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ANNUAL REPORT

FRANKLIN TEMPLETONETF TRUSTMarch 31, 2020

Franklin Liberty Investment Grade Corporate ETF Franklin Liberty U.S. Core Bond ETF

Franklin Liberty U.S. Low Volatility ETF

Internet Delivery of Fund Reports Unless You Request Paper Copies: Effective January 1,

2021, as permitted by the SEC, paper copies of the Fund’s shareholder reports will no longer be

sent by mail, unless you specifically request them from the Fund or your financial intermediary.

Instead, the reports will be made available on a website, and you will be notified by mail each time

a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this

change and you need not take any action. If you have not signed up for electronic delivery, we

would encourage you to join fellow shareholders who have. You may elect to receive shareholder

reports and other communications electronically from the Fund by calling (800) 632-2301 or by

contacting your financial intermediary.

You may elect to continue to receive paper copies of all your future shareholder reports free of

charge by contacting your financial intermediary or, if you invest directly with a Fund, calling

(800) 632-2301 to let the Fund know of your request. Your election to receive reports in paper will

apply to all funds held in your account.

Franklin Templeton

Successful investing begins with ambition. And achievement only comes when you reach for it.

That’s why we continually strive to deliver better outcomes for investors. No matter what your

goals are, our deep, global investment expertise allows us to offer solutions that can help.

During our more than 70 years of experience, we’ve managed through all kinds of markets—

up, down and those in between. We’re always preparing for what may come next. It’s because

of this, combined with our strength as one of the world’s largest asset managers that we’ve

earned the trust of millions of investors around the world.

Contents

Annual Report

Franklin Liberty Investment Grade Corporate ETF . . . . . . 2

Franklin Liberty U.S. Low Volatility ETF . . . . . . . . . . . . . . . . 9

Franklin Liberty U.S. Core Bond ETF . . . . . . . . . . . . . . . . . . 16

Financial Highlights and Statements of Investments . . . . . 23

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 46

Report of Independent RegisteredPublic Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Board Members and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Visit franklintempleton.com/investor/investments-and-solutions/investment-options/etfs/ for fundupdates and documents.

Not FDIC Insured | May Lose Value | No Bank Guarantee

franklintempleton.com Not part of the annual report 1

ANNUAL REPORT

Franklin Liberty Investment Grade Corporate ETFThis annual report for Franklin Liberty Investment GradeCorporate ETF covers the period ended March 31, 2020.

Your Fund’s Goal and Main InvestmentsThe Fund seeks a high level of current income as is consis-tent with prudent investing, while seeking preservation ofcapital. Under normal market conditions, the Fund invests atleast 80% of its net assets in investment-grade corporatedebt securities and investments.

Performance OverviewDuring the 12-month period, the Fund posted cumulative totalreturns of +3.25% based on market price and +4.02% basedon net asset value (NAV).1 In comparison, the BloombergBarclays U.S. Corporate Investment Grade Index posted a+4.98% total return for the same period.1 You can find moreof the Fund’s performance data in the Performance Summarybeginning on page 5.

Performance data represent past performance, which doesnot guarantee future results. Investment return and principalvalue will fluctuate, and you may have a gain or loss whenyou sell your shares. Current performance may differ fromfigures shown. For most recent month-end performance, goto franklintempleton.com or call (800) 342-5236.

Economic and Market OverviewThe U.S. bond market’s performance during the 12-monthperiod, as measured by the Bloomberg Barclays U.S. Aggre-gate Bond Index, was defined by two phases: before andduring the outbreak of the novel coronavirus (COVID-19) inthe country. Until late February 2020, prices for most U.S.bonds rose, as low inflation, interest-rate cuts and strongdemand for yield, which moves inversely to price, supportedfixed-income markets. In late February, as more countriesadopted social distancing and lockdown measures to slowthe global pandemic, the U.S. bond market began pricing inthe adverse impact on economic activity. Higher-quality,longer-term bonds rallied, while riskier, lower-rated corporatebonds declined sharply, reflecting a reversal in many invest-ors’ risk appetite. Similarly, strong demand for cash and cashequivalents drove yields on certain U.S. Treasury bill

Top 10 Sectors/Industries3/31/20

% of Total

Net Assets

Banks 14.9%

Oil, Gas & Consumable Fuels 10.1%

Electric Utilities 8.4%

Health Care Providers & Services 4.7%

Capital Markets 4.6%

Diversified Telecommunication Services 4.0%

Insurance 3.7%

Real Estate Management & Development 3.1%

Energy Equipment & Services 3.0%

Food & Staples Retailing 2.7%

maturities to fall briefly below zero. Thereafter, bond pricesfell then somewhat stabilized as the magnitude of the down-turn led to constricted liquidity and subsequent interventionby the U.S. Federal Reserve (Fed).

After reducing the federal funds target rate three times in2019 to a range of 1.50%–1.75%, the Fed enacted two emer-gency rate cuts in March 2020 in response to the COVID-19pandemic, further lowering the federal funds target rate to arange of 0.00%–0.25%. In addition, the Fed announced aplan to purchase government, government-backed and cor-porate bonds to help keep markets functioning, significantlyexpanding its balance sheet.

U.S. Treasury bonds, as measured by the BloombergBarclays U.S. Treasury Index, rose significantly during thereporting period, despite high levels of Treasury issuancedue to deficit spending and investor expectations for largeincreases in debt issuance for fiscal stimulus to alleviate theeconomic downturn. The yield on 10-year U.S. Treasurybonds declined to historic lows near period-end, driven byfears of a prolonged global economic disruption due to theCOVID-19 pandemic. Mortgage-backed securities (MBS), asmeasured by the Bloomberg Barclays MBS Index, alsoposted positive returns, aided by the Fed’s announcementthat it would make substantial MBS purchases.

1. Source: Morningstar.The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in anindex, 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 SOIbegins on page 24.

2 Annual Report franklintempleton.com

FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETF

U.S. corporate bond performance was hampered during theperiod’s last month by investor concerns about thepandemic-related economic disruption and the potentialcredit downgrades of many companies amid high levels ofindebtedness. For the 12-month period, investment-gradecorporate bonds, as represented by the Bloomberg BarclaysU.S. Corporate Bond Index, posted positive returns, whilehigh-yield corporate bonds, as represented by the BloombergBarclays U.S. Corporate High Yield Bond Index, posted neg-ative returns due to investor concerns about a potentialincrease in credit defaults.

Investment StrategyThe Fund invests primarily in U.S. dollar-denominated corpo-rate debt securities issued by U.S. and foreign companies.The Fund may invest in debt securities of any maturityor duration.

The Fund’s focus on the credit quality of its portfolio isintended to reduce credit risk and help to preserve the Fund’scapital. The Fund may also invest a portion of its assets inconvertible securities, preferred securities and U.S. Treasurysecurities, and generally expects to invest a portion of itsassets in cash, cash equivalents and high quality moneymarket securities, including commercial paper, repurchaseagreements and affiliated or unaffiliated money market funds.The Fund may invest up to 40% of its net assets in foreignsecurities, including those in developing markets, and up to15% of its net assets in non-U.S. dollar-denominated securi-ties. The Fund may enter into certain derivative transactionsto seek to enhance Fund returns, increase liquidity, gainexposure to certain instruments or markets in a more efficientor less expensive way and/or hedge risks associated with itsother portfolio investments.

In choosing investments, we select securities in various mar-ket sectors based on our assessment of changing economic,market, industry and issuer conditions. We use a top-downanalysis of macroeconomic trends, combined with a bottom-up fundamental analysis of market sectors, industries andissuers, to try to take advantage of varying sector reactionsto economic events. The Fund’s portfolio is constructed bytaking into account our desired duration and yield curveexposure, total return potential, as well as the appropriatediversification and risk profile at the issue, company andindustry level. We may utilize quantitative models to identifyinvestment opportunities in order to construct a portfolio ofinvestments for the Fund. Quantitative trading models areproprietary systems that rely on mathematical computationsto identify trading opportunities.

Top 10 Holdings3/31/20

Issue/Issuer

Sector/Industry

% of Total

Net Assets

U.S. Treasury 30 Yr. Bond , 6/19/2020 3.3%

CK Hutchison International 19 Ltd., senior note, 144A,senior note, 144A, 3.625%, 4/11/2029 1.9%

Morgan Stanley, senior bond, 3.591% to 7/22/27, FRNthereafter, 3.591%, 7/22/2028 1.9%

Enel Finance International NV, senior note, 144A,3.625%, 5/25/2027 1.9%

Bank of America Corp., sub. bond, 4.183%,11/25/2027 1.9%

Alibaba Group Holding Ltd., senior note, senior note,3.40%, 12/06/2027 1.9%

Capital One Financial Corp., senior bond, senior note,3.20%, 1/30/2023 1.9%

France Telecom SA, senior bond, 9.57%, 3/01/2031 1.8%

Citigroup, Inc., senior bond, 3.668% to 7/23/27, FRNthereafter, senior note, 3.352% to 4/24/24, FRNthereafter, 3.352%, 4/24/2025 1.7%

Glencore Funding LLC, senior note, 144A, seniornote, 144A, senior note, 144A, 4.875%, 3/12/2029 1.7%

Manager’s DiscussionThe investment grade corporate bond market performed wellduring the period on a total return basis, but results werenegatively impacted starting in early 2020 as markets reactedto the consequences of the COVID-19 pandemic. Corporatebond spreads moved beyond typical recession levels asinvestor uncertainty about the duration and severity of theeconomic shutdown caused a major pullback in investorrisk appetite. Fiscal and monetary policy intervention by theU.S. government, including a plan for the Fed to purchasesome investment grade corporate bonds, helped to stabilizethe market.

Earlier in the period, mixed economic data, increasinglyaccommodative central banks and headlines about globaltrade disputes were the main market drivers. S&P 500 corpo-rate earnings were weaker versus the prior year, but stillgenerally supportive. Government bond yields fell during theperiod, with the 10-year U.S. Treasury yield declining from2.41% to 0.70%.

Lower government bond yields globally helped demand forinvestment-grade corporate bonds, a higher yielding alterna-tive. Corporate issuance levels were in line with recent trendsuntil the final weeks of the period when issuance surged, assome higher quality companies sought to improve cashliquidity or pay down short-term borrowings.

franklintempleton.com Annual Report 3


The Fund underperformed its benchmark on a net basis forthe period. Industry allocation was the largest negative per-formance driver, followed by quality allocation. Yield curvepositioning was also a slight detractor, while security selec-tion was the biggest positive performance driver.

Industry underperformance was driven by our overweightedposition in energy bonds and an underweighted position intechnology bonds. Contributors on an individual companybasis included Valero Energy, CK Hutchison andSchlumberger. Detractors included Aflac, Devon Energy andWells Fargo.

News stories about the COVID-19 pandemic, together withsharply lower oil prices, impacted much of the portfolio late inthe period. For example, the Fund’s holdings in energy-related issuers saw significant price volatility. Even thehighest quality and normally most liquid holdings were undersome market stress during the most volatile days of March2020, although prices normalized as the market stabilized.

The Fund’s overweight position in BBB rated bonds hurt per-formance. This position was based on our view that thesebonds offered what we considered attractive yields based oncurrent valuations and economic conditions, but that beliefwas put to the test by the unexpected economic slowdowncaused by the pandemic. We kept the Fund’s duration posi-tioning close to neutral relative to the benchmark for most ofthe period.

What is the yield curve?

The yield curve is a line that plots the interest rates, at a set pointin time, of bonds having equal credit quality but differing maturitydates. The most frequently reported yield curve compares three-month, two-year and 30-year U.S. Treasury debt.

What is duration?

Duration is a measure of a bond’s price sensitivity to interest-ratechanges. In general, a portfolio of securities with a lower durationcan be expected to be less sensitive to interest-rate changes thana portfolio with a higher duration.

The Fund held primarily cash bonds during the period butused credit index derivatives to gain market exposure on atemporary, tactical basis. The Fund also used interest-ratefutures contracts to manage duration exposure.

Thank you for your participation in Franklin Liberty Invest-ment Grade Corporate ETF. We look forward to serving yourfuture investment needs.

Marc Kremer, CFACo-Lead Manager

Shawn Lyons, CFACo-Lead Manager

Thomas Runkel, CFACo-Lead Manager

Pururav Thoutireddy, Ph.D.Co-Lead Manager

The foregoing information reflects our analysis, opinions andportfolio holdings as of March 31, 2020, the end of the report-ing period. The way we implement our main investmentstrategies and the resulting portfolio holdings may changedepending on factors such as market and economic condi-tions. These opinions may not be relied upon as investmentadvice or an offer for a particular security. The information isnot a complete analysis of every aspect of any market, coun-try, industry, security or the Fund. Statements of fact are fromsources considered reliable, but the investment managermakes no representation or warranty as to their complete-ness or accuracy. Although historical performance is noguarantee of future results, these insights may help youunderstand our investment management philosophy.

CFA® is a trademark owned by CFA Institute.



Performance Summary as of March 31, 2020Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains orlosses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The per-formance tables and graph do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions,if any, or any realized gains on the sale of Fund shares.

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuingmutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between thehighest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the timethat such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s incep-tion, 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 theMarket Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions havebeen 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 oper-ating expenses. Capital gain distributions are net profits realized from the sale of portfolio securities.

Performance as of 3/31/201

Cumulative Total Return2 Average Annual Total Return2

Based on

NAV3

Based on

market price4

Based on

NAV3

Based on

market price4

1-Year +4.02% +3.25% +4.02% +3.25%

3-Year +11.24% +10.41% +3.61% +3.36%

Since Inception (10/3/16) +9.21% +8.53% +2.56% +2.37%

30 Day Standardized Yield6

Distribution Rate5

(with

fee waiver)

(without

fee waiver)

3.75% 3.39% 3.15%

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

See page 7 for Performance Summary footnotes.


FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETFPERFORMANCE SUMMARY

Total Return Index Comparison for a Hypothetical $10,000 Investment1

Total return is calculated at net asset value and represents the change in value of an investment over the periods shown. Itincludes any Fund fees and expenses, and reinvested distributions. The unmanaged index includes reinvestment of anyincome or distributions. It differs from the Fund in composition and does not pay management fees or expenses. One cannotinvest directly in an index.

10/13/16–3/31/20

$11,130$10,921

3/203/193/183/1710/16$9,000

$10,000

$11,000

$12,000

Bloomberg Barclays U.S. CorporateInvestment Grade Index7

Franklin Liberty InvestmentGrade Corporate ETF



FRANKLIN LIBERTY INVESTMENT GRADE CORPORATE ETFPERFORMANCE SUMMARY

Distributions (4/1/19–3/31/20)

Net Investment

Income

Short-Term

Capital Gain

Long-Term

Capital Gain Total

$0.806589 $0.05683 $— $0.05683

Total Annual Operating Expenses8

With Fee Waiver Without Fee Waiver

0.35% 1.07%

All investments involve risks, including possible loss of principal. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices ofbonds 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 ratesfall 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 itsvalue. The Fund’s investments in foreign securities involve certain risks including currency fluctuations, and economic and political uncertainties. Investments indeveloping 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 mayresult in losses to the Fund. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental or man-made disasters;financial, political or social disruptions; terrorism and war; and other tragedies or catastrophes, can cause investor fear and panic, which can adversely affect theeconomies of many companies, sectors, nations, regions and the market in general, in ways that cannot necessarily be foreseen. The Fund’s prospectus alsoincludes 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 willreduce returns.

1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without thisreduction, the results would have been lower.2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any,has not been annualized.3. Assumes reinvestment of distributions based on net asset value.4. Assumes reinvestment of distributions based on market price.5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may notequal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.7. Source: Morningstar. The Bloomberg Barclays U.S. Corporate Investment Grade Index measures the investment grade, fixed-rate, taxable corporate bond market. Itincludes U.S. dollar-denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers.8. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections inthis report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.See www.franklintempletondatasources.com for additional data provider information.



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

Actual Fund ExpensesThe 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 “End-ing Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, youraccount value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account hadan $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 thisillustration, the actual expenses paid this period are $64.50.

Hypothetical Example for Comparison with Other FundsUnder the heading “Hypothetical” in the table, information is provided about hypothetical account values and hypotheticalexpenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which isnot the Fund’s actual return. This information may not be used to estimate the actual ending account balance or expenses youpaid for the period, but it can help you compare ongoing costs of investing in the Fund with those of other funds. To do so, com-pare 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 youcompare total costs of owning different funds. In addition, if transactional costs were included, your total costs would havebeen higher.

Actual

(actual return after expenses)

Hypothetical

(5% annual return before expenses)

Beginning

Account

Value 10/1/19

Ending

Account

Value 3/31/20

Expenses

Paid During

Period

10/1/19–3/31/201,2

Ending

Account

Value 3/31/20

Expenses

Paid During

Period

10/1/19–3/31/201,2

Net Annualized

Expense Ratio2

$1,000.00 $964.20 $1.72 $1,023.25 $1.77 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 valueover the period indicated, and then multiplied by 183/366 to reflect the one-half year period.2. Reflects expenses after fee waivers and expense reimbursements.


Franklin Liberty U.S. Low Volatility ETFThis annual report for Franklin Liberty U.S. Low Volatility ETFcovers the period ended March 31, 2020.

Your Fund’s Goal and Main InvestmentsThe Fund seeks capital appreciation with an emphasis onlower volatility. Under normal market conditions, the Fundinvests at least 80% of its net assets in U.S. investments.

Performance OverviewDuring the 12-month period, the Fund posted cumulative totalreturns of -6.88% based on market price and -6.74% basedon net asset value (NAV). In comparison, the Russell 1000®

Index posted a -8.03% total return for the same period.1 Youcan find more of the Fund’s performance data in the Perfor-mance Summary beginning on page 12.


Economic and Market OverviewU.S. equities, as measured by the Standard & Poor’s® 500Index (S&P 500®), declined during the 12 months underreview. Equities posted strong gains for most of the reportingperiod, aided by relatively steady economic growth, easingtrade tensions and the U.S. Federal Reserve’s (Fed’s) sup-portive monetary policy. However, a sharp selloff began inlate February 2020 amid investor fears of a global economicslowdown due to the novel coronavirus (COVID-19) pan-demic. Concerns about global supply chain disruptions,business and personal restrictions, and subdued consumerspending drove many investors to sell equity holdings infavor of perceived safe investments such as governmentbonds and cash.

The Fed lowered the federal funds target rate three times in2019 to a range of 1.50%–1.75%. The labor market remained

Top 10 Sectors/Industries3/31/20

% of Total

Net Assets

Information Technology 24.8%

Health Care 15.0%

Financials 11.5%

Consumer Discretionary 10.3%

Communication Services 9.8%

Industrials 8.3%

Consumer Staples 7.2%

Real Estate 3.5%

Utilities 3.3%

Energy 2.8%

strong through February 2020 and supported consumer spend-ing, though some parts of the economy struggled as annualindustrial production contracted and capital spending declined.

However, economic activity weakened considerably as theCOVID-19 pandemic spread across the U.S. and many stateand local governments issued stay-at-home orders, whichincluded business closures and restrictions. Weekly unem-ployment claims surged near period-end, reflecting layoffs inmany industries, particularly retail, restaurants and hospital-ity. As a result, the unemployment rate jumped from a50-year low of 3.5% in February 2020 to 4.4% at period-end,and the economy contracted in the first quarter, following anexpansion that lasted more than a decade.2

Market volatility persisted at a heightened level throughoutMarch 2020, as social distancing measures intended to miti-gate the pandemic severely weakened the economy. In aneffort to boost the U.S. economy and aid businesses andindividuals directly impacted by the pandemic, the federalgovernment passed an unprecedented $2 trillion stimuluspackage. Furthermore, the Fed cut the federal funds targetrate to a range of 0.00%–0.25% and announced sweepingquantitative easing measures aimed at stimulating lendingand credit availability. Many investors were encouraged by

1. Source: Morningstar. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trade-mark 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 anindex, and an index is not representative of the Fund’s portfolio.2. Source: Bureau of Labor Statistics.The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOIbegins on page 31.


FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF

policymakers’ swift and decisive fiscal and monetary stimulusmeasures. U.S. stocks, as measured by the S&P 500,bounced from multi-year lows, but still finished the reportingperiod with negative returns.

Manager’s DiscussionThe Fund fared better than its benchmark, the Russell 1000®

Index, during the fiscal year. Leading contributors included thefinancials, industrials, materials and consumer staples sectors.

Stock selection proved positive for financials sector results,including a position in financial and analytics firm S&PGlobal. A position in aerospace and defense companyLockheed Martin and our avoidance of the poor-performingairline stocks aided relative returns in the industrials sector.Airline operators faced major challenges toward the end ofthe period due to COVID-19-related travel disruptions. Stockselection in the chemicals industry and the food and staplesretailing industry contributed to relative performance in thematerials and consumer staples sectors, respectively.

Several individual contributors helped advance the Fund’sresults. While information technology was an overall detrac-tor at the sector level, the Fund’s investments in electronicpayments processor Total System Services and chipmakerSynopsys added to returns. Accelerating sales growth andimproving profit margins was a boost for the shares of dis-count retailer Dollar General in the consumer discretionarysector. In the communication services sector, cable providerCharter Communications benefited from increasing penetra-tion rates in broadband, which was a growth driver ofrevenue for the company.

In contrast, stock selection in the information technology sec-tor detracted from relative performance. Within the sector,underweightings in Microsoft and Apple hindered relativereturns as shares of both companies sharply appreciatedover the period. In the consumer discretionary sector, anunderweighting in Amazon.com was a drag on performance.The retail giant reached a market cap of $1 trillion and sharesposted all-time highs over the period. Home improvementretailer Lowe’s struggled to pass along rising costs to con-sumers, which pressured the company’s profits and weighedon its stock. Elsewhere, investor concerns about a virus-induced economic decline and the impact on energy demandundermined the energy sector and our positions inSchlumberger and Occidental Petroleum.

Top 10 Holdings3/31/20

Company

Sector/Industry

% of Total

Net Assets

Automatic Data Processing Inc.Information Technology

1.7%

Fiserv Inc.Information Technology

1.6%

Synopsys Inc.Information Technology

1.6%

International Business Machines Corp.Information Technology

1.6%

Microsoft Corp.Information Technology

1.6%

Global Payments Inc.Information Technology

1.6%

McCormick & Co. Inc.Consumer Staples

1.6%

Oracle Corp.Information Technology

1.6%

Intuit Inc.Information Technology

1.6%

Mastercard Inc., AInformation Technology

1.6%

Thank you for your participation in Franklin Liberty U.S. LowVolatility ETF. We look forward to serving your future invest-ment needs.

Todd Brighton, CFA

Portfolio Manager

3. “U.S. companies” are those that (i) are organized under the laws of, or have a principal office in, or for whose securities the principal trading market is, the U.S.; (ii) derive50% 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.



Performance Summary as of March 31, 2020Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains orlosses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The per-formance table and graph do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, ifany, or any realized gains on the sale or redemption of Fund shares.





Based on

NAV3

Based on

market price4

Based on

NAV3

Based on

market price4

1-Year -6.74% -6.88% -6.74% -6.88%

3-Year +21.26% +21.18% +6.64% +6.61%

Since Inception (9/20/16) +31.45% +31.45% +8.06% +8.06%




FRANKLIN LIBERTY U.S. LOW VOLATILITY ETFPERFORMANCE SUMMARY



9/20/16–3/31/20

$12,793$13,145

3/203/193/183/179/16$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Russell 1000 Index5Franklin Liberty U.S. Low Volatility ETF



FRANKLIN LIBERTY U.S. LOW VOLATILITY ETFPERFORMANCE SUMMARY


Net Investment

Income

$0.483101



0.29% 0.91%

All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individualcompanies, particular industries or sectors, or general market conditions. There can be no guarantee that the Fund’s volatility strategy will be successful, andachieving 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 limitthe Fund’s participation in market price appreciation when compared to similar funds that do not attempt this strategy. Smaller and midsize-company stockshave historically experienced more price volatility than larger company stocks, especially over the short term. Unexpected events and their aftermaths, such asthe spread of deadly diseases; natural, environmental or man-made disasters; financial, political or social disruptions; terrorism and war; and other tragedies orcatastrophes, can cause investor fear and panic, which can adversely affect the economies of many companies, sectors, nations, regions and the market in gen-eral, in ways that cannot necessarily be foreseen. The Fund’s prospectus also includes a description of the main investment risks.


1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/20. Fund investment results reflect the expense reduction; without thisreduction, the results would have been lower.2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any,has not been annualized.3. Assumes reinvestment of distributions based on net asset value.4. Assumes reinvestment of distributions based on market price.5. Source: Morningstar. The Russell 1000 Index is market capitalization weighted and measures performance of the approximately 1,000 largest companies in the Russell3000 Index, which represents the majority of the U.S. market’s total capitalization.6. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections inthis report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.See www.franklintempletondatasources.com for additional data provider information.




Actual Fund ExpensesThe 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 “End-ing Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, youraccount value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account hadan $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 thisillustration, the actual expenses paid this period are $64.50.


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 com-pare total costs of owning different funds. In addition, if transactional costs were included, your total costs would have beenhigher.

Actual


Hypothetical


Beginning

Account

Value 10/1/19

Ending

Account

Value 3/31/20

Expenses

Paid During

Period

10/1/19–3/31/201,2

Ending

Account

Value 3/31/20

Expenses

Paid During

Period

10/1/19–3/31/201,2

Net Annualized

Expense Ratio2

$1,000.00 $851.60 $1.34 $1,023.55 $1.47 0.29%



Franklin Liberty U.S. Core Bond ETFThis annual report for Franklin Liberty U.S. Core Bond ETFcovers the period since the Fund’s inception on September 17,2019 through March 31, 2020.

Your Fund’s Goal and Main InvestmentsThe Fund seeks total return. Under normal market condi-tions, the Fund invests at least 80% of its net assets in bondsof U.S. issuers.

Performance OverviewFor the period since inception on September 17, 2019,through March 31, 2020, the Fund posted cumulative totalreturns of +3.12% based on market price and +3.12% basedon net asset value (NAV). In comparison, the BloombergBarclays U.S. Aggregate Bond Index, which tracks the U.S.investment-grade, taxable bond market, posted a +4.21%total return.1 You can find more of the Fund’s performancedata in the Performance Summary beginning on page 19.


Economic and Market OverviewThe U.S. bond market’s performance for the period since theFund’s inception on September 17, 2019, through March 31,2020, as measured by the Bloomberg Barclays U.S. Aggre-gate Bond Index, was defined by two distinct phases: beforeand during the outbreak of the novel coronavirus (COVID-19).Until late February 2020, prices for most U.S. bonds rose, aslow inflation, interest-rate cuts and strong demand for yield,which moves inversely to price, supported fixed income mar-kets. In late February, as more countries adopted socialdistancing and lockdown measures to slow the global pan-demic, the U.S. bond market began pricing in the adverseimpact on economic activity. Higher-quality, longer-termbonds rallied, while riskier, lower-rated corporate bondsdeclined sharply, reflecting a reversal in many investors’ risk

Portfolio CompositionBased on Total Net Assets as of 3/31/20

U.S. Government & Agency Securities 35.9%

Corporate Bonds & Notes 25.2%

Mortgage-Backed Securities 24.4%

Municipal Bonds 4.5%

Foreign Government and Agency Securities 2.9%

Asset-Backed Securities 2.9%

Long Futures 1.3%

Credit Default Swap Contracts (0.1)%

Short Futures (0.2)%

appetite. Similarly, strong demand for cash and cash equiva-lents drove yields on certain U.S. Treasury bill maturitiesbriefly below zero. Thereafter, bond prices fell sharply thensomewhat stabilized as the magnitude of the downturn led toconstricted liquidity and subsequent intervention by the U.S.Federal Reserve (Fed).

After reducing the federal funds target rate to a range of1.50%–1.75% in October 2019, the Fed enacted two emer-gency rate cuts in March 2020 in response to the COVID-19pandemic, further lowering the federal funds target rate to arange of 0.00%–0.25%. In addition, the Fed announced aplan to purchase government, government-backed and cor-porate bonds to help keep markets functioning, significantlyexpanding its balance sheet.

U.S. Treasury bonds, as measured by the BloombergBarclays U.S. Treasury Index, rose significantly during thereporting period, despite high levels of Treasury issuancedue to deficit spending and investor expectations for largeincreases in debt issuance for fiscal stimulus to alleviate theeconomic downturn. The yield on 10-year U.S. Treasurybonds declined to historic lows near period-end, driven byfears of a prolonged global economic disruption due to theCOVID-19 pandemic. Mortgage-backed securities (MBS), asmeasured by the Bloomberg Barclays MBS Index, alsoposted positive returns, aided by the Fed’s announcementthat it would make substantial MBS purchases.

1. Source: Factset.The index is unmanaged and includes reinvestment of any income or distributions. They do not reflect any fees, expenses or sales charges. One cannot invest directly in anindex, 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 SOIbegins on page 35.


FRANKLIN LIBERTY U.S. CORE BOND ETF

U.S. corporate bond performance was hampered during theperiod’s last month by investor concerns about the pandemic-related economic disruption and the potential creditdowngrades of many companies amid high levels of indebted-ness. For the period, U.S. investment-grade corporate bonds,as represented by the Bloomberg Barclays U.S. CorporateBond Index, declined modestly, while high-yield corporatebonds, as represented by the Bloomberg Barclays U.S. Cor-porate High Yield Bond Index, declined significantly due toinvestor concerns about a potential increase in credit defaults.

Investment StrategyThe Fund invests predominantly in investment-grade bondsof U.S. issuers, including government, corporate-debt,mortgage-backed and asset-backed securities. The Fund’sinvestments in mortgage-backed securities include securitiesthat are issued or guaranteed by the U.S. government, itsagencies or instrumentalities, and private issuers, includingcommercial mortgage-backed securities. Under normal mar-ket conditions, the Fund is generally expected to have sector,credit and duration exposures comparable to its benchmarkindex. However, we make investment decisions based uponour own fundamental analysis, which affects the Fund’s sec-tor, credit and duration exposures so that they may vary fromthe benchmark index.

In addition, the Fund may purchase or sell mortgage-backedsecurities on a delayed delivery or forward commitment basisthrough the to-be-announced (TBA) market. With TBA trans-actions, the particular securities to be delivered must meetspecified terms and conditions.

For purposes of pursuing its investment goal, the Fund mayenter into various interest-rate and credit-related derivatives,principally U.S. Treasury futures, interest-rate swaps andcredit default swaps. The use of these derivative transactionsmay allow the Fund to obtain net long or short exposuresto select interest rates, durations or credit risks. The Fundmay enter into certain derivative transactions to seek toenhance Fund returns, increase liquidity, gain exposure tocertain instruments or markets in a more efficient or lessexpensive way and/or hedge risks associated with its otherportfolio investments.

In choosing investments, we select securities in various mar-ket sectors based on our assessment of changing economic,market, industry and issuer conditions. We use a top-downanalysis of macroeconomic trends, combined with a bottom-up fundamental analysis of market sectors, industries andissuers, to try to take advantage of varying sector reactionsto economic events. We may consider selling a securitywhen we believe the security has become fully valued due to

Top 10 Fund Holdings3/31/20

% of Total

Net Assets

U.S. Treasury Note , 2.75%, 9/15/2021 28.0%

Federal National Mortgage Association , 4.50%,5/01/2048

23.1%

US DOLLAR 11.3%

U.S. Treasury Bond , 2.75%, 11/15/2042 7.9%

Federal Home Loan Mortgage Corp. , 4.00%,3/01/2049

1.3%

Capital One Multi-Asset Execution Trust, Series 2019-A1, Class A1, Series 2019-A2, Class A2, 1.72%,8/15/2024

1.2%

Contra Costa Community College Dist., Refunding,2.926%, 8/01/2038

1.2%

Metropolitan Transportation Auth., Refunding, SeriesB, 5.00%, 11/15/2052

1.0%

American Express Credit Account Master Trust,Series 2019-1, Class A, ABS, 2.87%, 10/15/2024

0.8%

CVS Health Corp., senior bond, senior note, seniornote, 4.10%, 3/25/2025

0.8%

either its price appreciation or changes in the issuer’s funda-mentals, or when we believe another security is a moreattractive investment opportunity.

Manager’s DiscussionDuring the period since the Fund’s inception onSeptember 19, 2019, through March 31, 2020, the Fundposted a positive return on a gross basis, but underper-formed the benchmark Bloomberg Barclays U.S. AggregateBond Index. In terms of drivers of relative return, sector allo-cation was the primary detractor from returns, particularly ourallocations to sovereign emerging markets (EM) debt, munici-pal bonds, and asset-backed securities. This effect waspartially offset by our underweighted allocation to investment-grade corporate credit (IG) and commercial mortgage-backedsecurities. Security selection also detracted from perfor-mance, particularly within the IG and sovereign developedsectors. In contrast, our security selection within the sover-eign EM and taxable municipal bond sectors contributed toreturns. The portfolio’s duration positioning remained rela-tively in line with the index over the period, although it had amarginally positive effect on returns due to a slightly over-weighted position going into March.

In terms of derivatives, we utilized Treasury futures for dura-tion management of the portfolio.



Thank you for your participation in Franklin Liberty U.S.Core Bond ETF. We look forward to serving your futureinvestment needs.

David Yuen, CFA, FRMCo-Lead Manager

Amy Cooper, CFACo-Lead Manager

Patrick Klein, Ph.D.Co-Lead Portfolio Manager

Tina ChouCo-Lead Portfolio Manager




Performance Summary as of March 31, 2020Total return reflects reinvestment of the Fund’s dividends and capital gain distributions, if any, and any unrealized gains orlosses. Total returns do not include brokerage commissions that may be payable on secondary market transactions. The per-formance table and graph do not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, ifany, or any realized gains on the sale or redemption of Fund shares.





Based on

NAV3

Based on

market price4

Based on

NAV3

Based on

market price4

Since Inception (9/17/19) +3.12% +3.12% +3.12% +3.12%

30 Day Standardized Yield6

Distribution Rate5

(with

fee waiver)

(without

fee waiver)

2.65% 2.00% 1.93%




FRANKLIN LIBERTY U.S. CORE BOND ETFPERFORMANCE SUMMARY



9/17/19–3/31/20

$10,421$10,312

3/209/19$9,000

$10,000

$11,000

Bloomberg Barclays U.S. AggregateBond Index7

Franklin Liberty U.S. Core Bond ETF



FRANKLIN LIBERTY U.S. CORE BOND ETFPERFORMANCE SUMMARY


Net Investment

Income

Short-Term

Capital Gain

Long-Term

Capital Gain Total

$0.309911 $0.026045 $0.002156 $0.028201



0.15% 0.19%

All investments involve risks, including possible loss of principal. Interest rate movements, unscheduled mortgage prepayments and other risk factors will affectthe Fund’s share price and yield. Bond prices, and thus a Fund’s share price, generally move in the opposite direction of interest rates. Therefore, as the pricesof 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 creditrating may affect its value. Unexpected events and their aftermaths, such as the spread of deadly diseases; natural, environmental or man-made disasters; finan-cial, political or social disruptions; terrorism and war; and other tragedies or catastrophes, can cause investor fear and panic, which can adversely affect theeconomies of many companies, sectors, nations, regions and the market in general, in ways that cannot necessarily be foreseen. The Fund’s prospectus alsoincludes a description of the main investment risks.


1. The Fund has a fee waiver and/or expense reimbursement contractually guaranteed through 7/31/21. Fund investment results reflect the expense reduction; without thisreduction, the results would have been lower.2. Total return calculations represent the cumulative and average annual changes in value of an investment over the periods indicated. Return for less than one year, if any,has not been annualized.3. Assumes reinvestment of distributions based on net asset value.4. Assumes reinvestment of distributions based on market price.5. Distribution rate is based on an annualization of the March dividend and the NAV per share on 3/31/20.6. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may notequal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.7. Source: Morningstar. The Bloomberg Barclays U.S. Aggregate Bond Index tracks the U.S. investment-grade, taxable bond market.8. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Your Fund’s Expenses and Financial Highlights sections inthis report. In periods of market volatility, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.See www.franklintempletondatasources.com for additional data provider information.




Actual Fund ExpensesThe 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 “End-ing Account Value.” You can estimate the expenses you paid during the period by following these steps (of course, youraccount value and expenses will differ from those in this illustration): Divide your account value by $1,000 (if your account hadan $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 thisillustration, the actual expenses paid this period are $64.50.


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 youcompare total costs of owning different funds. In addition, if transactional costs were included, your total costs would havebeen higher.

Actual


Hypothetical


Beginning

Account

Value 10/1/19

Ending

Account

Value 3/31/20

Expenses

Paid During

Period

10/1/19–3/31/201,2

Ending

Account

Value 3/31/20

Expenses

Paid During

Period

10/1/19–3/31/201,2

Net Annualized

Expense Ratio2

$1,000.00 $1,023.70 $0.76 $1,024.25 $0.76 0.15%



FRANKLIN TEMPLETON ETF TRUST

Financial HighlightsFranklin Liberty Investment Grade Corporate ETF

Year Ended March 31,

2020 2019 2018 2017a

Per share operating performance

(for a share outstanding throughout the year)

Net asset value, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24.09 $23.97 $24.21 $25.00

Income from investment operationsb:

Net investment incomec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.73 0.82 0.80 0.32

Net realized and unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.27 0.21 (0.22) (0.78)

Total from investment operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.00 1.03 0.58 (0.46)

Less distributions from:

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.81) (0.91) (0.82) (0.33)

Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.06) — — —

Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.87) (0.91) (0.82) (0.33)

Net asset value, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24.22 $24.09 $23.97 $24.21

Total returnd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02% 4.46% 2.38% (1.83)%

Ratios to average net assetse

Expenses before waiver and payments by affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.58% 1.07% 1.04% 1.06%

Expenses net of waiver and payments by affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35% 0.35% 0.37% 0.40%

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.86% 3.49% 3.27% 2.76%

Supplemental data

Net assets, end of year (000’s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $553,338 $18,065 $39,554 $53,268

Portfolio turnover ratef . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.17%g 22.02% 63.14% 17.85%

aFor the period October 3, 2016 (commencement of operations) to March 31, 2017.bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchasesof Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.cBased on average daily shares outstanding.dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of theperiod, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.eRatios are annualized for periods less than one year.fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 52.17%.

franklintempleton.com The accompanying notes are an integral part of these financial statements. | Annual Report 23


Statement of Investments, March 31, 2020

Franklin Liberty Investment Grade Corporate ETF

Country Principal Amount* Value

Corporate Bonds & Notes 96.5%Aerospace & Defense 2.5%

a L3Harris Technologies, Inc., senior note, 144A, 4.40%, 6/15/28 . . . . . . . . . . United States 4,300,000 $ 4,661,277Lockheed Martin Corp., senior note, 4.07%, 12/15/42 . . . . . . . . . . . . . . . . . . . United States 4,100,000 4,812,055United Technologies Corp.,

senior bond, 4.15%, 5/15/45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,100,000 2,343,494senior bond, 4.50%, 6/01/42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,700,000 1,982,866

13,799,692

Air Freight & Logistics 0.9%

FedEx Corp.,senior bond, 4.00%, 1/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,500,000 2,613,644senior bond, 4.75%, 11/15/45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,000,000 1,928,563senior bond, 5.10%, 1/15/44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 500,000 498,557

5,040,764

Banks 14.9%

Bancolombia SA, senior note, 3.00%, 1/29/25 . . . . . . . . . . . . . . . . . . . . . . . . . Colombia 6,200,000 5,578,512Bank of America Corp., sub. bond, 4.183%, 11/25/27 . . . . . . . . . . . . . . . . . . . United States 10,150,000 10,515,338

a BNP Paribas SA, senior note, 144A, 4.705% to 1/10/24, FRN thereafter,1/10/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . France 6,900,000 7,200,902

a BPCE SA, senior note, 144A, 5.70%, 10/22/23 . . . . . . . . . . . . . . . . . . . . . . . . France 6,700,000 6,896,175Citigroup, Inc.,

senior bond, 3.668% to 7/23/27, FRN thereafter, 7/24/28 . . . . . . . . . . . . . United States 3,600,000 3,737,490senior note, 2.876% to 07/24/22, FRN thereafter, 7/24/23 . . . . . . . . . . . . . United States 1,500,000 1,513,781senior note, 3.352% to 4/24/24, FRN thereafter, 4/24/25 . . . . . . . . . . . . . . United States 5,700,000 5,878,146

Danske Bank A/S, senior note, 3.244% to 12/20/24, FRN thereafter,12/20/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Denmark 2,600,000 2,421,516

JPMorgan Chase & Co.,senior bond, 3.54% to 5/01/27, FRN thereafter, 5/01/28 . . . . . . . . . . . . . . United States 4,150,000 4,385,553sub. bond, 4.25%, 10/01/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,400,000 2,648,910sub. note, 3.375%, 5/01/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,025,000 2,115,927

Lloyds Banking Group PLC, senior note, 3.75%, 1/11/27 . . . . . . . . . . . . . . . . United Kingdom 5,400,000 5,468,910a Santander UK PLC, sub. Note, 144A, 5.00%, 11/07/23 . . . . . . . . . . . . . . . . . United Kingdom 1,055,000 1,064,695a Truist Bank, sub. Note, 144A, 3.30%, 5/15/26 . . . . . . . . . . . . . . . . . . . . . . . . . United States 6,800,000 6,991,312Truist Financial Corp., sub. bond, 3.875%, 3/19/29 . . . . . . . . . . . . . . . . . . . . . United States 9,300,000 9,454,278Wachovia Corp., Subordinated, 5.50%, 8/01/35 . . . . . . . . . . . . . . . . . . . . . . . United States 600,000 688,497Wells Fargo & Co., sub. bond, 4.75%, 12/07/46 . . . . . . . . . . . . . . . . . . . . . . . United States 5,185,000 6,012,771

82,572,713

Beverages 0.4%

Anheuser-Busch InBev Worldwide, Inc., senior bond, 5.80%, 1/23/59 . . . . . Belgium 2,000,000 2,458,266

Biotechnology 2.6%

AbbVie, Inc.,a senior bond, 144A, 4.25%, 11/21/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,000,000 3,277,935a senior note, 144A, 2.95%, 11/21/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,200,000 5,310,506

Biogen, Inc., senior bond, 5.20%, 9/15/45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,585,000 3,360,029Gilead Sciences, Inc., senior bond, 4.80%, 4/01/44 . . . . . . . . . . . . . . . . . . . . United States 1,800,000 2,324,945

14,273,415

Building Products 1.4%a CRH America Finance, Inc., senior note, 144A, 3.95%, 4/04/28 . . . . . . . . . . Ireland 7,700,000 7,628,969

Capital Markets 4.6%

Credit Suisse Group AG,a senior bond,144A, 3.869% to 1/12/28, FRN thereafter, 1/12/29 . . . . . . . . Switzerland 900,000 912,848a senior note, 144A, 2.997% to 12/14/22, FRN therafter, 12/14/23 . . . . . . . Switzerland 6,400,000 6,239,010

Morgan Stanley, senior bond, 3.591% to 7/22/27, FRN thereafter,7/22/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 10,280,000 10,795,048


FRANKLIN TEMPLETON ETF TRUSTSTATEMENT OF INVESTMENTS

Franklin Liberty Investment Grade Corporate ETF (continued)


Corporate Bonds & Notes (continued)Capital Markets (continued)The Goldman Sachs Group, Inc.,

senior note, 3.50%, 1/23/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,500,000 $ 2,567,747senior note, 2.908% to 6/05/22, FRN thereafter, 6/05/23 . . . . . . . . . . . . . . United States 3,200,000 3,211,434sub. note, 4.25%, 10/21/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,475,000 1,553,765

25,279,852

Chemicals 1.3%

LYB International Finance II B.V., senior note, 3.50%, 3/02/27 . . . . . . . . . . . United States 7,300,000 7,155,314

Commercial Services & Supplies 0.3%a Ashtead Capital, Inc., senior note, second lien, 144A, 4.125%, 8/15/25 . . . . United Kingdom 1,770,000 1,628,400

Consumer Finance 1.9%

Capital One Financial Corp.,senior bond, 3.80%, 1/31/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 7,500,000 7,429,909senior note, 3.20%, 1/30/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,900,000 2,870,095

10,300,004

Containers & Packaging 0.9%

WRKCo, Inc.,senior bond, 4.90%, 3/15/29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,300,000 3,683,541senior note, 3.90%, 6/01/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,000,000 1,028,909

4,712,450

Diversified Financial Services 1.1%

Aircastle Ltd., senior note, 4.25%, 6/15/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,500,000 1,288,855GE Capital International Funding Co. Unlimited Co., senior bond, 4.418%,

11/15/35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,825,000 5,233,665

6,522,520


AT&T, Inc., senior note, 3.80%, 2/15/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 8,800,000 9,164,586France Telecom SA, senior bond, 9.57%, 3/01/31 . . . . . . . . . . . . . . . . . . . . . France 6,600,000 10,035,213Telefonica Emisiones SA,

senior bond, 5.52%, 3/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spain 1,650,000 1,943,649senior note, 4.103%, 3/08/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spain 1,000,000 1,039,619

22,183,067


Commonwealth Edison Co., first mortgage, Secured, 4.00%, 3/01/48 . . . . . United States 3,500,000 3,950,133Duke Energy Corp.,

senior bond, 3.15%, 8/15/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,200,000 1,184,699senior bond, 4.80%, 12/15/45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,565,000 2,812,361

a Electricite de France SA, senior note, 144A, 4.50%, 9/21/28 . . . . . . . . . . . . . France 2,200,000 2,429,597a Enel Finance International NV, senior note, 144A, 3.625%, 5/25/27 . . . . . . . Italy 10,500,000 10,685,868Exelon Corp., senior bond, 4.05%, 4/15/30 . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 900,000 893,164Georgia Power Co.,

senior bond, 4.30%, 3/15/42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,345,000 3,652,011senior bond, 4.75%, 9/01/40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,950,000 1,925,205

PSEG Power LLC, senior note, 3.85%, 6/01/23 . . . . . . . . . . . . . . . . . . . . . . . . United States 4,100,000 4,175,854a Saudi Electricity Global Sukuk Co. 2, senior bond, 144A, 5.06%, 4/08/43 . . Saudi Arabia 300,000 298,530Virginia Electric & Power Co., senior note, 3.50%, 3/15/27 . . . . . . . . . . . . . . United States 7,200,000 7,554,803

a Vistra Operations Co. LLC, senior secured note, first lien, 144A, 3.55%,7/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 7,400,000 6,978,569

46,540,794

Electronic Equipment, Instruments & Components 0.8%

Jabil, Inc., senior note, 3.60%, 1/15/30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,000,000 4,474,003





Corporate Bonds & Notes (continued)Energy Equipment & Services 3.0%

Baker Hughes a GE Co. LLC/Baker Hughes Co-Obligor, Inc., senior bond,4.08%, 12/15/47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,485,000 $ 2,051,139

Schlumberger Holdings Corp.,a senior bond, 144A, 4.30%, 5/01/29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 6,500,000 6,331,019a senior note, 144A, 3.75%, 5/01/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,600,000 2,465,245

Total Capital International SA, senior note, 3.455%, 2/19/29 . . . . . . . . . . . . . France 5,500,000 5,818,791

16,666,194

Entertainment 0.3%

The Walt Disney Co., senior bond, 6.20%, 12/15/34 . . . . . . . . . . . . . . . . . . . . . . United States 1,300,000 1,813,022


CK Hutchison International 19 Ltd.,a senior note, 144A, 3.25%, 4/11/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong 1,725,000 1,798,786a senior note, 144A, 3.625%, 4/11/29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong 8,400,000 9,023,575

The Kroger Co.,senior bond, 3.50%, 2/01/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,100,000 2,222,421senior bond, 4.45%, 2/01/47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,400,000 1,546,802

Walgreens Boots Alliance, Inc., senior bond, 4.80%, 11/18/44 . . . . . . . . . . . . . . United States 500,000 493,634

15,085,218

Food Products 1.7%

Bunge Ltd. Finance Corp., senior note, 4.35%, 3/15/24 . . . . . . . . . . . . . . . . . . . United States 1,700,000 1,764,235Tyson Foods, Inc.,

senior bond, 5.10%, 9/28/48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,680,000 2,092,866senior note, 4.00%, 3/01/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,300,000 5,617,983

9,475,084

Gas Utilities 0.5%

Dominion Energy Gas Holdings LLC, senior bond, 3.90%, 11/15/49 . . . . . . . . . United States 3,000,000 2,626,843

Health Care Equipment & Supplies 0.9%

Abbott Laboratories, senior bond, 4.90%, 11/30/46 . . . . . . . . . . . . . . . . . . . . . . . United States 3,600,000 4,939,827


Anthem, Inc.,senior bond, 3.70%, 9/15/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,000,000 1,007,972senior bond, 5.10%, 1/15/44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 570,000 678,931senior note, 4.101%, 3/01/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,785,000 4,082,914Sr. Unsecured, 3.50%, 8/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,000,000 4,111,845

Cigna Corp.,senior bond, 4.90%, 12/15/48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,450,000 6,619,985

a senior note, 144A, 4.50%, 2/25/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,500,000 1,622,904CVS Health Corp., senior bond, 5.30%, 12/05/43 . . . . . . . . . . . . . . . . . . . . . . . . United States 2,300,000 2,725,815HCA, Inc., senior secured bond, first lien, 4.50%, 2/15/27 . . . . . . . . . . . . . . . . . United States 5,100,000 5,262,710

26,113,076

Hotels, Restaurants & Leisure 0.8%

Marriott International, Inc., senior bond, 3.125%, 6/15/26 . . . . . . . . . . . . . . . . . . United States 4,700,000 4,325,761

Industrial Conglomerates 0.5%

General Electric Capital Corp., senior note, A, 6.15%, 8/07/37 . . . . . . . . . . . . . United States 1,500,000 1,734,936General Electric Co., senior bond, 3.10%, 1/09/23 . . . . . . . . . . . . . . . . . . . . . . . United States 1,000,000 1,016,968

2,751,904

Insurance 3.7%

Aflac, Inc., senior bond, 4.75%, 1/15/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,750,000 5,272,265AXA SA, 8.60%, 12/15/30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . France 4,500,000 5,994,482MetLife, Inc., junior sub. bond, 6.40%, 12/15/66 . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,910,000 5,140,008

a Metropolitan Life Global Funding I, Sr. Unsecured, 144A, 3.00%, 1/10/23 . . . . United States 2,800,000 2,841,939





Corporate Bonds & Notes (continued)Insurance (continued)

a The Allstate Corp., senior bond, 144A, 4.20%, 12/15/46 . . . . . . . . . . . . . . . . . . . United States 1,000,000 $ 1,113,853

20,362,547

Internet & Direct Marketing Retail 1.9%

Alibaba Group Holding Ltd.,senior note, 3.125%, 11/28/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China 5,800,000 5,878,988senior note, 3.40%, 12/06/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China 4,400,000 4,627,018

10,506,006

IT Services 1.4%

Fiserv, Inc.,senior bond, 3.50%, 7/01/29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 6,600,000 7,024,549senior bond, 4.40%, 7/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 700,000 755,201

7,779,750

Machinery 0.4%a Carrier Global Corp., senior note, 144A, 3.577%, 4/05/50 . . . . . . . . . . . . . . . . . United States 2,500,000 2,258,428

Media 2.5%

Charter Communications Operating LLC/Charter Communications OperatingCapital, senior secured note, first lien, 4.50%, 2/01/24 . . . . . . . . . . . . . . . . . . United States 1,500,000 1,548,679

Comcast Corp., senior bond, 4.95%, 10/15/58 . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,900,000 8,181,019FOX Corp., 5.476%, 1/25/39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,600,000 4,188,498

13,918,196

Metals & Mining 1.7%

Glencore Funding LLC,a senior note, 144A, 4.125%, 5/30/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Switzerland 4,825,000 4,451,343a senior note, 144A, 4.625%, 4/29/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Switzerland 1,800,000 1,651,827a senior note, 144A, 4.875%, 3/12/29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Switzerland 3,600,000 3,479,261

9,582,431

Multi-Utilities 0.9%

Berkshire Hathaway Energy Co.,senior bond, 3.80%, 7/15/48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,300,000 2,422,012Sr. Unsecured, 5.15%, 11/15/43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,900,000 2,275,222

4,697,234

Multiline Retail 1.1%

Dollar Tree, Inc.,senior note, 3.70%, 5/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,050,000 5,136,988senior note, 4.00%, 5/15/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,100,000 1,128,782

6,265,770

Oil, Gas & Consumable Fuels 10.1%a Aker BP ASA, senior note, 144A, 3.75%, 1/15/30 . . . . . . . . . . . . . . . . . . . . . . . . Norway 5,000,000 3,764,107Canadian Natural Resources Ltd., senior bond, 3.85%, 6/01/27 . . . . . . . . . . . . Canada 5,100,000 4,046,683Cheniere Corpus Christi Holdings LLC, senior secured note, first lien, 5.875%,

3/31/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 6,700,000 6,114,012Devon Energy Corp., Sr. Unsecured, 4.75%, 5/15/42 . . . . . . . . . . . . . . . . . . . . . United States 2,700,000 1,626,197Energy Transfer Operating LP,

senior bond, 6.05%, 6/01/41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,100,000 963,782senior note, 4.50%, 4/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 7,500,000 6,702,213

Enterprise Products Operating LLC,senior bond, 4.15%, 10/16/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,400,000 1,423,370senior bond, 5.10%, 2/15/45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,970,000 1,978,800senior bond, 6.125%, 10/15/39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 900,000 925,982

Kinder Morgan, Inc., senior bond, 5.55%, 6/01/45 . . . . . . . . . . . . . . . . . . . . . . . . United States 2,100,000 2,164,709





Corporate Bonds & Notes (continued)Oil, Gas & Consumable Fuels (continued)MPLX LP,

senior bond, 5.50%, 2/15/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,775,000 $ 1,504,471senior note, 4.875%, 12/01/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,000,000 4,385,230

Sabine Pass Liquefaction LLC, senior secured note, first lien,5.625%, 4/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,400,000 4,098,899

Shell International Finance B.V., senior note, 2.125%, 5/11/20 . . . . . . . . . . . Netherlands 500,000 499,489TC PipeLines LP, senior note, 3.90%, 5/25/27 . . . . . . . . . . . . . . . . . . . . . . . . . United States 400,000 380,639The Williams Cos. Inc.,

senior bond, 4.85%, 3/01/48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,900,000 1,781,420senior note, 4.30%, 3/04/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,200,000 2,002,525

TransCanada PipeLines Ltd., senior note, 6.10%, 6/01/40 . . . . . . . . . . . . . . . Canada 3,400,000 3,643,600Valero Energy Corp., senior note, 4.35%, 6/01/28 . . . . . . . . . . . . . . . . . . . . . . United States 8,000,000 7,795,141

55,801,269

Pharmaceuticals 1.6%

Allergan Funding SCS, senior bond, 4.85%, 6/15/44 . . . . . . . . . . . . . . . . . . . United States 800,000 997,315Bristol-Myers Squibb Co.,

a senior bond, 144A, 4.125%, 6/15/39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,700,000 3,271,249a senior bond, 144A, 5.00%, 8/15/45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,000,000 1,346,805

Shire Acquisitions Investments Ireland DAC, senior note,3.20%, 9/23/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,900,000 2,972,584

8,587,953

Real Estate Management & Development 3.1%

Brixmor Operating Partnership LP, Sr. Unsecured, 4.125%, 5/15/29 . . . . . . United States 3,200,000 3,287,994ERP Operating LP, senior bond, 4.50%, 7/01/44 . . . . . . . . . . . . . . . . . . . . . . . United States 3,500,000 3,825,603Healthcare Trust of America Holdings LP, senior bond, 3.75%, 7/01/27 . . . . United States 1,300,000 1,202,521Simon Property Group LP, senior note, 3.375%, 12/01/27 . . . . . . . . . . . . . . . United States 9,000,000 8,939,548

17,255,666

Road & Rail 1.6%

Burlington Northern Santa Fe LLC, Sr. Unsecured, 5.75%, 5/01/40 . . . . . . . United States 3,700,000 5,033,584CSX Corp.,

senior bond, 4.25%, 3/15/29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,600,000 1,799,213senior bond, 4.25%, 11/01/66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,800,000 1,805,984

8,638,781

Semiconductors & Semiconductor Equipment 0.9%

Maxim Integrated Products, Inc., senior note, 3.375%, 3/15/23 . . . . . . . . . . . United States 2,900,000 2,962,819Xilinx, Inc., senior note, 2.95%, 6/01/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,100,000 2,097,262

5,060,081

Software 1.1%

Microsoft Corp.,senior bond, 4.00%, 2/12/55 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,600,000 3,330,674senior note, 2.65%, 11/03/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,500,000 2,624,923

5,955,597

Specialty Retail 0.2%

AutoZone, Inc., senior note, 3.75%, 4/18/29 . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,300,000 1,320,529

Tobacco 2.7%a BAT International Finance Plc, senior note , 144A, 3.95%, 6/15/25 . . . . . . . . United Kingdom 6,500,000 6,389,562a Imperial Brands Finance Plc, senior note, 144A, 4.25%, 7/21/25 . . . . . . . . . . United Kingdom 7,165,000 6,984,511Reynolds American, Inc., senior bond, 5.85%, 8/15/45 . . . . . . . . . . . . . . . . . . United Kingdom 1,305,000 1,409,936

14,784,009





Corporate Bonds & Notes (continued)Wireless Telecommunication Services 0.5%

a Sprint Spectrum Co. LLC / Sprint Spectrum Co. II LLC / Sprint Spectrum Co.III LLC, first lien, 144A, 3.36%, 3/20/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,925,000 $ 2,921,344

Total Corporate Bonds & Notes (Cost $553,802,450) . . . . . . 534,062,743

U.S. Government & Agency Securities 1.3%U.S. Treasury Bond,

2.25%, 8/15/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,600,000 4,381,0313.75%, 8/15/41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,800,000 2,674,547

Total U.S. Government & Agency Securities

(Cost $6,934,756) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,055,578

Total Investments before Short Term Investments

(Cost $560,737,206) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541,118,321

Short Term Investments 0.0%†

U.S. Government & Agency Securities

(Cost $265,000) 0.0%† . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .b FHLB, 4/01/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 265,000 265,000

Total Investments (Cost $561,002,206) 97.8% . . . . . . . . . . . . . . 541,383,321

Other Assets, less Liabilities 2.2% . . . . . . . . . . . . . . . . . . . . . . . . . . 11,954,394

Net Assets 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $553,337,715

See Abbreviations on page 56.*The principal amount is stated in U.S. dollars unless otherwise indicated.†Rounds to less than 0.1% of net assets.aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyersor in a public offering registered under the Securities Act of 1933. At March 31, 2020, the aggregate value of these securities was $133,920,351, representing 24.2% of netassets.bThe security was issued on a discount basis with no stated coupon rate.

At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).

Futures Contracts

Description Type

Number of

Contracts

Notional

Amount*

Expiration

Date

Value/Unrealized

Appreciation

(Depreciation)

Index Contracts

U.S. Treasury 30 Yr. Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long 102 $18,264,375 6/19/20 $1,266,090CME Ultra Long Term U.S. Treasury Bond . . . . . . . . . . . . . . . . . . . . . . . Short 15 3,328,125 6/19/20 (234,861)Ultra 10 Yr. U.S. Treasury Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short 69 10,766,156 6/19/20 (349,289)U.S. Treasury 5 Yr. Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short 129 16,171,359 6/30/20 (299,484)U.S. Treasury 10 Yr. Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short 124 17,197,250 6/19/20 (450,215)

Total Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (67,759)

*As of period end.



Financial HighlightsFranklin Liberty U.S. Low Volatility ETF

Year Ended March 31,

2020 2019 2018 2017a



Net asset value, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33.61 $30.03 $26.97 $25.05


Net investment incomec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.64 0.52 0.45 0.23

Net realized and unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.84) 3.88 3.06 1.87

Total from investment operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.20) 4.40 3.51 2.10

Less distributions from net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.48) (0.47) (0.45) (0.18)

Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (0.35) — —

Net asset value, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30.93 $33.61 $30.03 $26.97

Total returnd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.74)% 14.98% 13.08% 8.40%


Expenses before waiver and payments by affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.57% 1.12% 2.11% 2.96%

Expenses net of waiver and payments by affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.33% 0.50% 0.50% 0.50%

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.75% 1.64% 1.56% 1.69%

Supplemental data

Net assets, end of year (000’s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $74,223 $13,443 $6,005 $5,393

Portfolio turnover ratef . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.61%g 46.90% 65.68% 12.55%

aFor the period September 20, 2016 (commencement of operations) to March 31, 2017.bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchasesof Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.cBased on average daily shares outstanding.dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of theperiod, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.eRatios are annualized for periods less than one year.fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 32.61%.

30 Annual Report | The accompanying notes are an integral part of these financial statements. franklintempleton.com




Shares Value

Common Stocks 98.9%Communication Services 9.8%

a Alphabet Inc., A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 922 $ 1,071,318AT&T Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,038 963,058

a Charter Communications Inc., A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,609 1,138,333Comcast Corp., A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,540 981,205TELUS Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,090 1,042,900The Walt Disney Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,805 1,043,763Verizon Communications Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,129 1,027,801

7,268,378

Consumer Discretionary 10.3%a Amazon.com Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412 803,285McDonald’s Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,192 858,497NIKE Inc., B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,184 925,364

a NVR Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286 734,765a O’Reilly Automotive Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,671 804,105Ross Stores Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,728 1,019,984Target Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,723 718,007The Home Depot Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,817 899,382Tractor Supply Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,161 859,113

7,622,502

Consumer Staples 7.2%

McCormick & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,219 1,160,605PepsiCo Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,800 1,056,880The Coca-Cola Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,687 1,092,400The Procter & Gamble Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,317 1,024,870Walmart Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,645 982,245

5,317,000

Energy 2.8%

Chevron Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,540 691,268Exxon Mobil Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,902 603,799Royal Dutch Shell PLC, A, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,775 794,620

2,089,687

Financials 11.5%

Aflac Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,021 890,959Arthur J. Gallagher & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,211 832,299Chubb Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,203 804,503Intercontinental Exchange Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,500 767,125JPMorgan Chase & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,092 728,523S&P Global Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,368 825,328The Progressive Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,441 770,963The Travelers Cos. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,143 809,007Truist Financial Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,125 713,175U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,542 638,772W.R. Berkley Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,447 753,700

8,534,354

Health Care 15.0%

Abbott Laboratories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,744 1,005,629AbbVie Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,361 1,017,975Baxter International Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,146 986,134Becton Dickinson and Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,247 975,833Danaher Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,645 1,058,144Johnson & Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,473 979,934

a Laboratory Corp. of America Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,291 1,047,900Medtronic PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,985 1,080,807



Franklin Liberty U.S. Low Volatility ETF (continued)

Shares Value

Common Stocks (continued)Health Care (continued)Merck & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,424 $ 1,032,843Pfizer Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,212 1,018,760Quest Diagnostics Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,971 961,271

11,165,230

Industrials 8.3%

General Dynamics Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,165 815,691Honeywell International Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,117 818,394Lockheed Martin Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,316 785,008Raytheon Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,997 786,507Republic Services Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,833 738,065Roper Technologies Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,425 756,139Trane Technologies PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,903 735,299Verisk Analytics Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,332 743,174

6,178,277

Information Technology 24.8%

Accenture PLC, A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,777 1,106,413Amphenol Corp., A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,623 1,138,604Analog Devices Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,893 1,066,207Apple Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,388 1,115,824Automatic Data Processing Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,152 1,250,895Cisco Systems Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,486 1,119,785

a Fiserv Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,718 1,208,083Global Payments Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,230 1,187,013International Business Machines Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,706 1,187,617Intuit Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,975 1,144,250Mastercard Inc., A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,729 1,142,337Microsoft Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,527 1,187,083Oracle Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,834 1,151,897

a Synopsys Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,344 1,203,414Texas Instruments Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,576 1,056,860Visa Inc., A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,055 1,136,702

18,402,984

Materials 2.4%

Air Products and Chemicals Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,011 601,026Ecolab Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,604 561,611Linde PLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,735 646,155

1,808,792

Real Estate 3.5%

Alexandria Real Estate Equities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,672 640,344American Tower Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,951 642,580Equity Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,176 627,961UDR Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,248 666,782

2,577,667

Utilities 3.3%

American Electric Power Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,289 582,974Dominion Energy Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,199 591,886Duke Energy Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,999 646,959Xcel Energy Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,158 612,528

2,434,347

Total Investments before Short Term Investments

(Cost $82,655,598) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,399,218



Franklin Liberty U.S. Low Volatility ETF (continued)

Shares Value

Short Term Investments 0.1%

U.S. Government & Agency Securities 0.1% . . . . . . . . . . . . . . . . . . . . . . . . . .b FHLB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 100,000 $ 100,000

Total Short-Term Investments (Cost $100,000) . . . . . . . . . . . . . . . . . . . . . . . 100,000

Total Investments (Cost $82,755,598) 99.0% . . . . . . . . . . . . . . . . . . . . . . . . . . 73,499,218

Other Assets, less Liabilities 1.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723,372

Net Assets 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $74,222,590

See Abbreviations on page 56.aNon-income producing.bThe security was issued on a discount basis with no stated coupon rate.



Financial HighlightsFranklin Liberty U.S. Core Bond ETF

Year Ended

March 31, 2020a



Net asset value, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25.00


Net investment incomec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.29

Net realized and unrealized gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.49

Total from investment operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.78

Less distributions from:

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.31)

Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.03)

Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.34)

Net asset value, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25.44

Total returnd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12%


Expenses before waiver and payments by affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.19%

Expenses net of waiver and payments by affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.15%

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14%

Supplemental data

Net assets, end of year (000’s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $853,532

Portfolio turnover ratef . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126.68%g

aFor the period September 17, 2019 (commencement of operations) to March 31, 2020.bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchasesof Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.cBased on average daily shares outstanding.dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of theperiod, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset value on the last day of the period.eRatios are annualized for periods less than one year.fPortfolio turnover rate includes portfolio transactions that are executed as a result of the Fund offering and redeeming Creation Units solely for cash (“Cash creations”).gPortfolio turnover rate excluding cash creations for the year ended March 31, 2020 was as follows: 126.68%.






Corporate Bonds & Notes 25.2%Aerospace & Defense 0.4%

Lockheed Martin Corp., senior bond, 4.09%, 9/15/52 . . . . . . . . . . . . . . . . . . . United States 1,600,000 $ 1,949,295United Technologies Corp., senior bond, 3.75%, 11/01/46 . . . . . . . . . . . . . . United States 1,800,000 1,895,996

3,845,291

Air Freight & Logistics 0.1%

FedEx Corp., senior bond, 4.05%, 2/15/48 . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,400,000 1,239,002

Banks 4.2%

Bancolombia SA, senior note, 3.00%, 1/29/25 . . . . . . . . . . . . . . . . . . . . . . . . Colombia 1,100,000 989,736Bank of America Corp.,

senior note, FRN thereafter, 2.881%, 4/24/23 . . . . . . . . . . . . . . . . . . . . . . United States 1,000,000 1,004,739senior note, FRN thereafter, 3.593%, 7/21/28 . . . . . . . . . . . . . . . . . . . . . . United States 700,000 717,813

a BNP Paribas SA, senior note, 144A, FRN thereafter, 4.705%, 1/10/25 . . . . France 5,150,000 5,374,586a BPCE SA, sub. Note, 144A, 4.875%, 4/01/26 . . . . . . . . . . . . . . . . . . . . . . . . . France 1,800,000 1,750,810b China Construction Bank Corp., sub. note, Reg S, FRN thereafter,

3.875%, 5/13/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China 2,900,000 2,902,813Citigroup Inc.,

senior note, 3.70%, 1/12/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,700,000 2,877,607senior note, FRN thereafter, 2.876%, 7/24/23 . . . . . . . . . . . . . . . . . . . . . . United States 500,000 504,594sub. bond, 4.45%, 9/29/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,500,000 1,576,343subordinated note, 3.875%, 3/26/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 100,000 104,997

FOX Corp., senior unsecured, 5.576%, 1/25/49 . . . . . . . . . . . . . . . . . . . . . . . United States 700,000 841,470Industrial & Commercial Bank of China Ltd., senior note, 3.538%,

11/08/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China 1,200,000 1,308,011JPMorgan Chase & Co.,

senior bond, FRN thereafter, 3.54%, 5/01/28 . . . . . . . . . . . . . . . . . . . . . . . United States 1,600,000 1,690,816Sr Unsecured, FRN thereafter, 4.493%, 3/24/31 . . . . . . . . . . . . . . . . . . . . United States 1,700,000 1,974,785sub. bond, 3.625%, 12/01/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,100,000 2,231,367sub. note, 3.875%, 9/10/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 100,000 105,788

Lloyds Banking Group PLC, senior bond, FRN thereafter,3.574%, 11/07/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom 4,000,000 3,977,562

a Truist Bank, sub. Note, 144A, 3.625%, 9/16/25 . . . . . . . . . . . . . . . . . . . . . . . . United States 2,400,000 2,527,426Wells Fargo & Co., senior bond, FRN thereafter, 2.879%, 10/30/30 . . . . . . . United States 3,700,000 3,676,659

36,137,922

Beverages 0.2%

Anheuser-Busch InBev Worldwide Inc., senior bond, 5.55%, 1/23/49 . . . . . United States 1,200,000 1,417,656

Biotechnology 1.1%a AbbVie Inc., senior note, 144A, 2.95%, 11/21/26 . . . . . . . . . . . . . . . . . . . . . . United States 5,300,000 5,412,631Biogen Inc., senior note, 3.625%, 9/15/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,050,000 2,107,645Gilead Sciences Inc., senior bond, 4.15%, 3/01/47 . . . . . . . . . . . . . . . . . . . . . United States 1,400,000 1,720,075

9,240,351

Building Products 0.2%

CRH America Finance Inc., senior note, 3.40%, 5/09/27 . . . . . . . . . . . . . . . . Ireland 1,850,000 1,845,179

Capital Markets 1.3%a Credit Suisse Group AG, senior note, 144A, FRN therafter,

2.997%, 12/14/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Switzerland 3,750,000 3,655,670Morgan Stanley,

senior note, 3.70%, 10/23/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 800,000 846,810sub. bond, 3.95%, 4/23/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,600,000 3,759,908

The Goldman Sachs Group Inc., senior bond, FRN thereafter,3.691%, 6/05/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,500,000 2,573,970

10,836,358

Chemicals 1.2%a Alpek SAB de CV, senior note, 144A, 4.25%, 9/18/29 . . . . . . . . . . . . . . . . . . Mexico 4,100,000 3,365,157



Franklin Liberty U.S. Core Bond ETF (continued)


Corporate Bonds & Notes (continued)Chemicals (continued)

b CNAC HK Finbridge Co. Ltd., senior note, Reg S, 4.875%, 3/14/25 . . . . . . . . . Hong Kong 1,600,000 $ 1,683,532Sherwin-Williams Co., senior note, 2.95%, 8/15/29 . . . . . . . . . . . . . . . . . . . . . . United States 4,900,000 4,839,825

9,888,514

Commercial Services & Supplies 0.5%

Boardwalk Pipelines LP, senior note, 4.80%, 5/03/29 . . . . . . . . . . . . . . . . . . . . . United States 3,950,000 2,985,232Republic Services Inc., senior bond, 3.95%, 5/15/28 . . . . . . . . . . . . . . . . . . . . . United States 1,500,000 1,626,568

4,611,800

Consumer Finance 0.6%

Capital One Financial Corp., senior note, 3.75%, 3/09/27 . . . . . . . . . . . . . . . . . United States 4,850,000 4,759,190

Containers & Packaging 0.2%

WRKCo Inc., Sr. Unsecured, 4.00%, 3/15/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,100,000 1,163,428WRKCo. Inc., senior note, 3.90%, 6/01/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 700,000 720,236

1,883,664


Telefonica Emisiones SA, senior bond, 4.895%, 3/06/48 . . . . . . . . . . . . . . . . . . Spain 4,200,000 4,670,339


Baltimore Gas & Electric Co., senior bond, 3.50%, 8/15/46 . . . . . . . . . . . . . . . . United States 1,400,000 1,419,714Duke Energy Carolinas LLC, secured bond, 3.70%, 12/01/47 . . . . . . . . . . . . . . United States 1,400,000 1,546,986Duke Energy Corp., senior bond, 3.75%, 9/01/46 . . . . . . . . . . . . . . . . . . . . . . . . United States 400,000 385,343Enel Finance International NV,

a senior bond, 144A, 3.50%, 4/06/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands 2,700,000 2,717,984a senior note, 144A, 3.625%, 5/25/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands 1,000,000 1,017,702a senior note, 144A, 6.00%, 10/07/39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands 200,000 216,254

Exelon Corp., senior bond, 4.05%, 4/15/30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 300,000 297,721Georgia Power Co., senior bond, 4.75%, 9/01/40 . . . . . . . . . . . . . . . . . . . . . . . . United States 1,400,000 1,382,199MidAmerican Energy Co., secured bond, 3.65%, 8/01/48 . . . . . . . . . . . . . . . . . United States 1,100,000 1,185,943Public Service Electric & Gas Co., secured bond, 3.80%, 3/01/46 . . . . . . . . . . United States 1,100,000 1,172,984

a State Grid Overseas Investment 2016 Ltd., senior note, 144A,3.50%, 5/04/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China 2,300,000 2,464,661

Virginia Electric & Power Co., Sr. Unsecured, 3.80%, 9/15/47 . . . . . . . . . . . . . United States 1,100,000 1,180,887

14,988,378

Electronic Equipment, Instruments & Components 0.1%

Keysight Technologies Inc., senior note, 4.60%, 4/06/27 . . . . . . . . . . . . . . . . . . United States 1,100,000 1,130,780

Energy Equipment & Services 0.8%

Baker Hughes a GE Co. LLC/Baker Hughes Co-obligator Inc., senior bond,4.08%, 12/15/47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,400,000 1,155,571

a Schlumberger Holdings Corp., Sr. Unsecured, 144A, 3.90%, 5/17/28 . . . . . . . United States 5,950,000 5,544,491

6,700,062

Equity Real Estate Investment Trusts (REITs) 0.1%

Kimco Realty Corp., Sr. Unsecured, 4.25%, 4/01/45 . . . . . . . . . . . . . . . . . . . . . United States 750,000 682,674


The Kroger Co., senior bond, 4.45%, 2/01/47 . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,350,000 1,491,559Walgreens Boots Alliance Inc., senior bond, 4.80%, 11/18/44 . . . . . . . . . . . . . . United States 500,000 493,634

1,985,193

Food Products 1.1%

BAT Capital Corp.,senior bond, 4.54%, 8/15/47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 750,000 688,034senior note, 3.222%, 8/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,500,000 1,509,552

Bunge Ltd. Finance Corp., senior note, 3.75%, 9/25/27 . . . . . . . . . . . . . . . . . . . United States 1,450,000 1,327,625





Corporate Bonds & Notes (continued)Food Products (continued)Kraft Heinz Foods Co., senior bond, 3.00%, 6/01/26 . . . . . . . . . . . . . . . . . . . . . United States 4,100,000 $ 3,994,180Tyson Foods Inc., senior bond, 5.10%, 9/28/48 . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,300,000 1,619,480

9,138,871


Anthem Inc.,senior bond, 3.70%, 9/15/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 700,000 705,581senior bond, 4.375%, 12/01/47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 100,000 108,170senior note, 4.101%, 3/01/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,200,000 1,294,451

a Cigna Corp., senior note, 144A, 3.40%, 3/01/27 . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,900,000 4,981,688CVS Health Corp.,

senior bond, 4.875%, 7/20/35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,400,000 1,597,567senior note, 3.875%, 7/20/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 500,000 517,568senior note, 4.10%, 3/25/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,100,000 4,322,451

HCA Inc., senior secured bond, first lien, 5.50%, 6/15/47 . . . . . . . . . . . . . . . . . . United States 900,000 986,533

14,514,009

Independent Power Producers & Energy Traders 0.5%a Colbun SA, senior note, 144A, 3.95%, 10/11/27 . . . . . . . . . . . . . . . . . . . . . . . . . Chile 4,050,000 3,903,694

Industrial Conglomerates 0.2%

General Electric Co.,senior bond, 4.125%, 10/09/42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 16,000 15,199senior bond, 4.50%, 3/11/44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 700,000 692,375senior note, 3.15%, 9/07/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 900,000 910,374

1,617,948

Insurance 0.8%

Metlife Inc.,senior bond, 4.05%, 3/01/45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 400,000 420,425senior bond, 5.875%, 2/06/41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,100,000 1,410,504

Reinsurance Group of America Inc, Sr. Unsecured, 3.90%, 5/15/29 . . . . . . . . . United States 2,250,000 2,201,818a Swiss Re Treasury US Corp., senior bond, 144A, 4.25%, 12/06/42 . . . . . . . . . United States 750,000 905,059The Allstate Corp., senior bond, 5.55%, 5/09/35 . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,800,000 2,253,622

7,191,428

Interactive Media & Services 0.2%b Tencent Holdings Ltd., senior note, Reg S, 3.28%, 4/11/24 . . . . . . . . . . . . . . . . China 1,250,000 1,298,220

Internet & Direct Marketing Retail 0.7%

Alibaba Group Holding Ltd.,senior bond, 4.00%, 12/06/37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China 200,000 227,091senior bond, 4.40%, 12/06/57 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China 700,000 935,150senior note, 3.40%, 12/06/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China 4,700,000 4,942,497

6,104,738

IT Services 0.2%

Fiserv Inc., senior bond, 4.40%, 7/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,400,000 1,510,401

Machinery 0.3%a Carrier Global Corp., senior note, 144A, 3.577%, 4/05/50 . . . . . . . . . . . . . . . . . United States 3,000,000 2,710,113

Media 0.5%

Comcast Corp.,senior bond, 3.30%, 2/01/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,800,000 1,912,941senior bond, 3.40%, 7/15/46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 800,000 870,229senior note, 6.50%, 11/15/35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 200,000 292,742

NBCUniversal Media LLC, senior bond, 4.45%, 1/15/43 . . . . . . . . . . . . . . . . . . United States 1,100,000 1,402,017

4,477,929





Corporate Bonds & Notes (continued)Metals & Mining 0.5%

Reliance Steel & Aluminum Co., senior note, 4.50%, 4/15/23 . . . . . . . . . . . United States 3,000,000 $ 2,973,639Southern Copper Corp., senior bond, 5.25%, 11/08/42 . . . . . . . . . . . . . . . . Mexico 1,300,000 1,347,964

4,321,603

Multiline Retail 0.5%

Dollar Tree Inc., senior bond, 4.20%, 5/15/28 . . . . . . . . . . . . . . . . . . . . . . . . United States 4,000,000 4,002,607

Oil, Gas & Consumable Fuels 2.4%

Canadian Natural Resources Ltd., senior bond, 3.85%, 6/01/27 . . . . . . . . . Canada 3,000,000 2,380,402Ecopetrol SA, senior bond, 4.125%, 1/16/25 . . . . . . . . . . . . . . . . . . . . . . . . . Colombia 4,000,000 3,761,020Enable Midstream Partners LP, senior note, 3.90%, 5/15/24 . . . . . . . . . . . . United States 2,650,000 1,473,069Energy Transfer Operating LP, senior bond, 5.15%, 3/15/45 . . . . . . . . . . . . United States 850,000 660,745Enterprise Products Operating LLC, senior bond, 4.25%, 2/15/48 . . . . . . . . United States 1,150,000 1,079,146MPLX LP, senior bond, 4.70%, 4/15/48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,250,000 972,330Sabine Pass Liquefaction LLC, senior secured bond, first lien,

4.20%, 3/15/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,000,000 3,443,097Sunoco Logistics Partner, senior bond, 5.40%, 10/01/47 . . . . . . . . . . . . . . . United States 300,000 239,252TC PipeLines LP, senior note, 3.90%, 5/25/27 . . . . . . . . . . . . . . . . . . . . . . . United States 2,550,000 2,426,573TransCanada PipeLines Ltd., senior bond, 4.875%, 5/15/48 . . . . . . . . . . . . Canada 1,200,000 1,310,546Valero Energy Corp.,

senior bond, 4.00%, 4/01/29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 500,000 489,080senior note, 4.35%, 6/01/28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,500,000 1,461,589

Williams Companies, Inc., senior bond, 5.10%, 9/15/45 . . . . . . . . . . . . . . . . United States 700,000 667,724

20,364,573

Pharmaceuticals 0.3%

Allergan Funding SCS, senior bond, 4.75%, 3/15/45 . . . . . . . . . . . . . . . . . . Luxembourg 1,400,000 1,517,508AstraZeneca Plc, senior bond, 4.00%, 9/18/42 . . . . . . . . . . . . . . . . . . . . . . . United Kingdom 1,300,000 1,470,382

2,987,890

Real Estate Management & Development 0.6%b China Overseas Finance Cayman VI Ltd, senior note, Reg S,

5.95%, 5/08/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cayman Islands 3,700,000 4,182,280Healthcare Trust of America Holdings LP, senior bond, 3.75%, 7/01/27 . . . United States 650,000 601,261

4,783,541

Road & Rail 0.3%

Burlington Northern Santa Fe LLC, senior bond, 4.15%, 4/01/45 . . . . . . . . United States 1,700,000 1,998,627CSX Corp., senior bond, 4.25%, 11/01/66 . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 750,000 752,493

2,751,120

Semiconductors & Semiconductor Equipment 0.4%

Maxim Integrated Products Inc.,senior note, 3.375%, 3/15/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 800,000 817,329senior note, 3.45%, 6/15/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,450,000 2,515,513

3,332,842

Tobacco 0.3%a BAT International Finance PLC, senior note , 144A, 3.95%, 6/15/25 . . . . . United Kingdom 2,600,000 2,555,825

Trading Companies & Distributors 0.2%

Aircastle Ltd., senior note, 4.25%, 6/15/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . Bermuda 2,250,000 1,933,282

Total Corporate Bonds & Notes (Cost $226,924,867) . . . . 215,362,987

U.S. Government & Agency Securities 35.9%

U.S. Treasury Bond,2.25%, 8/15/46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 27,460,000 33,063,5562.25%, 8/15/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,440,000 4,186,3192.50%, 5/15/46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,225,000 1,541,442





Corporate Bonds & Notes (continued)U.S. Government & Agency Securities (continued)

2.75%, 8/15/42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,740,000 $ 6,122,5622.75%, 11/15/42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 17,050,000 22,031,131

U.S. Treasury Note,1.375%, 8/31/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 87,600,000 90,765,2731.50%, 3/31/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 30,273,000 31,376,3091.50%, 9/30/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 14,050,000 14,766,7691.50%, 10/31/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,750,000 6,048,5061.625%, 10/15/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 29,700,000 29,939,5721.875%, 9/30/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,000,000 3,121,9921.875%, 8/31/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,150,000 5,490,3831.875%, 6/30/26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,200,000 5,632,6562.125%, 2/29/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 11,740,000 12,566,8452.125%, 3/31/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 11,000,000 11,782,8912.75%, 9/15/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 27,000,000 27,992,461

Total U.S. Government & Agency Securities

(Cost $289,443,502) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306,428,667

Municipal Bonds 4.5%Alabama 0.6%

Southeast Alabama Gas Supply Dist., Revenue, Libor-Project #2,Series, 1.91%, 6/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 4,962,850

California 1.7%

California State GO, Various Purpose, 3.00%, 10/01/37 . . . . . . . . . . . . . . . . . . 4,500,000 4,667,445Contra Costa Community College Dist., Refunding, 2.926%, 8/01/38 . . . . . . . 10,000,000 10,077,000

14,744,445

New York 1.7%

Metropolitan Transportation Auth., Refunding, Series B, 5.00%, 11/15/52 . . . 7,255,000 8,201,850Triborough Bridge & Tunnel Auth., MTA Bridges and Tunnels, Refunding,

Series B, 3.427%, 11/15/44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000,000 6,037,980

14,239,830

Texas 0.5%

Texas Water Dev. Board, State Water Implementation Fund, Master Trust,Series A, 4.00%, 10/15/44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,750,000 4,361,812

Total Municipals (Cost $38,490,880) . . . . . . . . . . . . . . . . . . . . . . . . 38,308,937

Mortgage-Backed Securities 24.4%Fannie Mae 1.3%

Federal Home Loan Mortgage Corp.,2.50%, 4/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 920,065 954,5452.50%, 6/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 31,463 32,6562.50%, 9/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 156,180 162,1522.50%, 11/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 890,436 924,4872.50%, 12/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 397,001 412,1833.00%, 5/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 693,523 727,8444.00%, 3/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 7,038,262 7,579,448

10,793,315

Freddie Mac 23.1%

Federal National Mortgage Association,2.50%, 12/01/34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 12,658,024 13,162,9022.50%, 8/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 89,385 92,8032.50%, 8/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 455,268 472,3412.50%, 12/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 1,429,922 1,484,4843.00%, 3/01/50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 52,820,968 55,502,2433.00%, 4/01/50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 24,500,000 25,693,418





Mortgage-Backed Securities (continued)Freddie Mac (continued)

3.50%, 8/01/49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 26,883,870 $ 28,762,6763.50%, 2/01/50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 29,693,403 31,434,7474.00%, 2/01/50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 14,841,411 15,860,8394.50%, 7/01/47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 14,549,336 15,894,8814.50%, 5/01/48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 8,093,554 8,878,119

197,239,453

Total Mortgage-Backed Securities (Cost $203,523,414) . . . 208,032,768

Foreign Government and Agency Securities 2.9%Colombia 0.4%

Government of Colombia,senior bond, 4.375%, 7/12/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,900,000 1,921,869senior bond, 5.00%, 6/15/45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,850,000 1,914,750

3,836,619

Indonesia 0.5%a Government of Indonesia, senior bond, 144A . . . . . . . . . . . . . . . . . . . . . . . . . . 1,750,000 1,817,662a Indonesia Government International Bond, senior note, 144A . . . . . . . . . . . . . 2,100,000 2,167,155

3,984,817

Mexico 0.5%

Government of Mexico, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .senior bond, 3.60%, 1/30/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000 1,223,700senior note, 4.15%, 3/28/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700,000 2,771,550

3,995,250

Panama 0.5%a Panama Notas del Tesoro, senior note, 144A . . . . . . . . . . . . . . . . . . . . . . . . . . 4,050,000 4,078,826

Supranational 0.5%a The African Export-Import Bank, senior bond, 144A . . . . . . . . . . . . . . . . . . . . . 4,500,000 4,254,390

Uruguay 0.5%

Government of Uruguay, senior bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,875,000 4,240,257

Total Foreign Government and Agency Securities

(Cost $25,425,057) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,390,159

Asset-Backed Securities 2.9%

American Express Credit Account Master Trust, Series 2019-1, Class A,ABS, 2.87%, 10/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 6,500,000 6,705,135

a BX Commercial Mortgage Trust, Series 2020-BXLP, Class A, 144A, FRNthereafter, 1.505%, 12/15/36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,090,000 2,919,882

Capital One Multi-Asset Execution Trust,Series 2019-A1, Class A1, 2.84%, 12/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . United States 4,460,000 4,603,272Series 2019-A2, Class A2, 1.72%, 8/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . United States 5,510,000 5,589,263

Citibank Credit Card Issuance Trust, Series 2017-A7 , Class A7, FRNthereafter, 1.375%, 8/08/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 2,000,000 1,974,100

Discover Card Execution Note Trust, Series 2019-A3, Class A,1.89%, 10/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States 3,220,000 3,250,361

Total Asset-Backed Securities (Cost $24,990,222) . . . . . . . . . 25,042,013

Total Investments (Cost $808,797,942) 95.8% . . . . . . . . . . . . . . 817,565,531

Other Assets, less Liabilities 4.2% . . . . . . . . . . . . . . . . . . . . . . . . . . 35,966,240

Net Assets 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $853,531,771




See Abbreviations on page 56.*The principal amount is stated in U.S. dollars unless otherwise indicated.aSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyersor in a public offering registered under the Securities Act of 1933. At March 31, 2020, the aggregate value of these securities was $64,341,666, representing 7.5% of netassets.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 exemptionfrom registration. At March 31, 2020, the aggregate value of these securities was $10,066,845, representing 1.2% of net assets.

At March 31, 2020, the Fund had the following credit default swap contracts outstanding. See Note 8.

Credit Default Swap Contracts

Description

Periodic

Payment

Rate

Received

(Paid)

Payment

Frequency

Maturity

Date

Notional

Amount Value

Unamortized

Upfront

Payments

(Reciepts)

Unrealized

Appreciation

(Depreciation)

Contracts to Sell Protectiona

CDX.NA.IG.33 . . . . . . . . . . . . . . . . . . . . . . 1% Quarterly 12/20/24 3,000,000 (9,772) (32,522) 22,750CDX.NA.IG.33 . . . . . . . . . . . . . . . . . . . . . . 1% Quarterly 12/20/24 10,200,000 (33,225) 162,061 (195,286)Italy Government International Bond . . . . 1% Quarterly 12/20/29 9,000,000 (840,709) (437,804) (402,905)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . (575,441)

aThe fund enters contracts to sell protection to create a long credit position.

At March 31, 2020, the Fund had the following futures contracts outstanding. See Note 1(c).

Futures Contracts

Description Type

Number of

Contracts

Notional

Amount*

Expiration

Date

Value/Unrealized

Appreciation

(Depreciation)

Index Contracts

U.S. Treasury 5 Yr. Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long 48 $6,017,250 6/30/20 $181,666U.S. Treasury 10 Yr. Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long 40 5,547,500 6/19/20 210,767Ultra 10 Yr. U.S. Treasury Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short 11 1,716,344 6/19/20 (4,828)

Total Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $387,605

*As of period end.


FRANKLIN TEMPLETON ETF TRUSTFINANCIAL STATEMENTS

Statements of Assets and LiabilitiesMarch 31, 2020

Franklin Liberty

Investment

Grade Corporate

ETF

Franklin Liberty

U.S. Low

Volatility ETF

Franklin Liberty

U.S. Core Bond

ETF

Assets:Investments in securities:

Cost – Unaffiliated issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $561,002,206 $ 82,755,598 $808,797,942

Value – Unaffiliated issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $541,383,321 $ 73,499,218 $817,565,531Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,192,580 679,143 95,819,153Receivables:

Investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,700,795 — 9,911,030Dividend and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,692,976 118,912 4,201,801

Deposits with brokers for:Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352,835 — 91,846Swap Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 960,930Variation margin on centrally cleared swap contracts . . . . . . . . . . . . . . . . — — 465,298

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556,322,507 74,297,273 929,015,589

Liabilities:Payables:

Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,581 — 35,682,024Capital shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 36,863,610Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,897 1,455 58,498Transfer agent fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,300 14,300 8,400Distributions to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,730,568 — 1,888,060Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,823 1,155 4,500Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,990 36,008 26,902Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843 1,003 4,630Variation margin on futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,075 — 3,385Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,311 15,876 98,100

Unrealized depreciation on OTC swap contracts . . . . . . . . . . . . . . . . . . . . . — — 402,905OTC swap contracts premiums received . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 437,804Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,404 4,886 5,000

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,984,792 74,683 75,483,818

Net assets, at value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $553,337,715 $ 74,222,590 $853,531,771

Net assets consist of:Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $573,759,111 $ 86,424,495 $841,985,535Total distributable earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,421,396) (12,201,905) 11,546,236

Net assets, at value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $553,337,715 $ 74,222,590 $853,531,771

Shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,850,000 2,400,000 33,550,000

Net asset value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24.22 $ 30.93 $ 25.44



Statements of Operationsfor the year ended March 31, 2020

Franklin Liberty

Investment

Grade Corporate

ETF

Franklin Liberty

U.S. Low

Volatility ETF

Franklin Liberty

U.S. Core Bond

ETFb

Investment income:Dividends: (net of foreign taxes)a

Unaffiliated issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 902,509 $ —Interest: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unaffiliated issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,940,416 — 10,461,465

Total investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,940,416 902,509 10,461,465

Expenses:Management fees (Note 3a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,759,381 143,655 684,435Transfer agent fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,600 15,600 8,400Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,493 1,391 4,500Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,062 10,024 6,000Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,481 16,520 100,369Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,176 54,672 28,940Trustees’ fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,668 3,406 27,730Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,307 1,211 8,971

Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,972,168 246,479 869,345Expenses waived/paid by affiliates (Note 3c) . . . . . . . . . . . . . . . . . . (780,871) (102,824) (184,910)

Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,191,297 143,655 684,435

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,749,119 758,854 9,777,030

Realized and unrealized gains (losses):Net realized gain (loss) from:

Investments:Unaffiliated issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,424,530 (3,051,657) 5,577,000

In-kind redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 170,411 —Foreign currency transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 185 —Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,144,168) — 850,090Swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,471 — (1,297,249)

Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,290,963 (2,881,061) 5,129,841

Net change in unrealized appreciation (depreciation) on:Investments:

Unaffiliated issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,780,326) (11,385,385) 8,767,589Translation of other assets and liabilities denominated in foreign

currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (392) —Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (67,759) — 387,605Swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (575,441)

Net change in unrealized appreciation (depreciation) . . . . . . (19,848,085) (11,385,777) 8,579,753

Net realized and unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,557,122) (14,266,838) 13,709,594

Net increase (decrease) in net assets resulting from operations . . . . . . . . . $ (6,808,003) $(13,507,984) $23,486,624

aForeign taxes withheld on dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 7,168 $ —

bFor the period September 17, 2019 (commencement of operations) to March 31, 2020.



Statements of Changes in Net Assets

Franklin Liberty Investment

Grade Corporate ETF

Franklin Liberty U.S. Low

Volatility ETF

Year Ended

March 31, 2020

Year Ended

March 31, 2019

Year Ended

March 31, 2020

Year Ended

March 31, 2019

Increase (decrease) in net assets:Operations:

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,749,119 $ 941,221 $ 758,854 $ 188,665Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . 3,290,963 (722,823) (2,881,061) 251,076Net change in unrealized appreciation

(depreciation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,848,085) 370,103 (11,385,777) 1,276,600

Net increase (decrease) in net assets resultingfrom operations . . . . . . . . . . . . . . . . . . . . . . . . (6,808,003) 588,501 (13,507,984) 1,716,341

Distributions to shareholders (Note 1e) . . . . . . . . . . . . . (12,798,430) (1,010,692) (613,357) (321,023)

Capital share transactions: (Note 2) . . . . . . . . . . . . . . . 554,879,195 (21,066,405) 74,900,836 6,042,757

Net increase (decrease) in net assets . . . . . . . . 535,272,762 (21,488,596) 60,779,495 7,438,075Net assets:

Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,064,953 39,553,549 13,443,095 6,005,020

End of year (Note 1e) . . . . . . . . . . . . . . . . . . . . . . . . . . . $553,337,715 $ 18,064,953 $ 74,222,590 $13,443,095



Statements of Changes in Net Assets (continued)

Franklin Liberty

U.S. Core Bond ETF

Year Ended

March 31, 2020

Increase (decrease) in net assets:Operations:

Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,777,030Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,129,841Net change in unrealized appreciation (depreciation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,579,753

Net increase (decrease) in net assets resulting fromoperations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,486,624

Distributions to shareholders (Note 1e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,075,002)

Capital share transactions: (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 842,120,149

Net increase (decrease) in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 853,531,771Net assets:

Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

End of year (Note 1e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $853,531,771

aFor the period September 17, 2019 (commencement of operations) to March 31, 2020.



Notes to Financial Statements

1. Organization and Significant Accounting

Policies

Franklin Templeton ETF Trust (Trust) is registered under theInvestment Company Act of 1940 (1940 Act) as an open-endmanagement investment company, consisting of forty-twoseparate funds, three of which are included in this report(Funds) and applies the specialized accounting and reportingguidance in U.S. Generally Accepted Accounting Principles(U.S. GAAP). Each of the Funds are an exchange tradedfund (ETF) and are actively managed, thus they are notdesigned to track an index. The Trust began offering sharesof Franklin Liberty U.S. Core Bond ETF.

The following summarizes the Funds’ significant account-ing policies.

a. Financial Instrument Valuation

The Funds’ investments in financial instruments are carriedat fair value daily. Fair value is the price that would bereceived to sell an asset or paid to transfer a liability in anorderly transaction between market participants on the mea-surement date. The Funds calculate the net asset value(NAV) per share as of 4 p.m. Eastern time each day the NewYork Stock Exchange (NYSE) is open for trading. Undercompliance policies and procedures approved by the Trust’sBoard of Trustees (the Board), the Funds’ administrator hasresponsibility for oversight of valuation, including leading thecross-functional Valuation Committee (VC). The Funds mayutilize independent pricing services, quotations from securi-ties and financial instrument dealers, and other marketsources to determine fair value.

Equity securities and exchange traded funds listed on anexchange or on the NASDAQ National Market System arevalued at the last quoted sale price or the official closingprice of the day, respectively. Foreign equity securities arevalued as of the close of trading on the foreign stockexchange on which the security is primarily traded or as of4 p.m. Eastern time. The value is then converted into its U.S.dollar equivalent at the foreign exchange rate in effect at4 p.m. London time on the day that the value of the securityis determined. Over-the-counter (OTC) securities are valuedwithin the range of the most recent quoted bid and askprices. Securities that trade in multiple markets or on multipleexchanges are valued according to the broadest and mostrepresentative market. Certain equity securities are valuedbased upon fundamental characteristics or relationships tosimilar securities.

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 deter-mine fair value. In instances where sufficient market activityexists, the pricing services may utilize a market-basedapproach through which quotes from market makers areused to determine fair value. In instances where sufficientmarket activity may not exist or is limited, the pricing servicesalso utilize proprietary valuation models which may considermarket characteristics such as benchmark yield curves,credit spreads, estimated default rates, anticipated marketinterest rate volatility, coupon rates, anticipated timing of prin-cipal repayments, underlying collateral, and other uniquesecurity 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 offinancial instruments for which market prices are not reliableor readily available. Under these procedures, the Funds pri-marily employ a market-based approach which may userelated or comparable assets or liabilities, recent transac-tions, market multiples, book values, and other relevantinformation for the investment to determine the fair value ofthe investment. An income-based valuation approach mayalso be used in which the anticipated future cash flows of theinvestment are discounted to calculate fair value. Discountsmay also be applied due to the nature or duration of anyrestrictions on the disposition of the investments. Due to theinherent uncertainty of valuations of such investments, thefair values may differ significantly from the values that wouldhave been used had an active market existed.

Trading in securities on foreign securities stock exchangesand OTC markets may be completed before 4 p.m. Easterntime. In addition, trading in certain foreign markets may nottake place on every Funds’ business day. Occasionally,events occur between the time at which trading in a foreignsecurity is completed and 4 p.m. Eastern time that might callinto question the reliability of the value of a portfolio securityheld by the Fund. As a result, differences may arise betweenthe value of the Funds’ portfolio securities as determined atthe foreign market close and the latest indications of value at4 p.m. Eastern time. The VC monitors price movements forsignificant events following the close of trading in foreignstock markets through a series of country specific marketproxies (such as baskets of American Depositary Receipts,futures contracts and exchange traded funds). These pricemovements are measured against established trigger thresh-olds for each specific market proxy to assist in determining if


FRANKLIN TEMPLETON ETF TRUSTNOTES TO FINANCIAL STATEMENTS

an event has occurred that may call into question the reliabil-ity of the values of the foreign securities held by the Funds. Ifsuch an event occurs, the securities may be valued using fairvalue procedures, which may include the use of independentpricing services.

When the last day of the reporting period is a non-businessday, certain foreign markets may be open on those days thatthe Funds’ NAV is not calculated, which could result in differ-ences between the value of the Funds’ portfolio securities onthe last business day and the last calendar day of the report-ing period. Any significant security valuation changes due toan open foreign market are adjusted and reflected by theFunds for financial reporting purposes

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denomi-nated in foreign currencies are translated into U.S. dollarsbased on the exchange rate of such currencies against U.S.dollars on the date of valuation. The Funds may enter intoforeign currency exchange contracts to facilitate transactionsdenominated in a foreign currency. Purchases and sales ofsecurities, income and expense items denominated in foreigncurrencies are translated into U.S. dollars at the exchangerate in effect on the transaction date. Portfolio securities andassets and liabilities denominated in foreign currencies con-tain risks that those currencies will decline in value relative tothe U.S. dollar. Occasionally, events may impact the avail-ability or reliability of foreign exchange rates used to convertthe U.S. dollar equivalent value. If such an event occurs, theforeign exchange rate will be valued at fair value using proce-dures established and approved by the Board.

The Funds do not separately report the effect of changes inforeign exchange rates from changes in market prices onsecurities held. Such changes are included in net realizedand unrealized gain or loss from investments in the State-ments of Operations.

Realized foreign exchange gains or losses arise from salesof foreign currencies, currency gains or losses realizedbetween the trade and settlement dates on securities trans-actions and the difference between the recorded amounts ofdividends, interest, and foreign withholding taxes and theU.S. dollar equivalent of the amounts actually received orpaid. Net unrealized foreign exchange gains and losses arisefrom changes in foreign exchange rates on foreign denomi-nated assets and liabilities other than investments insecurities held at the end of the reporting period.

c. Derivative Financial Instruments

Certain or all Funds invested in derivative financial instru-ments in order to manage risk or gain exposure to variousother investments or markets. Derivatives are financial con-tracts based on an underlying or notional amount, require noinitial investment or an initial net investment that is smallerthan would normally be required to have a similar responseto changes in market factors, and require or permit net settle-ment. Derivatives contain various risks including the potentialinability of the counterparty to fulfill their obligations under theterms of the contract, the potential for an illiquid secondarymarket, and/or the potential for market movements whichexpose the Fund to gains or losses in excess of the amountsshown in the Statements of Assets and Liabilities. Realizedgain and loss and unrealized appreciation and depreciationon these contracts for the period are included in the State-ments of Operations.

Derivative counterparty credit risk is managed through a for-mal evaluation of the creditworthiness of all potentialcounterparties. Certain or all Funds attempt to reduce theirexposure to counterparty credit risk on OTC derivatives,whenever possible, by entering into International Swaps andDerivatives Association (ISDA) master agreements with cer-tain counterparties. These agreements contain variousprovisions, including but not limited to collateral require-ments, events of default, or early termination.

Termination events applicable to the counterparty includecertain deteriorations in the credit quality of the counterparty.Termination events applicable to the Funds include failure ofthe Funds to maintain certain net asset levels and/or limit thedecline in net assets over various periods of time. In theevent of default or early termination, the ISDA master agree-ment gives the non-defaulting party the right to net andclose-out all transactions traded, whether or not arising underthe ISDA agreement, to one net amount payable by onecounterparty to the other. Early termination by the counter-party may result in an immediate payment by the Funds ofany net liability owed to that counterparty under theISDA agreement.

The Funds entered into credit default swap contracts primar-ily to manage and/or gain exposure to credit risk. A creditdefault swap is an agreement between the Fund and a coun-terparty whereby the buyer of the contract receives creditprotection and the seller of the contract guarantees the creditworthiness of a referenced debt obligation. These agree-ments may be privately negotiated in the over-the-counter



1. Organization and Significant Accounting Policies (continued)

c. Derivative Financial Instruments (continued)

market (OTC credit default swaps) or may be executed in amultilateral trade facility platform, such as a registeredexchange (centrally cleared credit default swaps). The under-lying referenced debt obligation may be a single issuer ofcorporate or sovereign debt, a credit index, a basket ofissuers or indices, or a tranche of a credit index or basket ofissuers or indices. In the event of a default of the underlyingreferenced debt obligation, the buyer is entitled to receive thenotional amount of the credit default swap contract from theseller in exchange for the referenced debt obligation, a netsettlement amount equal to the notional amount of the creditdefault swap less the recovery value of the referenced debtobligation, or other agreed upon amount. For centrallycleared credit default swaps, required initial margins arepledged by the Fund, and the daily change in fair value isaccounted for as a variation margin payable or receivable.Over the term of the contract, the buyer pays the seller aperiodic stream of payments, provided that no event ofdefault has occurred. Such periodic payments are accrueddaily as an unrealized appreciation or depreciation until thepayments are made, at which time they are realized. Upfrontpayments and receipts are reflected in the Statements ofAssets and Liabilities and represent compensating factorsbetween stated terms of the credit default swap agreementand prevailing market conditions (credit spreads and otherrelevant factors). These upfront payments and receipts areamortized over the term of the contract as a realized gain orloss in the Statements of Operations.

Collateral requirements differ by type of derivative. Collateralterms are contract specific for OTC derivatives. For OTCderivatives traded under an ISDA master agreement, postingof collateral is required by either the Fund or the applicablecounterparty if the total net exposure of all OTC derivativeswith the applicable counterparty exceeds the minimum trans-fer amount, which typically ranges from $100,000 to$250,000, and can vary depending on the counterparty andthe type of the agreement. Generally, collateral is determinedat the close of Fund business each day and any additionalcollateral required due to changes in derivative values maybe delivered by the Fund or the counterparty the next busi-ness day, or within a few business days. Collateral pledgedand/or received by the Fund, if any, is held in segregatedaccounts with the Fund’s custodian/counterparty broker andcan be in the form of cash and/or securities. Unrestrictedcash may be invested according to the Funds’ investment

objectives. To the extent that the amounts due to the Fundfrom its counterparties are not subject to collateralization orare not fully collateralized, the Fund bears the risk of lossfrom counterparty non-performance.

Certain or all Funds entered into exchange traded futurescontracts primarily to manage and/or gain exposure to equityprice risk. A futures contract is an agreement between theFund and a counterparty to buy or sell an asset at a specifiedprice on a future date. Required initial margins are pledgedby the Fund, and the daily change in fair value is accountedfor as a variation margin payable or receivable in the State-ments of Assets and Liabilities.

See Note 8 regarding other derivative information.

d. Income and Deferred Taxes

It is each Fund’s policy to qualify as a regulated investmentcompany under the Internal Revenue Code. Each Fundintends to distribute to shareholders substantially all of itstaxable income and net realized gains to relieve it fromfederal income and excise taxes. As a result, no provision forU.S. federal income taxes is required.

The Funds may be subject to foreign taxation related toincome received, capital gains on the sale of securities andcertain foreign currency transactions in the foreign jurisdic-tions in which the Funds invest. Foreign taxes, if any, arerecorded based on the tax regulations and rates that exist inthe foreign markets in which the Funds invest. When a capitalgain tax is determined to apply, certain or all Funds record anestimated deferred tax liability in an amount that would bepayable if the securities were disposed of on the valua-tion date.

Each Fund may recognize an income tax liability related to itsuncertain tax positions under U.S. GAAP when the uncertaintax position has a less than 50% probability that it will be sus-tained upon examination by the tax authorities based on itstechnical merits. As of March 31, 2020, each Fund has deter-mined that no tax liability is required in its financialstatements related to uncertain tax positions for any open taxyears (or expected to be taken in future tax years). Open taxyears are those that remain subject to examination and arebased on the statute of limitations in each jurisdiction inwhich the Fund invests.



1. Organization and Significant Accounting Policies (continued)

e. Security Transactions, Investment Income,

Expenses and Distributions

Security transactions are accounted for on trade date. Real-ized gains and losses on security transactions aredetermined on a specific identification basis. Interest incomeand estimated expenses are accrued daily. Amortization ofpremium and accretion of discount on debt securities areincluded in interest income. Dividend income and capital gaindistributions are recorded on the ex-dividend date except forcertain dividends from securities where the dividend rate is

not available. In such cases, the dividend is recorded as soonas the information is received by the Funds. Distributions toshareholders are recorded on the ex-dividend date. Distribut-able earnings are determined according to income taxregulations (tax basis) and may differ from earnings recordedin accordance with U.S. GAAP. These differences may bepermanent or temporary. Permanent differences are reclassi-fied among capital accounts to reflect their tax character.These reclassifications have no impact on net assets or theresults of operations. Temporary differences are not reclassi-fied, as they may reverse in subsequent periods.

For the year ended March 31, 2019, distributions to shareholders were as follows:

Franklin

Liberty

International

Opportunities

ETF

Franklin

Liberty

Investment

Grade

Corporate

ETF

Franklin

Liberty

U.S. Low

Volatility

ETF

Distributions to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(168,938) $(1,010,692) $(321,023)

Common expenses incurred by the Trust are allocated among the Funds based on the ratio of net assets of each Fund to thecombined net assets of the Trust. Certain Fund specific expenses are allocated directly to the Fund that incurred the expense.

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assump-tions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts ofincome 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 aris-ing out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of theFunds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum expo-sure under these arrangements is unknown as this would involve future claims that may be made against the Trust that havenot yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

Shares of the Funds are issued and redeemed at their respective NAV only in aggregations of a specific number of shares ormultiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation orredemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market inamounts less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary mar-ket which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for adesignated 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 Cre-ation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day bythe Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associatedwith the issuance and redemption of Creation Units and is not charged to or paid by the Funds.



2. Shares of Beneficial Interest (continued)

In addition, for cash Creation Unit transactions, a variable fee for creation transactions and redemption transactions may becharged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and othercosts and expenses related to the execution of trades. Variable fees, if any, are included in capital share transactions in theStatements of Changes in Net Assets.

At March 31, 2020, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’shares were as follows:


Year Ended

March 31, 2020

Year Ended

March 31, 2019

Shares Amount Shares Amount

Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,100,000 $ 554,879,195 50,000 $ 1,200,485Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (950,000) (22,266,890)

Net increase (decrease) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,100,000 $ 554,879,195 (900,000) $(21,066,405)


Year Ended

March 31, 2020

Year Ended

March 31, 2019

Shares Amount Shares Amount

Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,050,000 $ 76,346,270 250,000 $ 7,630,864Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50,000) (1,445,434) (50,000) (1,588,107)

Net increase (decrease) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 $ 74,900,836 200,000 $ 6,042,757

Franklin Liberty U.S.

Core Bond ETF

Year Ended

March 31, 2020a

Shares Amount

Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,500,001 $ 968,931,821Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,950,001) (126,811,672)

Net increase (decrease) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,550,000 $ 842,120,149

aFor the period September 17, 2019 (commencement of operations) to March 31, 2020.

3. Transactions with Affiliates

Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton.Certain officers and trustees of the Funds are also officers and/or directors of the following subsidiaries:

Subsidiary Affiliation

Franklin Advisers, Inc. (Advisers) Investment manager

Franklin Templeton Institutional, LLC (FT Institutional) Investment manager

Franklin Templeton Investimentos (Brasil) Ltda. (FTI Brasil) Investment manager

Franklin Templeton Investment Management Limited (FTIML) Investment manager

Franklin Templeton Investment Trust Management Co., Ltd. (FT Korea) Investment manager

Franklin Templeton Investments (ME) Limited (FTIME) Investment manager



3. Transactions with Affiliates (continued)

Subsidiary Affiliation

Franklin Templeton Investments Corp. (FTIC) Investment manager

Templeton Asset Management Ltd. (TAML) Investment manager

Franklin Templeton Services, LLC (FT Services) Administrative manager

Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter

a. Management Fees

Franklin Liberty U.S. Low Volatility ETF and Franklin Liberty U.S. Core Bond ETF pay an investment management fee toAdvisers of 0.290% and 0.150%, respectively, per year of the average daily net assets of each of the Funds.

Franklin Liberty Investment Grade Corporate ETF pays an investment management fee to Advisers based on the averagedaily 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


0.400% Over $15 billion, up to and including $17.5 billion


0.360% Over $20 billion, up to and including $35 billion

0.355% Over $35 billion, up to and including $50 billion

0.350% In excess of $50 billion

For the year ended March 31, 2020, the gross effective investment management fee rate was 0.625% of the Franklin LibertyInvestment Grade Corporate ETF’s average daily net assets.

Effective October 1, 2019, the Franklin Liberty U.S. Low Volatility ETF’s investment management fee was reduced, asapproved by the board of trustees. Prior to October 1, 2019, the Franklin Liberty U.S. Low Volatility ETF paid the investmentmanager a fee equal to an annual rate of 0.50% of the value of its average daily net assets. Effective October 1, 2019, theFranklin Liberty U.S. Low Volatility ETF pays the investment manager a fee equal to an annual rate of 0.29% of the value of itsaverage daily net assets.

b. Administrative Fees

Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisersbased 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 expensesotherwise payable by Franklin Liberty Investment Grade Corporate ETF, Franklin Liberty U.S. Low Volatility ETF, and FranklinLiberty U.S. Core Bond ETF so that the expenses (including acquired fund fees and expenses) of the Funds do not exceed0.35%, 0.50%, and 0.15% 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, 2020. Total expenseswaived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.



3. Transactions with Affiliates (continued)

d. Other Affiliated Transactions

At March 31, 2020, the shares of the funds were owned by the following investment companies:

Funds Shares

Percentage of

Outstanding Sharesa


Franklin Conservative Allocation Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,227,175 9.7%Franklin Total Return Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,335,000 80.2%

20,562,175 89.9%


Franklin Managed Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 41.7%

Franklin Liberty U.S Core Bond ETF

Franklin Conservative Allocation Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,349,425 33.8%Franklin Moderate Allocation Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,685,848 37.8%Franklin Growth Allocation Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,693,100 11.0%Franklin LifeSmart™ 2020 – 2055 Retirement Target Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,062,703 6.1%

29,791,076 88.7%

aInvestment activities of significant shareholders could have a material impact on the Funds.

4. Income Taxes

For tax purposes, capital losses may be carried over to offset future capital gains, if any. At March 31, 2020, the capital losscarryforwards were as follows:

Franklin Liberty

Low Volatility ETF

2020

Capital loss carryforwards not subject to expiration:Short-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,874,568

During the year ended March 31, 2020, FTLG utilized $909,692 as capital loss carryforward.

The tax character of distributions paid during the years ended March 31, 2020 and 2019, were as follows:


Grade Corporate ETF

Franklin Liberty U.S

Low Volatility ETF

Franklin Liberty U.S

Core Bond ETF

2020 2019 2020 2019 2020 2019

Distributions paid from:Ordinary income . . . . . . . . . . . . . . . . . $12,798,430 $1,010,692 $613,357 $186,923 $11,995,769 $ —Long-term Capital Gain . . . . . . . . . . . . — — — 134,100 79,233 —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,798,430 $1,010,692 $613,357 $321,023 $12,075,002 $ —



4. Income Taxes (continued)

At March 31, 2020, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes wereas follows:

Franklin Liberty

Investment Grade

Corporate ETF

Franklin Liberty

U.S. Low

Volatility ETF

Franklin Liberty

U.S. Core

Bond ETF

Cost of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $562,805,193 $ 82,989,811 $809,755,909

Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,286,678 $ 909,682 $ 25,553,059Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,708,550) (10,400,275) (17,743,437)

Net unrealized appreciation (depreciation) . . . . . . . . . . . . . . . . . . . . . . . . . $ (21,421,872) $ (9,490,593) $ 7,809,622

Distributable earnings-undistributed ordinary income . . . . . . . . . . . . . . . . $ 2,731,044 $ 163,638 $ 5,406,620

Distributable earnings-undistributed Capital Gain . . . . . . . . . . . . . . . . . . . — — $ 218,054

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differingtreatments of corporate actions, 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 year endedMarch 31, 2020, were as follows:

Franklin Liberty

Investment Grade

Corporate ETF

Franklin Liberty

U.S. Low

Volatility ETF

Franklin Liberty

U.S. Core

Bond ETF

Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $713,327,814 $14,336,550 $1,301,458,703Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $172,478,725 $14,335,453 $1,031,520,252

In-kind transactions associated with creation and redemptions for the year ended March 31, 2020, were as follows:

Franklin Liberty

Investment Grade

Corporate ETF

Franklin Liberty

U.S. Low

Volatility ETF

Franklin Liberty

U.S. Core

Bond ETF

Cost of Securities Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $75,719,566 $ —Value of Securities Delivereda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $156,250 $ 1,427,075 $8,521,827

aRealized gains and losses 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. secu-rities, such as fluctuating currency values and changing local, regional and global economic, political and social conditions,which may result in greater market volatility. Current political and financial uncertainty surrounding the European Union mayincrease market volatility and the economic risk of investing in securities in Europe. In addition, certain foreign securities maynot be as liquid as U.S. securities.

7. Novel Coronavirus Pandemic

The global outbreak of the novel coronavirus disease, known as COVID-19, has caused adverse effects on many companies,sectors, nations, regions and the markets in general, and may continue for an unpredictable duration. The effects of this pan-demic may materially impact the value and performance of the Funds, their ability to buy and sell fund investments atappropriate valuations and their ability to achieve their investment objectives.



8. Other Derivative Information

For the year ended March 31, 2020, the Funds investments in derivative contracts are reflected in the Statements of Assetsand Liabilities as follows:

Asset Derivatives Liability Derivatives

Statements of Assets and

Liabilities Location Fair Value

Statements of Assets and

Liabilities Location Fair Value


Grade Corporate ETF

Interest Rate contracts . . . . . . . . . . . Variation margin on futures contracts $1,266,090a Variation margin on futures contracts $1,333,849a

Franklin Liberty U.S. Core

Bond ETF

Interest Rate contracts . . . . . . . . . . . Variation margin on futures contracts $ 392,433a Variation margin on futures contracts $ 4,828a

Credit Default Contracts . . . . . . . . . . Swap Contracts 22,750 Swap Contracts 598,191

Totals . . . . . . . . . . . . . . . . . . . . . . . $ 415,183 $ 603,019

aThis amount reflects the cumulative appreciation (depreciation) of futures contracts as reported in the Statement of Investments. Only the variation margin receivable/payableat period end is separately reported within the Statements of Assets and Liabilities. Prior variation margin movements were recorded to cash upon receipt or payment.

For the year ended March 31, 2020, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:

Derivative Contracts

Not Accounted for as

Hedging Instruments

Statements of

Operations Locations

Net Realized

Gain (Loss)

for the Period

Statements of

Operations Locations

Net Change in

Unrealized

Appreciation

(Depreciation)

for the Period

Franklin Liberty Investment Grade

Corporate ETF

Net realized gain (loss) from: Net change in unrealizedappreciation (depreciation) on:

Interest Rate contracts . . . . . . . . . . . . Futures contracts $(1,144,168) Futures contracts $ (67,759)

Credit Default Contracts . . . . . . . . . . . Swap contracts 10,471 Swap contracts —

Totals . . . . . . . . . . . . . . . . . . . . . . . . $(1,133,697) $ (67,759)

Franklin Liberty U.S. Core

Bond ETF

Net realized gain (loss) from: Net change in unrealizedappreciation (depreciation) on:

Interest Rate contracts . . . . . . . . . . . . Futures contracts $ 850,090 Futures contracts $ 387,605

Credit Default Contracts . . . . . . . . . . . Swap contracts (1,297,249) Swap contracts (575,441)

Totals . . . . . . . . . . . . . . . . . . . . . . . . $ (447,159) $(187,836)

For the year ended March 31, 2020, the average month end notional amount of futures and swaps contracts were as follows:.

Franklin Liberty

Investment Grade

Corporate ETF

Franklin Liberty

U.S. Low

Volatility ETF

Franklin Liberty

U.S. Core

Bond ETF

Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,184,588 $ — $18,138,381Credit Default Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 553,846 $ — $ 7,028,571

See Note 1(c) regarding derivative financial instruments.



9. Fair Value Measurements

The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observ-able inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value ofthe 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, pre-

payment speed, credit risk, etc.)• Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of financial

instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

A summary of inputs used as of March 31, 2020, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:

Level 1 Level 2 Level 3 Total


Assets:

Investments in Securities:a

Corporate Bonds & Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $534,062,743 $ — $534,062,743U.S. Government & Agency Securities . . . . . . . . . . . . . . . . . . . . . . . . . — 7,055,578 — 7,055,578Short-Term Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 265,000 — 265,000

Total Investments in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $541,383,321 $ — $541,383,321

Other Financial Instruments:Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,266,090 $ — $ — $ 1,266,090

Liabilities:

Other Financial Instruments:Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,333,849 $ — $ — $ 1,333,849


Assets:


Equity Investmentsb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $73,399,218 $ — $ — $ 73,399,218Short-Term Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 100,000 — 100,000

Total Investments in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $73,399,218 $ 100,000 $ — $ 73,499,218



9. Fair Value Measurements (continued)

Level 1 Level 2 Level 3 Total


Assets:


Corporate Bonds & Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $215,362,987 $ — $215,362,987U.S. Government & Agency Securities . . . . . . . . . . . . . . . . . . . . . . . . . — 306,428,667 — 306,428,667Municipal Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 38,308,937 — 38,308,937Mortgage-Backed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 208,032,768 — 208,032,768Foreign Government & Agency Securities . . . . . . . . . . . . . . . . . . . . . . — 24,390,159 — 24,390,159Asset-Backed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 25,042,013 — 25,042,013

Total Investments in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $817,565,531 $ — $817,565,531

Other Financial Instruments:Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 392,433 $ — $ — $ 392,433Swap Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 22,750 $ — $ 22,750

Liabilities:

Other Financial Instruments:Futures Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,828 $ — $ — $ 4,828Swap Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 598,191 $ — $ 598,191

aFor detailed categories, see the accompanying Statement of Investments.bIncludes common and preferred stocks.

10. New Accounting Pronouncement

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04,Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Theamendments in the ASU provides optional temporary financial reporting relief from the effect of certain types of contract modi-fications due to the planned discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank-offered basedreference rates as of the end of 2021. The ASU is effective for certain reference rate-related contract modifications that occurduring the period March 12, 2020 through December 31, 2022. Management is currently evaluating the impact, if any, ofapplying this ASU.

11. Subsequent Events

The Funds have evaluated subsequent events through the issuance of the financial statements and determined that no eventshave occurred that require disclosure.

Abbreviations

Selected Portfolio

FHLB Federal Home Loan BankFRN Floating Rate NoteREIT Real Estate Investment TrustADR American Depositary Receipt+GO General ObligationMTA Metropolitan Transit AuthorityREIT Real Estate Investment Trust



Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Franklin Templeton ETF Trust and Shareholders of Franklin Liberty Investment Grade CorporateETF, Franklin Liberty U.S. Core Bond ETF and Franklin Liberty U.S. Low Volatility ETF

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the statements of investments of FranklinLiberty Investment Grade Corporate ETF, Franklin Liberty U.S. Core Bond ETF, and Franklin Liberty U.S. Low Volatility ETF(the “Funds”) as of March 31, 2020, the related statements of operations, and of changes in net assets for each of the periodsindicated in the table below, including the related notes, and each of the financial highlights for each of the periods indicated inthe table below (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, inall material respects, the financial position of the Funds as of March 31, 2020, and the results of each of their operations, thechanges in each of their net assets, and each of the financial highlights for each of the periods indicated in the table below inconformity with accounting principles generally accepted in the United States of America.

Franklin Templeton ETF Trust Statements of Operations

Statement of changes

in net assets Financial Highlights

Franklin Liberty Investment GradeCorporate ETF

Franklin Liberty U.S. LowVolatility ETF

For the year ended March 31,2020

For each of the two years inthe period ended March 31,2020

For each of the periodsindicated therein

Franklin Liberty U.S. CoreBond ETF

For the period September 17, 2019 (commencement of operations) through March 31, 2020

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on theFunds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Account-ing Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordancewith the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission andthe PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whetherdue to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a testbasis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation ofthe financial statements. Our procedures included confirmation of securities owned as of March 31, 2020 by correspondencewith the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. Webelieve that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

San Francisco, CaliforniaMay 19, 2020

We have served as the auditor of one or more investment companies in the Franklin Templeton Group of Funds since 1948.



Tax Information (unaudited)

Under Section 852(b)(3)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but noless than the following amounts as long term capital gain dividends for the fiscal year ended March 31, 2020:

Franklin Liberty

U.S. Core Bond

ETF

$527,460

Under Section 871(k)(2)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but no lessthan the following amounts as short term capital gain dividends for purposes of the tax imposed under Section 871(a)(1)(A) ofthe Internal Revenue Code for the fiscal year ended March 31, 2020:

Franklin Liberty

Investment Grade

Corporate

ETF

Franklin Liberty

U.S. Core Bond

ETF

$1,284,358 $957,154

Under Section 854(b)(1)(A) of the Internal Revenue Code, Franklin Liberty U.S. Low Volatility ETF hereby reports 94.52% of theordinary income dividends as income qualifying for the dividends received deduction for the fiscal year ended March 31, 2020.

Under Section 854(b)(1)(B) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but noless than the following amounts as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the InternalRevenue Code for the fiscal year ended March 31,2020.

Franklin Liberty

U.S. Low Volatlity

ETF

$833,135

Distributions, including qualified dividend income, paid during calendar year 2020 will be reported to shareholders onForm 1099-DIV by mid-February 2021. Shareholders are advised to check with their tax advisors for information on the treat-ment of these amounts on their individual income tax returns.

Under Section 871(k)(1)(C) of the Internal Revenue Code, the Funds hereby report the maximum amount allowable but noless than the following amounts as interest related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of theInternal Revenue Code for the fiscal year ended March 31, 2020:

Franklin Liberty

Investment Grade

Corporate

ETF

Franklin Liberty

U.S. Low Volatlity

ETF

Franklin Liberty

U.S. Core Bond

ETF

$8,615,268 $2,838 $9,681,682



Board Members and OfficersThe name, year of birth and address of the officers and board members, as well as their affiliations, positions held with theTrust, principal occupations during at least the past five years and number of U.S. registered portfolios overseen in theFranklin Templeton fund complex, are shown below. Generally, each board member serves until that person’s successor iselected and qualified.

Independent Board Members

Name, Year of Birth

and Address Position

Length of

Time Served

Number of Portfolios in

Fund Complex Overseen

by Board Member*

Other Directorships Held During

at Least the Past 5 Years

Rohit Bhagat (1964)

One Franklin ParkwaySan Mateo, CA 94403-1906

LeadIndependentTrustee andTrustee

Since 2016 44 Axis Bank (2013-present), AssetMarkFinancial Holdings, Inc. (investmentsolutions) (2018-present) and FlipKartLimited (2019-present) (eCommercecompany); formerly, CapFloatFinancial Services Pvt., Ltd.(non-banking finance company) (2018)and Zentific Investment Management(hedge fund) (2015-2018).

Principal Occupation During at Least the Past 5 Years:

Managing Member, Mukt Capital, LLC (private investment firm) (2014-present); Advisor, Optimal Asset Management (investment technologyand advisory services company) (2015-present); and formerly, Chairman, Asia Pacific, BlackRock (2009-2012); Global Chief OperatingOfficer, Barclays Global Investors (investment management) (2005-2009); and Senior Partner, The Boston Consulting Group (managementconsulting) (1992-2005).

Deborah D. McWhinney (1955)


Trustee Since January2020

44 Fluor Corporation (construction andengineering) (2014-present), IHSMarkit (information services)(2015-present), Borg Warner(automotive) (2018-present) andFocus Financial Partner, LLC(financial services) (2018-present).


Director of various companies; and formerly, Board Member, Lloyds Banking Group (2015-2018) (financial institution) and Fresenius MedicalGroup (2016-2018) (healthcare); Chief Executive Officer (2013-2014) and Chief Operating Officer (2011-2013), CitiGroup Global EnterprisePayments (financial services); and President, Citi’s Personal Banking and Wealth Management (2009-2011).

Anantha K. Pradeep (1963)


Trustee Since 2016 44 None


Chief Executive Officer, Smilable, Inc. (technology company) (2014-present); Chief Executive Officer, MachineVantage (technology company)(2018-present); Founder and Managing Partner, Consult Meridian, LLC (consulting company) (2009-present); and formerly, Founder,BoardVantage (board portal solutions provider delivering paperless process for boards and leadership) (2000-2002).



Interested Board Members and Officers

Name, Year of Birth


Length of Time

Served



by Board Member*



**Jennifer M. Johnson (1964)


Trustee andChairperson ofthe Board

Since 2016 49 None


Chief Executive Officer, President and Director, Franklin Resources, Inc.; officer and/or director or trustee, as the case may be, of some of theother subsidiaries of Franklin Resources, Inc. and of four of the investment companies in Franklin Templeton; and formerly, Chief OperatingOfficer and Executive Vice President, Franklin Resources, Inc. (1994-2015); Executive Vice President of Operations and Technology, FranklinResources, Inc. (2005-2010); and Senior Vice President, Franklin Resources, Inc. (2003-2005).

Alison E. Baur (1964)


Vice President Since 2016 Not Applicable Not Applicable


Deputy General Counsel, Franklin Templeton; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 41 of theinvestment companies in Franklin Templeton.

Breda M. Beckerle (1958)

280 Park AvenueNew York, NY 10017

Interim ChiefComplianceOfficer

Since January2020

Not Applicable Not Applicable


Chief Compliance Officer, Fiduciary Investment Management International, Inc., Franklin Advisers, Inc., Franklin Advisory Services, LLC,Franklin Mutual Advisers, LLC, Franklin Templeton Institutional, LLC; and officer of 41 of the investment companies in Franklin Templeton.

Steven J. Gray (1955)




Senior Associate General Counsel, Franklin Templeton; Vice President, Franklin Templeton Distributors, Inc. and FASA, LLC; and officer of 41of the investment companies in Franklin Templeton.

Matthew T. Hinkle (1971)


ChiefExecutiveOfficer –Finance andAdministration

Since 2017 Not Applicable Not Applicable


Senior Vice President, Franklin Templeton Services, LLC; officer of 41 of the investment companies in Franklin Templeton; and formerly, VicePresident, Global Tax (2012-April 2017) and Treasurer/Assistant Treasurer, Franklin Templeton (2009-2017).

Robert Lim (1948)


VicePresident –AMLCompliance



Vice President, Franklin Templeton Companies, LLC; Chief Compliance Officer, Franklin Templeton Distributors, Inc. and Franklin TempletonInvestor Services, LLC; and officer of 41 of the investment companies in Franklin Templeton.



Interested Board Members and Officers (continued)

Name, Year of Birth


Length of Time

Served



by Board Member*



Patrick O’Connor (1967)


President andChiefExecutiveOfficer –InvestmentManagement



President and Chief Investment Officer, Franklin Advisory Services, LLC; Senior Vice President, Franklin Advisers, Inc.; officer of two of theinvestment companies in Franklin Templeton; and formerly, Managing Director, Head of iShares Product Canada, BlackRock (1998-2014).

Vivek Pai (1970)

300 S.E. 2nd StreetFort Lauderdale,FL 33301-1923

Treasurer,ChiefFinancialOfficer andChiefAccountingOfficer

Since May 2019 Not Applicable Not Applicable


Treasurer, U.S. Fund Administration & Reporting and officer of two of the investment companies in Franklin Templeton.

Navid J. Tofigh (1972)


Vice Presidentand Secretary



Associate General Counsel and officer of 41 of the investment companies in Franklin Templeton.

Craig S. Tyle (1960)




General Counsel and Executive Vice President, Franklin Resources, Inc.; and officer of some of the other subsidiaries of Franklin Resources,Inc. and of 41 of the investment companies in Franklin Templeton.

Lori A. Weber (1964)

300 S.E. 2nd StreetFort Lauderdale, FL 33301-1923



Senior Associate General Counsel, Franklin Templeton; Assistant Secretary, Franklin Resources, Inc.; Vice President and Secretary,Templeton Investment Counsel, LLC; and officer of 41 of the investment companies in Franklin Templeton.

*We base the number of portfolios on each separate series of the U.S. registered investment companies within the Franklin Templeton fund complex. These portfolios have acommon investment manager or affiliated investment managers.

**Jennifer M. Johnson is considered to be an interested person of the Fund under the federal securities laws due to her position as an officer and director of FranklinResources, Inc. (Resources), which is the parent company of the Fund’s investment manager and distributor.

Note 2: Officer information is current as of the date of this report. It is possible that after this date, information about officers may change.

The Sarbanes-Oxley Act of 2002 and Rules adopted by the Securities and Exchange Commission require the Fund to disclose whether the Fund’s Audit Commit-tee includes at least one member who is an audit committee financial expert within the meaning of such Act and Rules. The Fund’s Board has determined thatthere is at least one such financial expert on the Audit Committee and has designated Rohit Bhagat as its audit committee financial expert. The Board believesthat Mr. Bhagat qualifies as such an expert in view of his extensive business background and experience, including extensive experience in the asset manage-ment and financial services industries. Mr. Bhagat has been a Member and Chairman of the Fund’s Audit Committee since 2016. As a result of such backgroundand experience, the Board believes that Mr. Bhagat has acquired an understanding of generally accepted accounting principles and financial statements, the gen-eral application of such principles in connection with the accounting estimates, accruals and reserves, and analyzing and evaluating financial statements thatpresent a breadth and level of complexity of accounting issues generally comparable to those of the Fund, as well as an understanding of internal controls andprocedures for financial reporting and an understanding of audit committee functions. Mr. Bhagat is an independent Board member as that term is defined underthe relevant Securities and Exchange Commission Rules and Releases.

The Statement of Additional Information (SAI) includes additional information about the board members and is available, without charge, upon request.

Shareholders may call (800) DIAL BEN/342-5236 to request the SAI.



Shareholder Information

Proxy Voting Policies and ProceduresThe Trust’s investment manager has established Proxy Vot-ing Policies and Procedures (Policies) that the Trust uses todetermine how to vote proxies relating to portfolio securities.Shareholders may view the Trust’s complete Policies onlineat franklintempleton.com. Alternatively, shareholders mayrequest copies of the Policies free of charge by calling theProxy Group collect at (954) 527-7678 or by sending a writ-ten request to: Franklin Templeton Companies, LLC, 300S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: ProxyGroup. Copies of the Trust’s proxy voting records are alsomade available online at franklintempleton.com and postedon the U.S. Securities and Exchange Commission’s websiteat sec.gov and reflect the most recent 12-month periodended June 30.

Quarterly Statement of InvestmentsThe Trust files a complete statement of investments with theU.S. Securities and Exchange Commission for the first andthird quarters for each fiscal year as an exhibit to its report onForm N-PORT. Shareholders may view the filed FormN-PORT by visiting the Commission’s website at sec.gov.The filed form may also be viewed and copied at the Com-mission’s Public Reference Room in Washington, DC.Information regarding the operations of the Public ReferenceRoom may be obtained by calling (800) SEC-0330.

Premium/Discount InformationInformation about the differences between the daily marketprice on the secondary market for the shares of the Fund andthe Fund’s net asset value may be found on the Fund’s web-site at franklintempleton.com.


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Authorized for distribution only when accompanied or preceded by a summary prospectus and/or prospectus. Investors shouldcarefully consider a fund’s investment goals, risks, charges and expenses before investing. A prospectus contains this and otherinformation; please read it carefully before investing.

To help ensure we provide you with quality service, all calls to and from our service areas are monitored and/or recorded.

Annual Report

Franklin Templeton ETF Trust

Investment Manager Distributor Investor Services

Franklin Advisers, Inc. Franklin Templeton Distributors, Inc.(800) DIAL BEN®/342-5236franklintempleton.com

Transfer AgentState Street Bank andTrust Company1 Heritage DriveMail Stop OHD0100North Quincy, MA 02171

© 2020 Franklin Templeton Investments. All rights reserved. ETF2 A 05/20

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