditional Chinese Medicine Co. Ltd. | Pharmaceuticals | 8,000 | 5,439 | |||||||||||
China Travel International Investment Hong Kong Ltd. | Hotels, Restaurants & Leisure | 8,000 | 2,576 | |||||||||||
China Unicom (Hong Kong) Ltd. | Diversified Telecommunication Services | 20,000 | 23,566 | |||||||||||
China Vanke Co. Ltd., H | Real Estate Management & Development | 5,000 | 16,550 | |||||||||||
China Zhongwang Holdings Ltd. | Metals & Mining | 5,600 | 2,741 | |||||||||||
Chongqing Changan Automobile Co. Ltd., B | Automobiles | 3,200 | 2,585 | |||||||||||
Chongqing Rural Commercial Bank Co. Ltd., H | Banks | 10,000 | 5,470 |
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
CIFI Holdings Group Co. Ltd. | Real Estate Management & Development | 12,000 | $ | 5,521 | ||||||||||
CIMC Enric Holdings Ltd. | Machinery | 4,000 | 4,171 | |||||||||||
Citic Pacific Ltd. | Industrial Conglomerates | 18,000 | 26,822 | |||||||||||
CITIC Resources Holdings Ltd. | Trading Companies & Distributors | 8,000 | 787 | |||||||||||
CITIC Securities Co. Ltd., H | Capital Markets | 9,000 | 16,010 | |||||||||||
CNOOC Ltd. | Oil, Gas & Consumable Fuels | 60,000 | 118,851 | |||||||||||
a | COSCO SHIPPING Development Co. Ltd., H | Marine | 14,000 | 1,897 | ||||||||||
COSCO Shipping Energy Transportation Co. Ltd., H | Marine | 4,000 | 1,989 | |||||||||||
a | COSCO Shipping Holdings Co. Ltd. | Marine | 10,000 | 4,153 | ||||||||||
COSCO Shipping Ports Ltd. | Transportation Infrastructure | 8,000 | 8,803 | |||||||||||
Country Garden Holdings Co. Ltd. | Real Estate Management & Development | 26,000 | 32,795 | |||||||||||
a | Country Garden Services Holdings Co. Ltd. | Commercial Services & Supplies | 4,000 | 6,799 | ||||||||||
CRRC Corp. Ltd., H | Machinery | 16,000 | 14,620 | |||||||||||
a | CSC Financial Co. Ltd., H | Capital Markets | 5,000 | 2,907 | ||||||||||
CSG Holding Co. Ltd. | Construction Materials | 3,910 | 1,504 | |||||||||||
CSPC Pharmaceutical Group Ltd. | Pharmaceuticals | 16,000 | 33,984 | |||||||||||
a | Ctrip.com International Ltd., ADR | Internet & Direct Marketing Retail | 1,434 | 53,302 | ||||||||||
Dali Foods Group Co. Ltd. | Food Products | 8,000 | 5,756 | |||||||||||
Dalian Port (PDA) Co. Ltd., H | Transportation Infrastructure | 8,000 | 1,002 | |||||||||||
Datang International Power Generation Co. Ltd., H | Independent Power and Renewable Electricity Producers | 12,000 | 3,036 | |||||||||||
Dazhong Transportation (Group) Co. Ltd., B | Road & Rail | 3,000 | 1,332 | |||||||||||
a | Dongfang Electric Corp. Ltd., H | Electrical Equipment | 1,200 | 710 | ||||||||||
Dongfeng Motor Group Co. Ltd., H | Automobiles | 12,000 | 12,361 | |||||||||||
ENN Energy Holdings Ltd. | Gas Utilities | 2,800 | 24,333 | |||||||||||
Everbright Securities Co. Ltd., H | Capital Markets | 1,200 | 1,066 | |||||||||||
Far East Horizon Ltd. | Diversified Financial Services | 8,000 | 7,617 | |||||||||||
a | FIH Mobile Ltd. | Electronic Equipment, Instruments & Components | 12,000 | 1,380 | ||||||||||
Foshan Electrical and Lighting Co. Ltd., B | Electrical Equipment | 1,320 | 692 | |||||||||||
Fosun International Ltd. | Industrial Conglomerates | 9,000 | 15,872 | |||||||||||
Future Land Development Holdings Ltd. | Real Estate Management & Development | 8,000 | 5,183 | |||||||||||
Fuyao Group Glass Industries Co. Ltd., H | Auto Components | 1,600 | 5,817 | |||||||||||
a | GCL-Poly Energy Holdings Ltd. | Semiconductors & Semiconductor Equipment | 48,000 | 3,374 | ||||||||||
a | GDS Holdings Ltd., ADR | IT Services | 200 | 7,026 | ||||||||||
Geely Automobile Holdings Ltd. | Automobiles | 18,000 | 35,885 | |||||||||||
a | Genscript Biotech Corp. | Life Sciences Tools & Services | 4,000 | 6,758 | ||||||||||
GF Securities Co. Ltd., H | Capital Markets | 6,000 | 7,699 | |||||||||||
a | GOME Retail Holdings Ltd. | Specialty Retail | 42,000 | 4,294 | ||||||||||
Great Wall Motor Co. Ltd., H | Automobiles | 12,000 | 7,652 | |||||||||||
Greentown China Holdings Ltd. | Real Estate Management & Development | 3,000 | 2,803 | |||||||||||
Guangdong Electric Power Development Co. Ltd., B | Independent Power and Renewable Electricity Producers | 3,000 | 1,097 | |||||||||||
Guangdong Investment Ltd. | Water Utilities | 12,000 | 21,317 | |||||||||||
Guangshen Railway Co. Ltd., H | Road & Rail | 4,000 | 1,789 | |||||||||||
Guangzhou Automobile Group Co. Ltd., H | Automobiles | 12,000 | 13,296 | |||||||||||
Guangzhou R&F Properties Co. Ltd., H | Real Estate Management & Development | 4,000 | 7,351 | |||||||||||
Guotai Junan International holdings Ltd. | Capital Markets | 8,000 | 1,401 | |||||||||||
Guotai Junan Securities Co. Ltd. | Capital Markets | 3,200 | 6,584 | |||||||||||
a | Haier Electronics Group Co. Ltd. | Household Durables | 4,000 | 10,863 | ||||||||||
Haitian International Holdings Ltd. | Machinery | 2,000 | 4,452 | |||||||||||
Haitong Securities Co. Ltd., H | Capital Markets | 12,800 | 11,647 | |||||||||||
a | Health & Happiness H&H International Holdings Ltd. | Food Products | 1,000 | 6,006 | ||||||||||
Hengan International Group Co. Ltd. | Personal Products | 3,000 | 27,681 |
106 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
a | HengTen Networks Group Ltd. | Textiles, Apparel & Luxury Goods | 72,000 | $ | 2,714 | |||||||||
a | Huadian Energy Co. Ltd. | Independent Power and Renewable Electricity Producers | 1,600 | 488 | ||||||||||
Huadian Fuxin Energy Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 8,000 | 1,615 | |||||||||||
Huadian Power International Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 8,000 | 3,128 | |||||||||||
Huaneng Power International Inc., H | Independent Power and Renewable Electricity Producers | 16,000 | 10,530 | |||||||||||
Huaneng Renewables Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 20,000 | 5,955 | |||||||||||
a | Huatai Securities Co. Ltd., H | Capital Markets | 6,800 | 9,750 | ||||||||||
Huazhu Group Ltd., ADR | Hotels, Restaurants & Leisure | 376 | 12,145 | |||||||||||
Industrial and Commercial Bank of China Ltd., H | Banks | 298,000 | 217,838 | |||||||||||
Inner Mongolia Yitai Coal Co. Ltd., B | Oil, Gas & Consumable Fuels | 4,000 | 4,800 | |||||||||||
a | Iqiyi Inc., ADR | Entertainment | 500 | 13,535 | ||||||||||
a | JD.com Inc., ADR | Internet & Direct Marketing Retail | 3,008 | 78,479 | ||||||||||
Jiangling Motors Corp. Ltd., B | Automobiles | 400 | 422 | |||||||||||
Jiangsu Expressway Co. Ltd., H | Transportation Infrastructure | 4,000 | 5,132 | |||||||||||
Jiangxi Copper Co. Ltd., H | Metals & Mining | 4,000 | 4,667 | |||||||||||
Jiayuan International Group Ltd. | Real Estate Management & Development | 4,000 | 6,850 | |||||||||||
Jinzhou Port Co. Ltd., B | Transportation Infrastructure | 800 | 296 | |||||||||||
Kingsoft Corp. Ltd. | Software | 4,000 | 7,627 | |||||||||||
Kunlun Energy Co. Ltd. | Oil, Gas & Consumable Fuels | 12,000 | 13,971 | |||||||||||
a | KWG Group Holdings Ltd. | Real Estate Management & Development | 5,000 | 4,575 | ||||||||||
Lao Feng Xiang Co., Ltd., B | Textiles, Apparel & Luxury Goods | 800 | 2,604 | |||||||||||
Legend Holdings Corp., H | Technology Hardware, Storage & Peripherals | 1,600 | 4,907 | |||||||||||
Lenovo Group Ltd. | Technology Hardware, Storage & Peripherals | 28,000 | 20,468 | |||||||||||
a | Li Ning Co. Ltd. | Textiles, Apparel & Luxury Goods | 6,000 | 5,674 | ||||||||||
Livzon Pharmaceutical Group Inc., H | Pharmaceuticals | 520 | 1,788 | |||||||||||
Logan Property Holdings Co. Ltd. | Real Estate Management & Development | 4,000 | 4,519 | |||||||||||
Longfor Group Holdings Ltd. | Real Estate Management & Development | 6,000 | 15,489 | |||||||||||
Luye Pharma Group Ltd. | Pharmaceuticals | 6,000 | 5,383 | |||||||||||
Maanshan Iron and Steel Co. Ltd., H | Metals & Mining | 8,000 | 4,294 | |||||||||||
a,b | Meitu Inc., Reg S | Technology Hardware, Storage & Peripherals | 7,000 | 4,902 | ||||||||||
a | Meituan Dianping, B | Internet & Direct Marketing Retail | 1,800 | 15,815 | ||||||||||
Metallurgical Corp. of China Ltd. | Construction & Engineering | 12,000 | 3,374 | |||||||||||
Minth Group Ltd. | Auto Components | 2,000 | 8,256 | |||||||||||
a | MMG Ltd. | Metals & Mining | 8,000 | 4,141 | ||||||||||
a | Momo Inc., ADR | Interactive Media & Services | 364 | 15,943 | ||||||||||
NetEase Inc., ADR | Entertainment | 280 | 63,910 | |||||||||||
New China Life Insurance Co. Ltd., H | Insurance | 3,200 | 15,356 | |||||||||||
New Oriental Education & Technology Group Inc., ADR | Diversified Consumer Services | 512 | 37,893 | |||||||||||
Nexteer Automotive Group Ltd. | Auto Components | 4,000 | 6,339 | |||||||||||
Nine Dragons Paper Holdings Ltd. | Paper & Forest Products | 6,000 | 6,487 | |||||||||||
Orient Securities Co. Ltd. of China, H | Capital Markets | 3,200 | 2,053 | |||||||||||
People’s Insurance Co. Group of China Ltd., H | Insurance | 32,000 | 14,395 | |||||||||||
PetroChina Co. Ltd., H | Oil, Gas & Consumable Fuels | 80,000 | 64,819 | |||||||||||
PICC Property and Casualty Co. Ltd., H | Insurance | 24,000 | 28,340 | |||||||||||
a | Pinduoduo Inc., ADR | Internet & Direct Marketing Retail | 320 | 8,413 | ||||||||||
Ping An Insurance (Group) Co. of China Ltd., H | Insurance | 19,000 | 193,038 | |||||||||||
Poly Property Group Co. Ltd. | Real Estate Management & Development | 8,000 | 2,822 | |||||||||||
Postal Savings Bank of China Co. Ltd., H | Banks | 22,000 | 13,861 | |||||||||||
Red Star Macalline Group Corp. Ltd. | Real Estate Management & Development | 1,080 | 1,037 | |||||||||||
a | Semiconductor Manufacturing International Corp. | Semiconductors & Semiconductor Equipment | 11,000 | 11,865 | ||||||||||
Shandong Chenming Paper Holdings Ltd., B | Paper & Forest Products | 2,800 | 1,807 |
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
Shandong Chenming Paper Holdings Ltd., H | Paper & Forest Products | 3,000 | $ | 1,825 | ||||||||||
Shandong Weigao Group Medical Polymer Co. Ltd., H | Health Care Equipment & Supplies | 8,000 | 7,903 | |||||||||||
Shanghai Bailian Group Co. Ltd., B | Food & Staples Retailing | 800 | 862 | |||||||||||
Shanghai Baosight Software Co. Ltd., B | Software | 800 | 1,455 | |||||||||||
Shanghai Chlor-Alkali Chemical Co. Ltd., B | Chemicals | 1,600 | 1,056 | |||||||||||
Shanghai Electric Group Co. Ltd., H | Electrical Equipment | 12,000 | 4,279 | |||||||||||
Shanghai Fosun Pharmaceutical Group Co. Ltd., H | Pharmaceuticals | 2,000 | 7,885 | |||||||||||
Shanghai Haixin Group Co., B | Pharmaceuticals | 1,600 | 784 | |||||||||||
Shanghai Huayi Group Corp. Ltd., B | Chemicals | 1,200 | 1,080 | |||||||||||
Shanghai Industrial Holdings Ltd. | Industrial Conglomerates | 2,000 | 4,432 | |||||||||||
Shanghai Jinjiang International Hotels Development Co. Ltd. | Hotels, Restaurants & Leisure | 800 | 1,786 | |||||||||||
Shanghai Jinjiang International Industrial Investment Co. Ltd. | Road & Rail | 800 | 823 | |||||||||||
Shanghai Jinqiao Export Processing Zone Development, B | Real Estate Management & Development | 1,000 | 1,182 | |||||||||||
Shanghai Lujiazui Finance & Trade Zone Develop Co. Ltd., B | Real Estate Management & Development | 3,400 | 4,658 | |||||||||||
Shanghai Mechanical and Electrical Industry Co. Ltd., B | Machinery | 800 | 1,410 | |||||||||||
Shanghai Pharmaceuticals Holding Co. Ltd., H | Health Care Providers & Services | 3,200 | 7,999 | |||||||||||
Shanghai Shibei Hi-Tech Co. Ltd., B | Real Estate Management & Development | 1,800 | 689 | |||||||||||
Shanghai Waigaoqiao Free Trade Zone Group Co. Ltd. | Trading Companies & Distributors | 800 | 1,093 | |||||||||||
Shanghai Zhenhua Port Machinery Co. Ltd., B | Machinery | 4,080 | 1,603 | |||||||||||
Shenzhen Accord Pharmaceutical Co. Ltd., B | Health Care Providers & Services | 200 | 741 | |||||||||||
Shenzhen Expressway Co. Ltd., H | Transportation Infrastructure | 4,000 | 4,018 | |||||||||||
Shenzhen International Holdings Ltd. | Transportation Infrastructure | 3,000 | 6,196 | |||||||||||
Shenzhen Investment Ltd. | Real Estate Management & Development | 16,000 | 5,112 | |||||||||||
Shenzhou International Group Holdings Ltd. | Textiles, Apparel & Luxury Goods | 2,800 | 35,926 | |||||||||||
Shimao Property Holdings Ltd. | Real Estate Management & Development | 5,000 | 12,473 | |||||||||||
Shougang Fushan Resources Group Ltd. | Metals & Mining | 12,000 | 2,668 | |||||||||||
Shui On Land Ltd. | Real Estate Management & Development | 13,000 | 3,024 | |||||||||||
Sichuan Expressway Co. Ltd., H | Transportation Infrastructure | 4,000 | 1,237 | |||||||||||
Sihuan Pharmaceutical Holdings Group Ltd. | Pharmaceuticals | 16,000 | 3,272 | |||||||||||
a | SINA Corp. | Interactive Media & Services | 236 | 16,397 | ||||||||||
Sino-Ocean Land Holdings Ltd. | Real Estate Management & Development | 11,000 | 4,850 | |||||||||||
a | Sinofert Holdings Ltd. | Chemicals | 8,000 | 1,033 | ||||||||||
Sinopec Engineering Group Co. Ltd. | Construction & Engineering | 6,000 | 6,855 | |||||||||||
a | Sinopec Oilfield Service Corp. | Energy Equipment & Services | 8,000 | 1,094 | ||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., H | Chemicals | 12,000 | 7,330 | |||||||||||
Sinopharm Group Co. Ltd., H | Health Care Providers & Services | 4,000 | 19,579 | |||||||||||
Sinotrans Ltd., H | Air Freight & Logistics | 8,000 | 3,261 | |||||||||||
Sinotruk Hong Kong Ltd. | Machinery | 3,000 | 6,533 | |||||||||||
Soho China Ltd. | Real Estate Management & Development | 7,000 | 2,720 | |||||||||||
Sunac China Holdings Ltd. | Real Estate Management & Development | 8,000 | 24,639 | |||||||||||
Sunny Optical Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 2,400 | 27,696 | |||||||||||
a | TAL Education Group, ADR | Diversified Consumer Services | 1,232 | 31,675 | ||||||||||
Tencent Holdings Ltd. | Interactive Media & Services | 21,600 | 892,167 | |||||||||||
Tingyi Cayman Islands Holding Corp. | Food Products | 8,000 | 14,702 | |||||||||||
a | Towngas China Co. Ltd. | Gas Utilities | 4,000 | 3,502 | ||||||||||
TravelSky Technology Ltd., H | IT Services | 4,000 | 10,403 | |||||||||||
Tsingtao Brewery Co. Ltd., H | Beverages | 2,000 | 9,406 | |||||||||||
Uni-President China Holdings Ltd. | Food Products | 4,000 | 4,268 | |||||||||||
a | Vipshop Holdings Ltd., ADR | Internet & Direct Marketing Retail | 1,622 | 10,121 |
108 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
Want Want China Holdings Ltd. | Food Products | 20,000 | $ | 16,844 | ||||||||||
a | Weibo Corp., ADR | Interactive Media & Services | 202 | 14,772 | ||||||||||
Weichai Power Co. Ltd., H | Machinery | 8,000 | 9,917 | |||||||||||
Weifu High-Technology Co. Ltd., B | Auto Components | 600 | 1,183 | |||||||||||
a,b | Wuxi Biologics Cayman Inc., Reg S | Life Sciences Tools & Services | 2,000 | 20,230 | ||||||||||
c | Wuxi Little Swan Co. Ltd., B | Household Durables | 400 | 1,849 | ||||||||||
a | Xiaomi Corp., B | Technology Hardware, Storage & Peripherals | 7,600 | 15,055 | ||||||||||
Xinhua Winshare Publishing and Media Co. Ltd., H | Distributors | 2,000 | 1,360 | |||||||||||
Xinjiang Goldwind Science & Technology Co. Ltd., H | Electrical Equipment | 2,000 | 2,150 | |||||||||||
Xinyi Solar Holdings Ltd. | Semiconductors & Semiconductor Equipment | 12,000 | 3,696 | |||||||||||
Yantai Changyu Pioneer Wine Co. Ltd., B | Beverages | 800 | 1,983 | |||||||||||
Yanzhou Coal Mining Co. Ltd., H | Oil, Gas & Consumable Fuels | 8,000 | 9,273 | |||||||||||
Yuexiu Property Co. Ltd. | Real Estate Management & Development | 32,000 | 5,725 | |||||||||||
a | YY Inc., ADR | Interactive Media & Services | 150 | 11,238 | ||||||||||
Zhaojin Mining Industry Co. Ltd., H | Metals & Mining | 4,000 | 3,098 | |||||||||||
Zhejiang Expressway Co. Ltd., H | Transportation Infrastructure | 4,000 | 3,328 | |||||||||||
a,b | ZhongAn Online P&C Insurance Co. Ltd., Reg S | Insurance | 400 | 1,633 | ||||||||||
Zhongsheng Group Holdings Ltd. | Specialty Retail | 2,000 | 4,872 | |||||||||||
Zhuzhou CRRC Times Electric Co. Ltd., H | Electrical Equipment | 2,000 | 11,425 | |||||||||||
Zijin Mining Group Co. Ltd., H | Metals & Mining | 24,000 | 9,232 | |||||||||||
Zoomlion Heavy Industry Science and Technology Development Co. Ltd., H | Machinery | 5,200 | 2,014 | |||||||||||
a | ZTE Corp., H | Communications Equipment | 2,800 | 5,131 | ||||||||||
ZTO Express Cayman Inc., ADR | Air Freight & Logistics | 1,284 | 21,276 | |||||||||||
|
| |||||||||||||
5,839,393 | ||||||||||||||
|
| |||||||||||||
Hong Kong 11.4% | ||||||||||||||
AIA Group Ltd. | Insurance | 46,000 | 410,919 | |||||||||||
a | Alibaba Pictures Group Ltd. | Media | 40,000 | 5,470 | ||||||||||
ASM Pacific Technology Ltd. | Semiconductors & Semiconductor Equipment | 1,200 | 12,223 | |||||||||||
BOC Hong Kong (Holdings) Ltd. | Banks | 14,000 | 66,557 | |||||||||||
Bosideng International Holdings Ltd. | Household Durables | 12,000 | 1,687 | |||||||||||
Cathay Pacific Airways Ltd. | Airlines | 2,000 | 3,016 | |||||||||||
Champion REIT | Equity Real Estate Investment Trusts (REITs | ) | 8,000 | 5,603 | ||||||||||
China Gas Holdings Ltd. | Gas Utilities | 6,000 | 16,984 | |||||||||||
Chow Tai Fook Jewellery Co. Ltd. | Specialty Retail | 4,000 | 4,115 | |||||||||||
CK Asset Holdings Ltd. | Real Estate Management & Development | 10,000 | 75,081 | |||||||||||
CK Hutchison Holdings Ltd. | Industrial Conglomerates | 10,000 | 115,273 | |||||||||||
CK Infrastructure Holdings Ltd. | Electric Utilities | 2,000 | 15,847 | |||||||||||
CLP Holdings Ltd. | Electric Utilities | 6,000 | 70,276 | |||||||||||
Dah Sing Banking Group Ltd. | Banks | 1,600 | 3,218 | |||||||||||
Dah Sing Financial Group | Banks | 800 | 5,127 | |||||||||||
Dairy Farm International Holdings Ltd. | Food & Staples Retailing | 1,200 | 10,800 | |||||||||||
First Pacific Co. Ltd. | Diversified Financial Services | 8,000 | 3,946 | |||||||||||
a | Fullshare Holdings Ltd. | Electrical Equipment | 30,000 | 14,416 | ||||||||||
Galaxy Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 8,000 | 50,761 | |||||||||||
Great Eagle Holdings Ltd. | Real Estate Management & Development | 2,000 | 9,994 | |||||||||||
Hang Lung Group Ltd. | Real Estate Management & Development | 4,000 | 10,633 | |||||||||||
Hang Lung Properties Ltd. | Real Estate Management & Development | 8,000 | 15,642 | |||||||||||
Hang Seng Bank Ltd. | Banks | 2,800 | 76,075 | |||||||||||
Henderson Land Development Co. Ltd. | Real Estate Management & Development | 4,400 | 22,127 | |||||||||||
Hong Kong and China Gas Co. Ltd. | Gas Utilities | 33,200 | 65,934 | |||||||||||
Hong Kong Exchanges and Clearing Ltd. | Capital Markets | 4,600 | 131,682 | |||||||||||
Hongkong Land Holdings Ltd. | Real Estate Management & Development | 4,400 | 29,128 | |||||||||||
Hopewell Holdings Ltd. | Industrial Conglomerates | 2,000 | 6,582 | |||||||||||
Huabao International Holdings Ltd. | Chemicals | 4,000 | 2,147 | |||||||||||
Hutchison Telecommunications Hong Kong Holdings Ltd. | Wireless Telecommunication Services | 8,000 | 3,159 |
libertyshares.com | Semiannual Report | 109 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Hong Kong (continued) | ||||||||||||||
Hysan Development Co. Ltd. | Real Estate Management & Development | 2,000 | $ | 10,109 | ||||||||||
Jardine Matheson Holdings Ltd. | Industrial Conglomerates | 800 | 50,200 | |||||||||||
Jardine Strategic Holdings Ltd. | Industrial Conglomerates | 600 | 21,780 | |||||||||||
Johnson Electric Holdings Ltd. | Electrical Equipment | 1,000 | 2,824 | |||||||||||
Kerry Logistics Network Ltd. | Air Freight & Logistics | 2,000 | 3,338 | |||||||||||
Kerry Properties Ltd. | Real Estate Management & Development | 2,000 | 6,786 | |||||||||||
Kingboard Holdings Ltd. | Electronic Equipment, Instruments & Components | 3,000 | 9,796 | |||||||||||
Kingboard Laminates Holdings Ltd. | Electronic Equipment, Instruments & Components | 4,000 | 3,548 | |||||||||||
a | Landing International Development Ltd. | Real Estate Management & Development | 9,600 | 3,092 | ||||||||||
Lee & Man Paper Manufacturing Ltd. | Paper & Forest Products | 6,000 | 5,567 | |||||||||||
Li & Fung Ltd. | Textiles, Apparel & Luxury Goods | 24,000 | 5,367 | |||||||||||
Lifestyle International Holdings Ltd. | Multiline Retail | 3,000 | 5,889 | |||||||||||
Link REIT | Equity Real Estate Investment Trusts (REITs | ) | 8,000 | 78,774 | ||||||||||
Melco International Development Ltd. | Hotels, Restaurants & Leisure | 4,000 | 7,995 | |||||||||||
MGM China Holdings Ltd. | Hotels, Restaurants & Leisure | 3,200 | 5,071 | |||||||||||
MTR Corp. Ltd. | Road & Rail | 5,000 | 26,326 | |||||||||||
New World Development Co. Ltd. | Real Estate Management & Development | 22,000 | 30,027 | |||||||||||
NWS Holdings Ltd. | Industrial Conglomerates | 6,000 | 11,870 | |||||||||||
PCCW Ltd. | Diversified Telecommunication Services | 16,000 | 9,324 | |||||||||||
Power Assets Holdings Ltd. | Electric Utilities | 5,000 | 34,825 | |||||||||||
Sa Sa International Holdings Ltd. | Specialty Retail | 4,000 | 2,219 | |||||||||||
a | Samsonite International SA | Textiles, Apparel & Luxury Goods | 4,800 | 17,789 | ||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 9,600 | 43,492 | |||||||||||
Shangri-La Asia Ltd. | Hotels, Restaurants & Leisure | 4,000 | 5,950 | |||||||||||
Shun Tak Holdings Ltd. | Industrial Conglomerates | 8,000 | 2,791 | |||||||||||
Sino Biopharmaceutical Ltd. | Pharmaceuticals | 24,000 | 22,390 | |||||||||||
Sino Land Co. Ltd. | Real Estate Management & Development | 12,000 | 20,580 | |||||||||||
SJM Holdings Ltd. | Hotels, Restaurants & Leisure | 8,000 | 7,402 | |||||||||||
Sun Art Retail Group Ltd. | Food & Staples Retailing | 8,000 | 10,408 | |||||||||||
Sun Hung Kai Properties Ltd. | Real Estate Management & Development | 5,000 | 72,844 | |||||||||||
Swire Pacific Ltd., A | Real Estate Management & Development | 2,000 | 21,917 | |||||||||||
Swire Pacific Ltd., B | Real Estate Management & Development | 5,000 | 8,844 | |||||||||||
Swire Properties Ltd. | Real Estate Management & Development | 4,000 | 15,157 | |||||||||||
Taifook Securities Group Ltd. | Capital Markets | 8,000 | 2,801 | |||||||||||
Techtronic Industries Co. Ltd. | Household Durables | 5,000 | 31,949 | |||||||||||
Television Broadcasts Ltd. | Media | 1,200 | 3,412 | |||||||||||
The Bank of East Asia Ltd. | Banks | 4,800 | 17,912 | |||||||||||
The Wharf Holdings Ltd. | Real Estate Management & Development | 4,000 | 10,888 | |||||||||||
VTech Holdings Ltd. | Communications Equipment | 600 | 6,932 | |||||||||||
b | WH Group Ltd., Reg S | Food Products | 32,000 | 22,533 | ||||||||||
Wharf Real Estate Investment Co. Ltd. | Real Estate Management & Development | �� | 4,000 | 25,815 | ||||||||||
Wheelock and Co. Ltd. | Real Estate Management & Development | 3,000 | 18,000 | |||||||||||
Xinyi Glass Holdings Ltd. | Auto Components | 8,000 | 10,111 | |||||||||||
Yue Yuen Industrial Holdings Ltd. | Textiles, Apparel & Luxury Goods | 3,000 | 8,339 | |||||||||||
|
| |||||||||||||
2,007,405 | ||||||||||||||
|
| |||||||||||||
India 10.7% | ||||||||||||||
ABB India Ltd. | Electrical Equipment | 196 | 3,812 | |||||||||||
ACC Ltd. | Construction Materials | 174 | 3,726 | |||||||||||
Adani Enterprises Ltd. | Trading Companies & Distributors | 1,018 | 1,834 | |||||||||||
a,c | Adani Gas Ltd | Trading Companies & Distributors | 1,018 | 850 | ||||||||||
Adani Ports And Special Economic Zone Ltd. | Transportation Infrastructure | 2,600 | 11,797 | |||||||||||
a | Adani Power Ltd. | Independent Power and Renewable Electricity Producers | 3,568 | 1,171 | ||||||||||
Ambuja Cements Ltd. | Construction Materials | 2,984 | 9,202 | |||||||||||
Ashok Leyland Ltd. | Machinery | 4,512 | 7,413 | |||||||||||
Asian Paints Ltd. | Chemicals | 1,102 | 19,661 | |||||||||||
Aurobindo Pharma Ltd. | Pharmaceuticals | 1,050 | 10,783 |
110 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
India (continued) | ||||||||||||||
a | Avenue Supermarts Ltd. | Food & Staples Retailing | 254 | $ | 4,891 | |||||||||
a | Axis Bank Ltd. | Banks | 6,706 | 56,731 | ||||||||||
Bajaj Auto Ltd. | Automobiles | 334 | 12,382 | |||||||||||
Bajaj Finance Ltd. | Consumer Finance | 662 | 19,799 | |||||||||||
Bajaj Finserv Ltd. | Diversified Financial Services | 148 | 12,263 | |||||||||||
Bajaj Holdings & Investment Ltd. | Diversified Financial Services | 102 | 4,353 | |||||||||||
Bandhan Bank Ltd | Banks | 482 | 3,758 | |||||||||||
a | Bank of Baroda | Banks | 1,776 | 2,438 | ||||||||||
a | Bank of India | Banks | 800 | 849 | ||||||||||
Berger Paints India Ltd. | Chemicals | 898 | 3,630 | |||||||||||
Bharat Electronics Ltd. | Aerospace & Defense | 2,272 | 2,517 | |||||||||||
Bharat Forge Ltd. | Auto Components | 718 | 5,954 | |||||||||||
Bharat Heavy Electricals Ltd. | Electrical Equipment | 3,396 | 3,209 | |||||||||||
Bharat Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 3,814 | 19,686 | |||||||||||
Bharti Airtel Ltd. | Wireless Telecommunication Services | 4,884 | 22,810 | |||||||||||
Bharti Infratel Ltd. | Diversified Telecommunication Services | 3,284 | 11,912 | |||||||||||
Biocon Ltd. | Biotechnology | 640 | 6,104 | |||||||||||
Bosch Ltd. | Auto Components | 24 | 6,600 | |||||||||||
Britannia Industries Ltd. | Food Products | 112 | 8,998 | |||||||||||
Cadila Healthcare Ltd. | Pharmaceuticals | 948 | 5,047 | |||||||||||
a | Canara Bank Ltd. | Banks | 460 | 1,401 | ||||||||||
Castrol India Ltd. | Chemicals | 914 | 1,801 | |||||||||||
Cipla Ltd. | Pharmaceuticals | 1,240 | 11,188 | |||||||||||
Coal India Ltd. | Oil, Gas & Consumable Fuels | 4,828 | 17,733 | |||||||||||
Colgate-Palmolive India Ltd. | Personal Products | 276 | 4,118 | |||||||||||
Container Corp. of India Ltd. | Road & Rail | 640 | 5,540 | |||||||||||
Cummins India Ltd. | Machinery | 256 | 2,377 | |||||||||||
Dabur India Ltd. | Personal Products | 2,096 | 12,344 | |||||||||||
Dalmia Bharat Ltd. | Construction Materials | 88 | 2,816 | |||||||||||
Divi’s Laboratories Ltd. | Life Sciences Tools & Services | 306 | 5,534 | |||||||||||
DLF Ltd. | Real Estate Management & Development | 1,624 | 3,642 | |||||||||||
Dr Reddy’s Laboratories Ltd. | Pharmaceuticals | 312 | 10,892 | |||||||||||
Eicher Motors Ltd. | Automobiles | 48 | 16,015 | |||||||||||
Emami Ltd. | Personal Products | 420 | 2,865 | |||||||||||
Exide Industries Ltd. | Auto Components | 786 | 2,878 | |||||||||||
a | Future Retail Ltd. | Multiline Retail | 780 | 5,016 | ||||||||||
GAIL India Ltd. | Gas Utilities | 2,084 | 10,896 | |||||||||||
GlaxoSmithKline Consumer Healthcare Ltd. | Food Products | 40 | 4,003 | |||||||||||
Glenmark Pharmaceuticals Ltd. | Pharmaceuticals | 532 | 4,639 | |||||||||||
a | GMR Infrastructure Ltd. | Construction & Engineering | 8,142 | 1,820 | ||||||||||
Godrej Consumer Products Ltd. | Personal Products | 1,410 | 14,951 | |||||||||||
Godrej Industries Ltd. | Industrial Conglomerates | 270 | 1,924 | |||||||||||
Grasim Industries Ltd. | Construction Materials | 1,234 | 17,389 | |||||||||||
Havell’s India Ltd. | Electrical Equipment | 924 | 7,578 | |||||||||||
HCL Technologies Ltd. | IT Services | 2,114 | 31,723 | |||||||||||
d | HDFC Standard Life Insurance Co. Ltd., 144A | Insurance | 1,218 | 6,580 | ||||||||||
Hero Motocorp Ltd. | Automobiles | 356 | 14,405 | |||||||||||
Hindalco Industries Ltd. | Metals & Mining | 3,430 | 10,866 | |||||||||||
Hindustan Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 2,326 | 8,068 | |||||||||||
Hindustan Unilever Ltd. | Household Products | 2,708 | 60,085 | |||||||||||
Hindustan Zinc Ltd. | Metals & Mining | 902 | 3,600 | |||||||||||
Housing Development Finance Corp. Ltd. | Thrifts & Mortgage Finance | 6,338 | 153,401 | |||||||||||
b | ICICI Lombard General Insurance Co. Ltd., Reg S | Insurance | 270 | 3,011 | ||||||||||
b | ICICI Prudential Life Insurance Co. Ltd., Reg S | Insurance | 994 | 4,576 | ||||||||||
a | IDBI Bank Ltd. | Banks | 2,038 | 1,411 | ||||||||||
IDFC Bank Ltd. | Banks | 5,150 | 2,579 | |||||||||||
IDFC Ltd. | Diversified Financial Services | 400 | 219 |
libertyshares.com | Semiannual Report | 111 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
India (continued) | ||||||||||||||
Indiabulls Housing Finance Ltd. | Thrifts & Mortgage Finance | 1,242 | $ | 14,681 | ||||||||||
Indian Oil Corp. Ltd. | Oil, Gas & Consumable Fuels | 8,370 | 17,706 | |||||||||||
Infosys Ltd. | IT Services | 14,480 | 145,829 | |||||||||||
b | InterGlobe Aviation Ltd., Reg S | Airlines | 362 | 4,125 | ||||||||||
ITC Ltd. | Tobacco | 11,214 | 46,061 | |||||||||||
a | Jindal Steel & Power Ltd. | Metals & Mining | 1,410 | 3,819 | ||||||||||
a | JSW Energy Ltd. | Independent Power and Renewable Electricity Producers | 1,472 | 1,244 | ||||||||||
JSW Steel Ltd. | Metals & Mining | 4,528 | 23,839 | |||||||||||
Kansai Nerolac Paints Ltd. | Chemicals | 498 | 3,160 | |||||||||||
L&T Finance Holdings Ltd. | Diversified Financial Services | 1,686 | 3,014 | |||||||||||
b | Larsen & Toubro Infotech Ltd., Reg S | IT Services | 114 | 3,015 | ||||||||||
Larsen & Toubro Ltd. | Construction & Engineering | 1,286 | 22,568 | |||||||||||
LIC Housing Finance Ltd. | Thrifts & Mortgage Finance | 954 | 5,493 | |||||||||||
Lupin Ltd. | Pharmaceuticals | 852 | 10,589 | |||||||||||
Mahindra & Mahindra Financial Services Ltd. | Consumer Finance | 1,052 | 5,808 | |||||||||||
Mahindra & Mahindra Ltd. | Automobiles | 2,326 | 27,625 | |||||||||||
Mangalore Refinery and Petrochemicals Ltd. | Oil, Gas & Consumable Fuels | 772 | 765 | |||||||||||
Marico Ltd. | Personal Products | 1,740 | 7,994 | |||||||||||
Maruti Suzuki India Ltd. | Automobiles | 454 | 46,020 | |||||||||||
Motherson Sumi Systems Ltd. | Auto Components | 2,410 | 8,538 | |||||||||||
Mphasis Ltd. | IT Services | 294 | 4,758 | |||||||||||
MRF Ltd. | Auto Components | 4 | 3,509 | |||||||||||
Nestle India Ltd. | Food Products | 90 | 12,043 | |||||||||||
NHPC Ltd. | Independent Power and Renewable Electricity Producers | 9,490 | 2,959 | |||||||||||
NMDC Ltd. | Metals & Mining | 2,926 | 4,569 | |||||||||||
NTPC Ltd. | Independent Power and Renewable Electricity Producers | 7,560 | 17,401 | |||||||||||
Oil & Natural Gas Corp. Ltd. | Oil, Gas & Consumable Fuels | 11,774 | 28,781 | |||||||||||
Oil India Ltd. | Oil, Gas & Consumable Fuels | 1,050 | 3,180 | |||||||||||
Oracle Financial Services Software Ltd. | Software | 88 | 4,754 | |||||||||||
Page Industries Ltd. | Textiles, Apparel & Luxury Goods | 20 | 9,073 | |||||||||||
Petronet LNG Ltd. | Oil, Gas & Consumable Fuels | 1,078 | 3,342 | |||||||||||
Pidilite Industries Ltd. | Chemicals | 474 | 6,839 | |||||||||||
Piramal Enterprises Ltd. | Pharmaceuticals | 324 | 10,277 | |||||||||||
Power Finance Corp., Ltd. | Diversified Financial Services | 2,200 | 2,310 | |||||||||||
Power Grid Corp. of India Ltd. | Electric Utilities | 2,960 | 7,693 | |||||||||||
a | Punjab National Bank Ltd. | Banks | 1,800 | 1,482 | ||||||||||
Rajesh Exports Ltd. | Textiles, Apparel & Luxury Goods | 534 | 4,979 | |||||||||||
Reliance Capital Ltd. | Diversified Financial Services | 476 | 1,853 | |||||||||||
Reliance Industries Ltd. | Oil, Gas & Consumable Fuels | 11,864 | 205,881 | |||||||||||
Reliance Infrastructure Ltd. | Electric Utilities | 496 | 2,054 | |||||||||||
a | Reliance Power Ltd. | Independent Power and Renewable Electricity Producers | 2,116 | 762 | ||||||||||
Rural Electrification Corp. Ltd. | Diversified Financial Services | 2,528 | 3,414 | |||||||||||
SBI Life Insurance Co. Ltd. | Insurance | 420 | 2,964 | |||||||||||
Shree Cement Ltd. | Construction Materials | 32 | 7,457 | |||||||||||
Shriram Transport Finance Co. Ltd. | Consumer Finance | 646 | 10,257 | |||||||||||
Siemens Ltd. | Industrial Conglomerates | 330 | 4,303 | |||||||||||
a | State Bank of India | Banks | 6,482 | 23,741 | ||||||||||
a | Steel Authority of India Ltd. | Metals & Mining | 3,820 | 3,597 | ||||||||||
Sun Pharmaceutical Industries Ltd. | Pharmaceuticals | 4,198 | 36,093 | |||||||||||
Sun TV Network Ltd. | Media | 324 | 2,745 | |||||||||||
Tata Communications Ltd. | Diversified Telecommunication Services | 262 | 1,809 | |||||||||||
Tata Consultancy Services Ltd. | IT Services | 3,510 | 105,736 | |||||||||||
a | Tata Motors Ltd. | Automobiles | 3,862 | 11,918 | ||||||||||
a | Tata Motors Ltd., A | Automobiles | 1,030 | 1,656 | ||||||||||
Tata Power Co. Ltd. | Electric Utilities | 3,648 | 3,314 |
112 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
India (continued) | ||||||||||||||
Tata Steel Ltd. | Metals & Mining | 1,042 | $ | 8,355 | ||||||||||
Tech Mahindra Ltd. | IT Services | 1,786 | 18,368 | |||||||||||
Titan Co. Ltd. | Textiles, Apparel & Luxury Goods | 1,190 | 13,225 | |||||||||||
Torrent Pharmaceuticals Ltd. | Pharmaceuticals | 156 | 3,556 | |||||||||||
Torrent Power Ltd. | Electric Utilities | 444 | 1,350 | |||||||||||
UltraTech Cement Ltd. | Construction Materials | 398 | 22,291 | |||||||||||
a | Union Bank of India Ltd. | Banks | 560 | 508 | ||||||||||
United Breweries Ltd. | Beverages | 256 | 4,794 | |||||||||||
a | United Spirits Ltd. | Beverages | 1,140 | 8,088 | ||||||||||
UPL Ltd. | Chemicals | 1,360 | 12,463 | |||||||||||
Vakrangee Ltd. | IT Services | 2,064 | 807 | |||||||||||
Vedanta Ltd. | Metals & Mining | 5,998 | 19,221 | |||||||||||
a | Vodafone Idea Ltd. | Wireless Telecommunication Services | 8,156 | 4,337 | ||||||||||
Wipro Ltd. | IT Services | 4,150 | 18,549 | |||||||||||
a | Wockhardt Ltd. | Pharmaceuticals | 112 | 837 | ||||||||||
Yes Bank Ltd. | Banks | 6,410 | 16,239 | |||||||||||
Zee Entertainment Enterprises Ltd. | Media | 2,028 | 12,270 | |||||||||||
|
| |||||||||||||
1,878,718 | ||||||||||||||
|
| |||||||||||||
Indonesia 2.1% | ||||||||||||||
Adaro Energy Tbk PT | Oil, Gas & Consumable Fuels | 48,000 | 5,911 | |||||||||||
Astra Agro Lestari Tbk PT | Food Products | 1,800 | 1,498 | |||||||||||
Astra International Tbk PT | Automobiles | 74,800 | 36,894 | |||||||||||
Bank Central Asia Tbk PT | Banks | 36,600 | 59,315 | |||||||||||
Bank Danamon Indonesia Tbk PT | Banks | 12,000 | 5,798 | |||||||||||
Bank Mandiri Persero Tbk PT | Banks | 69,200 | 31,230 | |||||||||||
Bank Negara Indonesia Persero Tbk PT | Banks | 28,400 | 14,103 | |||||||||||
Bank Rakyat Indonesia Persero Tbk PT | Banks | 199,200 | 42,108 | |||||||||||
Bukit Asam Tbk PT | Oil, Gas & Consumable Fuels | 15,600 | 4,522 | |||||||||||
a | Bumi Serpong Damai Tbk PT | Real Estate Management & Development | 29,200 | 2,263 | ||||||||||
Charoen Pokphand Indonesia Tbk PT | Food Products | 28,200 | 9,604 | |||||||||||
Gudang Garam Tbk PT | Tobacco | 1,800 | 8,945 | |||||||||||
Hanjaya Mandala Sampoerna Tbk PT | Tobacco | 33,600 | 8,681 | |||||||||||
Indah Kiat Pulp & Paper Corp Tbk PT | Paper & Forest Products | 10,200 | 11,876 | |||||||||||
Indocement Tunggal Prakarsa Tbk PT | Construction Materials | 5,200 | 6,456 | |||||||||||
Indofood CBP Sukses Makmur Tbk PT | Food Products | 8,800 | 5,212 | |||||||||||
Indofood Sukses Makmur Tbk PT | Food Products | 14,600 | 5,781 | |||||||||||
Jasa Marga Persero Tbk PT | Transportation Infrastructure | 8,400 | 2,520 | |||||||||||
Kalbe Farma Tbk PT | Pharmaceuticals | 72,400 | 6,705 | |||||||||||
Matahari Department Store Tbk PT | Multiline Retail | 9,000 | 4,182 | |||||||||||
Media Nusantara Citra Tbk PT | Media | 19,000 | 1,026 | |||||||||||
Perusahaan Gas Negara (Persero) Tbk PT | Gas Utilities | 40,200 | 6,070 | |||||||||||
PT Telkom Indonesia (Persero) Tbk | Diversified Telecommunication Services | 178,400 | 43,578 | |||||||||||
a | PT XL Axiata Tbk | Wireless Telecommunication Services | 13,800 | 2,556 | ||||||||||
Semen Indonesia (Persero) Tbk PT | Construction Materials | 11,200 | 7,460 | |||||||||||
Surya Citra Media Tbk PT | Media | 22,000 | 2,768 | |||||||||||
Tower Bersama Infrastructure Tbk PT | Diversified Telecommunication Services | 7,600 | 2,869 | |||||||||||
Unilever Indonesia Tbk PT | Household Products | 4,000 | 12,623 | |||||||||||
United Tractors Tbk PT | Oil, Gas & Consumable Fuels | 5,800 | 12,844 | |||||||||||
a | Vale Indonesia Tbk PT | Metals & Mining | 7,800 | 1,942 | ||||||||||
|
| |||||||||||||
367,340 | ||||||||||||||
|
| |||||||||||||
Italy 0.1% | ||||||||||||||
Prada SpA | Textiles, Apparel & Luxury Goods | 2,000 | 9,585 | |||||||||||
|
| |||||||||||||
Luxembourg 0.0%† | ||||||||||||||
L’Occitane International SA | Specialty Retail | 2,000 | 3,594 | |||||||||||
|
|
libertyshares.com | Semiannual Report | 113 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Macau 0.1% | ||||||||||||||
Macau Legend Development Ltd. | Hotels, Restaurants & Leisure | 6,000 | $ | 1,089 | ||||||||||
Wynn Macau Ltd. | Hotels, Restaurants & Leisure | 5,600 | 12,882 | |||||||||||
|
| |||||||||||||
13,971 | ||||||||||||||
|
| |||||||||||||
Malaysia 3.2% | ||||||||||||||
AirAsia Group Bhd. | Airlines | 5,400 | 4,123 | |||||||||||
Alliance Bank Malaysia Bhd. | Banks | 4,200 | 4,242 | |||||||||||
AMMB Holdings Bhd. | Banks | 7,200 | 7,185 | |||||||||||
Astro Malaysia Holdings Bhd. | Media | 5,400 | 1,918 | |||||||||||
Axiata Group Bhd. | Wireless Telecommunication Services | 17,000 | 18,731 | |||||||||||
British American Tobacco Malaysia Bhd. | Tobacco | 600 | 4,599 | |||||||||||
a | Bumi Armada Bhd. | Energy Equipment & Services | 9,000 | 1,153 | ||||||||||
CIMB Group Holdings Bhd. | Banks | 24,600 | 35,725 | |||||||||||
Dialog Group Bhd. | Energy Equipment & Services | 17,400 | 14,673 | |||||||||||
Digi.com Bhd. | Wireless Telecommunication Services | 14,200 | 16,538 | |||||||||||
FGV Holdings Bhd. | Food Products | 7,200 | 2,697 | |||||||||||
Gamuda Bhd. | Construction & Engineering | 8,400 | 6,820 | |||||||||||
Genting Bhd. | Hotels, Restaurants & Leisure | 8,600 | 16,230 | |||||||||||
Genting Malaysia Bhd. | Hotels, Restaurants & Leisure | 10,800 | 13,022 | |||||||||||
HAP Seng Consolidated Bhd. | Industrial Conglomerates | 2,800 | 6,698 | |||||||||||
Hartalega Holdings Bhd. | Health Care Equipment & Supplies | 5,400 | 8,638 | |||||||||||
Hong Leong Bank Bhd. | Banks | 2,400 | 11,935 | |||||||||||
Hong Leong Financial Group Bhd. | Banks | 1,000 | 4,664 | |||||||||||
IHH Healthcare Bhd. | Health Care Providers & Services | 10,800 | 13,596 | |||||||||||
IJM Corp. Bhd. | Construction & Engineering | 12,200 | 5,306 | |||||||||||
IOI Corp. Bhd. | Food Products | 11,800 | 12,945 | |||||||||||
IOI Properties Group Bhd. | Real Estate Management & Development | 7,200 | 2,905 | |||||||||||
KLCCP Stapled Group | Equity Real Estate Investment Trusts (REITs | ) | 1,800 | 3,306 | ||||||||||
Kuala Lumpur Kepong Bhd. | Food Products | 1,800 | 10,856 | |||||||||||
Malayan Banking Bhd. | Banks | 21,000 | 49,677 | |||||||||||
Malaysia Airports Holdings Bhd. | Transportation Infrastructure | 3,400 | 7,312 | |||||||||||
Maxis Bhd. | Wireless Telecommunication Services | 10,600 | 14,958 | |||||||||||
MISC Bhd. | Marine | 5,400 | 7,907 | |||||||||||
MMC Corp. Bhd. | Industrial Conglomerates | 2,200 | 728 | |||||||||||
Nestle (Malaysia) Bhd. | Food Products | 200 | 7,075 | |||||||||||
Petronas Chemicals Group Bhd. | Chemicals | 10,800 | 24,426 | |||||||||||
Petronas Dagangan Bhd. | Oil, Gas & Consumable Fuels | 1,200 | 7,614 | |||||||||||
Petronas Gas Bhd. | Gas Utilities | 3,000 | 13,701 | |||||||||||
PPB Group Bhd. | Food Products | 2,640 | 10,704 | |||||||||||
Press Metal Aluminium Holdings Bhd. | Metals & Mining | 8,000 | 9,395 | |||||||||||
Public Bank Bhd. | Banks | 11,800 | 71,282 | |||||||||||
RHB Bank Bhd | Banks | 4,400 | 5,741 | |||||||||||
a | Sapura Energy Bhd. | Energy Equipment & Services | 17,200 | 1,704 | ||||||||||
Sime Darby Bhd. | Industrial Conglomerates | 13,600 | 8,577 | |||||||||||
Sime Darby Plantation Bhd. | Food Products | 13,600 | 17,417 | |||||||||||
Sime Darby Property Bhd. | Real Estate Management & Development | 13,600 | 3,878 | |||||||||||
Telekom Malaysia Bhd. | Diversified Telecommunication Services | 4,600 | 3,579 | |||||||||||
Tenaga Nasional Bhd. | Electric Utilities | 15,200 | 56,782 | |||||||||||
UEM Sunrise Bhd. | Real Estate Management & Development | 4,800 | 963 | |||||||||||
Westports Holdings Bhd. | Transportation Infrastructure | 3,800 | 3,489 | |||||||||||
YTL Corp. Bhd. | Multi-Utilities | 17,800 | 5,376 | |||||||||||
YTL Power International Bhd. | Multi-Utilities | 8,000 | 2,088 | |||||||||||
|
| |||||||||||||
562,878 | ||||||||||||||
|
| |||||||||||||
Pakistan 0.1% | ||||||||||||||
Fauji Fertilizer Co. Ltd. | Chemicals | 3,000 | 2,359 | |||||||||||
Habib Bank Ltd. | Banks | 2,600 | 3,169 | |||||||||||
a | National Bank of Pakistan | Banks | 2,000 | 837 |
114 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Pakistan (continued) | ||||||||||||||
Oil & Gas Development Co. Ltd. | Oil, Gas & Consumable Fuels | 1,000 | $ | 1,232 | ||||||||||
Pakistan Petroleum Ltd. | Oil, Gas & Consumable Fuels | 1,800 | 3,093 | |||||||||||
|
| |||||||||||||
10,690 | ||||||||||||||
|
| |||||||||||||
Philippines 1.2% | ||||||||||||||
Aboitiz Power Corp | Independent Power and Renewable Electricity Producers | 6,000 | 3,715 | |||||||||||
a | Alliance Global Group Inc. | Industrial Conglomerates | 15,000 | 3,465 | ||||||||||
Ayala Corp. | Diversified Financial Services | 925 | 15,887 | |||||||||||
Ayala Land Inc. | Real Estate Management & Development | 26,600 | 19,717 | |||||||||||
Bank of the Philippine Islands | Banks | 6,844 | 10,552 | |||||||||||
BDO Unibank Inc. | Banks | 7,520 | 16,674 | |||||||||||
Bloomberry Resorts Corp. | Hotels, Restaurants & Leisure | 13,200 | 2,143 | |||||||||||
DMCI Holdings Inc. | Industrial Conglomerates | 14,200 | 2,991 | |||||||||||
a | Energy Development Corp. | Independent Power and Renewable Electricity Producers | 6,600 | 865 | ||||||||||
Globe Telecom Inc. | Wireless Telecommunication Services | 110 | 4,479 | |||||||||||
GT Capital Holdings Inc. | Diversified Financial Services | 351 | 5,327 | |||||||||||
International Container Terminal Services Inc. | Transportation Infrastructure | 4,200 | 7,315 | |||||||||||
Jollibee Foods Corp. | Hotels, Restaurants & Leisure | 1,560 | 7,420 | |||||||||||
LT Group Inc. | Industrial Conglomerates | 10,600 | 2,825 | |||||||||||
Manila Electric Co. | Electric Utilities | 1,020 | 6,419 | |||||||||||
Megaworld Corp. | Real Estate Management & Development | 44,000 | 3,583 | |||||||||||
Metro Pacific Investments Corp. | Diversified Financial Services | 54,600 | 4,800 | |||||||||||
Metropolitan Bank & Trust Co. | Banks | 6,126 | 7,596 | |||||||||||
Petron Corp. | Oil, Gas & Consumable Fuels | 9,200 | 1,480 | |||||||||||
PLDT Inc. | Wireless Telecommunication Services | 450 | 11,244 | |||||||||||
Semirara Mining and Power Corp. | Oil, Gas & Consumable Fuels | 4,600 | 2,273 | |||||||||||
SM Investments Corp. | Industrial Conglomerates | 1,860 | 31,120 | |||||||||||
SM Prime Holdings Inc. | Real Estate Management & Development | 34,600 | 23,150 | |||||||||||
Universal Robina Corp. | Food Products | 3,400 | 9,093 | |||||||||||
|
| |||||||||||||
204,133 | ||||||||||||||
|
| |||||||||||||
Singapore 4.0% | ||||||||||||||
Ascendas REIT | Equity Real Estate Investment Trusts (REITs | ) | 9,200 | 17,776 | ||||||||||
BOC Aviation Ltd. | Trading Companies & Distributors | 800 | 6,206 | |||||||||||
CapitaLand Commercial Trust | Equity Real Estate Investment Trusts (REITs | ) | 9,000 | 11,725 | ||||||||||
CapitaLand Ltd. | Real Estate Management & Development | 9,600 | 23,678 | |||||||||||
CapitaLand Mall Trust | Equity Real Estate Investment Trusts (REITs | ) | 8,800 | 14,298 | ||||||||||
City Developments Ltd. | Real Estate Management & Development | 1,800 | 12,001 | |||||||||||
ComfortDelGro Corp. Ltd. | Road & Rail | 7,800 | 13,872 | |||||||||||
DBS Group Holdings Ltd. | Banks | 6,800 | 129,844 | |||||||||||
Frasers Property Ltd. | Real Estate Management & Development | 1,400 | 1,732 | |||||||||||
Genting Singapore Ltd. | Hotels, Restaurants & Leisure | 22,200 | 17,222 | |||||||||||
Golden Agri-Resources Ltd. | Food Products | 24,600 | 4,501 | |||||||||||
Hutchison Port Holdings Trust | Transportation Infrastructure | 18,800 | 4,700 | |||||||||||
Jardine Cycle & Carriage Ltd. | Distributors | 400 | 9,365 | |||||||||||
Keppel Corp. Ltd. | Industrial Conglomerates | 5,600 | 28,526 | |||||||||||
M1 Ltd. | Wireless Telecommunication Services | 1,200 | 1,853 | |||||||||||
Oversea-Chinese Banking Corp. Ltd. | Banks | 12,200 | 102,146 | |||||||||||
SATS Ltd. | Transportation Infrastructure | 2,400 | 9,169 | |||||||||||
SembCorp Industries Ltd. | Industrial Conglomerates | 3,200 | 7,237 | |||||||||||
SembCorp Marine Ltd. | Machinery | 3,000 | 4,479 | |||||||||||
SIA Engineering Co. Ltd. | Transportation Infrastructure | 200 | 432 | |||||||||||
Singapore Airlines Ltd. | Airlines | 2,000 | 14,257 | |||||||||||
Singapore Exchange Ltd. | Capital Markets | 3,200 | 17,260 | |||||||||||
Singapore Post Ltd. | Air Freight & Logistics | 5,800 | 4,797 | |||||||||||
Singapore Press Holdings Ltd. | Media | 6,200 | 13,023 | |||||||||||
Singapore Technologies Engineering Ltd. | Aerospace & Defense | 5,800 | 15,112 |
libertyshares.com | Semiannual Report | 115 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Singapore (continued) | ||||||||||||||
Singapore Telecommunications Ltd. | Diversified Telecommunication Services | 27,600 | $ | 65,447 | ||||||||||
StarHub Ltd. | Wireless Telecommunication Services | 2,200 | 3,011 | |||||||||||
Suntec REIT | Equity Real Estate Investment Trusts (REITs | ) | 6,800 | 9,605 | ||||||||||
United Overseas Bank Ltd. | Banks | 4,800 | 95,132 | |||||||||||
UOL Group Ltd. | Real Estate Management & Development | 1,800 | 9,077 | |||||||||||
Venture Corp. Ltd. | Electronic Equipment, Instruments & Components | 1,000 | 12,903 | |||||||||||
Wilmar International Ltd. | Food Products | 7,400 | 17,439 | |||||||||||
Wing Tai Holdings Ltd. | Real Estate Management & Development | 1,400 | 1,998 | |||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | Machinery | 8,200 | 7,442 | |||||||||||
Yanlord Land Group Ltd. | Real Estate Management & Development | 2,600 | 2,816 | |||||||||||
|
| |||||||||||||
710,081 | ||||||||||||||
|
| |||||||||||||
South Korea 15.3% | ||||||||||||||
Amorepacific Corp. | Personal Products | 118 | 27,765 | |||||||||||
AmorePacific Group | Personal Products | 110 | 9,252 | |||||||||||
BGF Co. Ltd. | Industrial Conglomerates | 48 | 407 | |||||||||||
BGF Retail Co. Ltd. | Food & Staples Retailing | 22 | 4,076 | |||||||||||
BNK Financial Group Inc. | Banks | 1,118 | 8,668 | |||||||||||
a | Celltrion Healthcare Co. Ltd. | Health Care Providers & Services | 176 | 14,629 | ||||||||||
a | Celltrion Inc. | Biotechnology | 294 | 78,718 | ||||||||||
Cheil Worldwide Inc. | Media | 266 | 5,192 | |||||||||||
CJ CheilJedang Corp. | Food Products | 28 | 8,418 | |||||||||||
CJ Corp. | Industrial Conglomerates | 48 | 5,842 | |||||||||||
CJ ENM Co. Ltd. | Internet & Direct Marketing Retail | 40 | 8,943 | |||||||||||
a | CJ Logistics Corp. | Road & Rail | 28 | 3,988 | ||||||||||
Coway Co. Ltd. | Household Durables | 202 | 15,807 | |||||||||||
Daelim Industrial Co. Ltd. | Construction & Engineering | 104 | 7,744 | |||||||||||
a | Daewoo Engineering & Construction Co. Ltd. | Construction & Engineering | 680 | 3,629 | ||||||||||
DB Insurance Co. Ltd. | Insurance | 170 | 11,157 | |||||||||||
DGB Financial Group Inc. | Banks | 588 | 5,380 | |||||||||||
Dongsuh Cos. Inc. | Food & Staples Retailing | 118 | 2,234 | |||||||||||
Doosan Corp. | Industrial Conglomerates | 22 | 2,707 | |||||||||||
a | Doosan Heavy Industries & Construction Co. Ltd. | Electrical Equipment | 240 | 3,224 | ||||||||||
a | Doosan Infracore Co. Ltd. | Machinery | 508 | 4,488 | ||||||||||
E-MART Inc. | Food & Staples Retailing | 78 | 14,591 | |||||||||||
GS Engineering & Construction Corp. | Construction & Engineering | 222 | 10,467 | |||||||||||
GS Holdings Corp. | Oil, Gas & Consumable Fuels | 196 | 9,736 | |||||||||||
GS Retail Co. Ltd. | Food & Staples Retailing | 102 | 3,540 | |||||||||||
Hana Financial Group Inc. | Banks | 1,114 | 44,741 | |||||||||||
Hankook Tire Co. Ltd. | Auto Components | 280 | 12,646 | |||||||||||
Hanmi Pharm Co. Ltd. | Pharmaceuticals | 26 | 11,720 | |||||||||||
Hanmi Science Co. Ltd. | Pharmaceuticals | 50 | 3,958 | |||||||||||
Hanon Systems | Auto Components | 618 | 7,048 | |||||||||||
Hanssem Co. Ltd. | Household Durables | 38 | 2,624 | |||||||||||
a | Hanwha Aerospace Co. Ltd. | Aerospace & Defense | 140 | 3,206 | ||||||||||
Hanwha Chemical Corp. | Chemicals | 314 | 5,463 | |||||||||||
Hanwha Corp. | Industrial Conglomerates | 170 | 5,027 | |||||||||||
Hanwha Life Insurance Co. Ltd. | Insurance | 940 | 4,483 | |||||||||||
HDC Holdings Co. Ltd. | Construction & Engineering | 98 | 2,023 | |||||||||||
a | HDC Hyundai Development Co-Engineering & Construction | Construction & Engineering | 124 | 5,690 | ||||||||||
Hite Jinro Co. Ltd. | Beverages | 116 | 1,762 | |||||||||||
Hotel Shilla Co. Ltd. | Specialty Retail | 118 | 11,542 | |||||||||||
a | Hyosung Advanced Materials Corp. | Chemicals | 11 | 1,403 | ||||||||||
a | Hyosung Chemical Corp. | Chemicals | 7 | 966 | ||||||||||
Hyosung Corp. | Industrial Conglomerates | 34 | 1,471 | |||||||||||
a | Hyosung Heavy Industries Corp. | Electrical Equipment | 23 | 1,232 | ||||||||||
a | Hyosung TNC Co. Ltd. | Textiles, Apparel & Luxury Goods | 10 | 1,677 |
116 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
South Korea (continued) | ||||||||||||||
a | Hyundai Construction Equipment Co. Ltd. | Machinery | 22 | $ | 2,430 | |||||||||
Hyundai Department Store Co. Ltd. | Multiline Retail | 58 | 5,197 | |||||||||||
Hyundai Engineering & Construction Co. Ltd. | Construction & Engineering | 278 | 16,917 | |||||||||||
Hyundai Glovis Co. Ltd. | Air Freight & Logistics | 70 | 8,204 | |||||||||||
a | Hyundai Heavy Industries Co. Ltd. | Machinery | 156 | 18,915 | ||||||||||
a | Hyundai Heavy Industries Holdings Co. Ltd. | Machinery | 40 | 14,604 | ||||||||||
Hyundai Marine & Fire Insurance Co. Ltd. | Insurance | 232 | 8,774 | |||||||||||
a | Hyundai Mipo Dockyard Co. Ltd. | Machinery | 38 | 3,546 | ||||||||||
Hyundai Mobis Co. Ltd. | Auto Components | 246 | 50,564 | |||||||||||
Hyundai Motor Co. | Automobiles | 518 | 60,474 | |||||||||||
Hyundai Steel Co. | Metals & Mining | 288 | 14,669 | |||||||||||
Hyundai Wia Corp. | Auto Components | 54 | 2,062 | |||||||||||
Industrial Bank of Korea | Banks | 1,014 | 13,940 | |||||||||||
Kakao Corp. | Interactive Media & Services | 194 | 20,812 | |||||||||||
Kangwon Land Inc. | Hotels, Restaurants & Leisure | 408 | 10,556 | |||||||||||
KB Financial Group Inc. | Banks | 1,484 | 72,511 | |||||||||||
KCC Corp. | Building Products | 22 | 6,723 | |||||||||||
KEPCO Plant Service and Engineering Co. Ltd. | Commercial Services & Supplies | 82 | 2,513 | |||||||||||
Kia Motors Corp. | Automobiles | 956 | 30,251 | |||||||||||
a | Korea Aerospace Industries Ltd. | Aerospace & Defense | 248 | 7,847 | ||||||||||
Korea Electric Power Corp. | Electric Utilities | 972 | 25,718 | |||||||||||
a | Korea Gas Corp. | Gas Utilities | 102 | 5,582 | ||||||||||
Korea Investment Holdings Co. Ltd. | Capital Markets | 146 | 10,016 | |||||||||||
Korea Zinc Co. Ltd. | Metals & Mining | 36 | 14,150 | |||||||||||
Korean Air Lines Co. Ltd. | Airlines | 182 | 4,611 | |||||||||||
KT&G Corp. | Tobacco | 424 | 39,753 | |||||||||||
Kumho Petrochemical Co. Ltd. | Chemicals | 68 | 6,038 | |||||||||||
LG Chem Ltd. | Chemicals | 176 | 57,992 | |||||||||||
LG Corp. | Industrial Conglomerates | 346 | 22,646 | |||||||||||
LG Display Co. Ltd. | Electronic Equipment, Instruments & Components | 850 | 14,636 | |||||||||||
LG Electronics Inc. | Household Durables | 414 | 26,499 | |||||||||||
LG Household & Health Care Ltd. | Personal Products | 34 | 39,111 | |||||||||||
LG Uplus Corp. | Diversified Telecommunication Services | 740 | 12,208 | |||||||||||
Lotte Chemical Corp. | Chemicals | 56 | 14,035 | |||||||||||
a | Lotte Corp. | Industrial Conglomerates | 222 | 11,428 | ||||||||||
LOTTE Fine Chemical Co. Ltd. | Chemicals | 68 | 3,182 | |||||||||||
Lotte Shopping Co. Ltd. | Multiline Retail | 36 | 6,799 | |||||||||||
LS Corp. | Electrical Equipment | 66 | 4,076 | |||||||||||
Mando Corp. | Auto Components | 102 | 3,172 | |||||||||||
Mirae Asset Daewood Co. Ltd. | Capital Markets | 1,600 | 12,217 | |||||||||||
Naver Corp. | Interactive Media & Services | 100 | 64,548 | |||||||||||
NCsoft Corp. | Software | 66 | 26,329 | |||||||||||
Netmarble Corp. | Software | 68 | 7,050 | |||||||||||
NH Investment & Securities Co. Ltd. | Capital Markets | 492 | 6,343 | |||||||||||
a | NHN Entertainment Corp. | Software | 38 | 2,097 | ||||||||||
Nongshim Co. Ltd. | Food Products | 12 | 2,634 | |||||||||||
OCI Co. Ltd. | Chemicals | 70 | 6,942 | |||||||||||
Orion Corp. | Food Products | 82 | 7,799 | |||||||||||
Ottogi Corp. | Food Products | 4 | 2,694 | |||||||||||
Paradise Co. Ltd. | Hotels, Restaurants & Leisure | 174 | 3,286 | |||||||||||
POSCO | Metals & Mining | 254 | 67,436 | |||||||||||
Posco Daewoo Corp. | Trading Companies & Distributors | 188 | 3,551 | |||||||||||
S-1 Corp. | Commercial Services & Supplies | 72 | 5,933 | |||||||||||
S-Oil Corp. | Oil, Gas & Consumable Fuels | 158 | 19,514 | |||||||||||
a | Samsung Biologics Co. Ltd. | Life Sciences Tools & Services | 52 | 25,033 | ||||||||||
Samsung C&T Corp. | Industrial Conglomerates | 278 | 32,455 | |||||||||||
Samsung Card Co. Ltd. | Consumer Finance | 118 | 3,915 |
libertyshares.com | Semiannual Report | 117 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
South Korea (continued) | ||||||||||||||
Samsung Electro-Mechanics Co. Ltd. | Electronic Equipment, Instruments & Components | 214 | $ | 26,816 | ||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 17,844 | 747,220 | |||||||||||
a | Samsung Engineering Co. Ltd. | Construction & Engineering | 604 | 10,509 | ||||||||||
Samsung Fire & Marine Insurance Co. Ltd. | Insurance | 126 | 32,260 | |||||||||||
a | Samsung Heavy Industries Co. Ltd. | Machinery | 1,620 | 11,800 | ||||||||||
Samsung Life Insurance Co. Ltd. | Insurance | 232 | 20,350 | |||||||||||
Samsung SDI Co. Ltd. | Electronic Equipment, Instruments & Components | 202 | 47,074 | |||||||||||
Samsung SDS Co. Ltd. | IT Services | 122 | 25,406 | |||||||||||
Samsung Securities Co. Ltd. | Capital Markets | 242 | 7,123 | |||||||||||
Shinhan Financial Group Co. Ltd. | Banks | 1,718 | 69,696 | |||||||||||
Shinsegae Co. Ltd. | Multiline Retail | 26 | 8,497 | |||||||||||
a | SillaJen Inc. | Biotechnology | 200 | 18,463 | ||||||||||
SK Holdings Co. Ltd. | Industrial Conglomerates | 128 | 33,118 | |||||||||||
SK Hynix Inc. | Semiconductors & Semiconductor Equipment | 2,036 | 134,173 | |||||||||||
SK Innovation Co. Ltd. | Oil, Gas & Consumable Fuels | 232 | 44,967 | |||||||||||
SK Networks Co. Ltd. | Trading Companies & Distributors | 538 | 2,668 | |||||||||||
SK Telecom Co. Ltd. | Wireless Telecommunication Services | 86 | 21,863 | |||||||||||
SKC Co. Ltd. | Chemicals | 72 | 2,768 | |||||||||||
Woori Bank | Banks | 1,930 | 29,405 | |||||||||||
Yuhan Corp. | Pharmaceuticals | 32 | 6,996 | |||||||||||
|
| |||||||||||||
2,693,393 | ||||||||||||||
|
| |||||||||||||
Taiwan 13.7% | ||||||||||||||
a | Acer Inc. | Technology Hardware, Storage & Peripherals | 12,000 | 9,924 | ||||||||||
Advantech Co. Ltd. | Technology Hardware, Storage & Peripherals | 2,000 | 14,902 | |||||||||||
a | ASE Industrial Holding Co. Ltd. | Semiconductors & Semiconductor Equipment | 12,500 | 30,500 | ||||||||||
Asia Cement Corp. | Construction Materials | 8,000 | 10,873 | |||||||||||
Asustek Computer Inc. | Technology Hardware, Storage & Peripherals | 2,000 | 17,293 | |||||||||||
AU Optronics Corp. | Electronic Equipment, Instruments & Components | 34,000 | 14,365 | |||||||||||
Capital Securities Corp. | Capital Markets | 12,840 | 4,331 | |||||||||||
Catcher Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 2,820 | 31,033 | |||||||||||
Cathay Financial Holding Co. Ltd. | Insurance | 30,000 | 51,584 | |||||||||||
Chailease Holding Co. Ltd. | Diversified Financial Services | 4,000 | 14,018 | |||||||||||
Chang Hwa Commercial Bank Ltd. | Banks | 22,880 | 14,163 | |||||||||||
Cheng Shin Rubber Industry Co. Ltd. | Auto Components | 8,000 | 12,577 | |||||||||||
Chicony Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 2,010 | 4,068 | |||||||||||
China Airlines Ltd. | Airlines | 10,000 | 3,030 | |||||||||||
China Development Financial Holding Corp. | Banks | 54,000 | 20,162 | |||||||||||
China Life Insurance Co. Ltd. | Insurance | 10,600 | 10,658 | |||||||||||
China Motor Corp. | Automobiles | 2,000 | 1,680 | |||||||||||
China Steel Corp. | Metals & Mining | 48,000 | 40,088 | |||||||||||
Chunghwa Telecom Co. Ltd. | Diversified Telecommunication Services | 14,000 | 50,437 | |||||||||||
Compal Electronics Inc. | Technology Hardware, Storage & Peripherals | 16,000 | 9,930 | |||||||||||
CTBC Financial Holding Co. Ltd. | Banks | 70,000 | 52,730 | |||||||||||
Delta Electronics Inc. | Electronic Equipment, Instruments & Components | 8,000 | 34,324 | |||||||||||
E.Sun Financial Holding Co. Ltd. | Banks | 40,327 | 29,783 | |||||||||||
Eclat Textile Co. Ltd. | Textiles, Apparel & Luxury Goods | 1,000 | 12,380 | |||||||||||
Epistar Corp. | Semiconductors & Semiconductor Equipment | 4,000 | 4,546 | |||||||||||
Eternal Materials Co. Ltd. | Chemicals | 4,000 | 3,472 | |||||||||||
EVA Airways Corp. | Airlines | 8,400 | 4,085 | |||||||||||
Evergreen Marine Corp. Taiwan Ltd. | Marine | 8,400 | 3,521 | |||||||||||
Far Eastern International Bank | Banks | 12,325 | 4,360 | |||||||||||
Far Eastern New Century Corp. | Industrial Conglomerates | 16,000 | 18,708 | |||||||||||
Far EasTone Telecommunications Co. Ltd. | Wireless Telecommunication Services | 6,000 | 14,306 | |||||||||||
Feng Hsin Steel Co. Ltd. | Metals & Mining | 2,000 | 3,969 | |||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 2,000 | 12,315 | |||||||||||
First Financial Holding Co. Ltd. | Banks | 38,380 | 26,146 | |||||||||||
FIT Hon Teng Ltd. | Electronic Equipment, Instruments & Components | 6,000 | 2,967 |
118 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Taiwan (continued) | ||||||||||||||
Formosa Chemicals & Fibre Corp. | Chemicals | 12,000 | $ | 50,306 | ||||||||||
Formosa Petrochemical Corp. | Oil, Gas & Consumable Fuels | 6,000 | 29,083 | |||||||||||
Formosa Plastics Corp. | Chemicals | 18,000 | 68,975 | |||||||||||
Formosa Taffeta Co. Ltd. | Textiles, Apparel & Luxury Goods | 4,000 | 4,880 | |||||||||||
Foxconn Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 4,000 | 9,760 | |||||||||||
Fubon Financial Holding Co. Ltd. | Diversified Financial Services | 28,000 | 47,503 | |||||||||||
Giant Manufacturing Co. Ltd. | Leisure Products | 2,000 | 8,581 | |||||||||||
Globalwafers Co. Ltd. | Semiconductors & Semiconductor Equipment | 1,000 | 11,021 | |||||||||||
a | Hon Hai Precision Industry Co. Ltd. | Electronic Equipment, Instruments & Components | 56,000 | 145,259 | ||||||||||
a | HTC Corp. | Technology Hardware, Storage & Peripherals | 2,000 | 2,659 | ||||||||||
Hua Nan Financial Holdings Co. Ltd. | Banks | 33,440 | 20,261 | |||||||||||
Innolux Corp. | Electronic Equipment, Instruments & Components | 34,000 | 11,804 | |||||||||||
Inventec Corp. | Technology Hardware, Storage & Peripherals | 12,000 | 10,769 | |||||||||||
Largan Precision Co. Ltd. | Electronic Equipment, Instruments & Components | 400 | 47,621 | |||||||||||
Lite-On Technology Corp. | Technology Hardware, Storage & Peripherals | 8,000 | 10,061 | |||||||||||
MediaTek Inc. | Semiconductors & Semiconductor Equipment | 6,000 | 48,439 | |||||||||||
Mega Financial Holding Co. Ltd. | Banks | 42,000 | 37,828 | |||||||||||
Nan Ya Plastics Corp. | Chemicals | 22,000 | 61,101 | |||||||||||
Nanya Technology Corp. | Semiconductors & Semiconductor Equipment | 4,000 | 7,611 | |||||||||||
Novatek Microelectronics Corp. Ltd. | Semiconductors & Semiconductor Equipment | 2,000 | 9,891 | |||||||||||
Oriental Union Chemical Corp. | Chemicals | 2,000 | 2,230 | |||||||||||
Pegatron Corp. | Technology Hardware, Storage & Peripherals | 8,000 | 16,009 | |||||||||||
Pou Chen Corp. | Textiles, Apparel & Luxury Goods | 10,000 | 10,562 | |||||||||||
President Chain Store Corp. | Food & Staples Retailing | 2,000 | 23,483 | |||||||||||
Quanta Computer Inc. | Technology Hardware, Storage & Peripherals | 10,000 | 17,424 | |||||||||||
Realtek Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 2,000 | 8,908 | |||||||||||
Shin Kong Financial Holding Co. Ltd. | Insurance | 30,432 | 11,910 | |||||||||||
SinoPac Financial Holdings Co. Ltd. | Banks | 40,800 | 14,899 | |||||||||||
Synnex Technology International Corp. | Electronic Equipment, Instruments & Components | 6,000 | 7,654 | |||||||||||
Taishin Financial Holding Co. Ltd. | Banks | 37,596 | 18,162 | |||||||||||
Taiwan Business Bank | Banks | 16,640 | 6,049 | |||||||||||
Taiwan Cement Corp. | Construction Materials | 15,400 | 20,730 | |||||||||||
Taiwan Cooperative Financial Holding Co. Ltd. | Banks | 35,020 | 21,333 | |||||||||||
Taiwan Fertilizer Co. Ltd. | Chemicals | 2,000 | 3,046 | |||||||||||
Taiwan Glass Industry Corp. | Building Products | 6,000 | 3,193 | |||||||||||
Taiwan High Speed Rail Corp. | Transportation Infrastructure | 8,000 | 7,834 | |||||||||||
Taiwan Mobile Co. Ltd. | Wireless Telecommunication Services | 6,000 | 21,518 | |||||||||||
Taiwan Secom Co. Ltd. | Commercial Services & Supplies | 2,000 | 5,777 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 91,000 | 782,350 | |||||||||||
Teco Electric & Machinery Co. Ltd. | Electrical Equipment | 6,000 | 4,353 | |||||||||||
TPK Holding Co. Ltd. | Electronic Equipment, Instruments & Components | 2,000 | 3,432 | |||||||||||
Transcend Information Inc. | Technology Hardware, Storage & Peripherals | 2,000 | 4,585 | |||||||||||
U-Ming Marine Transport Corp. | Marine | 2,000 | 2,299 | |||||||||||
Uni-President Enterprises Corp. | Food Products | 18,000 | 46,985 | |||||||||||
Unimicron Technology Corp. | Electronic Equipment, Instruments & Components | 8,000 | 5,253 | |||||||||||
United Microelectronics Corp. | Semiconductors & Semiconductor Equipment | 46,000 | 24,331 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 4,000 | 8,908 | |||||||||||
Walsin Lihwa Corp. | Electrical Equipment | 14,000 | 9,423 | |||||||||||
Walsin Technology Corp. | Electronic Equipment, Instruments & Components | 2,000 | 13,952 | |||||||||||
Wan Hai Lines Ltd. | Marine | 2,000 | 1,094 | |||||||||||
Wistron Corp. | Technology Hardware, Storage & Peripherals | 10,293 | 6,709 | |||||||||||
Yageo Corp. | Electronic Equipment, Instruments & Components | 1,000 | 15,033 | |||||||||||
Yuanta Financial Holding Co. Ltd. | Capital Markets | 44,000 | 23,201 | |||||||||||
Yulon Motor Co. Ltd. | Automobiles | 4,000 | 2,843 | |||||||||||
|
| |||||||||||||
2,412,113 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 119 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Thailand 3.7% | ||||||||||||||
Advanced Info Service PCL | Wireless Telecommunication Services | 4,200 | $ | 26,104 | ||||||||||
Airports of Thailand Public Co. Ltd., NVDR | Transportation Infrastructure | 16,600 | 33,621 | |||||||||||
Bangkok Bank PCL, fgn | Banks | 1,800 | 12,133 | |||||||||||
Bangkok Dusit Medical Services PCL | Health Care Providers & Services | 33,400 | 26,336 | |||||||||||
Bangkok Expressway and Metro PCL, NVDR | Transportation Infrastructure | 30,600 | 8,232 | |||||||||||
Bangkok Life Assurance PCL, NVDR | Insurance | 2,000 | 2,010 | |||||||||||
Banpu PCL, NVDR | Oil, Gas & Consumable Fuels | 16,800 | 9,922 | |||||||||||
Berli Jucker PCL, NVDR | Food & Staples Retailing | 4,000 | 7,359 | |||||||||||
BTS Group Holdings PCL, NVDR | Road & Rail | 29,200 | 8,397 | |||||||||||
Bumrungrad Hospital PCL | Health Care Providers & Services | 1,200 | 6,902 | |||||||||||
Central Pattana PCL | Real Estate Management & Development | 9,600 | 24,638 | |||||||||||
Charoen Pokphand Foods PCL, NVDR | Food Products | 12,800 | 9,994 | |||||||||||
CP ALL PCL | Food & Staples Retailing | 20,000 | 42,672 | |||||||||||
Delta Electronics Thailand PCL | Electronic Equipment, Instruments & Components | 1,800 | 3,882 | |||||||||||
Electricity Generating PCL | Independent Power and Renewable Electricity Producers | 1,000 | 7,297 | |||||||||||
Energy Absolute PCL, NVDR | Oil, Gas & Consumable Fuels | 6,000 | 8,952 | |||||||||||
Glow Energy PCL | Independent Power and Renewable Electricity Producers | 1,800 | 4,898 | |||||||||||
Gulf Energy Development PCL, NVDR | Independent Power and Renewable Electricity Producers | 2,000 | 4,715 | |||||||||||
Home Product Center PCL, NVDR | Specialty Retail | 21,600 | 10,553 | |||||||||||
Indorama Ventures PCL, NVDR | Chemicals | 6,400 | 11,676 | |||||||||||
Intouch Holdings PCL | Wireless Telecommunication Services | 7,200 | 12,022 | |||||||||||
IRPC PCL | Oil, Gas & Consumable Fuels | 39,200 | 8,242 | |||||||||||
Kasikornbank PCL, fgn | Banks | 4,600 | 31,008 | |||||||||||
Kasikornbank PCL, NVDR | Banks | 3,200 | 21,373 | |||||||||||
Krung Thai Bank PCL | Banks | 23,800 | 14,866 | |||||||||||
Land and Houses PCL, NVDR | Real Estate Management & Development | 24,200 | 8,605 | |||||||||||
Minor International PCL | Hotels, Restaurants & Leisure | 13,600 | 17,242 | |||||||||||
PTT Exploration and Production PCL, NVDR | Oil, Gas & Consumable Fuels | 5,400 | 25,881 | |||||||||||
PTT Global Chemical PCL, NVDR | Chemicals | 7,800 | 19,596 | |||||||||||
PTT PCL | Oil, Gas & Consumable Fuels | 54,600 | 91,591 | |||||||||||
Ratchaburi Electricity Generating Holding PCL, NVDR | Independent Power and Renewable Electricity Producers | 3,200 | 5,121 | |||||||||||
Siam City Cement PCL, NVDR | Construction Materials | 200 | 1,546 | |||||||||||
Siam Commercial Bank PCL | Banks | 9,200 | 42,387 | |||||||||||
a | Thai Airways International PCL, NVDR | Airlines | 4,200 | 1,961 | ||||||||||
Thai Oil PCL | Oil, Gas & Consumable Fuels | 4,000 | 10,946 | |||||||||||
Thai Union Frozen Products PCL | Food Products | 10,800 | 5,978 | |||||||||||
The Siam Cement PCL | Construction Materials | 2,800 | 38,615 | |||||||||||
TMB Bank PCL, NVDR | Banks | 82,200 | 5,846 | |||||||||||
Total Access Communication PCL | Wireless Telecommunication Services | 2,600 | 3,779 | |||||||||||
True Corporation PCL, NVDR | Diversified Telecommunication Services | 40,800 | 7,633 | |||||||||||
|
| |||||||||||||
644,531 | ||||||||||||||
|
| |||||||||||||
Total Common Stocks | 17,357,825 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 0.8% | ||||||||||||||
South Korea 0.8% | ||||||||||||||
e | Amorepacific Corp., 0.935%, pfd. | Personal Products | 40 | 4,958 | ||||||||||
e | CJ CheilJedang Corp., 2.392%, pfd. | Food Products | 8 | 920 | ||||||||||
e | Hyundai Motor Co., 5.172%, pfd. | Automobiles | 74 | 5,224 | ||||||||||
e | Hyundai Motor Co., 4.841%, pfd., 2 | Automobiles | 128 | 9,774 | ||||||||||
e | LG Chem Ltd., 2.966%, pfd. | Chemicals | 30 | 5,517 | ||||||||||
e | LG Electronics Inc., 1.508%, pfd. | Household Durables | 66 | 1,776 | ||||||||||
e | LG Household & Health Care Ltd., 1.126%, pfd. | Personal Products | 8 | 5,798 |
120 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Asia ex Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Preferred Stocks (continued) | ||||||||||||||
South Korea (continued) | ||||||||||||||
a | Mirae Asset Daewoo Co. Ltd., pfd. | Capital Markets | 220 | $ | 846 | |||||||||
e | Samsung Electronics Co. Ltd., 3.009%, pfd. | Technology Hardware, Storage & Peripherals | 3,120 | 106,461 | ||||||||||
e | Samsung Fire & Marine Insurance Co. Ltd., 5.452%, pfd. | Insurance | 8 | 1,323 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $157,542) | 142,597 | |||||||||||||
|
| |||||||||||||
Warrants (Cost $—) 0.0% | ||||||||||||||
Thailand 0.0% | ||||||||||||||
a | BTS Group Holdings PCL, wts., 12/29/19 | Road & Rail | 3,244 | — | ||||||||||
|
| |||||||||||||
Total Investments | 17,500,422 | |||||||||||||
Other Assets, less Liabilities 0.3% | 56,847 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 17,557,269 | ||||||||||||
|
|
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $68,273, representing 0.4% of net assets.
cFair valued using significant unobservable inputs. See Note 6 regarding fair value measurements.
dSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the value of this security was $6,580, representing 0.0% of net assets.
eVariable rate security. The rate shown represents the yield at period end.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
MSCI Emerging Markets Index | Long | 1 | $ | 52,485 | 12/21/18 | $ | 1,035 | |||||||||||||
|
|
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 121 |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Australia ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 24.67 | $ | 25.23 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.57 | 0.52 | ||||||
Net realized and unrealized gains (losses) | 0.43 | (1.03 | ) | |||||
|
| |||||||
Total from investment operations | 1.00 | (0.51 | ) | |||||
|
| |||||||
Less distributions from net investment income | (0.46 | ) | (0.05 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 25.21 | $ | 24.67 | ||||
|
| |||||||
Total returnd | 4.08% | (2.05)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 4.50% | 4.96% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $6,302 | $2,467 | ||||||
Portfolio turnover ratef | 1.54% | 1.63% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
122 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Australia ETF
Industry | Shares | Value | ||||||||||||
Common Stocks and Other Equity Interests 99.5% | ||||||||||||||
Australia 99.0% | ||||||||||||||
Adelaide Brighton Ltd. | Construction Materials | 2,745 | $ | 12,274 | ||||||||||
AGL Energy Ltd. | Multi-Utilities | 3,960 | 55,873 | |||||||||||
ALS Ltd. | Professional Services | 2,950 | 19,082 | |||||||||||
Alumina Ltd. | Metals & Mining | 15,125 | 30,314 | |||||||||||
Amcor Ltd. | Containers & Packaging | 7,000 | 69,287 | |||||||||||
AMP Ltd. | Diversified Financial Services | 17,630 | 40,692 | |||||||||||
Ansell Ltd. | Health Care Equipment & Supplies | 860 | 15,712 | |||||||||||
Apa Group | Gas Utilities | 7,125 | 51,450 | |||||||||||
Aristocrat Leisure Ltd. | Hotels, Restaurants & Leisure | 3,855 | 79,327 | |||||||||||
Atlas Arteria Ltd. | Transportation Infrastructure | 4,120 | 20,808 | |||||||||||
Aurizon Holdings Ltd. | Road & Rail | 11,530 | 34,288 | |||||||||||
AusNet Services | Electric Utilities | 10,660 | 12,534 | |||||||||||
Australia & New Zealand Banking Group Ltd. | Banks | 17,515 | 357,125 | |||||||||||
Australian Stock Exchange Ltd. | Capital Markets | 1,175 | 54,122 | |||||||||||
Bank of Queensland Ltd. | Banks | 2,395 | 19,097 | |||||||||||
Bendigo and Adelaide Bank Ltd. | Banks | 2,925 | 22,751 | |||||||||||
BHP Billiton Ltd. | Metals & Mining | 19,410 | 486,348 | |||||||||||
Bluescope Steel Ltd. | Metals & Mining | 3,325 | 40,851 | |||||||||||
Boral Ltd. | Construction Materials | 7,055 | 35,273 | |||||||||||
Brambles Ltd. | Commercial Services & Supplies | 9,625 | 75,909 | |||||||||||
Caltex Australia Ltd. | Oil, Gas & Consumable Fuels | 1,575 | 34,074 | |||||||||||
Challenger Ltd. | Diversified Financial Services | 3,450 | 27,958 | |||||||||||
Cimic Group Ltd. | Construction & Engineering | 585 | 21,740 | |||||||||||
Coca-Cola Amatil Ltd. | Beverages | 3,085 | 21,786 | |||||||||||
Cochlear Ltd. | Health Care Equipment & Supplies | 340 | 49,359 | |||||||||||
Commonwealth Bank of Australia | Banks | 10,640 | 549,755 | |||||||||||
Computershare Ltd. | IT Services | 2,930 | 42,294 | |||||||||||
Crown Resorts Ltd. | Hotels, Restaurants & Leisure | 2,140 | 21,198 | |||||||||||
CSL Ltd. | Biotechnology | 2,730 | 397,251 | |||||||||||
CSR Ltd. | Construction Materials | 3,065 | 8,361 | |||||||||||
Dexus | Equity Real Estate Investment Trusts (REITs | ) | 6,145 | 46,952 | ||||||||||
Domain Holdings Australia Ltd. | Interactive Media & Services | 1,385 | 3,507 | |||||||||||
Domino’s Pizza Enterprises Ltd. | Hotels, Restaurants & Leisure | 360 | 13,857 | |||||||||||
Downer EDI Ltd. | Commercial Services & Supplies | 3,585 | 20,466 | |||||||||||
DuluxGroup Ltd. | Chemicals | 2,350 | 13,042 | |||||||||||
Evolution Mining Ltd. | Metals & Mining | 6,340 | 12,156 | |||||||||||
Fairfax Media Ltd. | Media | 13,875 | 8,282 | |||||||||||
Flight Centre Travel Group Ltd. | Hotels, Restaurants & Leisure | 340 | 13,078 | |||||||||||
Fortescue Metals Group Ltd. | Metals & Mining | 9,715 | 27,555 | |||||||||||
Goodman Group | Equity Real Estate Investment Trusts (REITs | ) | 10,680 | 80,057 | ||||||||||
GPT Group | Equity Real Estate Investment Trusts (REITs | ) | 10,910 | 41,127 | ||||||||||
Harvey Norman Holdings Ltd. | Multiline Retail | 3,260 | 8,303 | |||||||||||
a | Harvey Norman Holdings Ltd., rts., 10/15/18 | Multiline Retail | 187 | 108 | ||||||||||
Healthscope Ltd. | Health Care Providers & Services | 10,485 | 15,932 | |||||||||||
Iluka Resources Ltd. | Metals & Mining | 2,530 | 18,214 | |||||||||||
Incitec Pivot Ltd. | Chemicals | 10,020 | 28,855 | |||||||||||
Insurance Australia Group Ltd. | Insurance | 14,305 | 75,765 | |||||||||||
IOOF Holdings Ltd. | Capital Markets | 2,080 | 12,251 | |||||||||||
James Hardie Industries PLC, CDI | Construction Materials | 2,665 | 40,416 | |||||||||||
LendLease Group | Real Estate Management & Development | 3,500 | 49,788 | |||||||||||
Macquarie Group Ltd. | Capital Markets | 1,860 | 169,625 | |||||||||||
Magellan Financial Group Ltd. | Capital Markets | 800 | 16,028 | |||||||||||
Medibank Private Ltd. | Insurance | 16,665 | 35,089 | |||||||||||
Metcash Ltd. | Food & Staples Retailing | 5,845 | 12,687 | |||||||||||
Mirvac Group | Equity Real Estate Investment Trusts (REITs | ) | 22,400 | 39,060 | ||||||||||
National Australia Bank Ltd. | Banks | 16,445 | 330,905 | |||||||||||
Newcrest Mining Ltd. | Metals & Mining | 4,640 | 65,165 |
libertyshares.com | Semiannual Report | 123 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Australia ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks and Other Equity Interests (continued) | ||||||||||||||
Australia (continued) | ||||||||||||||
Nufarm Ltd. | Chemicals | 1,530 | $ | 7,417 | ||||||||||
Oil Search Ltd. | Oil, Gas & Consumable Fuels | 8,015 | 52,367 | |||||||||||
a | OneMarket Ltd. | Software | 575 | 449 | ||||||||||
Orica Ltd. | Chemicals | 2,280 | 28,094 | |||||||||||
a | Origin Energy Ltd. | Oil, Gas & Consumable Fuels | 10,600 | 63,351 | ||||||||||
Orora Ltd. | Containers & Packaging | 7,300 | 17,536 | |||||||||||
OZ Minerals Ltd. | Metals & Mining | 1,900 | 12,826 | |||||||||||
Perpetual Ltd. | Capital Markets | 265 | 8,162 | |||||||||||
Platinum Asset Management Ltd. | Capital Markets | 1,410 | 5,468 | |||||||||||
Qantas Airways Ltd. | Airlines | 4,000 | 17,076 | |||||||||||
QBE Insurance Group Ltd. | Insurance | 8,190 | 65,896 | |||||||||||
Ramsay Health Care Ltd. | Health Care Providers & Services | 780 | 31,001 | |||||||||||
REA Group Ltd. | Interactive Media & Services | 305 | 18,963 | |||||||||||
Rio Tinto Ltd. | Metals & Mining | 2,495 | 142,182 | |||||||||||
Santos Ltd. | Oil, Gas & Consumable Fuels | 10,685 | 56,128 | |||||||||||
Scentre Group | Equity Real Estate Investment Trusts (REITs | ) | 30,890 | 88,731 | ||||||||||
Seek Ltd. | Professional Services | 2,090 | 31,394 | |||||||||||
Seven Group Holdings Ltd. | Trading Companies & Distributors | 605 | 9,906 | |||||||||||
Shopping Centres Australasia Property Group | Equity Real Estate Investment Trusts (REITs | ) | 4,530 | 7,866 | ||||||||||
Sonic Healthcare Ltd. | Health Care Providers & Services | 2,560 | 46,141 | |||||||||||
South32 Ltd. | Metals & Mining | 31,075 | 88,139 | |||||||||||
Stockland | Equity Real Estate Investment Trusts (REITs | ) | 14,700 | 44,140 | ||||||||||
Suncorp-Metway Ltd. | Insurance | 7,840 | 82,026 | |||||||||||
Sydney Airport | Transportation Infrastructure | 6,700 | 33,401 | |||||||||||
Tabcorp Holdings Ltd. | Hotels, Restaurants & Leisure | 11,380 | 40,100 | |||||||||||
Telstra Corp. Ltd. | Diversified Telecommunication Services | 25,155 | 58,061 | |||||||||||
The Star Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 4,990 | 18,739 | |||||||||||
TPG Telecom Ltd. | Diversified Telecommunication Services | 2,180 | 13,470 | |||||||||||
Transurban Group | Transportation Infrastructure | 15,785 | 128,146 | |||||||||||
Treasury Wine Estates Ltd. | Beverages | 4,345 | 54,986 | |||||||||||
Vicinity Centres | Equity Real Estate Investment Trusts (REITs | ) | 19,360 | 36,701 | ||||||||||
a | Vocus Group Ltd. | Diversified Telecommunication Services | 3,610 | 8,567 | ||||||||||
Wesfarmers Ltd. | Food & Staples Retailing | 6,840 | 246,712 | |||||||||||
Westpac Banking Corp. | Banks | 20,680 | 417,917 | |||||||||||
Whitehaven Coal Ltd. | Oil, Gas & Consumable Fuels | 4,125 | 16,236 | |||||||||||
Woodside Petroleum Ltd. | Oil, Gas & Consumable Fuels | 5,640 | 157,438 | |||||||||||
Woolworths Group Ltd. | Food & Staples Retailing | 7,935 | 161,218 | |||||||||||
WorleyParsons Ltd. | Energy Equipment & Services | 1,230 | 18,182 | |||||||||||
|
| |||||||||||||
6,240,296 | ||||||||||||||
|
| |||||||||||||
New Zealand 0.3% | ||||||||||||||
a | Xero LTD. | Software | 550 | 19,500 | ||||||||||
|
| |||||||||||||
United States 0.2% | ||||||||||||||
Sims Metal Management Ltd. | Metals & Mining | 1,005 | 9,199 | |||||||||||
|
| |||||||||||||
Total Investments | 6,268,995 | |||||||||||||
Other Assets, less Liabilities 0.5% | 33,444 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 6,302,439 | ||||||||||||
|
|
See Abbreviations on page 266.
aNon-income producing.
124 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Brazil ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 27.87 | $ | 24.37 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.34 | 0.50 | ||||||
Net realized and unrealized gains (losses) | (6.54 | ) | 3.11 | |||||
|
| |||||||
Total from investment operations | (6.20 | ) | 3.61 | |||||
|
| |||||||
Less distributions from net investment income | (0.36 | ) | (0.11 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 21.31 | $ | 27.87 | ||||
|
| |||||||
Total returnd | (22.18)% | 14.86% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.19% | 0.19% | ||||||
Net investment income | 2.91% | 4.53% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $10,654 | $44,593 | ||||||
Portfolio turnover ratef | 4.39% | 4.79% |
aFor the period November 3, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 125 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Brazil ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 64.7% | ||||||||||||||
Brazil 64.7% | ||||||||||||||
Ambev SA | Beverages | 131,000 | $ | 601,605 | ||||||||||
Atacadao Distribuicao Comercio e Industria Ltd. | Food & Staples Retailing | 10,500 | 38,939 | |||||||||||
a | B2W Cia Digital | Internet & Direct Marketing Retail | 5,000 | 34,681 | ||||||||||
B3 SA – Brasil Bolsa Balcao | Capital Markets | 83,500 | 489,264 | |||||||||||
Banco Bradesco SA | Banks | 25,500 | 164,421 | |||||||||||
Banco BTG Pactual SA | Capital Markets | 6,500 | 34,668 | |||||||||||
Banco do Brasil SA | Banks | 32,500 | 239,668 | |||||||||||
Banco Santander Brasil SA | Banks | 12,000 | 107,303 | |||||||||||
BB Seguridade Participacoes SA | Insurance | 21,000 | 126,729 | |||||||||||
a | BR Malls Paricipacoes SA | Real Estate Management & Development | 24,500 | 59,018 | ||||||||||
a | BRF SA | Food Products | 17,500 | 96,274 | ||||||||||
CCR SA | Transportation Infrastructure | 35,000 | 74,145 | |||||||||||
a | Centrais Eletricas Brasileiras SA | Electric Utilities | 10,000 | 38,838 | ||||||||||
a | Cia Siderurgica Nacional SA | Metals & Mining | 19,000 | 44,437 | ||||||||||
Cielo SA | IT Services | 34,500 | 105,827 | |||||||||||
Companhia de Saneamento Basico do Estado de Sao Paulo | Water Utilities | 10,500 | 62,024 | |||||||||||
Companhia Energetica de Minas Gerais | Electric Utilities | 2,500 | 4,100 | |||||||||||
Companhia Paranaense de Energia-Copel | Electric Utilities | 1,000 | 5,036 | |||||||||||
Cosan SA Industria e Comercio | Oil, Gas & Consumable Fuels | 5,000 | 40,578 | |||||||||||
EDP-Energias do Brasil SA | Electric Utilities | 9,500 | 30,425 | |||||||||||
Embraer SA | Aerospace & Defense | 22,500 | 111,724 | |||||||||||
Energisa SA | Electric Utilities | 5,500 | 42,405 | |||||||||||
Engie Brasil SA | Independent Power and Renewable Electricity Producers | 4,500 | 39,979 | |||||||||||
Equatorial Energia SA | Electric Utilities | 5,200 | 74,819 | |||||||||||
Estacio Participacoes SA | Diversified Consumer Services | 8,000 | 50,061 | |||||||||||
Fibria Celulose SA | Paper & Forest Products | 7,160 | 135,399 | |||||||||||
Fleury SA | Health Care Providers & Services | 6,500 | 34,668 | |||||||||||
Grendene SA | Textiles, Apparel & Luxury Goods | 8,000 | 13,482 | |||||||||||
Guararapes Confeccoes SA | Textiles, Apparel & Luxury Goods | 235 | 6,120 | |||||||||||
Hypera SA | Pharmaceuticals | 12,500 | 89,269 | |||||||||||
IRB Brasil Resseguros SA | Insurance | 3,780 | 62,897 | |||||||||||
JBS SA | Food Products | 31,000 | 72,812 | |||||||||||
Klabin SA | Containers & Packaging | 22,500 | 112,062 | |||||||||||
Kroton Educacional SA | Diversified Consumer Services | 46,500 | 132,739 | |||||||||||
Localiza Rent a Car SA | Road & Rail | 15,500 | 88,299 | |||||||||||
Lojas Americanas SA | Multiline Retail | 7,000 | 20,946 | |||||||||||
Lojas Renner SA | Multiline Retail | 22,000 | 170,775 | |||||||||||
M. Dias Branco SA | Food Products | 2,500 | 24,658 | |||||||||||
Magazine Luiza SA | Multiline Retail | 2,290 | 70,239 | |||||||||||
Multiplan Empreendimentos Imobiliarios SA | Real Estate Management & Development | 8,500 | 39,823 | |||||||||||
Natura Cosmeticos SA | Personal Products | 5,500 | 39,086 | |||||||||||
Odontoprev SA | Health Care Providers & Services | 8,500 | 27,265 | |||||||||||
Petrobras Distribuidora SA | Specialty Retail | 10,500 | 51,270 | |||||||||||
Petroleo Brasileiro SA | Oil, Gas & Consumable Fuels | 86,500 | 524,820 | |||||||||||
Porto Seguro SA | Insurance | 3,000 | 44,539 | |||||||||||
Qualicorp Consultoria E Corretora de Seguros SA | Health Care Providers & Services | 7,500 | 30,950 | |||||||||||
Raia Drogasil SA | Food & Staples Retailing | 7,070 | 128,227 | |||||||||||
a | Rumo SA | Road & Rail | 34,500 | 129,411 | ||||||||||
Sao Martinho SA | Food Products | 5,000 | 22,937 | |||||||||||
Smiles Fidelidade SA | Media | 1,790 | 20,618 | |||||||||||
Sul America SA | Insurance | 7,000 | 45,573 | |||||||||||
Suzano Papel e Celulose SA | Paper & Forest Products | 14,500 | 174,571 | |||||||||||
Tim Participacoes SA | Wireless Telecommunication Services | 25,000 | 73,431 |
126 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Brazil ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Brazil (continued) | ||||||||||||||
Transmissora Alianca de Energia Eletrica SA | Electric Utilities | 7,000 | $ | 35,057 | ||||||||||
Ultrapar Participacoes SA | Oil, Gas & Consumable Fuels | 13,200 | 123,388 | |||||||||||
Vale SA | Metals & Mining | 100,500 | 1,505,405 | |||||||||||
Via Varejo SA | Specialty Retail | 4,000 | 14,944 | |||||||||||
Weg SA | Machinery | 23,000 | 113,746 | |||||||||||
|
| |||||||||||||
Total Common Stocks | 6,896,394 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 34.0% | ||||||||||||||
Brazil 34.0% | ||||||||||||||
b | Alpargatas SA, 4.555%, pfd. | Textiles, Apparel & Luxury Goods | 4,500 | 13,804 | ||||||||||
a | Azul SA, pfd. | Airlines | 6,000 | 36,133 | ||||||||||
b | Banco Bradesco SA, 4.053%, pfd. | Banks | 98,500 | 707,139 | ||||||||||
b | Banco do Estado do Rio Grande do Sul SA, 7.109%, pfd., B | Banks | 6,500 | 24,382 | ||||||||||
b | Bradespar SA, 6.045%, pfd. | Metals & Mining | 7,000 | 64,977 | ||||||||||
b | Braskem SA, 5.376%, pfd., A | Chemicals | 6,000 | 87,802 | ||||||||||
a | Centrais Eletricas Brasileiras SA, pfd., B | Electric Utilities | 7,000 | 32,638 | ||||||||||
b | Cia de Transmissao de Energia Eletrica Paulista, 12.569%, pfd. | Electric Utilities | 1,500 | 21,958 | ||||||||||
b | Companhia Brasileira de Distribuicao, 1.097%, pfd., A | Food & Staples Retailing | 4,870 | 106,715 | ||||||||||
b | Companhia de Gas de Sao Paulo, 14.610%, pfd., A | Gas Utilities | 500 | 6,165 | ||||||||||
b | Companhia Energetica de Minas Gerais, 6.983%, pfd. | Electric Utilities | 29,000 | 51,994 | ||||||||||
b | Companhia Paranaense de Energia, 5.180%, pfd., B | Electric Utilities | 3,000 | 16,083 | ||||||||||
b | Gerdau SA, 1.629%, pfd. | Metals & Mining | 32,000 | 137,742 | ||||||||||
b | Itau Unibanco Holding SA, 7.482%, pfd. | Banks | 91,000 | 1,005,579 | ||||||||||
b | Itausa-Investimentos Itau SA, 5.515%, pfd. | Banks | 180,000 | 455,234 | ||||||||||
b | Lojas Americanas SA, 0.473%, pfd. | Multiline Retail | 23,000 | 91,400 | ||||||||||
b | Petroleo Brasileiro SA, 0.474%, pfd. | Oil, Gas & Consumable Fuels | 115,500 | 609,957 | ||||||||||
b | Telefonica Brasil SA, 11.194%, pfd. | Diversified Telecommunication Services | 13,000 | 127,606 | ||||||||||
b | Usinas Siderurgicas de Minas Gerais SA, 0.577%, pfd., A | Metals & Mining | 12,000 | 25,000 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $4,170,622) | 3,622,308 | |||||||||||||
|
| |||||||||||||
Total Investments | 10,518,702 | |||||||||||||
Other Assets, less Liabilities 1.3% | 135,568 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 10,654,270 | ||||||||||||
|
|
aNon-income producing.
bVariable rate security. The rate shown represents the yield at period end.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
MINI Bovespa Index | Long | 34 | $ | 135,151 | 10/17/18 | $ | 3,828 | |||||||||||||
|
|
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 127 |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Canada ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 23.77 | $ | 24.80 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.31 | 0.24 | ||||||
Net realized and unrealized gains (losses) | 1.09 | (1.25 | ) | |||||
|
| |||||||
Total from investment operations | 1.40 | (1.01 | ) | |||||
|
| |||||||
Less distributions from net investment income | (0.18 | ) | (0.02 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 24.99 | $ | 23.77 | ||||
|
| |||||||
Total returnd | 5.91% | (4.06)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 2.48% | 2.39% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $4,997 | $2,377 | ||||||
Portfolio turnover ratef | 1.87% | 1.26% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
128 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Canada ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.8% | ||||||||||||||
Canada 97.5% | ||||||||||||||
Agnico Eagle Mines Ltd. | Metals & Mining | 916 | $ | 31,266 | ||||||||||
Alimentation Couche-Tard Inc., B | Food & Staples Retailing | 1,668 | 83,374 | |||||||||||
Bank of Montreal | Banks | 2,536 | 209,025 | |||||||||||
Bank of Nova Scotia | Banks | 4,836 | 288,042 | |||||||||||
Barrick Gold Corp. | Metals & Mining | 4,556 | 50,368 | |||||||||||
BCE Inc. | Diversified Telecommunication Services | 1,172 | 47,448 | |||||||||||
a | Blackberry Ltd. | Software | 1,900 | 21,490 | ||||||||||
Brookfield Asset Management Inc., A | Capital Markets | 3,324 | 147,839 | |||||||||||
Canadian Imperial Bank of Commerce | Banks | 1,744 | 163,296 | |||||||||||
Canadian National Railway Co. | Road & Rail | 2,884 | 258,592 | |||||||||||
Canadian Natural Resources Ltd. | Oil, Gas & Consumable Fuels | 4,724 | 154,226 | |||||||||||
Canadian Pacific Railway Ltd. | Road & Rail | 560 | 118,373 | |||||||||||
Canadian Tire Corp. Ltd., A | Multiline Retail | 236 | 27,631 | |||||||||||
Canadian Utilities Ltd., A | Multi-Utilities | 460 | 11,302 | |||||||||||
Cenovus Energy Inc. | Oil, Gas & Consumable Fuels | 3,988 | 40,016 | |||||||||||
a | CGI Group Inc., A | IT Services | 980 | 63,140 | ||||||||||
CI Financial Corp. | Capital Markets | 960 | 15,233 | |||||||||||
Constellation Software Inc. | Software | 79 | 58,053 | |||||||||||
Dollarama Inc. | Multiline Retail | 1,272 | 40,042 | |||||||||||
Enbridge Inc. | Oil, Gas & Consumable Fuels | 6,680 | 215,397 | |||||||||||
EnCana Corp. | Oil, Gas & Consumable Fuels | 3,764 | 49,299 | |||||||||||
Fairfax Financial Holdings Ltd. | Insurance | 104 | 56,461 | |||||||||||
Fortis Inc. | Electric Utilities | 1,636 | 53,006 | |||||||||||
Franco-Nevada Corp. | Metals & Mining | 712 | 44,507 | |||||||||||
George Weston Ltd. | Food & Staples Retailing | 180 | 13,615 | |||||||||||
Goldcorp Inc. | Metals & Mining | 3,372 | 34,330 | |||||||||||
Great-West Lifeco Inc. | Insurance | 1,084 | 26,282 | |||||||||||
Husky Energy Inc. | Oil, Gas & Consumable Fuels | 1,196 | 20,985 | |||||||||||
b | Hydro One Ltd., 144A | Electric Utilities | 1,244 | 18,902 | ||||||||||
IGM Financial Inc. | Capital Markets | 320 | 8,788 | |||||||||||
Imperial Oil Ltd. | Oil, Gas & Consumable Fuels | 956 | 30,915 | |||||||||||
Intact Financial Corp. | Insurance | 548 | 45,532 | |||||||||||
Inter Pipeline Ltd. | Oil, Gas & Consumable Fuels | 1,508 | 26,133 | |||||||||||
Loblaw Cos. Ltd. | Food & Staples Retailing | 732 | 37,580 | |||||||||||
Magna International Inc. | Auto Components | 1,276 | 66,979 | |||||||||||
Manulife Financial Corp. | Insurance | 7,784 | 139,047 | |||||||||||
Metro Inc., A | Food & Staples Retailing | 948 | 29,468 | |||||||||||
National Bank of Canada | Banks | 1,340 | 66,876 | |||||||||||
Nutrien Ltd. | Chemicals | 2,436 | 140,552 | |||||||||||
Pembina Pipeline Corp. | Oil, Gas & Consumable Fuels | 1,976 | 67,095 | |||||||||||
Power Corp. of Canada | Insurance | 1,508 | 32,736 | |||||||||||
Power Financial Corp. | Insurance | 960 | 21,976 | |||||||||||
Restaurant Brands International Inc. | Hotels, Restaurants & Leisure | 924 | 54,671 | |||||||||||
RioCan REIT | Equity Real Estate Investment Trusts (REITs | ) | 1,224 | 23,370 | ||||||||||
Rogers Communications Inc., B | Wireless Telecommunication Services | 1,412 | 72,566 | |||||||||||
Royal Bank of Canada | Banks | 5,664 | 453,698 | |||||||||||
Saputo Inc. | Food Products | 856 | 25,443 | |||||||||||
Shaw Communications Inc. | Media | 1,716 | 33,415 | |||||||||||
SNC-Lavalin Group Inc., A | Construction & Engineering | 684 | 27,871 | |||||||||||
Sun Life Financial Inc. | Insurance | 2,376 | 94,389 | |||||||||||
Suncor Energy Inc. | Oil, Gas & Consumable Fuels | 6,412 | 247,928 | |||||||||||
Teck Resources Ltd., B | Metals & Mining | 1,972 | 47,492 | |||||||||||
TELUS Corp. | Diversified Telecommunication Services | 772 | 28,435 | |||||||||||
The Toronto-Dominion Bank | Banks | 7,232 | 439,146 | |||||||||||
Thomson Reuters Corp. | Capital Markets | 1,092 | 49,793 | |||||||||||
Tourmaline Oil Corp. | Oil, Gas & Consumable Fuels | 976 | 17,170 | |||||||||||
TransCanada Corp. | Oil, Gas & Consumable Fuels | 3,560 | 143,931 |
libertyshares.com | Semiannual Report | 129 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Canada ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Canada (continued) | ||||||||||||||
a | Turquoise Hill Resources Ltd. | Metals & Mining | 3,848 | $ | 8,187 | |||||||||
Wheaton Precious Metals Corp. | Metals & Mining | 1,738 | 30,387 | |||||||||||
|
| |||||||||||||
4,873,109 | ||||||||||||||
|
| |||||||||||||
United States 2.3% | ||||||||||||||
a | Bausch Health Cos. Inc. | Pharmaceuticals | 1,336 | 34,284 | ||||||||||
IESI-BFC Ltd. | Commercial Services & Supplies | 1,032 | 82,202 | |||||||||||
|
| |||||||||||||
116,486 | ||||||||||||||
|
| |||||||||||||
Total Investments | 4,989,595 | |||||||||||||
Other Assets, less Liabilities 0.2% | 7,733 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 4,997,328 | ||||||||||||
|
|
See Abbreviations on page 266.
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. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the value of this security was $18,902, representing 0.4% of net assets.
130 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE China ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 25.99 | $ | 24.95 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment income (loss)c | 0.45 | (0.01 | ) | |||||
Net realized and unrealized gains (losses) | (3.15 | ) | 1.05 | |||||
|
| |||||||
Total from investment operations | (2.70 | ) | 1.04 | |||||
|
| |||||||
Less distributions from net investment income | (0.10 | ) | (— | )d | ||||
|
| |||||||
Net asset value, end of period | $ | 23.19 | $ | 25.99 | ||||
|
| |||||||
Total returne | (10.43)% | 4.17% | ||||||
Ratios to average net assetsf | ||||||||
Total expenses | 0.19% | 0.19% | ||||||
Net investment income (loss) | 3.58% | (0.12)% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $37,108 | $31,191 | ||||||
Portfolio turnover rateg | 3.57% | 2.71% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 131 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE China ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.8% | ||||||||||||||
China 98.3% | ||||||||||||||
3SBio Inc. | Biotechnology | 28,000 | $ | 47,091 | ||||||||||
a | 51job Inc., ADR | Professional Services | 560 | 43,114 | ||||||||||
a | 58.com Inc., ADR | Interactive Media & Services | 2,336 | 171,930 | ||||||||||
Agile Group Holdings Ltd. | Real Estate Management & Development | 32,000 | 45,230 | |||||||||||
Agricultural Bank of China Ltd., H | Banks | 752,000 | 369,037 | |||||||||||
Air China Ltd., H | Airlines | 48,000 | 46,375 | |||||||||||
a | Alibaba Group Holding Ltd., ADR | Internet & Direct Marketing Retail | 26,568 | 4,377,344 | ||||||||||
a | Alibaba Health Information Technology Ltd. | Health Care Technology | 96,000 | 94,100 | ||||||||||
a | Aluminum Corp. of China Ltd., H | Metals & Mining | 96,000 | 42,694 | ||||||||||
Angang Steel Co. Ltd., H | Metals & Mining | 32,000 | 28,627 | |||||||||||
Anhui Conch Cement Co. Ltd., H | Construction Materials | 28,000 | 169,076 | |||||||||||
Anhui Expressway Co. Ltd., H | Transportation Infrastructure | 16,000 | 9,713 | |||||||||||
Anhui Gujing Distillery Co. Ltd., B | Beverages | 3,200 | 20,693 | |||||||||||
Anta Sports Products Ltd. | Textiles, Apparel & Luxury Goods | 32,000 | 153,561 | |||||||||||
Autohome Inc., ADR | Interactive Media & Services | 1,344 | 104,039 | |||||||||||
AviChina Industry & Technology Co. Ltd., H | Aerospace & Defense | 56,000 | 36,928 | |||||||||||
BAIC Motor Corp. Ltd., H | Automobiles | 36,000 | 28,846 | |||||||||||
a | Baidu Inc., ADR | Interactive Media & Services | 6,752 | 1,544,047 | ||||||||||
Bank of China Ltd., H | Banks | 1,856,000 | 825,427 | |||||||||||
Bank of Communications Co. Ltd., H | Banks | 192,000 | 144,032 | |||||||||||
BBMG Corp., H | Construction Materials | 56,000 | 19,180 | |||||||||||
a | BeiGene Ltd., ADR | Biotechnology | 800 | 137,776 | ||||||||||
Beijing Capital International Airport Co. Ltd. | Transportation Infrastructure | 48,000 | 58,337 | |||||||||||
Beijing Enterprises Holdings Ltd. | Gas Utilities | 12,000 | 67,324 | |||||||||||
a | Beijing Enterprises Water Group Ltd. | Water Utilities | 112,000 | 59,686 | ||||||||||
Beijing Jingneng Clean Energy Co. Ltd., H | Independent Power and Renewable Electricity Producers | 32,000 | 6,461 | |||||||||||
Beijing North Star Co. Ltd., H | Real Estate Management & Development | 16,000 | 4,785 | |||||||||||
Bengang Steel Plates Co. Ltd., B | Metals & Mining | 9,600 | 3,337 | |||||||||||
BOE Technology Group Co. Ltd. | Technology Hardware, Storage & Peripherals | 16,800 | 6,377 | |||||||||||
Brilliance China Automotive Holdings Ltd. | Automobiles | 64,000 | 103,546 | |||||||||||
BYD Co. Ltd., H | Automobiles | 16,000 | 114,915 | |||||||||||
BYD Electronic International Co. Ltd. | Communications Equipment | 20,000 | 29,444 | |||||||||||
a | CAR Inc. | Road & Rail | 16,000 | 12,657 | ||||||||||
Central China Securities Co. Ltd., H | Capital Markets | 32,000 | 8,056 | |||||||||||
CGN Power Co. Ltd., H | Independent Power and Renewable Electricity Producers | 264,000 | 62,754 | |||||||||||
China Agri-Industries Holdings Ltd. | Food Products | 48,000 | 18,525 | |||||||||||
China Bluechemical Ltd. | Chemicals | 48,000 | 19,446 | |||||||||||
China Cinda Asset Management Co. Ltd., H | Capital Markets | 232,000 | 58,705 | |||||||||||
China CITIC Bank Corp. Ltd., H | Banks | 200,000 | 128,053 | |||||||||||
China Coal Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 48,000 | 20,243 | |||||||||||
China Communications Construction Co. Ltd., H | Construction & Engineering | 112,000 | 114,506 | |||||||||||
China Communications Services Corp. Ltd. | Diversified Telecommunication Services | 64,000 | 58,971 | |||||||||||
China Conch Venture Holdings Ltd. | Machinery | 40,000 | 139,554 | |||||||||||
China Construction Bank Corp., H | Banks | 2,184,000 | 1,909,106 | |||||||||||
China Dongxiang Group Co. Ltd. | Textiles, Apparel & Luxury Goods | 80,000 | 13,393 | |||||||||||
China Eastern Airlines Corp. Ltd., H | Airlines | 32,000 | 20,529 | |||||||||||
China Everbright Bank Co. Ltd., H | Banks | 80,000 | 35,476 | |||||||||||
China Everbright International Ltd. | Commercial Services & Supplies | 88,000 | 76,024 | |||||||||||
China Everbright Ltd. | Capital Markets | 16,000 | 28,667 |
132 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE China ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
China Evergrande Group | Real Estate Management & Development | 72,000 | $ | 201,971 | ||||||||||
China Foods Ltd. | Food Products | 16,000 | 8,138 | |||||||||||
China Galaxy Securities Co. Ltd., H | Capital Markets | 92,000 | 42,914 | |||||||||||
China Huarong Asset Management Co. Ltd., H | Capital Markets | 240,000 | 44,167 | |||||||||||
China International Capital Corp. Ltd., H | Capital Markets | 22,400 | 41,394 | |||||||||||
China International Marine Containers (Group) Co. Ltd. | Machinery | 10,400 | 11,031 | |||||||||||
China Jinmao Holdings Group Ltd. | Real Estate Management & Development | 144,000 | 65,514 | |||||||||||
China Life Insurance Co. Ltd., H | Insurance | 184,000 | 418,091 | |||||||||||
a | China Literature Ltd. | Media | 4,800 | 30,181 | ||||||||||
China Longyuan Power Group Corp. | Independent Power and Renewable Electricity Producers | 80,000 | 67,272 | |||||||||||
China Machinery Engineering Corp., H | Construction & Engineering | 24,000 | 11,747 | |||||||||||
China Medical System Holdings Ltd. | Pharmaceuticals | 32,000 | 44,494 | |||||||||||
China Merchants Bank Co. Ltd., H | Banks | 92,000 | 373,883 | |||||||||||
China Merchants Port Holdings Co. Ltd. | Transportation Infrastructure | 32,000 | 61,261 | |||||||||||
China Merchants Securities Co. Ltd. | Capital Markets | 22,400 | 27,023 | |||||||||||
China Minsheng Banking Corp. Ltd., H | Banks | 156,000 | 115,830 | |||||||||||
China Mobile Ltd. | Wireless Telecommunication Services | 128,000 | 1,262,023 | |||||||||||
China Molybdenum Co. Ltd., H | Metals & Mining | 96,000 | 40,241 | |||||||||||
China National Building Material Co. Ltd., H | Construction Materials | 96,000 | 85,266 | |||||||||||
China Oilfield Services Ltd., H | Energy Equipment & Services | 48,000 | 52,080 | |||||||||||
China Overseas Land & Investment Ltd. | Real Estate Management & Development | 96,000 | 300,579 | |||||||||||
China Pacific Insurance Group Co. Ltd., H | Insurance | 62,400 | 240,831 | |||||||||||
China Petroleum & Chemical Corp., H | Oil, Gas & Consumable Fuels | 624,000 | 625,204 | |||||||||||
China Power International Development Ltd. | Independent Power and Renewable Electricity Producers | 128,000 | 28,463 | |||||||||||
China Railway Construction Corp. Ltd., H | Construction & Engineering | 48,000 | 64,778 | |||||||||||
China Railway Group Ltd., H | Construction & Engineering | 96,000 | 95,204 | |||||||||||
b | China Railway Signal & Communication Corp. Ltd., H, Reg S | Electronic Equipment, Instruments & Components | 40,000 | 28,320 | ||||||||||
China Reinsurance Group Corp., H | Insurance | 192,000 | 38,032 | |||||||||||
China Resources Beer Holdings Co. Ltd. | Beverages | 38,400 | 154,338 | |||||||||||
China Resources Cement Holdings Ltd. | Construction Materials | 48,000 | 55,883 | |||||||||||
China Resources Gas Group Ltd. | Gas Utilities | 19,200 | 78,151 | |||||||||||
China Resources Land Ltd. | Real Estate Management & Development | 64,000 | 224,105 | |||||||||||
China Resources Pharmaceutical Group Ltd. | Pharmaceuticals | 40,000 | 63,490 | |||||||||||
China Resources Power Holdings Co. Ltd. | Independent Power and Renewable Electricity Producers | 48,000 | 84,898 | |||||||||||
China Shenhua Energy Co. Ltd., H | Oil, Gas & Consumable Fuels | 84,000 | 191,941 | |||||||||||
China South City Holdings Ltd. | Real Estate Management & Development | 64,000 | 10,469 | |||||||||||
China Southern Airlines Co. Ltd., H | Airlines | 48,000 | 30,733 | |||||||||||
China State Construction International Holdings Ltd. | Construction & Engineering | 48,000 | 50,730 | |||||||||||
China Taiping Insurance Holdings Co. Ltd. | Insurance | 35,200 | 123,483 | |||||||||||
China Telecom Corp. Ltd., H | Diversified Telecommunication Services | 336,000 | 167,036 | |||||||||||
a | China Tower Corp. Ltd., H | Diversified Telecommunication Services | 832,000 | 121,213 | ||||||||||
China Traditional Chinese Medicine Co. Ltd. | Pharmaceuticals | 64,000 | 43,512 | |||||||||||
China Unicom (Hong Kong) Ltd. | Diversified Telecommunication Services | 144,000 | 169,674 | |||||||||||
China Vanke Co. Ltd., H | Real Estate Management & Development | 32,000 | 105,918 | |||||||||||
China Zhongwang Holdings Ltd. | Metals & Mining | 35,200 | 17,229 | |||||||||||
Chongqing Changan Automobile Co. Ltd., B | Automobiles | 20,800 | 16,800 | |||||||||||
Chongqing Rural Commercial Bank Co. Ltd., H | Banks | 72,000 | 39,382 |
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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE China ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
CIFI Holdings Group Co. Ltd. | Real Estate Management & Development | 80,000 | $ | 36,806 | ||||||||||
CIMC Enric Holdings Ltd. | Machinery | 16,000 | 16,685 | |||||||||||
Citic Pacific Ltd. | Industrial Conglomerates | 120,000 | 178,814 | |||||||||||
CITIC Resources Holdings Ltd. | Trading Companies & Distributors | 64,000 | 6,298 | |||||||||||
CITIC Securities Co. Ltd., H | Capital Markets | 56,000 | 99,620 | |||||||||||
CNOOC Ltd. | Oil, Gas & Consumable Fuels | 384,000 | 760,649 | |||||||||||
a | COSCO SHIPPING Development Co. Ltd., H | Marine | 80,000 | 10,837 | ||||||||||
COSCO Shipping Energy Transportation Co. Ltd., H | Marine | 32,000 | 15,908 | |||||||||||
a | COSCO Shipping Holdings Co. Ltd. | Marine | 56,000 | 23,259 | ||||||||||
COSCO Shipping Ports Ltd. | Transportation Infrastructure | 48,000 | 52,816 | |||||||||||
Country Garden Holdings Co. Ltd. | Real Estate Management & Development | 184,000 | 232,090 | |||||||||||
a | Country Garden Services Holdings Co. Ltd. | Commercial Services & Supplies | 24,000 | 40,793 | ||||||||||
CRRC Corp. Ltd., H | Machinery | 96,000 | 87,720 | |||||||||||
a | CSC Financial Co. Ltd., H | Capital Markets | 24,000 | 13,955 | ||||||||||
CSG Holding Co. Ltd. | Construction Materials | 24,705 | 9,503 | |||||||||||
CSPC Pharmaceutical Group Ltd. | Pharmaceuticals | 112,000 | 237,887 | |||||||||||
a | Ctrip.com International Ltd., ADR | Internet & Direct Marketing Retail | 9,296 | 345,532 | ||||||||||
Dali Foods Group Co. Ltd. | Food Products | 52,000 | 37,414 | |||||||||||
Dalian Port (PDA) Co. Ltd., H | Transportation Infrastructure | 48,000 | 6,012 | |||||||||||
Datang International Power Generation Co. Ltd., H | Independent Power and Renewable Electricity Producers | 64,000 | 16,194 | |||||||||||
Dazhong Transportation (Group) Co. Ltd., B | Road & Rail | 19,200 | 8,525 | |||||||||||
a | Dongfang Electric Corp. Ltd., H | Electrical Equipment | 8,000 | 4,734 | ||||||||||
Dongfeng Motor Group Co. Ltd., H | Automobiles | 64,000 | 65,923 | |||||||||||
ENN Energy Holdings Ltd. | Gas Utilities | 17,600 | 152,948 | |||||||||||
Everbright Securities Co. Ltd., H | Capital Markets | 6,400 | 5,684 | |||||||||||
Far East Horizon Ltd. | Diversified Financial Services | 48,000 | 45,700 | |||||||||||
Foshan Electrical and Lighting Co. Ltd., B | Electrical Equipment | 7,940 | 4,160 | |||||||||||
Fosun International Ltd. | Industrial Conglomerates | 56,000 | 98,762 | |||||||||||
Future Land Development Holdings Ltd. | Real Estate Management & Development | 48,000 | 31,101 | |||||||||||
Fuyao Group Glass Industries Co. Ltd., H | Auto Components | 12,800 | 46,539 | |||||||||||
a | GCL-Poly Energy Holdings Ltd. | Semiconductors & Semiconductor Equipment | 272,000 | 19,118 | ||||||||||
a | GDS Holdings Ltd., ADR | IT Services | 1,144 | 40,189 | ||||||||||
Geely Automobile Holdings Ltd. | Automobiles | 120,000 | 239,236 | |||||||||||
a | Genscript Biotech Corp. | Life Sciences Tools & Services | 16,000 | 27,032 | ||||||||||
GF Securities Co. Ltd., H | Capital Markets | 38,400 | 49,270 | |||||||||||
a | GOME Retail Holdings Ltd. | Specialty Retail | 272,000 | 27,809 | ||||||||||
Great Wall Motor Co. Ltd., H | Automobiles | 76,000 | 48,466 | |||||||||||
Greentown China Holdings Ltd. | Real Estate Management & Development | 20,000 | 18,684 | |||||||||||
Guangdong Electric Power Development Co. Ltd., B | Independent Power and Renewable Electricity Producers | 32,000 | 11,696 | |||||||||||
Guangdong Investment Ltd. | Water Utilities | 64,000 | 113,688 | |||||||||||
Guangshen Railway Co. Ltd., H | Road & Rail | 32,000 | 14,313 | |||||||||||
Guangzhou Automobile Group Co. Ltd., H | Automobiles | 80,000 | 88,640 | |||||||||||
Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd. | Pharmaceuticals | 5,600 | 19,967 | |||||||||||
Guangzhou R&F Properties Co. Ltd., H | Real Estate Management & Development | 25,600 | 47,046 | |||||||||||
Guotai Junan Securities Co. Ltd. | Capital Markets | 20,800 | 42,797 | |||||||||||
a | Haier Electronics Group Co. Ltd. | Household Durables | 32,000 | 86,902 | ||||||||||
Haitian International Holdings Ltd. | Machinery | 16,000 | 35,620 | |||||||||||
Haitong Securities Co. Ltd., H | Capital Markets | 83,200 | 75,705 | |||||||||||
a | Health & Happiness H&H International Holdings Ltd. | Food Products | 4,000 | 24,026 |
134 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE China ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
Hengan International Group Co. Ltd. | Personal Products | 16,000 | $ | 147,631 | ||||||||||
a | HengTen Networks Group Ltd. | Textiles, Apparel & Luxury Goods | 480,000 | 18,096 | ||||||||||
Hopson Development Holdings Ltd. | Real Estate Management & Development | 16,000 | 13,618 | |||||||||||
a | Huadian Energy Co. Ltd. | Independent Power and Renewable Electricity Producers | 29,600 | 9,028 | ||||||||||
Huadian Fuxin Energy Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 64,000 | 12,923 | |||||||||||
Huadian Power International Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 32,000 | 12,514 | |||||||||||
Huaneng Power International Inc., H | Independent Power and Renewable Electricity Producers | 96,000 | 63,183 | |||||||||||
Huaneng Renewables Corp. Ltd., H | Independent Power and Renewable Electricity Producers | 128,000 | 38,114 | |||||||||||
a | Huatai Securities Co. Ltd., H | Capital Markets | 43,200 | 61,944 | ||||||||||
Huazhu Group Ltd., ADR | Hotels, Restaurants & Leisure | 2,560 | 82,688 | |||||||||||
Industrial and Commercial Bank of China Ltd., H | Banks | 1,904,000 | 1,391,824 | |||||||||||
Inner Mongolia Yitai Coal Co. Ltd., B | Oil, Gas & Consumable Fuels | 25,600 | 30,720 | |||||||||||
a | Iqiyi Inc., ADR | Entertainment | 3,048 | 82,509 | ||||||||||
a | JD.com Inc., ADR | Internet & Direct Marketing Retail | 19,432 | 506,981 | ||||||||||
Jiangling Motors Corp. Ltd., B | Automobiles | 2,400 | 2,533 | |||||||||||
Jiangsu Expressway Co. Ltd., H | Transportation Infrastructure | 32,000 | 41,059 | |||||||||||
Jiangxi Copper Co. Ltd., H | Metals & Mining | 32,000 | 37,337 | |||||||||||
Jiayuan International Group Ltd. | Real Estate Management & Development | 32,000 | 54,799 | |||||||||||
Jinzhou Port Co. Ltd., B | Transportation Infrastructure | 5,600 | 2,072 | |||||||||||
Kingsoft Corp. Ltd. | Software | 24,000 | 45,762 | |||||||||||
Kunlun Energy Co. Ltd. | Oil, Gas & Consumable Fuels | 64,000 | 74,511 | |||||||||||
a | KWG Group Holdings Ltd. | Real Estate Management & Development | 24,000 | 21,961 | ||||||||||
Lao Feng Xiang Co., Ltd., B | Textiles, Apparel & Luxury Goods | 4,800 | 15,624 | |||||||||||
Legend Holdings Corp., H | Technology Hardware, Storage & Peripherals | 9,600 | 29,444 | |||||||||||
Lenovo Group Ltd. | Technology Hardware, Storage & Peripherals | 176,000 | 128,656 | |||||||||||
a | Li Ning Co. Ltd. | Textiles, Apparel & Luxury Goods | 40,000 | 37,828 | ||||||||||
Livzon Pharmaceutical Group Inc., H | Pharmaceuticals | 3,200 | 11,001 | |||||||||||
Logan Property Holdings Co. Ltd. | Real Estate Management & Development | 16,000 | 18,076 | |||||||||||
Longfor Group Holdings Ltd. | Real Estate Management & Development | 36,000 | 92,934 | |||||||||||
Luye Pharma Group Ltd. | Pharmaceuticals | 40,000 | 35,885 | |||||||||||
Maanshan Iron and Steel Co. Ltd., H | Metals & Mining | 48,000 | 25,764 | |||||||||||
a,b | Meitu Inc., Reg S | Technology Hardware, Storage & Peripherals | 44,000 | 30,814 | ||||||||||
a | Meituan Dianping, B | Internet & Direct Marketing Retail | 12,000 | 105,433 | ||||||||||
Metallurgical Corp. of China Ltd. | Construction & Engineering | 72,000 | 20,243 | |||||||||||
a | Momo Inc., ADR | Interactive Media & Services | 2,384 | 104,419 | ||||||||||
NetEase Inc., ADR | Entertainment | 1,784 | 407,198 | |||||||||||
New China Life Insurance Co. Ltd., H | Insurance | 21,600 | 103,654 | |||||||||||
New Oriental Education & Technology Group Inc., ADR | Diversified Consumer Services | 3,344 | 247,489 | |||||||||||
Nine Dragons Paper Holdings Ltd. | Paper & Forest Products | 40,000 | 43,247 | |||||||||||
Orient Securities Co. Ltd. of China, H | Capital Markets | 19,200 | 12,318 | |||||||||||
People’s Insurance Co. Group of China Ltd., H | Insurance | 200,000 | 89,969 | |||||||||||
PetroChina Co. Ltd., H | Oil, Gas & Consumable Fuels | 512,000 | 414,840 | |||||||||||
PICC Property and Casualty Co. Ltd., H | Insurance | 160,000 | 188,935 | |||||||||||
a | Pinduoduo Inc., ADR | Internet & Direct Marketing Retail | 2,120 | 55,735 | ||||||||||
Ping An Insurance (Group) Co. of China Ltd., H | Insurance | 120,000 | 1,219,185 | |||||||||||
Poly Property Group Co. Ltd. | Real Estate Management & Development | 48,000 | 16,931 | |||||||||||
Postal Savings Bank of China Co. Ltd., H | Banks | 144,000 | 90,726 | |||||||||||
a,b | Qingdao Port International Co. Ltd., H, Reg S | Transportation Infrastructure | 24,000 | 17,023 | ||||||||||
Red Star Macalline Group Corp. Ltd. | Real Estate Management & Development | 12,800 | 12,285 | |||||||||||
Shandong Chenming Paper Holdings Ltd., B | Paper & Forest Products | 17,600 | 11,359 |
libertyshares.com | Semiannual Report | 135 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE China ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
Shandong Chenming Paper Holdings Ltd., H | Paper & Forest Products | 12,000 | $ | 7,300 | ||||||||||
Shandong Weigao Group Medical Polymer Co. Ltd., H | Health Care Equipment & Supplies | 32,000 | 31,612 | |||||||||||
Shanghai Bailian Group Co. Ltd., B | Food & Staples Retailing | 4,800 | 5,170 | |||||||||||
Shanghai Baosight Software Co. Ltd., B | Software | 5,600 | 10,186 | |||||||||||
Shanghai Chlor-Alkali Chemical Co. Ltd., B | Chemicals | 10,400 | 6,864 | |||||||||||
Shanghai Electric Group Co. Ltd., H | Electrical Equipment | 64,000 | 22,819 | |||||||||||
Shanghai Fosun Pharmaceutical Group Co. Ltd., H | Pharmaceuticals | 12,000 | 47,310 | |||||||||||
Shanghai Haixin Group Co., B | Pharmaceuticals | 10,400 | 5,096 | |||||||||||
Shanghai Huayi Group Corp. Ltd., B | Chemicals | 6,400 | 5,760 | |||||||||||
Shanghai Industrial Holdings Ltd. | Industrial Conglomerates | 8,000 | 17,728 | |||||||||||
Shanghai Jinjiang International Hotels Development Co. Ltd. | Hotels, Restaurants & Leisure | 4,000 | 8,932 | |||||||||||
Shanghai Jinjiang International Industrial Investment Co. Ltd. | Road & Rail | 4,000 | 4,116 | |||||||||||
Shanghai Jinqiao Export Processing Zone Development, B | Real Estate Management & Development | 6,400 | 7,565 | |||||||||||
Shanghai Lujiazui Finance & Trade Zone Develop Co. Ltd., B | Real Estate Management & Development | 22,400 | 30,688 | |||||||||||
Shanghai Mechanical and Electrical Industry Co. Ltd., B | Machinery | 5,600 | 9,867 | |||||||||||
Shanghai Pharmaceuticals Holding Co. Ltd., H | Health Care Providers & Services | 20,800 | 51,994 | |||||||||||
Shanghai Shibei Hi-Tech Co. Ltd., B | Real Estate Management & Development | 11,200 | 4,290 | |||||||||||
Shanghai Waigaoqiao Free Trade Zone Group Co. Ltd. | Trading Companies & Distributors | 4,800 | 6,557 | |||||||||||
Shanghai Zhenhua Port Machinery Co. Ltd., B | Machinery | 25,540 | 10,037 | |||||||||||
Shenzhen Accord Pharmaceutical Co. Ltd., B | Health Care Providers & Services | 1,600 | 5,930 | |||||||||||
Shenzhen Expressway Co. Ltd., H | Transportation Infrastructure | 16,000 | 16,072 | |||||||||||
Shenzhen International Holdings Ltd. | Transportation Infrastructure | 20,000 | 41,304 | |||||||||||
Shenzhen Investment Ltd. | Real Estate Management & Development | 80,000 | 25,559 | |||||||||||
Shenzhou International Group Holdings Ltd. | Textiles, Apparel & Luxury Goods | 17,600 | 225,823 | |||||||||||
Shimao Property Holdings Ltd. | Real Estate Management & Development | 28,000 | 69,849 | |||||||||||
Sichuan Expressway Co. Ltd., H | Transportation Infrastructure | 16,000 | 4,948 | |||||||||||
Sihuan Pharmaceutical Holdings Group Ltd. | Pharmaceuticals | 104,000 | 21,265 | |||||||||||
a | SINA Corp. | Interactive Media & Services | 1,496 | 103,942 | ||||||||||
Sino-Ocean Land Holdings Ltd. | Real Estate Management & Development | 72,000 | 31,745 | |||||||||||
a | Sinofert Holdings Ltd. | Chemicals | 48,000 | 6,196 | ||||||||||
Sinopec Engineering Group Co. Ltd. | Construction & Engineering | 36,000 | 41,130 | |||||||||||
a | Sinopec Oilfield Service Corp. | Energy Equipment & Services | 48,000 | 6,564 | ||||||||||
Sinopec Shanghai Petrochemical Co. Ltd., H | Chemicals | 80,000 | 48,870 | |||||||||||
Sinopharm Group Co. Ltd., H | Health Care Providers & Services | 25,600 | 125,303 | |||||||||||
Sinotrans Ltd., H | Air Freight & Logistics | 48,000 | 19,568 | |||||||||||
Sinotruk Hong Kong Ltd. | Machinery | 16,000 | 34,843 | |||||||||||
Soho China Ltd. | Real Estate Management & Development | 36,000 | 13,986 | |||||||||||
Sunac China Holdings Ltd. | Real Estate Management & Development | 56,000 | 172,475 | |||||||||||
Sunny Optical Technology Group Co. Ltd. | Electronic Equipment, Instruments & Components | 16,000 | 184,641 | |||||||||||
a | TAL Education Group, ADR | Diversified Consumer Services | 7,768 | 199,715 | ||||||||||
Tencent Holdings Ltd. | Interactive Media & Services | 139,200 | 5,749,523 | |||||||||||
a | Tianjin Capital Environmental Protection Group Co. Ltd. | Commercial Services & Supplies | 16,000 | 6,339 | ||||||||||
TravelSky Technology Ltd., H | IT Services | 24,000 | 62,416 | |||||||||||
Tsingtao Brewery Co. Ltd., H | Beverages | 9,600 | 45,148 | |||||||||||
a | Vipshop Holdings Ltd., ADR | Internet & Direct Marketing Retail | 10,512 | 65,595 | ||||||||||
a | Weibo Corp., ADR | Interactive Media & Services | 1,248 | 91,266 | ||||||||||
Weichai Power Co. Ltd., H | Machinery | 48,000 | 59,502 | |||||||||||
Weifu High-Technology Co. Ltd., B | Auto Components | 3,200 | 6,310 |
136 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE China ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
China (continued) | ||||||||||||||
a,b | Wuxi Biologics Cayman Inc., Reg S | Life Sciences Tools & Services | 12,000 | $ | 121,382 | |||||||||
c | Wuxi Little Swan Co. Ltd., B | Household Durables | 2,400 | 11,094 | ||||||||||
a | Xiaomi Corp., B | Technology Hardware, Storage & Peripherals | 46,400 | 91,912 | ||||||||||
Xinhua Winshare Publishing and Media Co. Ltd., H | Distributors | 8,000 | 5,439 | |||||||||||
Xinjiang Goldwind Science & Technology Co. Ltd., H | Electrical Equipment | 12,800 | 13,757 | |||||||||||
Yantai Changyu Pioneer Wine Co. Ltd., B | Beverages | 4,800 | 11,900 | |||||||||||
Yanzhou Coal Mining Co. Ltd., H | Oil, Gas & Consumable Fuels | 48,000 | 55,638 | |||||||||||
Yuexiu Property Co. Ltd. | Real Estate Management & Development | 144,000 | 25,764 | |||||||||||
a | YY Inc., ADR | Interactive Media & Services | 1,016 | 76,119 | ||||||||||
Zhaojin Mining Industry Co. Ltd., H | Metals & Mining | 24,000 | 18,587 | |||||||||||
Zhejiang Expressway Co. Ltd., H | Transportation Infrastructure | 32,000 | 26,623 | |||||||||||
a,b | ZhongAn Online P&C Insurance Co. Ltd., Reg S | Insurance | 3,200 | 13,066 | ||||||||||
Zhongsheng Group Holdings Ltd. | Specialty Retail | 16,000 | 38,973 | |||||||||||
Zhuzhou CRRC Times Electric Co. Ltd., H | Electrical Equipment | 12,000 | 68,550 | |||||||||||
Zijin Mining Group Co. Ltd., H | Metals & Mining | 144,000 | 55,392 | |||||||||||
Zoomlion Heavy Industry Science and Technology Development Co. Ltd., H | Machinery | 32,000 | 12,391 | |||||||||||
a | ZTE Corp., H | Communications Equipment | 19,200 | 35,186 | ||||||||||
ZTO Express Cayman Inc., ADR | Air Freight & Logistics | 7,992 | 132,427 | |||||||||||
|
| |||||||||||||
36,468,466 | ||||||||||||||
|
| |||||||||||||
Hong Kong 1.4% | ||||||||||||||
a | Alibaba Pictures Group Ltd. | Media | 320,000 | 43,758 | ||||||||||
Bosideng International Holdings Ltd. | Household Durables | 64,000 | 8,997 | |||||||||||
China Gas Holdings Ltd. | Gas Utilities | 40,000 | 113,228 | |||||||||||
a | Fullshare Holdings Ltd. | Electrical Equipment | 180,000 | 86,493 | ||||||||||
Kingboard Holdings Ltd. | Electronic Equipment, Instruments & Components | 16,000 | 52,243 | |||||||||||
Kingboard Laminates Holdings Ltd. | Electronic Equipment, Instruments & Components | 24,000 | 21,286 | |||||||||||
a | Landing International Development Ltd. | Real Estate Management & Development | 38,400 | 12,367 | ||||||||||
Lee & Man Paper Manufacturing Ltd. | Paper & Forest Products | 32,000 | 29,690 | |||||||||||
Sino Biopharmaceutical Ltd. | Pharmaceuticals | 160,000 | 149,267 | |||||||||||
|
| |||||||||||||
517,329 | ||||||||||||||
|
| |||||||||||||
Singapore 0.1% | ||||||||||||||
Yangzijiang Shipbuilding Holdings Ltd. | Machinery | 49,600 | 45,013 | |||||||||||
Yanlord Land Group Ltd. | Real Estate Management & Development | 16,000 | 17,331 | |||||||||||
|
| |||||||||||||
62,344 | ||||||||||||||
|
| |||||||||||||
Total Investments | 37,048,139 | |||||||||||||
Other Assets, less Liabilities 0.2% | 59,364 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 37,107,503 | ||||||||||||
|
|
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $210,605, representing 0.6% of net assets.
cFair valued using significant unobservable inputs. See Note 8 regarding fair value measurements.
libertyshares.com | Semiannual Report | 137 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE China ETF (continued)
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
HKG Mini Hang Seng Index | Long | 2 | $ | 28,279 | 10/30/18 | $ | 467 | |||||||||||||
|
|
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
138 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Europe ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 24.98 | $ | 25.05 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.56 | 0.24 | ||||||
Net realized and unrealized gains (losses) | (0.65 | ) | (0.30 | ) | ||||
|
| |||||||
Total from investment operations | (0.09 | ) | (0.06 | ) | ||||
|
| |||||||
Less distributions from net investment income | (0.56 | ) | (0.01 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 24.33 | $ | 24.98 | ||||
|
| |||||||
Total returnd | (0.35)% | (0.26)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 4.49% | 2.35% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $82,707 | $104,911 | ||||||
Portfolio turnover ratef | 2.87% | 0.96% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 139 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Europe ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 98.6% | ||||||||||||||
Austria 0.4% | ||||||||||||||
a | AMS AG | Semiconductors & Semiconductor Equipment | 646 | $ | 36,281 | |||||||||
Andritz AG | Machinery | 629 | 36,712 | |||||||||||
a | Erste Group Bank AG | Banks | 2,550 | 105,974 | ||||||||||
OMV AG | Oil, Gas & Consumable Fuels | 1,258 | 70,706 | |||||||||||
Raiffeisen Bank International AG | Banks | 1,156 | 33,299 | |||||||||||
a | Telekom Austria AG | Diversified Telecommunication Services | 1,224 | 9,483 | ||||||||||
Verbund AG | Electric Utilities | 255 | 12,564 | |||||||||||
Vienna Insurance Group AG Wiener Versicherung Gruppe | Insurance | 357 | 10,192 | |||||||||||
Voestalpine AG | Metals & Mining | 1,003 | 45,900 | |||||||||||
|
| |||||||||||||
361,111 | ||||||||||||||
|
| |||||||||||||
Belgium 1.6% | ||||||||||||||
Ackermans & van Haaren NV | Diversified Financial Services | 204 | 35,518 | |||||||||||
Ageas | Insurance | 1,717 | 92,356 | |||||||||||
Anheuser-Busch InBev SA/NV | Beverages | 6,579 | 574,794 | |||||||||||
bpost SA | Air Freight & Logistics | 884 | 14,354 | |||||||||||
Colruyt SA | Food & Staples Retailing | 442 | 25,027 | |||||||||||
Groupe Bruxelles Lambert SA | Diversified Financial Services | 663 | 69,538 | |||||||||||
KBC Groep NV | Banks | 2,329 | 173,399 | |||||||||||
Proximus SADP | Diversified Telecommunication Services | 1,241 | 29,665 | |||||||||||
Sofina SA | Diversified Financial Services | 153 | 30,531 | |||||||||||
Solvay SA | Chemicals | 612 | 82,102 | |||||||||||
a | Telenet Group Holding NV | Media | 425 | 23,408 | ||||||||||
UCB SA | Pharmaceuticals | 1,071 | 96,283 | |||||||||||
Umicore SA | Chemicals | 1,853 | 103,674 | |||||||||||
|
| |||||||||||||
1,350,649 | ||||||||||||||
|
| |||||||||||||
Denmark 2.6% | ||||||||||||||
A.P. Moeller-Maersk AS, A | Marine | 34 | 44,616 | |||||||||||
A.P. Moeller-Maersk AS, B | Marine | 51 | 71,650 | |||||||||||
Ambu AS, B | Health Care Equipment & Supplies | 1,292 | 31,051 | |||||||||||
Carlsberg AS, B | Beverages | 935 | 112,194 | |||||||||||
Chr. Hansen Holding AS | Chemicals | 782 | 79,414 | |||||||||||
Coloplast AS, B | Health Care Equipment & Supplies | 1,207 | 123,476 | |||||||||||
Danske Bank AS | Banks | 5,763 | 151,428 | |||||||||||
DSV AS | Road & Rail | 1,615 | 146,902 | |||||||||||
a | Genmab AS | Biotechnology | 493 | 77,555 | ||||||||||
GN Store Nord A/S | Health Care Equipment & Supplies | 1,156 | 56,338 | |||||||||||
H. Lundbeck AS | Pharmaceuticals | 527 | 32,562 | |||||||||||
ISS AS | Commercial Services & Supplies | 1,683 | 59,243 | |||||||||||
Jyske Bank AS | Banks | 629 | 30,478 | |||||||||||
Novo Nordisk AS, B | Pharmaceuticals | 14,824 | 698,214 | |||||||||||
Novozymes AS | Chemicals | 1,785 | 98,031 | |||||||||||
Orsted AS | Electric Utilities | 1,326 | 90,109 | |||||||||||
Pandora AS | Textiles, Apparel & Luxury Goods | 833 | 52,040 | |||||||||||
Rockwool International AS, B | Building Products | 68 | 29,126 | |||||||||||
Tryg AS | Insurance | 986 | 24,556 | |||||||||||
Vestas Wind Systems AS | Electrical Equipment | 1,734 | 117,322 | |||||||||||
a | William Demant Holding AS | Health Care Equipment & Supplies | 918 | 34,516 | ||||||||||
|
| |||||||||||||
2,160,821 | ||||||||||||||
|
| |||||||||||||
Finland 1.8% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 1,275 | 54,098 | |||||||||||
b | Fortum OYJ, Reg S | Electric Utilities | 3,842 | 96,345 | ||||||||||
Huhtamaki OYJ | Containers & Packaging | 731 | 23,442 | |||||||||||
Kesko OYJ | Food & Staples Retailing | 595 | 32,336 | |||||||||||
Kone OYJ, B | Machinery | 3,383 | 180,829 |
140 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Finland (continued) | ||||||||||||||
Metso OYJ | Machinery | 935 | $ | 33,167 | ||||||||||
Neste Oil OYJ | Oil, Gas & Consumable Fuels | 1,224 | 101,223 | |||||||||||
Nokia OYJ, A | Communications Equipment | 49,215 | 273,069 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 1,190 | 48,777 | |||||||||||
Orion OYJ | Pharmaceuticals | 901 | 34,137 | |||||||||||
Sampo OYJ, A | Insurance | 4,165 | 215,759 | |||||||||||
Stora Enso OYJ, R | Paper & Forest Products | 5,083 | 97,267 | |||||||||||
UPM-Kymmene OYJ | Paper & Forest Products | 4,743 | 186,204 | |||||||||||
Wartsila OYJ ABP | Machinery | 4,131 | 80,561 | |||||||||||
|
| |||||||||||||
1,457,214 | ||||||||||||||
|
| |||||||||||||
France 16.3% | ||||||||||||||
Accor SA | Hotels, Restaurants & Leisure | 1,819 | 93,427 | |||||||||||
Aeroports de Paris SA | Transportation Infrastructure | 255 | 57,430 | |||||||||||
a | Air France-KLM | Airlines | 1,921 | 20,019 | ||||||||||
Air Liquide SA | Chemicals | 3,638 | 478,753 | |||||||||||
Airbus SE | Aerospace & Defense | 4,794 | 602,371 | |||||||||||
c | ALD SA, 144A | Road & Rail | 765 | 13,995 | ||||||||||
Alstom SA | Machinery | 1,360 | 60,800 | |||||||||||
Amundi SA | Capital Markets | 442 | 33,134 | |||||||||||
ArcelorMittal | Metals & Mining | 5,355 | 166,691 | |||||||||||
Arkema SA | Chemicals | 629 | 77,953 | |||||||||||
Atos SE | IT Services | 832 | 99,053 | |||||||||||
AXA SA | Insurance | 16,609 | 446,595 | |||||||||||
Biomerieux | Health Care Equipment & Supplies | 374 | 31,190 | |||||||||||
BNP Paribas SA | Banks | 9,418 | 576,595 | |||||||||||
Bollore | Air Freight & Logistics | 9,414 | 40,676 | |||||||||||
Bouygues SA | Construction & Engineering | 1,768 | 76,453 | |||||||||||
Bureau Veritas SA | Professional Services | 2,261 | 58,379 | |||||||||||
Capgemini SE | IT Services | 1,377 | 173,373 | |||||||||||
Carrefour SA | Food & Staples Retailing | 4,879 | 93,505 | |||||||||||
Casino Guichard-Perrachon SA | Food & Staples Retailing | 510 | 21,455 | |||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 1,564 | 187,017 | |||||||||||
CNP Assurances | Insurance | 1,428 | 34,433 | |||||||||||
Compagnie de Saint-Gobain | Building Products | 4,216 | 181,895 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 357 | 37,215 | ||||||||||
Credit Agricole SA | Banks | 10,132 | 145,762 | |||||||||||
Danone SA | Food Products | 5,185 | 401,692 | |||||||||||
Dassault Aviation SA | Aerospace & Defense | 17 | 31,474 | |||||||||||
Dassault Systemes | Software | 1,163 | 173,919 | |||||||||||
Edenred | Commercial Services & Supplies | 2,127 | 81,107 | |||||||||||
EDF SA | Electric Utilities | 4,381 | 76,964 | |||||||||||
Eiffage SA | Construction & Engineering | 680 | 75,949 | |||||||||||
Elis SA | Commercial Services & Supplies | 1,717 | 40,444 | |||||||||||
Engie SA | Multi-Utilities | 14,110 | 207,564 | |||||||||||
Essilor International Cie Generale d’Optique SA | Health Care Equipment & Supplies | 1,802 | 266,756 | |||||||||||
Eurazeo SE | Diversified Financial Services | 411 | 32,390 | |||||||||||
Eutelsat Communications SA | Media | 1,530 | 36,182 | |||||||||||
Faurecia SA | Auto Components | 663 | 39,921 | |||||||||||
Gecina SA | Equity Real Estate Investment Trusts (REITs | ) | 400 | 66,809 | ||||||||||
Getlink SE | Transportation Infrastructure | 4,165 | 53,214 | |||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 272 | 180,268 | |||||||||||
ICADE | Equity Real Estate Investment Trusts (REITs | ) | 323 | 29,863 | ||||||||||
Iliad SA | Diversified Telecommunication Services | 221 | 28,878 | |||||||||||
Imerys SA | Construction Materials | 340 | 25,116 | |||||||||||
Ingenico Group SA | Electronic Equipment, Instruments & Components | 508 | 38,612 | |||||||||||
Ipsen SA | Pharmaceuticals | 306 | 51,465 | |||||||||||
JCDecaux SA | Media | 646 | 23,635 |
libertyshares.com | Semiannual Report | 141 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
France (continued) | ||||||||||||||
Kering SA | Textiles, Apparel & Luxury Goods | 646 | $ | 346,427 | ||||||||||
Klepierre SA | Equity Real Estate Investment Trusts (REITs | ) | 1,836 | 65,106 | ||||||||||
L’Oreal SA | Personal Products | 2,091 | 504,440 | |||||||||||
Lagardere SCA | Media | 1,020 | 31,407 | |||||||||||
Legrand SA | Electrical Equipment | 2,363 | 172,307 | |||||||||||
LVMH Moet Hennessy Louis Vuitton SE | Textiles, Apparel & Luxury Goods | 2,142 | 757,824 | |||||||||||
Natixis SA | Capital Markets | 7,429 | 50,427 | |||||||||||
Orange SA | Diversified Telecommunication Services | 17,034 | 271,747 | |||||||||||
Orpea | Health Care Providers & Services | 374 | 48,392 | |||||||||||
Pernod Ricard SA | Beverages | 1,819 | 298,534 | |||||||||||
Peugeot SA | Automobiles | 4,607 | 124,304 | |||||||||||
Plastic Omnium SA | Auto Components | 561 | 21,164 | |||||||||||
Publicis Groupe | Media | 1,819 | 108,765 | |||||||||||
Remy Cointreau SA | Beverages | 225 | 29,322 | |||||||||||
Renault SA | Automobiles | 1,530 | 132,394 | |||||||||||
Rexel SA | Trading Companies & Distributors | 2,686 | 40,354 | |||||||||||
Rubis SCA | Gas Utilities | 680 | 36,821 | |||||||||||
Safran SA | Aerospace & Defense | 2,788 | 390,858 | |||||||||||
Sanofi | Pharmaceuticals | 9,435 | 839,002 | |||||||||||
Sartorius Stedim Biotech | Life Sciences Tools & Services | 221 | 30,418 | |||||||||||
Schneider Electric SE | Electrical Equipment | 4,437 | 357,143 | |||||||||||
SCOR SE | Insurance | 1,377 | 63,975 | |||||||||||
SEB SA | Household Durables | 238 | 40,526 | |||||||||||
Societe BIC SA | Commercial Services & Supplies | 238 | 21,797 | |||||||||||
Societe Generale SA | Banks | 6,256 | 268,637 | |||||||||||
Sodexo SA | Hotels, Restaurants & Leisure | 765 | 81,160 | |||||||||||
Suez | Multi-Utilities | 3,230 | 45,920 | |||||||||||
Teleperformance | Professional Services | 510 | 96,259 | |||||||||||
Thales SA | Aerospace & Defense | 884 | 125,625 | |||||||||||
Total SA | Oil, Gas & Consumable Fuels | 21,879 | 1,419,031 | |||||||||||
a | UbiSoft Entertainment SA | Software | 680 | 73,785 | ||||||||||
Valeo SA | Auto Components | 2,125 | 92,310 | |||||||||||
Veolia Environnement SA | Multi-Utilities | 4,352 | 86,893 | |||||||||||
Vinci SA | Construction & Engineering | 4,029 | 383,828 | |||||||||||
Vivendi SA | Media | 8,228 | 211,875 | |||||||||||
Wendel SA | Diversified Financial Services | 255 | 37,971 | |||||||||||
a,b | Worldline SA, Reg S | IT Services | 357 | 22,868 | ||||||||||
|
| |||||||||||||
13,500,007 | ||||||||||||||
|
| |||||||||||||
Germany 13.8% | ||||||||||||||
1&1 Drillisch AG | Wireless Telecommunication Services | 425 | 20,683 | |||||||||||
Adidas AG | Textiles, Apparel & Luxury Goods | 1,717 | 420,597 | |||||||||||
Allianz SE | Insurance | 3,723 | 830,258 | |||||||||||
Aroundtown SA | Real Estate Management & Development | 5,100 | 45,375 | |||||||||||
Axel Springer SE | Media | 391 | 26,318 | |||||||||||
BASF SE | Chemicals | 7,956 | 707,390 | |||||||||||
Bayer AG | Pharmaceuticals | 8,041 | 714,574 | |||||||||||
Bayerische Motoren Werke AG | Automobiles | 2,771 | 250,111 | |||||||||||
Beiersdorf AG | Personal Products | 884 | 99,781 | |||||||||||
Brenntag AG | Trading Companies & Distributors | 1,377 | 85,023 | |||||||||||
Carl Zeiss Meditec AG | Health Care Equipment & Supplies | 306 | 25,768 | |||||||||||
CECONOMY AG | Specialty Retail | 1,445 | 10,211 | |||||||||||
a | Commerzbank AG | Banks | 9,282 | 96,760 | ||||||||||
Continental AG | Auto Components | 918 | 159,885 | |||||||||||
Covestro AG | Chemicals | 1,598 | 129,666 | |||||||||||
Daimler AG | Automobiles | 7,446 | 470,047 | |||||||||||
a | Delivery Hero SE | Internet & Direct Marketing Retail | 952 | 45,800 | ||||||||||
Deutsche Bank AG | Capital Markets | 16,575 | 189,207 |
142 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Germany (continued) | ||||||||||||||
Deutsche Boerse AG | Capital Markets | 1,666 | $ | 223,306 | ||||||||||
Deutsche Lufthansa AG | Airlines | 2,142 | 52,645 | |||||||||||
Deutsche Post AG | Air Freight & Logistics | 8,534 | 304,405 | |||||||||||
Deutsche Telekom AG | Diversified Telecommunication Services | 28,237 | 455,390 | |||||||||||
Deutsche Wohnen SE | Real Estate Management & Development | 3,162 | 151,754 | |||||||||||
a,c | DWS Group GmbH & Co. KGaA, 144A | Capital Markets | 306 | 8,459 | ||||||||||
E.ON SE | Multi-Utilities | 18,411 | 187,755 | |||||||||||
Evonik Industries AG | Chemicals | 1,326 | 47,514 | |||||||||||
Fielmann AG | Specialty Retail | 238 | 14,333 | |||||||||||
Fraport AG Frankfurt Airport Services Worldwide | Transportation Infrastructure | 323 | 28,550 | |||||||||||
Fresenius Medical Care AG & Co. KGaA | Health Care Providers & Services | 1,887 | 194,145 | |||||||||||
Fresenius SE and Co. KGaA | Health Care Providers & Services | 3,485 | 255,985 | |||||||||||
Fuchs Petrolub SE | Chemicals | 323 | 15,944 | |||||||||||
GEA Group AG | Machinery | 1,377 | 49,069 | |||||||||||
Grenkeleasing AG | Consumer Finance | 204 | 24,334 | |||||||||||
Hannover Rueck SE | Insurance | 527 | 74,494 | |||||||||||
Hapag-Lloyd AG | Marine | 340 | 12,858 | |||||||||||
HeidelbergCement AG | Construction Materials | 1,326 | 103,683 | |||||||||||
Hella GmbH & Co. KGaA | Auto Components | 391 | 21,817 | |||||||||||
Henkel AG & Co. KGaA | Household Products | 901 | 95,703 | |||||||||||
Hochtief AG | Construction & Engineering | 170 | 28,197 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 578 | 44,524 | |||||||||||
Infineon Technologies AG | Semiconductors & Semiconductor Equipment | 10,115 | 229,919 | |||||||||||
a | Innogy SE | Multi-Utilities | 1,139 | 48,354 | ||||||||||
K+S AG | Chemicals | 1,700 | 35,700 | |||||||||||
KION Group AG | Machinery | 629 | 38,677 | |||||||||||
Lanxess AG | Chemicals | 816 | 59,786 | |||||||||||
LEG Immobilien AG | Real Estate Management & Development | 561 | 66,626 | |||||||||||
Linde AG | Chemicals | 1,632 | 386,127 | |||||||||||
MAN SE | Machinery | 323 | 35,134 | |||||||||||
Merck KGaA | Pharmaceuticals | 1,156 | 119,500 | |||||||||||
METRO AG | Food & Staples Retailing | 1,513 | 23,724 | |||||||||||
MTU Aero Engines AG | Aerospace & Defense | 459 | 103,480 | |||||||||||
Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen | Insurance | 1,224 | 271,185 | |||||||||||
Osram Licht AG | Electrical Equipment | 850 | 33,824 | |||||||||||
ProSiebenSat.1 Media SE | Media | 2,040 | 53,005 | |||||||||||
Puma SE | Textiles, Apparel & Luxury Goods | 68 | 33,567 | |||||||||||
Rational AG | Machinery | 34 | 24,642 | |||||||||||
Rheinmetall AG | Industrial Conglomerates | 391 | 40,900 | |||||||||||
a,c | Rocket Internet SE, 144A | Internet & Direct Marketing Retail | 527 | 16,502 | ||||||||||
RWE AG | Multi-Utilities | 4,641 | 114,549 | |||||||||||
SAP SE | Software | 8,449 | 1,040,232 | |||||||||||
b | Scout24 AG, Reg S | Interactive Media & Services | 867 | 40,442 | ||||||||||
Siemens AG | Industrial Conglomerates | 6,698 | 858,415 | |||||||||||
a | Siemens Healthineers AG | Health Care Equipment & Supplies | 1,224 | 53,846 | ||||||||||
Stada Arzneimittel AG | Pharmaceuticals | 204 | 19,221 | |||||||||||
Suedzucker AG | Food Products | 697 | 9,265 | |||||||||||
Symrise AG | Chemicals | 1,071 | 97,801 | |||||||||||
a | Talanx AG | Insurance | 357 | 13,576 | ||||||||||
Telefonica Deutschland Holding AG | Diversified Telecommunication Services | 5,967 | 25,235 | |||||||||||
thyssenkrupp AG | Metals & Mining | 4,148 | 104,741 | |||||||||||
TUI AG | Hotels, Restaurants & Leisure | 3,876 | 74,453 | |||||||||||
Uniper SE | Independent Power and Renewable Electricity Producers | 1,751 | 53,916 | |||||||||||
United Internet AG | Diversified Telecommunication Services | 1,037 | 49,082 |
libertyshares.com | Semiannual Report | 143 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Germany (continued) | ||||||||||||||
Volkswagen AG | Automobiles | 255 | $ | 44,457 | ||||||||||
Vonovia SE | Real Estate Management & Development | 4,556 | 222,679 | |||||||||||
Wacker Chemie AG | Chemicals | 136 | 17,108 | |||||||||||
Wirecard AG | IT Services | 969 | 210,130 | |||||||||||
a,c | Zalando SE, 144A | Internet & Direct Marketing Retail | 1,139 | 44,332 | ||||||||||
|
| |||||||||||||
11,436,450 | ||||||||||||||
|
| |||||||||||||
Ireland 0.9% | ||||||||||||||
AIB Group PLC | Banks | 6,052 | 31,000 | |||||||||||
Bank of Ireland Group PLC | Banks | 8,262 | 63,288 | |||||||||||
CRH PLC | Construction Materials | 7,191 | 235,561 | |||||||||||
Glanbia PLC | Food Products | 1,887 | 32,525 | |||||||||||
Kerry Group PLC | Food Products | 1,241 | 137,295 | |||||||||||
Kingspan Group PLC | Building Products | 1,377 | 64,231 | |||||||||||
Paddy Power Betfair PLC | Hotels, Restaurants & Leisure | 731 | 61,867 | |||||||||||
Smurfit Kappa Group PLC | Containers & Packaging | 2,108 | 83,513 | |||||||||||
|
| |||||||||||||
709,280 | ||||||||||||||
|
| |||||||||||||
Italy 3.4% | ||||||||||||||
A2A SpA | Multi-Utilities | 13,736 | 23,852 | |||||||||||
Assicurazioni Generali SpA | Insurance | 11,254 | 194,504 | |||||||||||
Atlantia SpA | Transportation Infrastructure | 4,488 | 93,153 | |||||||||||
Banca Mediolanum SpA | Diversified Financial Services | 2,227 | 15,158 | |||||||||||
a | Banco BPM SpA | Banks | 13,498 | 33,284 | ||||||||||
Buzzi Unicem SpA | Construction Materials | 629 | 13,063 | |||||||||||
Buzzi Unicem SpA, di Risp | Construction Materials | 374 | 4,474 | |||||||||||
Davide Campari-Milano SpA | Beverages | 5,049 | 43,015 | |||||||||||
DiaSorin SpA | Health Care Equipment & Supplies | 102 | 10,734 | |||||||||||
Enel SpA | Electric Utilities | 67,779 | 347,336 | |||||||||||
Eni SpA | Oil, Gas & Consumable Fuels | 21,896 | 414,087 | |||||||||||
Ferrari NV | Automobiles | 1,122 | 154,560 | |||||||||||
FinecoBank Banca Fineco SpA | Banks | 3,485 | 46,611 | |||||||||||
Intesa Sanpaolo SpA | Banks | 128,514 | 328,541 | |||||||||||
Italgas Reti SpA | Gas Utilities | 4,352 | 23,626 | |||||||||||
Leonardo SpA | Aerospace & Defense | 3,451 | 41,606 | |||||||||||
Luxottica Group SpA | Textiles, Apparel & Luxury Goods | 1,377 | 93,596 | |||||||||||
a | Mediaset SpA | Media | 3,060 | 9,564 | ||||||||||
Mediobanca Banca di Credito Finanziario SpA | Banks | 5,151 | 51,477 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 1,462 | 63,000 | |||||||||||
Parmalat SpA | Food Products | 1,700 | 5,608 | |||||||||||
a | Pirelli & C SpA | Auto Components | 3,417 | 28,687 | ||||||||||
b | Poste Italiane SpA, Reg S | Insurance | 4,114 | 32,885 | ||||||||||
Prysmian SpA | Electrical Equipment | 2,141 | 49,885 | |||||||||||
Recordati SpA | Pharmaceuticals | 884 | 29,940 | |||||||||||
a | Saipem SpA | Energy Equipment & Services | 5,083 | 31,338 | ||||||||||
Salvatore Ferragamo SpA | Textiles, Apparel & Luxury Goods | 391 | 9,369 | |||||||||||
Snam SpA | Oil, Gas & Consumable Fuels | 21,046 | 87,733 | |||||||||||
a | Telecom Italia SpA | Diversified Telecommunication Services | 93,075 | 56,540 | ||||||||||
Telecom Italia SpA, di Risp | Diversified Telecommunication Services | 53,686 | 28,896 | |||||||||||
Tenaris SA | Energy Equipment & Services | 4,165 | 69,807 | |||||||||||
Terna Rete Elettrica Nazionale SpA | Electric Utilities | 12,563 | 67,137 | |||||||||||
UniCredit SpA | Banks | 19,533 | 294,122 | |||||||||||
Unione di Banche Italiane SpA | Banks | 8,738 | 35,075 | |||||||||||
UnipolSai Assicurazioni SpA | Insurance | 5,253 | 12,386 | |||||||||||
|
| |||||||||||||
2,844,649 | ||||||||||||||
|
|
144 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Luxembourg 0.2% | ||||||||||||||
Eurofins Scientific SE | Life Sciences Tools & Services | 85 | $ | 48,278 | ||||||||||
RTL Group SA | Media | 357 | 25,480 | |||||||||||
SES SA, IDR | Media | 3,128 | 68,667 | |||||||||||
|
| |||||||||||||
142,425 | ||||||||||||||
|
| |||||||||||||
Netherlands 4.4% | ||||||||||||||
Aalberts Industries NV | Machinery | 850 | 36,213 | |||||||||||
ABN AMRO Group NV, GDR | Banks | 3,689 | 100,478 | |||||||||||
Aegon NV | Insurance | 16,426 | 106,612 | |||||||||||
Akzo Nobel NV | Chemicals | 2,176 | 203,559 | |||||||||||
a | Altice Europe NV, A | Media | 4,216 | 11,375 | ||||||||||
a | Altice Europe NV, B | Media | 748 | 2,009 | ||||||||||
ASML Holding NV | Semiconductors & Semiconductor Equipment | 3,536 | 660,826 | |||||||||||
ASR Nederland NV | Insurance | 1,105 | 52,699 | |||||||||||
Boskalis Westminster | Construction & Engineering | 747 | 23,522 | |||||||||||
EXOR NV | Diversified Financial Services | 952 | 63,934 | |||||||||||
a | Gemalto NV | Software | 731 | 42,623 | ||||||||||
Grandvision NV | Specialty Retail | 442 | 10,884 | |||||||||||
Heineken Holding NV | Beverages | 935 | 84,708 | |||||||||||
Heineken NV | Beverages | 2,091 | 196,141 | |||||||||||
ING Groep NV | Banks | 34,051 | 442,330 | |||||||||||
Koninklijke Ahold Delhaize NV | Food & Staples Retailing | 10,302 | 236,324 | |||||||||||
Koninklijke DSM NV | Chemicals | 1,513 | 160,340 | |||||||||||
Koninklijke KPN NV | Diversified Telecommunication Services | 27,438 | 72,407 | |||||||||||
Koninklijke Philips NV | Health Care Equipment & Supplies | 8,092 | 368,764 | |||||||||||
Koninklijke Vopak NV | Oil, Gas & Consumable Fuels | 595 | 29,330 | |||||||||||
NN Group NV | Insurance | 2,968 | 132,481 | |||||||||||
a | OCI NV | Chemicals | 850 | 27,180 | ||||||||||
a | QIAGEN NV | Life Sciences Tools & Services | 1,972 | 74,670 | ||||||||||
Randstad NV | Professional Services | 986 | 52,658 | |||||||||||
Signify NV | Electrical Equipment | 833 | 21,576 | |||||||||||
a | Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs | ) | 420 | 84,502 | |||||||||
Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs | ) | 719 | 144,659 | ||||||||||
Wolters Kluwer NV | Professional Services | 2,380 | 148,391 | |||||||||||
|
| |||||||||||||
3,591,195 | ||||||||||||||
|
| |||||||||||||
Norway 1.2% | ||||||||||||||
Aker ASA | Diversified Financial Services | 170 | 15,323 | |||||||||||
Aker BP ASA | Oil, Gas & Consumable Fuels | 901 | 38,216 | |||||||||||
DNB ASA | Banks | 9,163 | 192,694 | |||||||||||
Equinor ASA | Oil, Gas & Consumable Fuels | 8,721 | 245,781 | |||||||||||
Gjensidige Forsikring ASA | Insurance | 1,479 | 24,919 | |||||||||||
Marine Harvest ASA | Food Products | 3,587 | 83,053 | |||||||||||
Norsk Hydro ASA | Metals & Mining | 11,866 | 71,196 | |||||||||||
Orkla ASA | Food Products | 6,902 | 58,279 | |||||||||||
Schibsted ASA, A | Media | 714 | 26,795 | |||||||||||
Schibsted ASA, B | Media | 782 | 27,080 | |||||||||||
Telenor ASA | Diversified Telecommunication Services | 6,052 | 118,241 | |||||||||||
Yara International ASA | Chemicals | 1,547 | 75,932 | |||||||||||
|
| |||||||||||||
977,509 | ||||||||||||||
|
| |||||||||||||
Poland 0.5% | ||||||||||||||
Bank Pekao SA | Banks | 1,394 | 40,162 | |||||||||||
a | CD Projekt SA | Software | 544 | 27,642 | ||||||||||
a | Cyfrowy Polsat SA | Media | 2,261 | 13,642 | ||||||||||
a | Dino Polska SA | Food & Staples Retailing | 425 | 11,484 | ||||||||||
Grupa Lotos SA | Oil, Gas & Consumable Fuels | 884 | 18,006 | |||||||||||
a | KGHM Polska Miedz SA | Metals & Mining | 1,224 | 29,586 |
libertyshares.com | Semiannual Report | 145 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Poland (continued) | ||||||||||||||
mBank SA | Banks | 136 | $ | 16,514 | ||||||||||
a | PGE Polska Grupa Energetyczna SA | Electric Utilities | 6,477 | 16,728 | ||||||||||
Polski Koncern Naftowy Orlen SA | Oil, Gas & Consumable Fuels | 2,703 | 74,063 | |||||||||||
a | Polskie Gornictwo Naftowe i Gazownictwo SA | Oil, Gas & Consumable Fuels | 15,045 | 26,408 | ||||||||||
Powszechna Kasa Oszczednosci Bank Polski SA | Banks | 7,582 | 88,242 | |||||||||||
Powszechny Zalkad Ubezpieczen SA | Insurance | 5,015 | 54,012 | |||||||||||
Santander Bank Polska SA | Banks | 272 | 27,716 | |||||||||||
|
| |||||||||||||
444,205 | ||||||||||||||
|
| |||||||||||||
Portugal 0.2% | ||||||||||||||
EDP – Energias de Portugal SA | Electric Utilities | 20,162 | 74,423 | |||||||||||
Galp Energia SGPS SA, B | Oil, Gas & Consumable Fuels | 4,573 | 90,774 | |||||||||||
Jeronimo Martins SGPS SA | Food & Staples Retailing | 2,176 | 32,060 | |||||||||||
|
| |||||||||||||
197,257 | ||||||||||||||
|
| |||||||||||||
Russia 0.1% | ||||||||||||||
Evraz PLC | Metals & Mining | 4,352 | 32,156 | |||||||||||
Polymetal International PLC | Metals & Mining | 2,295 | 18,388 | |||||||||||
|
| |||||||||||||
50,544 | ||||||||||||||
|
| |||||||||||||
South Africa 0.1% | ||||||||||||||
Investec PLC | Capital Markets | 5,661 | 39,834 | |||||||||||
|
| |||||||||||||
Spain 4.6% | ||||||||||||||
Acciona SA | Electric Utilities | 153 | 13,872 | |||||||||||
Acerinox SA | Metals & Mining | 1,258 | 18,002 | |||||||||||
ACS Actividades de Construccion y Servicios SA | Construction & Engineering | 2,074 | 88,360 | |||||||||||
Aena SME SA | Transportation Infrastructure | 578 | 100,366 | |||||||||||
Amadeus IT Group SA, A | IT Services | 3,570 | 331,807 | |||||||||||
Banco Bilbao Vizcaya Argentaria SA | Banks | 58,616 | 373,773 | |||||||||||
Banco de Sabadell SA | Banks | 49,878 | 77,573 | |||||||||||
Banco Santander SA | Banks | 138,822 | 699,063 | |||||||||||
Bankia SA | Banks | 10,013 | 39,275 | |||||||||||
Bankinter SA | Banks | 6,103 | 56,227 | |||||||||||
CaixaBank SA | Banks | 32,045 | 146,573 | |||||||||||
Cellnex Telecom SAU | Diversified Telecommunication Services | 1,360 | 35,747 | |||||||||||
Corporacion Financiera Alba SA | Diversified Financial Services | 204 | 11,362 | |||||||||||
Corporacion Mapfre SA | Insurance | 8,789 | 27,583 | |||||||||||
EDP Renovaveis SA | Independent Power and Renewable Electricity Producers | 1,360 | 13,806 | |||||||||||
Enagas SA | Oil, Gas & Consumable Fuels | 2,023 | 54,631 | |||||||||||
Endesa SA | Electric Utilities | 2,822 | 60,999 | |||||||||||
Ferrovial SA | Construction & Engineering | 4,131 | 85,743 | |||||||||||
a | Fomento de Construcciones y Contratas SA | Construction & Engineering | 527 | 7,909 | ||||||||||
Grifols SA | Biotechnology | 2,941 | 82,871 | |||||||||||
Grupo Catalana Occidente SA | Insurance | 408 | 17,771 | |||||||||||
Iberdrola SA | Electric Utilities | 52,258 | 384,702 | |||||||||||
Industria de Diseno Textil SA | Specialty Retail | 9,095 | 275,822 | |||||||||||
Inmobiliaria Colonial SA | Equity Real Estate Investment Trusts (REITs | ) | 2,244 | 23,327 | ||||||||||
Mediaset Espana Comunicacion SA | Media | 1,615 | 11,799 | |||||||||||
Merlin Properties Socimi SA | Equity Real Estate Investment Trusts (REITs | ) | 2,975 | 40,377 | ||||||||||
Naturgy Energy Group SA | Gas Utilities | 2,754 | 75,203 | |||||||||||
Red Electrica Corp. SA | Electric Utilities | 3,842 | 80,503 | |||||||||||
Repsol SA | Oil, Gas & Consumable Fuels | 10,689 | 213,108 | |||||||||||
a | Siemens Gamesa Renewable Energy SA | Electrical Equipment | 1,989 | 25,181 |
146 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Spain (continued) | ||||||||||||||
Telefonica SA | Diversified Telecommunication Services | 39,423 | $ | 312,195 | ||||||||||
Zardoya Otis SA | Machinery | 1,581 | 14,746 | |||||||||||
|
| |||||||||||||
3,800,276 | ||||||||||||||
|
| |||||||||||||
Sweden 4.5% | ||||||||||||||
Alfa Laval AB | Machinery | 2,788 | 75,553 | |||||||||||
Assa Abloy AB, B | Building Products | 7,990 | 160,506 | |||||||||||
Atlas Copco AB, A | Machinery | 5,287 | 152,311 | |||||||||||
Atlas Copco AB, B | Machinery | 3,366 | 89,759 | |||||||||||
Boliden AB | Metals & Mining | 2,431 | 67,765 | |||||||||||
Electrolux AB, B | Household Durables | 1,972 | 43,461 | |||||||||||
Elekta AB, B | Health Care Equipment & Supplies | 2,975 | 39,992 | |||||||||||
a | Epiroc AB, A | Machinery | 5,593 | 62,450 | ||||||||||
a | Epiroc AB, B | Machinery | 3,366 | 34,632 | ||||||||||
Ericsson, B | Communications Equipment | 26,282 | 233,113 | |||||||||||
Essity AB, B | Household Products | 5,270 | 132,384 | |||||||||||
a | Fastighets AB Balder, B | Real Estate Management & Development | 884 | 24,512 | ||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 7,888 | 145,676 | |||||||||||
Hexagon AB, B | Electronic Equipment, Instruments & Components | 2,227 | 130,467 | |||||||||||
Husqvarna AB, B | Household Durables | 3,315 | 28,218 | |||||||||||
ICA Gruppen AB | Food & Staples Retailing | 697 | 22,102 | |||||||||||
Industrivarden AB, A | Diversified Financial Services | 1,853 | 42,339 | |||||||||||
Industrivarden AB, C | Diversified Financial Services | 1,513 | 33,601 | |||||||||||
Investment AB Latour, B | Industrial Conglomerates | 1,071 | 13,356 | |||||||||||
Investor AB, A | Diversified Financial Services | 867 | 39,951 | |||||||||||
Investor AB, B | Diversified Financial Services | 4,080 | 188,420 | |||||||||||
Kinnevik AB, B | Diversified Financial Services | 2,091 | 63,272 | |||||||||||
L E Lundbergforetagen AB, B | Diversified Financial Services | 680 | 22,908 | |||||||||||
Lundin Petroleum AB | Oil, Gas & Consumable Fuels | 1,615 | 61,780 | |||||||||||
Nibe Industrier AB | Building Products | 2,159 | 25,855 | |||||||||||
Nordea Bank AB | Banks | 27,489 | 299,396 | |||||||||||
Saab AB, B | Aerospace & Defense | 578 | 29,052 | |||||||||||
Sandvik AB | Machinery | 9,554 | 169,471 | |||||||||||
Securitas AB, B | Commercial Services & Supplies | 2,856 | 49,697 | |||||||||||
Skandinaviska Enskilda Banken AB, A | Banks | 12,716 | 141,899 | |||||||||||
Skandinaviska Enskilda Banken AB, C | Banks | 187 | 2,040 | |||||||||||
Skanska AB, B | Construction & Engineering | 3,162 | 62,062 | |||||||||||
SKF AB, B | Machinery | 3,383 | 66,704 | |||||||||||
Svenska Cellulosa AB, B | Paper & Forest Products | 5,270 | 59,674 | |||||||||||
Svenska Handelsbanken AB, A | Banks | 13,056 | 164,793 | |||||||||||
Svenska Handelsbanken AB, B | Banks | 323 | 4,061 | |||||||||||
Swedbank AB, A | Banks | 8,704 | 215,613 | |||||||||||
Swedish Match AB | Tobacco | 1,428 | 73,060 | |||||||||||
a | Swedish Orphan Biovitrum AB | Biotechnology | 1,360 | 39,761 | ||||||||||
Tele2 AB, B | Wireless Telecommunication Services | 3,094 | 37,226 | |||||||||||
Telefonaktiebolaget LM Ericsson, A | Communications Equipment | 323 | 2,927 | |||||||||||
Telia Co. AB | Diversified Telecommunication Services | 22,950 | 105,341 | |||||||||||
Trelleborg AB, B | Machinery | 2,159 | 44,002 | |||||||||||
Volvo AB, B | Machinery | 12,801 | 226,132 | |||||||||||
|
| |||||||||||||
3,727,294 | ||||||||||||||
|
| |||||||||||||
Switzerland 13.6% | ||||||||||||||
ABB Ltd. | Electrical Equipment | 15,776 | 374,535 | |||||||||||
Adecco Group AG | Professional Services | 1,360 | 71,759 | |||||||||||
Baloise Holding AG | Insurance | 408 | 62,528 | |||||||||||
Banque Cantonale Vaudoise | Banks | 34 | 25,340 | |||||||||||
Barry Callebaut AG | Food Products | 17 | 32,371 | |||||||||||
Chocoladefabriken Lindt & Spruengli AG | Food Products | 17 | 119,738 |
libertyshares.com | Semiannual Report | 147 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Switzerland (continued) | ||||||||||||||
a | Clariant AG | Chemicals | 1,819 | $ | 47,561 | |||||||||
a | Coca-Cola HBC AG | Beverages | 1,734 | 59,086 | ||||||||||
Compagnie Financiere Richemont SA | Textiles, Apparel & Luxury Goods | 4,437 | 363,391 | |||||||||||
a | Credit Suisse Group AG | Capital Markets | 22,287 | 336,541 | ||||||||||
DKSH Holding AG | Professional Services | 238 | 16,276 | |||||||||||
a | Dufry AG | Specialty Retail | 289 | 32,737 | ||||||||||
EMS-Chemie Holding AG | Chemicals | 68 | 40,725 | |||||||||||
Ferguson PLC | Trading Companies & Distributors | 2,023 | 171,872 | |||||||||||
Flughafen Zurich AG | Transportation Infrastructure | 170 | 34,529 | |||||||||||
Geberit AG | Building Products | 289 | 134,677 | |||||||||||
Georg Fischer AG | Machinery | 34 | 38,636 | |||||||||||
Givaudan AG | Chemicals | 85 | 209,976 | |||||||||||
a | Glencore PLC | Metals & Mining | 100,963 | 436,719 | ||||||||||
Helvetia Holding AG | Insurance | 68 | 41,630 | |||||||||||
a | Julius Baer Group Ltd. | Capital Markets | 1,921 | 96,581 | ||||||||||
Kuehne + Nagel International AG | Marine | 442 | 70,363 | |||||||||||
a | LafargeHolcim Ltd., B | Construction Materials | 4,080 | 202,371 | ||||||||||
Logitech International SA | Technology Hardware, Storage & Peripherals | 1,275 | 57,250 | |||||||||||
a | Lonza Group AG | Life Sciences Tools & Services | 663 | 227,380 | ||||||||||
Nestle SA | Food Products | 26,316 | 2,204,315 | |||||||||||
Novartis AG | Pharmaceuticals | 19,006 | 1,642,206 | |||||||||||
a | OC Oerlikon Corp. AG | Machinery | 1,785 | 24,597 | ||||||||||
Pargesa Holding SA, B | Diversified Financial Services | 272 | 21,957 | |||||||||||
Partners Group Holding AG | Capital Markets | 136 | 108,391 | |||||||||||
PSP Swiss Property AG | Real Estate Management & Development | 374 | 36,393 | |||||||||||
Roche Holding AG | Pharmaceuticals | 6290 | 1,531,221 | |||||||||||
Schindler Holding AG | Machinery | 187 | 45,333 | |||||||||||
Schindler Holding AG, PC | Machinery | 357 | 89,396 | |||||||||||
SGS SA | Professional Services | 34 | 89,943 | |||||||||||
Sika AG | Chemicals | 1,156 | 169,116 | |||||||||||
Sonova Holding AG | Health Care Equipment & Supplies | 459 | 91,772 | |||||||||||
STMicroelectronics NV | Semiconductors & Semiconductor Equipment | 5,576 | 101,487 | |||||||||||
Straumann Holding AG | Health Care Equipment & Supplies | 85 | 64,220 | |||||||||||
Sulzer AG | Machinery | 119 | 14,363 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 408 | 31,953 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 255 | 101,890 | |||||||||||
a | Swiss Life Holding AG | Insurance | 289 | 110,061 | ||||||||||
a | Swiss Prime Site AG | Real Estate Management & Development | 848 | 72,620 | ||||||||||
a | Swiss Prime Site AG, rts., 9/26/18 | Real Estate Management & Development | 15 | 9 | ||||||||||
Swiss Re AG | Insurance | 2,652 | 245,978 | |||||||||||
Swisscom AG | Diversified Telecommunication Services | 204 | 93,020 | |||||||||||
a | Temenos AG | Software | 527 | 85,891 | ||||||||||
a | UBS Group AG | Capital Markets | 30,923 | 490,691 | ||||||||||
Vifor Pharma AG | Pharmaceuticals | 408 | 71,070 | |||||||||||
Zurich Insurance Group AG | Insurance | 1,309 | 415,696 | |||||||||||
|
| |||||||||||||
11,258,161 | ||||||||||||||
|
| |||||||||||||
United Arab Emirates 0.0%† | ||||||||||||||
NMC Health PLC | Health Care Providers & Services | 714 | 31,601 | |||||||||||
|
| |||||||||||||
United Kingdom 28.3% | ||||||||||||||
3i Group PLC | Capital Markets | 8,466 | 103,909 | |||||||||||
Admiral Group PLC | Insurance | 1,785 | 48,417 | |||||||||||
Anglo American PLC | Metals & Mining | 8,619 | 193,658 | |||||||||||
Antofagasta PLC | Metals & Mining | 3,077 | 34,307 | |||||||||||
Ashmore Group PLC | Capital Markets | 3,417 | 16,220 | |||||||||||
Ashtead Group PLC | Trading Companies & Distributors | 4,148 | 131,822 | |||||||||||
Associated British Foods PLC | Food Products | 3,094 | 92,395 |
148 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
AstraZeneca PLC | Pharmaceuticals | 11,033 | $ | 857,931 | ||||||||||
Auto Trader Group PLC | Interactive Media & Services | 8,381 | 48,810 | |||||||||||
Aveva Group PLC | Software | 510 | 19,247 | |||||||||||
Aviva PLC | Insurance | 33,541 | 214,103 | |||||||||||
B&M European Value Retail SA | Multiline Retail | 7,463 | 37,644 | |||||||||||
Babcock International Group PLC | Commercial Services & Supplies | 2,244 | 21,157 | |||||||||||
BAE Systems PLC | Aerospace & Defense | 27,472 | 225,625 | |||||||||||
Barclays PLC | Banks | 149,464 | 334,814 | |||||||||||
Barratt Developments PLC | Household Durables | 8,908 | 65,865 | |||||||||||
Bellway PLC | Household Durables | 1,088 | 42,763 | |||||||||||
BHP Billiton PLC | Metals & Mining | 17,901 | 390,121 | |||||||||||
BP PLC | Oil, Gas & Consumable Fuels | 170,850 | 1,312,942 | |||||||||||
British American Tobacco PLC | Tobacco | 19,907 | 930,526 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs | ) | 8,279 | 66,591 | ||||||||||
BT Group PLC | Diversified Telecommunication Services | 71,825 | 211,024 | |||||||||||
Bunzl PLC | Trading Companies & Distributors | 2,992 | 94,148 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 3,570 | 93,808 | |||||||||||
Capita PLC | Professional Services | 14,620 | 27,244 | |||||||||||
Capital & Counties Properties PLC | Real Estate Management & Development | 6,511 | 22,611 | |||||||||||
Centrica PLC | Multi-Utilities | 49,759 | 100,512 | |||||||||||
Cineworld Group PLC | Media | 8,245 | 33,933 | |||||||||||
CNH Industrial NV | Machinery | 8,551 | 102,796 | |||||||||||
a | Cobham PLC | Aerospace & Defense | 21,284 | 32,404 | ||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 13,668 | 304,073 | |||||||||||
ConvaTec Group PLC | Health Care Equipment & Supplies | 11,679 | 35,395 | |||||||||||
Croda International PLC | Chemicals | 1,122 | 76,113 | |||||||||||
CYBG PLC | Banks | 7,871 | 33,235 | |||||||||||
DCC PLC | Industrial Conglomerates | 799 | 72,571 | |||||||||||
Derwent London PLC | Equity Real Estate Investment Trusts (REITs | ) | 884 | 32,935 | ||||||||||
Diageo PLC | Beverages | 21,063 | 746,833 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 12,240 | 51,700 | |||||||||||
Dixons Carphone PLC | Specialty Retail | 8,874 | 19,632 | |||||||||||
DS Smith PLC | Containers & Packaging | 11,057 | 68,966 | |||||||||||
easyJet PLC | Airlines | 2,040 | 34,956 | |||||||||||
Experian PLC | Professional Services | 7,990 | 205,313 | |||||||||||
a | Fiat Chrysler Automobiles NV | Automobiles | 9,707 | 170,744 | ||||||||||
Fresnillo PLC | Metals & Mining | 1,649 | 17,663 | |||||||||||
G4S PLC | Commercial Services & Supplies | 13,770 | 43,455 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 42,296 | 847,639 | |||||||||||
GVC Holdings PLC | Hotels, Restaurants & Leisure | 4,828 | 57,828 | |||||||||||
Halma PLC | Electronic Equipment, Instruments & Components | 3,366 | 63,427 | |||||||||||
Hammerson PLC | Equity Real Estate Investment Trusts (REITs | ) | 7,055 | 42,017 | ||||||||||
Hargreaves Lansdown PLC | Capital Markets | 2,329 | 67,880 | |||||||||||
Hikma Pharmaceuticals PLC | Pharmaceuticals | 1,241 | 29,939 | |||||||||||
Hiscox Ltd. | Insurance | 2,414 | 51,784 | |||||||||||
Howden Joinery Group PLC | Trading Companies & Distributors | 5,355 | 32,744 | |||||||||||
HSBC Holdings PLC | Banks | 175,440 | 1,532,385 | |||||||||||
IMI PLC | Machinery | 2,380 | 34,047 | |||||||||||
Imperial Brands PLC | Tobacco | 8,347 | 290,736 | |||||||||||
Inchcape PLC | Distributors | 3,706 | 32,332 | |||||||||||
Informa PLC | Media | 11,033 | 109,662 | |||||||||||
Inmarsat PLC | Diversified Telecommunication Services | 4,029 | 26,270 | |||||||||||
InterContinental Hotels Group PLC | Hotels, Restaurants & Leisure | 1,683 | 104,907 | |||||||||||
International Consolidated Airlines Group SA | Airlines | 8,840 | 76,107 | |||||||||||
Intertek Group PLC | Professional Services | 1,428 | 92,960 | |||||||||||
Intu Properties PLC | Equity Real Estate Investment Trusts (REITs | ) | 8,432 | 16,944 | ||||||||||
ITV PLC | Media | 33,150 | 68,237 |
libertyshares.com | Semiannual Report | 149 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
J Sainsbury PLC | Food & Staples Retailing | 14,331 | $ | 60,139 | ||||||||||
JD Sports Fashion PLC | Specialty Retail | 2,873 | 17,200 | |||||||||||
John Wood Group PLC | Energy Equipment & Services | 5,950 | 59,869 | |||||||||||
Johnson Matthey PLC | Chemicals | 1,683 | 78,176 | |||||||||||
a | Just Eat PLC | Internet & Direct Marketing Retail | 5,100 | 44,573 | ||||||||||
KAZ Minerals PLC | Metals & Mining | 2,091 | 14,986 | |||||||||||
Kingfisher PLC | Specialty Retail | 19,499 | 65,603 | |||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 6,341 | 73,048 | ||||||||||
Legal & General Group PLC | Insurance | 52,632 | 179,960 | |||||||||||
Lloyds Banking Group PLC | Banks | 629,918 | 486,870 | |||||||||||
London Stock Exchange Group PLC | Capital Markets | 2,788 | 166,733 | |||||||||||
Marks & Spencer Group PLC | Multiline Retail | 14,467 | 54,484 | |||||||||||
Mediclinic International PLC | Health Care Providers & Services | 3,485 | 19,496 | |||||||||||
Meggitt PLC | Aerospace & Defense | 6,885 | 50,854 | |||||||||||
Melrose Industries PLC | Electrical Equipment | 40,919 | 106,667 | |||||||||||
Merlin Entertainments PLC | Hotels, Restaurants & Leisure | 6,239 | 32,576 | |||||||||||
Micro Focus International PLC | Software | 3,859 | 71,937 | |||||||||||
Mondi PLC | Paper & Forest Products | 3,264 | 89,555 | |||||||||||
National Grid PLC | Multi-Utilities | 29,767 | 307,203 | |||||||||||
NEX Group PLC | Capital Markets | 2,516 | 32,613 | |||||||||||
Next PLC | Multiline Retail | 1,156 | 82,821 | |||||||||||
a | Ocado Group PLC | Internet & Direct Marketing Retail | 3,740 | 43,855 | ||||||||||
Pearson PLC | Media | 6,732 | 78,132 | |||||||||||
Pennon Group PLC | Water Utilities | 3,706 | 34,468 | |||||||||||
Persimmon PLC | Household Durables | 2,737 | 84,411 | |||||||||||
Phoenix Group Holdings | Insurance | 4,097 | 36,117 | |||||||||||
Prudential PLC | Insurance | 22,780 | 522,682 | |||||||||||
Quilter PLC | Capital Markets | 14,093 | 24,682 | |||||||||||
Randgold Resources Ltd. | Metals & Mining | 833 | 59,202 | |||||||||||
Reckitt Benckiser Group PLC | Household Products | 5,440 | 497,717 | |||||||||||
a | RELX PLC (EUR Traded) | Professional Services | 7,633 | 160,425 | ||||||||||
RELX PLC (GBP Traded) | Professional Services | 9,078 | 191,305 | |||||||||||
Renishaw PLC | Electronic Equipment, Instruments & Components | 255 | 15,775 | |||||||||||
Rentokil Initial PLC | Commercial Services & Supplies | 16,371 | 67,974 | |||||||||||
Rightmove PLC | Interactive Media & Services | 8,160 | 50,119 | |||||||||||
Rio Tinto PLC | Metals & Mining | 10,030 | 507,489 | |||||||||||
a | Rolls-Royce Holdings PLC | Aerospace & Defense | 14,620 | 188,250 | ||||||||||
Royal Bank of Scotland Group PLC | Banks | 36,771 | 119,878 | |||||||||||
Royal Dutch Shell PLC, A | Oil, Gas & Consumable Fuels | 40,546 | 1,394,023 | |||||||||||
Royal Dutch Shell PLC, B | Oil, Gas & Consumable Fuels | 32,691 | 1,146,339 | |||||||||||
Royal Mail PLC | Air Freight & Logistics | 8,330 | 51,826 | |||||||||||
RPC Group PLC | Containers & Packaging | 3,638 | 37,716 | |||||||||||
RSA Insurance Group PLC | Insurance | 9,061 | 67,942 | |||||||||||
Schroders PLC | Capital Markets | 986 | 39,795 | |||||||||||
Segro PLC | Equity Real Estate Investment Trusts (REITs | ) | 8,874 | 73,807 | ||||||||||
Severn Trent PLC | Water Utilities | 2,108 | 50,828 | |||||||||||
Shire PLC | Biotechnology | 7,803 | 470,464 | |||||||||||
Sky PLC | Media | 9,197 | �� | 207,365 | ||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 7,786 | 142,096 | |||||||||||
Smiths Group PLC | Industrial Conglomerates | 3,519 | 68,628 | |||||||||||
Spirax-Sarco Engineering PLC | Machinery | 646 | 61,496 | |||||||||||
SSE PLC | Electric Utilities | 9,027 | 134,903 | |||||||||||
St. James’s Place Capital PLC | Capital Markets | 4,641 | 69,236 | |||||||||||
Standard Chartered PLC | Banks | 24,106 | 200,055 | |||||||||||
Standard Life Aberdeen PLC | Diversified Financial Services | 24,106 | 96,161 | |||||||||||
Subsea 7 SA | Energy Equipment & Services | 2,023 | 29,910 | |||||||||||
Tate & Lyle PLC | Food Products | 4,131 | 36,783 |
150 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
Taylor Wimpey PLC | Household Durables | 28,900 | $ | 64,746 | ||||||||||
TechnipFMC PLC | Energy Equipment & Services | 3,859 | 121,468 | |||||||||||
Tesco PLC | Food & Staples Retailing | 83,011 | 259,585 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 1,139 | 54,645 | |||||||||||
The Sage Group PLC | Software | 9,622 | 73,579 | |||||||||||
Travis Perkins PLC | Trading Companies & Distributors | 2,244 | 31,180 | |||||||||||
Unilever NV, IDR | Personal Products | 13,209 | 735,891 | |||||||||||
Unilever PLC | Personal Products | 9,724 | 534,613 | |||||||||||
United Utilities Group PLC | Water Utilities | 6,069 | 55,717 | |||||||||||
Vodafone Group PLC | Wireless Telecommunication Services | 231,506 | 496,618 | |||||||||||
Weir Group PLC | Machinery | 1,989 | 45,728 | |||||||||||
Whitbread PLC | Hotels, Restaurants & Leisure | 1,632 | 100,388 | |||||||||||
William Hill PLC | Hotels, Restaurants & Leisure | 7,616 | 25,038 | |||||||||||
William Morrison Supermarkets PLC | Food & Staples Retailing | 19,176 | 64,867 | |||||||||||
WPP PLC | Media | 10,591 | 155,307 | |||||||||||
|
| |||||||||||||
23,375,363 | ||||||||||||||
|
| |||||||||||||
United States 0.1% | ||||||||||||||
Carnival PLC | Hotels, Restaurants & Leisure | 1,445 | 89,770 | |||||||||||
|
| |||||||||||||
Total Common Stocks | 81,545,615 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 0.9% | ||||||||||||||
Germany 0.8% | ||||||||||||||
d | Bayerische Motoren Werke AG, 5.938%, pfd. | Automobiles | 493 | 38,766 | ||||||||||
d | Fuchs Petrolub SE, 1.891%, pfd. | Chemicals | 629 | 35,156 | ||||||||||
d | Henkel AG & Co. KGaA, 1.771%, pfd. | Household Products | 1,496 | 175,585 | ||||||||||
d | Porsche Automobil Holding SE, 3.034%, pfd. | Automobiles | 1,377 | 92,764 | ||||||||||
d | RWE AG, 8.651%, pfd. | Multi-Utilities | 306 | 6,163 | ||||||||||
d | Sartorius AG, 0.365%, pfd. | Health Care Equipment & Supplies | 306 | 49,688 | ||||||||||
d | Volkswagen AG, 2.612%, pfd. | Automobiles | 1,632 | 287,368 | ||||||||||
|
| |||||||||||||
685,490 | ||||||||||||||
|
| |||||||||||||
Spain 0.1% | ||||||||||||||
d | Grifols SA, 2.160%, pfd., B | Biotechnology | 2,278 | 48,261 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $808,348) | 733,751 | |||||||||||||
|
| |||||||||||||
Total Investments | 82,279,366 | |||||||||||||
Other Assets, less Liabilities 0.5% | 428,054 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 82,707,420 | ||||||||||||
|
|
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $192,540, representing 0.2% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $83,288, representing 0.1% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
libertyshares.com | Semiannual Report | 151 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe ETF (continued)
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
EURO STOXX 50 Index | Long | 3 | $ | 118,020 | 12/21/18 | $ | 2,195 | |||||||||||||
FTSE 100 Index | Long | 1 | 97,628 | 12/21/18 | 2,817 | |||||||||||||||
|
| |||||||||||||||||||
Total Futures Contracts | $ | 5,012 | ||||||||||||||||||
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
152 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Europe Hedged ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 23.88 | $ | 25.05 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.54 | 0.25 | ||||||
Net realized and unrealized gains (losses) | 1.02 | (1.40 | ) | |||||
|
| |||||||
Total from investment operations | 1.56 | (1.15 | ) | |||||
|
| |||||||
Less distributions from net investment income | (0.38 | ) | (0.02 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 25.06 | $ | 23.88 | ||||
|
| |||||||
Total returnd | 6.54% | (4.61)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 4.27% | 2.47% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $35,085 | $33,428 | ||||||
Portfolio turnover ratef | 2.38% | 5.33% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 153 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Europe Hedged ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 97.9% | ||||||||||||||
Austria 0.4% | ||||||||||||||
a | AMS AG | Semiconductors & Semiconductor Equipment | 280 | $ | 15,726 | |||||||||
Andritz AG | Machinery | 259 | 15,117 | |||||||||||
a | Erste Group Bank AG | Banks | 1,050 | 43,636 | ||||||||||
OMV AG | Oil, Gas & Consumable Fuels | 532 | 29,901 | |||||||||||
Raiffeisen Bank International AG | Banks | 455 | 13,106 | |||||||||||
a | Telekom Austria AG | Diversified Telecommunication Services | 504 | 3,905 | ||||||||||
Verbund AG | Electric Utilities | 105 | 5,173 | |||||||||||
Vienna Insurance Group AG Wiener Versicherung Gruppe | Insurance | 154 | 4,397 | |||||||||||
Voestalpine AG | Metals & Mining | 413 | 18,900 | |||||||||||
|
| |||||||||||||
149,861 | ||||||||||||||
|
| |||||||||||||
Belgium 1.6% | ||||||||||||||
Ackermans & van Haaren NV | Diversified Financial Services | 98 | 17,063 | |||||||||||
Ageas | Insurance | 728 | 39,158 | |||||||||||
Anheuser-Busch InBev SA/NV | Beverages | 2,807 | 245,242 | |||||||||||
bpost SA | Air Freight & Logistics | 357 | 5,797 | |||||||||||
Colruyt SA | Food & Staples Retailing | 196 | 11,098 | |||||||||||
Groupe Bruxelles Lambert SA | Diversified Financial Services | 266 | 27,899 | |||||||||||
KBC Groep NV | Banks | 1,001 | 74,527 | |||||||||||
Proximus SADP | Diversified Telecommunication Services | 560 | 13,386 | |||||||||||
Sofina SA | Diversified Financial Services | 56 | 11,175 | |||||||||||
Solvay SA | Chemicals | 252 | 33,807 | |||||||||||
a | Telenet Group Holding NV | Media | 196 | 10,795 | ||||||||||
UCB SA | Pharmaceuticals | 455 | 40,904 | |||||||||||
Umicore SA | Chemicals | 763 | 42,689 | |||||||||||
|
| |||||||||||||
573,540 | ||||||||||||||
|
| |||||||||||||
Denmark 2.6% | ||||||||||||||
A.P. Moeller-Maersk AS, A | Marine | 14 | 18,371 | |||||||||||
A.P. Moeller-Maersk AS, B | Marine | 21 | 29,503 | |||||||||||
Ambu AS, B | Health Care Equipment & Supplies | 539 | 12,954 | |||||||||||
Carlsberg AS, B | Beverages | 413 | 49,557 | |||||||||||
Chr. Hansen Holding AS | Chemicals | 336 | 34,121 | |||||||||||
Coloplast AS, B | Health Care Equipment & Supplies | 490 | 50,127 | |||||||||||
Danske Bank AS | Banks | 2,464 | 64,744 | |||||||||||
DSV AS | Road & Rail | 693 | 63,036 | |||||||||||
a | Genmab AS | Biotechnology | 210 | 33,036 | ||||||||||
GN Store Nord A/S | Health Care Equipment & Supplies | 462 | 22,516 | |||||||||||
H. Lundbeck AS | Pharmaceuticals | 210 | 12,975 | |||||||||||
ISS AS | Commercial Services & Supplies | 637 | 22,423 | |||||||||||
Jyske Bank AS | Banks | 252 | 12,211 | |||||||||||
Novo Nordisk AS, B | Pharmaceuticals | 6,265 | 295,083 | |||||||||||
Novozymes AS | Chemicals | 749 | 41,134 | |||||||||||
Orsted AS | Electric Utilities | 588 | 39,958 | |||||||||||
Pandora AS | Textiles, Apparel & Luxury Goods | 406 | 25,364 | |||||||||||
Rockwool International AS, B | Building Products | 28 | 11,993 | |||||||||||
Tryg AS | Insurance | 413 | 10,286 | |||||||||||
Vestas Wind Systems AS | Electrical Equipment | 714 | 48,309 | |||||||||||
a | William Demant Holding AS | Health Care Equipment & Supplies | 420 | 15,792 | ||||||||||
|
| |||||||||||||
913,493 | ||||||||||||||
|
| |||||||||||||
Finland 1.7% | ||||||||||||||
Elisa OYJ | Diversified Telecommunication Services | 497 | 21,088 | |||||||||||
b | Fortum OYJ, Reg S | Electric Utilities | 1,666 | 41,778 | ||||||||||
Huhtamaki OYJ | Containers & Packaging | 336 | 10,775 | |||||||||||
Kesko OYJ | Food & Staples Retailing | 252 | 13,695 | |||||||||||
Kone OYJ, B | Machinery | 1,421 | 75,956 |
154 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Finland (continued) | ||||||||||||||
Metso OYJ | Machinery | 371 | $ | 13,160 | ||||||||||
Neste Oil OYJ | Oil, Gas & Consumable Fuels | 511 | 42,259 | |||||||||||
Nokia OYJ, A | Communications Equipment | 20,636 | 114,499 | |||||||||||
Nokian Renkaat OYJ | Auto Components | 518 | 21,232 | |||||||||||
Orion OYJ | Pharmaceuticals | 371 | 14,056 | |||||||||||
Sampo OYJ, A | Insurance | 1,764 | 91,380 | |||||||||||
Stora Enso OYJ, R | Paper & Forest Products | 2,023 | 38,712 | |||||||||||
UPM-Kymmene OYJ | Paper & Forest Products | 1,995 | 78,321 | |||||||||||
Wartsila OYJ ABP | Machinery | 1,701 | 33,172 | |||||||||||
|
| |||||||||||||
610,083 | ||||||||||||||
|
| |||||||||||||
France 16.2% | ||||||||||||||
Accor SA | Hotels, Restaurants & Leisure | 749 | 38,470 | |||||||||||
Aeroports de Paris SA | Transportation Infrastructure | 98 | 22,071 | |||||||||||
a | Air France-KLM | Airlines | 751 | 7,826 | ||||||||||
Air Liquide SA | Chemicals | 1,561 | 205,424 | |||||||||||
Airbus SE | Aerospace & Defense | 2,023 | 254,192 | |||||||||||
c | ALD SA, 144A | Road & Rail | 322 | 5,891 | ||||||||||
Alstom SA | Machinery | 595 | 26,600 | |||||||||||
Amundi SA | Capital Markets | 196 | 14,693 | |||||||||||
ArcelorMittal | Metals & Mining | 2,261 | 70,381 | |||||||||||
Arkema SA | Chemicals | 273 | 33,833 | |||||||||||
Atos SE | IT Services | 341 | 40,597 | |||||||||||
AXA SA | Insurance | 7,084 | 190,480 | |||||||||||
Biomerieux | Health Care Equipment & Supplies | 154 | 12,843 | |||||||||||
BNP Paribas SA | Banks | 3,976 | 243,421 | |||||||||||
Bollore | Air Freight & Logistics | 3,592 | 15,520 | |||||||||||
Bouygues SA | Construction & Engineering | 777 | 33,600 | |||||||||||
Bureau Veritas SA | Professional Services | 938 | 24,219 | |||||||||||
Capgemini SE | IT Services | 581 | 73,152 | |||||||||||
Carrefour SA | Food & Staples Retailing | 2,065 | 39,575 | |||||||||||
Casino Guichard-Perrachon SA | Food & Staples Retailing | 210 | 8,835 | |||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 651 | 77,844 | |||||||||||
CNP Assurances | Insurance | 588 | 14,178 | |||||||||||
Compagnie de Saint-Gobain | Building Products | 1,799 | 77,616 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 140 | 14,594 | ||||||||||
Credit Agricole SA | Banks | 4,137 | 59,516 | |||||||||||
Danone SA | Food Products | 2,142 | 165,945 | |||||||||||
Dassault Aviation SA | Aerospace & Defense | 7 | 12,960 | |||||||||||
Dassault Systemes | Software | 471 | 70,435 | |||||||||||
Edenred | Commercial Services & Supplies | 839 | 31,993 | |||||||||||
EDF SA | Electric Utilities | 1,824 | 32,043 | |||||||||||
Eiffage SA | Construction & Engineering | 280 | 31,273 | |||||||||||
Elis SA | Commercial Services & Supplies | 658 | 15,499 | |||||||||||
Engie SA | Multi-Utilities | 6,041 | 88,866 | |||||||||||
Essilor International Cie Generale d’Optique SA | Health Care Equipment & Supplies | 749 | 110,877 | |||||||||||
Eurazeo SE | Diversified Financial Services | 204 | 16,077 | |||||||||||
Eutelsat Communications SA | Media | 602 | 14,236 | |||||||||||
Faurecia SA | Auto Components | 287 | 17,281 | |||||||||||
Gecina SA | Equity Real Estate Investment Trusts (REITs | ) | 178 | 29,730 | ||||||||||
Getlink SE | Transportation Infrastructure | 1,631 | 20,839 | |||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 112 | 74,228 | |||||||||||
ICADE | Equity Real Estate Investment Trusts (REITs | ) | 133 | 12,297 | ||||||||||
Iliad SA | Diversified Telecommunication Services | 84 | 10,976 | |||||||||||
Imerys SA | Construction Materials | 133 | 9,825 | |||||||||||
Ingenico Group SA | Electronic Equipment, Instruments & Components | 228 | 17,330 | |||||||||||
Ipsen SA | Pharmaceuticals | 133 | 22,369 | |||||||||||
JCDecaux SA | Media | 280 | 10,244 |
libertyshares.com | Semiannual Report | 155 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
France (continued) | ||||||||||||||
Kering SA | Textiles, Apparel & Luxury Goods | 273 | $ | 146,400 | ||||||||||
Klepierre SA | Equity Real Estate Investment Trusts (REITs | ) | 707 | 25,071 | ||||||||||
L’Oreal SA | Personal Products | 889 | 214,465 | |||||||||||
Lagardere SCA | Media | 427 | 13,148 | |||||||||||
Legrand SA | Electrical Equipment | 973 | 70,950 | |||||||||||
LVMH Moet Hennessy Louis Vuitton SE | Textiles, Apparel & Luxury Goods | 917 | 324,428 | |||||||||||
Natixis SA | Capital Markets | 2,982 | 20,241 | |||||||||||
Orange SA | Diversified Telecommunication Services | 7,126 | 113,683 | |||||||||||
Orpea | Health Care Providers & Services | 168 | 21,738 | |||||||||||
Pernod Ricard SA | Beverages | 784 | 128,670 | |||||||||||
Peugeot SA | Automobiles | 1,932 | 52,129 | |||||||||||
Plastic Omnium SA | Auto Components | 203 | 7,658 | |||||||||||
Publicis Groupe | Media | 756 | 45,204 | |||||||||||
Remy Cointreau SA | Beverages | 92 | 11,989 | |||||||||||
Renault SA | Automobiles | 679 | 58,755 | |||||||||||
Rexel SA | Trading Companies & Distributors | 1,071 | 16,091 | |||||||||||
Rubis SCA | Gas Utilities | 294 | 15,920 | |||||||||||
Safran SA | Aerospace & Defense | 1,176 | 164,867 | |||||||||||
Sanofi | Pharmaceuticals | 3,990 | 354,808 | |||||||||||
Sartorius Stedim Biotech | Life Sciences Tools & Services | 105 | 14,452 | |||||||||||
Schneider Electric SE | Electrical Equipment | 1,876 | 151,003 | |||||||||||
SCOR SE | Insurance | 553 | 25,692 | |||||||||||
SEB SA | Household Durables | 105 | 17,879 | |||||||||||
Societe BIC SA | Commercial Services & Supplies | 91 | 8,334 | |||||||||||
Societe Generale SA | Banks | 2,674 | 114,823 | |||||||||||
Sodexo SA | Hotels, Restaurants & Leisure | 322 | 34,161 | |||||||||||
Suez | Multi-Utilities | 1,414 | 20,103 | |||||||||||
Teleperformance | Professional Services | 203 | 38,315 | |||||||||||
Thales SA | Aerospace & Defense | 357 | 50,733 | |||||||||||
Total SA | Oil, Gas & Consumable Fuels | 9,220 | 597,992 | |||||||||||
a | UbiSoft Entertainment SA | Software | 322 | 34,939 | ||||||||||
Valeo SA | Auto Components | 868 | 37,706 | |||||||||||
Veolia Environnement SA | Multi-Utilities | 1,862 | 37,177 | |||||||||||
Vinci SA | Construction & Engineering | 1,701 | 162,048 | |||||||||||
Vivendi SA | Media | 3,542 | 91,208 | |||||||||||
Wendel SA | Diversified Financial Services | 105 | 15,635 | |||||||||||
a,b | Worldline SA, Reg S | IT Services | 140 | 8,968 | ||||||||||
|
| |||||||||||||
5,688,077 | ||||||||||||||
|
| |||||||||||||
Germany 13.7% | ||||||||||||||
1&1 Drillisch AG | Wireless Telecommunication Services | 168 | 8,176 | |||||||||||
Adidas AG | Textiles, Apparel & Luxury Goods | 728 | 178,331 | |||||||||||
Allianz SE | Insurance | 1,575 | 351,237 | |||||||||||
Aroundtown SA | Real Estate Management & Development | 1,862 | 16,566 | |||||||||||
Axel Springer SE | Media | 168 | 11,308 | |||||||||||
BASF SE | Chemicals | 3,360 | 298,747 | |||||||||||
Bayer AG | Pharmaceuticals | 3,438 | 305,522 | |||||||||||
Bayerische Motoren Werke AG | Automobiles | 1,176 | 106,146 | |||||||||||
Beiersdorf AG | Personal Products | 371 | 41,876 | |||||||||||
Brenntag AG | Trading Companies & Distributors | 574 | 35,442 | |||||||||||
Carl Zeiss Meditec AG | Health Care Equipment & Supplies | 119 | 10,021 | |||||||||||
CECONOMY AG | Specialty Retail | 595 | 4,205 | |||||||||||
a | Commerzbank AG | Banks | 3,976 | 41,448 | ||||||||||
Continental AG | Auto Components | 399 | 69,493 | |||||||||||
Covestro AG | Chemicals | 651 | 52,824 | |||||||||||
Daimler AG | Automobiles | 3,164 | 199,735 | |||||||||||
a | Delivery Hero SE | Internet & Direct Marketing Retail | 385 | 18,522 | ||||||||||
Deutsche Bank AG | Capital Markets | 7,056 | 80,546 |
156 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Germany (continued) | ||||||||||||||
Deutsche Boerse AG | Capital Markets | 686 | $ | 91,949 | ||||||||||
Deutsche Lufthansa AG | Airlines | 875 | 21,505 | |||||||||||
Deutsche Post AG | Air Freight & Logistics | 3,584 | 127,840 | |||||||||||
Deutsche Telekom AG | Diversified Telecommunication Services | 12,075 | 194,739 | |||||||||||
Deutsche Wohnen SE | Real Estate Management & Development | 1,302 | 62,487 | |||||||||||
a,c | DWS Group GmbH & Co. KGaA, 144A | Capital Markets | 105 | 2,903 | ||||||||||
E.ON SE | Multi-Utilities | 7,966 | 81,237 | |||||||||||
Evonik Industries AG | Chemicals | 581 | 20,819 | |||||||||||
Fielmann AG | Specialty Retail | 98 | 5,902 | |||||||||||
Fraport AG Frankfurt Airport Services Worldwide | Transportation Infrastructure | 119 | 10,518 | |||||||||||
Fresenius Medical Care AG & Co. KGaA | Health Care Providers & Services | 784 | 80,662 | |||||||||||
Fresenius SE and Co. KGaA | Health Care Providers & Services | 1,491 | 109,519 | |||||||||||
Fuchs Petrolub SE | Chemicals | 119 | 5,874 | |||||||||||
GEA Group AG | Machinery | 637 | 22,699 | |||||||||||
Grenkeleasing AG | Consumer Finance | 98 | 11,690 | |||||||||||
Hannover Rueck SE | Insurance | 217 | 30,674 | |||||||||||
Hapag-Lloyd AG | Marine | 133 | 5,030 | |||||||||||
HeidelbergCement AG | Construction Materials | 553 | 43,240 | |||||||||||
Hella GmbH & Co. KGaA | Auto Components | 175 | 9,765 | |||||||||||
Henkel AG & Co. KGaA | Household Products | 378 | 40,151 | |||||||||||
Hochtief AG | Construction & Engineering | 70 | 11,610 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 245 | 18,873 | |||||||||||
Infineon Technologies AG | Semiconductors & Semiconductor Equipment | 4,249 | 96,582 | |||||||||||
a | Innogy SE | Multi-Utilities | 448 | 19,019 | ||||||||||
K+S AG | Chemicals | 686 | 14,406 | |||||||||||
KION Group AG | Machinery | 252 | 15,495 | |||||||||||
Lanxess AG | Chemicals | 350 | 25,644 | |||||||||||
LEG Immobilien AG | Real Estate Management & Development | 224 | 26,603 | |||||||||||
Linde AG | Chemicals | 686 | 162,306 | |||||||||||
MAN SE | Machinery | 147 | 15,990 | |||||||||||
Merck KGaA | Pharmaceuticals | 483 | 49,929 | |||||||||||
METRO AG | Food & Staples Retailing | 602 | 9,440 | |||||||||||
MTU Aero Engines AG | Aerospace & Defense | 189 | 42,610 | |||||||||||
Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen | Insurance | 532 | 117,868 | |||||||||||
Osram Licht AG | Electrical Equipment | 371 | 14,763 | |||||||||||
ProSiebenSat.1 Media SE | Media | 868 | 22,553 | |||||||||||
Puma SE | Textiles, Apparel & Luxury Goods | 29 | 14,315 | |||||||||||
Rational AG | Machinery | 14 | 10,147 | |||||||||||
Rheinmetall AG | Industrial Conglomerates | 154 | 16,109 | |||||||||||
a,c | Rocket Internet SE, 144A | Internet & Direct Marketing Retail | 147 | 4,603 | ||||||||||
RWE AG | Multi-Utilities | 1,967 | 48,549 | |||||||||||
SAP SE | Software | 3,584 | 441,258 | |||||||||||
b | Scout24 AG, Reg S | Interactive Media & Services | 350 | 16,326 | ||||||||||
Siemens AG | Industrial Conglomerates | 2,821 | 361,539 | |||||||||||
a | Siemens Healthineers AG | Health Care Equipment & Supplies | 469 | 20,632 | ||||||||||
Stada Arzneimittel AG | Pharmaceuticals | 77 | 7,255 | |||||||||||
Suedzucker AG | Food Products | 294 | 3,908 | |||||||||||
Symrise AG | Chemicals | 448 | 40,910 | |||||||||||
a | Talanx AG | Insurance | 119 | 4,525 | ||||||||||
Telefonica Deutschland Holding AG | Diversified Telecommunication Services | 2,457 | 10,391 | |||||||||||
thyssenkrupp AG | Metals & Mining | 1,722 | 43,482 | |||||||||||
TUI AG | Hotels, Restaurants & Leisure | 1,666 | 32,002 | |||||||||||
Uniper SE | Independent Power and Renewable Electricity Producers | 777 | 23,925 | |||||||||||
United Internet AG | Diversified Telecommunication Services | 413 | 19,548 |
libertyshares.com | Semiannual Report | 157 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Germany (continued) | ||||||||||||||
Volkswagen AG | Automobiles | 119 | $ | 20,747 | ||||||||||
Vonovia SE | Real Estate Management & Development | 1,876 | 91,691 | |||||||||||
Wacker Chemie AG | Chemicals | 56 | 7,044 | |||||||||||
Wirecard AG | IT Services | 413 | 89,560 | |||||||||||
a,c | Zalando SE, 144A | Internet & Direct Marketing Retail | 483 | 18,799 | ||||||||||
|
| |||||||||||||
4,820,304 | ||||||||||||||
|
| |||||||||||||
Ireland 0.9% | ||||||||||||||
AIB Group PLC | Banks | 2,814 | 14,414 | |||||||||||
Bank of Ireland Group PLC | Banks | 3,521 | 26,971 | |||||||||||
CRH PLC | Construction Materials | 3,045 | 99,747 | |||||||||||
Glanbia PLC | Food Products | 693 | 11,945 | |||||||||||
Kerry Group PLC | Food Products | 532 | 58,857 | |||||||||||
Kingspan Group PLC | Building Products | 532 | 24,815 | |||||||||||
Paddy Power Betfair PLC | Hotels, Restaurants & Leisure | 308 | 26,067 | |||||||||||
Smurfit Kappa Group PLC | Containers & Packaging | 875 | 34,665 | |||||||||||
|
| |||||||||||||
297,481 | ||||||||||||||
|
| |||||||||||||
Italy 3.4% | ||||||||||||||
A2A SpA | Multi-Utilities | 5,656 | 9,821 | |||||||||||
Assicurazioni Generali SpA | Insurance | 4,795 | 82,873 | |||||||||||
Atlantia SpA | Transportation Infrastructure | 1,974 | 40,972 | |||||||||||
Banca Mediolanum SpA | Diversified Financial Services | 910 | 6,194 | |||||||||||
a | Banco BPM SpA | Banks | 5,544 | 13,671 | ||||||||||
Buzzi Unicem SpA | Construction Materials | 336 | 6,978 | |||||||||||
Buzzi Unicem SpA, di Risp | Construction Materials | 161 | 1,926 | |||||||||||
Davide Campari-Milano SpA | Beverages | 2,002 | 17,056 | |||||||||||
DiaSorin SpA | Health Care Equipment & Supplies | 35 | 3,683 | |||||||||||
Enel SpA | Electric Utilities | 28,777 | 147,469 | |||||||||||
Eni SpA | Oil, Gas & Consumable Fuels | 9,247 | 174,875 | |||||||||||
Ferrari NV | Automobiles | 462 | 63,642 | |||||||||||
FinecoBank Banca Fineco SpA | Banks | 1,400 | 18,725 | |||||||||||
Intesa Sanpaolo SpA | Banks | 54,278 | 138,760 | |||||||||||
Italgas Reti SpA | Gas Utilities | 1,750 | 9,501 | |||||||||||
Leonardo SpA | Aerospace & Defense | 1,386 | 16,710 | |||||||||||
Luxottica Group SpA | Textiles, Apparel & Luxury Goods | 567 | 38,540 | |||||||||||
a | Mediaset SpA | Media | 1,260 | 3,938 | ||||||||||
Mediobanca Banca di Credito Finanziario SpA | Banks | 2,100 | 20,986 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 588 | 25,338 | |||||||||||
Parmalat SpA | Food Products | 700 | 2,309 | |||||||||||
a | Pirelli & C SpA | Auto Components | 1,379 | 11,577 | ||||||||||
b | Poste Italiane SpA, Reg S | Insurance | 1,645 | 13,149 | ||||||||||
Prysmian SpA | Electrical Equipment | 895 | 20,853 | |||||||||||
Recordati SpA | Pharmaceuticals | 406 | 13,751 | |||||||||||
a | Saipem SpA | Energy Equipment & Services | 2,093 | 12,904 | ||||||||||
Salvatore Ferragamo SpA | Textiles, Apparel & Luxury Goods | 161 | 3,858 | |||||||||||
Snam SpA | Oil, Gas & Consumable Fuels | 8,246 | 34,374 | |||||||||||
a | Telecom Italia SpA | Diversified Telecommunication Services | 40,866 | 24,825 | ||||||||||
Telecom Italia SpA, di Risp | Diversified Telecommunication Services | 22,106 | 11,898 | |||||||||||
Tenaris SA | Energy Equipment & Services | 1,757 | 29,448 | |||||||||||
Terna Rete Elettrica Nazionale SpA | Electric Utilities | 4,942 | 26,410 | |||||||||||
UniCredit SpA | Banks | 8,323 | 125,325 | |||||||||||
Unione di Banche Italiane SpA | Banks | 3,780 | 15,174 | |||||||||||
UnipolSai Assicurazioni SpA | Insurance | 2,695 | 6,354 | |||||||||||
|
| |||||||||||||
1,193,867 | ||||||||||||||
|
|
158 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Luxembourg 0.2% | ||||||||||||||
Eurofins Scientific SE | Life Sciences Tools & Services | 42 | $ | 23,855 | ||||||||||
RTL Group SA | Media | 147 | 10,492 | |||||||||||
SES SA, IDR | Media | 1,330 | 29,197 | |||||||||||
|
| |||||||||||||
63,544 | ||||||||||||||
|
| |||||||||||||
Netherlands 4.3% | ||||||||||||||
Aalberts Industries NV | Machinery | 378 | 16,104 | |||||||||||
ABN AMRO Group NV, GDR | Banks | 1,456 | 39,657 | |||||||||||
Aegon NV | Insurance | 6,600 | 42,837 | |||||||||||
Akzo Nobel NV | Chemicals | 932 | 87,186 | |||||||||||
a | Altice Europe NV, A | Media | 2,303 | 6,214 | ||||||||||
a | Altice Europe NV, B | Media | 308 | 827 | ||||||||||
ASML Holding NV | Semiconductors & Semiconductor Equipment | 1,498 | 279,954 | |||||||||||
ASR Nederland NV | Insurance | 539 | 25,706 | |||||||||||
Boskalis Westminster | Construction & Engineering | 300 | 9,447 | |||||||||||
EXOR NV | Diversified Financial Services | 399 | 26,796 | |||||||||||
a | Gemalto NV | Software | 322 | 18,775 | ||||||||||
Grandvision NV | Specialty Retail | 189 | 4,654 | |||||||||||
Heineken Holding NV | Beverages | 392 | 35,514 | |||||||||||
Heineken NV | Beverages | 868 | 81,421 | |||||||||||
ING Groep NV | Banks | 14,322 | 186,046 | |||||||||||
Koninklijke Ahold Delhaize NV | Food & Staples Retailing | 4,368 | 100,200 | |||||||||||
Koninklijke DSM NV | Chemicals | 636 | 67,400 | |||||||||||
Koninklijke KPN NV | Diversified Telecommunication Services | 11,396 | 30,073 | |||||||||||
Koninklijke Philips NV | Health Care Equipment & Supplies | 3,458 | 157,586 | |||||||||||
Koninklijke Vopak NV | Oil, Gas & Consumable Fuels | 245 | 12,077 | |||||||||||
NN Group NV | Insurance | 1,228 | 54,814 | |||||||||||
a | OCI NV | Chemicals | 350 | 11,192 | ||||||||||
a | QIAGEN NV | Life Sciences Tools & Services | 833 | 31,541 | ||||||||||
Randstad NV | Professional Services | 392 | 20,935 | |||||||||||
Signify NV | Electrical Equipment | 385 | 9,972 | |||||||||||
a | Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs | ) | 175 | 35,209 | |||||||||
Unibail-Rodamco-Westfield | Equity Real Estate Investment Trusts (REITs | ) | 329 | 66,193 | ||||||||||
Wolters Kluwer NV | Professional Services | 1,001 | 62,412 | |||||||||||
|
| |||||||||||||
1,520,742 | ||||||||||||||
|
| |||||||||||||
Norway 1.2% | ||||||||||||||
Aker ASA | Diversified Financial Services | 91 | 8,202 | |||||||||||
Aker BP ASA | Oil, Gas & Consumable Fuels | 385 | 16,330 | |||||||||||
DNB ASA | Banks | 3,962 | 83,319 | |||||||||||
Equinor ASA | Oil, Gas & Consumable Fuels | 3,584 | 101,007 | |||||||||||
Gjensidige Forsikring ASA | Insurance | 588 | 9,907 | |||||||||||
Marine Harvest ASA | Food Products | 1,470 | 34,037 | |||||||||||
Norsk Hydro ASA | Metals & Mining | 5,054 | 30,324 | |||||||||||
Orkla ASA | Food Products | 2,975 | 25,120 | |||||||||||
Schibsted ASA, A | Media | 266 | 9,982 | |||||||||||
Schibsted ASA, B | Media | 392 | 13,575 | |||||||||||
Telenor ASA | Diversified Telecommunication Services | 2,506 | 48,961 | |||||||||||
Yara International ASA | Chemicals | 658 | 32,297 | |||||||||||
|
| |||||||||||||
413,061 | ||||||||||||||
|
| |||||||||||||
Poland 0.5% | ||||||||||||||
Bank Pekao SA | Banks | 532 | 15,327 | |||||||||||
a | CD Projekt SA | Software | 231 | 11,738 | ||||||||||
a | Cyfrowy Polsat SA | Media | 875 | 5,279 | ||||||||||
a | Dino Polska SA | Food & Staples Retailing | 140 | 3,783 | ||||||||||
Grupa Lotos SA | Oil, Gas & Consumable Fuels | 364 | 7,414 | |||||||||||
a | KGHM Polska Miedz SA | Metals & Mining | 392 | 9,475 |
libertyshares.com | Semiannual Report | 159 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Poland (continued) | ||||||||||||||
mBank SA | Banks | 35 | $ | 4,250 | ||||||||||
a | PGE Polska Grupa Energetyczna SA | Electric Utilities | 1,120 | 2,893 | ||||||||||
Polski Koncern Naftowy Orlen SA | Oil, Gas & Consumable Fuels | 1,099 | 30,113 | |||||||||||
a | Polskie Gornictwo Naftowe i Gazownictwo SA | Oil, Gas & Consumable Fuels | 5,054 | 8,871 | ||||||||||
Powszechna Kasa Oszczednosci Bank Polski SA | Banks | 3,038 | 35,357 | |||||||||||
Powszechny Zalkad Ubezpieczen SA | Insurance | 1,820 | 19,602 | |||||||||||
Santander Bank Polska SA | Banks | 105 | 10,699 | |||||||||||
|
| |||||||||||||
164,801 | ||||||||||||||
|
| |||||||||||||
Portugal 0.2% | ||||||||||||||
EDP- Energias de Portugal SA | Electric Utilities | 8,435 | 31,136 | |||||||||||
Galp Energia SGPS SA, B | Oil, Gas & Consumable Fuels | 1,911 | 37,933 | |||||||||||
Jeronimo Martins SGPS SA | Food & Staples Retailing | 847 | 12,479 | |||||||||||
|
| |||||||||||||
81,548 | ||||||||||||||
|
| |||||||||||||
Russia 0.1% | ||||||||||||||
Evraz PLC | Metals & Mining | 1,862 | 13,758 | |||||||||||
Polymetal International PLC | Metals & Mining | 931 | 7,459 | |||||||||||
|
| |||||||||||||
21,217 | ||||||||||||||
|
| |||||||||||||
South Africa 0.1% | ||||||||||||||
Investec PLC | Capital Markets | 2,275 | 16,008 | |||||||||||
|
| |||||||||||||
Spain 4.6% | ||||||||||||||
Acciona SA | Electric Utilities | 77 | 6,981 | |||||||||||
Acerinox SA | Metals & Mining | 532 | 7,613 | |||||||||||
ACS Actividades de Construccion y Servicios SA | Construction & Engineering | 947 | 40,346 | |||||||||||
Aena SME SA | Transportation Infrastructure | 231 | 40,112 | |||||||||||
Amadeus IT Group SA, A | IT Services | 1,526 | 141,831 | |||||||||||
Banco Bilbao Vizcaya Argentaria SA | Banks | 24,647 | 157,165 | |||||||||||
Banco de Sabadell SA | Banks | 20,930 | 32,551 | |||||||||||
Banco Santander SA | Banks | 58,744 | 295,816 | |||||||||||
Bankia SA | Banks | 4,823 | 18,918 | |||||||||||
Bankinter SA | Banks | 2,422 | 22,314 | |||||||||||
CaixaBank SA | Banks | 13,314 | 60,898 | |||||||||||
Cellnex Telecom SAU | Diversified Telecommunication Services | 539 | 14,167 | |||||||||||
Corporacion Financiera Alba SA | Diversified Financial Services | 84 | 4,678 | |||||||||||
Corporacion Mapfre SA | Insurance | 3,535 | 11,094 | |||||||||||
EDP Renovaveis SA | Independent Power and Renewable Electricity Producers | 560 | 5,685 | |||||||||||
Enagas SA | Oil, Gas & Consumable Fuels | 798 | 21,550 | |||||||||||
Endesa SA | Electric Utilities | 1,225 | 26,479 | |||||||||||
Ferrovial SA | Construction & Engineering | 1,772 | 36,780 | |||||||||||
a | Fomento de Construcciones y Contratas SA | Construction & Engineering | 105 | 1,576 | ||||||||||
Grifols SA | Biotechnology | 1,239 | 34,912 | |||||||||||
Grupo Catalana Occidente SA | Insurance | 161 | 7,013 | |||||||||||
Iberdrola SA | Electric Utilities | 22,234 | 163,677 | |||||||||||
Industria de Diseno Textil SA | Specialty Retail | 3,871 | 117,395 | |||||||||||
Inmobiliaria Colonial SA | Equity Real Estate Investment Trusts (REITs | ) | 700 | 7,277 | ||||||||||
Mediaset Espana Comunicacion SA | Media | 630 | 4,603 | |||||||||||
Merlin Properties Socimi SA | Equity Real Estate Investment Trusts (REITs | ) | 1,183 | 16,056 | ||||||||||
Naturgy Energy Group SA | Gas Utilities | 1,162 | 31,731 | |||||||||||
Red Electrica Corp. SA | Electric Utilities | 1,568 | 32,855 | |||||||||||
Repsol SA | Oil, Gas & Consumable Fuels | 4,481 | 89,338 | |||||||||||
a | Siemens Gamesa Renewable Energy SA | Electrical Equipment | 896 | 11,344 | ||||||||||
Telefonica SA | Diversified Telecommunication Services | 16,758 | 132,708 | |||||||||||
Zardoya Otis SA | Machinery | 812 | 7,573 | |||||||||||
|
| |||||||||||||
1,603,036 | ||||||||||||||
|
|
160 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Sweden 4.5% | ||||||||||||||
Alfa Laval AB | Machinery | 1,176 | $ | 31,869 | ||||||||||
Assa Abloy AB, B | Building Products | 3,381 | 67,919 | |||||||||||
Atlas Copco AB, A | Machinery | 2,275 | 65,539 | |||||||||||
Atlas Copco AB, B | Machinery | 1,400 | 37,333 | |||||||||||
Boliden AB | Metals & Mining | 1,008 | 28,098 | |||||||||||
Electrolux AB, B | Household Durables | 833 | 18,359 | |||||||||||
Elekta AB, B | Health Care Equipment & Supplies | 1,064 | 14,303 | |||||||||||
a | Epiroc AB, A | Machinery | 2,275 | 25,402 | ||||||||||
a | Epiroc AB, B | Machinery | 1,400 | 14,404 | ||||||||||
Ericsson, B | Communications Equipment | 11,088 | 98,347 | |||||||||||
Essity AB, B | Household Products | 2,205 | 55,390 | |||||||||||
a | Fastighets AB Balder, B | Real Estate Management & Development | 448 | 12,423 | ||||||||||
Hennes & Mauritz AB, B | Specialty Retail | 3,227 | 59,596 | |||||||||||
Hexagon AB, B | Electronic Equipment, Instruments & Components | 917 | 53,722 | |||||||||||
Husqvarna AB, B | Household Durables | 1,309 | 11,142 | |||||||||||
ICA Gruppen AB | Food & Staples Retailing | 280 | 8,879 | |||||||||||
Industrivarden AB, A | Diversified Financial Services | 847 | 19,353 | |||||||||||
Industrivarden AB, C | Diversified Financial Services | 539 | 11,970 | |||||||||||
Investment AB Latour, B | Industrial Conglomerates | 441 | 5,499 | |||||||||||
Investor AB, A | Diversified Financial Services | 560 | 25,805 | |||||||||||
Investor AB, B | Diversified Financial Services | 1,603 | 74,029 | |||||||||||
Kinnevik AB, B | Diversified Financial Services | 931 | 28,171 | |||||||||||
L E Lundbergforetagen AB, B | Diversified Financial Services | 280 | 9,433 | |||||||||||
Lundin Petroleum AB | Oil, Gas & Consumable Fuels | 679 | 25,974 | |||||||||||
Nibe Industrier AB | Building Products | 1,050 | 12,574 | |||||||||||
Nordea Bank AB | Banks | 11,599 | 126,330 | |||||||||||
Saab AB, B | Aerospace & Defense | 245 | 12,315 | |||||||||||
Sandvik AB | Machinery | 3,976 | 70,527 | |||||||||||
Securitas AB, B | Commercial Services & Supplies | 1,169 | 20,342 | |||||||||||
Skandinaviska Enskilda Banken AB, A | Banks | 5,082 | 56,711 | |||||||||||
Skandinaviska Enskilda Banken AB, C | Banks | 84 | 916 | |||||||||||
Skanska AB, B | Construction & Engineering | 1,274 | 25,005 | |||||||||||
SKF AB, B | Machinery | 1,435 | 28,294 | |||||||||||
Svenska Cellulosa AB, B | Paper & Forest Products | 2,359 | 26,712 | |||||||||||
Svenska Handelsbanken AB, A | Banks | 5,439 | 68,651 | |||||||||||
Svenska Handelsbanken AB, B | Banks | 126 | 1,584 | |||||||||||
Swedbank AB, A | Banks | 3,717 | 92,077 | |||||||||||
Swedish Match AB | Tobacco | 651 | 33,307 | |||||||||||
a | Swedish Orphan Biovitrum AB | Biotechnology | 567 | 16,577 | ||||||||||
Tele2 AB, B | Wireless Telecommunication Services | 1,372 | 16,508 | |||||||||||
Telefonaktiebolaget LM Ericsson, A | Communications Equipment | 133 | 1,205 | |||||||||||
Telia Co. AB | Diversified Telecommunication Services | 10,003 | 45,914 | |||||||||||
Trelleborg AB, B | Machinery | 938 | 19,117 | |||||||||||
Volvo AB, B | Machinery | 5,488 | 96,947 | |||||||||||
|
| |||||||||||||
1,574,572 | ||||||||||||||
|
| |||||||||||||
Switzerland 13.5% | ||||||||||||||
ABB Ltd. | Electrical Equipment | 6,496 | 154,220 | |||||||||||
Adecco Group AG | Professional Services | 588 | 31,025 | |||||||||||
Baloise Holding AG | Insurance | 196 | 30,038 | |||||||||||
Banque Cantonale Vaudoise | Banks | 14 | 10,434 | |||||||||||
Barry Callebaut AG | Food Products | 7 | 13,329 | |||||||||||
Chocoladefabriken Lindt & Spruengli AG | Food Products | 7 | 49,304 | |||||||||||
a | Clariant AG | Chemicals | 686 | 17,937 | ||||||||||
a | Coca-Cola HBC AG | Beverages | 749 | 25,522 | ||||||||||
Compagnie Financiere Richemont SA | Textiles, Apparel & Luxury Goods | 1,869 | 153,071 | |||||||||||
a | Credit Suisse Group AG | Capital Markets | 9,450 | 142,698 | ||||||||||
DKSH Holding AG | Professional Services | 112 | 7,659 |
libertyshares.com | Semiannual Report | 161 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Switzerland (continued) | ||||||||||||||
a | Dufry AG | Specialty Retail | 112 | $ | 12,687 | |||||||||
EMS-Chemie Holding AG | Chemicals | 28 | 16,769 | |||||||||||
Ferguson PLC | Trading Companies & Distributors | 862 | 73,235 | |||||||||||
Flughafen Zurich AG | Transportation Infrastructure | 84 | 17,061 | |||||||||||
Geberit AG | Building Products | 126 | 58,718 | |||||||||||
Georg Fischer AG | Machinery | 14 | 15,909 | |||||||||||
Givaudan AG | Chemicals | 35 | 86,461 | |||||||||||
a | Glencore PLC | Metals & Mining | 43,358 | 187,547 | ||||||||||
Helvetia Holding AG | Insurance | 28 | 17,142 | |||||||||||
a | Julius Baer Group Ltd. | Capital Markets | 756 | 38,009 | ||||||||||
Kuehne + Nagel International AG | Marine | 203 | 32,316 | |||||||||||
a | LafargeHolcim Ltd., B | Construction Materials | 1,785 | 88,537 | ||||||||||
Logitech International SA | Technology Hardware, Storage & Peripherals | 511 | 22,945 | |||||||||||
a | Lonza Group AG | Life Sciences Tools & Services | 273 | 93,627 | ||||||||||
Nestle SA | Food Products | 11,088 | 928,768 | |||||||||||
Novartis AG | Pharmaceuticals | 8,001 | 691,323 | |||||||||||
a | OC Oerlikon Corp. AG | Machinery | 721 | 9,935 | ||||||||||
Pargesa Holding SA, B | Diversified Financial Services | 112 | 9,041 | |||||||||||
Partners Group Holding AG | Capital Markets | 56 | 44,632 | |||||||||||
PSP Swiss Property AG | Real Estate Management & Development | 154 | 14,985 | |||||||||||
Roche Holding AG | Pharmaceuticals | 2646 | 644,133 | |||||||||||
Schindler Holding AG | Machinery | 84 | 20,364 | |||||||||||
Schindler Holding AG, PC | Machinery | 133 | 33,305 | |||||||||||
SGS SA | Professional Services | 21 | 55,553 | |||||||||||
Sika AG | Chemicals | 511 | 74,756 | |||||||||||
Sonova Holding AG | Health Care Equipment & Supplies | 189 | 37,788 | |||||||||||
STMicroelectronics NV | Semiconductors & Semiconductor Equipment | 2,331 | 42,426 | |||||||||||
Straumann Holding AG | Health Care Equipment & Supplies | 35 | 26,444 | |||||||||||
Sulzer AG | Machinery | 56 | 6,759 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 105 | 41,955 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 168 | 13,157 | |||||||||||
a | Swiss Life Holding AG | Insurance | 126 | 47,985 | ||||||||||
a | Swiss Prime Site AG | Real Estate Management & Development | 259 | 22,180 | ||||||||||
Swiss Re AG | Insurance | 1,127 | 104,531 | |||||||||||
Swisscom AG | Diversified Telecommunication Services | 84 | 38,302 | |||||||||||
a | Temenos AG | Software | 217 | 35,367 | ||||||||||
a | UBS Group AG | Capital Markets | 12,943 | 205,381 | ||||||||||
Vifor Pharma AG | Pharmaceuticals | 168 | 29,264 | |||||||||||
Zurich Insurance Group AG | Insurance | 546 | 173,392 | |||||||||||
|
| |||||||||||||
4,747,926 | ||||||||||||||
|
| |||||||||||||
United Arab Emirates 0.0%† | ||||||||||||||
NMC Health PLC | Health Care Providers & Services | 322 | 14,252 | |||||||||||
|
| |||||||||||||
United Kingdom 28.1% | ||||||||||||||
3i Group PLC | Capital Markets | 3,458 | 42,443 | |||||||||||
Admiral Group PLC | Insurance | 721 | 19,557 | |||||||||||
Anglo American PLC | Metals & Mining | 3,696 | 83,045 | |||||||||||
Antofagasta PLC | Metals & Mining | 1,253 | 13,970 | |||||||||||
Ashmore Group PLC | Capital Markets | 1,344 | 6,380 | |||||||||||
Ashtead Group PLC | Trading Companies & Distributors | 1,827 | 58,061 | |||||||||||
Associated British Foods PLC | Food Products | 1,274 | 38,045 | |||||||||||
AstraZeneca PLC | Pharmaceuticals | 4,676 | 363,608 | |||||||||||
Auto Trader Group PLC | Interactive Media & Services | 3,339 | 19,446 | |||||||||||
Aveva Group PLC | Software | 210 | 7,925 | |||||||||||
Aviva PLC | Insurance | 14,399 | 91,913 | |||||||||||
B&M European Value Retail SA | Multiline Retail | 2,968 | 14,971 | |||||||||||
Babcock International Group PLC | Commercial Services & Supplies | 924 | 8,712 |
162 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
BAE Systems PLC | Aerospace & Defense | 11,802 | $ | 96,929 | ||||||||||
Barclays PLC | Banks | 62,503 | 140,013 | |||||||||||
Barratt Developments PLC | Household Durables | 3,864 | 28,570 | |||||||||||
Bellway PLC | Household Durables | 448 | 17,608 | |||||||||||
BHP Billiton PLC | Metals & Mining | 7,672 | 167,198 | |||||||||||
BP PLC | Oil, Gas & Consumable Fuels | 71,904 | 552,565 | |||||||||||
British American Tobacco PLC | Tobacco | 8,393 | 392,320 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs | ) | 3,766 | 30,291 | ||||||||||
BT Group PLC | Diversified Telecommunication Services | 31,024 | 91,149 | |||||||||||
Bunzl PLC | Trading Companies & Distributors | 1,253 | 39,428 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 1,526 | 40,098 | |||||||||||
Capita PLC | Professional Services | 6,093 | 11,354 | |||||||||||
Capital & Counties Properties PLC | Real Estate Management & Development | 2,982 | 10,356 | |||||||||||
Centrica PLC | Multi-Utilities | 21,154 | 42,731 | |||||||||||
Cineworld Group PLC | Media | 3,276 | 13,483 | |||||||||||
CNH Industrial NV | Machinery | 3,591 | 43,169 | |||||||||||
a | Cobham PLC | Aerospace & Defense | 8,764 | 13,343 | ||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 5,838 | 129,878 | |||||||||||
ConvaTec Group PLC | Health Care Equipment & Supplies | 5,306 | 16,080 | |||||||||||
Croda International PLC | Chemicals | 476 | 32,290 | |||||||||||
CYBG PLC | Banks | 3,094 | 13,064 | |||||||||||
DCC PLC | Industrial Conglomerates | 336 | 30,518 | |||||||||||
Derwent London PLC | Equity Real Estate Investment Trusts (REITs | ) | 364 | 13,561 | ||||||||||
Diageo PLC | Beverages | 8,890 | 315,214 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 4,893 | 20,667 | |||||||||||
Dixons Carphone PLC | Specialty Retail | 3,465 | 7,666 | |||||||||||
DS Smith PLC | Containers & Packaging | 4,784 | 29,839 | |||||||||||
easyJet PLC | Airlines | 840 | 14,394 | |||||||||||
Experian PLC | Professional Services | 3,388 | 87,059 | |||||||||||
a | Fiat Chrysler Automobiles NV | Automobiles | 4,067 | 71,537 | ||||||||||
Fresnillo PLC | Metals & Mining | 651 | 6,973 | |||||||||||
G4S PLC | Commercial Services & Supplies | 5,964 | 18,821 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 17,906 | 358,848 | |||||||||||
GVC Holdings PLC | Hotels, Restaurants & Leisure | 2,100 | 25,153 | |||||||||||
Halma PLC | Electronic Equipment, Instruments & Components | 1,442 | 27,172 | |||||||||||
Hammerson PLC | Equity Real Estate Investment Trusts (REITs | ) | 3,136 | 18,677 | ||||||||||
Hargreaves Lansdown PLC | Capital Markets | 1,008 | 29,379 | |||||||||||
Hikma Pharmaceuticals PLC | Pharmaceuticals | 511 | 12,328 | |||||||||||
Hiscox Ltd. | Insurance | 1,050 | 22,524 | |||||||||||
Howden Joinery Group PLC | Trading Companies & Distributors | 2,079 | 12,712 | |||||||||||
HSBC Holdings PLC | Banks | 74,109 | 647,307 | |||||||||||
IMI PLC | Machinery | 952 | 13,619 | |||||||||||
Imperial Brands PLC | Tobacco | 3,486 | 121,421 | |||||||||||
Inchcape PLC | Distributors | 1,484 | 12,947 | |||||||||||
Informa PLC | Media | 4,676 | 46,477 | |||||||||||
Inmarsat PLC | Diversified Telecommunication Services | 1,687 | 11,000 | |||||||||||
InterContinental Hotels Group PLC | Hotels, Restaurants & Leisure | 707 | 44,070 | |||||||||||
International Consolidated Airlines Group SA | Airlines | 3,682 | 31,700 | |||||||||||
Intertek Group PLC | Professional Services | 595 | 38,733 | |||||||||||
Intu Properties PLC | Equity Real Estate Investment Trusts (REITs | ) | 3,094 | 6,218 | ||||||||||
ITV PLC | Media | 13,433 | 27,651 | |||||||||||
J Sainsbury PLC | Food & Staples Retailing | 6,209 | 26,056 | |||||||||||
JD Sports Fashion PLC | Specialty Retail | 1,330 | 7,963 | |||||||||||
John Wood Group PLC | Energy Equipment & Services | 2,352 | 23,666 | |||||||||||
Johnson Matthey PLC | Chemicals | 714 | 33,165 | |||||||||||
a | Just Eat PLC | Internet & Direct Marketing Retail | 2,205 | 19,271 | ||||||||||
KAZ Minerals PLC | Metals & Mining | 826 | 5,920 |
libertyshares.com | Semiannual Report | 163 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
Kingfisher PLC | Specialty Retail | 8,092 | $ | 27,225 | ||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 2,646 | 30,482 | ||||||||||
Legal & General Group PLC | Insurance | 22,155 | 75,753 | |||||||||||
Lloyds Banking Group PLC | Banks | 263,998 | 204,047 | |||||||||||
London Stock Exchange Group PLC | Capital Markets | 1,169 | 69,911 | |||||||||||
Marks & Spencer Group PLC | Multiline Retail | 6,237 | 23,489 | |||||||||||
Mediclinic International PLC | Health Care Providers & Services | 1,407 | 7,871 | |||||||||||
Meggitt PLC | Aerospace & Defense | 2,772 | 20,474 | |||||||||||
Melrose Industries PLC | Electrical Equipment | 16,835 | 43,885 | |||||||||||
Merlin Entertainments PLC | Hotels, Restaurants & Leisure | 2,457 | 12,829 | |||||||||||
Micro Focus International PLC | Software | 1,617 | 30,143 | |||||||||||
Mondi PLC | Paper & Forest Products | 1,365 | 37,452 | |||||||||||
National Grid PLC | Multi-Utilities | 12,523 | 129,240 | |||||||||||
NEX Group PLC | Capital Markets | 1,148 | 14,881 | |||||||||||
Next PLC | Multiline Retail | 497 | 35,607 | |||||||||||
a | Ocado Group PLC | Internet & Direct Marketing Retail | 1,393 | 16,334 | ||||||||||
Pearson PLC | Media | 2,870 | 33,309 | |||||||||||
Pennon Group PLC | Water Utilities | 1,512 | 14,062 | |||||||||||
Persimmon PLC | Household Durables | 1,148 | 35,405 | |||||||||||
Phoenix Group Holdings | Insurance | 1,400 | 12,342 | |||||||||||
Prudential PLC | Insurance | 9,499 | 217,952 | |||||||||||
Quilter PLC | Capital Markets | 6,323 | 11,074 | |||||||||||
Randgold Resources Ltd. | Metals & Mining | 336 | 23,880 | |||||||||||
Reckitt Benckiser Group PLC | Household Products | 2,303 | 210,706 | |||||||||||
a | RELX PLC (EUR Traded) | Professional Services | 3,206 | 67,382 | ||||||||||
RELX PLC (GBP Traded) | Professional Services | 3,843 | 80,985 | |||||||||||
Renishaw PLC | Electronic Equipment, Instruments & Components | 105 | 6,496 | |||||||||||
Rentokil Initial PLC | Commercial Services & Supplies | 6,895 | 28,629 | |||||||||||
Rightmove PLC | Interactive Media & Services | 3,306 | 20,306 | |||||||||||
Rio Tinto PLC | Metals & Mining | 4,249 | 214,987 | |||||||||||
a | Rolls-Royce Holdings PLC | Aerospace & Defense | 6,139 | 79,047 | ||||||||||
Royal Bank of Scotland Group PLC | Banks | 16,730 | 54,542 | |||||||||||
Royal Dutch Shell PLC, A | Oil, Gas & Consumable Fuels | 17,115 | 588,435 | |||||||||||
Royal Dutch Shell PLC, B | Oil, Gas & Consumable Fuels | 13,797 | 483,804 | |||||||||||
Royal Mail PLC | Air Freight & Logistics | 3,507 | 21,819 | |||||||||||
RPC Group PLC | Containers & Packaging | 1,449 | 15,022 | |||||||||||
RSA Insurance Group PLC | Insurance | 3,829 | 28,711 | |||||||||||
Schroders PLC | Capital Markets | 406 | 16,386 | |||||||||||
Segro PLC | Equity Real Estate Investment Trusts (REITs | ) | 3,724 | 30,973 | ||||||||||
Severn Trent PLC | Water Utilities | 847 | 20,423 | |||||||||||
Shire PLC | Biotechnology | 3,318 | 200,051 | |||||||||||
Sky PLC | Media | 3,766 | 84,912 | |||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 3,283 | 59,915 | |||||||||||
Smiths Group PLC | Industrial Conglomerates | 1,491 | 29,078 | |||||||||||
Spirax-Sarco Engineering PLC | Machinery | 273 | 25,988 | |||||||||||
SSE PLC | Electric Utilities | 3,731 | 55,758 | |||||||||||
St. James’s Place Capital PLC | Capital Markets | 1,925 | 28,718 | |||||||||||
Standard Chartered PLC | Banks | 9,996 | 82,957 | |||||||||||
Standard Life Aberdeen PLC | Diversified Financial Services | 9,954 | 39,707 | |||||||||||
Subsea 7 SA | Energy Equipment & Services | 931 | 13,765 | |||||||||||
Tate & Lyle PLC | Food Products | 1,645 | 14,647 | |||||||||||
Taylor Wimpey PLC | Household Durables | 11,935 | 26,739 | |||||||||||
TechnipFMC PLC | Energy Equipment & Services | 1,708 | 53,762 | |||||||||||
Tesco PLC | Food & Staples Retailing | 35,721 | 111,704 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 448 | 21,493 | |||||||||||
The Sage Group PLC | Software | 4,053 | 30,993 | |||||||||||
Travis Perkins PLC | Trading Companies & Distributors | 875 | 12,158 |
164 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
Unilever NV, IDR | Personal Products | 5,593 | $ | 311,593 | ||||||||||
Unilever PLC | Personal Products | 4,081 | 224,368 | |||||||||||
United Utilities Group PLC | Water Utilities | 2,443 | 22,428 | |||||||||||
Vodafone Group PLC | Wireless Telecommunication Services | 97,097 | 208,289 | |||||||||||
Weir Group PLC | Machinery | 875 | 20,117 | |||||||||||
Whitbread PLC | Hotels, Restaurants & Leisure | 679 | 41,767 | |||||||||||
William Hill PLC | Hotels, Restaurants & Leisure | 3,402 | 11,184 | |||||||||||
William Morrison Supermarkets PLC | Food & Staples Retailing | 8,176 | 27,657 | |||||||||||
WPP PLC | Media | 4,550 | 66,721 | |||||||||||
|
| |||||||||||||
9,852,988 | ||||||||||||||
|
| |||||||||||||
United States 0.1% | ||||||||||||||
Carnival PLC | Hotels, Restaurants & Leisure | 630 | 39,139 | |||||||||||
|
| |||||||||||||
Total Common Stocks | 34,359,540 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 0.9% | ||||||||||||||
Germany 0.8% | ||||||||||||||
d | Bayerische Motoren Werke AG, 5.938%, pfd. | Automobiles | 203 | 15,962 | ||||||||||
d | Fuchs Petrolub SE, 1.891%, pfd. | Chemicals | 287 | 16,041 | ||||||||||
d | Henkel AG & Co. KGaA, 1.771%, pfd. | Household Products | 651 | 76,407 | ||||||||||
d | Porsche Automobil Holding SE, 3.034%, pfd. | Automobiles | 574 | 38,669 | ||||||||||
d | RWE AG, 8.651%, pfd. | Multi-Utilities | 133 | 2,679 | ||||||||||
d | Sartorius AG, 0.365%, pfd. | Health Care Equipment & Supplies | 133 | 21,596 | ||||||||||
d | Volkswagen AG, 2.612%, pfd. | Automobiles | 658 | 115,863 | ||||||||||
|
| |||||||||||||
287,217 | ||||||||||||||
|
| |||||||||||||
Spain 0.1% | ||||||||||||||
d | Grifols SA, 2.160%, pfd., B | Biotechnology | 896 | 18,983 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $340,075) | 306,200 | |||||||||||||
|
| |||||||||||||
Total Investments | 34,665,740 | |||||||||||||
Other Assets, less Liabilities 1.2% | 419,305 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 35,085,045 | ||||||||||||
|
|
†Rounds to less than 0.1% of net assets.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $80,221, representing 0.2% of net assets.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $32,196, representing 0.1% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
At September 30, 2018 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
Forward Exchange Contracts | ||||||||||||||||||||||||||||
Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
OTC Forward Exchange Contracts | ||||||||||||||||||||||||||||
Danish Krone | BOFA | Buy | 5,953,672 | $ | 927,359 | 10/02/18 | $ | — | $ | (46 | ) | |||||||||||||||||
Danish Krone | BOFA | Sell | 5,953,672 | 931,153 | 10/02/18 | 3,840 | — | |||||||||||||||||||||
Euro | BOFA | Buy | 15,277,082 | 17,744,850 | 10/02/18 | — | (526 | ) |
libertyshares.com | Semiannual Report | 165 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF (continued)
Forward Exchange Contracts (continued) | ||||||||||||||||||||||||||||
Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
OTC Forward Exchange Contracts (continued) |
| |||||||||||||||||||||||||||
Euro | BOFA | Sell | 15,277,082 | $ | 17,808,953 | 10/02/18 | $ | 64,629 | $ | — | ||||||||||||||||||
Great British Pound | BOFA | Buy | 7,606,017 | 9,918,330 | 10/02/18 | 293 | — | |||||||||||||||||||||
Great British Pound | BOFA | Sell | 7,606,017 | 9,895,732 | 10/02/18 | — | (22,891 | ) | ||||||||||||||||||||
Norwegian Krone | BOFA | Buy | 3,262,037 | 400,559 | 10/02/18 | 20 | — | |||||||||||||||||||||
Norwegian Krone | BOFA | Sell | 3,262,037 | 390,484 | 10/02/18 | — | (10,095 | ) | ||||||||||||||||||||
Swedish Krona | BOFA | Buy | 13,639,597 | 1,533,634 | 10/02/18 | 77 | — | |||||||||||||||||||||
Swedish Krona | BOFA | Sell | 13,639,597 | 1,496,026 | 10/02/18 | — | (37,685 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Buy | 4,406,340 | 4,511,226 | 10/02/18 | — | (231 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 4,406,340 | 4,567,284 | 10/02/18 | 56,289 | — | |||||||||||||||||||||
Danish Krone | BOFA | Sell | 5,864,600 | 915,863 | 11/02/18 | 45 | — | |||||||||||||||||||||
Euro | BOFA | Sell | 15,015,000 | 17,479,532 | 11/02/18 | — | (2,576 | ) | ||||||||||||||||||||
Great British Pound | BOFA | Sell | 7,636,500 | 9,970,107 | 11/02/18 | — | (1,860 | ) | ||||||||||||||||||||
Norwegian Krone | BOFA | Sell | 3,447,100 | 423,810 | 11/02/18 | — | (23 | ) | ||||||||||||||||||||
Polish Zloty | BOFA | Sell | 709,150 | 192,488 | 11/02/18 | — | (19 | ) | ||||||||||||||||||||
Swedish Krona | BOFA | Sell | 14,080,700 | 1,587,222 | 11/02/18 | — | (85 | ) | ||||||||||||||||||||
Swiss Franc | MSCO | Sell | 4,310,455 | 4,424,928 | 11/02/18 | — | (91 | ) | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total Forward Exchange Contracts |
| $ | 125,193 | $ | (76,128 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) |
| $ | 49,065 | |||||||||||||||||||||||||
|
|
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
EURO STOXX 50 Index | Long | 9 | $ | 354,060 | 12/21/18 | $ | 5,118 | |||||||||||||
|
|
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
166 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE France ETF
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 25.33 | $ | 25.32 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.61 | 0.08 | ||||||
Net realized and unrealized gains (losses) | 0.12 | (0.01 | ) | |||||
|
| |||||||
Total from investment operations | 0.73 | 0.07 | ||||||
|
| |||||||
Less distributions from net investment income | (0.51 | ) | (0.06 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 25.55 | $ | 25.33 | ||||
|
| |||||||
Total returnd | 2.96% | 0.26% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 4.74% | 0.78% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $2,555 | $2,533 | ||||||
Portfolio turnover ratef | 3.96% | 1.90% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 167 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE France ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.7% | ||||||||||||||
France 97.1% | ||||||||||||||
Accor SA | Hotels, Restaurants & Leisure | 327 | $ | 16,795 | ||||||||||
Aeroports de Paris SA | Transportation Infrastructure | 46 | 10,360 | |||||||||||
a | Air France-KLM | Airlines | 356 | 3,710 | ||||||||||
Air Liquide SA | Chemicals | 682 | 89,750 | |||||||||||
Airbus SE | Aerospace & Defense | 893 | 112,206 | |||||||||||
b | ALD SA, 144A | Road & Rail | 133 | 2,433 | ||||||||||
Alstom SA | Machinery | 249 | 11,132 | |||||||||||
Amundi SA | Capital Markets | 93 | 6,972 | |||||||||||
Arkema SA | Chemicals | 118 | 14,624 | |||||||||||
Atos SE | IT Services | 150 | 17,858 | |||||||||||
AXA SA | Insurance | 3,124 | 84,000 | |||||||||||
Biomerieux | Health Care Equipment & Supplies | 67 | 5,588 | |||||||||||
BNP Paribas SA | Banks | 1,758 | 107,629 | |||||||||||
Bollore | Air Freight & Logistics | 1,600 | 6,913 | |||||||||||
Bouygues SA | Construction & Engineering | 331 | 14,313 | |||||||||||
Bureau Veritas SA | Professional Services | 413 | 10,664 | |||||||||||
Capgemini SE | IT Services | 253 | 31,854 | |||||||||||
Carrefour SA | Food & Staples Retailing | 906 | 17,363 | |||||||||||
Casino Guichard-Perrachon SA | Food & Staples Retailing | 93 | 3,912 | |||||||||||
Cie Generale des Etablissements Michelin SCA | Auto Components | 286 | 34,199 | |||||||||||
CNP Assurances | Insurance | 255 | 6,149 | |||||||||||
Compagnie de Saint-Gobain | Building Products | 800 | 34,515 | |||||||||||
Covivio | Equity Real Estate Investment Trusts (REITs | ) | 58 | 6,046 | ||||||||||
Credit Agricole SA | Banks | 1,847 | 26,572 | |||||||||||
Danone SA | Food Products | 971 | 75,225 | |||||||||||
Dassault Aviation SA | Aerospace & Defense | 4 | 7,406 | |||||||||||
Dassault Systemes | Software | 214 | 32,002 | |||||||||||
Edenred | Commercial Services & Supplies | 385 | 14,681 | |||||||||||
EDF SA | Electric Utilities | 808 | 14,195 | |||||||||||
Eiffage SA | Construction & Engineering | 120 | 13,403 | |||||||||||
Elis SA | Commercial Services & Supplies | 307 | 7,231 | |||||||||||
Engie SA | Multi-Utilities | 2,658 | 39,100 | |||||||||||
Essilor International Cie Generale d’Optique SA | Health Care Equipment & Supplies | 332 | 49,147 | |||||||||||
Eurazeo SE | Diversified Financial Services | 77 | 6,068 | |||||||||||
Eutelsat Communications SA | Media | 273 | 6,456 | |||||||||||
Faurecia SA | Auto Components | 119 | 7,165 | |||||||||||
Gecina SA | Equity Real Estate Investment Trusts (REITs | ) | 85 | 14,197 | ||||||||||
Getlink SE | Transportation Infrastructure | 728 | 9,301 | |||||||||||
Hermes International | Textiles, Apparel & Luxury Goods | 50 | 33,138 | |||||||||||
ICADE | Equity Real Estate Investment Trusts (REITs | ) | 52 | 4,808 | ||||||||||
Iliad SA | Diversified Telecommunication Services | 39 | 5,096 | |||||||||||
Imerys SA | Construction Materials | 59 | 4,358 | |||||||||||
Ingenico Group SA | Electronic Equipment, Instruments & Components | 102 | 7,753 | |||||||||||
Ipsen SA | Pharmaceuticals | 56 | 9,418 | |||||||||||
JCDecaux SA | Media | 121 | 4,427 | |||||||||||
Kering SA | Textiles, Apparel & Luxury Goods | 121 | 64,888 | |||||||||||
Klepierre SA | Equity Real Estate Investment Trusts (REITs | ) | 324 | 11,489 | ||||||||||
L’Oreal SA | Personal Products | 391 | 94,326 | |||||||||||
Lagardere SCA | Media | 186 | 5,727 | |||||||||||
Legrand SA | Electrical Equipment | 432 | 31,501 | |||||||||||
LVMH Moet Hennessy Louis Vuitton SE | Textiles, Apparel & Luxury Goods | 403 | 142,579 | |||||||||||
Natixis SA | Capital Markets | 1,352 | 9,177 | |||||||||||
Orange SA | Diversified Telecommunication Services | 3,115 | 49,694 | |||||||||||
Orpea | Health Care Providers & Services | 72 | 9,316 | |||||||||||
Pernod Ricard SA | Beverages | 343 | 56,293 | |||||||||||
Peugeot SA | Automobiles | 882 | 23,798 | |||||||||||
Plastic Omnium SA | Auto Components | 90 | 3,395 | |||||||||||
Publicis Groupe | Media | 342 | 20,450 |
168 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE France ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
France (continued) | ||||||||||||||
Remy Cointreau SA | Beverages | 39 | $ | 5,083 | ||||||||||
Renault SA | Automobiles | 299 | 25,873 | |||||||||||
Rexel SA | Trading Companies & Distributors | 491 | 7,377 | |||||||||||
Rubis SCA | Gas Utilities | 137 | 7,418 | |||||||||||
Safran SA | Aerospace & Defense | 521 | 73,041 | |||||||||||
Sanofi | Pharmaceuticals | 1,762 | 156,685 | |||||||||||
Sartorius Stedim Biotech | Life Sciences Tools & Services | 40 | 5,506 | |||||||||||
Schneider Electric SE | Electrical Equipment | 831 | 66,889 | |||||||||||
SCOR SE | Insurance | 253 | 11,754 | |||||||||||
SEB SA | Household Durables | 44 | 7,492 | |||||||||||
Societe BIC SA | Commercial Services & Supplies | 43 | 3,938 | |||||||||||
Societe Generale SA | Banks | 1,174 | 50,412 | |||||||||||
Sodexo SA | Hotels, Restaurants & Leisure | 143 | 15,171 | |||||||||||
Suez | Multi-Utilities | 592 | 8,416 | |||||||||||
Teleperformance | Professional Services | 93 | 17,553 | |||||||||||
Thales SA | Aerospace & Defense | 162 | 23,022 | |||||||||||
Total SA | Oil, Gas & Consumable Fuels | 4,043 | 262,221 | |||||||||||
a | UbiSoft Entertainment SA | Software | 138 | 14,974 | ||||||||||
Valeo SA | Auto Components | 386 | 16,768 | |||||||||||
Veolia Environnement SA | Multi-Utilities | 804 | 16,053 | |||||||||||
Vinci SA | Construction & Engineering | 754 | 71,831 | |||||||||||
Vivendi SA | Media | 1,556 | 40,068 | |||||||||||
Wendel SA | Diversified Financial Services | 47 | 6,999 | |||||||||||
a,c | Worldline SA, Reg S | IT Services | 66 | 4,228 | ||||||||||
|
| |||||||||||||
2,481,537 | ||||||||||||||
|
| |||||||||||||
Luxembourg 0.9% | ||||||||||||||
Eurofins Scientific SE | Life Sciences Tools & Services | 18 | 10,223 | |||||||||||
SES SA, IDR | Media | 570 | 12,513 | |||||||||||
|
| |||||||||||||
22,736 | ||||||||||||||
|
| |||||||||||||
Switzerland 0.8% | ||||||||||||||
STMicroelectronics NV | Semiconductors & Semiconductor Equipment | 1,029 | 18,729 | |||||||||||
|
| |||||||||||||
United Kingdom 0.9% | ||||||||||||||
TechnipFMC PLC | Energy Equipment & Services | 744 | 23,419 | |||||||||||
|
| |||||||||||||
Total Investments | 2,546,421 | |||||||||||||
Other Assets, less Liabilities 0.3% | 8,890 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 2,555,311 | ||||||||||||
|
|
See Abbreviations on page 266.
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. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the value of this security was $2,433, representing 0.1% of net assets.
cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. This security has been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the value of this security was $4,228, representing 0.2% of net assets.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 169 |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Germany ETF
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 24.60 | $ | 25.55 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.55 | 0.05 | ||||||
Net realized and unrealized gains (losses) | (1.71 | ) | (1.00 | ) | ||||
|
| |||||||
Total from investment operations | (1.16 | ) | (0.95 | ) | ||||
|
| |||||||
Less distributions from net investment income | (0.60 | ) | — | |||||
|
| |||||||
Net asset value, end of period | $ | 22.84 | $ | 24.60 | ||||
|
| |||||||
Total returnd | (4.80)% | (3.72)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 4.58% | 0.52% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $2,284 | $2,460 | ||||||
Portfolio turnover ratef | 8.37% | 1.75% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
170 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Germany ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 94.0% | ||||||||||||||
Germany 93.2% | ||||||||||||||
1&1 Drillisch AG | Wireless Telecommunication Services | 75 | $ | 3,650 | ||||||||||
Adidas AG | Textiles, Apparel & Luxury Goods | 323 | 79,122 | |||||||||||
Allianz SE | Insurance | 699 | 155,883 | |||||||||||
Aroundtown SA | Real Estate Management & Development | 1,030 | 9,164 | |||||||||||
Axel Springer SE | Media | 73 | 4,914 | |||||||||||
BASF SE | Chemicals | 1,497 | 133,102 | |||||||||||
Bayer AG | Pharmaceuticals | 1,527 | 135,699 | |||||||||||
Bayerische Motoren Werke AG | Automobiles | 526 | 47,477 | |||||||||||
Beiersdorf AG | Personal Products | 163 | 18,399 | |||||||||||
Brenntag AG | Trading Companies & Distributors | 254 | 15,683 | |||||||||||
Carl Zeiss Meditec AG | Health Care Equipment & Supplies | 59 | 4,968 | |||||||||||
CECONOMY AG | Specialty Retail | 267 | 1,887 | |||||||||||
a | Commerzbank AG | Banks | 1,705 | 17,774 | ||||||||||
Continental AG | Auto Components | 177 | 30,828 | |||||||||||
Covestro AG | Chemicals | 294 | 23,856 | |||||||||||
Daimler AG | Automobiles | 1,407 | 88,820 | |||||||||||
a | Delivery Hero SE | Internet & Direct Marketing Retail | 179 | 8,612 | ||||||||||
Deutsche Bank AG | Capital Markets | 3,109 | 35,490 | |||||||||||
Deutsche Boerse AG | Capital Markets | 306 | 41,015 | |||||||||||
Deutsche Lufthansa AG | Airlines | 385 | 9,462 | |||||||||||
Deutsche Post AG | Air Freight & Logistics | 1,590 | 56,715 | |||||||||||
Deutsche Telekom AG | Diversified Telecommunication Services | 5,284 | 85,217 | |||||||||||
Deutsche Wohnen SE | Real Estate Management & Development | 582 | 27,932 | |||||||||||
a,b | DWS Group GmbH & Co. KGaA, 144A | Capital Markets | 55 | 1,520 | ||||||||||
E.ON SE | Multi-Utilities | 3,552 | 36,223 | |||||||||||
Evonik Industries AG | Chemicals | 271 | 9,711 | |||||||||||
Fielmann AG | Specialty Retail | 38 | 2,289 | |||||||||||
Fraport AG Frankfurt Airport Services Worldwide | Transportation Infrastructure | 59 | 5,215 | |||||||||||
Fresenius Medical Care AG & Co. KGaA | Health Care Providers & Services | 348 | 35,804 | |||||||||||
Fresenius SE and Co. KGaA | Health Care Providers & Services | 664 | 48,773 | |||||||||||
Fuchs Petrolub SE | Chemicals | 56 | 2,764 | |||||||||||
GEA Group AG | Machinery | 271 | 9,657 | |||||||||||
Grenkeleasing AG | Consumer Finance | 42 | 5,010 | |||||||||||
Hannover Rueck SE | Insurance | 98 | 13,853 | |||||||||||
Hapag-Lloyd AG | Marine | 45 | 1,702 | |||||||||||
HeidelbergCement AG | Construction Materials | 244 | 19,079 | |||||||||||
Hella GmbH & Co. KGaA | Auto Components | 73 | 4,073 | |||||||||||
Henkel AG & Co. KGaA | Household Products | 166 | 17,632 | |||||||||||
Hochtief AG | Construction & Engineering | 30 | 4,976 | |||||||||||
Hugo Boss AG | Textiles, Apparel & Luxury Goods | 105 | 8,088 | |||||||||||
Infineon Technologies AG | Semiconductors & Semiconductor Equipment | 1,853 | 42,120 | |||||||||||
a | Innogy SE | Multi-Utilities | 213 | 9,042 | ||||||||||
K+S AG | Chemicals | 317 | 6,657 | |||||||||||
KION Group AG | Machinery | 115 | 7,071 | |||||||||||
Lanxess AG | Chemicals | 150 | 10,990 | |||||||||||
LEG Immobilien AG | Real Estate Management & Development | 104 | 12,351 | |||||||||||
Linde AG | Chemicals | 304 | 71,926 | |||||||||||
MAN SE | Machinery | 58 | 6,309 | |||||||||||
Merck KGaA | Pharmaceuticals | 212 | 21,915 | |||||||||||
METRO AG | Food & Staples Retailing | 278 | 4,359 | |||||||||||
MTU Aero Engines AG | Aerospace & Defense | 84 | 18,938 | |||||||||||
Muenchener Rueckversicherungs-Gesellschaft Aktiengesellschaft in Muenchen | Insurance | 243 | 53,838 | |||||||||||
Osram Licht AG | Electrical Equipment | 156 | 6,208 | |||||||||||
ProSiebenSat.1 Media SE | Media | 373 | 9,692 | |||||||||||
Puma SE | Textiles, Apparel & Luxury Goods | 13 | 6,417 | |||||||||||
Rational AG | Machinery | 5 | 3,624 | |||||||||||
Rheinmetall AG | Industrial Conglomerates | 70 | 7,322 |
libertyshares.com | Semiannual Report | 171 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Germany ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Germany (continued) | ||||||||||||||
a,b | Rocket Internet SE, 144A | Internet & Direct Marketing Retail | 105 | $ | 3,288 | |||||||||
RWE AG | Multi-Utilities | 876 | 21,621 | |||||||||||
SAP SE | Software | 1,584 | 195,020 | |||||||||||
c | Scout24 AG, Reg S | Interactive Media & Services | 175 | 8,163 | ||||||||||
Siemens AG | Industrial Conglomerates | 1,255 | 160,841 | |||||||||||
a | Siemens Healthineers AG | Health Care Equipment & Supplies | 212 | 9,326 | ||||||||||
Stada Arzneimittel AG | Pharmaceuticals | 37 | 3,486 | |||||||||||
Suedzucker AG | Food Products | 129 | 1,715 | |||||||||||
Symrise AG | Chemicals | 198 | 18,081 | |||||||||||
a | Talanx AG | Insurance | 64 | 2,434 | ||||||||||
Telefonica Deutschland Holding AG | Diversified Telecommunication Services | 1,083 | 4,580 | |||||||||||
thyssenkrupp AG | Metals & Mining | 760 | 19,191 | |||||||||||
Uniper SE | Independent Power and Renewable Electricity Producers | 321 | 9,884 | |||||||||||
United Internet AG | Diversified Telecommunication Services | 188 | 8,898 | |||||||||||
Volkswagen AG | Automobiles | 51 | 8,891 | |||||||||||
Vonovia SE | Real Estate Management & Development | 847 | 41,398 | |||||||||||
Wacker Chemie AG | Chemicals | 25 | 3,145 | |||||||||||
Wirecard AG | IT Services | 187 | 40,551 | |||||||||||
a,b | Zalando SE, 144A | Internet & Direct Marketing Retail | 222 | 8,641 | ||||||||||
|
| |||||||||||||
2,129,971 | ||||||||||||||
|
| |||||||||||||
Luxembourg 0.2% | ||||||||||||||
RTL Group SA | Media | 63 | 4,496 | |||||||||||
|
| |||||||||||||
Netherlands 0.6% | ||||||||||||||
a | QIAGEN NV | Life Sciences Tools & Services | 358 | 13,556 | ||||||||||
|
| |||||||||||||
Total Common Stocks | 2,148,023 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 5.6% | ||||||||||||||
Germany 5.6% | ||||||||||||||
d | Bayerische Motoren Werke AG, 5.938%, pfd. | Automobiles | 91 | 7,156 | ||||||||||
d | Fuchs Petrolub SE, 1.891%, pfd. | Chemicals | 114 | 6,371 | ||||||||||
d | Henkel AG & Co. KGaA, 1.771%, pfd. | Household Products | 286 | 33,568 | ||||||||||
d | Porsche Automobil Holding SE, 3.034%, pfd. | Automobiles | 251 | 16,909 | ||||||||||
d | RWE AG, 8.651%, pfd. | Multi-Utilities | 65 | 1,309 | ||||||||||
d | Sartorius AG, 0.365%, pfd. | Health Care Equipment & Supplies | 56 | 9,093 | ||||||||||
d | Volkswagen AG, 2.612%, pfd. | Automobiles | 300 | 52,825 | ||||||||||
Total Preferred Stocks | 127,231 | |||||||||||||
|
| |||||||||||||
Total Investments | 2,275,254 | |||||||||||||
Other Assets, less Liabilities 0.4% | 8,552 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 2,283,806 | ||||||||||||
|
|
See Abbreviations on page 266.
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. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $13,449, representing 0.6% 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 registration. This security has been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the value of this security was $8,163, representing 0.4% of net assets.
dVariable rate security. The rate shown represents the yield at period end.
172 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Hong Kong ETF
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 26.17 | $ | 25.30 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.61 | 0.16 | ||||||
Net realized and unrealized gains (losses) | (1.43 | ) | 0.78 | |||||
|
| |||||||
Total from investment operations | (0.82 | ) | 0.94 | |||||
|
| |||||||
Less distributions from net investment income | (0.40 | ) | (0.07 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 24.95 | $ | 26.17 | ||||
|
| |||||||
Total returnd | (3.20)% | 3.70% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 4.73% | 1.49% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $11,228 | $7,852 | ||||||
Portfolio turnover ratef | 1.53% | 0.93% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 173 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Hong Kong ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.6% | ||||||||||||||
China 7.0% | ||||||||||||||
AAC Technologies Holdings Inc. | Electronic Equipment, Instruments & Components | 13,500 | $ | 140,264 | ||||||||||
a | China Mengniu Dairy Co. Ltd. | Food Products | 54,000 | 179,772 | ||||||||||
China Travel International Investment Hong Kong Ltd. | Hotels, Restaurants & Leisure | 48,000 | 15,458 | |||||||||||
a | FIH Mobile Ltd. | Electronic Equipment, Instruments & Components | 63,000 | 7,246 | ||||||||||
Guotai Junan International holdings Ltd. | Capital Markets | 72,000 | 12,606 | |||||||||||
Minth Group Ltd. | Auto Components | 13,830 | 57,088 | |||||||||||
a | MMG Ltd. | Metals & Mining | 48,000 | 24,844 | ||||||||||
Nexteer Automotive Group Ltd. | Auto Components | 15,000 | 23,770 | |||||||||||
a | Semiconductor Manufacturing International Corp. | Semiconductors & Semiconductor Equipment | 61,500 | 66,334 | ||||||||||
Shougang Fushan Resources Group Ltd. | Metals & Mining | 72,000 | 16,011 | |||||||||||
Shui On Land Ltd. | Real Estate Management & Development | 72,000 | 16,747 | |||||||||||
Tingyi Cayman Islands Holding Corp. | Food Products | 36,000 | 66,158 | |||||||||||
a | Towngas China Co. Ltd. | Gas Utilities | 24,000 | 21,010 | ||||||||||
Uni-President China Holdings Ltd. | Food Products | 24,000 | 25,611 | |||||||||||
Want Want China Holdings Ltd. | Food Products | 111,000 | 93,482 | |||||||||||
Xinyi Solar Holdings Ltd. | Semiconductors & Semiconductor Equipment | 66,000 | 20,327 | |||||||||||
|
| |||||||||||||
786,728 | ||||||||||||||
|
| |||||||||||||
Hong Kong 90.9% | ||||||||||||||
AIA Group Ltd. | Insurance | 242,400 | 2,165,364 | |||||||||||
ASM Pacific Technology Ltd. | Semiconductors & Semiconductor Equipment | 6,000 | 61,113 | |||||||||||
BOC Hong Kong (Holdings) Ltd. | Banks | 72,000 | 342,292 | |||||||||||
Cafe de Coral Holdings Ltd. | Hotels, Restaurants & Leisure | 6,000 | 13,725 | |||||||||||
Cathay Pacific Airways Ltd. | Airlines | 12,000 | 18,096 | |||||||||||
Champion REIT | Equity Real Estate Investment Trusts (REITs | ) | 39,000 | 27,313 | ||||||||||
Chow Tai Fook Jewellery Co. Ltd. | Specialty Retail | 21,600 | 22,221 | |||||||||||
CK Asset Holdings Ltd. | Real Estate Management & Development | 54,000 | 405,437 | |||||||||||
CK Hutchison Holdings Ltd. | Industrial Conglomerates | 54,000 | 622,474 | |||||||||||
CK Infrastructure Holdings Ltd. | Electric Utilities | 12,000 | 95,081 | |||||||||||
CLP Holdings Ltd. | Electric Utilities | 33,000 | 386,516 | |||||||||||
Dah Sing Banking Group Ltd. | Banks | 8,400 | 16,897 | |||||||||||
Dah Sing Financial Group | Banks | 2,400 | 15,382 | |||||||||||
Dairy Farm International Holdings Ltd. | Food & Staples Retailing | 6,000 | 54,000 | |||||||||||
First Pacific Co. Ltd. | Diversified Financial Services | 48,000 | 23,678 | |||||||||||
Galaxy Entertainment Group Ltd. | Hotels, Restaurants & Leisure | 42,000 | 266,496 | |||||||||||
Great Eagle Holdings Ltd. | Real Estate Management & Development | 6,000 | 29,981 | |||||||||||
Hang Lung Group Ltd. | Real Estate Management & Development | 18,000 | 47,847 | |||||||||||
Hang Lung Properties Ltd. | Real Estate Management & Development | 42,000 | 82,123 | |||||||||||
Hang Seng Bank Ltd. | Banks | 14,400 | 391,243 | |||||||||||
Henderson Land Development Co. Ltd. | Real Estate Management & Development | 24,000 | 120,692 | |||||||||||
Hong Kong and China Gas Co. Ltd. | Gas Utilities | 180,000 | 357,474 | |||||||||||
Hong Kong Exchanges and Clearing Ltd. | Capital Markets | 24,900 | 712,802 | |||||||||||
Hongkong Land Holdings Ltd. | Real Estate Management & Development | 23,700 | 156,894 | |||||||||||
Hopewell Holdings Ltd. | Industrial Conglomerates | 12,000 | 39,489 | |||||||||||
Huabao International Holdings Ltd. | Chemicals | 18,000 | 9,662 | |||||||||||
Hutchison Telecommunications Hong Kong Holdings Ltd. | Wireless Telecommunication Services | 24,000 | 9,478 | |||||||||||
Hysan Development Co. Ltd. | Real Estate Management & Development | 12,000 | 60,653 | |||||||||||
Jardine Matheson Holdings Ltd. | Industrial Conglomerates | 4,200 | 263,550 | |||||||||||
Jardine Strategic Holdings Ltd. | Industrial Conglomerates | 3,600 | 130,680 | |||||||||||
Johnson Electric Holdings Ltd. | Electrical Equipment | 7,500 | 21,182 | |||||||||||
Kerry Logistics Network Ltd. | Air Freight & Logistics | 10,500 | 17,525 | |||||||||||
Kerry Properties Ltd. | Real Estate Management & Development | 12,000 | 40,716 | |||||||||||
Li & Fung Ltd. | Textiles, Apparel & Luxury Goods | 120,000 | 26,837 | |||||||||||
Lifestyle International Holdings Ltd. | Multiline Retail | 10,500 | 20,611 | |||||||||||
Link REIT | Equity Real Estate Investment Trusts (REITs | ) | 43,500 | 428,335 |
174 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Hong Kong ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Hong Kong (continued) | ||||||||||||||
Melco International Development Ltd. | Hotels, Restaurants & Leisure | 15,000 | $ | 29,981 | ||||||||||
MGM China Holdings Ltd. | Hotels, Restaurants & Leisure | 14,400 | 22,820 | |||||||||||
MTR Corp. Ltd. | Road & Rail | 28,500 | 150,060 | |||||||||||
New World Development Co. Ltd. | Real Estate Management & Development | 114,000 | 155,596 | |||||||||||
NWS Holdings Ltd. | Industrial Conglomerates | 27,000 | 53,414 | |||||||||||
PCCW Ltd. | Diversified Telecommunication Services | 84,000 | 48,951 | |||||||||||
Power Assets Holdings Ltd. | Electric Utilities | 25,500 | 177,606 | |||||||||||
Sa Sa International Holdings Ltd. | Specialty Retail | 24,000 | 13,311 | |||||||||||
a | Samsonite International SA | Textiles, Apparel & Luxury Goods | 26,100 | 96,730 | ||||||||||
Sands China Ltd. | Hotels, Restaurants & Leisure | 48,000 | 217,460 | |||||||||||
Shangri-La Asia Ltd. | Hotels, Restaurants & Leisure | 24,000 | 35,701 | |||||||||||
Shun Tak Holdings Ltd. | Industrial Conglomerates | 36,000 | 12,560 | |||||||||||
Sino Land Co. Ltd. | Real Estate Management & Development | 60,000 | 102,902 | |||||||||||
SJM Holdings Ltd. | Hotels, Restaurants & Leisure | 36,000 | 33,309 | |||||||||||
Sun Art Retail Group Ltd. | Food & Staples Retailing | 43,500 | 56,592 | |||||||||||
Sun Hung Kai Properties Ltd. | Real Estate Management & Development | 28,500 | 415,213 | |||||||||||
Swire Pacific Ltd., A | Real Estate Management & Development | 10,500 | 115,065 | |||||||||||
Swire Pacific Ltd., B | Real Estate Management & Development | 15,000 | 26,531 | |||||||||||
Swire Properties Ltd. | Real Estate Management & Development | 21,600 | 81,846 | |||||||||||
Taifook Securities Group Ltd. | Capital Markets | 54,000 | 18,909 | |||||||||||
Techtronic Industries Co. Ltd. | Household Durables | 25,500 | 162,941 | |||||||||||
Television Broadcasts Ltd. | Media | 6,000 | 17,061 | |||||||||||
The Bank of East Asia Ltd. | Banks | 24,600 | 91,799 | |||||||||||
The Wharf Holdings Ltd. | Real Estate Management & Development | 24,000 | 65,330 | |||||||||||
VTech Holdings Ltd. | Communications Equipment | 3,300 | 38,125 | |||||||||||
b | WH Group Ltd., Reg S | Food Products | 168,000 | 118,299 | ||||||||||
Wharf Real Estate Investment Co. Ltd. | Real Estate Management & Development | 24,000 | 154,890 | |||||||||||
Wheelock and Co. Ltd. | Real Estate Management & Development | 16,380 | 98,281 | |||||||||||
Xinyi Glass Holdings Ltd. | Auto Components | 42,000 | 53,084 | |||||||||||
Yue Yuen Industrial Holdings Ltd. | Textiles, Apparel & Luxury Goods | 15,000 | 41,694 | |||||||||||
|
| |||||||||||||
10,209,920 | ||||||||||||||
|
| |||||||||||||
Italy 0.4% | ||||||||||||||
Prada SpA | Textiles, Apparel & Luxury Goods | 10,200 | 48,882 | |||||||||||
|
| |||||||||||||
Luxembourg 0.2% | ||||||||||||||
L’Occitane International SA | Specialty Retail | 9,000 | 16,171 | |||||||||||
|
| |||||||||||||
Macau 0.7% | ||||||||||||||
Macau Legend Development Ltd. | Hotels, Restaurants & Leisure | 42,000 | 7,622 | |||||||||||
Wynn Macau Ltd. | Hotels, Restaurants & Leisure | 28,800 | 66,250 | |||||||||||
|
| |||||||||||||
73,872 | ||||||||||||||
|
| |||||||||||||
Singapore 0.3% | ||||||||||||||
BOC Aviation Ltd. | Trading Companies & Distributors | 4,200 | 32,581 | |||||||||||
|
| |||||||||||||
Taiwan 0.1% | ||||||||||||||
FIT Hon Teng Ltd. | Electronic Equipment, Instruments & Components | 24,000 | 11,870 | |||||||||||
|
| |||||||||||||
Total Investments | 11,180,024 | |||||||||||||
Other Assets, less Liabilities 0.4% | 48,273 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 11,228,297 | ||||||||||||
|
|
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. This security has been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the value of this security was $118,299, representing 1.1% of net assets.
libertyshares.com | Semiannual Report | 175 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Hong Kong ETF (continued)
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
HKG Mini Hang Seng Index | Long | 1 | $ | 35,626 | 10/30/18 | $ | 356 | |||||||||||||
|
|
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
176 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE India ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 22.74 | $ | 23.72 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.18 | 0.09 | ||||||
Net realized and unrealized gains (losses) | (1.21 | ) | (1.07 | ) | ||||
|
| |||||||
Total from investment operations | (1.03 | ) | (0.98 | ) | ||||
|
| |||||||
Less distributions from net investment income | (0.07 | ) | — | |||||
|
| |||||||
Net asset value, end of period | $ | 21.64 | $ | 22.74 | ||||
|
| |||||||
Total returnd | (4.56)% | (4.13)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.19% | 0.19% | ||||||
Net investment income | 1.53% | 2.78% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $6,491 | $2,274 | ||||||
Portfolio turnover ratef | 1.86% | 1.59% |
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 177 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE India ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.7% | ||||||||||||||
India 99.7% | ||||||||||||||
ABB India Ltd. | Electrical Equipment | 663 | $ | 12,894 | ||||||||||
ACC Ltd. | Construction Materials | 594 | 12,720 | |||||||||||
Adani Enterprises Ltd. | Trading Companies & Distributors | 3,540 | 6,378 | |||||||||||
a | Adani Gas Ltd | Trading Companies & Distributors | 3,540 | 2,957 | ||||||||||
Adani Ports And Special Economic Zone Ltd. | Transportation Infrastructure | 9,150 | 41,515 | |||||||||||
b | Adani Power Ltd. | Independent Power and Renewable Electricity Producers | 12,417 | 4,077 | ||||||||||
Ambuja Cements Ltd. | Construction Materials | 10,155 | 31,317 | |||||||||||
Ashok Leyland Ltd. | Machinery | 15,399 | 25,300 | |||||||||||
Asian Paints Ltd. | Chemicals | 3,747 | 66,851 | |||||||||||
Aurobindo Pharma Ltd. | Pharmaceuticals | 3,480 | 35,739 | |||||||||||
b | Avenue Supermarts Ltd. | Food & Staples Retailing | 864 | 16,638 | ||||||||||
b | Axis Bank Ltd. | Banks | 23,478 | 198,619 | ||||||||||
Bajaj Auto Ltd. | Automobiles | 1,140 | 42,264 | |||||||||||
Bajaj Finance Ltd. | Consumer Finance | 2,274 | 68,010 | |||||||||||
Bajaj Finserv Ltd. | Diversified Financial Services | 501 | 41,511 | |||||||||||
Bajaj Holdings & Investment Ltd. | Diversified Financial Services | 348 | 14,851 | |||||||||||
Bandhan Bank Ltd | Banks | 1,551 | 12,094 | |||||||||||
b | Bank of Baroda | Banks | 6,960 | 9,553 | ||||||||||
b | Bank of India | Banks | 3,873 | 4,109 | ||||||||||
Berger Paints India Ltd. | Chemicals | 3,039 | 12,286 | |||||||||||
Bharat Electronics Ltd. | Aerospace & Defense | 7,647 | 8,471 | |||||||||||
Bharat Forge Ltd. | Auto Components | 2,442 | 20,250 | |||||||||||
Bharat Heavy Electricals Ltd. | Electrical Equipment | 11,547 | 10,911 | |||||||||||
Bharat Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 13,026 | 67,232 | |||||||||||
Bharti Airtel Ltd. | Wireless Telecommunication Services | 16,713 | 78,055 | |||||||||||
Bharti Infratel Ltd. | Diversified Telecommunication Services | 11,289 | 40,950 | |||||||||||
Biocon Ltd. | Biotechnology | 1,890 | 18,025 | |||||||||||
Bosch Ltd. | Auto Components | 96 | 26,399 | |||||||||||
Britannia Industries Ltd. | Food Products | 378 | 30,367 | |||||||||||
Cadila Healthcare Ltd. | Pharmaceuticals | 3,213 | 17,107 | |||||||||||
b | Canara Bank Ltd. | Banks | 1,929 | 5,877 | ||||||||||
Castrol India Ltd. | Chemicals | 3,096 | 6,101 | |||||||||||
Cipla Ltd. | Pharmaceuticals | 4,173 | 37,651 | |||||||||||
Coal India Ltd. | Oil, Gas & Consumable Fuels | 16,527 | 60,702 | |||||||||||
Colgate-Palmolive India Ltd. | Personal Products | 858 | 12,800 | |||||||||||
Container Corp. of India Ltd. | Road & Rail | 2,172 | 18,800 | |||||||||||
Cummins India Ltd. | Machinery | 870 | 8,078 | |||||||||||
Dabur India Ltd. | Personal Products | 6,939 | 40,864 | |||||||||||
Dalmia Bharat Ltd. | Construction Materials | 279 | 8,929 | |||||||||||
Divi’s Laboratories Ltd. | Life Sciences Tools & Services | 1,047 | 18,934 | |||||||||||
DLF Ltd. | Real Estate Management & Development | 5,541 | 12,425 | |||||||||||
Dr Reddy’s Laboratories Ltd. | Pharmaceuticals | 1,068 | 37,284 | |||||||||||
Eicher Motors Ltd. | Automobiles | 174 | 58,053 | |||||||||||
Emami Ltd. | Personal Products | 1,416 | 9,658 | |||||||||||
Exide Industries Ltd. | Auto Components | 2,691 | 9,854 | |||||||||||
b | Future Retail Ltd. | Multiline Retail | 2,709 | 17,420 | ||||||||||
GAIL India Ltd. | Gas Utilities | 7,110 | 37,173 | |||||||||||
GlaxoSmithKline Consumer Healthcare Ltd. | Food Products | 132 | 13,209 | |||||||||||
Glenmark Pharmaceuticals Ltd. | Pharmaceuticals | 1,815 | 15,828 | |||||||||||
b | GMR Infrastructure Ltd. | Construction & Engineering | 27,702 | 6,191 | ||||||||||
Godrej Consumer Products Ltd. | Personal Products | 4,833 | 51,247 | |||||||||||
Godrej Industries Ltd. | Industrial Conglomerates | 921 | 6,564 | |||||||||||
Grasim Industries Ltd. | Construction Materials | 4,203 | 59,227 | |||||||||||
Havell’s India Ltd. | Electrical Equipment | 3,144 | 25,784 | |||||||||||
HCL Technologies Ltd. | IT Services | 7,251 | 108,810 | |||||||||||
c | HDFC Standard Life Insurance Co. Ltd., 144A | Insurance | 4,155 | 22,446 | ||||||||||
Hero Motocorp Ltd. | Automobiles | 1,284 | 51,956 |
178 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE India ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
India (continued) | ||||||||||||||
Hindalco Industries Ltd. | Metals & Mining | 11,793 | $ | 37,360 | ||||||||||
Hindustan Petroleum Corp. Ltd. | Oil, Gas & Consumable Fuels | 8,007 | 27,774 | |||||||||||
Hindustan Unilever Ltd. | Household Products | 9,264 | 205,549 | |||||||||||
Hindustan Zinc Ltd. | Metals & Mining | 3,048 | 12,164 | |||||||||||
Housing Development Finance Corp. Ltd. | Thrifts & Mortgage Finance | 21,927 | 530,707 | |||||||||||
d | ICICI Lombard General Insurance Co. Ltd., Reg S | Insurance | 1,200 | 13,381 | ||||||||||
d | ICICI Prudential Life Insurance Co. Ltd., Reg S | Insurance | 3,978 | 18,315 | ||||||||||
b | IDBI Bank Ltd. | Banks | 7,089 | 4,909 | ||||||||||
IDFC Bank Ltd. | Banks | 17,610 | 8,818 | |||||||||||
IDFC Ltd. | Diversified Financial Services | 3,552 | 1,948 | |||||||||||
Indiabulls Housing Finance Ltd. | Thrifts & Mortgage Finance | 4,275 | 50,532 | |||||||||||
Indian Oil Corp. Ltd. | Oil, Gas & Consumable Fuels | 28,668 | 60,646 | |||||||||||
Infosys Ltd. | IT Services | 49,704 | 500,571 | |||||||||||
d | InterGlobe Aviation Ltd., Reg S | Airlines | 1,260 | 14,359 | ||||||||||
ITC Ltd. | Tobacco | 38,286 | 157,258 | |||||||||||
b | Jindal Steel & Power Ltd. | Metals & Mining | 4,911 | 13,302 | ||||||||||
b | JSW Energy Ltd. | Independent Power and Renewable Electricity Producers | 5,121 | 4,327 | ||||||||||
JSW Steel Ltd. | Metals & Mining | 15,486 | 81,532 | |||||||||||
Kansai Nerolac Paints Ltd. | Chemicals | 1,677 | 10,642 | |||||||||||
L&T Finance Holdings Ltd. | Diversified Financial Services | 6,291 | 11,247 | |||||||||||
d | Larsen & Toubro Infotech Ltd., Reg S | IT Services | 369 | 9,758 | ||||||||||
Larsen & Toubro Ltd. | Construction & Engineering | 4,392 | 77,074 | |||||||||||
LIC Housing Finance Ltd. | Thrifts & Mortgage Finance | 3,255 | 18,742 | |||||||||||
Lupin Ltd. | Pharmaceuticals | 2,910 | 36,167 | |||||||||||
Mahindra & Mahindra Financial Services Ltd. | Consumer Finance | 3,894 | 21,498 | |||||||||||
Mahindra & Mahindra Ltd. | Automobiles | 7,968 | 94,634 | |||||||||||
Mangalore Refinery and Petrochemicals Ltd. | Oil, Gas & Consumable Fuels | 2,445 | 2,422 | |||||||||||
Marico Ltd. | Personal Products | 5,922 | 27,208 | |||||||||||
Maruti Suzuki India Ltd. | Automobiles | 1,584 | 160,562 | |||||||||||
Motherson Sumi Systems Ltd. | Auto Components | 8,283 | 29,343 | |||||||||||
Mphasis Ltd. | IT Services | 1,002 | 16,217 | |||||||||||
MRF Ltd. | Auto Components | 12 | 10,528 | |||||||||||
Nestle India Ltd. | Food Products | 303 | 40,543 | |||||||||||
NHPC Ltd. | Independent Power and Renewable Electricity Producers | 32,514 | 10,137 | |||||||||||
NMDC Ltd. | Metals & Mining | 9,951 | 15,539 | |||||||||||
NTPC Ltd. | Independent Power and Renewable Electricity Producers | 25,959 | 59,750 | |||||||||||
Oil & Natural Gas Corp. Ltd. | Oil, Gas & Consumable Fuels | 40,302 | 98,517 | |||||||||||
Oil India Ltd. | Oil, Gas & Consumable Fuels | 3,585 | 10,858 | |||||||||||
Oracle Financial Services Software Ltd. | Software | 279 | 15,074 | |||||||||||
Page Industries Ltd. | Textiles, Apparel & Luxury Goods | 63 | 28,580 | |||||||||||
Petronet LNG Ltd. | Oil, Gas & Consumable Fuels | 4,893 | 15,170 | |||||||||||
Pidilite Industries Ltd. | Chemicals | 1,596 | 23,026 | |||||||||||
Piramal Enterprises Ltd. | Pharmaceuticals | 1,104 | 35,018 | |||||||||||
Power Finance Corp., Ltd. | Diversified Financial Services | 8,373 | 8,790 | |||||||||||
Power Grid Corp. of India Ltd. | Electric Utilities | 10,065 | 26,159 | |||||||||||
b | Punjab National Bank Ltd. | Banks | 7,248 | 5,969 | ||||||||||
Rajesh Exports Ltd. | Textiles, Apparel & Luxury Goods | 1,815 | 16,922 | |||||||||||
Reliance Capital Ltd. | Diversified Financial Services | 1,626 | 6,330 | |||||||||||
Reliance Industries Ltd. | Oil, Gas & Consumable Fuels | 40,599 | 704,532 | |||||||||||
Reliance Infrastructure Ltd. | Electric Utilities | 1,668 | 6,908 | |||||||||||
b | Reliance Power Ltd. | Independent Power and Renewable Electricity Producers | 7,143 | 2,572 | ||||||||||
Rural Electrification Corp. Ltd. | Diversified Financial Services | 8,361 | 11,292 | |||||||||||
SBI Life Insurance Co. Ltd. | Insurance | 1,521 | 10,735 | |||||||||||
Shree Cement Ltd. | Construction Materials | 108 | 25,167 | |||||||||||
Shriram Transport Finance Co. Ltd. | Consumer Finance | 2,205 | 35,010 | |||||||||||
Siemens Ltd. | Industrial Conglomerates | 1,113 | 14,512 |
libertyshares.com | Semiannual Report | 179 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE India ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
India (continued) | ||||||||||||||
b | State Bank of India | Banks | 23,343 | $ | 85,495 | |||||||||
b | Steel Authority of India Ltd. | Metals & Mining | 12,993 | 12,233 | ||||||||||
Sun Pharmaceutical Industries Ltd. | Pharmaceuticals | 14,307 | 123,008 | |||||||||||
Sun TV Network Ltd. | Media | 1,101 | 9,329 | |||||||||||
Tata Communications Ltd. | Diversified Telecommunication Services | 891 | 6,152 | |||||||||||
Tata Consultancy Services Ltd. | IT Services | 12,021 | 362,122 | |||||||||||
b | Tata Motors Ltd. | Automobiles | 13,230 | 40,827 | ||||||||||
b | Tata Motors Ltd., A | Automobiles | 4,965 | 7,983 | ||||||||||
Tata Power Co. Ltd. | Electric Utilities | 12,459 | 11,318 | |||||||||||
Tata Steel Ltd. | Metals & Mining | 3,801 | 30,478 | |||||||||||
Tech Mahindra Ltd. | IT Services | 6,126 | 63,001 | |||||||||||
Titan Co. Ltd. | Textiles, Apparel & Luxury Goods | 4,080 | 45,342 | |||||||||||
Torrent Pharmaceuticals Ltd. | Pharmaceuticals | 531 | 12,106 | |||||||||||
Torrent Power Ltd. | Electric Utilities | 1,509 | 4,588 | |||||||||||
UltraTech Cement Ltd. | Construction Materials | 1,368 | 76,618 | |||||||||||
b | Union Bank of India Ltd. | Banks | 3,090 | 2,803 | ||||||||||
United Breweries Ltd. | Beverages | 873 | 16,347 | |||||||||||
b | United Spirits Ltd. | Beverages | 3,900 | 27,670 | ||||||||||
UPL Ltd. | Chemicals | 4,695 | 43,025 | |||||||||||
Vakrangee Ltd. | IT Services | 6,891 | 2,695 | |||||||||||
Vedanta Ltd. | Metals & Mining | 21,882 | 70,123 | |||||||||||
b | Vodafone Idea Ltd. | Wireless Telecommunication Services | 28,044 | 14,914 | ||||||||||
Wipro Ltd. | IT Services | 14,196 | 63,450 | |||||||||||
b | Wockhardt Ltd. | Pharmaceuticals | 387 | 2,892 | ||||||||||
Yes Bank Ltd. | Banks | 22,329 | 56,569 | |||||||||||
Zee Entertainment Enterprises Ltd. | Media | 6,957 | 42,093 | |||||||||||
|
| |||||||||||||
Total Investments | 6,469,100 | |||||||||||||
Other Assets, less Liabilities 0.3% | 21,571 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 6,490,671 | ||||||||||||
|
|
aFair valued using significant unobservable inputs. See Note 6 regarding fair value measurements.
bNon-income producing.
cSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the value of this security was $22,446, representing 0.3% of net assets.
dSecurity 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 registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $55,813, representing 0.9% of net assets.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
SGX CNX Nifty Index | Long | 1 | $ | 21,918 | 10/25/18 | $ | (469 | ) | ||||||||||||
|
|
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
180 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Italy ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 26.27 | $ | 25.51 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.48 | 0.11 | ||||||
Net realized and unrealized gains (losses) | (3.12 | ) | 0.70 | |||||
|
| |||||||
Total from investment operations | (2.64 | ) | 0.81 | |||||
|
| |||||||
Less distributions from net investment income | (0.53 | ) | (0.05 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 23.10 | $ | 26.27 | ||||
|
| |||||||
Total returnd | (10.16)% | 3.19% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 3.93% | 1.01% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $2,310 | $2,627 | ||||||
Portfolio turnover ratef | 3.85% | 3.09% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 181 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Italy ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.6% | ||||||||||||||
Italy 89.5% | ||||||||||||||
A2A SpA | Multi-Utilities | 10,840 | $ | 18,823 | ||||||||||
Assicurazioni Generali SpA | Insurance | 7,978 | 137,885 | |||||||||||
Atlantia SpA | Transportation Infrastructure | 3,468 | 71,982 | |||||||||||
Banca Mediolanum SpA | Diversified Financial Services | 1,702 | 11,584 | |||||||||||
a | Banco BPM SpA | Banks | 10,646 | 26,252 | ||||||||||
Buzzi Unicem SpA | Construction Materials | 500 | 10,384 | |||||||||||
Buzzi Unicem SpA, di Risp | Construction Materials | 282 | 3,374 | |||||||||||
Davide Campari-Milano SpA | Beverages | 3,978 | 33,891 | |||||||||||
DiaSorin SpA | Health Care Equipment & Supplies | 98 | 10,313 | |||||||||||
Enel SpA | Electric Utilities | 46,446 | 238,014 | |||||||||||
Eni SpA | Oil, Gas & Consumable Fuels | 14,876 | 281,328 | |||||||||||
Ferrari NV | Automobiles | 710 | 97,805 | |||||||||||
FinecoBank Banca Fineco SpA | Banks | 2,758 | 36,887 | |||||||||||
Intesa Sanpaolo SpA | Banks | 90,170 | 230,516 | |||||||||||
Italgas Reti SpA | Gas Utilities | 3,438 | 18,664 | |||||||||||
Leonardo SpA | Aerospace & Defense | 2,718 | 32,769 | |||||||||||
Luxottica Group SpA | Textiles, Apparel & Luxury Goods | 1,054 | 71,641 | |||||||||||
a | Mediaset SpA | Media | 2,168 | 6,776 | ||||||||||
Mediobanca Banca di Credito Finanziario SpA | Banks | 4,186 | 41,833 | |||||||||||
Moncler SpA | Textiles, Apparel & Luxury Goods | 1,202 | 51,796 | |||||||||||
Parmalat SpA | Food Products | 1,338 | 4,414 | |||||||||||
a | Pirelli & C SpA | Auto Components | 3,030 | 25,438 | ||||||||||
b | Poste Italiane SpA, Reg S | Insurance | 3,240 | 25,899 | ||||||||||
Prysmian SpA | Electrical Equipment | 1,838 | 42,825 | |||||||||||
Recordati SpA | Pharmaceuticals | 670 | 22,692 | |||||||||||
a | Saipem SpA | Energy Equipment & Services | 3,950 | 24,353 | ||||||||||
Salvatore Ferragamo SpA | Textiles, Apparel & Luxury Goods | 344 | 8,243 | |||||||||||
Snam SpA | Oil, Gas & Consumable Fuels | 15,638 | 65,189 | |||||||||||
a | Telecom Italia SpA | Diversified Telecommunication Services | 73,200 | 44,466 | ||||||||||
Telecom Italia SpA, di Risp | Diversified Telecommunication Services | 41,040 | 22,089 | |||||||||||
Tenaris SA | Energy Equipment & Services | 3,282 | 55,008 | |||||||||||
Terna Rete Elettrica Nazionale SpA | Electric Utilities | 9,908 | 52,949 | |||||||||||
UniCredit SpA | Banks | 13,422 | 202,104 | |||||||||||
Unione di Banche Italiane SpA | Banks | 7,138 | 28,653 | |||||||||||
UnipolSai Assicurazioni SpA | Insurance | 5,348 | 12,610 | |||||||||||
|
| |||||||||||||
2,069,449 | ||||||||||||||
|
| |||||||||||||
Netherlands 2.2% | ||||||||||||||
EXOR NV | Diversified Financial Services | 750 | 50,368 | |||||||||||
|
| |||||||||||||
United Kingdom 7.9% | ||||||||||||||
CNH Industrial NV | Machinery | 6,386 | 76,769 | |||||||||||
a | Fiat Chrysler Automobiles NV | Automobiles | 6,000 | 105,539 | ||||||||||
|
| |||||||||||||
182,308 | ||||||||||||||
|
| |||||||||||||
Total Investments | 2,302,125 | |||||||||||||
Other Assets, less Liabilities 0.4% | 8,200 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 2,310,325 | ||||||||||||
|
|
See Abbreviations on page 266.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. This security has been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the value of this security was $25,899, representing 1.1% of net assets.
182 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Japan ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 26.69 | $ | 25.91 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.29 | 0.44 | ||||||
Net realized and unrealized gains (losses) | (0.11 | ) | 0.37 | |||||
|
| |||||||
Total from investment operations | 0.18 | 0.81 | ||||||
|
| |||||||
Less distributions from net investment income | (0.10 | ) | (0.03 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 26.77 | $ | 26.69 | ||||
|
| |||||||
Total returnd | 0.68% | 3.11% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 2.22% | 4.07% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $256,992 | $96,082 | ||||||
Portfolio turnover ratef | 1.22% | 0.93% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 183 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Japan ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.0% | ||||||||||||||
Japan 99.0% | ||||||||||||||
ABC-Mart Inc. | Specialty Retail | 1,600 | $ | 89,026 | ||||||||||
Acom Co. Ltd. | Consumer Finance | 24,000 | 96,773 | |||||||||||
Advantest Corp. | Semiconductors & Semiconductor Equipment | 11,200 | 235,961 | |||||||||||
AEON Co. Ltd. | Food & Staples Retailing | 44,800 | 1,079,720 | |||||||||||
AEON Financial Service Co. Ltd. | Consumer Finance | 8,000 | 165,726 | |||||||||||
AEON Mall Co. Ltd. | Real Estate Management & Development | 8,000 | 137,483 | |||||||||||
AGC Inc. | Building Products | 12,800 | 531,338 | |||||||||||
Aica Kogyo Co. Ltd. | Building Products | 3,200 | 129,313 | |||||||||||
a | Aiful Corp. | Consumer Finance | 19,200 | 57,641 | ||||||||||
AIN Holdings Inc. | Food & Staples Retailing | 1,600 | 129,172 | |||||||||||
Air Water Inc. | Chemicals | 9,600 | 176,220 | |||||||||||
Aisin Seiki Co. Ltd. | Auto Components | 11,200 | 545,283 | |||||||||||
Ajinomoto Co. Inc. | Food Products | 33,600 | 576,985 | |||||||||||
Alfresa Holdings Corp. | Health Care Providers & Services | 11,200 | 299,758 | |||||||||||
Alps Electric Co. Ltd. | Electronic Equipment, Instruments & Components | 12,800 | 325,226 | |||||||||||
Amada Holdings Co. Ltd. | Machinery | 20,800 | 222,128 | |||||||||||
ANA Holdings Inc. | Airlines | 8,000 | 279,614 | |||||||||||
Aoyama Trading Co. Ltd. | Specialty Retail | 3,200 | 98,323 | |||||||||||
Aozora Bank Ltd. | Banks | 6,400 | 228,763 | |||||||||||
a | Aplus Financial Co. Ltd. | Consumer Finance | 6,400 | 6,198 | ||||||||||
Ariake Japan Co. Ltd. | Food Products | 1,600 | 159,599 | |||||||||||
Asahi Group Holdings Ltd. | Beverages | 24,000 | 1,040,630 | |||||||||||
Asahi Intecc Co. Ltd. | Health Care Equipment & Supplies | 6,400 | 279,474 | |||||||||||
Asahi Kasei Corp. | Chemicals | 80,000 | 1,213,541 | |||||||||||
Asics Corp. | Textiles, Apparel & Luxury Goods | 11,200 | 167,036 | |||||||||||
ASKUL Corp. | Internet & Direct Marketing Retail | 1,600 | 48,035 | |||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 124,800 | 2,177,696 | |||||||||||
Autobacs Seven Co. Ltd. | Specialty Retail | 3,200 | 54,937 | |||||||||||
Awa Bank Ltd. | Banks | 3,200 | 99,309 | |||||||||||
Azbil Corp. | Electronic Equipment, Instruments & Components | 9,600 | 208,929 | |||||||||||
Bandai Namco Holdings Inc. | Leisure Products | 12,800 | 497,530 | |||||||||||
Benesse Holdings Inc. | Diversified Consumer Services | 4,800 | 136,708 | |||||||||||
BIC CAMERA Inc. | Specialty Retail | 9,600 | 133,539 | |||||||||||
Bridgestone Corp. | Auto Components | 38,400 | 1,451,347 | |||||||||||
Brother Industries Ltd. | Technology Hardware, Storage & Peripherals | 14,400 | 284,488 | |||||||||||
Calbee Inc. | Food Products | 4,800 | 158,049 | |||||||||||
CANON Inc. | Technology Hardware, Storage & Peripherals | 65,600 | 2,084,923 | |||||||||||
Canon Marketing Japan Inc. | Distributors | 3,200 | 67,953 | |||||||||||
Capcom Co. Ltd. | Software | 6,400 | 162,444 | |||||||||||
Casio Computer Co. Ltd. | Household Durables | 14,400 | 235,425 | |||||||||||
Central Japan Railway Co. | Road & Rail | 11,200 | 2,332,984 | |||||||||||
CHIYODA Corp. | Construction & Engineering | 9,600 | 78,179 | |||||||||||
Chubu Electric Power Co. Inc. | Electric Utilities | 44,800 | 677,808 | |||||||||||
Chugai Pharmaceutical Co. Ltd. | Pharmaceuticals | 14,400 | 925,474 | |||||||||||
Chuo Mitsui Trust Holdings Inc. | Banks | 24,000 | 988,018 | |||||||||||
Ci:z Holdings Co. Ltd. | Personal Products | 1,600 | 59,233 | |||||||||||
Citizen Watch Co. Ltd. | Electronic Equipment, Instruments & Components | 17,600 | 116,058 | |||||||||||
Coca-Cola Bottlers Japan Holdings Inc. | Beverages | 9,600 | 256,935 | |||||||||||
COMSYS Holdings Corp. | Construction & Engineering | 6,400 | 189,602 | |||||||||||
Concordia Financial Group Ltd. | Banks | 76,800 | 376,613 | |||||||||||
Cosmo Energy Holdings Co. Ltd. | Oil, Gas & Consumable Fuels | 4,800 | 197,350 | |||||||||||
Cosmos Pharmaceutical Corp. | Food & Staples Retailing | 500 | 112,471 | |||||||||||
Credit Saison Co. Ltd. | Consumer Finance | 9,600 | 156,612 | |||||||||||
CyberAgent Inc. | Media | 6,400 | 340,890 | |||||||||||
Dai Nippon Printing Co. Ltd. | Commercial Services & Supplies | 19,200 | 446,594 | |||||||||||
Daicel Corp. | Chemicals | 19,200 | 223,128 | |||||||||||
Daido Steel Co. Ltd. | Metals & Mining | 1,600 | 77,757 |
184 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Daifuku Co. Ltd. | Machinery | 6,400 | $ | 326,240 | ||||||||||
Daiichi Sankyo Co. Ltd. | Pharmaceuticals | 40,000 | 1,734,384 | |||||||||||
Daiichikosho Co. Ltd. | Media | 3,200 | 154,387 | |||||||||||
Daikin Industries Ltd. | Building Products | 17,600 | 2,343,619 | |||||||||||
Daikyo Inc. | Real Estate Management & Development | 1,600 | 32,568 | |||||||||||
a | Daishi Hokuetsu Financial Group Inc. | Banks | 1,600 | 69,446 | ||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 4,800 | 617,617 | |||||||||||
Daiwa House Industry Co. Ltd. | Real Estate Management & Development | 41,600 | 1,233,515 | |||||||||||
Daiwa Securities Group Inc. | Capital Markets | 96,000 | 584,190 | |||||||||||
DeNA Co. Ltd. | Entertainment | 6,400 | 113,085 | |||||||||||
Denka Co. Ltd. | Chemicals | 6,400 | 223,128 | |||||||||||
Denso Corp. | Auto Components | 28,800 | 1,521,074 | |||||||||||
Dentsu Inc. | Media | 14,400 | 668,116 | |||||||||||
DIC Corp. | Chemicals | 4,800 | 172,840 | |||||||||||
Disco Corp. | Semiconductors & Semiconductor Equipment | 1,600 | 267,923 | |||||||||||
DMG Mori Co. Ltd. | Machinery | 6,400 | 106,944 | |||||||||||
Don Quijote Holdings Co. Ltd. | Multiline Retail | 8,000 | 404,983 | |||||||||||
Dowa Holdings Co. Ltd. | Metals & Mining | 3,200 | 101,704 | |||||||||||
East Japan Railway Co. | Road & Rail | 24,000 | 2,230,224 | |||||||||||
EBARA Corp. | Machinery | 6,400 | 220,874 | |||||||||||
Eisai Co. Ltd. | Pharmaceuticals | 17,600 | 1,713,747 | |||||||||||
Electric Power Development Co. Ltd. | Independent Power and Renewable Electricity Producers | 11,200 | 310,111 | |||||||||||
Exedy Corp. | Auto Components | 1,600 | 53,035 | |||||||||||
Ezaki Glico Co. Ltd. | Food Products | 3,200 | 157,204 | |||||||||||
FamilyMart UNY Holdings Co. Ltd. | Food & Staples Retailing | 3,200 | 333,283 | |||||||||||
Fancl Corp. | Personal Products | 1,600 | 78,602 | |||||||||||
FANUC Corp. | Machinery | 12,800 | 2,413,840 | |||||||||||
Fast Retailing Co. Ltd. | Specialty Retail | 3,200 | 1,631,765 | |||||||||||
FP Corp. | Containers & Packaging | 1,600 | 97,337 | |||||||||||
Fuji Electric Co. Ltd. | Electrical Equipment | 9,600 | 384,558 | |||||||||||
Fuji Media Holdings Inc. | Media | 3,200 | 56,937 | |||||||||||
Fuji Oil Holdings Inc. | Food Products | 3,200 | 100,858 | |||||||||||
FUJIFILM Holdings Corp. | Technology Hardware, Storage & Peripherals | 24,000 | 1,080,776 | |||||||||||
Fujikura Ltd. | Electrical Equipment | 19,200 | 90,773 | |||||||||||
Fujitsu General Ltd. | Household Durables | 3,200 | 53,725 | |||||||||||
Fujitsu Ltd. | IT Services | 12,800 | 912,346 | |||||||||||
Fukuoka Financial Group Inc. | Banks | 9,600 | 264,119 | |||||||||||
Fukuyama Transporting Co. Ltd. | Road & Rail | 1,600 | 69,234 | |||||||||||
Furukawa Electric Co. Ltd. | Electrical Equipment | 3,200 | 106,493 | |||||||||||
Fuyo General Lease Co. Ltd. | Diversified Financial Services | 1,600 | 97,337 | |||||||||||
Glory Ltd. | Machinery | 3,200 | 78,236 | |||||||||||
GMO Internet Inc. | IT Services | 3,200 | 55,838 | |||||||||||
GMO Payment Gateway Inc. | IT Services | 3,200 | 198,336 | |||||||||||
Gree Inc. | Interactive Media & Services | 8,000 | 37,751 | |||||||||||
GS Yuasa Corp. | Electrical Equipment | 6,400 | 157,598 | |||||||||||
GungHo Online Entertainment Inc. | Software | 24,000 | 49,443 | |||||||||||
Gunma Bank Ltd. | Banks | 27,200 | 140,089 | |||||||||||
H2O Retailing Corp. | Multiline Retail | 4,800 | 79,025 | |||||||||||
Hachijuni Bank Ltd. | Banks | 27,200 | 124,763 | |||||||||||
Hakuhodo DY Holdings Inc. | Media | 16,000 | 280,741 | |||||||||||
Hamamatsu Photonics K.K. | Electronic Equipment, Instruments & Components | 8,000 | 318,704 | |||||||||||
Hankyu Hanshin Holdings Inc. | Road & Rail | 14,400 | 510,913 | |||||||||||
Haseko Corp. | Household Durables | 17,600 | 228,551 | |||||||||||
Heiwa Corp. | Leisure Products | 3,200 | 71,390 | |||||||||||
Hikari Tsushin Inc. | Specialty Retail | 1,600 | 316,380 | |||||||||||
Hino Motors Ltd. | Machinery | 17,600 | 192,758 | |||||||||||
Hirose Electric Co. Ltd. | Electronic Equipment, Instruments & Components | 1,630 | 178,233 |
libertyshares.com | Semiannual Report | 185 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
HIS Co. Ltd. | Hotels, Restaurants & Leisure | 1,600 | $ | 53,528 | ||||||||||
Hisamitsu Pharmaceutical Co. Inc. | Pharmaceuticals | 4,800 | 368,077 | |||||||||||
Hitachi Capital Corp. | Consumer Finance | 3,200 | 89,167 | |||||||||||
Hitachi Chemical Co. Ltd. | Chemicals | 8,000 | 162,909 | |||||||||||
Hitachi Construction Machinery Co. Ltd. | Machinery | 6,400 | 214,113 | |||||||||||
Hitachi High-Technologies Corp. | Electronic Equipment, Instruments & Components | 4,800 | 165,444 | |||||||||||
Hitachi Ltd. | Electronic Equipment, Instruments & Components | 60,800 | 2,066,188 | |||||||||||
Hitachi Metals Ltd. | Metals & Mining | 12,800 | 158,556 | |||||||||||
Hitachi Transport System Ltd. | Road & Rail | 3,200 | 89,871 | |||||||||||
Hokkaido Electric Power Co. Inc. | Electric Utilities | 11,200 | 70,601 | |||||||||||
Hokugin Financial Group Inc. | Banks | 8,000 | 112,480 | |||||||||||
a | Hokuriku Electric Power Co. | Electric Utilities | 11,200 | 114,677 | ||||||||||
Honda Motor Co. Ltd. | Automobiles | 112,000 | 3,391,011 | |||||||||||
HORIBA Ltd. | Electronic Equipment, Instruments & Components | 1,600 | 84,800 | |||||||||||
Hoshizaki Corp. | Machinery | 3,200 | 331,311 | |||||||||||
House Foods Group Inc. | Food Products | 4,800 | 144,104 | |||||||||||
Hoya Corp. | Health Care Equipment & Supplies | 24,000 | 1,426,245 | |||||||||||
Ibiden Co. Ltd. | Electronic Equipment, Instruments & Components | 6,400 | 89,758 | |||||||||||
Ichigo Inc. | Real Estate Management & Development | 11,200 | 42,006 | |||||||||||
Idemitsu Kosan Co. Ltd. | Oil, Gas & Consumable Fuels | 9,600 | 507,954 | |||||||||||
IHI Corp. | Machinery | 8,000 | 303,209 | |||||||||||
Iida Group Holdings Co. Ltd. | Household Durables | 9,600 | 170,811 | |||||||||||
INPEX Corp. | Oil, Gas & Consumable Fuels | 59,200 | 738,534 | |||||||||||
Isetan Mitsukoshi Holdings Ltd. | Multiline Retail | 22,400 | 275,107 | |||||||||||
Isuzu Motors Ltd. | Automobiles | 35,200 | 555,031 | |||||||||||
Ito En Ltd. | Beverages | 3,200 | 141,991 | |||||||||||
ITOCHU Corp. | Trading Companies & Distributors | 91,200 | 1,670,080 | |||||||||||
ITOCHU Techno-Solutions Corp. | IT Services | 6,400 | 139,117 | |||||||||||
Itoham Yonekyu Holdings Inc. | Food Products | 9,600 | 66,262 | |||||||||||
Izumi Co. Ltd. | Multiline Retail | 3,200 | 212,704 | |||||||||||
J Front Retailing Co. Ltd. | Multiline Retail | 16,000 | 248,343 | |||||||||||
Jafco Co. Ltd. | Capital Markets | 1,600 | 62,262 | |||||||||||
Japan Airlines Co. Ltd. | Airlines | 8,000 | 287,644 | |||||||||||
Japan Airport Terminal Co. Ltd. | Transportation Infrastructure | 3,200 | 145,653 | |||||||||||
Japan Aviatn Elect | Electronic Equipment, Instruments & Components | 1,800 | 30,331 | |||||||||||
Japan Exchange Group Inc. | Capital Markets | 35,200 | 613,602 | |||||||||||
Japan Petroleum Exploration Co. Ltd. | Oil, Gas & Consumable Fuels | 3,200 | 73,418 | |||||||||||
Japan Post Bank Co. Ltd. | Banks | 27,200 | 321,606 | |||||||||||
Japan Post Holdings Co. Ltd. | Insurance | 84,800 | 1,009,373 | |||||||||||
Japan Post Insurance Co. Ltd. | Insurance | 4,800 | 113,804 | |||||||||||
Japan Tobacco Inc. | Tobacco | 76,800 | 2,005,448 | |||||||||||
JFE Holdings Inc. | Metals & Mining | 33,600 | 771,186 | |||||||||||
JGC Corp. | Construction & Engineering | 14,400 | 330,382 | |||||||||||
JSR Corp. | Chemicals | 12,800 | 239,017 | |||||||||||
JTEKT Corp. | Machinery | 14,400 | 210,831 | |||||||||||
JXTG Holdings Inc. | Oil, Gas & Consumable Fuels | 204,800 | 1,547,562 | |||||||||||
K’s Holdings Corp. | Specialty Retail | 9,600 | 116,213 | |||||||||||
Kagome Co. Ltd. | Food Products | 4,800 | 138,610 | |||||||||||
Kajima Corp. | Construction & Engineering | 32,000 | 465,132 | |||||||||||
Kakaku.com Inc. | Interactive Media & Services | 8,000 | 156,500 | |||||||||||
Kaken Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,600 | 85,082 | |||||||||||
Kamigumi Co. Ltd. | Transportation Infrastructure | 8,000 | 176,361 | |||||||||||
Kandenko Co. Ltd. | Construction & Engineering | 6,400 | 66,093 | |||||||||||
Kaneka Corp. | Chemicals | 3,200 | 147,907 | |||||||||||
Kansai Electric Power Co. Inc. | Electric Utilities | 46,400 | 699,768 | |||||||||||
a | Kansai Mirai Financial Group Inc. | Banks | 11,200 | 104,915 | ||||||||||
Kansai Paint Co. Ltd. | Chemicals | 12,800 | 235,975 |
186 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
KAO Corp. | Personal Products | 30,400 | $ | 2,455,338 | ||||||||||
Kawasaki Heavy Industries Ltd. | Machinery | 9,600 | 270,881 | |||||||||||
a | Kawasaki Kisen Kaisha Ltd. | Marine | 6,400 | 129,426 | ||||||||||
KDDI Corp. | Wireless Telecommunication Services | 115,200 | 3,183,632 | |||||||||||
Keihan Holdings Co. Ltd. | Industrial Conglomerates | 6,400 | 244,539 | |||||||||||
Keikyu Corp. | Road & Rail | 17,600 | 320,902 | |||||||||||
Keio Corp. | Road & Rail | 8,000 | 438,086 | |||||||||||
Keisei Electric Railway Co. Ltd. | Road & Rail | 9,600 | 338,073 | |||||||||||
Keiyo Bank Ltd. | Banks | 8,000 | 67,333 | |||||||||||
Kewpie Corp. | Food Products | 8,000 | 185,236 | |||||||||||
Keyence Corp. | Electronic Equipment, Instruments & Components | 5,800 | 3,369,142 | |||||||||||
Kikkoman Corp. | Food Products | 11,200 | 666,567 | |||||||||||
Kinden Corp. | Construction & Engineering | 8,000 | 128,116 | |||||||||||
Kintetsu Group Holdings Co. Ltd. | Road & Rail | 11,200 | 450,623 | |||||||||||
Kirin Holdings Co. Ltd. | Beverages | 52,800 | 1,353,179 | |||||||||||
Kissei Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,600 | 50,711 | |||||||||||
Kobayashi Pharmaceutical Co. Ltd. | Personal Products | 3,200 | 235,524 | |||||||||||
Kobe Steel Ltd. | Metals & Mining | 19,200 | 170,727 | |||||||||||
Koei Tecmo Holdings Co. Ltd. | Software | 3,840 | 66,059 | |||||||||||
Koito Manufacturing Co. Ltd. | Auto Components | 8,000 | 525,421 | |||||||||||
Kokuyo Co. Ltd. | Commercial Services & Supplies | 4,800 | 86,462 | |||||||||||
Komatsu Ltd. | Machinery | 59,200 | 1,801,252 | |||||||||||
Komeri Co. Ltd. | Specialty Retail | 1,600 | 37,399 | |||||||||||
Konami Holdings Corp. | Software | 6,400 | 250,737 | |||||||||||
Konica Minolta Inc. | Technology Hardware, Storage & Peripherals | 28,800 | 306,294 | |||||||||||
KOSE Corp. | Personal Products | 1,600 | 304,970 | |||||||||||
Kubota Corp. | Machinery | 72,000 | 1,224,035 | |||||||||||
Kuraray Co. Ltd. | Chemicals | 22,400 | 336,833 | |||||||||||
Kurita Water Industries Ltd. | Machinery | 6,400 | 186,503 | |||||||||||
Kusuri No Aoki Holdings Co. Ltd. | Food & Staples Retailing | 1,600 | 127,482 | |||||||||||
Kyocera Corp. | Electronic Equipment, Instruments & Components | 19,200 | 1,152,828 | |||||||||||
Kyorin Holdings Inc. | Pharmaceuticals | 3,200 | 66,093 | |||||||||||
Kyoritsu Maintenance Co. Ltd. | Hotels, Restaurants & Leisure | 1,600 | 67,685 | |||||||||||
Kyowa Exeo Corp. | Construction & Engineering | 6,400 | 187,349 | |||||||||||
Kyowa Hakko Kirin Co. Ltd. | Pharmaceuticals | 16,000 | 299,899 | |||||||||||
Kyudenko Corp. | Construction & Engineering | 3,200 | 127,059 | |||||||||||
Kyushu Electric Power Co. Inc. | Electric Utilities | 30,400 | 366,936 | |||||||||||
Kyushu Financial Group Inc. | Banks | 25,600 | 121,706 | |||||||||||
Kyushu Railway Co. | Road & Rail | 9,600 | 292,433 | |||||||||||
Lawson Inc. | Food & Staples Retailing | 3,200 | 194,955 | |||||||||||
Leopalace21 Corp. | Real Estate Management & Development | 14,400 | 80,250 | |||||||||||
a | Line Corp. | Software | 3,200 | 135,229 | ||||||||||
LINTEC Corp. | Chemicals | 3,200 | 81,983 | |||||||||||
Lion Corp. | Household Products | 16,000 | 355,540 | |||||||||||
LIXIL Group Corp. | Building Products | 16,000 | 308,210 | |||||||||||
M3 Inc. | Health Care Technology | 25,600 | 581,034 | |||||||||||
Mabuchi Motor Co. Ltd. | Electrical Equipment | 3,200 | 129,172 | |||||||||||
Maeda Corp. | Construction & Engineering | 8,000 | 105,648 | |||||||||||
Maeda Road Construction Co. Ltd. | Construction & Engineering | 3,200 | 65,107 | |||||||||||
Makita Corp. | Machinery | 16,000 | 801,514 | |||||||||||
Marubeni Corp. | Trading Companies & Distributors | 100,800 | 922,939 | |||||||||||
Maruha Nichiro Corp. | Food Products | 1,600 | 59,022 | |||||||||||
Marui Group Co. Ltd. | Multiline Retail | 12,800 | 315,985 | |||||||||||
Maruichi Steel Tube Ltd. | Metals & Mining | 3,200 | 104,380 | |||||||||||
Matsui Securities Co. Ltd. | Capital Markets | 8,000 | 84,096 | |||||||||||
Matsumotokiyoshi Holdings Co. Ltd. | Food & Staples Retailing | 4,800 | 196,927 | |||||||||||
Mazda Motor Corp. | Automobiles | 36,800 | 441,918 |
libertyshares.com | Semiannual Report | 187 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Mebuki Financial Group Inc. | Banks | 65,600 | $ | 226,974 | ||||||||||
Medipal Holdings Corp. | Health Care Providers & Services | 9,600 | 200,393 | |||||||||||
Megmilk Snow Brand Co. Ltd. | Food Products | 3,200 | 82,236 | |||||||||||
Meiji Holdings Co. Ltd. | Food Products | 8,000 | 537,395 | |||||||||||
Minebea Mitsumi Inc. | Machinery | 27,200 | 493,305 | |||||||||||
Miraca Holdings Inc. | Health Care Providers & Services | 3,200 | 83,250 | |||||||||||
MISUMI Group Inc. | Machinery | 17,600 | 455,553 | |||||||||||
Mitsubishi Chemical Holdings Corp. | Chemicals | 83,200 | 796,584 | |||||||||||
Mitsubishi Corp. | Trading Companies & Distributors | 83,200 | 2,564,451 | |||||||||||
Mitsubishi Electric Corp. | Electrical Equipment | 126,400 | 1,732,109 | |||||||||||
Mitsubishi Estate Co. Ltd. | Real Estate Management & Development | 75,200 | 1,279,098 | |||||||||||
Mitsubishi Gas Chemical Co. Inc. | Chemicals | 11,200 | 238,524 | |||||||||||
Mitsubishi Heavy Industries Ltd. | Machinery | 17,600 | 679,766 | |||||||||||
Mitsubishi Logistics Corp. | Transportation Infrastructure | 4,800 | 124,073 | |||||||||||
Mitsubishi Materials Corp. | Metals & Mining | 8,000 | 239,116 | |||||||||||
Mitsubishi Motors Corp. | Automobiles | 40,000 | 282,432 | |||||||||||
Mitsubishi Shokuhin Co. Ltd. | Food & Staples Retailing | 1,600 | 42,752 | |||||||||||
Mitsubishi Tanabe Pharma Corp. | Pharmaceuticals | 14,400 | 240,877 | |||||||||||
Mitsubishi UFJ Financial Group Inc. | Banks | 814,400 | 5,084,219 | |||||||||||
Mitsubishi UFJ Lease & Finance Co. Ltd. | Diversified Financial Services | 28,800 | 169,628 | |||||||||||
Mitsui & Co. Ltd. | Trading Companies & Distributors | 107,200 | 1,906,921 | |||||||||||
Mitsui Chemicals Inc. | Chemicals | 11,200 | 280,136 | |||||||||||
Mitsui Fudosan Co. Ltd. | Real Estate Management & Development | 60,800 | 1,439,373 | |||||||||||
Mitsui Mining and Smelting Co. Ltd. | Metals & Mining | 3,200 | 92,688 | |||||||||||
Mitsui O.S.K. Lines Ltd. | Marine | 6,400 | 186,785 | |||||||||||
Miura Co. Ltd. | Machinery | 6,400 | 198,336 | |||||||||||
Mizuho Financial Group Inc. | Banks | 1,633,600 | 2,850,548 | |||||||||||
Mochida Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,600 | 132,271 | |||||||||||
Monotaro Co. Ltd. | Trading Companies & Distributors | 6,400 | 180,587 | |||||||||||
Morinaga & Co. Ltd. | Food Products | 3,200 | 119,593 | |||||||||||
Morinaga Milk Industry Co. Ltd. | Food Products | 3,200 | 86,913 | |||||||||||
MS&AD Insurance Group Holdings Inc. | Insurance | 32,000 | 1,068,874 | |||||||||||
Murata Manufacturing Co. Ltd. | Electronic Equipment, Instruments & Components | 12,800 | 1,968,147 | |||||||||||
Nabtesco Corp. | Machinery | 8,000 | 212,704 | |||||||||||
Nagase & Co. Ltd. | Trading Companies & Distributors | 6,400 | 112,466 | |||||||||||
Nagoya Railroad Co. Ltd. | Road & Rail | 11,200 | 277,473 | |||||||||||
Nankai Electric Railway Co. Ltd. | Road & Rail | 6,400 | 160,866 | |||||||||||
NEC Corp. | Technology Hardware, Storage & Peripherals | 16,000 | 442,312 | |||||||||||
a | Nexon Co. Ltd. | Software | 25,600 | 334,692 | ||||||||||
NGK Insulators Ltd. | Machinery | 17,600 | 290,376 | |||||||||||
NGK Spark Plug Co. Ltd. | Auto Components | 12,800 | 373,007 | |||||||||||
NH Foods Ltd. | Food Products | 6,400 | 236,369 | |||||||||||
NHK Spring Co. Ltd. | Auto Components | 9,600 | 99,816 | |||||||||||
Nichirei Corp. | Food Products | 6,400 | 169,600 | |||||||||||
Nidec Corp. | Electrical Equipment | 14,400 | 2,072,175 | |||||||||||
Nifco Inc. | Auto Components | 4,800 | 129,102 | |||||||||||
Nihon Kohden Corp. | Health Care Equipment & Supplies | 4,800 | 152,133 | |||||||||||
Nihon M&A Center Inc. | Professional Services | 8,000 | 240,173 | |||||||||||
Nihon Unisys Ltd. | IT Services | 4,800 | 123,904 | |||||||||||
Nikon Corp. | Household Durables | 22,400 | 421,042 | |||||||||||
Nintendo Co. Ltd. | Software | 6,400 | 2,336,083 | |||||||||||
Nippo Corp. | Construction & Engineering | 3,200 | 58,740 | |||||||||||
Nippon Electric Glass Co. Ltd. | Electronic Equipment, Instruments & Components | 4,800 | 151,076 | |||||||||||
Nippon Express Co. Ltd. | Road & Rail | 4,800 | 315,253 | |||||||||||
Nippon Gas Co. Ltd. | Gas Utilities | 3,200 | 159,739 | |||||||||||
Nippon Kayaku Co. Ltd. | Chemicals | 11,200 | 133,215 | |||||||||||
Nippon Paint Holdings Co. Ltd. | Chemicals | 9,600 | 358,357 |
188 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Nippon Paper Industries Co. Ltd. | Paper & Forest Products | 6,400 | $ | 117,818 | ||||||||||
Nippon Shinyaku Co. Ltd. | Pharmaceuticals | 3,200 | 209,887 | |||||||||||
Nippon Shobukai Co. Ltd. | Chemicals | 1,600 | 124,383 | |||||||||||
Nippon Steel & Sumitomo Metal Corp. | Metals & Mining | 49,600 | 1,049,554 | |||||||||||
Nippon Telegraph & Telephone Corp. | Diversified Telecommunication Services | 41,600 | 1,879,572 | |||||||||||
Nippon Television Holdings Inc. | Media | 3,200 | 55,444 | |||||||||||
Nippon Yusen KK | Marine | 11,200 | 210,718 | |||||||||||
Nipro Corp. | Health Care Equipment & Supplies | 8,000 | 109,451 | |||||||||||
Nishi-Nippon Financial Holdings Inc. | Banks | 9,600 | 111,057 | |||||||||||
Nishi-Nippon Railroad Co. Ltd. | Road & Rail | 4,800 | 129,947 | |||||||||||
Nissan Chemical Corp. | Chemicals | 9,600 | 507,109 | |||||||||||
Nissan Motor Co. Ltd. | Automobiles | 124,800 | 1,168,506 | |||||||||||
Nissan Shatai Co. Ltd. | Automobiles | 3,200 | 28,877 | |||||||||||
Nisshin Seifun Group Inc. | Food Products | 16,000 | 350,751 | |||||||||||
Nisshin Steel Co. Ltd. | Metals & Mining | 4,800 | 72,010 | |||||||||||
Nisshinbo Holdings Inc. | Industrial Conglomerates | 9,600 | 114,353 | |||||||||||
Nissin Foods Holdings Co. Ltd. | Food Products | 4,800 | 330,044 | |||||||||||
Nitori Co. Ltd. | Specialty Retail | 4,800 | 688,612 | |||||||||||
Nitto Denko Corp. | Chemicals | 9,600 | 719,757 | |||||||||||
Noevir Holdings Co. Ltd. | Personal Products | 1,600 | 87,195 | |||||||||||
NOF Corp. | Chemicals | 4,800 | 162,064 | |||||||||||
NOK Corp. | Auto Components | 8,000 | 137,413 | |||||||||||
Nomura Holdings Inc. | Capital Markets | 209,600 | 1,001,452 | |||||||||||
Nomura Real Estate Holdings Inc. | Real Estate Management & Development | 8,000 | 161,571 | |||||||||||
Nomura Research Institute Ltd. | IT Services | 6,400 | 323,423 | |||||||||||
North Pacific Bank Ltd. | Banks | 17,600 | 59,656 | |||||||||||
NS Solutions Corp. | IT Services | 1,600 | 51,697 | |||||||||||
NSK Ltd. | Machinery | 28,800 | 330,128 | |||||||||||
NTN Corp. | Machinery | 27,200 | 111,353 | |||||||||||
NTT Data Corp. | IT Services | 40,000 | 553,946 | |||||||||||
NTT DoCoMo Inc. | Wireless Telecommunication Services | 80,000 | 2,151,693 | |||||||||||
NTT Urban Development Corp. | Real Estate Management & Development | 6,400 | 73,362 | |||||||||||
Obayashi Corp. | Construction & Engineering | 43,200 | 409,237 | |||||||||||
OBIC Co. Ltd. | IT Services | 4,800 | 454,285 | |||||||||||
Odakyu Electric Railway Co. Ltd. | Road & Rail | 19,200 | 454,370 | |||||||||||
Oji Holdings Corp. | Paper & Forest Products | 64,000 | 464,850 | |||||||||||
Okuma Corp. | Machinery | 1,600 | 88,885 | |||||||||||
Olympus Corp. | Health Care Equipment & Supplies | 17,600 | 687,203 | |||||||||||
Omron Corp. | Electronic Equipment, Instruments & Components | 12,800 | 540,916 | |||||||||||
Ono Pharmaceutical Co. Ltd. | Pharmaceuticals | 28,800 | 815,178 | |||||||||||
Open House Co. Ltd. | Real Estate Management & Development | 1,600 | 78,884 | |||||||||||
Oracle Corp. Japan | Software | 1,600 | 129,031 | |||||||||||
Orient Corp. | Consumer Finance | 36,800 | 54,106 | |||||||||||
Oriental Land Co. Ltd. | Hotels, Restaurants & Leisure | 12,800 | 1,338,768 | |||||||||||
ORIX Corp. | Diversified Financial Services | 83,200 | 1,349,249 | |||||||||||
Osaka Gas Co. Ltd. | Gas Utilities | 25,600 | 499,446 | |||||||||||
OSG Corp. | Machinery | 4,800 | 109,324 | |||||||||||
Otsuka Corp. | IT Services | 6,400 | 238,905 | |||||||||||
Otsuka Holdings Co. Ltd. | Pharmaceuticals | 27,200 | 1,371,435 | |||||||||||
Paltac Corp. | Distributors | 1,600 | 87,476 | |||||||||||
Panasonic Corp. | Household Durables | 137,600 | 1,603,324 | |||||||||||
Park24 Co. Ltd. | Commercial Services & Supplies | 6,400 | 193,547 | |||||||||||
Penta-Ocean Construction Co. Ltd. | Construction & Engineering | 17,600 | 117,297 | |||||||||||
a | PeptiDream Inc. | Biotechnology | 4,800 | 191,434 | ||||||||||
Persol Holdings Co. Ltd. | Professional Services | 11,200 | 262,781 | |||||||||||
Pigeon Corp. | Household Products | 6,400 | 360,611 | |||||||||||
Pilot Corp. | Commercial Services & Supplies | 1,600 | 96,210 |
libertyshares.com | Semiannual Report | 189 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Pola Orbis Holdings Inc. | Personal Products | 4,800 | $ | 175,375 | ||||||||||
Rakuten Inc. | Internet & Direct Marketing Retail | 51,200 | 392,525 | |||||||||||
Recruit Holdings Co. Ltd. | Professional Services | 76,800 | 2,563,944 | |||||||||||
Relo Group Inc. | Real Estate Management & Development | 6,400 | 188,194 | |||||||||||
a | Renesas Electronics Corp. | Semiconductors & Semiconductor Equipment | 41,600 | 260,034 | ||||||||||
Rengo Co. Ltd. | Containers & Packaging | 12,800 | 109,198 | |||||||||||
Resona Holdings Inc. | Banks | 140,800 | 791,237 | |||||||||||
Resorttrust Inc. | Hotels, Restaurants & Leisure | 4,800 | 79,151 | |||||||||||
Ricoh Co. Ltd. | Technology Hardware, Storage & Peripherals | 43,200 | 464,005 | |||||||||||
Rinnai Corp. | Household Durables | 1,600 | 121,988 | |||||||||||
Rohm Co. Ltd. | Semiconductors & Semiconductor Equipment | 6,400 | 466,540 | |||||||||||
Rohto Pharmaceutical Co. Ltd. | Pharmaceuticals | 6,400 | 224,818 | |||||||||||
Ryohin Keikaku Co. Ltd. | Multiline Retail | 1,600 | 476,119 | |||||||||||
Sankyo Co. Ltd. | Leisure Products | 3,200 | 125,228 | |||||||||||
Sankyu Inc. | Road & Rail | 3,200 | 179,742 | |||||||||||
Sanrio Co. Ltd. | Specialty Retail | 3,200 | 64,882 | |||||||||||
Santen Pharmaceutical Co. Ltd. | Pharmaceuticals | 24,000 | 380,543 | |||||||||||
Sanwa Holdings Corp. | Building Products | 12,800 | 152,471 | |||||||||||
Sapporo Holdings Ltd. | Beverages | 4,800 | 99,774 | |||||||||||
Sawai Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,600 | 86,349 | |||||||||||
SBI Holdings Inc. | Capital Markets | 14,400 | 447,524 | |||||||||||
SCREEN Holdings Co. Ltd. | Semiconductors & Semiconductor Equipment | 3,200 | 187,067 | |||||||||||
SCSK Corp. | IT Services | 3,200 | 151,288 | |||||||||||
Secom Co. Ltd. | Commercial Services & Supplies | 12,800 | 1,043,743 | |||||||||||
Sega Sammy Holdings Inc. | Leisure Products | 12,800 | 188,757 | |||||||||||
Seibu Holdings Inc. | Industrial Conglomerates | 14,400 | 259,006 | |||||||||||
Seiko Epson Corp. | Technology Hardware, Storage & Peripherals | 17,600 | 300,293 | |||||||||||
Seino Holdings Co. Ltd. | Road & Rail | 9,600 | 145,118 | |||||||||||
Sekisui Chemical Co. Ltd. | Household Durables | 22,400 | 413,350 | |||||||||||
Sekisui House Ltd. | Household Durables | 36,800 | 561,306 | |||||||||||
Seven & i Holdings Co. Ltd. | Food & Staples Retailing | 49,600 | 2,209,588 | |||||||||||
Seven Bank Ltd. | Banks | 41,600 | 131,482 | |||||||||||
SG Holdings Co. Ltd. | Air Freight & Logistics | 4,800 | 125,805 | |||||||||||
Sharp Corp. | Household Durables | 9,600 | 195,153 | |||||||||||
Shikoku Electric Power Co. Inc. | Electric Utilities | 9,600 | 125,340 | |||||||||||
Shima Seiki Manufacturing Ltd. | Machinery | 1,600 | 70,714 | |||||||||||
Shimachu Co. Ltd. | Specialty Retail | 3,200 | 103,394 | |||||||||||
Shimadzu Corp. | Electronic Equipment, Instruments & Components | 17,600 | 551,622 | |||||||||||
Shimamura Co. Ltd. | Specialty Retail | 1,600 | 151,851 | |||||||||||
SHIMANO Inc. | Leisure Products | 4,800 | 773,764 | |||||||||||
Shimizu Corp. | Construction & Engineering | 36,800 | 335,974 | |||||||||||
Shin-Etsu Chemical Co. Ltd. | Chemicals | 25,600 | 2,268,469 | |||||||||||
Shinsei Bank Ltd. | Banks | 11,200 | 183,109 | |||||||||||
Shionogi & Co. Ltd. | Pharmaceuticals | 17,600 | 1,150,349 | |||||||||||
Shiseido Co. Ltd. | Personal Products | 25,600 | 1,983,135 | |||||||||||
Shoei Co. Ltd. | Real Estate Management & Development | 20,800 | 204,182 | |||||||||||
Showa Denko K.K. | Chemicals | 9,600 | 529,929 | |||||||||||
Showa Shell Sekiyu K.K. | Oil, Gas & Consumable Fuels | 12,800 | 271,247 | |||||||||||
Sky Perfect JSAT Holdings Inc. | Media | 8,000 | 38,597 | |||||||||||
Skylark Holdings Co. Ltd. | Hotels, Restaurants & Leisure | 12,800 | 189,433 | |||||||||||
SMC Corp. | Machinery | 3,200 | 1,024,361 | |||||||||||
SoftBank Group Corp. | Wireless Telecommunication Services | 54,400 | 5,493,401 | |||||||||||
Sohgo Security Services Co. Ltd. | Commercial Services & Supplies | 4,800 | 211,084 | |||||||||||
Sojitz Corp. | Trading Companies & Distributors | 80,000 | 288,771 | |||||||||||
Sompo Holdings Inc. | Insurance | 22,400 | 954,295 | |||||||||||
Sony Corp. | Household Durables | 81,600 | 5,004,407 | |||||||||||
Sony Financial Holdings Inc. | Insurance | 11,200 | 246,906 |
190 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Sotetsu Holdings Inc. | Road & Rail | 4,800 | $ | 160,585 | ||||||||||
Square Enix Holdings Co. Ltd. | Software | 4,800 | 198,618 | |||||||||||
Stanley Electric Co. Ltd. | Auto Components | 9,600 | 328,353 | |||||||||||
Start Today Co. Ltd. | Internet & Direct Marketing Retail | 11,200 | 339,200 | |||||||||||
Subaru Corp. | Automobiles | 40,000 | 1,225,514 | |||||||||||
Sugi Pharmacy Co. Ltd. | Food & Staples Retailing | 3,200 | 157,204 | |||||||||||
Sumco Corp. | Semiconductors & Semiconductor Equipment | 14,400 | 208,929 | |||||||||||
Sumitomo Bakelite Co. Ltd. | Chemicals | 3,200 | 143,963 | |||||||||||
Sumitomo Chemical Co. Ltd. | Chemicals | 96,000 | 562,046 | |||||||||||
Sumitomo Corp. | Trading Companies & Distributors | 72,000 | 1,200,898 | |||||||||||
Sumitomo Dainippon Pharma Co. Ltd. | Pharmaceuticals | 11,200 | 257,259 | |||||||||||
Sumitomo Electric Industries Ltd. | Auto Components | 48,000 | 753,057 | |||||||||||
Sumitomo Forestry Co. Ltd. | Household Durables | 8,000 | 139,103 | |||||||||||
Sumitomo Heavy Industries Ltd. | Machinery | 8,000 | 285,601 | |||||||||||
Sumitomo Metal Mining Co. Ltd. | Metals & Mining | 16,000 | 561,483 | |||||||||||
Sumitomo Mitsui Financial Group Inc. | Banks | 84,800 | 3,423,804 | |||||||||||
Sumitomo Osaka Cement Co. Ltd. | Construction Materials | 1,600 | 66,347 | |||||||||||
Sumitomo Realty & Development Co. Ltd. | Real Estate Management & Development | 32,000 | 1,149,448 | |||||||||||
Sumitomo Rubber Industries Ltd. | Auto Components | 12,800 | 192,138 | |||||||||||
Sundrug Co. Ltd. | Food & Staples Retailing | 4,800 | 171,361 | |||||||||||
Suntory Beverage & Food Ltd. | Beverages | 8,000 | 338,777 | |||||||||||
Suzuken Co. Ltd. | Health Care Providers & Services | 4,800 | 227,777 | |||||||||||
Suzuki Motor Corp. | Automobiles | 25,600 | 1,466,785 | |||||||||||
Sysmex Corp. | Health Care Equipment & Supplies | 12,800 | 1,102,117 | |||||||||||
T&D Holdings Inc. | Insurance | 35,200 | 581,063 | |||||||||||
Tadano Ltd. | Machinery | 8,000 | 93,040 | |||||||||||
Taiheiyo Cement Corp. | Construction Materials | 8,000 | 251,089 | |||||||||||
Taisei Corp. | Construction & Engineering | 12,800 | 583,739 | |||||||||||
Taisho Pharmaceutical Holdings Co. Ltd. | Pharmaceuticals | 3,200 | 391,319 | |||||||||||
Taiyo Nippon Sanso Corp. | Chemicals | 9,600 | 143,681 | |||||||||||
Taiyo Yuden Co. Ltd. | Electronic Equipment, Instruments & Components | 6,400 | 143,906 | |||||||||||
Takara Bio Inc. | Biotechnology | 3,200 | 88,744 | |||||||||||
Takara Holdings Inc. | Beverages | 12,800 | 188,194 | |||||||||||
Takashimaya Co. Ltd. | Multiline Retail | 8,000 | 135,159 | |||||||||||
Takeda Pharmaceutical Co. Ltd. | Pharmaceuticals | 48,000 | 2,054,215 | |||||||||||
TDK Corp. | Electronic Equipment, Instruments & Components | 8,000 | 872,650 | |||||||||||
TechnoPro Holdings Inc. | Professional Services | 1,600 | 99,309 | |||||||||||
Teijin Ltd. | Chemicals | 11,200 | 214,859 | |||||||||||
Terumo Corp. | Health Care Equipment & Supplies | 19,200 | 1,137,615 | |||||||||||
The 77 Bank Ltd. | Banks | 4,800 | 114,184 | |||||||||||
The Bank of Kyoto Ltd. | Banks | 4,800 | 250,596 | |||||||||||
The Chiba Bank Ltd. | Banks | 41,600 | 284,207 | |||||||||||
The Chugoku Bank Ltd. | Banks | 11,200 | 114,085 | |||||||||||
The Chugoku Electric Power Co. Inc. | Electric Utilities | 19,200 | 246,793 | |||||||||||
The Dai-ichi Life Holdings Inc. | Insurance | 72,000 | 1,499,459 | |||||||||||
The Hiroshima Bank Ltd. | Banks | 19,200 | 129,989 | |||||||||||
The Iyo Bank Ltd. | Banks | 17,600 | 110,015 | |||||||||||
The Japan Steel Works Ltd. | Machinery | 4,800 | 116,889 | |||||||||||
The San-In Godo Bank Ltd. | Banks | 9,600 | 84,349 | |||||||||||
The Shiga Bank Ltd. | Banks | 3,200 | 82,377 | |||||||||||
The Shizuoka Bank Ltd. | Banks | 32,000 | 287,362 | |||||||||||
The Suruga Bank Ltd. | Banks | 12,800 | 64,008 | |||||||||||
THK Co. Ltd. | Machinery | 8,000 | 203,689 | |||||||||||
TIS Inc. | IT Services | 4,800 | 240,032 | |||||||||||
Tobu Railway Co. Ltd. | Road & Rail | 12,800 | 378,642 | |||||||||||
Toda Corp. | Construction & Engineering | 16,000 | 115,508 | |||||||||||
Toho Co. Ltd. | Media | 8,000 | 251,089 |
libertyshares.com | Semiannual Report | 191 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Toho Gas Co. Ltd. | Gas Utilities | 4,800 | $ | 182,348 | ||||||||||
Tohoku Electric Power Co. Inc. | Electric Utilities | 30,400 | 412,702 | |||||||||||
b | Tokai Carbon Co. Ltd. | Chemicals | 12,800 | 251,413 | ||||||||||
Tokai Rika Co. Ltd. | Auto Components | 3,200 | 67,615 | |||||||||||
Tokai Tokyo Financial Holdings Inc. | Capital Markets | 14,400 | 82,912 | |||||||||||
Tokio Marine Holdings Inc. | Insurance | 43,200 | 2,143,931 | |||||||||||
Tokuyama Corp. | Chemicals | 4,800 | 130,581 | |||||||||||
Tokyo Broadcasting System Holdings Inc. | Media | 1,600 | 33,300 | |||||||||||
Tokyo Century Corp. | Diversified Financial Services | 3,200 | 198,899 | |||||||||||
a | Tokyo Electric Power Co. Holdings Inc. | Electric Utilities | 100,800 | 495,192 | ||||||||||
Tokyo Electron Ltd. | Semiconductors & Semiconductor Equipment | 9,600 | 1,319,329 | |||||||||||
Tokyo Gas Co. Ltd. | Gas Utilities | 27,200 | 668,715 | |||||||||||
Tokyo Tatemono Co. Ltd. | Real Estate Management & Development | 12,800 | 156,190 | |||||||||||
TOKYU Corp. | Road & Rail | 32,000 | 585,429 | |||||||||||
Tokyu Fudosan Holdings Corp. | Real Estate Management & Development | 32,000 | 223,128 | |||||||||||
Topcon Corp. | Electronic Equipment, Instruments & Components | 6,400 | 116,860 | |||||||||||
Toppan Forms Co. Ltd. | Commercial Services & Supplies | 3,200 | 30,765 | |||||||||||
Toppan Printing Co. Ltd. | Commercial Services & Supplies | 16,000 | 257,076 | |||||||||||
Toray Industries Inc. | Chemicals | 97,600 | 733,386 | |||||||||||
a | Toshiba Corp. | Industrial Conglomerates | 38,400 | 1,110,569 | ||||||||||
Tosoh Corp. | Chemicals | 17,600 | 271,163 | |||||||||||
TOTO Ltd. | Building Products | 9,600 | 398,503 | |||||||||||
Toyo Seikan Group Holdings Ltd. | Containers & Packaging | 9,600 | 199,209 | |||||||||||
Toyo Suisan Kaisha Ltd. | Food Products | 6,400 | 248,202 | |||||||||||
Toyo Tire & Rubber Co. Ltd | Auto Components | 8,000 | 144,174 | |||||||||||
Toyobo Co. Ltd. | Chemicals | 6,400 | 108,634 | |||||||||||
Toyoda Gosei Co. Ltd. | Auto Components | 4,800 | 118,537 | |||||||||||
Toyota Boshoku Corp. | Auto Components | 4,800 | 89,632 | |||||||||||
Toyota Industries Corp. | Auto Components | 9,600 | 567,962 | |||||||||||
Toyota Motor Corp. | Automobiles | 163,200 | 10,194,163 | |||||||||||
Toyota Tsusho Corp. | Trading Companies & Distributors | 14,400 | 543,875 | |||||||||||
Trend Micro Inc. | Software | 8,000 | 514,857 | |||||||||||
TS TECH Co. Ltd. | Auto Components | 3,200 | 110,437 | |||||||||||
Tsumura & Co. | Pharmaceuticals | 4,800 | 165,656 | |||||||||||
Tsuruha Holdings Inc. | Food & Staples Retailing | 1,600 | 197,068 | |||||||||||
TV Asahi Holdings Corp. | Media | 1,600 | 30,751 | |||||||||||
Ube Industries Ltd. | Chemicals | 6,400 | 174,107 | |||||||||||
Ulvac Inc. | Semiconductors & Semiconductor Equipment | 3,200 | 120,157 | |||||||||||
Unicharm Corp. | Household Products | 25,600 | 846,985 | |||||||||||
Ushio Inc. | Electrical Equipment | 8,000 | 109,733 | |||||||||||
USS Co. Ltd. | Specialty Retail | 14,400 | 267,373 | |||||||||||
Wacoal Corp. | Textiles, Apparel & Luxury Goods | 3,200 | 91,843 | |||||||||||
Welcia Holdings Co. Ltd. | Food & Staples Retailing | 3,200 | 181,432 | |||||||||||
West Japan Railway Co. | Road & Rail | 11,200 | 781,047 | |||||||||||
Yahoo Japan Corp. | Interactive Media & Services | 152,000 | 547,326 | |||||||||||
Yakult Honsha Co. Ltd. | Food Products | 8,000 | 655,720 | |||||||||||
Yamada Denki Co. Ltd. | Specialty Retail | 46,400 | 234,890 | |||||||||||
Yamaguchi Financial Group Inc. | Banks | 16,000 | 174,389 | |||||||||||
Yamaha Corp. | Leisure Products | 11,200 | 593,599 | |||||||||||
Yamaha Motor Co. Ltd. | Automobiles | 17,600 | 493,516 | |||||||||||
Yamato Holdings Co. Ltd. | Air Freight & Logistics | 22,400 | 687,865 | |||||||||||
Yamato Kogyo Co. Ltd. | Metals & Mining | 3,200 | 99,309 | |||||||||||
Yamazaki Baking Co. Ltd. | Food Products | 8,000 | 160,162 | |||||||||||
Yaoko Co. Ltd. | Food & Staples Retailing | 1,600 | 97,900 | |||||||||||
YASKAWA Electric Corp. | Electronic Equipment, Instruments & Components | 17,600 | 522,956 | |||||||||||
Yokogawa Electric Corp. | Electronic Equipment, Instruments & Components | 16,000 | 338,495 | |||||||||||
Yokohama Rubber Co. Ltd. | Auto Components | 6,400 | 137,990 |
192 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Zenkoku Hosho Co. Ltd. | Diversified Financial Services | 3,200 | $ | 128,045 | ||||||||||
Zensho Holdings Co. Ltd. | Hotels, Restaurants & Leisure | 6,400 | 126,327 | |||||||||||
Zeon Corp. | Chemicals | 9,600 | 101,084 | |||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 254,603,383 | |||||||||||||
|
| |||||||||||||
Short-Term Investments (Cost $184,230) 0.1% | ||||||||||||||
Investments from Cash Collateral Received for Loaned Securities 0.1% | ||||||||||||||
United States 0.1% | ||||||||||||||
c,d | Institutional Fiduciary Trust Money Market Portfolio, 1.69% | Money Market Funds | 184,230 | 184,230 | ||||||||||
|
| |||||||||||||
Total Investments | 254,787,613 | |||||||||||||
Other Assets, less Liabilities 0.9% | 2,204,522 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 256,992,135 | ||||||||||||
|
|
aNon-income producing.
bA portion or all of the security is on loan at September 30, 2018. See Note 1(d).
cSee Note 3(c) regarding investments in affiliated management investment companies.
dThe rate shown is the annualized seven-day effective yield at period end.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
Nikkei 225 Mini | Long | 82 | $ | 1,741,286 | 12/13/18 | $ | 9,700 | |||||||||||||
Nikkei 225 Mini | Long | 19 | 403,469 | 10/11/18 | 32,643 | |||||||||||||||
|
| |||||||||||||||||||
Total Futures Contracts | $ | 42,343 | ||||||||||||||||||
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 193 |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Japan Hedged ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 25.11 | $ | 25.91 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.23 | 0.32 | ||||||
Net realized and unrealized gains (losses) | 1.85 | (1.11 | ) | |||||
|
| |||||||
Total from investment operations | 2.08 | (0.79 | ) | |||||
|
| |||||||
Less distributions from net investment income | (0.01 | ) | (0.01 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 27.18 | $ | 25.11 | ||||
|
| |||||||
Total returnd | 8.33% | (3.04)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 1.80% | 3.10% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $48,930 | $45,197 | ||||||
Portfolio turnover ratef | 1.06% | 1.92% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
194 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Japan Hedged ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 98.7% | ||||||||||||||
Japan 98.7% | ||||||||||||||
ABC-Mart Inc. | Specialty Retail | 300 | $ | 16,692 | ||||||||||
Acom Co. Ltd. | Consumer Finance | 4,800 | 19,355 | |||||||||||
Advantest Corp. | Semiconductors & Semiconductor Equipment | 2,400 | 50,563 | |||||||||||
AEON Co. Ltd. | Food & Staples Retailing | 8,700 | 209,678 | |||||||||||
AEON Financial Service Co. Ltd. | Consumer Finance | 1,500 | 31,074 | |||||||||||
AEON Mall Co. Ltd. | Real Estate Management & Development | 1,500 | 25,778 | |||||||||||
AGC Inc. | Building Products | 2,400 | 99,626 | |||||||||||
Aica Kogyo Co. Ltd. | Building Products | 600 | 24,246 | |||||||||||
a | Aiful Corp. | Consumer Finance | 3,300 | 9,907 | ||||||||||
AIN Holdings Inc. | Food & Staples Retailing | 300 | 24,220 | |||||||||||
Air Water Inc. | Chemicals | 1,800 | 33,041 | |||||||||||
Aisin Seiki Co. Ltd. | Auto Components | 2,100 | 102,241 | |||||||||||
Ajinomoto Co. Inc. | Food Products | 6,300 | 108,185 | |||||||||||
Alfresa Holdings Corp. | Health Care Providers & Services | 2,100 | 56,205 | |||||||||||
Alps Electric Co. Ltd. | Electronic Equipment, Instruments & Components | 2,400 | 60,980 | |||||||||||
Amada Holdings Co. Ltd. | Machinery | 4,500 | 48,057 | |||||||||||
ANA Holdings Inc. | Airlines | 1,500 | 52,428 | |||||||||||
Aoyama Trading Co. Ltd. | Specialty Retail | 600 | 18,436 | |||||||||||
Aozora Bank Ltd. | Banks | 1,500 | 53,616 | |||||||||||
a | Aplus Financial Co. Ltd. | Consumer Finance | 1,200 | 1,162 | ||||||||||
Ariake Japan Co. Ltd. | Food Products | 300 | 29,925 | |||||||||||
Asahi Group Holdings Ltd. | Beverages | 4,500 | 195,118 | |||||||||||
Asahi Intecc Co. Ltd. | Health Care Equipment & Supplies | 1,200 | 52,401 | |||||||||||
Asahi Kasei Corp. | Chemicals | 15,000 | 227,539 | |||||||||||
Asics Corp. | Textiles, Apparel & Luxury Goods | 2,100 | 31,319 | |||||||||||
ASKUL Corp. | Internet & Direct Marketing Retail | 300 | 9,006 | |||||||||||
Astellas Pharma Inc. | Pharmaceuticals | 23,400 | 408,318 | |||||||||||
Autobacs Seven Co. Ltd. | Specialty Retail | 600 | 10,301 | |||||||||||
Awa Bank Ltd. | Banks | 600 | 18,620 | |||||||||||
Azbil Corp. | Electronic Equipment, Instruments & Components | 1,800 | 39,174 | |||||||||||
Bandai Namco Holdings Inc. | Leisure Products | 2,400 | 93,287 | |||||||||||
Benefit One Inc. | Professional Services | 300 | 9,799 | |||||||||||
Benesse Holdings Inc. | Diversified Consumer Services | 900 | 25,633 | |||||||||||
BIC CAMERA Inc. | Specialty Retail | 1,800 | 25,039 | |||||||||||
Bridgestone Corp. | Auto Components | 7,500 | 283,466 | |||||||||||
Brother Industries Ltd. | Technology Hardware, Storage & Peripherals | 3,000 | 59,268 | |||||||||||
Calbee Inc. | Food Products | 900 | 29,634 | |||||||||||
CANON Inc. | Technology Hardware, Storage & Peripherals | 12,300 | 390,923 | |||||||||||
Canon Marketing Japan Inc. | Distributors | 600 | 12,741 | |||||||||||
Capcom Co. Ltd. | Software | 1,200 | 30,458 | |||||||||||
Casio Computer Co. Ltd. | Household Durables | 2,700 | 44,142 | |||||||||||
Central Japan Railway Co. | Road & Rail | 2,100 | 437,435 | |||||||||||
CHIYODA Corp. | Construction & Engineering | 2,100 | 17,102 | |||||||||||
Chubu Electric Power Co. Inc. | Electric Utilities | 8,400 | 127,089 | |||||||||||
Chugai Pharmaceutical Co. Ltd. | Pharmaceuticals | 2,700 | 173,526 | |||||||||||
Chuo Mitsui Trust Holdings Inc. | Banks | 4,500 | 185,253 | |||||||||||
Ci:z Holdings Co. Ltd. | Personal Products | 300 | 11,106 | |||||||||||
Citizen Watch Co. Ltd. | Electronic Equipment, Instruments & Components | 3,300 | 21,761 | |||||||||||
Coca-Cola Bottlers Japan Holdings Inc. | Beverages | 1,800 | 48,175 | |||||||||||
COMSYS Holdings Corp. | Construction & Engineering | 1,500 | 44,438 | |||||||||||
Concordia Financial Group Ltd. | Banks | 13,800 | 67,673 | |||||||||||
Cosmo Energy Holdings Co. Ltd. | Oil, Gas & Consumable Fuels | 900 | 37,003 | |||||||||||
Cosmos Pharmaceutical Corp. | Food & Staples Retailing | 100 | 22,494 | |||||||||||
Credit Saison Co. Ltd. | Consumer Finance | 2,100 | 34,259 | |||||||||||
CyberAgent Inc. | Media | 1,200 | 63,917 | |||||||||||
Dai Nippon Printing Co. Ltd. | Commercial Services & Supplies | 3,600 | 83,736 | |||||||||||
Daicel Corp. | Chemicals | 3,600 | 41,837 |
libertyshares.com | Semiannual Report | 195 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Daido Steel Co. Ltd. | Metals & Mining | 300 | $ | 14,579 | ||||||||||
Daifuku Co. Ltd. | Machinery | 1,200 | 61,170 | |||||||||||
Daiichi Sankyo Co. Ltd. | Pharmaceuticals | 7,500 | 325,197 | |||||||||||
Daiichikosho Co. Ltd. | Media | 600 | 28,947 | |||||||||||
Daikin Industries Ltd. | Building Products | 3,300 | 439,429 | |||||||||||
Daikyo Inc. | Real Estate Management & Development | 300 | 6,106 | |||||||||||
a | Daishi Hokuetsu Financial Group Inc. | Banks | 300 | 13,021 | ||||||||||
Daito Trust Construction Co. Ltd. | Real Estate Management & Development | 900 | 115,803 | |||||||||||
Daiwa House Industry Co. Ltd. | Real Estate Management & Development | 7,800 | 231,284 | |||||||||||
Daiwa Securities Group Inc. | Capital Markets | 19,200 | 116,838 | |||||||||||
DeNA Co. Ltd. | Entertainment | 1,500 | 26,504 | |||||||||||
Denka Co. Ltd. | Chemicals | 900 | 31,377 | |||||||||||
Denso Corp. | Auto Components | 5,700 | 301,046 | |||||||||||
Dentsu Inc. | Media | 2,700 | 125,272 | |||||||||||
DIC Corp. | Chemicals | 900 | 32,407 | |||||||||||
Disco Corp. | Semiconductors & Semiconductor Equipment | 300 | 50,236 | |||||||||||
DMG Mori Co. Ltd. | Machinery | 1,500 | 25,065 | |||||||||||
Don Quijote Holdings Co. Ltd. | Multiline Retail | 1,500 | 75,934 | |||||||||||
Dowa Holdings Co. Ltd. | Metals & Mining | 600 | 19,069 | |||||||||||
East Japan Railway Co. | Road & Rail | 4,500 | 418,167 | |||||||||||
EBARA Corp. | Machinery | 1,200 | 41,414 | |||||||||||
Eisai Co. Ltd. | Pharmaceuticals | 3,300 | 321,328 | |||||||||||
Electric Power Development Co. Ltd. | Independent Power and Renewable Electricity Producers | 1,800 | 49,839 | |||||||||||
Exedy Corp. | Auto Components | 300 | 9,944 | |||||||||||
Ezaki Glico Co. Ltd. | Food Products | 600 | 29,476 | |||||||||||
FamilyMart UNY Holdings Co. Ltd. | Food & Staples Retailing | 600 | 62,491 | |||||||||||
Fancl Corp. | Personal Products | 600 | 29,476 | |||||||||||
FANUC Corp. | Machinery | 2,400 | 452,595 | |||||||||||
Fast Retailing Co. Ltd. | Specialty Retail | 600 | 305,956 | |||||||||||
FP Corp. | Containers & Packaging | 300 | 18,251 | |||||||||||
Fuji Electric Co. Ltd. | Electrical Equipment | 1,500 | 60,087 | |||||||||||
Fuji Media Holdings Inc. | Media | 900 | 16,014 | |||||||||||
Fuji Oil Holdings Inc. | Food Products | 600 | 18,911 | |||||||||||
FUJIFILM Holdings Corp. | Technology Hardware, Storage & Peripherals | 4,500 | 202,646 | |||||||||||
Fujikura Ltd. | Electrical Equipment | 3,300 | 15,602 | |||||||||||
Fujitsu General Ltd. | Household Durables | 600 | 10,074 | |||||||||||
Fujitsu Ltd. | IT Services | 2,400 | 171,065 | |||||||||||
Fukuoka Financial Group Inc. | Banks | 1,800 | 49,522 | |||||||||||
Fukuyama Transporting Co. Ltd. | Road & Rail | 300 | 12,981 | |||||||||||
Furukawa Electric Co. Ltd. | Electrical Equipment | 900 | 29,951 | |||||||||||
Glory Ltd. | Machinery | 600 | 14,669 | |||||||||||
GMO Internet Inc. | IT Services | 900 | 15,705 | |||||||||||
GMO Payment Gateway Inc. | IT Services | 600 | 37,188 | |||||||||||
Gree Inc. | Interactive Media & Services | 1,200 | 5,663 | |||||||||||
GS Yuasa Corp. | Electrical Equipment | 1,200 | 29,550 | |||||||||||
GungHo Online Entertainment Inc. | Software | 4,500 | 9,271 | |||||||||||
Gunma Bank Ltd. | Banks | 5,100 | 26,267 | |||||||||||
H2O Retailing Corp. | Multiline Retail | 900 | 14,817 | |||||||||||
Hachijuni Bank Ltd. | Banks | 5,700 | 26,145 | |||||||||||
Hakuhodo DY Holdings Inc. | Media | 3,000 | 52,639 | |||||||||||
Hamamatsu Photonics K.K. | Electronic Equipment, Instruments & Components | 1,500 | 59,757 | |||||||||||
Hankyu Hanshin Holdings Inc. | Road & Rail | 2,700 | 95,796 | |||||||||||
Haseko Corp. | Household Durables | 3,300 | 42,853 | |||||||||||
Heiwa Corp. | Leisure Products | 600 | 13,386 | |||||||||||
Hikari Tsushin Inc. | Specialty Retail | 300 | 59,321 | |||||||||||
Hino Motors Ltd. | Machinery | 3,900 | 42,713 | |||||||||||
Hirose Electric Co. Ltd. | Electronic Equipment, Instruments & Components | 315 | 34,444 |
196 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
HIS Co. Ltd. | Hotels, Restaurants & Leisure | 300 | $ | 10,037 | ||||||||||
Hisamitsu Pharmaceutical Co. Inc. | Pharmaceuticals | 900 | 69,014 | |||||||||||
Hitachi Capital Corp. | Consumer Finance | 600 | 16,719 | |||||||||||
Hitachi Chemical Co. Ltd. | Chemicals | 1,200 | 24,436 | |||||||||||
Hitachi Construction Machinery Co. Ltd. | Machinery | 1,500 | 50,183 | |||||||||||
Hitachi High-Technologies Corp. | Electronic Equipment, Instruments & Components | 900 | 31,021 | |||||||||||
Hitachi Ltd. | Electronic Equipment, Instruments & Components | 11,100 | 377,215 | |||||||||||
Hitachi Metals Ltd. | Metals & Mining | 2,400 | 29,729 | |||||||||||
Hitachi Transport System Ltd. | Road & Rail | 600 | 16,851 | |||||||||||
Hokkaido Electric Power Co. Inc. | Electric Utilities | 2,100 | 13,238 | |||||||||||
Hokugin Financial Group Inc. | Banks | 1,500 | 21,090 | |||||||||||
a | Hokuriku Electric Power Co. | Electric Utilities | 2,100 | 21,502 | ||||||||||
Honda Motor Co. Ltd. | Automobiles | 21,000 | 635,815 | |||||||||||
HORIBA Ltd. | Electronic Equipment, Instruments & Components | 600 | 31,800 | |||||||||||
Hoshizaki Corp. | Machinery | 600 | 62,121 | |||||||||||
House Foods Group Inc. | Food Products | 900 | 27,019 | |||||||||||
Hoya Corp. | Health Care Equipment & Supplies | 4,500 | 267,421 | |||||||||||
Ibiden Co. Ltd. | Electronic Equipment, Instruments & Components | 1,500 | 21,037 | |||||||||||
Ichigo Inc. | Real Estate Management & Development | 2,400 | 9,001 | |||||||||||
Idemitsu Kosan Co. Ltd. | Oil, Gas & Consumable Fuels | 1,800 | 95,241 | |||||||||||
IHI Corp. | Machinery | 1,500 | 56,852 | |||||||||||
Iida Group Holdings Co. Ltd. | Household Durables | 1,800 | 32,027 | |||||||||||
INPEX Corp. | Oil, Gas & Consumable Fuels | 11,100 | 138,475 | |||||||||||
Isetan Mitsukoshi Holdings Ltd. | Multiline Retail | 4,200 | 51,583 | |||||||||||
Isuzu Motors Ltd. | Automobiles | 6,600 | 104,068 | |||||||||||
Ito En Ltd. | Beverages | 600 | 26,623 | |||||||||||
ITOCHU Corp. | Trading Companies & Distributors | 17,100 | 313,140 | |||||||||||
ITOCHU Techno-Solutions Corp. | IT Services | 1,500 | 32,606 | |||||||||||
Itoham Yonekyu Holdings Inc. | Food Products | 2,100 | 14,495 | |||||||||||
Izumi Co. Ltd. | Multiline Retail | 600 | 39,882 | |||||||||||
J Front Retailing Co. Ltd. | Multiline Retail | 3,000 | 46,564 | |||||||||||
Jafco Co. Ltd. | Capital Markets | 600 | 23,348 | |||||||||||
Japan Airlines Co. Ltd. | Airlines | 1,500 | 53,933 | |||||||||||
Japan Airport Terminal Co. Ltd. | Transportation Infrastructure | 600 | 27,310 | |||||||||||
Japan Exchange Group Inc. | Capital Markets | 6,900 | 120,280 | |||||||||||
Japan Petroleum Exploration Co. Ltd. | Oil, Gas & Consumable Fuels | 600 | 13,766 | |||||||||||
Japan Post Bank Co. Ltd. | Banks | 5,400 | 63,848 | |||||||||||
Japan Post Holdings Co. Ltd. | Insurance | 16,500 | 196,399 | |||||||||||
Japan Post Insurance Co. Ltd. | Insurance | 1,200 | 28,451 | |||||||||||
Japan Tobacco Inc. | Tobacco | 14,700 | 383,855 | |||||||||||
JFE Holdings Inc. | Metals & Mining | 6,300 | 144,597 | |||||||||||
JGC Corp. | Construction & Engineering | 2,700 | 61,947 | |||||||||||
JSR Corp. | Chemicals | 2,400 | 44,816 | |||||||||||
JTEKT Corp. | Machinery | 2,700 | 39,531 | |||||||||||
JXTG Holdings Inc. | Oil, Gas & Consumable Fuels | 38,100 | 287,901 | |||||||||||
K’s Holdings Corp. | Specialty Retail | 2,100 | 25,421 | |||||||||||
Kagome Co. Ltd. | Food Products | 900 | 25,989 | |||||||||||
Kajima Corp. | Construction & Engineering | 6,000 | 87,212 | |||||||||||
Kakaku.com Inc. | Interactive Media & Services | 1,800 | 35,212 | |||||||||||
Kaken Pharmaceutical Co. Ltd. | Pharmaceuticals | 300 | 15,953 | |||||||||||
Kamigumi Co. Ltd. | Transportation Infrastructure | 1,200 | 26,454 | |||||||||||
Kandenko Co. Ltd. | Construction & Engineering | 1,200 | 12,392 | |||||||||||
Kaneka Corp. | Chemicals | 600 | 27,733 | |||||||||||
Kansai Electric Power Co. Inc. | Electric Utilities | 8,700 | 131,207 | |||||||||||
a | Kansai Mirai Financial Group Inc. | Banks | 2,100 | 19,672 | ||||||||||
Kansai Paint Co. Ltd. | Chemicals | 2,400 | 44,245 | |||||||||||
KAO Corp. | Personal Products | 5,700 | 460,376 |
libertyshares.com | Semiannual Report | 197 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Kawasaki Heavy Industries Ltd. | Machinery | 1,800 | $ | 50,790 | ||||||||||
a | Kawasaki Kisen Kaisha Ltd. | Marine | 900 | 18,200 | ||||||||||
KDDI Corp. | Wireless Telecommunication Services | 21,600 | 596,931 | |||||||||||
Keihan Holdings Co. Ltd. | Industrial Conglomerates | 1,200 | 45,851 | |||||||||||
Keikyu Corp. | Road & Rail | 3,000 | 54,699 | |||||||||||
Keio Corp. | Road & Rail | 1,500 | 82,141 | |||||||||||
Keisei Electric Railway Co. Ltd. | Road & Rail | 1,800 | 63,389 | |||||||||||
Keiyo Bank Ltd. | Banks | 1,500 | 12,625 | |||||||||||
Kewpie Corp. | Food Products | 1,500 | 34,732 | |||||||||||
Keyence Corp. | Electronic Equipment, Instruments & Components | 1,100 | 638,975 | |||||||||||
Kikkoman Corp. | Food Products | 2,100 | 124,981 | |||||||||||
Kinden Corp. | Construction & Engineering | 1,500 | 24,022 | |||||||||||
Kintetsu Group Holdings Co. Ltd. | Road & Rail | 2,100 | 84,492 | |||||||||||
Kirin Holdings Co. Ltd. | Beverages | 9,900 | 253,721 | |||||||||||
Kissei Pharmaceutical Co. Ltd. | Pharmaceuticals | 300 | 9,508 | |||||||||||
Kobayashi Pharmaceutical Co. Ltd. | Personal Products | 600 | 44,161 | |||||||||||
Kobe Steel Ltd. | Metals & Mining | 3,600 | 32,011 | |||||||||||
Koei Tecmo Holdings Co. Ltd. | Software | 720 | 12,386 | |||||||||||
Koito Manufacturing Co. Ltd. | Auto Components | 1,500 | 98,517 | |||||||||||
Kokuyo Co. Ltd. | Commercial Services & Supplies | 900 | 16,212 | |||||||||||
Komatsu Ltd. | Machinery | 11,100 | 337,735 | |||||||||||
Komeri Co. Ltd. | Specialty Retail | 300 | 7,012 | |||||||||||
Konami Holdings Corp. | Software | 1,200 | 47,013 | |||||||||||
Konica Minolta Inc. | Technology Hardware, Storage & Peripherals | 5,700 | 60,621 | |||||||||||
KOSE Corp. | Personal Products | 300 | 57,182 | |||||||||||
Kubota Corp. | Machinery | 13,500 | 229,507 | |||||||||||
Kuraray Co. Ltd. | Chemicals | 4,500 | 67,667 | |||||||||||
Kurita Water Industries Ltd. | Machinery | 1,200 | 34,969 | |||||||||||
Kusuri No Aoki Holdings Co. Ltd. | Food & Staples Retailing | 300 | 23,903 | |||||||||||
Kyocera Corp. | Electronic Equipment, Instruments & Components | 3,600 | 216,155 | |||||||||||
Kyorin Holdings Inc. | Pharmaceuticals | 600 | 12,392 | |||||||||||
Kyowa Exeo Corp. | Construction & Engineering | 1,200 | 35,128 | |||||||||||
Kyowa Hakko Kirin Co. Ltd. | Pharmaceuticals | 3,300 | 61,854 | |||||||||||
Kyudenko Corp. | Construction & Engineering | 600 | 23,824 | |||||||||||
Kyushu Electric Power Co. Inc. | Electric Utilities | 6,000 | 72,422 | |||||||||||
Kyushu Financial Group Inc. | Banks | 4,500 | 21,394 | |||||||||||
Kyushu Railway Co. | Road & Rail | 2,100 | 63,970 | |||||||||||
Lawson Inc. | Food & Staples Retailing | 600 | 36,554 | |||||||||||
Leopalace21 Corp. | Real Estate Management & Development | 2,700 | 15,047 | |||||||||||
a | Line Corp. | Software | 900 | 38,033 | ||||||||||
LINTEC Corp. | Chemicals | 600 | 15,372 | |||||||||||
Lion Corp. | Household Products | 3,000 | 66,664 | |||||||||||
LIXIL Group Corp. | Building Products | 3,300 | 63,568 | |||||||||||
M3 Inc. | Health Care Technology | 4,800 | 108,944 | |||||||||||
Mabuchi Motor Co. Ltd. | Electrical Equipment | 600 | 24,220 | |||||||||||
Maeda Corp. | Construction & Engineering | 1,800 | 23,771 | |||||||||||
Maeda Road Construction Co. Ltd. | Construction & Engineering | 600 | 12,208 | |||||||||||
Makita Corp. | Machinery | 3,000 | 150,284 | |||||||||||
Marubeni Corp. | Trading Companies & Distributors | 19,200 | 175,798 | |||||||||||
Maruha Nichiro Corp. | Food Products | 300 | 11,067 | |||||||||||
Marui Group Co. Ltd. | Multiline Retail | 2,700 | 66,653 | |||||||||||
Maruichi Steel Tube Ltd. | Metals & Mining | 600 | 19,571 | |||||||||||
Matsui Securities Co. Ltd. | Capital Markets | 1,500 | 15,768 | |||||||||||
Matsumotokiyoshi Holdings Co. Ltd. | Food & Staples Retailing | 900 | 36,924 | |||||||||||
Mazda Motor Corp. | Automobiles | 7,500 | 90,065 | |||||||||||
Mebuki Financial Group Inc. | Banks | 12,000 | 41,520 | |||||||||||
Medipal Holdings Corp. | Health Care Providers & Services | 1,800 | 37,574 |
198 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Megmilk Snow Brand Co. Ltd. | Food Products | 600 | $ | 15,419 | ||||||||||
Meiji Holdings Co. Ltd. | Food Products | 1,500 | 100,762 | |||||||||||
Minebea Mitsumi Inc. | Machinery | 5,100 | 92,495 | |||||||||||
Miraca Holdings Inc. | Health Care Providers & Services | 600 | 15,609 | |||||||||||
MISUMI Group Inc. | Machinery | 3,300 | 85,416 | |||||||||||
Mitsubishi Chemical Holdings Corp. | Chemicals | 15,600 | 149,360 | |||||||||||
Mitsubishi Corp. | Trading Companies & Distributors | 15,600 | 480,835 | |||||||||||
Mitsubishi Electric Corp. | Electrical Equipment | 24,000 | 328,881 | |||||||||||
Mitsubishi Estate Co. Ltd. | Real Estate Management & Development | 14,100 | 239,831 | |||||||||||
Mitsubishi Gas Chemical Co. Inc. | Chemicals | 2,400 | 51,112 | |||||||||||
Mitsubishi Heavy Industries Ltd. | Machinery | 3,600 | 139,043 | |||||||||||
Mitsubishi Logistics Corp. | Transportation Infrastructure | 900 | 23,264 | |||||||||||
Mitsubishi Materials Corp. | Metals & Mining | 1,500 | 44,834 | |||||||||||
Mitsubishi Motors Corp. | Automobiles | 7,800 | 55,074 | |||||||||||
Mitsubishi Shokuhin Co. Ltd. | Food & Staples Retailing | 300 | 8,016 | |||||||||||
Mitsubishi Tanabe Pharma Corp. | Pharmaceuticals | 3,000 | 50,183 | |||||||||||
Mitsubishi UFJ Financial Group Inc. | Banks | 153,900 | 960,783 | |||||||||||
Mitsubishi UFJ Lease & Finance Co. Ltd. | Diversified Financial Services | 5,100 | 30,038 | |||||||||||
Mitsui & Co. Ltd. | Trading Companies & Distributors | 20,700 | 368,221 | |||||||||||
Mitsui Chemicals Inc. | Chemicals | 2,400 | 60,029 | |||||||||||
Mitsui Fudosan Co. Ltd. | Real Estate Management & Development | 11,100 | 262,780 | |||||||||||
Mitsui Mining and Smelting Co. Ltd. | Metals & Mining | 600 | 17,379 | |||||||||||
Mitsui O.S.K. Lines Ltd. | Marine | 1,200 | 35,022 | |||||||||||
Miura Co. Ltd. | Machinery | 1,200 | 37,188 | |||||||||||
Mizuho Financial Group Inc. | Banks | 310,500 | 541,807 | |||||||||||
Mochida Pharmaceutical Co. Ltd. | Pharmaceuticals | 300 | 24,801 | |||||||||||
Monotaro Co. Ltd. | Trading Companies & Distributors | 1,500 | 42,325 | |||||||||||
Morinaga & Co. Ltd. | Food Products | 600 | 22,424 | |||||||||||
Morinaga Milk Industry Co. Ltd. | Food Products | 600 | 16,296 | |||||||||||
MS&AD Insurance Group Holdings Inc. | Insurance | 6,000 | 200,414 | |||||||||||
Murata Manufacturing Co. Ltd. | Electronic Equipment, Instruments & Components | 2,400 | 369,028 | |||||||||||
Nabtesco Corp. | Machinery | 1,500 | 39,882 | |||||||||||
Nagase & Co. Ltd. | Trading Companies & Distributors | 1,200 | 21,087 | |||||||||||
Nagoya Railroad Co. Ltd. | Road & Rail | 2,400 | 59,459 | |||||||||||
Nankai Electric Railway Co. Ltd. | Road & Rail | 1,200 | 30,162 | |||||||||||
NEC Corp. | Technology Hardware, Storage & Peripherals | 3,000 | 82,933 | |||||||||||
a | Nexon Co. Ltd. | Software | 5,100 | 66,677 | ||||||||||
NGK Insulators Ltd. | Machinery | 3,300 | 54,446 | |||||||||||
NGK Spark Plug Co. Ltd. | Auto Components | 2,400 | 69,939 | |||||||||||
NH Foods Ltd. | Food Products | 1,200 | 44,319 | |||||||||||
NHK Spring Co. Ltd. | Auto Components | 1,800 | 18,715 | |||||||||||
Nichirei Corp. | Food Products | 1,200 | 31,800 | |||||||||||
Nidec Corp. | Electrical Equipment | 2,700 | 388,533 | |||||||||||
Nifco Inc. | Auto Components | 1,200 | 32,275 | |||||||||||
Nihon Kohden Corp. | Health Care Equipment & Supplies | 900 | 28,525 | |||||||||||
Nihon M&A Center Inc. | Professional Services | 1,500 | 45,032 | |||||||||||
Nihon Unisys Ltd. | IT Services | 900 | 23,232 | |||||||||||
Nikon Corp. | Household Durables | 4,500 | 84,584 | |||||||||||
Nintendo Co. Ltd. | Software | 1,200 | 438,016 | |||||||||||
Nippo Corp. | Construction & Engineering | 600 | 11,014 | |||||||||||
Nippon Electric Glass Co. Ltd. | Electronic Equipment, Instruments & Components | 900 | 28,327 | |||||||||||
Nippon Express Co. Ltd. | Road & Rail | 900 | 59,110 | |||||||||||
Nippon Gas Co. Ltd. | Gas Utilities | 600 | 29,951 | |||||||||||
Nippon Kayaku Co. Ltd. | Chemicals | 2,100 | 24,978 | |||||||||||
Nippon Paint Holdings Co. Ltd. | Chemicals | 1,800 | 67,192 | |||||||||||
Nippon Paper Industries Co. Ltd. | Paper & Forest Products | 1,200 | 22,091 | |||||||||||
Nippon Shinyaku Co. Ltd. | Pharmaceuticals | 600 | 39,354 |
libertyshares.com | Semiannual Report | 199 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Nippon Shobukai Co. Ltd. | Chemicals | 300 | $ | 23,322 | ||||||||||
Nippon Steel & Sumitomo Metal Corp. | Metals & Mining | 9,900 | 209,488 | |||||||||||
Nippon Telegraph & Telephone Corp. | Diversified Telecommunication Services | 8,100 | 365,974 | |||||||||||
Nippon Television Holdings Inc. | Media | 600 | 10,396 | |||||||||||
Nippon Yusen KK | Marine | 2,100 | 39,510 | |||||||||||
Nipro Corp. | Health Care Equipment & Supplies | 1,500 | 20,522 | |||||||||||
Nishi-Nippon Financial Holdings Inc. | Banks | 1,800 | 20,823 | |||||||||||
Nishi-Nippon Railroad Co. Ltd. | Road & Rail | 900 | 24,365 | |||||||||||
Nissan Chemical Corp. | Chemicals | 1,800 | 95,083 | |||||||||||
Nissan Motor Co. Ltd. | Automobiles | 24,000 | 224,713 | |||||||||||
Nissan Shatai Co. Ltd. | Automobiles | 600 | 5,414 | |||||||||||
Nisshin Seifun Group Inc. | Food Products | 3,000 | 65,766 | |||||||||||
Nisshin Steel Co. Ltd. | Metals & Mining | 600 | 9,001 | |||||||||||
Nisshinbo Holdings Inc. | Industrial Conglomerates | 1,800 | 21,441 | |||||||||||
Nissin Foods Holdings Co. Ltd. | Food Products | 900 | 61,883 | |||||||||||
Nitori Co. Ltd. | Specialty Retail | 900 | 129,115 | |||||||||||
Nitto Denko Corp. | Chemicals | 1,800 | 134,954 | |||||||||||
Noevir Holdings Co. Ltd. | Personal Products | 300 | 16,349 | |||||||||||
NOF Corp. | Chemicals | 900 | 30,387 | |||||||||||
NOK Corp. | Auto Components | 1,200 | 20,612 | |||||||||||
Nomura Holdings Inc. | Capital Markets | 41,100 | 196,372 | |||||||||||
Nomura Real Estate Holdings Inc. | Real Estate Management & Development | 1,500 | 30,294 | |||||||||||
Nomura Research Institute Ltd. | IT Services | 1,200 | 60,642 | |||||||||||
North Pacific Bank Ltd. | Banks | 3,300 | 11,185 | |||||||||||
NS Solutions Corp. | IT Services | 300 | 9,693 | |||||||||||
NSK Ltd. | Machinery | 6,000 | 68,777 | |||||||||||
NTN Corp. | Machinery | 5,100 | 20,879 | |||||||||||
NTT Data Corp. | IT Services | 7,800 | 108,020 | |||||||||||
NTT DoCoMo Inc. | Wireless Telecommunication Services | 15,300 | 411,511 | |||||||||||
NTT Urban Development Corp. | Real Estate Management & Development | 1,200 | 13,755 | |||||||||||
Obayashi Corp. | Construction & Engineering | 8,100 | 76,732 | |||||||||||
OBIC Co. Ltd. | IT Services | 900 | 85,178 | |||||||||||
Odakyu Electric Railway Co. Ltd. | Road & Rail | 3,600 | 85,194 | |||||||||||
Oji Holdings Corp. | Paper & Forest Products | 9,000 | 65,370 | |||||||||||
Okuma Corp. | Machinery | 300 | 16,666 | |||||||||||
Olympus Corp. | Health Care Equipment & Supplies | 3,300 | 128,851 | |||||||||||
Omron Corp. | Electronic Equipment, Instruments & Components | 2,400 | 101,422 | |||||||||||
Ono Pharmaceutical Co. Ltd. | Pharmaceuticals | 5,100 | 144,354 | |||||||||||
Open House Co. Ltd. | Real Estate Management & Development | 300 | 14,791 | |||||||||||
Oracle Corp. Japan | Software | 300 | 24,193 | |||||||||||
Orient Corp. | Consumer Finance | 6,900 | 10,145 | |||||||||||
Oriental Land Co. Ltd. | Hotels, Restaurants & Leisure | 2,400 | 251,019 | |||||||||||
ORIX Corp. | Diversified Financial Services | 15,300 | 248,119 | |||||||||||
Osaka Gas Co. Ltd. | Gas Utilities | 4,500 | 87,793 | |||||||||||
OSG Corp. | Machinery | 900 | 20,498 | |||||||||||
Otsuka Corp. | IT Services | 1,200 | 44,795 | |||||||||||
Otsuka Holdings Co. Ltd. | Pharmaceuticals | 5,100 | 257,144 | |||||||||||
Paltac Corp. | Distributors | 300 | 16,402 | |||||||||||
Panasonic Corp. | Household Durables | 25,800 | 300,623 | |||||||||||
Park24 Co. Ltd. | Commercial Services & Supplies | 1,200 | 36,290 | |||||||||||
Penta-Ocean Construction Co. Ltd. | Construction & Engineering | 3,300 | 21,993 | |||||||||||
a | PeptiDream Inc. | Biotechnology | 900 | 35,894 | ||||||||||
Persol Holdings Co. Ltd. | Professional Services | 2,100 | 49,271 | |||||||||||
Pigeon Corp. | Household Products | 1,200 | 67,615 | |||||||||||
Pilot Corp. | Commercial Services & Supplies | 300 | 18,039 | |||||||||||
Pola Orbis Holdings Inc. | Personal Products | 1,200 | 43,844 | |||||||||||
Rakuten Inc. | Internet & Direct Marketing Retail | 9,300 | 71,298 |
200 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Recruit Holdings Co. Ltd. | Professional Services | 14,700 | $ | 490,755 | ||||||||||
Relo Group Inc. | Real Estate Management & Development | 1,200 | 35,286 | |||||||||||
a | Renesas Electronics Corp. | Semiconductors & Semiconductor Equipment | 8,400 | 52,507 | ||||||||||
Rengo Co. Ltd. | Containers & Packaging | 2,400 | 20,475 | |||||||||||
Resona Holdings Inc. | Banks | 26,700 | 150,043 | |||||||||||
Resorttrust Inc. | Hotels, Restaurants & Leisure | 900 | 14,841 | |||||||||||
Ricoh Co. Ltd. | Technology Hardware, Storage & Peripherals | 8,400 | 90,223 | |||||||||||
Rinnai Corp. | Household Durables | 300 | 22,873 | |||||||||||
Rohm Co. Ltd. | Semiconductors & Semiconductor Equipment | 1,200 | 87,476 | |||||||||||
Rohto Pharmaceutical Co. Ltd. | Pharmaceuticals | 1,200 | 42,153 | |||||||||||
Ryohin Keikaku Co. Ltd. | Multiline Retail | 300 | 89,272 | |||||||||||
Sankyo Co. Ltd. | Leisure Products | 900 | 35,220 | |||||||||||
Sankyu Inc. | Road & Rail | 600 | 33,702 | |||||||||||
Sanrio Co. Ltd. | Specialty Retail | 600 | 12,165 | |||||||||||
Santen Pharmaceutical Co. Ltd. | Pharmaceuticals | 4,200 | 66,595 | |||||||||||
Sanwa Holdings Corp. | Building Products | 2,400 | 28,588 | |||||||||||
Sapporo Holdings Ltd. | Beverages | 900 | 18,708 | |||||||||||
Sawai Pharmaceutical Co. Ltd. | Pharmaceuticals | 600 | 32,381 | |||||||||||
SBI Holdings Inc. | Capital Markets | 2,700 | 83,911 | |||||||||||
SCREEN Holdings Co. Ltd. | Semiconductors & Semiconductor Equipment | 600 | 35,075 | |||||||||||
SCSK Corp. | IT Services | 600 | 28,366 | |||||||||||
Secom Co. Ltd. | Commercial Services & Supplies | 2,400 | 195,702 | |||||||||||
Sega Sammy Holdings Inc. | Leisure Products | 2,400 | 35,392 | |||||||||||
Seibu Holdings Inc. | Industrial Conglomerates | 2,700 | 48,564 | |||||||||||
Seiko Epson Corp. | Technology Hardware, Storage & Peripherals | 3,300 | 56,305 | |||||||||||
Seino Holdings Co. Ltd. | Road & Rail | 1,800 | 27,210 | |||||||||||
Sekisui Chemical Co. Ltd. | Household Durables | 4,800 | 88,575 | |||||||||||
Sekisui House Ltd. | Household Durables | 7,500 | 114,397 | |||||||||||
Seven & i Holdings Co. Ltd. | Food & Staples Retailing | 9,300 | 414,298 | |||||||||||
Seven Bank Ltd. | Banks | 7,800 | 24,653 | |||||||||||
SG Holdings Co. Ltd. | Air Freight & Logistics | 1,200 | 31,451 | |||||||||||
Sharp Corp. | Household Durables | 2,100 | 42,690 | |||||||||||
Shikoku Electric Power Co. Inc. | Electric Utilities | 1,800 | 23,501 | |||||||||||
Shima Seiki Manufacturing Ltd. | Machinery | 300 | 13,259 | |||||||||||
Shimachu Co. Ltd. | Specialty Retail | 600 | 19,386 | |||||||||||
Shimadzu Corp. | Electronic Equipment, Instruments & Components | 3,300 | 103,429 | |||||||||||
Shimamura Co. Ltd. | Specialty Retail | 300 | 28,472 | |||||||||||
SHIMANO Inc. | Leisure Products | 900 | 145,081 | |||||||||||
Shimizu Corp. | Construction & Engineering | 7,200 | 65,734 | |||||||||||
Shin-Etsu Chemical Co. Ltd. | Chemicals | 4,800 | 425,338 | |||||||||||
Shinsei Bank Ltd. | Banks | 2,100 | 34,333 | |||||||||||
Shionogi & Co. Ltd. | Pharmaceuticals | 3,600 | 235,299 | |||||||||||
Shiseido Co. Ltd. | Personal Products | 4,800 | 371,838 | |||||||||||
Shochiku Co. Ltd. | Media | 100 | 12,220 | |||||||||||
Shoei Co. Ltd. | Real Estate Management & Development | 4,200 | 41,229 | |||||||||||
Showa Denko K.K. | Chemicals | 1,800 | 99,362 | |||||||||||
Showa Shell Sekiyu K.K. | Oil, Gas & Consumable Fuels | 2,400 | 50,859 | |||||||||||
Sky Perfect JSAT Holdings Inc. | Media | 1,500 | 7,237 | |||||||||||
Skylark Holdings Co. Ltd. | Hotels, Restaurants & Leisure | 2,400 | 35,519 | |||||||||||
SMC Corp. | Machinery | 600 | 192,068 | |||||||||||
SoftBank Group Corp. | Wireless Telecommunication Services | 10,500 | 1,060,307 | |||||||||||
Sohgo Security Services Co. Ltd. | Commercial Services & Supplies | 900 | 39,578 | |||||||||||
Sojitz Corp. | Trading Companies & Distributors | 15,000 | 54,144 | |||||||||||
Sompo Holdings Inc. | Insurance | 4,200 | 178,930 | |||||||||||
Sony Corp. | Household Durables | 15,300 | 938,326 | |||||||||||
Sony Financial Holdings Inc. | Insurance | 2,400 | 52,908 | |||||||||||
Sotetsu Holdings Inc. | Road & Rail | 900 | 30,110 |
libertyshares.com | Semiannual Report | 201 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Square Enix Holdings Co. Ltd. | Software | 900 | $ | 37,241 | ||||||||||
Stanley Electric Co. Ltd. | Auto Components | 1,800 | 61,566 | |||||||||||
Start Today Co. Ltd. | Internet & Direct Marketing Retail | 2,100 | 63,600 | |||||||||||
Subaru Corp. | Automobiles | 7,200 | 220,592 | |||||||||||
Sugi Pharmacy Co. Ltd. | Food & Staples Retailing | 300 | 14,738 | |||||||||||
Sumco Corp. | Semiconductors & Semiconductor Equipment | 3,300 | 47,880 | |||||||||||
Sumitomo Bakelite Co. Ltd. | Chemicals | 600 | 26,993 | |||||||||||
Sumitomo Chemical Co. Ltd. | Chemicals | 18,000 | 105,384 | |||||||||||
Sumitomo Corp. | Trading Companies & Distributors | 13,800 | 230,172 | |||||||||||
Sumitomo Dainippon Pharma Co. Ltd. | Pharmaceuticals | 2,100 | 48,236 | |||||||||||
Sumitomo Electric Industries Ltd. | Auto Components | 9,000 | 141,198 | |||||||||||
Sumitomo Forestry Co. Ltd. | Household Durables | 1,800 | 31,298 | |||||||||||
Sumitomo Heavy Industries Ltd. | Machinery | 1,500 | 53,550 | |||||||||||
Sumitomo Metal Mining Co. Ltd. | Metals & Mining | 3,000 | 105,278 | |||||||||||
Sumitomo Mitsui Financial Group Inc. | Banks | 15,900 | 641,963 | |||||||||||
Sumitomo Osaka Cement Co. Ltd. | Construction Materials | 600 | 24,880 | |||||||||||
Sumitomo Realty & Development Co. Ltd. | Real Estate Management & Development | 6,000 | 215,521 | |||||||||||
Sumitomo Rubber Industries Ltd. | Auto Components | 2,100 | 31,523 | |||||||||||
Sundrug Co. Ltd. | Food & Staples Retailing | 900 | 32,130 | |||||||||||
Suntory Beverage & Food Ltd. | Beverages | 1,500 | 63,521 | |||||||||||
Suzuken Co. Ltd. | Health Care Providers & Services | 900 | 42,708 | |||||||||||
Suzuki Motor Corp. | Automobiles | 5,100 | 292,211 | |||||||||||
Sysmex Corp. | Health Care Equipment & Supplies | 2,400 | 206,647 | |||||||||||
T&D Holdings Inc. | Insurance | 6,900 | 113,901 | |||||||||||
Tadano Ltd. | Machinery | 1,500 | 17,445 | |||||||||||
Taiheiyo Cement Corp. | Construction Materials | 1,500 | 47,079 | |||||||||||
Taisei Corp. | Construction & Engineering | 2,400 | 109,451 | |||||||||||
Taisho Pharmaceutical Holdings Co. Ltd. | Pharmaceuticals | 600 | 73,372 | |||||||||||
Taiyo Nippon Sanso Corp. | Chemicals | 1,800 | 26,940 | |||||||||||
Taiyo Yuden Co. Ltd. | Electronic Equipment, Instruments & Components | 1,500 | 33,728 | |||||||||||
Takara Bio Inc. | Biotechnology | 600 | 16,640 | |||||||||||
Takara Holdings Inc. | Beverages | 2,400 | 35,286 | |||||||||||
Takashimaya Co. Ltd. | Multiline Retail | 1,500 | 25,342 | |||||||||||
Takeda Pharmaceutical Co. Ltd. | Pharmaceuticals | 9,000 | 385,165 | |||||||||||
TDK Corp. | Electronic Equipment, Instruments & Components | 1,500 | 163,622 | |||||||||||
TechnoPro Holdings Inc. | Professional Services | 300 | 18,620 | |||||||||||
Teijin Ltd. | Chemicals | 2,400 | 46,041 | |||||||||||
Terumo Corp. | Health Care Equipment & Supplies | 3,600 | 213,303 | |||||||||||
The 77 Bank Ltd. | Banks | 900 | 21,410 | |||||||||||
The Bank of Kyoto Ltd. | Banks | 900 | 46,987 | |||||||||||
The Chiba Bank Ltd. | Banks | 7,800 | 53,289 | |||||||||||
The Chugoku Bank Ltd. | Banks | 2,100 | 21,391 | |||||||||||
The Chugoku Electric Power Co. Inc. | Electric Utilities | 3,900 | 50,130 | |||||||||||
The Dai-ichi Life Holdings Inc. | Insurance | 13,500 | 281,148 | |||||||||||
The Hiroshima Bank Ltd. | Banks | 3,300 | 22,342 | |||||||||||
The Iyo Bank Ltd. | Banks | 3,300 | 20,628 | |||||||||||
The Japan Steel Works Ltd. | Machinery | 900 | 21,917 | |||||||||||
The San-In Godo Bank Ltd. | Banks | 1,800 | 15,815 | |||||||||||
The Shiga Bank Ltd. | Banks | 600 | 15,446 | |||||||||||
The Shizuoka Bank Ltd. | Banks | 6,000 | 53,880 | |||||||||||
The Suruga Bank Ltd. | Banks | 2,100 | 10,501 | |||||||||||
THK Co. Ltd. | Machinery | 1,800 | 45,830 | |||||||||||
TIS Inc. | IT Services | 900 | 45,006 | |||||||||||
Tobu Railway Co. Ltd. | Road & Rail | 2,400 | 70,995 | |||||||||||
Toda Corp. | Construction & Engineering | 3,000 | 21,658 | |||||||||||
Toho Co. Ltd. | Media | 1,200 | 37,663 | |||||||||||
Toho Gas Co. Ltd. | Gas Utilities | 1,200 | 45,587 |
202 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Tohoku Electric Power Co. Inc. | Electric Utilities | 5,400 | $ | 73,309 | ||||||||||
Tokai Carbon Co. Ltd. | Chemicals | 2,400 | 47,140 | |||||||||||
Tokai Rika Co. Ltd. | Auto Components | 600 | 12,678 | |||||||||||
Tokai Tokyo Financial Holdings Inc. | Capital Markets | 2,700 | 15,546 | |||||||||||
Tokio Marine Holdings Inc. | Insurance | 8,100 | 401,987 | |||||||||||
Tokuyama Corp. | Chemicals | 900 | 24,484 | |||||||||||
Tokyo Broadcasting System Holdings Inc. | Media | 300 | 6,244 | |||||||||||
Tokyo Century Corp. | Diversified Financial Services | 600 | 37,294 | |||||||||||
a | Tokyo Electric Power Co. Holdings Inc. | Electric Utilities | 18,900 | 92,849 | ||||||||||
Tokyo Electron Ltd. | Semiconductors & Semiconductor Equipment | 1,800 | 247,374 | |||||||||||
Tokyo Gas Co. Ltd. | Gas Utilities | 5,400 | 132,760 | |||||||||||
Tokyo Tatemono Co. Ltd. | Real Estate Management & Development | 2,400 | 29,286 | |||||||||||
TOKYU Corp. | Road & Rail | 6,300 | 115,256 | |||||||||||
Tokyu Fudosan Holdings Corp. | Real Estate Management & Development | 6,300 | 43,928 | |||||||||||
Topcon Corp. | Electronic Equipment, Instruments & Components | 1,500 | 27,389 | |||||||||||
Toppan Forms Co. Ltd. | Commercial Services & Supplies | 600 | 5,768 | |||||||||||
Toppan Printing Co. Ltd. | Commercial Services & Supplies | 3,300 | 53,022 | |||||||||||
Toray Industries Inc. | Chemicals | 18,600 | 139,764 | |||||||||||
a | Toshiba Corp. | Industrial Conglomerates | 7,200 | 208,232 | ||||||||||
Tosoh Corp. | Chemicals | 3,300 | 50,843 | |||||||||||
TOTO Ltd. | Building Products | 1,800 | 74,719 | |||||||||||
Toyo Seikan Group Holdings Ltd. | Containers & Packaging | 2,100 | 43,577 | |||||||||||
Toyo Suisan Kaisha Ltd. | Food Products | 1,200 | 46,538 | |||||||||||
Toyo Tire & Rubber Co. Ltd | Auto Components | 1,200 | 21,626 | |||||||||||
Toyobo Co. Ltd. | Chemicals | 1,200 | 20,369 | |||||||||||
Toyoda Gosei Co. Ltd. | Auto Components | 900 | 22,226 | |||||||||||
Toyota Boshoku Corp. | Auto Components | 600 | 11,204 | |||||||||||
Toyota Industries Corp. | Auto Components | 2,100 | 124,242 | |||||||||||
Toyota Motor Corp. | Automobiles | 30,600 | 1,911,406 | |||||||||||
Toyota Tsusho Corp. | Trading Companies & Distributors | 3,000 | 113,307 | |||||||||||
Trend Micro Inc. | Software | 1,500 | 96,536 | |||||||||||
TS TECH Co. Ltd. | Auto Components | 600 | 20,707 | |||||||||||
Tsumura & Co. | Pharmaceuticals | 900 | 31,060 | |||||||||||
Tsuruha Holdings Inc. | Food & Staples Retailing | 300 | 36,950 | |||||||||||
TV Asahi Holdings Corp. | Media | 300 | 5,766 | |||||||||||
Ube Industries Ltd. | Chemicals | 1,200 | 32,645 | |||||||||||
Ulvac Inc. | Semiconductors & Semiconductor Equipment | 600 | 22,529 | |||||||||||
Unicharm Corp. | Household Products | 4,800 | 158,810 | |||||||||||
Ushio Inc. | Electrical Equipment | 1,500 | 20,575 | |||||||||||
USS Co. Ltd. | Specialty Retail | 2,400 | 44,562 | |||||||||||
Wacoal Corp. | Textiles, Apparel & Luxury Goods | 600 | 17,221 | |||||||||||
Welcia Holdings Co. Ltd. | Food & Staples Retailing | 600 | 34,019 | |||||||||||
West Japan Railway Co. | Road & Rail | 2,100 | 146,446 | |||||||||||
Yahoo Japan Corp. | Interactive Media & Services | 27,900 | 100,463 | |||||||||||
Yakult Honsha Co. Ltd. | Food Products | 1,500 | 122,948 | |||||||||||
Yamada Denki Co. Ltd. | Specialty Retail | 9,000 | 45,561 | |||||||||||
Yamaguchi Financial Group Inc. | Banks | 3,000 | 32,698 | |||||||||||
Yamaha Corp. | Leisure Products | 1,800 | 95,400 | |||||||||||
Yamaha Motor Co. Ltd. | Automobiles | 3,600 | 100,946 | |||||||||||
Yamato Holdings Co. Ltd. | Air Freight & Logistics | 4,200 | 128,975 | |||||||||||
Yamato Kogyo Co. Ltd. | Metals & Mining | 300 | 9,310 | |||||||||||
Yamazaki Baking Co. Ltd. | Food Products | 1,800 | 36,036 | |||||||||||
Yaoko Co. Ltd. | Food & Staples Retailing | 300 | 18,356 | |||||||||||
YASKAWA Electric Corp. | Electronic Equipment, Instruments & Components | 3,300 | 98,054 | |||||||||||
Yokogawa Electric Corp. | Electronic Equipment, Instruments & Components | 3,000 | 63,468 | |||||||||||
Yokohama Rubber Co. Ltd. | Auto Components | 1,200 | 25,873 | |||||||||||
Zenkoku Hosho Co. Ltd. | Diversified Financial Services | 600 | 24,008 |
libertyshares.com | Semiannual Report | 203 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Japan Hedged ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Japan (continued) | ||||||||||||||
Zensho Holdings Co. Ltd. | Hotels, Restaurants & Leisure | 1,200 | $ | 23,686 | ||||||||||
Zeon Corp. | Chemicals | 1,800 | 18,953 | |||||||||||
|
| |||||||||||||
Total Investments | 48,278,729 | |||||||||||||
Other Assets, less Liabilities 1.3% | 651,194 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 48,929,923 | ||||||||||||
|
|
aNon-income producing.
At September 30, 2018 the Fund had the following forward exchange contracts outstanding. See Note 1(c).
Forward Exchange Contracts | ||||||||||||||||||||||||||||
Currency | Counterpartya | Type | Quantity | Contract Amount | Settlement Date | Unrealized Appreciation | Unrealized Depreciation | |||||||||||||||||||||
OTC Forward Exchange Contracts | ||||||||||||||||||||||||||||
Japanese Yen | BOFA | Buy | 4,598,955,340 | $ | 40,487,896 | 10/02/18 | $ | 1,212 | $ | — | ||||||||||||||||||
Japanese Yen | BOFA | Sell | 4,598,955,340 | 41,549,192 | 10/02/18 | 1,060,083 | — | |||||||||||||||||||||
Japanese Yen | MSCO | Buy | 510,995,038 | 4,498,564 | 10/02/18 | 226 | — | |||||||||||||||||||||
Japanese Yen | MSCO | Sell | 510,995,038 | 4,617,517 | 10/02/18 | 118,728 | — | |||||||||||||||||||||
Japanese Yen | BOFA | Sell | 5,008,473,454 | 44,183,459 | 11/02/18 | — | (9,747 | ) | ||||||||||||||||||||
Japanese Yen | MSCO | Sell | 556,497,050 | 4,909,862 | 11/02/18 | — | (494 | ) | ||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Total Forward Exchange Contracts |
| $ | 1,180,249 | $ | (10,241 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) |
| $ | 1,170,008 | |||||||||||||||||||||||||
|
|
aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
Nikkei 225 Mini | Long | 20 | $ | 424,704 | 12/13/18 | $ | 1,745 | |||||||||||||
Nikkei 225 Mini | Long | 2 | 42,470 | 10/11/18 | 3,436 | |||||||||||||||
|
| |||||||||||||||||||
Total Futures Contracts | $ | 5,181 | ||||||||||||||||||
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
204 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Mexico ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 24.98 | $ | 24.90 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.32 | 0.12 | ||||||
Net realized and unrealized gains (losses) | 0.90 | 0.04 | ||||||
|
| |||||||
Total from investment operations | 1.22 | 0.16 | ||||||
|
| |||||||
Less distributions from net investment income | (0.14 | ) | (0.08 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 26.06 | $ | 24.98 | ||||
|
| |||||||
Total returnd | 4.98% | 0.63% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.19% | 0.19% | ||||||
Net investment income | 2.62% | 1.18% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $3,908 | $2,498 | ||||||
Portfolio turnover ratef | 6.22% | 9.64% |
aFor the period November 3, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 205 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Mexico ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.9% | ||||||||||||||
Mexico 99.9% | ||||||||||||||
Alfa SAB de CV | Industrial Conglomerates | 74,790 | $ | 96,511 | ||||||||||
a | Alpek SAB de CV | Chemicals | 9,414 | 15,365 | ||||||||||
Alsea de Mexico SAB de CV | Hotels, Restaurants & Leisure | 12,906 | 43,944 | |||||||||||
America Movil SAB de CV, L | Wireless Telecommunication Services | 569,445 | 458,010 | |||||||||||
Arca Continental SAB de CV | Beverages | 9,585 | 61,962 | |||||||||||
Banco del Bajio SA | Banks | 17,148 | 42,349 | |||||||||||
Banco Santander (Mexico), SA, Institucion de Banca Multiple, Grupo Financiero Santander, B | Banks | 41,853 | 65,222 | |||||||||||
Becle SA de CV | Beverages | 13,695 | 22,213 | |||||||||||
a | Cemex SAB de CV | Construction Materials | 324,111 | 227,753 | ||||||||||
Coca-Cola Femsa SA de CV, L | Beverages | 12,675 | 77,449 | |||||||||||
Concentradora Fibra Danhos SA de CV | Equity Real Estate Investment Trusts (REITs | ) | 5,724 | 9,281 | ||||||||||
El Puerto de Liverpool SAB de CV | Multiline Retail | 4,884 | 36,681 | |||||||||||
Fibra Uno Administracion SA de CV | Equity Real Estate Investment Trusts (REITs | ) | 74,427 | 97,953 | ||||||||||
Fomento Economico Mexicano SAB de CV | Beverages | 43,758 | 433,339 | |||||||||||
b | GMexico Transportes SAB de CV, 144A | Road & Rail | 10,689 | 18,132 | ||||||||||
Gruma SAB de CV | Food Products | 5,118 | 65,480 | |||||||||||
Grupo Aeroportuario del Centro Norte SAB de CV | Transportation Infrastructure | 7,926 | 56,565 | |||||||||||
Grupo Aeroportuario del Pacifico SAB de CV | Transportation Infrastructure | 8,703 | 95,216 | |||||||||||
Grupo Aeroportuario del Sureste SAB de CV, B | Transportation Infrastructure | 4,995 | 102,209 | |||||||||||
Grupo Bimbo SAB de CV, A | Food Products | 55,332 | 118,096 | |||||||||||
Grupo Carso SAB de CV | Industrial Conglomerates | 11,865 | 39,385 | |||||||||||
Grupo Comercial Chedraui SA de CV | Food & Staples Retailing | 7,503 | 16,784 | |||||||||||
Grupo Elektra SAB de CV | Banks | 1,593 | 72,703 | |||||||||||
Grupo Financiero Banorte SAB de CV | Banks | 58,635 | 424,258 | |||||||||||
Grupo Financiero Inbursa SAB de CV | Banks | 55,389 | 86,967 | |||||||||||
Grupo Lala SAB de CV | Food Products | 14,388 | 16,466 | |||||||||||
Grupo Mexico SAB de CV, B | Metals & Mining | 62,211 | 179,488 | |||||||||||
Grupo Televisa SA | Media | 44,481 | 158,283 | |||||||||||
Industrias Bachoco SAB de CV, B | Food Products | 3,999 | 17,968 | |||||||||||
Industrias Penoles SA | Metals & Mining | 3,063 | 52,805 | |||||||||||
Infraestructura Energetica Nova SAB de CV | Gas Utilities | 12,708 | 63,196 | |||||||||||
Kimberly-Clark de Mexico SAB de CV, A | Household Products | 20,583 | 36,655 | |||||||||||
Megacable Holdings SAB de CV | Media | 7,413 | 38,169 | |||||||||||
Mexichem SAB de CV | Chemicals | 25,467 | 87,654 | |||||||||||
Nemak SAB de CV | Auto Components | 14,916 | 11,199 | |||||||||||
a | Organizacion Soriana SAB de CV, B | Food & Staples Retailing | 6,273 | 11,020 | ||||||||||
Promotora y Operadora de Infraestructura SAB de CV | Transportation Infrastructure | 5,277 | 56,184 | |||||||||||
Regional SAB de CV | Banks | 5,652 | 35,600 | |||||||||||
a | Telesites SAB de CV | Diversified Telecommunication Services | 31,899 | 25,196 | ||||||||||
Wal-Mart de Mexico SAB de CV, V | Food & Staples Retailing | 108,810 | 331,855 | |||||||||||
|
| |||||||||||||
Total Investments | 3,905,565 | |||||||||||||
Other Assets, less Liabilities 0.1% | 2,915 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 3,908,480 | ||||||||||||
|
|
See Abbreviations on page 266.
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. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the value of this security was $18,132, representing 0.5% of net assets.
206 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Russia ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 24.24 | $ | 23.90 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment income (loss)c | 0.95 | (— | )d | |||||
Net realized and unrealized gains (losses) | (1.44 | ) | 0.34 | |||||
|
| |||||||
Total from investment operations | (0.49 | ) | 0.34 | |||||
|
| |||||||
Less distributions from net investment income | (0.04 | ) | — | |||||
|
| |||||||
Net asset value, end of period | $ | 23.71 | $ | 24.24 | ||||
|
| |||||||
Total returne | (2.03)% | 1.42% | ||||||
Ratios to average net assetsf | ||||||||
Total expenses | 0.19% | 0.19% | ||||||
Net investment income (loss) | 8.57% | (0.13)% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $7,114 | $2,424 | ||||||
Portfolio turnover rateg | 13.25% | 7.58% |
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 207 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Russia ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 93.5% | ||||||||||||||
Russia 93.5% | ||||||||||||||
Aeroflot – Russian Airlines PJSC | Airlines | 43,935 | $ | 71,475 | ||||||||||
Alrosa PJSC | Metals & Mining | 117,588 | 191,728 | |||||||||||
Federal Grid Co. Unified Energy System PJSC | Electric Utilities | 20,920,476 | 53,056 | |||||||||||
Federal Hydrogenerating Co. | Electric Utilities | 9,221,031 | 87,374 | |||||||||||
Gazprom PJSC | Oil, Gas & Consumable Fuels | 323,820 | 803,975 | |||||||||||
Inter RAO UES PJSC | Electric Utilities | 2,852,415 | 178,845 | |||||||||||
LUKOIL PJSC | Oil, Gas & Consumable Fuels | 13,971 | 1,071,262 | |||||||||||
Magnit PJSC | Food & Staples Retailing | 3,045 | 178,297 | |||||||||||
Magnitogorsk Iron & Steel Works | Metals & Mining | 142,137 | 113,252 | |||||||||||
MMC Norilsk Nickel PJSC | Metals & Mining | 1,266 | 220,127 | |||||||||||
Mobile TeleSystems PJSC | Wireless Telecommunication Services | 46,371 | 192,932 | |||||||||||
Moscow Exchange MICEX | Capital Markets | 115,227 | 171,006 | |||||||||||
Mosenergo PAO | Electric Utilities | 645,192 | 20,667 | |||||||||||
NLMK PJSC | Metals & Mining | 67,068 | 182,172 | |||||||||||
NovaTek PJSC | Oil, Gas & Consumable Fuels | 18,285 | 326,140 | |||||||||||
OAO TMK | Energy Equipment & Services | 24,897 | 25,735 | |||||||||||
PhosAgro PJSC | Chemicals | 2,832 | 108,835 | |||||||||||
b | Polyus PJSC, GDR, Reg S | Metals & Mining | 3,531 | 110,873 | ||||||||||
Rosneft PJSC | Oil, Gas & Consumable Fuels | 32,790 | 246,820 | |||||||||||
ROSSETI PJSC | Electric Utilities | 2,353,575 | 25,819 | |||||||||||
Rostelecom PJSC | Diversified Telecommunication Services | 67,809 | 72,421 | |||||||||||
a | RussNeft PJSC | Oil, Gas & Consumable Fuels | 3,573 | 32,252 | ||||||||||
Safmar Financial Investment | Consumer Finance | 5,280 | 57,399 | |||||||||||
Sberbank of Russia PJSC | Banks | 311,115 | 965,812 | |||||||||||
Severstal PJSC | Metals & Mining | 10,923 | 182,003 | |||||||||||
Sistema PJSFC | Wireless Telecommunication Services | 226,812 | 30,128 | |||||||||||
Surgutneftegas PJSC | Oil, Gas & Consumable Fuels | 209,877 | 87,883 | |||||||||||
Tatneft PAO | Oil, Gas & Consumable Fuels | 47,142 | 601,304 | |||||||||||
Unipro PJSC | Independent Power and Renewable Electricity Producers | 832,125 | 34,278 | |||||||||||
a | Uralkali | Chemicals | 21,366 | 27,077 | ||||||||||
VTB Bank PJSC | Banks | 295,467,819 | 183,881 | |||||||||||
|
| |||||||||||||
Total Common Stocks | 6,654,828 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 5.8% | ||||||||||||||
Russia 5.8% | ||||||||||||||
c | Bashneft PJSC, 8.457%, pfd. | Oil, Gas & Consumable Fuels | 1,548 | 44,422 | ||||||||||
c | Surgutneftegas PJSC, 3.625%, pfd. | Oil, Gas & Consumable Fuels | 225,840 | 131,273 | ||||||||||
c | Tatneft PJSC, 6.946%, pfd., 3 | Oil, Gas & Consumable Fuels | 4,650 | 40,824 | ||||||||||
c | Transneft PJSC, 6.910%, pfd. | Oil, Gas & Consumable Fuels | 77 | 194,866 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $400,739) | 411,385 | |||||||||||||
|
| |||||||||||||
Total Investments | 7,066,213 | |||||||||||||
Other Assets, less Liabilities 0.7% | 47,703 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 7,113,916 | ||||||||||||
|
|
See Abbreviations on page 266.
aNon-income producing.
bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. This security has been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the value of this security was $110,873, representing 1.6% of net assets.
cVariable rate security. The rate shown represents the yield at period end.
208 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE South Korea ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 25.98 | $ | 25.75 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.08 | 0.10 | ||||||
Net realized and unrealized gains (losses) | (2.31 | ) | 0.40 | |||||
|
| |||||||
Total from investment operations | (2.23 | ) | 0.50 | |||||
|
| |||||||
Less distributions from net investment income | (— | )d | (0.27 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 23.75 | $ | 25.98 | ||||
|
| |||||||
Total returne | (8.58)% | 1.95% | ||||||
Ratios to average net assetsf | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 0.66% | 0.94% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $23,753 | $25,981 | ||||||
Portfolio turnover rateg | 1.42% | 3.85% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dAmount rounds to less than $0.01 per share.
eTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
fRatios are annualized for periods less than one year.
gPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 209 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE South Korea ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 95.8% | ||||||||||||||
South Korea 95.8% | ||||||||||||||
Amorepacific Corp. | Personal Products | 1,140 | $ | 268,235 | ||||||||||
AmorePacific Group | Personal Products | 1,040 | 87,475 | |||||||||||
BGF Co. Ltd. | Industrial Conglomerates | 980 | 8,305 | |||||||||||
BGF Retail Co. Ltd. | Food & Staples Retailing | 220 | 40,757 | |||||||||||
BNK Financial Group Inc. | Banks | 10,520 | 81,561 | |||||||||||
a,b | Celltrion Healthcare Co. Ltd. | Health Care Providers & Services | 1,820 | 151,277 | ||||||||||
a,b | Celltrion Inc. | Biotechnology | 2,810 | 752,373 | ||||||||||
Cheil Worldwide Inc. | Media | 2,500 | 48,794 | |||||||||||
CJ CheilJedang Corp. | Food Products | 280 | 84,183 | |||||||||||
CJ Corp. | Industrial Conglomerates | 450 | 54,767 | |||||||||||
CJ ENM Co. Ltd. | Internet & Direct Marketing Retail | 390 | 87,194 | |||||||||||
a | CJ Logistics Corp. | Road & Rail | 270 | 38,458 | ||||||||||
Coway Co. Ltd. | Household Durables | 2,010 | 157,285 | |||||||||||
Daelim Industrial Co. Ltd. | Construction & Engineering | 980 | 72,975 | |||||||||||
a | Daewoo Engineering & Construction Co. Ltd. | Construction & Engineering | 6,390 | 34,103 | ||||||||||
DB Insurance Co. Ltd. | Insurance | 1,700 | 111,571 | |||||||||||
DGB Financial Group Inc. | Banks | 5,540 | 50,693 | |||||||||||
Dongsuh Cos. Inc. | Food & Staples Retailing | 1,110 | 21,014 | |||||||||||
Doosan Corp. | Industrial Conglomerates | 200 | 24,611 | |||||||||||
a | Doosan Heavy Industries & Construction Co. Ltd. | Electrical Equipment | 2,480 | 33,313 | ||||||||||
a | Doosan Infracore Co. Ltd. | Machinery | 4,800 | 42,407 | ||||||||||
E-MART Inc. | Food & Staples Retailing | 730 | 136,556 | |||||||||||
GS Engineering & Construction Corp. | Construction & Engineering | 2,040 | 96,184 | |||||||||||
GS Holdings Corp. | Oil, Gas & Consumable Fuels | 1,840 | 91,399 | |||||||||||
GS Retail Co. Ltd. | Food & Staples Retailing | 960 | 33,320 | |||||||||||
Hana Financial Group Inc. | Banks | 10,700 | 429,736 | |||||||||||
Hankook Tire Co. Ltd. | Auto Components | 2,690 | 121,496 | |||||||||||
Hanmi Pharm Co. Ltd. | Pharmaceuticals | 250 | 112,689 | |||||||||||
Hanmi Science Co. Ltd. | Pharmaceuticals | 470 | 37,202 | |||||||||||
Hanon Systems | Auto Components | 5,810 | 66,258 | |||||||||||
Hanssem Co. Ltd. | Household Durables | 350 | 24,169 | |||||||||||
a | Hanwha Aerospace Co. Ltd. | Aerospace & Defense | 1,280 | 29,310 | ||||||||||
Hanwha Chemical Corp. | Chemicals | 2,960 | 51,501 | |||||||||||
Hanwha Corp. | Industrial Conglomerates | 1,520 | 44,946 | |||||||||||
Hanwha Life Insurance Co. Ltd. | Insurance | 9,920 | 47,308 | |||||||||||
HDC Holdings Co. Ltd. | Construction & Engineering | 850 | 17,548 | |||||||||||
a | HDC Hyundai Development Co-Engineering & Construction | Construction & Engineering | 1,300 | 59,653 | ||||||||||
Hite Jinro Co. Ltd. | Beverages | 1,100 | 16,710 | |||||||||||
Hotel Shilla Co. Ltd. | Specialty Retail | 1,120 | 109,552 | |||||||||||
a | Hyosung Advanced Materials Corp. | Chemicals | 110 | 14,032 | ||||||||||
a | Hyosung Chemical Corp. | Chemicals | 80 | 11,034 | ||||||||||
Hyosung Corp. | Industrial Conglomerates | 330 | 14,280 | |||||||||||
a | Hyosung Heavy Industries Corp. | Electrical Equipment | 230 | 12,316 | ||||||||||
a | Hyosung TNC Co. Ltd. | Textiles, Apparel & Luxury Goods | 110 | 18,445 | ||||||||||
a | Hyundai Construction Equipment Co. Ltd. | Machinery | 230 | 25,400 | ||||||||||
Hyundai Department Store Co. Ltd. | Multiline Retail | 540 | 48,389 | |||||||||||
Hyundai Engineering & Construction Co. Ltd. | Construction & Engineering | 2,620 | 159,432 | |||||||||||
Hyundai Glovis Co. Ltd. | Air Freight & Logistics | 670 | 78,522 | |||||||||||
a | Hyundai Heavy Industries Co. Ltd. | Machinery | 1,520 | 184,305 | ||||||||||
a | Hyundai Heavy Industries Holdings Co. Ltd. | Machinery | 380 | 138,742 | ||||||||||
Hyundai Marine & Fire Insurance Co. Ltd. | Insurance | 2,180 | 82,444 | |||||||||||
a | Hyundai Mipo Dockyard Co. Ltd. | Machinery | 370 | 34,523 | ||||||||||
Hyundai Mobis Co. Ltd. | Auto Components | 2,360 | 485,085 | |||||||||||
Hyundai Motor Co. | Automobiles | 4,960 | 579,058 | |||||||||||
Hyundai Steel Co. | Metals & Mining | 2,700 | 137,525 | |||||||||||
Hyundai Wia Corp. | Auto Components | 570 | 21,762 | |||||||||||
Industrial Bank of Korea | Banks | 9,540 | 131,156 | |||||||||||
Kakao Corp. | Interactive Media & Services | 1,850 | 198,467 | |||||||||||
Kangwon Land Inc. | Hotels, Restaurants & Leisure | 3,830 | 99,095 | |||||||||||
KB Financial Group Inc. | Banks | 14,240 | 695,793 |
210 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE South Korea ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
South Korea (continued) | ||||||||||||||
KCC Corp. | Building Products | 200 | $ | 61,122 | ||||||||||
KEPCO Plant Service and Engineering Co. Ltd. | Commercial Services & Supplies | 760 | 23,295 | |||||||||||
Kia Motors Corp. | Automobiles | 9,290 | 293,964 | |||||||||||
a | Korea Aerospace Industries Ltd. | Aerospace & Defense | 2,330 | 73,728 | ||||||||||
Korea Electric Power Corp. | Electric Utilities | 9,200 | 243,426 | |||||||||||
a | Korea Gas Corp. | Gas Utilities | 950 | 51,986 | ||||||||||
Korea Investment Holdings Co. Ltd. | Capital Markets | 1,370 | 93,989 | |||||||||||
Korea Zinc Co. Ltd. | Metals & Mining | 360 | 141,501 | |||||||||||
Korean Air Lines Co. Ltd. | Airlines | 1,720 | 43,572 | |||||||||||
KT&G Corp. | Tobacco | 3,990 | 374,091 | |||||||||||
Kumho Petrochemical Co. Ltd. | Chemicals | 630 | 55,943 | |||||||||||
LG Chem Ltd. | Chemicals | 1,650 | 543,678 | |||||||||||
LG Corp. | Industrial Conglomerates | 3,250 | 212,711 | |||||||||||
LG Display Co. Ltd. | Electronic Equipment, Instruments & Components | 8,050 | 138,612 | |||||||||||
LG Electronics Inc. | Household Durables | 3,890 | 248,988 | |||||||||||
LG Household & Health Care Ltd. | Personal Products | 313 | 360,052 | |||||||||||
LG Uplus Corp. | Diversified Telecommunication Services | 6,960 | 114,824 | |||||||||||
Lotte Chemical Corp. | Chemicals | 530 | 132,829 | |||||||||||
Lotte Chilsung Beverage Co. Ltd. | Beverages | 10 | 12,549 | |||||||||||
a | Lotte Corp. | Industrial Conglomerates | 2,140 | 110,159 | ||||||||||
LOTTE Fine Chemical Co. Ltd. | Chemicals | 630 | 29,477 | |||||||||||
Lotte Shopping Co. Ltd. | Multiline Retail | 400 | 75,547 | |||||||||||
LS Corp. | Electrical Equipment | 620 | 38,287 | |||||||||||
Mando Corp. | Auto Components | 1,190 | 37,012 | |||||||||||
Mirae Asset Daewood Co. Ltd. | Capital Markets | 13,530 | 103,312 | |||||||||||
Naver Corp. | Interactive Media & Services | 970 | 626,117 | |||||||||||
NCsoft Corp. | Software | 620 | 247,329 | |||||||||||
Netmarble Corp. | Software | 640 | 66,351 | |||||||||||
NH Investment & Securities Co. Ltd. | Capital Markets | 4,620 | 59,559 | |||||||||||
a | NHN Entertainment Corp. | Software | 360 | 19,862 | ||||||||||
Nongshim Co. Ltd. | Food Products | 120 | 26,342 | |||||||||||
OCI Co. Ltd. | Chemicals | 650 | 64,458 | |||||||||||
Orion Corp. | Food Products | 780 | 74,185 | |||||||||||
Ottogi Corp. | Food Products | 45 | 30,304 | |||||||||||
Paradise Co. Ltd. | Hotels, Restaurants & Leisure | 1,640 | 30,974 | |||||||||||
POSCO | Metals & Mining | 2,460 | 653,117 | |||||||||||
Posco Daewoo Corp. | Trading Companies & Distributors | 1,770 | 33,429 | |||||||||||
S-1 Corp. | Commercial Services & Supplies | 690 | 56,855 | |||||||||||
S-Oil Corp. | Oil, Gas & Consumable Fuels | 1,480 | 182,790 | |||||||||||
a | Samsung Biologics Co. Ltd. | Life Sciences Tools & Services | 480 | 231,075 | ||||||||||
Samsung C&T Corp. | Industrial Conglomerates | 2,990 | 349,069 | |||||||||||
Samsung Card Co. Ltd. | Consumer Finance | 1,100 | 36,493 | |||||||||||
Samsung Electro-Mechanics Co. Ltd. | Electronic Equipment, Instruments & Components | 2,010 | 251,873 | |||||||||||
Samsung Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 99,130 | 4,151,083 | |||||||||||
a | Samsung Engineering Co. Ltd. | Construction & Engineering | 5,680 | 98,827 | ||||||||||
Samsung Fire & Marine Insurance Co. Ltd. | Insurance | 1,180 | 302,114 | |||||||||||
a | Samsung Heavy Industries Co. Ltd. | Machinery | 15,760 | 114,799 | ||||||||||
Samsung Life Insurance Co. Ltd. | Insurance | 2,290 | 200,872 | |||||||||||
Samsung SDI Co. Ltd. | Electronic Equipment, Instruments & Components | 1,900 | 442,777 | |||||||||||
Samsung SDS Co. Ltd. | IT Services | 1,150 | 239,486 | |||||||||||
Samsung Securities Co. Ltd. | Capital Markets | 2,270 | 66,816 | |||||||||||
Shinhan Financial Group Co. Ltd. | Banks | 16,460 | 667,749 | |||||||||||
Shinsegae Co. Ltd. | Multiline Retail | 250 | 81,699 | |||||||||||
a | SillaJen Inc. | Biotechnology | 1,890 | 174,475 | ||||||||||
SK Holdings Co. Ltd. | Industrial Conglomerates | 1,200 | 310,480 | |||||||||||
SK Hynix Inc. | Semiconductors & Semiconductor Equipment | 19,240 | 1,267,923 | |||||||||||
SK Innovation Co. Ltd. | Oil, Gas & Consumable Fuels | 2,180 | 422,538 | |||||||||||
SK Networks Co. Ltd. | Trading Companies & Distributors | 5,350 | 26,527 | |||||||||||
SK Telecom Co. Ltd. | Wireless Telecommunication Services | 820 | 208,465 | |||||||||||
SKC Co. Ltd. | Chemicals | 690 | 26,530 |
libertyshares.com | Semiannual Report | 211 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE South Korea ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
South Korea (continued) | ||||||||||||||
Woori Bank | Banks | 18,310 | $ | 278,962 | ||||||||||
Yuhan Corp. | Pharmaceuticals | 300 | 65,585 | |||||||||||
|
| |||||||||||||
Total Common Stocks | 22,749,236 | |||||||||||||
|
| |||||||||||||
Preferred Stocks 4.1% | ||||||||||||||
South Korea 4.1% | ||||||||||||||
c | Amorepacific Corp., 0.935%, pfd. | Personal Products | 380 | 47,104 | ||||||||||
c | CJ CheilJedang Corp., 2.392%, pfd. | Food Products | 50 | 5,747 | ||||||||||
c | Hanwha Corp., 4.365%, pfd. | Industrial Conglomerates | 770 | 10,274 | ||||||||||
c | Hyundai Motor Co., 5.172%, pfd. | Automobiles | 790 | 55,765 | ||||||||||
c | Hyundai Motor Co., 4.841%, pfd., 2 | Automobiles | 1,260 | 96,211 | ||||||||||
c | LG Chem Ltd., 2.966%, pfd. | Chemicals | 280 | 51,494 | ||||||||||
c | LG Electronics Inc., 1.508%, pfd. | Household Durables | 620 | 16,684 | ||||||||||
c | LG Household & Health Care Ltd., 1.126%, pfd. | Personal Products | 80 | 57,985 | ||||||||||
a,c | Mirae Asset Daewoo Co. Ltd., pfd. | Capital Markets | 4,700 | 18,071 | ||||||||||
c | Samsung Electronics Co. Ltd., 3.009%, pfd. | Technology Hardware, Storage & Peripherals | 17,400 | 593,725 | ||||||||||
c | Samsung Fire & Marine Insurance Co. Ltd., 5.452%, pfd. | Insurance | 100 | 16,543 | ||||||||||
|
| |||||||||||||
Total Preferred Stocks (Cost $1,112,998) | 969,603 | |||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 23,718,839 | |||||||||||||
|
| |||||||||||||
Short-Term Investments (Cost $693,195) 2.9% | ||||||||||||||
Investments from Cash Collateral Received for Loaned Securities 2.9% | ||||||||||||||
Money Market Funds 2.9% | ||||||||||||||
d,e | Institutional Fiduciary Trust Money Market Portfolio, 1.69% | 693,195 | 693,195 | |||||||||||
|
| |||||||||||||
Total Investments | 24,412,034 | |||||||||||||
Other Assets, less Liabilities (2.8)% | (658,774 | ) | ||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 23,753,260 | ||||||||||||
|
|
aNon-income producing.
bA portion or all of the security is on loan at September 30, 2018. See Note 1(d).
cVariable rate security. The rate shown represents the yield at period end.
dSee Note 3(c) regarding investments in affiliated management investment companies.
eThe rate shown is the annualized seven-day effective yield at period end.
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
Kospi 200 Mini | Long | 1 | $ | 13,557 | 10/11/18 | $ | 385 | |||||||||||||
|
|
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
212 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Switzerland ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 23.11 | $ | 23.56 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.39 | 0.22 | ||||||
Net realized and unrealized gains (losses) | 0.49 | (0.67 | ) | |||||
|
| |||||||
Total from investment operations | 0.88 | (0.45 | ) | |||||
|
| |||||||
Less distributions from net investment income | (0.61 | ) | — | |||||
|
| |||||||
Net asset value, end of period | $ | 23.38 | $ | 23.11 | ||||
|
| |||||||
Total returnd | 4.00% | (1.91)% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 3.45% | 6.54% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $4,675 | $2,311 | ||||||
Portfolio turnover ratef | 6.58% | 2.72% |
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 213 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Switzerland ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.7% | ||||||||||||||
Austria 0.4% | ||||||||||||||
a | AMS AG | Semiconductors & Semiconductor Equipment | 326 | $ | 18,309 | |||||||||
|
| |||||||||||||
Switzerland 99.3% | ||||||||||||||
ABB Ltd. | Electrical Equipment | 6,978 | 165,663 | |||||||||||
Adecco Group AG | Professional Services | 646 | 34,086 | |||||||||||
Baloise Holding AG | Insurance | 200 | 30,651 | |||||||||||
Banque Cantonale Vaudoise | Banks | 14 | 10,434 | |||||||||||
Barry Callebaut AG | Food Products | 8 | 15,233 | |||||||||||
Chocoladefabriken Lindt & Spruengli AG | Food Products | 10 | 70,434 | |||||||||||
a | Clariant AG | Chemicals | 846 | 22,120 | ||||||||||
Compagnie Financiere Richemont SA | Textiles, Apparel & Luxury Goods | 1,994 | 163,309 | |||||||||||
a | Credit Suisse Group AG | Capital Markets | 10,102 | 152,544 | ||||||||||
DKSH Holding AG | Professional Services | 112 | 7,659 | |||||||||||
a | Dufry AG | Specialty Retail | 130 | 14,726 | ||||||||||
EMS-Chemie Holding AG | Chemicals | 32 | 19,165 | |||||||||||
Flughafen Zurich AG | Transportation Infrastructure | 82 | 16,655 | |||||||||||
Geberit AG | Building Products | 152 | 70,834 | |||||||||||
Georg Fischer AG | Machinery | 16 | 18,182 | |||||||||||
Givaudan AG | Chemicals | 38 | 93,872 | |||||||||||
Helvetia Holding AG | Insurance | 30 | 18,366 | |||||||||||
a | Julius Baer Group Ltd. | Capital Markets | 914 | 45,953 | ||||||||||
Kuehne + Nagel International AG | Marine | 212 | 33,749 | |||||||||||
a | LafargeHolcim Ltd., B | Construction Materials | 1,998 | 99,102 | ||||||||||
Logitech International SA | Technology Hardware, Storage & Peripherals | 610 | 27,390 | |||||||||||
a | Lonza Group AG | Life Sciences Tools & Services | 312 | 107,002 | ||||||||||
Nestle SA | Food Products | 10,880 | 911,345 | |||||||||||
Novartis AG | Pharmaceuticals | 7,920 | 684,324 | |||||||||||
a | OC Oerlikon Corp. AG | Machinery | 818 | 11,272 | ||||||||||
Pargesa Holding SA, B | Diversified Financial Services | 162 | 13,077 | |||||||||||
Partners Group Holding AG | Capital Markets | 70 | 55,789 | |||||||||||
PSP Swiss Property AG | Real Estate Management & Development | 168 | 16,348 | |||||||||||
Roche Holding AG | Pharmaceuticals | 2626 | 639,263 | |||||||||||
Schindler Holding AG | Machinery | 82 | 19,879 | |||||||||||
Schindler Holding AG, PC | Machinery | 172 | 43,070 | |||||||||||
SGS SA | Professional Services | 22 | 58,198 | |||||||||||
Sika AG | Chemicals | 586 | 85,728 | |||||||||||
Sonova Holding AG | Health Care Equipment & Supplies | 214 | 42,787 | |||||||||||
Straumann Holding AG | Health Care Equipment & Supplies | 42 | 31,732 | |||||||||||
Sulzer AG | Machinery | 54 | 6,518 | |||||||||||
Swatch Group AG | Textiles, Apparel & Luxury Goods | 316 | 64,584 | |||||||||||
a | Swiss Life Holding AG | Insurance | 144 | 54,840 | ||||||||||
a | Swiss Prime Site AG | Real Estate Management & Development | 318 | 27,233 | ||||||||||
Swiss Re AG | Insurance | 1,266 | 117,424 | |||||||||||
Swisscom AG | Diversified Telecommunication Services | 108 | 49,246 | |||||||||||
a | Temenos AG | Software | 246 | 40,093 | ||||||||||
a | UBS Group AG | Capital Markets | 13,438 | 213,236 | ||||||||||
Vifor Pharma AG | Pharmaceuticals | 186 | 32,400 | |||||||||||
Zurich Insurance Group AG | Insurance | 584 | 185,459 | |||||||||||
|
| |||||||||||||
4,640,974 | ||||||||||||||
|
| |||||||||||||
Total Investments | 4,659,283 | |||||||||||||
Other Assets, less Liabilities 0.3% | 15,932 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 4,675,215 | ||||||||||||
|
|
See Abbreviations on page 266.
aNon-income producing.
214 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE Taiwan ETF
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 26.34 | $ | 25.59 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment income (loss)c | 0.80 | (0.02 | ) | |||||
Net realized and unrealized gains (losses) | (0.53 | ) | 0.77 | |||||
|
| |||||||
Total from investment operations | 0.27 | 0.75 | ||||||
|
| |||||||
Net asset value, end of period | $ | 26.61 | $ | 26.34 | ||||
|
| |||||||
Total returnd | 1.02% | 2.93% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.19% | 0.19% | ||||||
Net investment income (loss) | 6.22% | (0.19)% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $5,323 | $5,268 | ||||||
Portfolio turnover ratef | 5.78% | 3.63% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 215 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE Taiwan ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.9% | ||||||||||||||
Taiwan 99.9% | ||||||||||||||
a | Acer Inc. | Technology Hardware, Storage & Peripherals | 29,000 | $ | 23,982 | |||||||||
Advantech Co. Ltd. | Technology Hardware, Storage & Peripherals | 4,000 | 29,804 | |||||||||||
a | ASE Industrial Holding Co. Ltd. | Semiconductors & Semiconductor Equipment | 34,000 | 82,959 | ||||||||||
Asia Cement Corp. | Construction Materials | 23,000 | 31,261 | |||||||||||
Asustek Computer Inc. | Technology Hardware, Storage & Peripherals | 7,000 | 60,525 | |||||||||||
AU Optronics Corp. | Electronic Equipment, Instruments & Components | 88,000 | 37,179 | |||||||||||
Capital Securities Corp. | Capital Markets | 22,470 | 7,580 | |||||||||||
Catcher Technology Co. Ltd. | Technology Hardware, Storage & Peripherals | 7,310 | 80,443 | |||||||||||
Cathay Financial Holding Co. Ltd. | Insurance | 79,000 | 135,837 | |||||||||||
Chailease Holding Co. Ltd. | Diversified Financial Services | 12,000 | 42,053 | |||||||||||
Chang Hwa Commercial Bank Ltd. | Banks | 61,360 | 37,982 | |||||||||||
Cheng Shin Rubber Industry Co. Ltd. | Auto Components | 19,000 | 29,869 | |||||||||||
Chicony Electronics Co. Ltd. | Technology Hardware, Storage & Peripherals | 6,030 | 12,205 | |||||||||||
China Airlines Ltd. | Airlines | 26,000 | 7,877 | |||||||||||
China Development Financial Holding Corp. | Banks | 140,000 | 52,271 | |||||||||||
China Life Insurance Co. Ltd. | Insurance | 26,000 | 26,142 | |||||||||||
China Motor Corp. | Automobiles | 7,000 | 5,880 | |||||||||||
China Steel Corp. | Metals & Mining | 124,000 | 103,560 | |||||||||||
Chunghwa Telecom Co. Ltd. | Diversified Telecommunication Services | 38,000 | 136,901 | |||||||||||
Compal Electronics Inc. | Technology Hardware, Storage & Peripherals | 42,000 | 26,067 | |||||||||||
CTBC Financial Holding Co. Ltd. | Banks | 183,000 | 137,851 | |||||||||||
Delta Electronics Inc. | Electronic Equipment, Instruments & Components | 22,000 | 94,390 | |||||||||||
E.Sun Financial Holding Co. Ltd. | Banks | 104,000 | 76,809 | |||||||||||
Eclat Textile Co. Ltd. | Textiles, Apparel & Luxury Goods | 2,000 | 24,760 | |||||||||||
Epistar Corp. | Semiconductors & Semiconductor Equipment | 10,000 | 11,365 | |||||||||||
Eternal Materials Co. Ltd. | Chemicals | 9,630 | 8,358 | |||||||||||
EVA Airways Corp. | Airlines | 21,000 | 10,214 | |||||||||||
Evergreen Marine Corp. Taiwan Ltd. | Marine | 21,000 | 8,804 | |||||||||||
Far Eastern International Bank | Banks | 20,542 | 7,266 | |||||||||||
Far Eastern New Century Corp. | Industrial Conglomerates | 40,000 | 46,769 | |||||||||||
Far EasTone Telecommunications Co. Ltd. | Wireless Telecommunication Services | 16,000 | 38,149 | |||||||||||
Feng Hsin Steel Co. Ltd. | Metals & Mining | 5,000 | 9,924 | |||||||||||
Feng Tay Enterprise Co. Ltd. | Textiles, Apparel & Luxury Goods | 3,000 | 18,472 | |||||||||||
First Financial Holding Co. Ltd. | Banks | 97,950 | 66,726 | |||||||||||
Formosa Chemicals & Fibre Corp. | Chemicals | 35,000 | 146,726 | |||||||||||
Formosa Petrochemical Corp. | Oil, Gas & Consumable Fuels | 14,000 | 67,861 | |||||||||||
Formosa Plastics Corp. | Chemicals | 49,000 | 187,764 | |||||||||||
Formosa Taffeta Co. Ltd. | Textiles, Apparel & Luxury Goods | 11,000 | 13,420 | |||||||||||
Foxconn Technology Co. Ltd. | Electronic Equipment, Instruments & Components | 11,000 | 26,840 | |||||||||||
Fubon Financial Holding Co. Ltd. | Diversified Financial Services | 74,000 | 125,543 | |||||||||||
Giant Manufacturing Co. Ltd. | Leisure Products | 3,000 | 12,871 | |||||||||||
Globalwafers Co. Ltd. | Semiconductors & Semiconductor Equipment | 2,100 | 23,144 | |||||||||||
Hon Hai Precision Industry Co. Ltd. | Electronic Equipment, Instruments & Components | 150,000 | 389,087 | |||||||||||
a | HTC Corp. | Technology Hardware, Storage & Peripherals | 7,000 | 9,308 | ||||||||||
Hua Nan Financial Holdings Co. Ltd. | Banks | 88,000 | 53,319 | |||||||||||
Innolux Corp. | Electronic Equipment, Instruments & Components | 86,000 | 29,856 | |||||||||||
Inventec Corp. | Technology Hardware, Storage & Peripherals | 30,000 | 26,922 | |||||||||||
Largan Precision Co. Ltd. | Electronic Equipment, Instruments & Components | 1,020 | 121,433 | |||||||||||
Lite-On Technology Corp. | Technology Hardware, Storage & Peripherals | 21,000 | 26,411 | |||||||||||
MediaTek Inc. | Semiconductors & Semiconductor Equipment | 15,000 | 121,098 | |||||||||||
Mega Financial Holding Co. Ltd. | Banks | 110,000 | 99,073 | |||||||||||
Nan Ya Plastics Corp. | Chemicals | 57,000 | 158,307 | |||||||||||
Nanya Technology Corp. | Semiconductors & Semiconductor Equipment | 8,000 | 15,223 | |||||||||||
Novatek Microelectronics Corp. Ltd. | Semiconductors & Semiconductor Equipment | 6,000 | 29,673 | |||||||||||
a | OBI Pharma Inc. | Biotechnology | 1,000 | 4,765 | ||||||||||
Oriental Union Chemical Corp. | Chemicals | 7,000 | 7,806 | |||||||||||
Pegatron Corp. | Technology Hardware, Storage & Peripherals | 20,000 | 40,022 | |||||||||||
Pou Chen Corp. | Textiles, Apparel & Luxury Goods | 27,000 | 28,518 |
216 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE Taiwan ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
Taiwan (continued) | ||||||||||||||
President Chain Store Corp. | Food & Staples Retailing | 5,650 | $ | 66,339 | ||||||||||
Quanta Computer Inc. | Technology Hardware, Storage & Peripherals | 27,000 | 47,044 | |||||||||||
Realtek Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 5,000 | 22,271 | |||||||||||
Shin Kong Financial Holding Co. Ltd. | Insurance | 92,000 | 36,007 | |||||||||||
SinoPac Financial Holdings Co. Ltd. | Banks | 106,040 | 38,724 | |||||||||||
Synnex Technology International Corp. | Electronic Equipment, Instruments & Components | 14,000 | 17,859 | |||||||||||
Taishin Financial Holding Co. Ltd. | Banks | 99,167 | 47,906 | |||||||||||
Taiwan Business Bank | Banks | 42,640 | 15,501 | |||||||||||
Taiwan Cement Corp. | Construction Materials | 46,000 | 61,920 | |||||||||||
Taiwan Cooperative Financial Holding Co. Ltd. | Banks | 91,610 | 55,807 | |||||||||||
Taiwan Fertilizer Co. Ltd. | Chemicals | 7,000 | 10,661 | |||||||||||
Taiwan Glass Industry Corp. | Building Products | 16,000 | 8,515 | |||||||||||
Taiwan High Speed Rail Corp. | Transportation Infrastructure | 21,000 | 20,565 | |||||||||||
Taiwan Mobile Co. Ltd. | Wireless Telecommunication Services | 16,000 | 57,381 | |||||||||||
Taiwan Secom Co. Ltd. | Commercial Services & Supplies | 3,000 | 8,666 | |||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | Semiconductors & Semiconductor Equipment | 122,750 | 1,055,313 | |||||||||||
Teco Electric & Machinery Co. Ltd. | Electrical Equipment | 18,000 | 13,058 | |||||||||||
TPK Holding Co. Ltd. | Electronic Equipment, Instruments & Components | 3,000 | 5,149 | |||||||||||
Transcend Information Inc. | Technology Hardware, Storage & Peripherals | 3,000 | 6,878 | |||||||||||
U-Ming Marine Transport Corp. | Marine | 4,000 | 4,598 | |||||||||||
Uni-President Enterprises Corp. | Food Products | 48,000 | 125,294 | |||||||||||
Unimicron Technology Corp. | Electronic Equipment, Instruments & Components | 13,000 | 8,537 | |||||||||||
United Microelectronics Corp. | Semiconductors & Semiconductor Equipment | 119,000 | 62,943 | |||||||||||
Vanguard International Semiconductor Corp. | Semiconductors & Semiconductor Equipment | 9,000 | 20,044 | |||||||||||
Walsin Lihwa Corp. | Electrical Equipment | 31,000 | 20,864 | |||||||||||
Walsin Technology Corp. | Electronic Equipment, Instruments & Components | 5,000 | 34,880 | |||||||||||
Wan Hai Lines Ltd. | Marine | 7,000 | 3,829 | |||||||||||
Wistron Corp. | Technology Hardware, Storage & Peripherals | 27,793 | 18,114 | |||||||||||
Yageo Corp. | Electronic Equipment, Instruments & Components | 4,000 | 60,132 | |||||||||||
Yuanta Financial Holding Co. Ltd. | Capital Markets | 113,000 | 59,585 | |||||||||||
Yulon Motor Co. Ltd. | Automobiles | 10,000 | 7,107 | |||||||||||
|
| |||||||||||||
Total Investments | 5,316,715 | |||||||||||||
Other Assets, less Liabilities 0.1% | 5,815 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 5,322,530 | ||||||||||||
|
|
See Abbreviations on page 266.
aNon-income producing.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 217 |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin FTSE United Kingdom ETF
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||
Per share operating performance (for a share outstanding throughout the period) | ||||||||
Net asset value, beginning of period | $ | 25.23 | $ | 24.89 | ||||
|
| |||||||
Income from investment operationsb: | ||||||||
Net investment incomec | 0.54 | 0.38 | ||||||
Net realized and unrealized gains (losses) | (0.30 | ) | 0.07 | |||||
|
| |||||||
Total from investment operations | 0.24 | 0.45 | ||||||
|
| |||||||
Less distributions from net investment income | (0.52 | ) | (0.11 | ) | ||||
|
| |||||||
Net asset value, end of period | $ | 24.95 | $ | 25.23 | ||||
|
| |||||||
Total returnd | 0.93% | 1.80% | ||||||
Ratios to average net assetse | ||||||||
Total expenses | 0.09% | 0.09% | ||||||
Net investment income | 4.31% | 3.68% | ||||||
Supplemental data | ||||||||
Net assets, end of period (000’s) | $13,723 | $2,523 | ||||||
Portfolio turnover ratef | 4.28% | 1.61% |
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year, except for non-recurring expenses, if any.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
218 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin FTSE United Kingdom ETF
Industry | Shares | Value | ||||||||||||
Common Stocks 99.2% | ||||||||||||||
Germany 0.3% | ||||||||||||||
TUI AG | Hotels, Restaurants & Leisure | 2,222 | $ | 42,682 | ||||||||||
|
| |||||||||||||
Ireland 1.6% | ||||||||||||||
CRH PLC | Construction Materials | 4,191 | 137,288 | |||||||||||
Paddy Power Betfair PLC | Hotels, Restaurants & Leisure | 407 | 34,445 | |||||||||||
Smurfit Kappa Group PLC | Containers & Packaging | 1,210 | 47,937 | |||||||||||
|
| |||||||||||||
219,670 | ||||||||||||||
|
| |||||||||||||
Russia 0.2% | ||||||||||||||
Evraz PLC | Metals & Mining | 2,541 | 18,775 | |||||||||||
Polymetal International PLC | Metals & Mining | 1,133 | 9,077 | |||||||||||
|
| |||||||||||||
27,852 | ||||||||||||||
|
| |||||||||||||
South Africa 0.2% | ||||||||||||||
Investec PLC | Capital Markets | 3,245 | 22,834 | |||||||||||
|
| |||||||||||||
Switzerland 2.8% | ||||||||||||||
a | Coca-Cola HBC AG | Beverages | 1,001 | 34,109 | ||||||||||
Ferguson PLC | Trading Companies & Distributors | 1,177 | 99,997 | |||||||||||
a | Glencore PLC | Metals & Mining | 58,861 | 254,605 | ||||||||||
|
| |||||||||||||
388,711 | ||||||||||||||
|
| |||||||||||||
United Arab Emirates 0.2% | ||||||||||||||
NMC Health PLC | Health Care Providers & Services | 429 | 18,987 | |||||||||||
|
| |||||||||||||
United Kingdom 93.5% | ||||||||||||||
3i Group PLC | Capital Markets | 4,829 | 59,270 | |||||||||||
Admiral Group PLC | Insurance | 1,034 | 28,046 | |||||||||||
Anglo American PLC | Metals & Mining | 4,972 | 111,715 | |||||||||||
Antofagasta PLC | Metals & Mining | 1,771 | 19,746 | |||||||||||
Ashmore Group PLC | Capital Markets | 1,958 | 9,294 | |||||||||||
Ashtead Group PLC | Trading Companies & Distributors | 2,453 | 77,956 | |||||||||||
Associated British Foods PLC | Food Products | 1,771 | 52,887 | |||||||||||
AstraZeneca PLC | Pharmaceuticals | 6,402 | 497,823 | |||||||||||
Auto Trader Group PLC | Interactive Media & Services | 4,576 | 26,650 | |||||||||||
Aveva Group PLC | Software | 319 | 12,039 | |||||||||||
Aviva PLC | Insurance | 19,712 | 125,828 | |||||||||||
B&M European Value Retail SA | Multiline Retail | 4,367 | 22,027 | |||||||||||
Babcock International Group PLC | Commercial Services & Supplies | 1,287 | 12,134 | |||||||||||
BAE Systems PLC | Aerospace & Defense | 16,082 | 132,080 | |||||||||||
Barclays PLC | Banks | 85,954 | 192,545 | |||||||||||
Barratt Developments PLC | Household Durables | 5,115 | 37,820 | |||||||||||
Bellway PLC | Household Durables | 627 | 24,644 | |||||||||||
BHP Billiton PLC | Metals & Mining | 10,472 | 228,219 | |||||||||||
BP PLC | Oil, Gas & Consumable Fuels | 98,626 | 757,918 | |||||||||||
British American Tobacco PLC | Tobacco | 11,506 | 537,833 | |||||||||||
British Land Co. PLC | Equity Real Estate Investment Trusts (REITs | ) | 4,994 | 40,169 | ||||||||||
BT Group PLC | Diversified Telecommunication Services | 42,020 | 123,456 | |||||||||||
Bunzl PLC | Trading Companies & Distributors | 1,716 | 53,997 | |||||||||||
Burberry Group PLC | Textiles, Apparel & Luxury Goods | 2,101 | 55,207 | |||||||||||
Capita PLC | Professional Services | 8,525 | 15,886 | |||||||||||
Capital & Counties Properties PLC | Real Estate Management & Development | 3,729 | 12,950 | |||||||||||
Centrica PLC | Multi-Utilities | 28,050 | 56,660 | |||||||||||
Cineworld Group PLC | Media | 5,038 | 20,734 | |||||||||||
a | Cobham PLC | Aerospace & Defense | 12,210 | 18,589 | ||||||||||
Compass Group PLC | Hotels, Restaurants & Leisure | 7,975 | 177,421 | |||||||||||
ConvaTec Group PLC | Health Care Equipment & Supplies | 7,535 | 22,836 | |||||||||||
Croda International PLC | Chemicals | 649 | 44,026 | |||||||||||
CYBG PLC | Banks | 4,510 | 19,044 | |||||||||||
DCC PLC | Industrial Conglomerates | 440 | 39,964 |
libertyshares.com | Semiannual Report | 219 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE United Kingdom ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
Derwent London PLC | Equity Real Estate Investment Trusts (REITs | ) | 517 | $ | 19,262 | |||||||||
Diageo PLC | Beverages | 12,177 | 431,761 | |||||||||||
Direct Line Insurance Group PLC | Insurance | 7,018 | 29,643 | |||||||||||
Dixons Carphone PLC | Specialty Retail | 5,093 | 11,267 | |||||||||||
DS Smith PLC | Containers & Packaging | 6,446 | 40,205 | |||||||||||
easyJet PLC | Airlines | 1,111 | 19,037 | |||||||||||
Experian PLC | Professional Services | 4,609 | 118,434 | |||||||||||
Fresnillo PLC | Metals & Mining | 946 | 10,133 | |||||||||||
G4S PLC | Commercial Services & Supplies | 7,898 | 24,925 | |||||||||||
GlaxoSmithKline PLC | Pharmaceuticals | 24,618 | 493,360 | |||||||||||
GVC Holdings PLC | Hotels, Restaurants & Leisure | 2,882 | 34,520 | |||||||||||
Halma PLC | Electronic Equipment, Instruments & Components | 1,936 | 36,481 | |||||||||||
Hammerson PLC | Equity Real Estate Investment Trusts (REITs | ) | 4,048 | 24,108 | ||||||||||
Hargreaves Lansdown PLC | Capital Markets | 1,342 | 39,113 | |||||||||||
Hikma Pharmaceuticals PLC | Pharmaceuticals | 715 | 17,249 | |||||||||||
Hiscox Ltd. | Insurance | 1,430 | 30,676 | |||||||||||
Howden Joinery Group PLC | Trading Companies & Distributors | 2,882 | 17,623 | |||||||||||
HSBC Holdings PLC | Banks | 101,475 | 886,336 | |||||||||||
IMI PLC | Machinery | 1,375 | 19,670 | |||||||||||
Imperial Brands PLC | Tobacco | 4,785 | 166,667 | |||||||||||
Inchcape PLC | Distributors | 2,079 | 18,137 | |||||||||||
Informa PLC | Media | 6,226 | 61,883 | |||||||||||
Inmarsat PLC | Diversified Telecommunication Services | 2,387 | 15,564 | |||||||||||
InterContinental Hotels Group PLC | Hotels, Restaurants & Leisure | 957 | 59,653 | |||||||||||
International Consolidated Airlines Group SA | Airlines | 5,060 | 43,563 | |||||||||||
Intertek Group PLC | Professional Services | 803 | 52,274 | |||||||||||
Intu Properties PLC | Equity Real Estate Investment Trusts (REITs | ) | 4,521 | 9,085 | ||||||||||
ITV PLC | Media | 18,942 | 38,991 | |||||||||||
J Sainsbury PLC | Food & Staples Retailing | 8,217 | 34,482 | |||||||||||
JD Sports Fashion PLC | Specialty Retail | 1,793 | 10,735 | |||||||||||
John Wood Group PLC | Energy Equipment & Services | 3,355 | 33,758 | |||||||||||
Johnson Matthey PLC | Chemicals | 968 | 44,964 | |||||||||||
a | Just Eat PLC | Internet & Direct Marketing Retail | 2,926 | 25,572 | ||||||||||
KAZ Minerals PLC | Metals & Mining | 1,210 | 8,672 | |||||||||||
Kingfisher PLC | Specialty Retail | 10,879 | 36,602 | |||||||||||
Land Securities Group PLC | Equity Real Estate Investment Trusts (REITs | ) | 3,608 | 41,564 | ||||||||||
Legal & General Group PLC | Insurance | 29,722 | 101,626 | |||||||||||
Lloyds Banking Group PLC | Banks | 361,911 | 279,725 | |||||||||||
London Stock Exchange Group PLC | Capital Markets | 1,573 | 94,071 | |||||||||||
Marks & Spencer Group PLC | Multiline Retail | 8,294 | 31,236 | |||||||||||
Mediclinic International PLC | Health Care Providers & Services | 1,991 | 11,138 | |||||||||||
Meggitt PLC | Aerospace & Defense | 3,949 | 29,168 | |||||||||||
Melrose Industries PLC | Electrical Equipment | 24,211 | 63,113 | |||||||||||
Merlin Entertainments PLC | Hotels, Restaurants & Leisure | 3,586 | 18,724 | |||||||||||
Micro Focus International PLC | Software | 2,145 | 39,986 | |||||||||||
Mondi PLC | Paper & Forest Products | 1,859 | 51,006 | |||||||||||
National Grid PLC | Multi-Utilities | 17,094 | 176,414 | |||||||||||
NEX Group PLC | Capital Markets | 1,573 | 20,390 | |||||||||||
Next PLC | Multiline Retail | 671 | 48,073 | |||||||||||
a | Ocado Group PLC | Internet & Direct Marketing Retail | 2,189 | 25,668 | ||||||||||
Pearson PLC | Media | 3,971 | 46,088 | |||||||||||
Pennon Group PLC | Water Utilities | 2,123 | 19,745 | |||||||||||
Persimmon PLC | Household Durables | 1,540 | 47,495 | |||||||||||
Phoenix Group Holdings | Insurance | 2,849 | 25,115 | |||||||||||
Prudential PLC | Insurance | 13,101 | 300,599 | |||||||||||
Quilter PLC | Capital Markets | 9,064 | 15,874 | |||||||||||
Randgold Resources Ltd. | Metals & Mining | 462 | 32,835 | |||||||||||
Reckitt Benckiser Group PLC | Household Products | 3,146 | 287,834 |
220 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE United Kingdom ETF (continued)
Industry | Shares | Value | ||||||||||||
Common Stocks (continued) | ||||||||||||||
United Kingdom (continued) | ||||||||||||||
RELX PLC | Professional Services | 9,636 | $ | 203,064 | ||||||||||
Renishaw PLC | Electronic Equipment, Instruments & Components | 165 | 10,208 | |||||||||||
Rentokil Initial PLC | Commercial Services & Supplies | 9,350 | 38,822 | |||||||||||
Rightmove PLC | Interactive Media & Services | 4,554 | 27,971 | |||||||||||
Rio Tinto PLC | Metals & Mining | 5,819 | 294,425 | |||||||||||
a | Rolls-Royce Holdings PLC | Aerospace & Defense | 8,349 | 107,503 | ||||||||||
Royal Bank of Scotland Group PLC | Banks | 22,748 | 74,161 | |||||||||||
Royal Dutch Shell PLC, A | Oil, Gas & Consumable Fuels | 23,243 | 799,124 | |||||||||||
Royal Dutch Shell PLC, B | Oil, Gas & Consumable Fuels | 18,909 | 663,061 | |||||||||||
Royal Mail PLC | Air Freight & Logistics | 4,675 | 29,086 | |||||||||||
RPC Group PLC | Containers & Packaging | 2,079 | 21,553 | |||||||||||
RSA Insurance Group PLC | Insurance | 5,236 | 39,261 | |||||||||||
Schroders PLC | Capital Markets | 572 | 23,086 | |||||||||||
Segro PLC | Equity Real Estate Investment Trusts (REITs | ) | 5,115 | 42,543 | ||||||||||
Severn Trent PLC | Water Utilities | 1,210 | 29,175 | |||||||||||
Shire PLC | Biotechnology | 4,532 | 273,247 | |||||||||||
Sky PLC | Media | 5,214 | 117,560 | |||||||||||
Smith & Nephew PLC | Health Care Equipment & Supplies | 4,411 | 80,502 | |||||||||||
Smiths Group PLC | Industrial Conglomerates | 2,024 | 39,472 | |||||||||||
Spirax-Sarco Engineering PLC | Machinery | 363 | 34,556 | |||||||||||
SSE PLC | Electric Utilities | 5,159 | 77,098 | |||||||||||
St. James’s Place Capital PLC | Capital Markets | 2,651 | 39,549 | |||||||||||
Standard Chartered PLC | Banks | 13,629 | 113,107 | |||||||||||
Standard Life Aberdeen PLC | Diversified Financial Services | 14,718 | 58,711 | |||||||||||
Tate & Lyle PLC | Food Products | 2,354 | 20,960 | |||||||||||
Taylor Wimpey PLC | Household Durables | 16,500 | 36,966 | |||||||||||
Tesco PLC | Food & Staples Retailing | 48,653 | 152,143 | |||||||||||
The Berkeley Group Holdings PLC | Household Durables | 616 | 29,553 | |||||||||||
The Sage Group PLC | Software | 5,500 | 42,058 | |||||||||||
Travis Perkins PLC | Trading Companies & Distributors | 1,287 | 17,882 | |||||||||||
Unilever PLC | Personal Products | 5,621 | 309,035 | |||||||||||
United Utilities Group PLC | Water Utilities | 3,454 | 31,710 | |||||||||||
Vodafone Group PLC | Wireless Telecommunication Services | 134,530 | 288,589 | |||||||||||
Weir Group PLC | Machinery | 1,309 | 30,094 | |||||||||||
Whitbread PLC | Hotels, Restaurants & Leisure | 913 | 56,160 | |||||||||||
William Hill PLC | Hotels, Restaurants & Leisure | 4,367 | 14,357 | |||||||||||
William Morrison Supermarkets PLC | Food & Staples Retailing | 11,066 | 37,433 | |||||||||||
WPP PLC | Media | 6,160 | 90,330 | |||||||||||
|
| |||||||||||||
12,833,420 | ||||||||||||||
|
| |||||||||||||
United States 0.4% | ||||||||||||||
Carnival PLC | Hotels, Restaurants & Leisure | 858 | 53,303 | |||||||||||
|
| |||||||||||||
Total Investments | 13,607,459 | |||||||||||||
Other Assets, less Liabilities 0.8% | 115,406 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 13,722,865 | ||||||||||||
|
|
aNon-income producing.
libertyshares.com | Semiannual Report | 221 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin FTSE United Kingdom ETF (continued)
At September 30, 2018, the Fund had the following futures contracts outstanding. See Note 1(c).
Futures Contracts | ||||||||||||||||||||
Description | Type | Number of Contracts | Notional Amount* | Expiration Date | Value/Unrealized Appreciation (Depreciation) | |||||||||||||||
Index Contracts | ||||||||||||||||||||
FTSE 100 Index | Long | 1 | $ | 97,628 | 12/21/18 | $ | 2,817 | |||||||||||||
|
|
|
|
*As of period end.
See Note 7 regarding other derivative information.
See Abbreviations on page 266.
222 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
September 30, 2018 (unaudited)
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 19,008,345 | $ | 6,587,357 | $ | 12,142,948 | $ | 5,005,440 | ||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers | $ | 17,500,422 | $ | 6,268,995 | $ | 10,518,702 | $ | 4,989,595 | ||||||||
Cash | 7,953 | 805 | 32,894 | 58 | ||||||||||||
Foreign currency, at value (cost $31,308, $27,540, $28,496 and $-, respectively) | 31,295 | 27,548 | 28,720 | — | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 6,587 | — | — | — | ||||||||||||
Dividends | 33,932 | 20,418 | 59,802 | 8,916 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | 2,600 | — | 20,656 | — | ||||||||||||
|
| |||||||||||||||
Total assets | 17,582,789 | 6,317,766 | 10,660,774 | 4,998,569 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 15,434 | 14,845 | — | — | ||||||||||||
Management fees | 2,719 | 482 | 2,677 | 368 | ||||||||||||
Variation margin on futures contracts | 326 | — | 3,827 | — | ||||||||||||
Foreign currency advanced by custodian | — | — | — | 873 | ||||||||||||
Deferred tax | 7,041 | — | — | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 25,520 | 15,327 | 6,504 | 1,241 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 17,557,269 | $ | 6,302,439 | $ | 10,654,270 | $ | 4,997,328 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 18,898,409 | $ | 6,295,961 | $ | 21,949,885 | $ | 4,983,626 | ||||||||
Total distributable earnings (loss) | (1,341,140 | ) | 6,478 | (11,295,615 | ) | 13,702 | ||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 17,557,269 | $ | 6,302,439 | $ | 10,654,270 | $ | 4,997,328 | ||||||||
|
| |||||||||||||||
Shares outstanding | 800,000 | 250,000 | 500,000 | 200,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 21.95 | $ | 25.21 | $ | 21.31 | $ | 24.99 | ||||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 223 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
September 30, 2018 (unaudited)
Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 42,244,498 | $ | 85,565,954 | $ | 36,344,398 | $ | 2,527,327 | ||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers | $ | 37,048,139 | $ | 82,279,366 | $ | 34,665,740 | $ | 2,546,421 | ||||||||
Cash | 6,150 | 8,583 | 109,379 | 100 | ||||||||||||
Foreign currency, at value (cost $84,339, $255,083, $192,955 and $2,308, respectively) | 84,210 | 252,564 | 190,821 | 2,275 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | — | — | — | 2,602 | ||||||||||||
Dividends | 77,137 | 188,737 | 65,684 | 4,100 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | 2,193 | 12,421 | 24,955 | — | ||||||||||||
Unrealized appreciation on OTC forward exchange contracts | — | — | 125,193 | — | ||||||||||||
|
| |||||||||||||||
Total assets | 37,217,829 | 82,741,671 | 35,181,772 | 2,555,498 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 102,483 | 26,158 | 12,721 | — | ||||||||||||
Management fees | 5,721 | 6,230 | 2,571 | 187 | ||||||||||||
Variation margin on futures contracts | 2,122 | 1,863 | 5,307 | — | ||||||||||||
Unrealized depreciation on OTC forward exchange contracts | — | — | 76,128 | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 110,326 | 34,251 | 96,727 | 187 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 37,107,503 | $ | 82,707,420 | $ | 35,085,045 | $ | 2,555,311 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 42,112,935 | $ | 85,900,939 | $ | 34,927,597 | $ | 2,532,072 | ||||||||
Total distributable earnings (loss) | (5,005,432 | ) | (3,193,519 | ) | 157,448 | 23,239 | ||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 37,107,503 | $ | 82,707,420 | $ | 35,085,045 | $ | 2,555,311 | ||||||||
|
| |||||||||||||||
Shares outstanding | 1,600,000 | 3,400,000 | 1,400,000 | 100,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 23.19 | $ | 24.33 | $ | 25.06 | $ | 25.55 | ||||||||
|
|
224 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
September 30, 2018 (unaudited)
Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 2,527,322 | $ | 11,356,623 | $ | 6,975,731 | $ | 2,648,101 | ||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers | $ | 2,275,254 | $ | 11,180,024 | $ | 6,469,100 | $ | 2,302,125 | ||||||||
Cash | 16 | 3,450 | 28,989 | 53 | ||||||||||||
Foreign currency, at value (cost $3,036, $18,717, $- and $7,798, respectively) | 2,992 | 18,687 | — | 7,685 | ||||||||||||
Receivables: | ||||||||||||||||
Dividends | 6,699 | 26,927 | 3,022 | 630 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | — | 2,815 | 825 | 5 | ||||||||||||
|
| |||||||||||||||
Total assets | 2,284,961 | 11,231,903 | 6,501,936 | 2,310,498 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 985 | 2,002 | — | — | ||||||||||||
Management fees | 170 | 818 | 1,062 | 173 | ||||||||||||
Variation margin on futures contracts | — | 786 | 165 | — | ||||||||||||
Deferred tax | — | — | 10,038 | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 1,155 | 3,606 | 11,265 | 173 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 2,283,806 | $ | 11,228,297 | $ | 6,490,671 | $ | 2,310,325 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 2,554,846 | $ | 11,355,368 | $ | 6,996,327 | $ | 2,717,135 | ||||||||
Total distributable earnings (loss) | (271,040 | ) | (127,071 | ) | (505,656 | ) | (406,810 | ) | ||||||||
|
| |||||||||||||||
Net assets, at value | $ | 2,283,806 | $ | 11,228,297 | $ | 6,490,671 | $ | 2,310,325 | ||||||||
|
| |||||||||||||||
Shares outstanding | 100,000 | 450,000 | 300,000 | 100,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 22.84 | $ | 24.95 | $ | 21.64 | $ | 23.10 | ||||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 225 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
September 30, 2018 (unaudited)
Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Mexico ETF | Franklin FTSE Russia ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 262,154,153 | $ | 48,559,211 | $ | 3,690,408 | $ | 6,955,899 | ||||||||
Cost – Non-controlled affiliates (Note 3c) | 184,230 | — | — | — | ||||||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers+ | $ | 254,603,383 | $ | 48,278,729 | $ | 3,905,565 | $ | 7,066,213 | ||||||||
Value – Non-controlled affiliates (Note 3c) | 184,230 | — | — | — | ||||||||||||
Cash | 100,520 | 2,371 | 1,435 | 19,169 | ||||||||||||
Foreign currency, at value (cost $316,659, $35,950, $1,677 and $-, respectively) | 315,725 | 35,843 | 1,704 | — | ||||||||||||
Receivables: | ||||||||||||||||
Dividends | 1,900,259 | 356,977 | 375 | 38,828 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | 64,023 | 13,946 | — | — | ||||||||||||
Variation margin for futures contracts | 25,892 | — | — | — | ||||||||||||
Unrealized appreciation on OTC forward exchange contracts | — | 1,180,249 | — | — | ||||||||||||
|
| |||||||||||||||
Total assets | 257,194,032 | 49,868,115 | 3,909,079 | 7,124,210 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | — | 921,364 | — | 9,262 | ||||||||||||
Management fees | 17,667 | 3,459 | 599 | 1,032 | ||||||||||||
Variation margin for futures contracts | — | 3,128 | — | — | ||||||||||||
Payable upon return of securities loaned | 184,230 | — | — | — | ||||||||||||
Unrealized depreciation on OTC forward exchange contracts | — | 10,241 | — | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 201,897 | 938,192 | 599 | 10,294 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 256,992,135 | $ | 48,929,923 | $ | 3,908,480 | $ | 7,113,916 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 262,772,644 | $ | 47,422,041 | $ | 3,707,607 | $ | 6,815,959 | ||||||||
Total distributable earnings (loss) | (5,780,509 | ) | 1,507,882 | 200,873 | 297,957 | |||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 256,992,135 | $ | 48,929,923 | $ | 3,908,480 | $ | 7,113,916 | ||||||||
|
| |||||||||||||||
Shares outstanding | 9,600,000 | 1,800,000 | 150,000 | 300,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 26.77 | $ | 27.18 | $ | 26.06 | $ | 23.71 | ||||||||
|
|
+Includes securities loaned | $ | 175,328 | — | — | — | |||||||||||
|
|
226 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities (continued)
September 30, 2018 (unaudited)
Franklin FTSE South Korea ETF | Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | |||||||||||||
Assets: | ||||||||||||||||
Investments in securities: | ||||||||||||||||
Cost – Unaffiliated issuers | $ | 26,839,657 | $ | 4,676,228 | $ | 5,280,970 | $ | 13,938,183 | ||||||||
Cost – Non-controlled affiliates (Note 3c) | 693,195 | — | — | — | ||||||||||||
|
| |||||||||||||||
Value – Unaffiliated issuers+ | $ | 23,718,839 | $ | 4,659,283 | $ | 5,316,715 | $ | 13,607,459 | ||||||||
Value – Non-controlled affiliates (Note 3c) | 693,195 | — | — | — | ||||||||||||
Cash | 2,206 | 1,605 | 2,095 | 1,604 | ||||||||||||
Foreign currency, at value (cost $16,494, $2,348, $3,833 and $107,034, respectively) | 16,494 | 2,345 | 3,844 | 106,079 | ||||||||||||
Receivables: | ||||||||||||||||
Investment securities sold | 17,735 | — | — | — | ||||||||||||
Dividends | 39,301 | 12,178 | 4,308 | 20,624 | ||||||||||||
Deposits with brokers for: | ||||||||||||||||
Futures contracts | 914 | — | — | 4,103 | ||||||||||||
|
| |||||||||||||||
Total assets | 24,488,684 | 4,675,411 | 5,326,962 | 13,739,869 | ||||||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Payables: | ||||||||||||||||
Investment securities purchased | 40,499 | — | 3,614 | 15,632 | ||||||||||||
Management fees | 1,720 | 196 | 818 | 1,018 | ||||||||||||
Variation margin on futures contracts | 10 | — | — | 354 | ||||||||||||
Payable upon return of securities loaned | 693,195 | — | — | — | ||||||||||||
|
| |||||||||||||||
Total liabilities | 735,424 | 196 | 4,432 | 17,004 | ||||||||||||
|
| |||||||||||||||
Net assets, at value | $ | 23,753,260 | $ | 4,675,215 | $ | 5,322,530 | $ | 13,722,865 | ||||||||
|
| |||||||||||||||
Net assets consist of: | ||||||||||||||||
Paid-in capital | $ | 26,906,909 | $ | 4,708,515 | $ | 5,127,889 | $ | 13,888,322 | ||||||||
Total distributable earnings (loss) | (3,153,649 | ) | (33,300 | ) | 194,641 | (165,457 | ) | |||||||||
|
| |||||||||||||||
Net assets, at value | $ | 23,753,260 | $ | 4,675,215 | $ | 5,322,530 | $ | 13,722,865 | ||||||||
|
| |||||||||||||||
Shares outstanding | 1,000,000 | 200,000 | 200,000 | 550,000 | ||||||||||||
|
| |||||||||||||||
Net asset value per share | $ | 23.75 | $ | 23.38 | $ | 26.61 | $ | 24.95 | ||||||||
|
|
+Includes securities loaned | $ | 660,081 | — | — | — | |||||||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 227 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the period ended September 30, 2018 (unaudited)
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 316,801 | $ | 145,627 | $ | 488,651 | $ | 53,042 | ||||||||
|
| |||||||||||||||
Total investment income | 316,801 | 145,627 | 488,651 | 53,042 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 15,428 | 2,853 | 29,971 | 1,856 | ||||||||||||
Other | — | — | 16 | — | ||||||||||||
|
| |||||||||||||||
Total expenses | 15,428 | 2,853 | 29,987 | 1,856 | ||||||||||||
|
| |||||||||||||||
Net investment income | 301,373 | 142,774 | 458,664 | 51,186 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (44,714 | ) | (9,103 | ) | (9,801,368 | ) | (8,323 | ) | ||||||||
In-kind redemptions | — | 219,539 | — | — | ||||||||||||
Foreign currency transactions | (1,662 | ) | (965 | ) | (47,713 | ) | 93 | |||||||||
Futures contracts | (7,139 | ) | — | 1,705 | — | |||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (53,515 | ) | 209,471 | (9,847,376 | ) | (8,230 | ) | |||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (1,492,385 | ) | (143,694 | ) | (1,699,169 | ) | 150,010 | |||||||||
Translation of other assets and liabilities denominated in foreign currencies | 79 | 361 | (4,765 | ) | 15 | |||||||||||
Futures contracts | 1,035 | — | 3,828 | — | ||||||||||||
Change in deferred taxes on unrealized appreciation | (7,001 | ) | — | — | — | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (1,498,272 | ) | (143,333 | ) | (1,700,106 | ) | 150,025 | |||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (1,551,787 | ) | 66,138 | (11,547,482 | ) | 141,795 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (1,250,414 | ) | $ | 208,912 | $ | (11,088,818 | ) | $ | 192,981 | ||||||
|
|
aForeign taxes withheld on dividends | $ | 35,480 | $ | 3,027 | $ | 38,024 | $ | 9,361 | ||||||||
|
|
228 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations (continued)
for the period ended September 30, 2018 (unaudited)
Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 618,218 | $ | 2,307,547 | $ | 765,673 | $ | 61,843 | ||||||||
|
| |||||||||||||||
Total investment income | 618,218 | 2,307,547 | 765,673 | 61,843 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 31,186 | 45,360 | 15,797 | 1,153 | ||||||||||||
Other | — | — | 125 | — | ||||||||||||
|
| |||||||||||||||
Total expenses | 31,186 | 45,360 | 15,922 | 1,153 | ||||||||||||
|
| |||||||||||||||
Net investment income | 587,032 | 2,262,187 | 749,751 | 60,690 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (218,328 | ) | (135,753 | ) | (85,902 | ) | (6,600 | ) | ||||||||
In-kind redemptions | — | (295,095 | ) | — | — | |||||||||||
Foreign currency transactions | 196 | (83,595 | ) | (17,039 | ) | (497 | ) | |||||||||
Futures contracts | (12,050 | ) | 12,045 | (408 | ) | — | ||||||||||
Forward exchange contracts | — | — | 2,095,967 | — | ||||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (230,182 | ) | (502,398 | ) | 1,992,618 | (7,097 | ) | |||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (3,938,669 | ) | (2,088,726 | ) | (799,540 | ) | 20,117 | |||||||||
Translation of other assets and liabilities denominated in foreign currencies | 143 | (3,589 | ) | 1,341 | (171 | ) | ||||||||||
Futures contracts | 467 | 9,475 | 7,030 | — | ||||||||||||
Forward exchange contracts | — | — | 234,034 | — | ||||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (3,938,059 | ) | (2,082,840 | ) | (557,135 | ) | 19,946 | |||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (4,168,241 | ) | (2,585,238 | ) | 1,435,483 | 12,849 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (3,581,209 | ) | $ | (323,051 | ) | $ | 2,185,234 | $ | 73,539 | ||||||
|
|
aForeign taxes withheld on dividends | $ | 50,895 | $ | 252,278 | $ | 82,580 | $ | 10,493 | ||||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 229 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations (continued)
for the period ended September 30, 2018 (unaudited)
Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 56,149 | $ | 202,753 | $ | 35,646 | $ | 84,471 | ||||||||
|
| |||||||||||||||
Total investment income | 56,149 | 202,753 | 35,646 | 84,471 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | �� | 1,083 | 3,789 | 3,945 | 1,893 | |||||||||||
|
| |||||||||||||||
Total expenses | 1,083 | 3,789 | 3,945 | 1,893 | ||||||||||||
|
| |||||||||||||||
Net investment income | 55,066 | 198,964 | 31,701 | 82,578 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (17,140 | ) | (39,191 | ) | (9,355 | ) | (12,157 | ) | ||||||||
In-kind redemptions | — | — | — | (81,519 | ) | |||||||||||
Foreign currency transactions | (497 | ) | 252 | (6,012 | ) | (663 | ) | |||||||||
Futures contracts | — | (2,950 | ) | 679 | (1,137 | ) | ||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (17,637 | ) | (41,889 | ) | (14,688 | ) | (95,476 | ) | ||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (153,714 | ) | (417,076 | ) | (398,570 | ) | (417,364 | ) | ||||||||
Translation of other assets and liabilities denominated in foreign currencies | (229 | ) | 24 | (11 | ) | (153 | ) | |||||||||
Futures contracts | — | 356 | (469 | ) | — | |||||||||||
Change in deferred taxes on unrealized appreciation | — | — | (8,146 | ) | — | |||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (153,943 | ) | (416,696 | ) | (407,196 | ) | (417,517 | ) | ||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (171,580 | ) | (458,585 | ) | (421,884 | ) | (512,993 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (116,514 | ) | $ | (259,621 | ) | $ | (390,183 | ) | $ | (430,415 | ) | ||||
|
|
aForeign taxes withheld on dividends | $ | 8,219 | $ | 138 | $ | — | $ | 14,545 | ||||||||
|
|
230 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations (continued)
for the period ended September 30, 2018 (unaudited)
Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Mexico ETF | Franklin FTSE Russia ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 2,250,062 | $ | 439,687 | $ | 48,713 | $ | 198,805 | ||||||||
Income from securities loaned (net of fees and rebates) | 1,434 | — | — | �� | — | |||||||||||
|
| |||||||||||||||
Total investment income | 2,251,496 | 439,687 | 48,713 | 198,805 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 87,745 | 20,917 | 3,289 | 4,310 | ||||||||||||
Other | 853 | 174 | — | — | ||||||||||||
|
| |||||||||||||||
Total expenses | 88,598 | 21,091 | 3,289 | 4,310 | ||||||||||||
|
| |||||||||||||||
Net investment income | 2,162,898 | 418,596 | 45,424 | 194,495 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (232,739 | ) | (24,891 | ) | (29,248 | ) | 3,124 | |||||||||
Foreign currency transactions | (70,102 | ) | (21,974 | ) | 489 | (3,808 | ) | |||||||||
Futures contracts | 39,525 | 30,951 | — | — | ||||||||||||
Foreign exchange contracts | — | 2,194,136 | — | — | ||||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (263,316 | ) | 2,178,222 | (28,759 | ) | (684 | ) | |||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (2,034,891 | ) | (63,092 | ) | 198,232 | 74,542 | ||||||||||
Translation of other assets and liabilities denominated in foreign currencies | (9,935 | ) | (5,706 | ) | (8 | ) | (717 | ) | ||||||||
Futures contracts | 34,612 | 599 | — | — | ||||||||||||
Forward exchange contracts | — | 1,224,718 | — | — | ||||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (2,010,214 | ) | 1,156,519 | 198,224 | 73,825 | |||||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (2,273,530 | ) | 3,334,741 | 169,465 | 73,141 | |||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (110,632 | ) | $ | 3,753,337 | $ | 214,889 | $ | 267,636 | |||||||
|
|
aForeign taxes withheld on dividends | $ | 250,007 | $ | 48,612 | $ | 2,226 | $ | 34,786 | ||||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 231 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations (continued)
for the period ended September 30, 2018 (unaudited)
Franklin FTSE South Korea ETF | Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | |||||||||||||
Investment income: | ||||||||||||||||
Dividends: (net of foreign taxes)a | ||||||||||||||||
Unaffiliated issuers | $ | 89,867 | $ | 41,509 | $ | 165,084 | $ | 179,434 | ||||||||
Income from securities loaned (net of fees and rebates) | 1,883 | — | — | — | ||||||||||||
|
| |||||||||||||||
Total investment income | 91,750 | 41,509 | 165,084 | 179,434 | ||||||||||||
|
| |||||||||||||||
Expenses: | ||||||||||||||||
Management fees (Note 3a) | 10,951 | 1,056 | 4,894 | 3,674 | ||||||||||||
Other | — | — | 46 | — | ||||||||||||
|
| |||||||||||||||
Total expenses | 10,951 | 1,056 | 4,940 | 3,674 | ||||||||||||
|
| |||||||||||||||
Net investment income | 80,799 | 40,453 | 160,144 | 175,760 | ||||||||||||
|
| |||||||||||||||
Realized and unrealized gains (losses): | ||||||||||||||||
Net realized gain (loss) from: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (69,705 | ) | (17,255 | ) | 3,192 | (25,318 | ) | |||||||||
In-kind redemptions | — | — | — | 45,241 | ||||||||||||
Foreign currency transactions | (1,423 | ) | (276 | ) | (923 | ) | (22 | ) | ||||||||
Futures contracts | (2,935 | ) | — | 4,266 | (5,333 | ) | ||||||||||
|
| |||||||||||||||
Net realized gain (loss) | (74,063 | ) | (17,531 | ) | 6,535 | 14,568 | ||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||
Investments: | ||||||||||||||||
Unaffiliated issuers | (2,233,323 | ) | 50,049 | (112,475 | ) | (339,199 | ) | |||||||||
Translation of other assets and liabilities denominated in foreign currencies | (710 | ) | (151 | ) | 48 | (772 | ) | |||||||||
Futures contracts | 325 | — | — | 2,817 | ||||||||||||
|
| |||||||||||||||
Net change in unrealized appreciation (depreciation) | (2,233,708 | ) | 49,898 | (112,427 | ) | (337,154 | ) | |||||||||
|
| |||||||||||||||
Net realized and unrealized gain (loss) | (2,307,771 | ) | 32,367 | (105,892 | ) | (322,586 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (2,226,972 | ) | $ | 72,820 | $ | 54,252 | $ | (146,826 | ) | ||||||
|
|
aForeign taxes withheld on dividends | $ | 12,491 | $ | 5,360 | $ | 44,061 | $ | 2,437 | ||||||||
|
|
232 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018b | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 301,373 | $ | 14,772 | $ | 142,774 | $ | 55,028 | ||||||||
Net realized gain (loss) | (53,515 | ) | (18,736 | ) | 209,471 | 104,836 | ||||||||||
Net change in unrealized appreciation (depreciation) | (1,498,272 | ) | (15,572 | ) | (143,333 | ) | (174,893 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (1,250,414 | ) | (19,536 | ) | 208,912 | (15,029 | ) | |||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (71,190 | ) | — | (69,690 | ) | (22,846 | ) | |||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 9,428,138 | 9,470,271 | 3,696,671 | 2,504,421 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 8,106,534 | 9,450,735 | 3,835,893 | 2,466,546 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 9,450,735 | — | 2,466,546 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 17,557,269 | $ | 9,450,735 | $ | 6,302,439 | $ | 2,466,546 | ||||||||
|
|
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 233 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018b | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 458,664 | $ | 369,484 | $ | 51,186 | $ | 25,263 | ||||||||
Net realized gain (loss) | (9,847,376 | ) | (120,390 | ) | (8,230 | ) | 152,154 | |||||||||
Net change in unrealized appreciation (depreciation) | (1,700,106 | ) | 73,350 | 150,025 | (165,809 | ) | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (11,088,818 | ) | 322,444 | 192,981 | 11,608 | |||||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (508,665 | ) | (21,049 | ) | (27,211 | ) | (10,464 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | (22,341,297 | ) | 44,291,655 | 2,454,490 | 2,375,924 | |||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (33,938,780 | ) | 44,593,050 | 2,620,260 | 2,377,068 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 44,593,050 | — | 2,377,068 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 10,654,270 | $ | 44,593,050 | $ | 4,997,328 | $ | 2,377,068 | ||||||||
|
|
aFor the period November 3, 2017 (commencement of operations) to March 31, 2018.
bFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
234 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE China ETF | Franklin FTSE Europe ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 587,032 | $ | (9,724 | ) | $ | 2,262,187 | $ | 716,594 | |||||||
Net realized gain (loss) | (230,182 | ) | (35,622 | ) | (502,398 | ) | (9,244 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (3,938,059 | ) | (1,257,688 | ) | (2,082,840 | ) | (1,204,509 | ) | ||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (3,581,209 | ) | (1,303,034 | ) | (323,051 | ) | (497,159 | ) | ||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (120,853 | ) | (336 | ) | (2,349,959 | ) | (23,965 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 9,618,208 | 32,494,727 | (19,530,228 | ) | 105,431,782 | |||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 5,916,146 | 31,191,357 | (22,203,238 | ) | 104,910,658 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 31,191,357 | — | 104,910,658 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 37,107,503 | $ | 31,191,357 | $ | 82,707,420 | $ | 104,910,658 | ||||||||
|
|
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 235 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 749,751 | $ | 231,036 | $ | 60,690 | $ | 8,162 | ||||||||
Net realized gain (loss) | 1,992,618 | (647,897 | ) | (7,097 | ) | (630 | ) | |||||||||
Net change in unrealized appreciation (depreciation) | (557,135 | ) | (1,066,507 | ) | 19,946 | (986 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | 2,185,234 | (1,483,368 | ) | 73,539 | 6,546 | |||||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (528,067 | ) | (16,503 | ) | (51,277 | ) | (5,569 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | 34,927,749 | — | 2,532,072 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 1,657,167 | 33,427,878 | 22,262 | 2,533,049 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 33,427,878 | — | 2,533,049 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 35,085,045 | $ | 33,427,878 | $ | 2,555,311 | $ | 2,533,049 | ||||||||
|
|
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
236 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 55,066 | $ | 5,409 | $ | 198,964 | $ | 48,141 | ||||||||
Net realized gain (loss) | (17,637 | ) | (1,887 | ) | (41,889 | ) | (17,552 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (153,943 | ) | (98,379 | ) | (416,696 | ) | 240,471 | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (116,514 | ) | (94,857 | ) | (259,621 | ) | 271,060 | |||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (59,669 | ) | — | (118,896 | ) | (19,614 | ) | |||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | 2,554,846 | 3,754,680 | 7,600,688 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (176,183 | ) | 2,459,989 | 3,376,163 | 7,852,134 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 2,459,989 | — | 7,852,134 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 2,283,806 | $ | 2,459,989 | $ | 11,228,297 | $ | 7,852,134 | ||||||||
|
|
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 237 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018b | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 31,701 | $ | 9,414 | $ | 82,578 | $ | 10,697 | ||||||||
Net realized gain (loss) | (14,688 | ) | (10,175 | ) | (95,476 | ) | (966 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (407,196 | ) | (108,062 | ) | (417,517 | ) | 71,421 | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (390,183 | ) | (108,823 | ) | (430,415 | ) | 81,152 | |||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (6,650 | ) | — | (52,540 | ) | (5,007 | ) | |||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 4,613,516 | 2,382,811 | 166,424 | 2,550,711 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 4,216,683 | 2,273,988 | (316,531 | ) | 2,626,856 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 2,273,988 | — | 2,626,856 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 6,490,671 | $ | 2,273,988 | $ | 2,310,325 | $ | 2,626,856 | ||||||||
|
|
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
238 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 2,162,898 | $ | 811,796 | $ | 418,596 | $ | 406,721 | ||||||||
Net realized gain (loss) | (263,316 | ) | (58,588 | ) | 2,178,222 | (2,348,792 | ) | |||||||||
Net change in unrealized appreciation (depreciation) | (2,010,214 | ) | (5,509,189 | ) | 1,156,519 | (268,166 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (110,632 | ) | (4,755,981 | ) | 3,753,337 | (2,210,237 | ) | |||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (898,389 | ) | (15,507 | ) | (20,480 | ) | (15,372 | ) | ||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 161,918,973 | 100,853,671 | — | 47,422,675 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 160,909,952 | 96,082,183 | 3,732,857 | 45,197,066 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 96,082,183 | — | 45,197,066 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 256,992,135 | $ | 96,082,183 | $ | 48,929,923 | $ | 45,197,066 | ||||||||
|
|
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 239 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE Mexico ETF | Franklin FTSE Russia ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018b | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 45,424 | $ | 12,150 | $ | 194,495 | $ | (446 | ) | |||||||
Net realized gain (loss) | (28,759 | ) | (14,040 | ) | (684 | ) | (1,922 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | 198,224 | 16,978 | 73,825 | 35,772 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | 214,889 | 15,088 | 267,636 | 33,404 | ||||||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (21,421 | ) | (7,683 | ) | (3,527 | ) | — | |||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | 1,217,290 | 2,490,317 | 4,426,126 | 2,390,277 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 1,410,758 | 2,497,722 | 4,690,235 | 2,423,681 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 2,497,722 | — | 2,423,681 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 3,908,480 | $ | 2,497,722 | $ | 7,113,916 | $ | 2,423,681 | ||||||||
|
|
aFor the period November 3, 2017 (commencement of operations) to March 31, 2018.
bFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
240 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE South Korea ETF | Franklin FTSE Switzerland ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018b | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 80,799 | $ | 58,440 | $ | 40,453 | $ | 22,339 | ||||||||
Net realized gain (loss) | (74,063 | ) | (70,934 | ) | (17,531 | ) | (437 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | (2,233,708 | ) | (886,880 | ) | 49,898 | (67,085 | ) | |||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (2,226,972 | ) | (899,374 | ) | 72,820 | (45,183 | ) | |||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | (492 | ) | (26,811 | ) | (60,937 | ) | — | |||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | 26,906,909 | 2,352,538 | 2,355,977 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | (2,227,464 | ) | 25,980,724 | 2,364,421 | 2,310,794 | |||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 25,980,724 | — | 2,310,794 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 23,753,260 | $ | 25,980,724 | $ | 4,675,215 | $ | 2,310,794 | ||||||||
|
|
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
bFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 241 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets (continued)
Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | |||||||||||||||
Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | Six Months Ended September 30, 2018 (unaudited) | Year Ended March 31, 2018a | |||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 160,144 | $ | (3,997 | ) | $ | 175,760 | $ | 38,381 | |||||||
Net realized gain (loss) | 6,535 | (8,531 | ) | 14,568 | (2,200 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) | (112,427 | ) | 148,220 | (337,154 | ) | 8,468 | ||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets resulting from operations | 54,252 | 135,692 | (146,826 | ) | 44,649 | |||||||||||
|
| |||||||||||||||
Distributions to shareholders: (Note 1f) | — | — | (52,364 | ) | (10,964 | ) | ||||||||||
|
| |||||||||||||||
Capital share transactions: (Note 2) | — | 5,132,586 | 11,399,228 | 2,489,142 | ||||||||||||
|
| |||||||||||||||
Net increase (decrease) in net assets | 54,252 | 5,268,278 | 11,200,038 | 2,522,827 | ||||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 5,268,278 | — | 2,522,827 | — | ||||||||||||
|
| |||||||||||||||
End of period (Note 1f) | $ | 5,322,530 | $ | 5,268,278 | $ | 13,722,865 | $ | 2,522,827 | ||||||||
|
|
aFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
242 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of thirty-five separate funds, twenty of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Each of the Funds are an exchange traded fund (ETF) and seek to provide the investment results that closely correspond, before fees and expenses, to the performance of each Fund’s corresponding underlying index.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Equity securities and derivative financial instruments (derivatives) listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of 4 p.m. Eastern time. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. London time on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.
Certain derivative financial instruments trade in the OTC market. The Funds’ pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.
The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every Funds’ business day. Occasionally, events occur between the time at which trading in a foreign security is completed and 4 p.m. Eastern time that might call into question the reliability of the value of a portfolio security held by the Funds. As a result, differences may arise between the value of the Funds’ portfolio securities as determined at the foreign market close and the latest indications of value at 4 p.m. Eastern time. The VC monitors price movements for significant events following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
a. Financial Instrument Valuation (continued)
by the Funds. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.
When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the Funds’ NAV is not calculated, which could result in differences between the value of the Funds’ portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Funds for financial reporting purposes.
b. Foreign Currency Translation
Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.
The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statements of Operations.
Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.
c. Derivative Financial Instruments
Certain or all Funds invested in derivative financial instruments in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.
Derivative counterparty credit risk is managed through a formal evaluation of the creditworthiness of all potential counterparties. Certain or all Funds attempt to reduce their exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements, events of default, or early termination. Termination events applicable to the counterparty include certain deteriorations in the credit quality of the counterparty. Termination events applicable to the Funds include failure of the Funds to maintain certain net asset levels and/or limit the decline in net assets over various periods of time. In the event of default or early termination, the ISDA master agreement gives the non-defaulting party the right to net and close-out all transactions traded, whether or not arising under the ISDA agreement, to one net amount payable by one counterparty to the other. However, absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by the Funds of any net liability owed to that counterparty under the ISDA agreement.
Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer
244 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty within a few business days. Collateral pledged and/or received by the Fund, if any, is held in segregated accounts with the Fund’s custodian/ counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Funds’ investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.
Certain or all Funds entered into exchange traded futures contracts primarily to manage and/or gain exposure to equity price risk. A futures contract is an agreement between the Fund and a counterparty to buy or sell an asset at a specified price on a future date. Required initial margins are pledged by the Fund, and the daily change in fair value is accounted for as a variation margin payable or receivable in the Statements of Assets and Liabilities.
Certain or all Funds entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.
See Note 7 regarding other derivative information.
d. Securities Lending
Certain or all Funds participate in an agency based securities lending program to earn additional income. The Fund receives cash collateral against the loaned securities in an amount equal to at least 102% of the fair value of the loaned securities. Collateral is maintained over the life of the loan in an amount not less than 100% of the fair value of loaned securities, as determined at the close of Fund business each day; any additional collateral required due to changes in security values is delivered to the Fund on the next business day. The collateral is deposited into a joint cash account with other funds and is used to invest in a money market fund managed by Franklin Advisers, Inc. The Fund may receive income from the investment of cash collateral, in addition to lending fees and rebates paid by the borrower. Income from securities loaned, net of fees paid to the securities lending agent and/or third-party vendor, is reported separately in the Statements of Operations. The Fund bears the market risk
with respect to the collateral investment, securities loaned, and the risk that the agent may default on its obligations to the Fund. If the borrower defaults on its obligation to return the securities loaned, the Fund has the right to repurchase the securities in the open market using the collateral received. The securities lending agent has agreed to indemnify the Fund in the event of default by a third party borrower.
e. Income and Deferred Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which the Funds invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, certain or all Funds record an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of September 30, 2018, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years). Open tax years are those that remain subject to examination and are based on the statute of limitations in each jurisdiction in which the Fund invests.
f. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined
libertyshares.com | Semiannual Report | 245 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
f. Security Transactions, Investment Income, Expenses and Distributions (continued)
according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.*
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense. These expenses are paid by the Funds or by Franklin Advisers, Inc. as applicable, according to the terms of the unified management fee agreement.
g. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
h. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
*Effective with the current reporting period, it is no longer required to present certain line items on the Statements of Changes in Net Assets. Such disclosure changes are included in the Statements of Changes in Net Assets, therefore prior period amounts are presented below.
For the year ended March 31, 2018, distributions to shareholders were as follows:
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Distributions from net investment income: | $ | — | $ | (22,846 | ) | $ | (21,049 | ) | $ | (10,464 | ) | |||||
Franklin FTSE China ETF | Franklin Europe | Franklin Europe | Franklin France | |||||||||||||
Distributions from net investment income: | $ | (336 | ) | $ | (23,965 | ) | $ | (16,503 | ) | $ | (5,569 | ) | ||||
Franklin Germany | Franklin FTSE Hong Kong ETF | Franklin India | Franklin FTSE Italy ETF | |||||||||||||
Distributions from net investment income: | $ | — | $ | (19,614 | ) | $ | — | $ | (5,007 | ) | ||||||
Franklin Japan | Franklin FTSE Japan Hedged ETF | Franklin FTSE Mexico ETF | Franklin FTSE Russia ETF | |||||||||||||
Distributions from net investment income: | $ | (15,507 | ) | $ | (15,372 | ) | $ | (7,683 | ) | $ | — | |||||
Franklin FTSE South Korea ETF | Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin United Kingdom | |||||||||||||
Distributions from net investment income: | $ | (26,811 | ) | $ | — | $ | — | $ | (10,964 | ) |
246 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
For the year ended March 31, 2018, undistributed net investment income, distributions in excess of net investment income, and accumulated net investment loss included in net assets were as follows:
Fund | Undistributed net investment income (loss) | Distribution in excess of net investment income | Accumulated net investment loss | |||||||||
Franklin FTSE Asia ex Japan ETF | $ | 6,112 | $ | — | $ | — | ||||||
Franklin FTSE Australia ETF | 43,205 | — | — | |||||||||
Franklin FTSE Brazil ETF | 348,056 | — | — | |||||||||
Franklin FTSE Canada ETF | 14,773 | — | — | |||||||||
Franklin FTSE China ETF | — | — | (11,229 | ) | ||||||||
Franklin FTSE Europe ETF | 702,383 | — | — | |||||||||
Franklin FTSE Europe Hedged ETF | — | (402,369 | ) | — | ||||||||
Franklin FTSE France ETF | 2,625 | — | — | |||||||||
Franklin FTSE Germany ETF | 5,376 | — | — | |||||||||
Franklin FTSE Hong Kong ETF | 27,702 | — | — | |||||||||
Franklin FTSE India ETF | 2,164 | — | — | |||||||||
Franklin FTSE Italy ETF | 5,919 | — | — | |||||||||
Franklin FTSE Japan ETF | 798,554 | — | — | |||||||||
Franklin FTSE Japan Hedged ETF | — | (1,934,972 | ) | — | ||||||||
Franklin FTSE Mexico ETF | 4,480 | — | — | |||||||||
Franklin FTSE Russia ETF | — | — | (2 | ) | ||||||||
Franklin FTSE South Korea ETF | — | (1,809 | ) | — | ||||||||
Franklin FTSE Switzerland ETF | 22,210 | — | — | |||||||||
Franklin FTSE Taiwan ETF | — | — | (3,621 | ) | ||||||||
Franklin FTSE United Kingdom ETF | 28,168 | — | — |
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specified number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities).
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
libertyshares.com | Semiannual Report | 247 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
At September 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
Franklin FTSE Asia ex Japan ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 400,000 | $ | 9,428,138 | 400,000 | $ | 9,470,271 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Australia ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 350,000 | $ | 8,801,882 | 550,000 | $ | 14,079,999 | ||||||||||||||
Shares redeemed | (200,000 | ) | (5,105,211 | ) | (450,000 | ) | (11,575,578 | ) | ||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 150,000 | $ | 3,696,671 | 100,000 | $ | 2,504,421 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Brazil ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018c | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 1,600,000 | $ | 44,291,655 | ||||||||||||||
Shares redeemed | (1,100,000 | ) | (22,341,297 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (1,100,000 | ) | $ | (22,341,297 | ) | 1,600,000 | $ | 44,291,655 | ||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Canada ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 100,000 | $ | 2,454,490 | 500,000 | $ | 12,447,175 | ||||||||||||||
Shares redeemed | — | — | (400,000 | ) | (10,071,251 | ) | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 100,000 | $ | 2,454,490 | 100,000 | $ | 2,375,924 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE China ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 400,000 | $ | 9,618,208 | 1,200,000 | $ | 32,494,727 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Europe ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 4,200,000 | $ | 105,431,782 | ||||||||||||||
Shares redeemed | (800,000 | ) | (19,530,228 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | (800,000 | ) | $ | (19,530,228 | ) | 4,200,000 | $ | 105,431,782 | ||||||||||||
|
|
248 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Franklin FTSE Europe Hedged ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 1,400,000 | $ | 34,927,749 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE France ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 100,000 | $ | 2,532,072 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Germany ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 100,000 | $ | 2,554,846 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Hong Kong ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 150,000 | $ | 3,754,680 | 300,000 | $ | 7,600,688 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE India ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 4,613,516 | 100,000 | $ | 2,382,811 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Italy ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 300,000 | $ | 7,279,973 | 100,000 | $ | 2,550,711 | ||||||||||||||
Shares redeemed | (300,000 | ) | (7,113,549 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | — | $ | 166,424 | 100,000 | $ | 2,550,711 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Japan ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 6,000,000 | $ | 161,918,973 | 3,600,000 | $ | 100,853,671 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 249 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. Shares of Beneficial Interest (continued)
Franklin FTSE Japan Hedged ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 1,800,000 | $ | 47,422,675 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Mexico ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018c | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 50,000 | $ | 1,217,290 | 100,000 | $ | 2,490,317 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Russia ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 200,000 | $ | 4,426,126 | 100,000 | $ | 2,390,277 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE South Korea ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 1,000,000 | $ | 26,906,909 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Switzerland ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018a | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 100,000 | $ | 2,352,538 | 100,000 | $ | 2,355,977 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE Taiwan ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | — | $ | — | 200,000 | $ | 5,132,586 | ||||||||||||||
|
| |||||||||||||||||||
Franklin FTSE United Kingdom ETF | ||||||||||||||||||||
Six Months Ended September 30, 2018 | Year Ended March 31, 2018b | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 500,000 | $ | 12,615,557 | 100,000 | $ | 2,489,142 | ||||||||||||||
Shares redeemed | (50,000 | ) | (1,216,329 | ) | — | — | ||||||||||||||
|
| |||||||||||||||||||
Net increase (decrease) | 450,000 | $ | 11,399,228 | 100,000 | $ | 2,489,142 | ||||||||||||||
|
|
aFor the period February 6, 2018 (commencement of operations) to March 31, 2018.
bFor the period November 2, 2017 (commencement of operations) to March 31, 2018.
cFor the period November 3, 2017 (commencement of operations) to March 31, 2018.
250 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers and/or directors of the following subsidiaries:
Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter |
a. Management Fees
The Funds pay a unified management fee to Advisers whereby Advisers has agreed to reimburse the Funds’ acquired fund fee and expenses (if any) and pay all of the ordinary operating expenses of the Funds, including custody, transfer agency, and Trustee fees and expenses, among others, but excluding payments under the Funds’ Rule 12b-1 plan (if any), brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments), taxes, interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), litigation expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto), and other nonroutine or extraordinary expenses. The fees are based on the average daily net assets of each of the Funds as follows:
Annualized Fee Rate | ||
Franklin FTSE Asia ex Japan ETF | 0.19% | |
Franklin FTSE Australia ETF | 0.09% | |
Franklin FTSE Brazil ETF | 0.19% | |
Franklin FTSE Canada ETF | 0.09% | |
Franklin FTSE China ETF | 0.19% | |
Franklin FTSE Europe ETF | 0.09% | |
Franklin FTSE Europe Hedged ETF | 0.09% | |
Franklin FTSE France ETF | 0.09% | |
Franklin FTSE Germany ETF | 0.09% | |
Franklin FTSE Hong Kong ETF | 0.09% | |
Franklin FTSE India ETF | 0.19% | |
Franklin FTSE Italy ETF | 0.09% | |
Franklin FTSE Japan ETF | 0.09% | |
Franklin FTSE Japan Hedged ETF | 0.09% | |
Franklin FTSE Mexico ETF | 0.19% | |
Franklin FTSE Russia ETF | 0.19% | |
Franklin FTSE South Korea ETF | 0.09% | |
Franklin FTSE Switzerland ETF | 0.09% | |
Franklin FTSE Taiwan ETF | 0.19% | |
Franklin FTSE United Kingdom ETF | 0.09% |
b. Administrative Fees
Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.
libertyshares.com | Semiannual Report | 251 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
c. Investments in Affiliated Management Investment Companies
Certain or all Funds invest in one or more affiliated management investment companies for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Funds are waived on assets invested in the affiliated management investment companies, as noted in the Statements of Operations, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. During the period ended September 30, 2018, the Funds held investments in affiliated management investment companies as follows:
Number of Shares Held at Beginning of Period | Gross Additions | Gross Reductions | Number of Shares Held at End of Period | Value at End of Period | Dividend Income | Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||
Franklin FTSE Japan ETF | ||||||||||||||||||||||||||||||||
Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 1.69% | — | 356,915 | (172,685 | ) | 184,230 | $ | 184,230 | $ | — | $ | — | $ | — | |||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Franklin FTSE South Korea ETF | ||||||||||||||||||||||||||||||||
Non-Controlled Affiliates | ||||||||||||||||||||||||||||||||
Institutional Fiduciary Trust Money Market Portfolio 1.69% | — | 735,600 | (42,405 | ) | 693,195 | $ | 693,195 | $ | — | $ | — | $ | — | |||||||||||||||||||
|
|
d. Other Affiliated Transactions
At September 30, 2018, the shares of the Funds were owned by the following entities:
Fund | Shares | Percentage of Outstanding Sharesa | ||||||
Franklin FTSE Asia ex Japan ETF | ||||||||
Franklin Resources Inc. | 100,000 | 12.5% | ||||||
|
| |||||||
Franklin FTSE Australia ETF | ||||||||
Franklin Resources Inc. | 27,000 | 10.8% | ||||||
|
| |||||||
Franklin FTSE Europe ETF | ||||||||
Franklin Conservative Allocation Fund | 489,855 | 14.4% | ||||||
Franklin Growth Allocation Fund | 1,043,500 | 30.7% | ||||||
Franklin LifeSmart™ 2020 – 2055 Retirement Target Funds | 582,555 | 17.1% | ||||||
Franklin Moderate Allocation Fund | 1,189,212 | 35.0% | ||||||
|
| |||||||
Total | 3,305,122 | 97.2% | ||||||
|
| |||||||
Franklin FTSE Europe Hedged ETF | ||||||||
Franklin Balanced Fund | 1,350,000 | 96.4% | ||||||
|
| |||||||
Franklin FTSE India ETF | ||||||||
Franklin Resources Inc. | 25,000 | 8.3% | ||||||
|
| |||||||
Franklin FTSE Japan ETF | ||||||||
Franklin Conservative Allocation Fund | 486,757 | 5.1% | ||||||
Franklin Growth Allocation Fund | 1,007,100 | 10.5% | ||||||
Franklin Moderate Allocation Fund | 1,201,977 | 12.5% | ||||||
Franklin Resources Inc. | 485,000 | 5.1% | ||||||
|
| |||||||
Total | 3,180,834 | 33.2% | ||||||
|
|
252 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Fund | Shares | Percentage of Outstanding Sharesa | ||||||
Franklin FTSE Japan Hedged ETF | ||||||||
Franklin Balanced Fund | 1,250,000 | 69.4% | ||||||
|
| |||||||
Franklin FTSE Mexico ETF | ||||||||
Franklin Resources Inc. | 10,000 | 6.7% | ||||||
|
| |||||||
Franklin FTSE Russia ETF | ||||||||
Franklin Resources Inc. | 20,000 | 6.7% | ||||||
|
|
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2018, the capital loss carryforwards were as follows:
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Capital loss carryforwards: | ||||||||||||||||
Short term | $ | 10,076 | $ | 821 | $ | 20,985 | $ | 812 | ||||||||
|
| |||||||||||||||
Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Capital loss carryforwards: | ||||||||||||||||
Short term | $ | 34,331 | $ | 20,674 | $ | 57,035 | $ | 543 | ||||||||
Long term | — | 2,115 | 109,768 | — | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 34,331 | $ | 22,789 | $ | 166,803 | $ | 543 | ||||||||
|
| |||||||||||||||
Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Capital loss carryforwards: | ||||||||||||||||
Short term | $ | 1,563 | $ | 16,441 | $ | 2,854 | $ | 1,039 | ||||||||
|
| |||||||||||||||
Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE Mexico ETF | Franklin FTSE Russia ETF | |||||||||||||
Capital loss carryforwards: | ||||||||||||||||
Short term | $ | 60,853 | $ | 7,450 | $ | 13,943 | $ | 1,915 | ||||||||
Long term | — | 32,871 | — | — | ||||||||||||
|
| |||||||||||||||
Total capital loss carryforwards | $ | 60,853 | $ | 40,321 | $ | 13,943 | $ | 1,915 | ||||||||
|
|
libertyshares.com | Semiannual Report | 253 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
4. Income Taxes (continued)
Franklin FTSE South Korea ETF | Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | |||||||||||||
Capital loss carryforwards: | ||||||||||||||||
Short term | $ | 34,735 | $ | 49 | $ | 4,210 | $ | 2,601 | ||||||||
|
|
For tax purposes, the Funds may elect to defer any portion of a late-year ordinary loss to the first day of the following fiscal year. At March 31, 2018, the deferred late-year ordinary losses were as follows:
Franklin FTSE China ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE Japan Hedged ETF | Franklin FTSE South Korea ETF | Franklin FTSE Taiwan ETF | ||||||||||||||||
Late-year ordinary losses | $ | 9,344 | $ | 397,355 | $ | 1,868,452 | $ | 332 | $ | 2,453 | ||||||||||
|
|
At September 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Franklin FTSE Asia ex Japan | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Cost of investments | $ | 19,013,424 | $ | 6,587,592 | $ | 12,247,268 | $ | 5,005,577 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 549,499 | $ | 92,874 | $ | 576,621 | $ | 190,088 | ||||||||
Unrealized depreciation | (2,061,466 | ) | (411,471 | ) | (2,301,359 | ) | (206,070 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (1,511,967 | ) | $ | (318,597 | ) | $ | (1,724,738 | ) | $ | (15,982 | ) | ||||
|
| |||||||||||||||
Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin Europe | Franklin FTSE France ETF | |||||||||||||
Cost of investments | $ | 42,246,505 | $ | 85,578,197 | $ | 36,213,452 | $ | 2,527,446 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 772,665 | $ | 4,079,677 | $ | 1,774,281 | $ | 186,530 | ||||||||
Unrealized depreciation | (5,970,564 | ) | (7,373,496 | ) | (3,267,810 | ) | (167,555 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (5,197,899 | ) | $ | (3,293,819 | ) | $ | (1,493,529 | ) | $ | 18,975 | |||||
|
| |||||||||||||||
Franklin Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Cost of investments | $ | 2,527,613 | $ | 11,356,909 | $ | 6,978,436 | $ | 2,648,257 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 81,066 | $ | 496,946 | $ | 215,179 | $ | 35,535 | ||||||||
Unrealized depreciation | (333,425 | ) | (673,475 | ) | (724,984 | ) | (381,667 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (252,359 | ) | $ | (176,529 | ) | $ | (509,805 | ) | $ | (346,132 | ) | ||||
|
|
254 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Franklin FTSE Japan ETF | Franklin Hedged ETF | Franklin FTSE Mexico ETF | Franklin FTSE Russia ETF | |||||||||||||
Cost of investments | $ | 262,394,717 | $ | 48,607,247 | $ | 3,690,546 | $ | 6,955,908 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 11,208,041 | $ | 4,508,413 | $ | 339,160 | $ | 543,911 | ||||||||
Unrealized depreciation | (18,772,802 | ) | (3,661,742 | ) | (124,141 | ) | (433,606 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (7,564,761 | ) | $ | 846,671 | $ | 215,019 | $ | 110,305 | |||||||
|
| |||||||||||||||
Franklin FTSE South Korea ETF | Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | |||||||||||||
Cost of investments | $ | 27,537,090 | $ | 4,676,632 | $ | 5,282,138 | $ | 13,938,485 | ||||||||
|
| |||||||||||||||
Unrealized appreciation | $ | 478,613 | $ | 88,648 | $ | 454,530 | $ | 276,068 | ||||||||
Unrealized depreciation | (3,603,284 | ) | (105,997 | ) | (419,953 | ) | (604,277 | ) | ||||||||
|
| |||||||||||||||
Net unrealized appreciation (depreciation) | $ | (3,124,671 | ) | $ | (17,349 | ) | $ | 34,577 | $ | (328,209 | ) | |||||
|
|
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of foreign currency transactions, financial futures transactions, passive foreign investment company shares and wash sales.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities and in-kind transactions, if any) for the period ended September 30, 2018, were as follows:
Franklin FTSE Asia ex Japan ETF | Franklin ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Purchases | $ | 4,600,852 | $ | 228,726 | $ | 1,344,139 | $ | 111,087 | ||||||||
Sales | $ | 363,244 | $ | 100,552 | $ | 23,805,949 | $ | 75,923 | ||||||||
Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Purchases | $ | 11,202,176 | $ | 2,781,042 | $ | 3,267,251 | $ | 106,569 | ||||||||
Sales | $ | 1,158,759 | $ | 3,000,732 | $ | 819,519 | $ | 100,725 | ||||||||
Franklin FTSE Germany ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Purchases | $ | 198,954 | $ | 201,178 | $ | 4,681,013 | $ | 230,210 | ||||||||
Sales | $ | 210,270 | $ | 134,282 | $ | 73,024 | $ | 175,202 |
libertyshares.com | Semiannual Report | 255 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. Investment Transactions (continued)
Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | Franklin Mexico ETF | Franklin FTSE Russia ETF | |||||||||||||
Purchases | $ | 4,034,951 | $ | 4,128,947 | $ | 241,528 | $ | 839,173 | ||||||||
Sales | $ | 2,396,992 | $ | 486,290 | $ | 209,322 | $ | 646,440 | ||||||||
Franklin FTSE South Korea ETF | Franklin FTSE Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | |||||||||||||
Purchases | $ | 488,940 | $ | 172,060 | $ | — | $ | 442,918 | ||||||||
Sales | $ | 348,128 | $ | 183,639 | $ | — | $ | 360,145 |
In-kind transactions associated with creation and redemptions for the period ended September 30, 2018, were as follows:
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Australia ETF | Franklin FTSE Brazil ETF | Franklin FTSE Canada ETF | |||||||||||||
Cost of Securities Received | $ | 5,369,893 | $ | 8,742,664 | $ | — | $ | 2,446,087 | ||||||||
Value of Securities Delivereda | $ | — | $ | 5,086,983 | $ | — | $ | — | ||||||||
Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | Franklin FTSE France ETF | |||||||||||||
Cost of Securities Received | $ | — | $ | — | $ | — | $ | — | ||||||||
Value of Securities Delivereda | $ | — | $ | 19,366,968 | $ | — | $ | — | ||||||||
Franklin ETF | Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | |||||||||||||
Cost of Securities Received | $ | — | $ | 3,740,566 | $ | — | $ | 7,240,866 | ||||||||
Value of Securities Delivereda | $ | — | $ | — | $ | — | $ | 7,108,197 | ||||||||
Franklin FTSE Japan ETF | Franklin Japan Hedged ETF | Franklin FTSE Mexico ETF | Franklin FTSE Russia ETF | |||||||||||||
Cost of Securities Received | $ | 160,052,228 | $ | — | $ | 1,211,693 | $ | 4,376,182 | ||||||||
Value of Securities Delivereda | $ | — | $ | — | $ | — | $ | — | ||||||||
Franklin FTSE South Korea ETF | Franklin Switzerland ETF | Franklin FTSE Taiwan ETF | Franklin FTSE United Kingdom ETF | |||||||||||||
Cost of Securities Received | $ | — | $ | 2,336,555 | $ | 456,491 | $ | 12,551,390 | ||||||||
Value of Securities Delivereda | $ | — | $ | — | $ | 297,204 | $ | 1,205,855 |
aRealized gains and losses from in-kind redemptions, as shown on the Statements of Operations, are not recognized by the Funds for tax purposes
256 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
At September 30, 2018, in connection with securities lending transactions, certain or all Funds loaned investments and received cash collateral as follows:
Franklin FTSE Japan ETF | Franklin FTSE South Korea ETF | |||||||
Securities lending transactionsa: | ||||||||
Equity investmentsb | $ | 184,230 | $ | 693,195 |
aThe agreements can be terminated at any time.
bThe gross amount of recognized liability for such transactions is included in payable upon return of securities loaned in the Statements of Assets and Liabilities.
6. Concentration of Risk
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.
The United States and other nations have imposed and could impose additional sanctions on certain issuers in Russia due to regional conflicts. These sanctions could result in the devaluation of Russia’s currency, a downgrade in Russian issuers’ credit ratings, or a decline in the value and liquidity of Russian stocks or other securities. Such sanctions could also adversely affect Russia’s economy, possibly forcing the economy into a recession. Certain or all Funds may be prohibited from investing in securities issued by companies subject to such sanctions. In addition, if the Fund holds the securities of an issuer that is subject to such sanctions, an immediate freeze of that issuer’s securities could result, impairing the ability of the Fund to buy, sell, receive or deliver those securities. There is also the risk that countermeasures could be taken by Russia’s government, which could involve the seizure of the Fund’s assets. These risks could affect the value of the Funds’ portfolio. While the Funds hold securities of certain issuers recently impacted by the sanctions, existing investments do not presently violate the applicable terms and conditions of the sanctions. The sanctions currently do not affect the Fund’s ability to sell these securities. At September 30, 2018, Franklin FTSE Russia ETF had 99.3% of its net assets invested in Russia. The remaining Funds in the Trust did not have significant investment in Russia.
7. Other Derivative Information
At September 30, 2018, the Funds’ investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:
Derivative Contracts Not Accounted for as Hedging Instruments | Asset Derivatives | Liability Derivatives | ||||||||||
Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | |||||||||
Franklin FTSE Asia ex Japan ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 1,035 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Franklin FTSE Brazil ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 3,828 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Franklin FTSE China ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 467 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Franklin FTSE Europe ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 5,012 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
|
libertyshares.com | Semiannual Report | 257 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
7. Other Derivative Information (continued)
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value | ||||||||
Franklin FTSE Europe Hedged ETF | ||||||||||||
Foreign exchange contracts | Unrealized appreciation on | $ | 125,193 | Unrealized depreciation on | $ | 76,128 | ||||||
Equity contracts | Variation margin on futures contracts | 5,118 | a | Variation margin on futures contracts | — | |||||||
|
|
|
| |||||||||
Totals | $ | 130,311 | $ | 76,128 | ||||||||
|
|
|
| |||||||||
Franklin FTSE Hong Kong ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 356 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Franklin FTSE India ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | — | Variation margin on futures contracts | $ | 469 | a | |||||
|
|
|
| |||||||||
Franklin FTSE Japan ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 42,343 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Franklin FTSE Japan Hedged ETF | ||||||||||||
Foreign exchange contracts | Unrealized appreciation on | $ | 1,180,249 | Unrealized depreciation on | $ | 10,241 | ||||||
Equity contracts | Variation margin on futures contracts | 5,181 | a | Variation margin on futures contracts | — | |||||||
|
|
|
| |||||||||
Totals | $ | 1,185,430 | $ | 10,241 | ||||||||
|
|
|
| |||||||||
Franklin FTSE South Korea ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 385 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
| |||||||||
Franklin FTSE United Kingdom ETF | ||||||||||||
Equity contracts | Variation margin on futures contracts | $ | 2,817 | a | Variation margin on futures contracts | $ | — | |||||
|
|
|
|
aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payable at period end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.
For the period ended September 30, 2018, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
Franklin FTSE Asia ex Japan ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | (7,139 | ) | Futures contracts | $ | 1,035 | |||||
|
|
|
| |||||||||
Franklin FTSE Brazil ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | 1,705 | Futures contracts | $ | 3,828 | ||||||
|
|
|
|
258 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
Franklin FTSE China ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | (12,050 | ) | Futures contracts | $ | 467 | |||||
|
|
|
| |||||||||
Franklin FTSE Europe ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | 12,045 | Futures contracts | $ | 9,475 | ||||||
|
|
|
| |||||||||
Franklin FTSE Europe Hedged ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Foreign exchange contracts | Forward exchange contracts | $ | 2,095,967 | Forward exchange contracts | $ | 234,034 | ||||||
Equity contracts | Futures contracts | (408 | ) | Futures contracts | 7,030 | |||||||
|
|
|
| |||||||||
Totals | $ | 2,095,559 | $ | 241,064 | ||||||||
|
|
|
| |||||||||
Franklin FTSE Hong Kong ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | (2,950 | ) | Futures contracts | $ | 356 | |||||
|
|
|
| |||||||||
Franklin FTSE India ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | 679 | Futures contracts | $ | (469 | ) | |||||
|
|
|
| |||||||||
Franklin FTSE Italy ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | (1,137 | ) | Futures contracts | $ | — | |||||
|
|
|
| |||||||||
Franklin FTSE Japan ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | 39,525 | Futures contracts | $ | 34,612 | ||||||
|
|
|
| |||||||||
Franklin FTSE Japan Hedged ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Foreign exchange contracts | Forward exchange contracts | $ | 2,194,136 | Forward exchange contracts | $ | 1,224,718 | ||||||
Equity contracts | Futures contracts | 30,951 | Futures contracts | 599 | ||||||||
|
|
|
| |||||||||
Totals | $ | 2,225,087 | $ | 1,225,317 | ||||||||
|
|
|
| |||||||||
Franklin FTSE South Korea ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | (2,935 | ) | Futures contracts | $ | 325 | |||||
|
|
|
|
libertyshares.com | Semiannual Report | 259 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
7. Other Derivative Information (continued)
Asset Derivatives | Liability Derivatives | |||||||||||
Derivative Contracts Not Accounted for as Hedging Instruments | Statements of Operations Locations | Net Realized Gain (Loss) for the Period | Statements of Operations Locations | Net Change in Unrealized Appreciation (Depreciation) for the Period | ||||||||
Franklin FTSE Taiwan ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | 4,266 | Futures contracts | $ | — | ||||||
|
|
|
| |||||||||
Franklin FTSE United Kingdom ETF | ||||||||||||
Net realized gain (loss) from: | Net change in unrealized appreciation (depreciation) on: | |||||||||||
Equity contracts | Futures contracts | $ | (5,333 | ) | Futures contracts | $ | 2,817 | | ||||
|
|
|
|
For the period ended September 30, 2018, the average month end notional amount of futures contracts and average month end contract value for forward exchange contracts were as follows:
Franklin FTSE Asia ex Japan ETF | Franklin FTSE Brazil ETF | Franklin FTSE China ETF | Franklin FTSE Europe ETF | Franklin FTSE Europe Hedged ETF | ||||||||||||||||
Futures contracts | $ | 61,431 | $ | 89,964 | $ | 98,971 | $ | 675,989 | $ | 292,662 | ||||||||||
Forward exchange contracts | $ | — | $ | — | $ | — | $ | — | $ | 97,692,581 | ||||||||||
Franklin FTSE Hong Kong ETF | Franklin FTSE India ETF | Franklin FTSE Italy ETF | Franklin FTSE Japan ETF | Franklin FTSE Japan Hedged ETF | ||||||||||||||||
Futures contracts | $ | 16,225 | $ | 9,733 | $ | 3,631 | $ | 1,116,723 | $ | 292,662 | ||||||||||
Forward exchange contracts | $ | — | $ | — | $ | — | $ | — | $ | 130,274,067 | ||||||||||
Franklin FTSE South Korea ETF | Franklin FTSE Taiwan ETF | Franklin FTSE | ||||||||||||||||||
Futures contracts | $ | 40,787 | $ | 25,653 | $ | 27,732 |
260 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
At September 30, 2018, the Funds’ OTC derivative assets and liabilities were as follows:
Gross and Net Amounts of Assets and Liabilities Presented in the Statements of Assets and Liabilities | ||||||||
Assetsa | Liabilitiesa | |||||||
Franklin FTSE Europe Hedged ETF | ||||||||
Forward exchange contracts | $ | 125,193 | $ | 76,128 | ||||
|
| |||||||
Franklin FTSE Japan Hedged ETF | ||||||||
Forward exchange contracts | $ | 1,180,249 | $ | 10,241 | ||||
|
|
aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.
At September 30, 2018, the Funds’ OTC derivative assets, which may be offset against the Funds’ OTC derivative liabilities and collateral received from the counterparty, are as follows:
Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
Gross and Net Amounts of Assets Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Received | Cash Collateral Received | Net Amount (Not less than zero) | ||||||||||||||||
Franklin FTSE Europe Hedged ETF | ||||||||||||||||||||
Counterparty | ||||||||||||||||||||
BOFA | $ | 68,904 | $ | (68,904 | ) | $ | — | $ | — | $ | — | |||||||||
MSCO | 56,289 | (322 | ) | — | — | 55,967 | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 125,193 | $ | (69,226 | ) | $ | — | $ | — | $ | 55,967 | |||||||||
|
| |||||||||||||||||||
Franklin FTSE Japan Hedged ETF | ||||||||||||||||||||
Counterparty | ||||||||||||||||||||
BOFA | $ | 1,061,295 | $ | (9,747 | ) | $ | — | $ | — | $ | 1,051,548 | |||||||||
MSCO | 118,954 | (494 | ) | — | — | 118,460 | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 1,180,249 | $ | (10,241 | ) | $ | — | $ | — | $ | 1,170,008 | |||||||||
|
|
At September 30, 2018, the Funds’ OTC derivative liabilities, which may be offset against the Funds’ OTC derivative assets and collateral pledged to the counterparty, are as follows:
Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
Gross and Net Amounts of Liabilities Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Pledged | Cash Collateral Pledged | Net Amount (Not less than zero) | ||||||||||||||||
Franklin FTSE Europe Hedged ETF | ||||||||||||||||||||
Counterparty | ||||||||||||||||||||
BOFA | $ | 75,806 | $ | (68,904 | ) | $ | — | $ | — | $ | 6,902 | |||||||||
MSCO | 322 | (322 | ) | — | — | — | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 76,128 | $ | (69,226 | ) | $ | — | $ | — | $ | 6,902 | |||||||||
|
|
libertyshares.com | Semiannual Report | 261 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
7. Other Derivative Information (continued)
Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||
Gross and Net Amounts of Liabilities Presented in the Statements of Assets and Liabilities | Financial Instruments Available for Offset | Financial Instruments Collateral Pledged | Cash Collateral Pledged | Net Amount (Not less than zero) | ||||||||||||||||
Franklin FTSE Japan Hedged ETF | ||||||||||||||||||||
Counterparty | ||||||||||||||||||||
BOFA | $ | 9,747 | $ | (9,747 | ) | $ | — | $ | — | $ | — | |||||||||
MSCO | 494 | (494 | ) | — | — | — | ||||||||||||||
|
| |||||||||||||||||||
Total | $ | 10,241 | $ | (10,241 | ) | $ | — | $ | — | $ | — | |||||||||
|
|
See Note 1(c) regarding derivative financial instruments.
See Abbreviations on page 266.
8. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
• | Level 1 – quoted prices in active markets for identical financial instruments |
• | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
A summary of inputs used as of September 30, 2018, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Franklin FTSE Asia ex Japan ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 9,430,039 | $ | — | $ | — | $ | 9,430,039 | ||||||||
China | 5,837,544 | — | 1,849 | 5,839,393 | ||||||||||||
India | 1,877,868 | — | 850 | 1,878,718 | ||||||||||||
Other Equity Investmentsb | 9,782,311 | — | ^ | — | 9,782,311 | |||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 17,497,723 | $ | — | $ | 2,699 | $ | 17,500,422 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 1,035 | $ | — | $ | — | $ | 1,035 | ||||||||
|
|
262 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Franklin FTSE Australia ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Australia | $ | 6,232,879 | $ | 7,417 | $ | — | $ | 6,240,296 | ||||||||
Other Equity Investments | 28,699 | — | — | 28,699 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 6,261,578 | $ | 7,417 | $ | — | $ | 6,268,995 | ||||||||
|
| |||||||||||||||
Franklin FTSE Brazil ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 10,518,702 | $ | — | $ | — | $ | 10,518,702 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 3,828 | $ | — | $ | — | $ | 3,828 | ||||||||
|
| |||||||||||||||
Franklin FTSE Canada ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 4,989,595 | $ | — | $ | — | $ | 4,989,595 | ||||||||
|
| |||||||||||||||
Franklin FTSE China ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
China | $ | 36,457,372 | $ | — | $ | 11,094 | $ | 36,468,466 | ||||||||
Other Equity Investments | 579,673 | — | — | 579,673 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 37,037,045 | $ | — | $ | 11,094 | $ | 37,048,139 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 467 | $ | — | $ | — | $ | 467 | ||||||||
|
| |||||||||||||||
Franklin FTSE Europe ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 82,279,366 | $ | — | $ | — | $ | 82,279,366 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 5,012 | $ | — | $ | — | $ | 5,012 | ||||||||
|
| |||||||||||||||
Franklin FTSE Europe Hedged ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 34,665,740 | $ | — | $ | — | $ | 34,665,740 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 125,193 | $ | — | $ | 125,193 | ||||||||
Futures Contracts | 5,118 | — | — | 5,118 | ||||||||||||
|
| |||||||||||||||
Total Other Financial Instruments | $ | 5,118 | $ | 125,193 | $ | — | $ | 130,311 | ||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 76,128 | $ | — | $ | 76,128 | ||||||||
|
| |||||||||||||||
Franklin FTSE France ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 2,546,421 | $ | — | $ | — | $ | 2,546,421 | ||||||||
|
|
libertyshares.com | Semiannual Report | 263 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
8. Fair Value Measurements (continued)
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Franklin FTSE Germany ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 2,275,254 | $ | — | $ | — | $ | 2,275,254 | ||||||||
|
| |||||||||||||||
Franklin FTSE Hong Kong ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 11,180,024 | $ | — | $ | — | $ | 11,180,024 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 356 | $ | — | $ | — | $ | 356 | ||||||||
|
| |||||||||||||||
Franklin FTSE India ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 6,466,143 | $ | — | $ | 2,957 | $ | 6,469,100 | ||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 469 | $ | — | $ | — | $ | 469 | ||||||||
|
| |||||||||||||||
Franklin FTSE Italy ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 2,302,125 | $ | — | $ | — | $ | 2,302,125 | ||||||||
|
| |||||||||||||||
Franklin FTSE Japan ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 254,603,383 | $ | — | $ | — | $ | 254,603,383 | ||||||||
Short Term Investments | 184,230 | — | — | 184,230 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 254,787,613 | $ | — | $ | — | $ | 254,787,613 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 42,343 | $ | — | $ | — | $ | 42,343 | ||||||||
|
| |||||||||||||||
Franklin FTSE Japan Hedged ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 48,278,729 | $ | — | $ | — | $ | 48,278,729 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 1,180,249 | $ | — | $ | 1,180,249 | ||||||||
Futures Contracts | 5,181 | — | — | 5,181 | ||||||||||||
|
| |||||||||||||||
Total Other Financial Instruments | $ | 5,181 | $ | 1,180,249 | $ | — | $ | 1,185,430 | ||||||||
|
| |||||||||||||||
Liabilities: | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Forward Exchange Contracts | $ | — | $ | 10,241 | $ | — | $ | 10,241 | ||||||||
|
| |||||||||||||||
Franklin FTSE Mexico ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 3,905,565 | $ | — | $ | — | $ | 3,905,565 | ||||||||
|
|
264 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Franklin FTSE Russia ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 7,066,213 | $ | — | $ | — | $ | 7,066,213 | ||||||||
|
| |||||||||||||||
Franklin FTSE South Korea ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investmentsb | $ | 23,718,839 | $ | — | $ | — | $ | 23,718,839 | ||||||||
Short Term Investments | 693,195 | — | — | 693,195 | ||||||||||||
|
| |||||||||||||||
Total Investments in Securities | $ | 24,412,034 | $ | — | $ | — | $ | 24,412,034 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 385 | $ | — | $ | — | $ | 385 | ||||||||
|
| |||||||||||||||
Franklin FTSE Switzerland ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 4,659,283 | $ | — | $ | — | $ | 4,659,283 | ||||||||
|
| |||||||||||||||
Franklin FTSE Taiwan ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 5,316,715 | $ | — | $ | — | $ | 5,316,715 | ||||||||
|
| |||||||||||||||
Franklin FTSE United Kingdom ETF | ||||||||||||||||
Assets: | ||||||||||||||||
Investments in Securities:a | ||||||||||||||||
Equity Investments | $ | 13,607,459 | $ | — | $ | — | $ | 13,607,459 | ||||||||
|
| |||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Futures Contracts | $ | 2,817 | $ | — | $ | — | $ | 2,817 | ||||||||
|
|
aFor detailed categories, see the accompanying Statement of Investments.
bIncludes common and preferred stocks, management investment companies, as well as other equity interests.
^Includes securities determined to have no value at September 30, 2018.
A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the beginning and/or end of the period.
9. New Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in the ASU modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Management is currently evaluating the impact, if any, of applying this provision.
10. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure, except for the following:
Effective October 9, 2018, the Trust began offering shares of Franklin FTSE Latin America ETF and Franklin FTSE Saudi Arabia ETF. Effective October 10, 2018, the Trust began offering shares of Franklin FTSE South Africa ETF.
libertyshares.com | Semiannual Report | 265 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Counterparty | ||
BOFA | Bank of America Corp. | |
MSCO | Morgan Stanley | |
Selected Portfolio | ||
ADR | American Depository Receipt | |
CDI | Clearing House Electronic Subregister System Depositary Interest | |
GDR | Global Depositary Receipt | |
IDR | International Depositary Receipt | |
NVDR | Non-Voting Depositary Receipt | |
REIT | Real Estate Investment Trust |
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FRANKLIN TEMPLETON ETF TRUST
At March 31, 2018 , more than 50% of the Funds’ total assets were invested in securities of foreign issuers. In most instances, foreign taxes were withheld from income paid to the Funds on these investments. As shown in the table below, the Funds hereby report to shareholders the foreign source income and foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This written statement will allow shareholders of record on June 21, 2018, to treat their proportionate share of foreign taxes paid by the Funds as having been paid directly by them. The shareholder shall consider these amounts as foreign taxes paid in the tax year in which they receive the Fund distribution.
The following table provides a detailed analysis of foreign tax paid, foreign source income, and foreign source qualified dividends as reported by the Funds to shareholders of record.
Fund | Foreign Tax Paid Per Share | Foreign Source Income Per Share | Foreign Source Qualified Dividends Per Share | |||||||||
Franklin FTSE Asia ex Japan ETF | $ | 0.0019 | $ | 0.0198 | $ | 0.0000 | ||||||
Franklin FTSE Australia ETF | $ | 0.0048 | $ | 0.3727 | $ | 0.2822 | ||||||
Franklin FTSE Brazil ETF | $ | 0.0250 | $ | 0.2896 | $ | 0.0000 | ||||||
Franklin FTSE Canada ETF | $ | 0.0308 | $ | 0.1993 | $ | 0.1689 | ||||||
Franklin FTSE Europe ETF | $ | 0.0133 | $ | 0.1845 | $ | 0.1845 | ||||||
Franklin FTSE Europe Hedged ETF | $ | 0.0130 | $ | 0.1350 | $ | 0.1350 | ||||||
Franklin FTSE France ETF | $ | 0.0157 | $ | 0.0974 | $ | 0.0974 | ||||||
Franklin FTSE Germany ETF | $ | 0.0101 | $ | 0.0642 | $ | 0.0642 | ||||||
Franklin FTSE India ETF | $ | 0.0000 | $ | 0.0000 | $ | 0.0000 | ||||||
Franklin FTSE Italy ETF | $ | 0.0198 | $ | 0.1269 | $ | 0.1269 | ||||||
Franklin FTSE Japan ETF | $ | 0.0102 | $ | 0.1006 | $ | 0.0923 | ||||||
Franklin FTSE Japan Hedged ETF | $ | 0.0259 | $ | 0.2191 | $ | 0.2191 | ||||||
Franklin FTSE Mexico ETF | $ | 0.0039 | $ | 0.0850 | $ | 0.0850 | ||||||
Franklin FTSE South Korea ETF | $ | 0.0181 | $ | 0.0745 | $ | 0.0745 | ||||||
Franklin FTSE Switzerland ETF | $ | 0.0395 | $ | 0.2629 | $ | 0.0000 | ||||||
Franklin FTSE United Kingdom ETF | $ | 0.0037 | $ | 0.3882 | $ | 0.3874 |
Foreign Tax Paid Per Share (Column 1) is the amount per share available to you, as a tax credit (assuming you held your shares in the Fund for a minimum of 16 days during the 31-day period beginning 15 days before the ex-dividend date of the Fund’s distribution to which the foreign taxes relate), or, as a tax deduction.
Foreign Source Income Per Share (Column 2) is the amount per share of income dividends attributable to foreign securities held by the Fund, plus any foreign taxes withheld on these dividends. The amounts reported include foreign source qualified dividends that have not been adjusted for the rate differential applicable to such dividend income.
Foreign Source Qualified Dividends Per Share (Column 3) is the amount per share of foreign source qualified dividends, plus any foreign taxes withheld on these dividends. These amounts represent the portion of the Foreign Source Income reported to you in column 2 that were derived from qualified foreign securities held by the Fund.1
By mid-February 2019, shareholders will receive Form 1099-DIV which will include their share of taxes paid and foreign source income distributed during the calendar year 2018. The Foreign Source Income reported on Form 1099-DIV has not been adjusted for the rate differential on foreign source qualified dividend income. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their 2018 individual income tax returns.
1. Qualified dividends are taxed at reduced long term capital gains tax rates. In determining the amount of foreign tax credit that may be applied against the U.S. tax liability of individuals receiving foreign source qualified dividends, adjustments may be required to the foreign tax credit limitation calculation to reflect the rate differential applicable to such dividend income. The rules however permit certain individuals to elect not to apply the rate differential adjustments for capital gains and/or dividends for any taxable year. Please consult your tax advisor and the instructions to Form 1116 for more information.
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FRANKLIN TEMPLETON ETF TRUST
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at libertyshares.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at libertyshares.com.
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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
Semiannual Report | ||||||
Franklin Templeton ETF Trust | ||||||
Investment Manager Franklin Advisers, Inc. | Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 libertyshares.com | Investor Services Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 |
© 2018 Franklin Templeton Investments. All rights reserved. | ETF5 S 11/18 |
Franklin Templeton
ETF Trust
Semiannual Report
September 30, 2018
Franklin Liberty High Yield Corporate ETF |
Franklin Liberty International Aggregate Bond ETF |
Franklin Liberty Senior Loan ETF |
Franklin Templeton Investments
Why choose Franklin Templeton Investments?
Successful investing begins with ambition. And achievement only comes when you reach for it. That’s why we continually strive to deliver better outcomes for investors. No matter what your goals are, our deep, global investment expertise allows us to offer solutions that can help.
During our more than 70 years of experience, we’ve managed through all kinds of markets—up, down and those in between. We’re always preparing for what may come next. It’s because of this, combined with our strength as one of the world’s largest asset managers that we’ve earned the trust of millions of investors around the world.
Visit libertyshares.com for fund
updates and documents.
Not FDIC Insured | | | May Lose Value | | | No Bank Guarantee |
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SEMIANNUAL REPORT
The U.S. economy grew during the period under review. The economy grew faster in 2018’s second quarter, driven by consumer spending, business investment, exports and government spending, but moderated in the third quarter due to declines in exports and housing investment. The unemployment rate declined from 3.8% in May 2018, as reported at the beginning of the period, to a nearly 49-year low of 3.7% at period-end.1
The U.S. Federal Reserve (Fed) raised its target range for the federal funds rate 0.25% at its June 2018 meeting, and continued reducing its balance sheet as part of an ongoing plan to normalize monetary policy. In his congressional testimony in July 2018 and at the Fed symposium in August, Fed Chair Jerome Powell reiterated the Fed’s intention to gradually raise interest rates. At its September 2018 meeting, the Fed raised its target range for the federal funds rate 0.25% to 2.00%–2.25%, as widely expected. Furthermore, the Fed raised its forecast for U.S. economic growth in 2018 and 2019 and projected one more rate increase in 2018.
The 10-year Treasury yield, which moves inversely to its price, increased during the period. Expectations that global central banks might scale back monetary stimulus and better-than-expected U.S. economic reports also pushed the yield higher. However, some factors weighed on the Treasury yield at certain points during the period, including concerns about political turmoil in Italy, political uncertainties in the U.S., tensions between the U.S. and North Korea, the Trump
administration’s protectionist trade policies, U.S. trade disputes with its allies and China, and economic turmoil in Turkey. Overall, the 10-year Treasury yield rose from 2.83% at the beginning of the period to 3.05% at period-end.
International bonds outside the U.S. generally registered losses over the review period, ending on a weak note in keeping with their U.S. counterparts. The weakness in bond markets was mainly driven by the robust performance of the U.S. economy, which increased speculation about the pace of further monetary tightening by the U.S. Federal Reserve, after U.S. policymakers raised interest rates in June and September. However, other parts of the global economy faced headwinds, with the strength of the U.S. dollar and uncertainty about U.S. trade policy increasing pressure on many emerging markets. In Europe, there were concerns about a proposed expansion in public spending by Italy’s coalition government of populist parties. Elsewhere, benchmark Japanese government bond yields climbed to their highest level in 18 months, prompting the Bank of Japan to widen its target range for yields.
The foregoing information reflects our analysis and opinions as of September 30, 2018. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.
1. Source: U.S. Bureau of Labor Statistics
2 | Semiannual Report | libertyshares.com |
Franklin Liberty High Yield Corporate ETF
We are pleased to bring you Franklin Liberty High Yield Corporate ETF’s semiannual report that covers the period since the Fund’s inception on June 1, 2018, through September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks a high level of current income with a secondary goal of seeking capital appreciation. The Fund invests at least 80% of its net assets in high yield corporate debt securities and investments that provide exposure to high yield corporate debt securities, including fixed or floating rate corporate loans and corporate debt securities.
Performance Overview
For the period since inception on June 1, 2018, through September 30, 2018, the Fund posted cumulative total returns of +3.26% based on market price and +3.26% based on net asset value (NAV).1 In comparison, the ICE BofAML US High Yield Constrained Index posted a +2.80% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 6.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund may invest up to 100% of its total assets in high yield debt securities. The Fund may buy both rated and unrated debt securities, including securities rated below B by Moody’s or Standard & Poor’s® (or deemed comparable by the Fund’s investment manager). The Fund may invest in fixed or floating rate corporate loans and corporate debt securities. The Fund may also invest in defaulted debt securities. The Fund may invest in debt securities of any maturity or duration.
The Fund may invest in debt securities of U.S. and foreign issuers, including those in developing or emerging markets.
The Fund may enter into certain derivative transactions, principally currency and cross currency forwards; and swap agreements, including interest rate and credit default swaps (including credit default index swaps). The use of these derivative transactions may allow the Fund to obtain net long or short exposures to select currencies, interest rates, countries, durations or credit risks.
What is a currency forward contract?
A currency forward contract, or a currency forward, is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.
What is a credit default swap?
A credit default swap, or CDS, is an agreement between two parties whereby the buyer receives credit protection from the seller. The buyer makes periodic payments over the term of the agreement in return for a payment by the seller in the event of a default or other credit event.
We are research driven, fundamental investors who rely on our team of analysts to provide in-depth industry expertise and use qualitative and quantitative analysis to evaluate companies. As bottom-up investors, we focus primarily on individual securities but consider sectors when choosing investments. In selecting securities, we do not rely principally on the ratings assigned by rating agencies, but perform our
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Materials | 14.8% | |||
Energy | 14.4% | |||
Media & Entertainment | 10.8% | |||
Consumer Services | 9.1% | |||
Health Care Equipment & Services | 8.9% | |||
Capital Goods | 8.8% | |||
Technology Hardware & Equipment | 4.0% | |||
Pharmaceuticals, Biotechnology & Life Sciences | 4.0% | |||
Telecommunication Services | 3.1% | |||
Real Estate | 3.0% |
1. 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 (6/5/18), the NAV of the Fund is used as a proxy for the market price to calculate market returns.
2. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 21.
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
Portfolio Composition |
Based on Total Net Assets as of 9/30/18 |
own independent investment analysis to evaluate the creditworthiness of the issuer. We consider a variety of factors, including the issuer’s experience and managerial strength, its sensitivity to economic conditions, and its current and prospective financial condition.
Manager’s Discussion
During the reporting period, the U.S. economy continued to expand due to a more favorable regulatory environment and the associated benefits from tax reform. The yield on the 10-year Treasury bond began the period at 2.74% and finished the period at 3.05%. Several factors drove the Treasury yield higher including investor expectations of higher inflation and continued positive trends in key economic data, particularly the labor market and consumer and business confidence. These attributes also led the Fed to increase interests by 25 basis points (bps) in June 2018 and again in September 2018 to an upper bound target of 2.25%. We believe investors were not averse to taking risk during the period.
Overall, spreads over Treasuries decreased from 365 to 339 bps during the period; what we considered a meaningful decline in spreads of lower-rated credits factored into that move. The Fund benefited from its underweighted positions in the automotive and energy industries. Although industry demand has generally been stable, credits in the automotive industry declined in value due to a variety of idiosyncratic factors. Our industry weighting in energy also supported returns, but the largest benefit was driven by our security selection as those credits benefited from a rising Brent crude oil price environment as well as solid operational results. In contrast, the Fund’s overweighted position in the packaging sector detracted from performance as our packaging investments consisted of higher-quality credits in a period when lower-rated credits outperformed.
Thank you for your participation in Franklin Liberty High Yield Corporate ETF. We look forward to serving your future investment needs.
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
CSC Holdings LLC Media & Entertainment | 2.1% | |||
HCA Inc. Health Care Equipment & Services | 2.0% | |||
CEMEX Finance LLC Materials | 2.0% | |||
Horizon Pharma Inc. Pharmaceuticals, Biotechnology & Life Services | 2.0% | |||
Ardagh Packaging Finance PLC / Ardagh Holdings USA Inc. | 1.9% | |||
Materials | ||||
Altice Luxembourg SA Media & Entertainment | 1.9% | |||
Aker BP ASA Energy | 1.5% | |||
Jack Ohio Finance LLC / Jack Ohio Finance 1 Corp. Consumer Services | 1.1% | |||
Cloud Crane LLC Capital Goods | 1.1% | |||
Tenet Healthcare Corp. Health Care Equipment & Services | 1.0% |
Glenn I. Voyles, CFA |
Patricia O’Connor, CFA | ||
Portfolio Management Team |
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
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CFA® is a trademark owned by CFA Institute.
FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
Performance Summary as of September 30, 2018
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/5/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
Since Inception (6/1/18) | +3.26% | +3.26% | +3.26% | +3.26% |
30-Day Standardized Yield6 | ||||||||
Distribution Rate5 | (with waiver) | (without waiver) | ||||||
5.28% | 5.61% | 4.65% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 7 for Performance Summary footnotes.
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
PERFORMANCE SUMMARY
Distributions (6/1/18–9/30/18)
Net Investment Income |
$0.479916 |
Total Annual Operating Expenses7
With Waiver | Without Waiver | |||
0.40% | 0.84% |
All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Distributions to shareholders may decline when prevailing interest rates fall or when the Fund experiences defaults on debt securities it holds. The high yield corporate debt securities and instruments in which the Fund invests tend be rated below investment grade. Investing in higher-yielding, lower-rated corporate debt securities and instruments involves greater risk of default, which could result in loss of principal—a risk that may be heightened in a slowing economy. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The markets for particular securities or types of securities are or may become relatively illiquid. Reduced liquidity will have an adverse impact on the security’s value and on the Fund’s ability to sell such securities when necessary to meet the Fund’s liquidity needs or in response to a specific market event. Investing in derivative securities and the use of foreign currency techniques involve special risks as such may not achieve the anticipated benefits and/or may result in losses to the Fund. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has an expense reduction contractually guaranteed through 7/31/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/18.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections in this report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
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FRANKLIN LIBERTY HIGH YIELD CORPORATE ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $ 7.50, then 8.6 × $ 7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different 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 Value1 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/182,3 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/182,3 | Net Annualized Expense Ratio3 | |||||||||||||||||
$1,000.00 | $ | 1,032.60 | $ | 1.37 | $ | 1,023.06 | $ | 2.03 | 0.40 | % |
1. 5/30/18 for Actual; 4/1/18 for Hypothetical.
2. 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. For Actual expenses, the multiplier is 123/365 to reflect the number of days since commencement of operations.
3. Reflects expenses after fee waivers and expense reimbursements.
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Franklin Liberty International Aggregate Bond ETF
This semiannual report for Franklin Liberty International Aggregate Bond ETF covers the period since the Fund’s inception on June 1, 2018, through September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to maximize total investment return, consisting of a combination of interest income and capital appreciation. Under normal market conditions, the Fund invests at least 80% of its net assets in bonds and investments that provide exposure to bonds.
Performance Overview
For the period since inception on June 1, 2018, through September 30, 2018, the Fund had cumulative total returns of -2.44% based on market price and -1.92% based on net asset value (NAV).1 In comparison, the Bloomberg Barclays Global Aggregate ex-USD Index had a -2.43% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 11.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund invests predominantly in fixed and floating-rate bonds issued by governments, government agencies and governmental-related or corporate issuers located outside the U.S. The Fund may also invest in securities or structured products that are linked to or derive their value from another security, asset or currency of any nation. In addition, the Fund’s assets are invested in issuers located in at least three countries (excluding the U.S.).
The Fund may invest in debt securities of any maturity or duration, and the average maturity or duration of debt securities in the Fund’s portfolio will fluctuate depending on the
Geographic Composition |
Based on Total Net Assets as of 9/30/18 |
investment manager’s outlook on changing market, economic, and political conditions.
The Fund is a “non-diversified” fund, which means it generally invests a greater portion of its assets in the securities of one or more issuers and invests overall in a smaller number of issuers than a diversified fund.
What is duration?
Duration is a measure of a bond’s price sensitivity to interest rate changes. In general, a portfolio of securities with a lower duration can be expected to be less sensitive to interest rate changes than a portfolio with a higher duration.
When choosing investments for the Fund, we allocate the Fund’s assets based upon our assessment of changing market, political and economic conditions. We consider various factors, including evaluation of interest rates, currency exchange rate changes and credit risks. We may consider selling a security when we believe the security has become fully valued due to either its price appreciation or changes in the issuer’s fundamentals, or when we believe another security is a more attractive investment opportunity.
1. 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 (6/5/18), the NAV of the Fund is used as a proxy for the market price to calculate market returns.
2. Source: Morningstar.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 26.
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FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
Portfolio Composition |
Based on Total Net Assets as of 9/30/18 |
Manager’s Discussion
The Fund’s currency positioning was the main contributor to relative returns, boosted by underweighted exposure to the Japanese yen and the British pound as well as an overweighted allocation to the Mexican peso. However, this was partially offset by the negative impact of overweighted exposure to the Australian dollar, the South African rand and the Indonesian rupiah.
In contrast, the Fund’s local market allocation held back relative performance. Overweighted exposures to South Africa, Indonesia and the U.S. undermined relative results, as did an underweighted allocation to the eurozone. Conversely, underweighted exposures to Japan and the U.K. contributed to relative returns.
The Fund’s sector allocation modestly added to relative performance, although this was curbed by the negative effect of security selection. Overweighted allocations to eurozone corporate high yield industrial and utility bonds were the main contributors, while selection among Italian government debt and eurozone corporate investment-grade issues for industrials detracted.
Thank you for your participation in Franklin Liberty International Aggregate Bond ETF. We look forward to serving your future investment needs.
John Beck |
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
10 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
Performance Summary as of September 30, 2018
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/5/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
Since Inception (6/1/18) | -1.92% | -2.44% | -1.92% | -2.44% |
30-Day Standardized Yield6 | ||||||||
Distribution Rate5 | (with waiver) | (without waiver) | ||||||
2.29% | 2.18% | 0.49% |
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 libertyshares.com or call (800) 342-5236.
See page 12 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 11 |
FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
PERFORMANCE SUMMARY
Distributions (6/1/18–9/30/18)
Net Investment Income |
$0.140894 |
Total Annual Operating Expenses7
With Waiver | Without Waiver | |||
0.35% | 0.69% |
All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the Fund adjust to a rise in interest rates, the Fund’s share price may decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The Fund’s investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated with their relatively small size and lesser liquidity. Investing in derivative securities and the use of foreign currency techniques involve special risks as such may not achieve the anticipated benefits and/or may result in losses to the Fund. The Fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a governmental entity may be unwilling or unable to pay interest and repay principal on its sovereign debt, or otherwise meet its obligations when due because of cash flow problems, insufficient foreign reserves, the relative size of the debt service burden to the economy as a whole, the government’s policy toward principal international lenders such as the International Monetary Fund, or the political considerations to which the government may be subject. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has an expense reduction contractually guaranteed through at least 7/31/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/18.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. 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.
12 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY INTERNATIONAL AGGREGATE BOND ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value1 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/182,3 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/182,3 | Net Annualized Expense Ratio3 | |||||||||||||||||
$1,000.00 | $ | 980.80 | $ | 1.17 | $ | 1,023.31 | $ | 1.78 | 0.35 | % |
1. 5/30/18 for Actual; 4/1/18 for Hypothetical.
2. 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. For Actual expenses, the multiplier is 123/365 to reflect the number of days since commencement of operations.
3. Reflects expenses after fee waivers and expense reimbursements.
libertyshares.com | Semiannual Report | 13 |
Franklin Liberty Senior Loan ETF
This semiannual report for Franklin Liberty Senior Loan ETF covers the period since the Fund’s inception on June 1, 2018, through September 30, 2018.
Your Fund’s Goal and Main Investments
The Fund seeks to provide a high level of current income with a secondary goal of preservation of capital. The Fund invests at least 80% of its net assets in senior loans and investments that provide exposure to senior loans.
Performance Overview
For the period since inception on June 1, 2018, through September 30, 2018, the Fund posted cumulative total returns of +2.11% based on market price and +1.87% based on net asset value (NAV).1 In comparison, the Fund’s primary benchmark, the S&P/LSTA U.S. Leveraged Loan 100 Index, posted a +2.14% total return for the same period.2 The Fund’s additional benchmark, the Subset Index of Top 50 Obligors in Credit Suisse Leveraged Loan Index, posted a +1.96% total return for the same period.2 You can find more of the Fund’s performance data in the Performance Summary beginning on page 17.
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
Investment Strategy
The Fund invests predominantly in income-producing senior floating interest rate corporate loans made to or issued by U.S. companies, non-U.S. entities and U.S. subsidiaries of non-U.S. entities. Floating interest rates vary with and are periodically adjusted to a generally recognized base interest rate such as the London Interbank Offered Rate (LIBOR) or the Prime Rate. The Fund may invest in companies whose financial condition is troubled or uncertain and that may be involved in bankruptcy proceedings, reorganizations or financial restructurings.
Top 10 Sectors/Industries | ||||
9/30/18 | ||||
% of Total Net Assets | ||||
Pharmaceuticals | 8.8% | |||
Health Care Services | 7.0% | |||
Casinos & Gaming | 6.7% | |||
Packaged Foods & Meats | 5.6% | |||
Diversified Support Services | 5.3% | |||
Internet Services & Infrastructure | 5.0% | |||
Cable & Satellite | 4.6% | |||
Specialty Stores | 3.0% | |||
Broadcasting | 2.8% | |||
Independent Power Producers & Energy Traders | 2.6% |
Senior loans generally have credit ratings below investment grade and may be subject to restrictions on resale. Under normal market conditions, the Fund invests at least 75% of its net assets in senior loans that are rated B- or higher at the time of purchase by a nationally recognized statistical rating organization (NRSRO) or, if unrated, are determined to be of comparable quality by the Fund’s investment manager. Under normal market conditions, the Fund may invest up to 25% of its net assets in senior loans that are rated below B- by an NRSRO or, if unrated, are determined to be of comparable quality by the investment manager.
Manager’s Discussion
The Fund maintained an overweighted position in the upper tier of the market and an underweighted position in the middle tier throughout the period, which detracted from relative performance. As of period-end, the Fund had approximately 83% of its loan portfolio in the upper tier and 17% in the middle tier, compared to the custom index, which had 52% in the upper tier and 44% in the middle tier. During the period, upper-tier loans in the custom index returned +1.82%, middle-tier loans returned +2.47% and lower-tier loans returned -1.96%.
1. 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 (6/5/18), the NAV of the Fund is used as a proxy for the market price to calculate market returns.
2. Source: Factset. The Subset Index of Top 50 Obligors in Credit Suisse Leveraged Loan Index includes only the top 50 obligors of the Credit Suisse Leveraged Loan Index. Credit Suisse is not responsible for or involved in the calculation or management of the Subset Index of Top 50 Obligors in Credit Suisse Leveraged Loan Index.
The indexes are unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an index, and an index is not representative of the Fund’s portfolio.
See www.franklintempletondatasources.com for additional data provider information
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI begins on page 29.
14 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY SENIOR LOAN ETF
Portfolio Composition |
Based on Total Net Assets as of 9/30/18 |
Top 10 Holdings | ||||
9/30/18 | ||||
Company Sector/Industry | % of Total Net Assets | |||
Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC | 3.7% | |||
Pharmaceuticals | ||||
Air Medical Group Holdings Inc. Health Care Services | 3.6% | |||
Envision Healthcare Corp. Health Care Services | 3.3% | |||
LCM XVIII LP Diversified Support Services | 3.3% | |||
Asurion LLC Diversified Support Services | 3.3% | |||
Michaels Stores Inc. Speciality Stores | 3.0% | |||
JBS USA LUX SA Packaged Foods & Meats | 2.9% | |||
Sinclair Television Group Inc. Broadcasting | 2.8% | |||
Caesars Resort Collection LLC/CRC Finco Inc. Casinos & Gaming | 2.8% | |||
Bausch Health Companies Inc. Pharmaceuticals | 2.8% |
In addition to credit quality allocation, Fund performance was impacted by issuer-specific developments during the period. The term loan of Endo International, a specialty pharmaceutical company, traded higher after the company reported better-than-anticipated results, despite expectations of weaker earnings due to competition in its generic drugs segment. JBS USA, a global food company, also contributed to performance due to better-than-expected results despite investor concerns surrounding investigations of its Brazilian parent company. However, Air Medical Group, a provider of air and ground ambulance services, detracted from relative performance amid industry-wide concerns of underpayment from commercial insurers and government payors. The term loan of Harbor Freight Tools, a retailer of tools and equipment, also declined as same store sales fell due to new store openings negatively impacting existing stores.
Since the Fund’s inception date, the Fund has invested in loans from the largest obligors in the loan market.
Thank you for your participation in Franklin Liberty Senior Loan ETF. We look forward to serving your future investment needs.
Mark Boyadjian, CFA |
Madeline Lam |
Justin Ma, CFA | ||
Portfolio Management Team |
libertyshares.com | Semiannual Report | 15 |
FRANKLIN LIBERTY SENIOR LOAN ETF
The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2018, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
16 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY SENIOR LOAN ETF
Performance Summary as of September 30, 2018
Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains or losses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The performance tables do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares.
Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/5/18), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.
Your dividend income will vary depending on dividends or interest paid by securities in the Fund’s portfolio, adjusted for operating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.
Performance as of 9/30/181
Cumulative Total Return2 | Average Annual Total Return2 | |||||||||||||||
Based on NAV3 | Based on market price4 | Based on NAV3 | Based on market price4 | |||||||||||||
Since Inception (6/1/18) | +1.87% | +2.11% | +1.87% | +2.11% |
30-Day Standardized Yield6 | ||||||||
Distribution Rate5 | (with waiver) | (without waiver) | ||||||
3.18% | 3.74% | 3.28% |
Performance data represent past performance, which does not guarantee future results. Investment return and principal value will fluctuate, and you may have a gain or loss when you sell your shares. Current performance may differ from figures shown. For most recent month-end performance, go to libertyshares.com or call (800) 342-5236.
See page 18 for Performance Summary footnotes.
libertyshares.com | Semiannual Report | 17 |
FRANKLIN LIBERTY SENIOR LOAN ETF
PERFORMANCE SUMMARY
Distributions (6/1/18–9/30/18)
Net Investment Income |
$0.265671 |
Total Annual Operating Expenses7
With Waiver | Without Waiver | |||
0.45% | 0.81% |
All investments involve risks, including possible loss of principal. Investors should be aware that the Fund’s share price and yield will fluctuate with market conditions. The Fund should not be considered an alternative to money market funds or certificates of deposit (CDs). The senior loans and debt securities in which the Fund invests tend to be rated below investment grade. Investing in higher-yielding, lower-rated, senior loans and debt securities involves greater risk of default, which could result in loss of principal—a risk that may be heightened in a slowing economy. Interest earned on senior loans varies with changes in prevailing interest rates. Therefore, while senior loans offer higher interest income when interest rates rise, they will also generate less income when interest rates decline. Changes in the financial strength of a bond issuer or in a bond’s credit rating may affect its value. The markets for particular securities or types of securities are or may become relatively illiquid. Reduced liquidity will have an adverse impact on the security’s value and on the Fund’s ability to sell such securities when necessary to meet the Fund’s liquidity needs or in response to a specific market event. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce the desired results. The Fund’s prospectus also includes a description of the main investment risks.
ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns.
1. The Fund has an expense reduction contractually guaranteed through at least 7/31/19. Fund investment results reflect the expense reduction; without this reduction, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has not been annualized.
3. Assumes reinvestment of distributions based on net asset value.
4. Assumes reinvestment of distributions based on market price.
5. Distribution rate is based on an annualization of the September dividend and the NAV per share on 9/30/18.
6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.
7. 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.
18 | Semiannual Report | libertyshares.com |
FRANKLIN LIBERTY SENIOR LOAN ETF
Your Fund’s Expenses
As a Fund shareholder, you can incur two types of costs: (1) transaction costs, including brokerage commissions on purchases and sales of Fund shares; and (2) ongoing Fund costs, including management fees and other Fund expenses. All funds have ongoing costs, sometimes referred to as operating expenses. The table below shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other funds. The table assumes a $1,000 investment held for the six months indicated.
Actual Fund Expenses
The table below provides information about actual account values and actual expenses in the columns under the heading “Actual.” In these columns the Fund’s actual return, which includes the effect of Fund expenses, is used to calculate the “Ending Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, your account value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account had an $8,600 value, then $8,600 ÷ $1,000 = 8.6). Then multiply the result by the number in the row under the headings “Actual” and “Expenses Paid During Period” (if Actual Expenses Paid During Period were $7.50, then 8.6 x $7.50 = $64.50). In this illustration, the actual expenses paid this period are $64.50.
Hypothetical Example for Comparison with Other Funds
Under the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses you paid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that expenses shown in the table are meant to highlight ongoing costs and do not reflect any transactional costs. Therefore, information under the heading “Hypothetical” is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have been higher.
Actual (actual return after expenses) | Hypothetical (5% annual return before expenses) | |||||||||||||||||||||
Beginning Account Value1 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/182,3 | Ending Account Value 9/30/18 | Expenses Paid During Period 4/1/18–9/30/182,3 | Net Annualized Expense Ratio3 | |||||||||||||||||
$1,000.00 | $ | 1,018.70 | $ | 1.53 | $ | 1,022.81 | $ | 2.28 | 0.45 | % |
1. 5/30/18 for Actual; 4/1/18 for Hypothetical.
2. 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. For Actual expenses, the multiplier is 123/365 to reflect the number of days since commencement of operations.
3. Reflects expenses after fee waivers and expense reimbursements.
libertyshares.com | Semiannual Report | 19 |
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty High Yield Corporate ETF
Period Ended (unaudited) | ||||
Per share operating performance (for a share outstanding throughout the period) | ||||
Net asset value, beginning of period | $ | 25.00 | ||
|
| |||
Income from investment operationsb: | ||||
Net investment incomec | 0.48 | |||
Net realized and unrealized gains (losses) | 0.33 | |||
|
| |||
Total from investment operations | 0.81 | |||
|
| |||
Less distributions from net investment income | (0.48 | ) | ||
|
| |||
Net asset value, end of period | $ | 25.33 | ||
|
| |||
Total returnd | 3.26% | |||
Ratios to average net assetse | ||||
Expenses before waiver and payments by affiliates | 1.40% | |||
Expenses net of waiver and payments by affiliates | 0.40% | |||
Net investment income | 5.65% | |||
Supplemental data | ||||
Net assets, end of period (000’s) | $10,134 | |||
Portfolio turnover ratef | 4.44% |
aFor the period May 30, 2018 (commencement of operations) to September 30, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
20 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin Liberty High Yield Corporate ETF
Country | Principal Amount* | Value | ||||||||||||
Corporate Bonds & Notes 98.3% | ||||||||||||||
Banks 2.0% | ||||||||||||||
CIT Group Inc., senior note, 5.25%, 3/07/25 | United States | $ | 100,000 | $ | 102,250 | |||||||||
Royal Bank of Scotland Group PLC, sub. note, 5.125%, 5/28/24 | United Kingdom | 100,000 | 100,198 | |||||||||||
|
| |||||||||||||
202,448 | ||||||||||||||
|
| |||||||||||||
Capital Goods 8.8% | ||||||||||||||
Aircastle Ltd., senior note, 4.125%, 5/01/24 | Bermuda | 100,000 | 98,480 | |||||||||||
a | BBA US Holdings Inc., senior note, 144A, 5.375%, 5/01/26 | United States | 100,000 | 100,375 | ||||||||||
a | Beacon Roofing Supply Inc., senior note, 144A, 4.875%, 11/01/25 | United States | 100,000 | 92,500 | ||||||||||
a | Cloud Crane LLC, secured note, second lien, 144A, 10.125%, 8/01/24 | United States | 100,000 | 109,750 | ||||||||||
H&E Equipment Services Inc., senior note, 5.625%, 9/01/25 | United States | 100,000 | 100,000 | |||||||||||
a | Jeld-Wen Inc., senior note, 144A, 4.625%, 12/15/25 | United States | 100,000 | 92,500 | ||||||||||
a | Pisces Midco Inc., senior secured note, 144A, 8.00%, 4/15/26 | United States | 100,000 | 101,125 | ||||||||||
a | Stevens Holding Co. Inc., senior note, 144A, 6.125%, 10/01/26 | United States | 100,000 | 101,875 | ||||||||||
a | Terex Corp., senior note, 144A, 5.625%, 2/01/25 | United States | 100,000 | 99,500 | ||||||||||
|
| |||||||||||||
896,105 | ||||||||||||||
|
| |||||||||||||
Commercial & Professional Services 1.9% | ||||||||||||||
United Rentals North America Inc., senior bond, 5.875%, 9/15/26 | United States | 100,000 | 103,000 | |||||||||||
a | West Corp., senior note, 144A, 8.50%, 10/15/25 | United States | 100,000 | 92,250 | ||||||||||
|
| |||||||||||||
195,250 | ||||||||||||||
|
| |||||||||||||
Consumer Durables & Apparel 0.9% | ||||||||||||||
Weekley Homes LLC / Weekley Finance Corp., senior note, 6.625%, 8/15/25 | United States | 100,000 | 95,750 | |||||||||||
|
| |||||||||||||
Consumer Services 9.1% | ||||||||||||||
a | 1011778 BC ULC / New Red Finance Inc., secured note, second lien, 144A, 5.00%, 10/15/25 | Canada | 100,000 | 96,001 | ||||||||||
a | 24 Hour Fitness Worldwide Inc., senior note, 144A, 8.00%, 6/01/22 | United States | 100,000 | 100,000 | ||||||||||
a | Ascend Learning LLC, senior note, 144A, 6.875%, 8/01/25 | United States | 100,000 | 101,250 | ||||||||||
a | Boyne USA Inc., secured note, second lien, 144A, 7.25%, 5/01/25 | United States | 100,000 | 106,250 | ||||||||||
a | Downstream Development Authority of Quapaw Tribe of Oklahoma, secured note, 144A, 10.50%, 2/15/23 | United States | 100,000 | 102,750 | ||||||||||
a | Golden Nugget Inc., senior note, 144A, 6.75%, 10/15/24 | United States | 100,000 | 101,688 | ||||||||||
a | Jack Ohio Finance LLC / Jack Ohio Finance 1 Corp., secured note, second lien, 144A, 10.25%, 11/15/22 | United States | 100,000 | 110,270 | ||||||||||
a | Stars Group Holdings B.V. / Stars Group US Co-Borrower LLC, senior note, 144A, 7.00%, 7/15/26 | Netherlands | 100,000 | 103,419 | ||||||||||
a | Wynn Las Vegas LLC / Wynn Las Vegas Capital Corp., senior bond, 144A, 5.50%, 3/01/25 | United States | 100,000 | 96,875 | ||||||||||
|
| |||||||||||||
918,503 | ||||||||||||||
|
| |||||||||||||
Diversified Financials 1.1% | ||||||||||||||
Navient Corp., senior note, 7.25%, 9/25/23 | United States | 100,000 | 106,500 | |||||||||||
|
| |||||||||||||
Energy 14.4% | ||||||||||||||
a | Aker BP ASA, senior note, 144A, 5.875%, 3/31/25 | Norway | 150,000 | 155,437 | ||||||||||
a | California Resources Corp., secured note, second lien, 144A, 8.00%, 12/15/22 | United States | 100,000 | 95,750 | ||||||||||
Callon Petroleum Co., senior note, 6.375%, 7/01/26 | United States | 100,000 | 102,250 | |||||||||||
Cheniere Corpus Christi Holdings LLC, senior secured note, first lien, 5.875%, 3/31/25 | United States | 100,000 | 105,375 | |||||||||||
Cheniere Energy Partners LP, senior secured note, first lien, 5.25%, 10/01/25 | United States | 100,000 | 100,373 | |||||||||||
Chesapeake Energy Corp., senior note, 7.50%, 10/01/26 | United States | 100,000 | 100,125 | |||||||||||
Crestwood Midstream Partners LP / Crestwood Midstream Finance Corp., senior note, 5.75%, 4/01/25 | United States | 100,000 | 102,500 | |||||||||||
a | Diamondback Energy Inc., senior note, 144A, 4.75%, 11/01/24 | United States | 100,000 | 100,375 |
libertyshares.com | Semiannual Report | 21 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty High Yield Corporate ETF (continued)
Country | Principal Amount* | Value | ||||||||||||
Corporate Bonds & Notes (continued) | ||||||||||||||
Energy (continued) | ||||||||||||||
Energy Transfer Equity LP, senior secured bond, first lien, 5.875%, 1/15/24 | United States | $ | 100,000 | $ | 105,500 | |||||||||
Martin Midstream Partners LP / Martin Midstream Finance Corp., senior note, 7.25%, 2/15/21 | United States | 100,000 | 100,250 | |||||||||||
Nabors Industries Inc., senior note, 5.50%, 1/15/23 | United States | 100,000 | 98,731 | |||||||||||
Oceaneering International Inc., senior note, 4.65%, 11/15/24 | United States | 100,000 | 95,879 | |||||||||||
QEP Resources Inc., senior note, 5.625%, 3/01/26 | United States | 100,000 | 96,000 | |||||||||||
a | Sunoco LP / Sunoco Finance Corp., senior note, 144A, 5.50%, 2/15/26 | United States | 100,000 | 96,850 | ||||||||||
|
| |||||||||||||
1,455,395 | ||||||||||||||
|
| |||||||||||||
Food, Beverage & Tobacco 2.9% | ||||||||||||||
B&G Foods Inc., senior note, 5.25%, 4/01/25 | United States | 100,000 | 95,875 | |||||||||||
a | Cott Holdings Inc., senior note, 144A, 5.50%, 4/01/25 | United States | 100,000 | 97,875 | ||||||||||
a | Lamb Weston Holdings Inc., senior note, 144A, 4.625%, 11/01/24 | United States | 100,000 | 98,125 | ||||||||||
|
| |||||||||||||
291,875 | ||||||||||||||
|
| |||||||||||||
Health Care Equipment & Services 8.9% | ||||||||||||||
a | Avantor Inc., senior secured note, first lien, 144A, 6.00%, 10/01/24 | United States | 100,000 | 101,750 | ||||||||||
Centene Corp., senior note, 4.75%, 1/15/25 | United States | 100,000 | 100,000 | |||||||||||
a | CHS/Community Health Systems Inc., senior note, 8.125%, 6/30/24 | United States | 100,000 | 83,638 | ||||||||||
DaVita Inc., senior bond, 5.125%, 7/15/24 | United States | 100,000 | 97,000 | |||||||||||
HCA Inc., | United States | 100,000 | 103,125 | |||||||||||
senior bond, 5.875%, 5/01/23 | United States | 100,000 | 105,750 | |||||||||||
a,b | Polaris Intermediate Corp., senior note, 144A, PIK, 8.50%, 12/01/22 | United States | 100,000 | 103,699 | ||||||||||
Tenet Healthcare Corp., senior note, 8.125%, 4/01/22 | United States | 100,000 | 105,755 | |||||||||||
a | WellCare Health Plans Inc., senior note, 144A, 5.375%, 8/15/26 | United States | 100,000 | 102,000 | ||||||||||
|
| |||||||||||||
902,717 | ||||||||||||||
|
| |||||||||||||
Household & Personal Products 1.0% | ||||||||||||||
a | Prestige Brands Inc., senior note, 144A, 6.375%, 3/01/24 | United States | 100,000 | 101,625 | ||||||||||
|
| |||||||||||||
Materials 14.8% | ||||||||||||||
a | Ardagh Packaging Finance PLC / Ardagh Holdings USA Inc., senior note, 144A, 6.00%, 2/15/25 | Ireland | 200,000 | 196,250 | ||||||||||
a | BWAY Holding Co., senior note, 144A, 7.25%, 4/15/25 | United States | 100,000 | 97,740 | ||||||||||
a | CEMEX Finance LLC, senior secured note, first lien, 144A, 6.00%, 4/01/24 | United States | 200,000 | 206,506 | ||||||||||
Chemours Co., senior bond, 7.00%, 5/15/25 | United States | 100,000 | 106,549 | |||||||||||
a | Eldorado Gold Corp., senior note, 144A, 6.125%, 12/15/20 | Canada | 100,000 | 95,250 | ||||||||||
a | Novelis Corp., senior bond, 144A, 5.875%, 9/30/26 | United States | 100,000 | 97,950 | ||||||||||
a | Owens-Brockway Glass Container Inc., senior note, 144A, 5.875%, 8/15/23 | United States | 100,000 | 103,250 | ||||||||||
a | Plastipak Holdings Inc., senior note, 144A, 6.25%, 10/15/25 | United States | 100,000 | 91,750 | ||||||||||
a | Platform Specialty Products Corp., senior note, 144A, 5.875%, 12/01/25 | United States | 100,000 | 99,177 | ||||||||||
a | Reynolds Group Issuer Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer Luxembourg SA, senior secured note, first lien, 144A, 5.125%, 7/15/23 | United States | 100,000 | 99,625 | ||||||||||
a | Sealed Air Corp., senior bond, 144A, 5.25%, 4/01/23 | United States | 100,000 | 102,250 | ||||||||||
Steel Dynamics Inc., senior bond, 5.00%, 12/15/26 | United States | 100,000 | 99,750 | |||||||||||
a | SunCoke Energy Partners LP / SunCoke Energy Partners Finance Corp., senior note, 144A, 7.50%, 6/15/25 | United States | 100,000 | 103,250 | ||||||||||
|
| |||||||||||||
1,499,297 | ||||||||||||||
|
| |||||||||||||
Media & Entertainment 10.8% | ||||||||||||||
a | Altice Luxembourg SA, senior secured note, 144A, 7.75%, 5/15/22 | Luxembourg | 200,000 | 195,000 | ||||||||||
AMC Entertainment Holdings Inc., senior sub. note, 5.875%, 11/15/26 | United States | 100,000 | 96,000 | |||||||||||
AMC Networks Inc., senior note, 5.00%, 4/01/24 | United States | 100,000 | 98,750 | |||||||||||
CCO Holdings LLC / CCO Holdings Capital Corp., senior bond, 5.125%, 2/15/23 | United States | 100,000 | 100,625 | |||||||||||
Clear Channel Worldwide Holdings Inc., senior note, 6.50%, 11/15/22 | United States | 100,000 | 102,250 |
22 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty High Yield Corporate ETF (continued)
Country | Principal Amount* | Value | ||||||||||||
Corporate Bonds & Notes (continued) | ||||||||||||||
Media & Entertainment (continued) | ||||||||||||||
a | CSC Holdings LLC, senior bond, 144A, 6.625%, 10/15/25 | United States | $ | 200,000 | $ | 211,250 | ||||||||
DISH DBS Corp., senior bond, 5.875%, 7/15/22 | United States | 100,000 | 97,981 | |||||||||||
a | Univision Communications Inc., senior secured note, first lien, 144A, 5.125%, 5/15/23 | United States | 100,000 | 95,750 | ||||||||||
a | WMG Acquisition Corp., secured note, first lien, 144A, 5.00%, 8/01/23 | United States | 100,000 | 100,375 | ||||||||||
|
| |||||||||||||
1,097,981 | ||||||||||||||
|
| |||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences 4.0% | ||||||||||||||
a | Bausch Health Companies Inc., senior note, 144A, 5.875%, 5/15/23 | Canada | 100,000 | 97,875 | ||||||||||
a,b | Eagle Holding Co. II LLC, senior note, 144A, PIK, 7.625%, 5/15/22 | United States | 100,000 | 101,500 | ||||||||||
Horizon Pharma Inc., senior note, 6.625%, 5/01/23 | United States | 200,000 | 205,000 | |||||||||||
|
| |||||||||||||
404,375 | ||||||||||||||
|
| |||||||||||||
Real Estate 3.0% | ||||||||||||||
CyrusOne LP / CyrusOne Finance Corp., senior note, 5.00%, 3/15/24 | United States | 100,000 | 102,125 | |||||||||||
Equinix Inc., senior bond, 5.75%, 1/01/25 | United States | 100,000 | 103,500 | |||||||||||
MPT Operating Partnership LP / MPT Finance Corp., senior bond, 5.25%, 8/01/26 | United States | 100,000 | 99,875 | |||||||||||
|
| |||||||||||||
305,500 | ||||||||||||||
|
| |||||||||||||
Retailing 2.0% | ||||||||||||||
Netflix Inc., senior bond, 5.875%, 2/15/25 | United States | 100,000 | 103,625 | |||||||||||
a | Party City Holdings Inc., senior note, 144A, 6.625%, 8/01/26 | United States | 100,000 | 101,500 | ||||||||||
|
| |||||||||||||
205,125 | ||||||||||||||
|
| |||||||||||||
Semiconductors & Semiconductor Equipment 1.0% | ||||||||||||||
a | Qorvo Inc., senior note, 144A, 5.50%, 7/15/26 | United States | 100,000 | 102,000 | ||||||||||
|
| |||||||||||||
Software & Services 2.0% | ||||||||||||||
a | First Data Corp., secured note, second lien, 144A, 5.75%, 1/15/24 | United States | 100,000 | 102,000 | ||||||||||
a | Symantec Corp., senior note, 144A, 5.00%, 4/15/25 | United States | 100,000 | 99,195 | ||||||||||
|
| |||||||||||||
201,195 | ||||||||||||||
|
| |||||||||||||
Technology Hardware & Equipment 4.0% | ||||||||||||||
a | CommScope Technologies LLC, senior bond, 144A, 6.00%, 6/15/25 | United States | 100,000 | 103,500 | ||||||||||
a | Dell International LLC / EMC Corp., senior note, 144A, 7.125%, 6/15/24 | United States | 100,000 | 107,288 | ||||||||||
a | Tempo Acquisition LLC / Tempo Acquisition Finance Corp., senior note, 144A, 6.75%, 6/01/25 | United States | 100,000 | 97,500 | ||||||||||
Western Digital Corp., senior note, 4.75%, 2/15/26 | United States | 100,000 | 96,895 | |||||||||||
|
| |||||||||||||
405,183 | ||||||||||||||
|
| |||||||||||||
Telecommunication Services 3.1% | ||||||||||||||
a | Block Communications Inc., senior note, 144A, 6.875%, 2/15/25 | United States | 100,000 | 103,000 | ||||||||||
Sprint Corp., senior note, 7.625%, 2/15/25 | United States | 100,000 | 106,300 | |||||||||||
T-Mobile USA Inc., senior note, 5.125%, 4/15/25 | United States | 100,000 | 101,000 | |||||||||||
|
| |||||||||||||
310,300 | ||||||||||||||
|
| |||||||||||||
Utilities 2.6% | ||||||||||||||
Calpine Corp., senior note, 5.375%, 1/15/23 | United States | 100,000 | 94,875 | |||||||||||
Clearway Energy Operating LLC, senior bond, 5.00%, 9/15/26 | United States | 100,000 | 96,250 | |||||||||||
Talen Energy Supply LLC, senior note, 6.50%, 6/01/25 | United States | 100,000 | 77,000 | |||||||||||
|
| |||||||||||||
268,125 | ||||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 9,965,249 | |||||||||||||
|
|
libertyshares.com | Semiannual Report | 23 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty High Yield Corporate ETF (continued)
Country | Principal Amount* | Value | ||||||||||||
Short-Term Investments 1.3% | ||||||||||||||
U.S. Government & Agency Securities (Cost $130,000) 1.3% | ||||||||||||||
c | FHLB, 10/01/18 | United States | $ | 130,000 | $ | 130,000 | ||||||||
|
| |||||||||||||
Total Investments (Cost $10,008,740) 99.6% | 10,095,249 | |||||||||||||
Other Assets, less Liabilities 0.4% | 38,335 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 10,133,584 | ||||||||||||
|
|
See Abbreviations on page 42.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $5,756,233, representing 56.8% of net assets.
bIncome may be received in additional securities and/or cash.
cThe security was issued on a discount basis with no stated coupon rate.
24 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty International Aggregate Bond ETF
Period Ended September 30, 2018a (unaudited) | ||||
Per share operating performance (for a share outstanding throughout the period) |
| |||
Net asset value, beginning of period | $ | 25.00 | ||
|
| |||
Income from investment operationsb: |
| |||
Net investment incomec | 0.15 | |||
Net realized and unrealized gains (losses) | (0.63 | ) | ||
|
| |||
Total from investment operations | (0.48 | ) | ||
|
| |||
Less distributions from net investment income | (0.14 | ) | ||
|
| |||
Net asset value, end of period | $ | 24.38 | ||
|
| |||
Total returnd | (1.92)% | |||
Ratios to average net assetse |
| |||
Expenses before waiver and payments by affiliates | 2.07% | |||
Expenses net of waiver and payments by affiliates | 0.35% | |||
Net investment income | 1.86% | |||
Supplemental data |
| |||
Net assets, end of period (000’s) | $4,876 | |||
Portfolio turnover ratef | 36.04% |
aFor the period May 30, 2018 (commencement of operations) to September 30, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 25 |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin Liberty International Aggregate Bond ETF
Principal Amount* | Value | |||||||||||||
Foreign Government and Agency Securities 72.3% | ||||||||||||||
Australia 8.5% | ||||||||||||||
a | New South Wales Treasury Corp., senior bond, Reg S, 3.00%, 5/20/27 | 140,000 | AUD | $ | 101,542 | |||||||||
Queensland Treasury Corp., | 140,000 | AUD | 103,129 | |||||||||||
a senior bond, Reg S, 5.75%, 7/22/24 | 130,000 | AUD | 109,335 | |||||||||||
Western Australian Treasury Corp., senior note, 26, 3.00%, 10/21/26 | 140,000 | AUD | 100,844 | |||||||||||
|
| |||||||||||||
414,850 | ||||||||||||||
|
| |||||||||||||
Canada 5.2% | ||||||||||||||
Government of Canada, 2.75%, 6/01/22 | 320,000 | CAD | 251,776 | |||||||||||
|
| |||||||||||||
France 4.4% | ||||||||||||||
Government of France, | 80,000 | EUR | 93,823 | |||||||||||
a Reg S, 1.00%, 11/25/25 | 100,000 | EUR | 121,171 | |||||||||||
|
| |||||||||||||
214,994 | ||||||||||||||
|
| |||||||||||||
Germany 5.2% | ||||||||||||||
Government of Germany, | 60,000 | EUR | 74,889 | |||||||||||
a Reg S, 3.25%, 7/04/21 | 60,000 | EUR | 76,815 | |||||||||||
KFW, senior note, 2.05%, 2/16/26 | 10,000,000 | JPY | 101,487 | |||||||||||
|
| |||||||||||||
253,191 | ||||||||||||||
|
| |||||||||||||
Indonesia 3.2% | ||||||||||||||
Indonesia Treasury Bond, senior bond, 8.25%, 5/15/36 | 2,400,000,000 | IDR | 157,474 | |||||||||||
|
| |||||||||||||
Italy 5.7% | ||||||||||||||
Italy Treasury Bond, | 150,000 | EUR | 154,604 | |||||||||||
senior bond, 4.25%, 9/01/19 | 55,000 | EUR | 65,932 | |||||||||||
senior bond, 5.50%, 9/01/22 | 45,000 | EUR | 58,810 | |||||||||||
|
| |||||||||||||
279,346 | ||||||||||||||
|
| |||||||||||||
Japan 11.8% | ||||||||||||||
Development Bank of Japan, Inc., senior bond, 2.30%, 3/19/26 | 20,000,000 | JPY | 203,747 | |||||||||||
Government of Japan, | 30,000,000 | JPY | 285,079 | |||||||||||
senior note, 121, 0.10%, 9/20/19 | 10,000,000 | JPY | 88,207 | |||||||||||
|
| |||||||||||||
577,033 | ||||||||||||||
|
| |||||||||||||
Mexico 6.3% | ||||||||||||||
Mexican Bonos, | 36,000 | b | MXN | 187,335 | ||||||||||
M, 10.00%, 12/05/24 | 20,000 | b | MXN | 118,555 | ||||||||||
|
| |||||||||||||
305,890 | ||||||||||||||
|
| |||||||||||||
Poland 4.8% | ||||||||||||||
Government of Poland, | 400,000 | PLN | 102,805 | |||||||||||
5.75%, 4/25/29 | 400,000 | PLN | 133,568 | |||||||||||
|
| |||||||||||||
236,373 | ||||||||||||||
|
| |||||||||||||
South Africa 2.4% | ||||||||||||||
Government of South Africa, senior bond, 7.00%, 2/28/31 | 2,000,000 | ZAR | 116,206 | |||||||||||
|
| |||||||||||||
Spain 7.8% | ||||||||||||||
Government of Spain, | 96,000 | EUR | 116,902 | |||||||||||
a senior bond, Reg S, 5.15%, 10/31/28 | 80,000 | EUR | 124,496 | |||||||||||
senior note, 0.45%, 10/31/22 | 120,000 | EUR | 140,083 | |||||||||||
|
| |||||||||||||
381,481 | ||||||||||||||
|
|
26 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty International Aggregate Bond ETF (continued)
Principal Amount* | Value | |||||||||||||
Foreign Government and Agency Securities (continued) | ||||||||||||||
c | Supranational 7.0% | |||||||||||||
Asian Development Bank, senior bond, 339-00-1, 2.35%, 6/21/27 | 10,000,000 | JPY | $ | 105,503 | ||||||||||
a | European Investment Bank, senior bond, Reg S, 1.90%, 1/26/26 | 10,000,000 | JPY | 100,324 | ||||||||||
International Finance Corp., senior note, 8.00%, 7/27/27 | 2,000,000 | ZAR | 133,261 | |||||||||||
|
| |||||||||||||
339,088 | ||||||||||||||
|
| |||||||||||||
Total Foreign Government and Agency Securities | 3,527,702 | |||||||||||||
|
| |||||||||||||
Quasi-Sovereign and Corporate Bonds 9.9% | ||||||||||||||
Belgium 1.5% | ||||||||||||||
a | Anheuser-Busch InBev SA/NV, senior note, Reg S, 1.50%, 3/17/25 | 60,000 | EUR | 71,895 | ||||||||||
|
| |||||||||||||
Czech Republic 2.4% | ||||||||||||||
a | Energo-Pro AS, senior note, Reg S, 4.00%, 12/07/22 | 100,000 | EUR | 115,404 | ||||||||||
|
| |||||||||||||
Guernsey 2.4% | ||||||||||||||
a | Globalworth Real Estate Investments Ltd, senior note, Reg S, 3.00%, 3/29/25 | 100,000 | EUR | 117,087 | ||||||||||
|
| |||||||||||||
Luxembourg 2.2% | ||||||||||||||
a | Aroundtown SA, senior note, Reg S, 1.625%, 1/31/28 | 100,000 | EUR | 106,785 | ||||||||||
|
| |||||||||||||
Netherlands 1.4% | ||||||||||||||
a | BMW Finance NV, senior note, Reg S, 0.75%, 4/15/24 | 60,000 | EUR | 69,316 | ||||||||||
|
| |||||||||||||
Total Quasi-Sovereign and Corporate Bonds | 480,487 | |||||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 4,008,189 | |||||||||||||
|
| |||||||||||||
Short-Term Investments 11.7% | ||||||||||||||
U.S. Government & Agency Securities (Cost $570,000) 11.7% | ||||||||||||||
d | FHLB, 10/01/18 | 570,000 | 570,000 | |||||||||||
|
| |||||||||||||
Total Investments (Cost $4,676,095) 93.9% | 4,578,189 | |||||||||||||
Other Assets, less Liabilities 6.1% | 297,618 | |||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 4,875,807 | ||||||||||||
|
|
See Abbreviations on page 42.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2018, the aggregate value of these securities was $1,502,913, representing 30.8% of net assets.
bPrincipal amount is stated in 100 Mexican Peso Units.
cA supranational organization is an entity formed by two or more central governments through international treaties.
dThe security was issued on a discount basis with no stated coupon rate.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 27 |
FRANKLIN TEMPLETON ETF TRUST
Financial Highlights
Franklin Liberty Senior Loan ETF
Period Ended (unaudited) | ||||
Per share operating performance (for a share outstanding throughout the period) | ||||
Net asset value, beginning of period | $ | 25.00 | ||
|
| |||
Income from investment operationsb: | ||||
Net investment incomec | 0.30 | |||
Net realized and unrealized gains (losses) | 0.17 | |||
|
| |||
Total from investment operations | 0.47 | |||
|
| |||
Less distributions from net investment income | (0.27 | ) | ||
|
| |||
Net asset value, end of period | $ | 25.20 | ||
|
| |||
Total returnd | 1.87% | |||
Ratios to average net assetse | ||||
Expenses before waiver and payments by affiliates | 0.96% | |||
Expenses net of waiver and payments by affiliates | 0.45% | |||
Net investment income | 3.55% | |||
Supplemental data | ||||
Net assets, end of period (000’s) | $30,235 | |||
Portfolio turnover ratef | 0.83% |
aFor the period May 30, 2018 (commencement of operations) to September 30, 2018.
bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
cBased on average daily shares outstanding.
dTotal return is not annualized for periods of less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.
eRatios are annualized for periods less than one year.
fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units, if any.
28 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Statement of Investments, September 30, 2018 (unaudited)
Franklin Liberty Senior Loan ETF
Country | Principal Amount* | Value | ||||||||||||
a | Senior Floating Rate Interests 83.8% | |||||||||||||
Airlines 2.0% | ||||||||||||||
American Airlines, Inc., 2018 Replacement Term Loans B, 3.98%, | United States | $ | 610,000 | $ | 599,706 | |||||||||
|
| |||||||||||||
Application Software 1.6% | ||||||||||||||
b,c | SS&C European Holdings S.A.R.L., Term B-4 Loans, TBD, 4/16/25 | Luxembourg | 140,029 | 140,302 | ||||||||||
b,c | SS&C Technologies Inc., Term B-3 Loans, TBD, 4/16/25 | United States | 357,616 | 358,314 | ||||||||||
|
| |||||||||||||
498,616 | ||||||||||||||
|
| |||||||||||||
Broadcasting 2.8% | ||||||||||||||
Sinclair Television Group Inc., Tranche B Term Loans, 4.50%, (1-month USD LIBOR + 2.25%), 1/03/24 | United States | 835,747 | 839,665 | |||||||||||
|
| |||||||||||||
Cable & Satellite 4.6% | ||||||||||||||
Charter Communications Operating, LLC, Term B Loan, 4.25%, (1-month USD LIBOR + 2.00%), 4/30/25 | United States | 646,742 | 648,396 | |||||||||||
CSC Holdings, LLC, March 2017 Incremental Term Loans, 4.408%, (1-month USD LIBOR + 2.25%), 7/17/25 | United States | 738,131 | 738,900 | |||||||||||
|
| |||||||||||||
1,387,296 | ||||||||||||||
|
| |||||||||||||
Casinos & Gaming 6.7% | ||||||||||||||
Aristocrat Technologies Inc., Term B-3 Loans, 4.098%, (3-month USD LIBOR + 1.75%), 10/19/24 | Australia | 659,362 | 659,552 | |||||||||||
Caesars Resort Collection LLC/CRC Finco Inc., Term B Loans, 4.992%, (1-month USD LIBOR + 2.75%), 12/22/24 | United States | 835,789 | 841,237 | |||||||||||
Las Vegas Sands LLC, Term B Loans, 3.992%, (1-month USD LIBOR + 1.75%), 3/27/25 | United States | 517,400 | 517,577 | |||||||||||
|
| |||||||||||||
2,018,366 | ||||||||||||||
|
| |||||||||||||
Catalog Retail 2.1% | ||||||||||||||
Harbor Freight Tools USA Inc., Refinancing Loans, 4.742%, (1-month USD LIBOR + 2.50%), 8/18/23 | United States | 641,834 | 643,127 | |||||||||||
|
| |||||||||||||
Data Processing & Outsourced Services 1.6% | ||||||||||||||
First Data Corp., Term A Loan, 3.819%, (1-month USD LIBOR + 1.75%), 6/02/20 | United States | 476,933 | 477,759 | |||||||||||
|
| |||||||||||||
Diversified Support Services 5.3% | ||||||||||||||
Aramark Services Inc., Term B-3 Loan, 4.084%, (3-month USD LIBOR + 1.750%), 3/11/25 | United States | 607,750 | 609,725 | |||||||||||
Asurion LLC, Replacement B-6 Term Loans, 5.242%, (1-month USD LIBOR + 3.00%), 11/03/23 | United States | 974,940 | 982,963 | |||||||||||
|
| |||||||||||||
1,592,688 | ||||||||||||||
|
| |||||||||||||
Food Distributors 1.7% | ||||||||||||||
b | US Foods Inc., First Lien Term Loan, 4.242%, (1-month USD LIBOR + 2.00%), 6/27/23 | United States | 523,346 | 525,636 | ||||||||||
|
| |||||||||||||
Health Care Distributors 1.3% | ||||||||||||||
Mallinckrodt International Finance SA/CB LLC, Extended Term Loan B, 5.136%, (3-month USD LIBOR + 2.75%), 9/24/24 | Luxembourg | 397,980 | 396,073 | |||||||||||
|
| |||||||||||||
Health Care Facilities 1.7% | ||||||||||||||
HCA Inc., Term Loan B11, 3.992%, (1-month USD LIBOR + 1.75%), 3/18/23 | United States | 517,400 | 521,927 | |||||||||||
|
| |||||||||||||
Health Care Services 7.0% | ||||||||||||||
Air Medical Group Holdings Inc., 2018 New Term Loans, 6.415%, (1-month USD LIBOR + 4.25%), 3/14/25 | United States | 1,104,436 | 1,100,886 | |||||||||||
Envision Healthcare Corp., Initial Term Loans, 5.25%, (1-month USD LIBOR + 3.00%), 12/01/23 | United States | 1,010,000 | 1,011,257 | |||||||||||
|
| |||||||||||||
2,112,143 | ||||||||||||||
|
|
libertyshares.com | Semiannual Report | 29 |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty Senior Loan ETF (continued)
Country | Principal Amount* | Value | ||||||||||||
a | Senior Floating Rate Interests (continued) | |||||||||||||
Hotels, Resorts & Cruise Lines 2.2% | ||||||||||||||
Hilton Worldwide Finance LLC, Series B-2 Term Loans, 3.966%, (1-month USD LIBOR + 1.75%), 10/25/23 | United States | $ | 650,000 | $ | 653,252 | |||||||||
|
| |||||||||||||
Independent Power Producers & Energy Traders 2.6% | ||||||||||||||
NRG Energy Inc., Term Loan B, 4.136%, (3-month USD LIBOR + 1.75%), 6/30/23 | United States | 776,031 | 777,443 | |||||||||||
|
| |||||||||||||
Internet Services & Infrastructure 5.0% | ||||||||||||||
Go Daddy Operating Co. LLC, Tranche B-1 Term Loans, 4.492%, (1-month USD LIBOR + 2.25%), 2/15/24 | United States | 716,369 | 719,887 | |||||||||||
Rackspace Hosting Inc., Term B Loans, 5.348%, (3-month USD LIBOR + 3.00%), 11/03/23 | United States | 803,879 | 794,691 | |||||||||||
|
| |||||||||||||
1,514,578 | ||||||||||||||
|
| |||||||||||||
Metal & Glass Containers 1.9% | ||||||||||||||
Berry Global Inc., Term Loan Q, 4.186%, (3-month USD LIBOR + 2.00%), 10/01/22 | United States | 587,840 | 589,330 | |||||||||||
|
| |||||||||||||
Packaged Foods & Meats 5.6% | ||||||||||||||
JBS USA LUX SA, New Initial Term Loans, 4.837%, (3-month USD LIBOR + 2.50%), 10/30/22 | United States | 875,556 | 878,292 | |||||||||||
Post Holdings Inc., Series A Incremental Term Loans, 4.22%, (1-month USD LIBOR + 2.00%), 5/24/24 | United States | 805,919 | 807,027 | |||||||||||
|
| |||||||||||||
1,685,319 | ||||||||||||||
|
| |||||||||||||
Paper Packaging 2.0% | ||||||||||||||
Reynolds Group Holdings Inc, Term B Loans, 4.992%, (1-month USD LIBOR + 2.750%), 2/05/23 | United States | 599,492 | 602,906 | |||||||||||
|
| |||||||||||||
Pharmaceuticals 8.8% | ||||||||||||||
Bausch Health Companies. Inc., Initial Term Loans, 5.081%, (1-month USD LIBOR + 3.00%), 6/01/25 | Canada | 828,750 | 833,930 | |||||||||||
Endo Luxembourg Finance Co. I S.A.R.L. and Endo LLC, Initial Term Loans, 6.50%, (1-month USD LIBOR + 4.25%), 4/29/24 | Luxembourg | 1,094,458 | 1,104,035 | |||||||||||
Grifols Worldwide Operations USA Inc., Tranche B Term Loan, 4.417%, (1-week USD LIBOR + 2.25%), 1/31/25 | United States | 716,364 | 720,841 | |||||||||||
|
| |||||||||||||
2,658,806 | ||||||||||||||
|
| |||||||||||||
Research & Consulting Services 2.6% | ||||||||||||||
Nielsen Finance LLC, Class B-4 Term Loans, 4.133%, (1-month USD LIBOR + 2.00%), 10/04/23 | United States | 778,030 | 778,128 | |||||||||||
|
| |||||||||||||
Security & Alarm Services 2.3% | ||||||||||||||
Prime Security Services Borrower LLC, Term B-1 Loans, 4.992%, (1-month USD LIBOR + 2.75%), 5/02/22 | United States | 706,423 | 710,642 | |||||||||||
|
| |||||||||||||
Specialized Consumer Services 0.9% | ||||||||||||||
Sabre GLBL Inc., 2018 Other Term B Loans, 4.242%, (1-month USD LIBOR + 2.00%), 2/22/24 | United States | 268,647 | 269,766 | |||||||||||
|
| |||||||||||||
Specialized Finance 1.5% | ||||||||||||||
Trans Union LLC, Term A-2 Facility, 3.992%, (1-month USD LIBOR + 1.75%), 8/09/22 | United States | 450,921 | 450,545 | |||||||||||
|
| |||||||||||||
Specialty Chemicals 2.1% | ||||||||||||||
Axalta Coating Systems U.S. Holdings Inc., Term B-3 Dollar Loan, 4.136%, (3-month USD LIBOR + 1.75%), 6/01/24 | Netherlands | 646,750 | 648,771 | |||||||||||
|
| |||||||||||||
Specialty Stores 3.0% | ||||||||||||||
Michaels Stores Inc., 2018 New Replacement Term B Loan, 4.742%, (1-month USD LIBOR + 2.50%), 1/28/23 | United States | 907,725 | 906,023 | |||||||||||
|
|
30 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)
Franklin Liberty Senior Loan ETF (continued)
Country | Principal Amount* | Value | ||||||||||||
a | Senior Floating Rate Interests (continued) | |||||||||||||
Technology Hardware, Storage & Peripherals 2.5% | ||||||||||||||
Western Digital Corp., US Term B-4 Loan, 3.992%, (1-month USD LIBOR + 1.75%), 4/29/23 | United States | $ | 746,250 | $ | 748,579 | |||||||||
|
| |||||||||||||
Trading Companies & Distributors 2.4% | ||||||||||||||
b | Univar USA Inc., Term B-3 Loans, 4.492%, (1-month USD LIBOR + 2.25%), 7/01/24 | United States | 725,108 | 727,726 | ||||||||||
|
| |||||||||||||
Total Floating Rate Loans | 25,334,816 | |||||||||||||
|
| |||||||||||||
Asset-Backed Securities 3.3% | ||||||||||||||
d,e | LCM XVIII LP, 2018A, CR, 144A, FRN, 4.089% | United States | 1,000,000 | 993,750 | ||||||||||
|
| |||||||||||||
Total Investments before Short Term Investments | 26,328,566 | |||||||||||||
|
| |||||||||||||
Short-Term Investments 18.5% | ||||||||||||||
U.S. Government & Agency Securities | ||||||||||||||
f | FHLB,10/01/18 | United States | 5,590,000 | 5,590,000 | ||||||||||
|
| |||||||||||||
Total Investments (Cost $31,906,039) 105.6% | 31,918,566 | |||||||||||||
Other Assets, less Liabilities (5.6)% | (1,683,410 | ) | ||||||||||||
|
| |||||||||||||
Net Assets 100.0% | $ | 30,235,156 | ||||||||||||
|
|
See Abbreviations on page 42.
*The principal amount is stated in U.S. dollars unless otherwise indicated.
aThe coupon rate shown represents the rate at period end.
bA portion or all of the security purchased on a delayed delivery basis. See Note 1(c).
cA portion or all of the security represents an unsettled loan commitment. The coupon rate is to-be determined (TBD) at the time of settlement and will be based upon a reference index/floor plus a spread.
dSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. This security has been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At September 30, 2018, the value of this security was $993,750, representing 3.3% of net assets.
eThe coupon rate shown represents the rate inclusive of any caps or floors, if applicable, in effect at period end.
fThe security was issued on a discount basis with no stated coupon rate.
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 31 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Assets and Liabilities
September 30, 2018 (unaudited)
Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | ||||||||||
Assets: |
| |||||||||||
Investments in securities: |
| |||||||||||
Cost – Unaffiliated issuers | $ | 10,008,740 | $ | 4,676,095 | $ | 31,906,039 | ||||||
|
| |||||||||||
Value – Unaffiliated issuers | $ | 10,095,249 | $ | 4,578,189 | $ | 31,918,566 | ||||||
Cash | — | 85,579 | 855,003 | |||||||||
Foreign currency, at value (cost $–, $180,546 and $–, respectively) | — | 179,286 | — | |||||||||
Receivables: |
| |||||||||||
Investment securities sold | 117,417 | — | 105,889 | |||||||||
Interest | 177,019 | 43,442 | 98,548 | |||||||||
Affiliates | 4,280 | 21,094 | — | |||||||||
|
| |||||||||||
Total assets | 10,393,965 | 4,907,590 | 32,978,006 | |||||||||
|
| |||||||||||
Liabilities: |
| |||||||||||
Payables: |
| |||||||||||
Investment securities purchased | 100,000 | — | 2,639,316 | |||||||||
Management fees | — | — | 2,738 | |||||||||
Transfer agent fees | 5,242 | 5,242 | 5,242 | |||||||||
Trustees’ fees and expenses | 49 | 227 | 49 | |||||||||
Distributions to shareholders | 44,606 | 9,312 | 80,122 | |||||||||
Custodian fees | 2,991 | 3,250 | 1,579 | |||||||||
Professional fees | 11,277 | 11,276 | 11,277 | |||||||||
Reports to shareholders | 2,527 | 2,476 | 2,527 | |||||||||
Funds advanced by custodian | 93,689 | — | — | |||||||||
|
| |||||||||||
Total liabilities | 260,381 | 31,783 | 2,742,850 | |||||||||
|
| |||||||||||
Net assets, at value | $ | 10,133,584 | $ | 4,875,807 | $ | 30,235,156 | ||||||
|
| |||||||||||
Net assets consist of: |
| |||||||||||
Paid-in capital | $ | 10,035,000 | $ | 5,005,000 | $ | 30,213,729 | ||||||
Total distributable earnings (loss) | 98,584 | (129,193 | ) | 21,427 | ||||||||
|
| |||||||||||
Net assets, at value | $ | 10,133,584 | $ | 4,875,807 | $ | 30,235,156 | ||||||
|
| |||||||||||
Shares outstanding | 400,000 | 200,000 | 1,200,000 | |||||||||
|
| |||||||||||
Net asset value per share | $ | 25.33 | $ | 24.38 | $ | 25.20 | ||||||
|
|
32 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Operations
for the period ended September 30, 2018a (unaudited)
Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | ||||||||||
Investment income: |
| |||||||||||
Interest: (net of foreign taxes)b |
| |||||||||||
Unaffiliated issuers | $ | 206,184 | $ | 36,807 | $ | 324,976 | ||||||
|
| |||||||||||
Expenses: |
| |||||||||||
Management fees (Note 3a) | 21,284 | 7,484 | 52,869 | |||||||||
Transfer agent fees | 5,242 | 5,242 | 5,242 | |||||||||
Custodian fees | 2,991 | 3,250 | 1,579 | |||||||||
Reports to shareholders | 2,823 | 2,823 | 2,823 | |||||||||
Professional fees | 12,099 | 12,098 | 12,098 | |||||||||
Trustees’ fees and expenses | 403 | 403 | 403 | |||||||||
Other | 2,935 | 3,099 | 2,935 | |||||||||
|
| |||||||||||
Total expenses | 47,777 | 34,399 | 77,949 | |||||||||
Expenses waived/paid by affiliates (Note 3c) | (34,155 | ) | (28,578 | ) | (41,348 | ) | ||||||
|
| |||||||||||
Net expenses | 13,622 | 5,821 | 36,601 | |||||||||
|
| |||||||||||
Net investment income | 192,562 | 30,986 | 288,375 | |||||||||
|
| |||||||||||
Realized and unrealized gains (losses): |
| |||||||||||
Net realized gain (loss) from: |
| |||||||||||
Investments: |
| |||||||||||
Unaffiliated issuers | 11,479 | (1,426 | ) | (450 | ) | |||||||
Foreign currency transactions | — | (31,362 | ) | — | ||||||||
|
| |||||||||||
Net realized gain (loss) | 11,479 | (32,788 | ) | (450 | ) | |||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) on: |
| |||||||||||
Investments: |
| |||||||||||
Unaffiliated issuers | 86,509 | (97,906 | ) | 12,527 | ||||||||
Translation of other assets and liabilities denominated in foreign currencies | — | (1,306 | ) | — | ||||||||
|
| |||||||||||
Net change in unrealized appreciation (depreciation) | 86,509 | (99,212 | ) | 12,527 | ||||||||
|
| |||||||||||
Net realized and unrealized gain (loss) | 97,988 | (132,000 | ) | 12,077 | ||||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 290,550 | $ | (101,014 | ) | $ | 300,452 | |||||
|
|
aFor the period May 30, 2018 (commencement of operations) to September 30, 2018.
bForeign taxes withheld on interest | $ | — | $ | 1,041 | $ | — | ||||||
|
|
libertyshares.com | The accompanying notes are an integral part of these financial statements. | Semiannual Report | 33 |
FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS
Statements of Changes in Net Assets
Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | ||||||||||
Period Ended September 30, 2018a (unaudited) | ||||||||||||
Increase (decrease) in net assets: |
| |||||||||||
Operations: |
| |||||||||||
Net investment income | $ | 192,562 | $ | 30,986 | $ | 288,375 | ||||||
Net realized gain (loss) | 11,479 | (32,788 | ) | (450 | ) | |||||||
Net change in unrealized appreciation (depreciation) | 86,509 | (99,212 | ) | 12,527 | ||||||||
|
| |||||||||||
Net increase (decrease) in net assets resulting from operations | 290,550 | (101,014 | ) | 300,452 | ||||||||
|
| |||||||||||
Distributions to shareholders | (191,966 | ) | (28,179 | ) | (279,025 | ) | ||||||
|
| |||||||||||
Capital share transactions: (Note 2) | 10,035,000 | 5,005,000 | 30,213,729 | |||||||||
|
| |||||||||||
Net increase (decrease) in net assets | 10,133,584 | 4,875,807 | 30,235,156 | |||||||||
Net assets: |
| |||||||||||
Beginning of period | — | — | — | |||||||||
|
| |||||||||||
End of period | $ | 10,133,584 | $ | 4,875,807 | $ | 30,235,156 | ||||||
|
|
aFor the period May 30, 2018 (commencement of operations) to September 30, 2018.
34 | Semiannual Report | The accompanying notes are an integral part of these financial statements. | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Notes to Financial Statements (unaudited)
1. Organization and Significant Accounting Policies
Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end management investment company, consisting of thirty-five separate funds, three of which are included in this report (Funds) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Each of the Funds are an exchange traded fund (ETF) and are actively managed, thus they are not designed to track an index. Effective May 30, 2018, the Trust began offering shares of Franklin Liberty High Yield Corporate ETF, Franklin Liberty International Aggregate Bond ETF and Franklin Liberty Senior Loan ETF.
The following summarizes the Funds’ significant accounting policies.
a. Financial Instrument Valuation
The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Debt securities generally trade in the OTC market rather than on a securities exchange. The Funds’ pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or is limited, the pricing services also utilize proprietary valuation models which may consider market characteristics such as benchmark yield curves, credit spreads, estimated default rates, anticipated market interest rate volatility, coupon rates, anticipated timing of principal repayments, underlying
collateral, and other unique security features in order to estimate the relevant cash flows, which are then discounted to calculate the fair value. Securities denominated in a foreign currency are converted into their U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time.
The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
b. Foreign Currency Translation
Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.
The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices on
libertyshares.com | Semiannual Report | 35 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Significant Accounting Policies (continued)
b. Foreign Currency Translation (continued)
securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statements of Operations.
Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.
c. Securities Purchased on a Delayed Delivery Basis
Certain or all Funds purchase securities on a delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Funds will generally purchase these securities with the intention of holding the securities, they may sell the securities before the settlement date.
d. Senior Floating Rate Interests
Certain or all Funds invest in senior secured corporate loans that pay interest at rates which are periodically reset by reference to a base lending rate plus a spread. These base lending rates are generally the prime rate offered by a designated U.S. bank or the London InterBank Offered Rate (LIBOR). Senior secured corporate loans often require prepayment of principal from excess cash flows or at the discretion of the borrower. As a result, actual maturity may be substantially less than the stated maturity. Senior secured corporate loans in which the Funds invest are generally readily marketable, but may be subject to certain restrictions on resale.
e. Income and Deferred Taxes
It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.
The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which the Funds invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, certain or all Funds record an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.
Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of September 30, 2018, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years).
f. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Distributions to shareholders are recorded on the ex-dividend date. Distributable earnings are determined according to income tax regulations (tax basis) and may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in sub sequent periods.
Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to the combined net assets of the Trust. Fund specific expenses are charged directly to the Fund that incurred the expense.
g. Accounting Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
h. Guarantees and Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust.
Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.
2. Shares of Beneficial Interest
Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specified number of shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities). For the period ended September 30, 2018, all Creation Unit transactions were made in cash.
Authorized Participants pay a standard transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance and redemption of Creation Units and is not charged to or paid by the Funds.
In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in the Statements of Changes in Net Assets.
At September 30, 2018, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:
Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Period ended September 30, 2018a | ||||||||||||||||||||
Shares sold | 400,000 | $ | 10,035,000 | 200,000 | $ | 5,005,000 | ||||||||||||||
|
| |||||||||||||||||||
Franklin Liberty Senior Loan ETF | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||
Period ended September 30, 2018a | ||||||||||||||||||||
Shares sold | 1,200,000 | $ | 30,213,729 | |||||||||||||||||
|
|
aFor the period May 30, 2018 (commencement of operations) to September 30, 2018.
libertyshares.com | Semiannual Report | 37 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates
Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and trustees of the Funds are also officers and/or directors of the following subsidiaries:
Subsidiary | Affiliation | |
Franklin Advisers, Inc. (Advisers) | Investment manager | |
Franklin Templeton Investment Management Limited (FTIML) | Investment manager | |
Franklin Templeton Services, LLC (FT Services) | Administrative manager | |
Franklin Templeton Distributors, Inc. (Distributors) | Principal underwriter |
a. Management Fees
Franklin Liberty High Yield Corporate ETF pays an investment management fee to Advisers based on the average daily net assets of the fund as follows:
Annualized Fee Rate | Net Assets | |
0.625% | Up to and including $100 million | |
0.500% | Over $100 million, up to and including $250 million | |
0.450% | Over $250 million, up to and including $7.5 billion | |
0.440% | Over $7.5 billion, up to and including $10 billion | |
0.430% | Over $10 billion, up to and including $12.5 billion | |
0.420% | Over $12.5 billion, up to and including $15 billion | |
0.400% | Over $15 billion, up to and including $17.5 billion | |
0.380% | Over $17.5 billion, up to and including $20 billion | |
0.360% | Over $20 billion, up to and including $35 billion | |
0.355% | Over $35 billion, up to and including $50 billion | |
0.350% | In excess of $50 billion |
Franklin Liberty International Aggregate Bond ETF pays an investment management fee to FTIML based on the average daily net assets of the fund as follows:
Annualized Fee Rate | Net Assets | |
0.450% | Up to and including $1 billion | |
0.400% | Over $1 billion, up to and including $5 billion | |
0.350% | Over $5 billion, up to and including $10 billion | |
0.345% | Over $10 billion, up to and including $15 billion | |
0.340% | Over $15 billion, up to and including $20 billion | |
0.335% | In excess of $20 billion |
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Franklin Liberty Senior Loan ETF pays an investment management fee to Advisers based on the average daily net assets of the fund as follows:
Annualized Fee Rate | Net Assets | |
0.650% | Up to and including $500 million | |
0.550% | Over $500 million, up to and including $1 billion | |
0.500% | Over $1 billion, up to and including $1.5 billion | |
0.450% | Over $1.5 billion, up to and including $6.5 billion | |
0.425% | Over $6.5 billion, up to and including $11.5 billion | |
0.400% | Over $11.5 billion, up to and including $16.5 billion | |
0.390% | Over $16.5 billion, up to and including $19 billion | |
0.380% | Over $19 billion, up to and including $21.5 billion | |
0.370% | In excess of $21.5 billion |
For the period ended September 30, 2018, each Fund’s annualized gross effective investment management fee rate based on average daily net assets was as follows:
Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | ||||||||||||
0.625% | 0.450% | 0.650% |
b. Administrative Fees
Under an agreement with Advisers and FTIML, FT Services provides administrative services to the Funds. The fee is paid by Advisers and FTIML based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.
c. Waiver and Expense Reimbursements
Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by Franklin Liberty High Yield Corporate ETF and Franklin Liberty Senior Loan ETF so that the expenses (including acquired fund fees and expenses) for each of the Funds do not exceed 0.40% and 0.45%, respectively, based on the average net assets (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until July 31, 2019. FTIML has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by Franklin Liberty International Aggregate Bond ETF so that the expenses (including acquired fund fees and expenses) of the Fund do not exceed 0.35% based on the average net assets (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until July 31, 2019. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.
libertyshares.com | Semiannual Report | 39 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. Transactions with Affiliates (continued)
d. Other Affiliated Transactions
At September 30, 2018, the shares of the Funds were owned by the following entities:
Funds | Shares | Percentage of Outstanding Sharesa | ||||||
Franklin Liberty High Yield Corporate ETF | ||||||||
Franklin Resources Inc. | 200,000 | 50.0% | ||||||
|
| |||||||
Franklin Liberty International Aggregate Bond ETF | ||||||||
Franklin Balanced Fund | 110,000 | 55.0% | ||||||
|
| |||||||
Franklin Liberty Senior Loan ETF | ||||||||
Franklin Floating Rate Master Trust | 298,000 | 24.8% | ||||||
Franklin Total Return Fund | 299,900 | 25.0% | ||||||
|
| |||||||
Total | 597,900 | 49.8% | ||||||
|
|
aInvestment activities of significant shareholders could have a material impact on the Funds.
4. Income Taxes
At September 30, 2018, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | ||||||||||
Cost of investments | $ | 10,013,814 | $ | 4,685,823 | $ | 31,908,803 | ||||||
|
| |||||||||||
Unrealized appreciation | $ | 111,551 | $ | 26,617 | $ | 45,510 | ||||||
Unrealized depreciation | (30,116 | ) | (134,251 | ) | (35,747 | ) | ||||||
|
| |||||||||||
Net unrealized appreciation (depreciation) | $ | 81,435 | $ | (107,634 | ) | $ | 9,763 | |||||
|
|
Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatments of bond discounts and premiums.
5. Investment Transactions
Purchases and sales of investments (excluding short term securities and in-kind transactions, if any) for the period ended September 30, 2018, were as follows:
Franklin Liberty High Yield Corporate ETF | Franklin Liberty International Aggregate Bond ETF | Franklin Liberty Senior Loan ETF | ||||||||||
Purchases | $ | 10,299,145 | $ | 5,258,069 | $ | 26,493,506 | ||||||
Sales | $ | 433,880 | $ | 1,217,388 | $ | 175,188 |
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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
6. Credit Risk
At September 30, 2018, Franklin Liberty High Yield Corporate ETF, Franklin Liberty International Aggregate Bond ETF, and Franklin Liberty Senior Loan ETF had 98.0%, 8.7%, and 88.0%, respectively, of their portfolio invested in high yield securities, senior secured floating rate notes, or other securities rated below investment grade and unrated securities, if any. These securities may be more sensitive to economic conditions causing greater price volatility and are potentially subject to a greater risk of loss due to default than higher rated securities.
7. Concentration of Risk
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.
8. Fair Value Measurements
The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:
• | Level 1 – quoted prices in active markets for identical financial instruments |
• | Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.) |
• | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial instruments) |
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.
At September 30, 2018, all of the Funds’ investments in financial instruments carried at fair value were valued using Level 2 inputs.
9. New Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on
Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities, held at a premium, to be amortized to the earliest call date. The ASU does not require an accounting change for securities held at a discount; which continues to be amortized to maturity. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management is currently evaluating the impact, if any, of applying this provision.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in the ASU modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Management is currently evaluating the impact, if any, of applying this provision.
10. Subsequent Events
The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no events have occurred that require disclosure.
libertyshares.com | Semiannual Report | 41 |
FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Selected Portfolio | Currency | |||||
FHLB | Federal Home Loan Bank | AUD | Australian Dollar | |||
FRN | Floating Rate Note | CAD | Canadian Dollar | |||
LIBOR | London InterBank Offered | EUR | Euro | |||
PIK | Payment-In-Kind | JPY | Japanese Yen | |||
TBD | To Be Determined | IDR | Indonesian Rupiah | |||
MXN | Mexican Peso | |||||
PLN | Polish Zloty | |||||
USD | United States Dollar | |||||
ZAR | South African Rand |
42 | Semiannual Report | libertyshares.com |
FRANKLIN TEMPLETON ETF TRUST
Board Approval of Investment Management Agreements
FRANKLIN TEMPLETON ETF TRUST
Franklin Liberty High Yield Corporate ETF
Franklin Liberty International Aggregate Bond ETF
Franklin Liberty Senior Loan ETF
(each a Fund)
At an in-person meeting held on April 9, 2018 (Meeting), the Board of Trustees (Board) of Franklin Templeton ETF Trust (Trust), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (Independent Trustees), reviewed and approved an investment management agreement between Franklin Advisers, Inc. (FAI) and the Trust, on behalf of the Franklin Liberty High Yield Corporate ETF and the Franklin Liberty Senior Loan ETF, and an investment management agreement between Franklin Templeton Investment Management Limited (FTIML) and the Trust, on behalf of the Franklin Liberty International Aggregate Bond ETF (each a Management Agreement) for an initial two-year period. The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve each Management Agreement. Although the Management Agreements for the Funds were considered at the same Board meeting, the Board considered the information provided to it about the Funds together and with respect to each Fund separately as the Board deemed appropriate. FAI and FTIML are each referred to herein as a Manager.
In considering the approval of each Management Agreement, the Board reviewed and considered information provided by each Manager at the Meeting and throughout the year at meetings of the Board and its committees. The Board reviewed and considered all of the factors it deemed relevant in approving each Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services to be provided by each Manager; (ii) the costs of the services to be provided by each Manager; and (iii) the extent to which economies of scale may be realized as each Fund grows. The Board also reviewed and considered the form of Management Agreement and the terms of each Management Agreement which were explained at the Meeting, noting that the form of Management Agreement was substantially the same as the standard forms of investment management agreement (that include administration services) for the other funds in the Franklin Templeton family of funds, including the other series of the Trust.
In approving each Management Agreement, the Board, including a majority of the Independent Trustees, determined that the terms of the proposed Management Agreement are fair and reasonable and that such Management Agreement is in the interests of the applicable Fund and its shareholders. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board reviewed and considered information regarding the nature, extent and quality of investment management services to be provided by each Manager and its affiliates to the Funds and their shareholders. This information included, among other things, the Funds’ proposed investment goals and each Manager’s proposed investment strategies and ability to implement such investment strategies; the qualifications, background and experience of the investment personnel that will be responsible for the day-to-day portfolio management of each Fund; each Manager’s experience as the manager of other funds and accounts, including other series of the Trust and other funds in the Franklin Templeton family of funds; each Manager’s strength and reputation within the industry; the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of each Manager; and each Manager’s compliance capabilities, as demonstrated by, among other things, its policies and procedures designed to prevent violations of the Federal Securities Laws (as defined in Rule 38a-1 of the Investment Company Act of 1940). Following consideration of such information, the Board was satisfied with the nature, extent and quality of services to be provided by each Manager and its affiliates to the Funds and their shareholders.
FUND PERFORMANCE. The Board noted that, as the Funds had not yet commenced investment operations, there was no investment performance for the Funds. The Board considered the proposed performance benchmarks for the Funds and how such benchmarks would be utilized to measure performance of each Manager.
COMPARATIVE FEES AND EXPENSES. The Board reviewed and considered information regarding the proposed investment management fee to be charged to each Fund by its Manager. In particular, the Board considered information relating to proposed fees and expenses for the Funds, including comparative data provided by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent organization, which compared the Funds’ proposed fees and expenses with those of
libertyshares.com | Semiannual Report | 43 |
FRANKLIN TEMPLETON ETF TRUST
SHAREHOLDER INFORMATION
other funds deemed comparable to the Funds as selected by Broadridge (“Comparable Funds”). The Board noted that for each Fund the contractual management fee and net expenses would be below the median of the fee and expenses of the Comparable Funds. The Board concluded that the proposed investment management fee for each Fund is reasonable. In doing so, the Board noted that each Fund’s net expenses reflected a proposed fee waiver from management.
The Board then noted that each Manager (and its affiliates) could not report any financial results from their relationships with the Funds because the Funds had not yet commenced investment operations, and thus, the Board could not evaluate each Manager’s (or its affiliates’) profitability with respect to the Funds.
ECONOMIES OF SCALE. The Board reviewed and considered the extent to which each Manager may realize economies of scale, if any, as each Fund grows larger and whether the Fund’s investment management fee structure reflects any economies of scale for the benefit of shareholders. With respect to possible economies of scale, the Board noted the existence of management fee breakpoints, which operate generally to share any economies of scale with a Fund’s shareholders by reducing the Fund’s effective management fees as the Fund grows in size. The Board also considered the Managers’ view that any analyses of potential economies of scale in managing a particular fund are inherently limited in light of the joint and common costs and investments a Manager incurs across the Franklin Templeton family of funds as a whole. The Board noted that it is not anticipated that the Funds will generate significant, if any, profit for a Manager and/or its affiliates for some time.
CONCLUSION. Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the Management Agreement for each Fund for an initial two-year period.
Proxy Voting Policies and Procedures
The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at libertyshares.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention:
Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.
Quarterly Statement of Investments
The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.
Premium/Discount Information
Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s website at libertyshares.com.
44 | Semiannual Report | libertyshares.com |
Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and other information; please read it carefully before investing.
To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.
Semiannual Report | ||||||
Franklin Templeton ETF Trust | ||||||
Investment Managers Franklin Advisers, Inc. Franklin Templeton Investment Management Limited | Distributor Franklin Templeton Distributors, Inc. (800) DIAL BEN®/342-5236 libertyshares.com | Investor Services Transfer Agent State Street Bank and 1 Heritage Drive North Quincy, MA 02171 |
© 2018 Franklin Templeton Investments. All rights reserved. | ETF6 S 11/18 |
Item 2. | Code of Ethics. |
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
Item 3. | Audit Committee Financial Expert. |
(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.
(2) The audit committee financial expert is John B. Wilson and he is “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases.
Item 4. | Principal Accountant Fees and Services. N/A |
Item 5. | Audit Committee of Listed Registrants. N/A |
Item 6. | Schedule of Investments. N/A |
Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A |
Item 8. | Portfolio Managers of Closed-End Management Investment Companies. N/A |
Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A |
Item 10. | Submission of Matters to a Vote of Security Holders. |
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.
Item 11. | Controls and Procedures. |
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.
(b) Changes in Internal Controls. There have been no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.
Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Company. N/A |
Item 13. | Exhibits. |
(a) (1) Code of Ethics
(a) (2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer—Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Matthew T. Hinkle, Chief Executive Officer—Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN TEMPLETON ETF TRUST | ||
By | /s/ MATTHEW T. HINKLE | |
Matthew T. Hinkle |
Chief Executive Officer – Finance and Administration
Date November 27, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By | /s/ MATTHEW T. HINKLE | |
Matthew T. Hinkle |
Chief Executive Officer – Finance and Administration
Date November 27, 2018
By | /s/ GASTON GARDEY | |
Gaston Gardey |
Chief Financial Officer and Chief Accounting Officer
Date November 27, 2018