SEC Info - Franklin Templeton ETF Trust - ‘N-CSRS’ for 9/30/16

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number_811-23124

Franklin Templeton ETF Trust

(Exact name of registrant as specified in charter)

One Franklin Parkway, San Mateo, CA 94403-1906

(Address of principal executive offices) (Zip code)

Craig S. Tyle, One Franklin Parkway, San Mateo, CA 94403-1906

(Name and address of agent for service)

Registrant's telephone number, including area code: 650 312-2000

Date of fiscal year end: 3/31

Date of reporting period: 09/30/16

Item 1. Reports to Stockholders.

SEMIANNUAL REPORT

Economic and Market Overview

The global economy expanded during the period since the Fund’s inception on June 1, 2016. Global markets were aided by accommodative monetary policies of various global central banks, an improvement in commodity prices, finalization of Greece’s new debt deal, generally encouraging economic data across regions and an Organization of the Petroleum Exporting Countries (OPEC) proposal to curb oil production. However, the impact of these factors was partially offset by global economic concerns, the U.K.’s historic referendum to leave the European Union (also known as the “Brexit”), uncertainty about the U.S. Federal Reserve’s (Fed’s) timing for raising interest rates and worries about the health of European banks.

The U.S. economy expanded during the period under review. The economy grew at a faster pace in 2016’s third quarter, compared to the second quarter, supported by increases in consumer spending, business investment and exports. Although the Fed kept its target interest rate unchanged during the review period, in July, the Fed Chair signaled the possibility of a near-term increase in interest rates, citing strengthening labor market conditions and its optimism about future economic growth. However, following lower-than-expected job growth in August, the Fed kept interest rates unchanged at its September meeting and lowered its forecast for 2016 U.S. economic growth.

In Europe, the U.K.’s economy grew in the second and third quarters, supported by the services industries. Immediate effects of the Brexit vote in June materialized as U.K. stocks declined significantly, the pound sterling hit a three-decade low amid intensified selling and the U.K.’s credit rating was downgraded. In the eurozone, despite investors’ concerns about banking sector weakness, low corporate earnings and post-Brexit political repercussions, some regions benefited due to rising consumer spending resulting from a cheaper euro, low inflation and signs of sustained economic growth. The eurozone’s economy grew steadily in the third quarter following a moderation in the second quarter, while the region’s annual inflation rate rose above zero in June. After announcing monetary easing measures and cutting its benchmark interest rate to 0% in March, the European Central Bank expanded its massive bond-buying program in August 2016 to boost the region’s slowing growth.

In Asia, Japan’s economy grew in the first quarter largely due to increases in private consumption, government spending and exports, although it slowed in the second quarter amid falling exports and weak corporate investment. The Bank of Japan (BOJ) took several actions during the review period. The most recent of which was at its September meeting when the BOJ overhauled its monetary stimulus program to adjust Japanese government bond purchases with the aim of keeping the 10-year rate near the current level of 0%.

In emerging markets, economic growth generally moderated during the review period. Brazil’s economy continued to be in recession, although the pace of contraction slowed in 2016’s first half as business sentiment improved near period-end with the expected impeachment of President Dilma Rousseff. Russia’s economic contraction eased in 2016’s second quarter as crude oil prices began to recover and industrial production improved. The Bank of Russia reduced its key interest rate in June and September in an attempt to revive its economy. China’s economy expanded in 2016’s second quarter, aided by fiscal and monetary stimulus measures. The People’s Bank of China lowered the midpoint for the yuan’s trading band against the Japanese yen to align China’s currency reference rate with the international exchange rate, and also weakened its currency as the U.S. dollar strengthened. Elsewhere, India’s economic growth slowed in 2016’s second quarter due to slower private consumption growth and declining fixed investment. Overall, emerging market stocks, as measured by the MSCI Emerging Markets Index, rose strongly for the period.

The foregoing information reflects our analysis and opinions as of September 30, 2016. The information is not a complete analysis of every aspect of any market, country, industry, security or fund. Statements of fact are from sources considered reliable.

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Franklin LibertyQ Emerging Markets ETF

This semiannual report for Franklin LibertyQ Emerging Markets ETF covers the period since the Fund’s inception on June 1, 2016, through September 30, 2016.

Your Fund’s Goal and Main Investments

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

Performance Overview

For the period since inception on June 1, 2016, through September 30, 2016, the Fund posted cumulative total returns of +10.13% based on market price and +9.04% based on net asset value (NAV).²In comparison, the Liber-tyQ EM Index delivered a +9.16% total return for the same period, while the MSCI EM Index (Net Returns) produced a +13.41% total return.³You can find more of the Fund’s performance data in the Performance Summary beginning on page 6.

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

Investment Strategy

The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ EM Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the index of 95% or better. A figure of 100% would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the index as closely as possible. However, under various circumstances, it may not be possible or practicable to purchase all of the component securities in their respective weightings in the index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the index, but may not track the index with the same degree of accuracy as would an investment vehicle replicating the entire index. The Fund’s portfolio is reconstituted semiannually following the semiannual reconstitution of the index.

1. The LibertyQ EM Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI EM Index using a method-
ology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EM Index is a free float-adjusted market capitalization index
that is designed to measure the equity market performance of emerging markets.
2. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the
NAV of the Fund is used as a proxy for the market price to calculate market returns.
3. Source: Factset.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or
sales charges. One cannot invest directly in an index.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI
begins on page 24.

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FRANKLIN LIBERTYQ EMERGING MARKETS ETF


Top 10 Countries
9/30/16
	% of Total
	Net Assets
South Korea	16.0	%
Taiwan	14.5	%
India	10.5	%
China	9.4	%
Russia	8.9	%
Brazil	7.5	%
South Africa	6.6	%
Indonesia	4.7	%
Malaysia	4.4	%
Mexico	3.3	%

Manager’s Discussion

During the period since inception on June 1, 2016, through September 30, 2016, a small part of the Fund’s underperfor-mance relative to the MSCI EM Index (Net Returns) was attributable to the four investment-style factors that the investment strategy targets, namely quality, value, momentum and low volatility. These factors accounted for almost three-fourths of the Fund’s active risk, when measured on a prospective tracking-error basis, and over time we expect them to drive the bulk of the Fund’s performance. The main impact on returns during the reporting period came from security-specific positions.

The most significant factor influencing relative performance during the review period was the defensive nature of the Fund’s holdings, as the Fund’s overall sensitivity to the direction of broad market moves (i.e., beta) was notably lower than that of the MSCI EM Index (Net Returns). The Fund had on average about nine-tenths the sensitivity to the overall direction of the market and, as a result, lagged the sharp market rally that occurred during the period, as funds flowed into emerging markets and ample liquidity drove stock prices higher. This defensive characteristic of the Fund reflected the factor that identifies stocks with lower-than-average volatility, as well as the influence of the other elements of our multi-factor approach.

Among other drivers of relative performance, the stocks that the Fund selected with noticeably higher dividend yields than the market boosted returns during the period. This metric is a key element of our value factor. Value includes measures of price-to-earnings ratios and makes up three-tenths of the overall multi-factor score that drives portfolio construction. The Fund had a pronounced tilt toward stocks with higher


Top 10 Sectors/Industries
9/30/16
	% of Total
	Net Assets
Wireless Telecommunication Services	10.6	%
Diversified Financial Services	9.3	%
Oil, Gas & Consumable Fuels	7.8	%
Banks	6.6	%
Semiconductors & Semiconductor Equipment	5.1	%
Technology Hardware, Storage & Peripherals	4.7	%
Diversified Telecommunication Services	4.0	%
Automobiles	3.6	%
Food & Staples Retailing	3.6	%
Electric Utilities	3.1	%

return on equity, as part of the quality factor, which accounts for half of the overall multi-factor score. The quality factor had limited impact on relative performance during the period, but the Fund benefited modestly from exposure to stocks that exhibited positive price momentum.

The aggregate characteristics of the Fund reflect the four attributes that comprise our multi-factor approach to investing. The Fund is designed to be less volatile than the broader equity market, with modeled risk notably lower than that of the MSCI EM Index (Net Returns). The Fund’s holdings at period-end had a higher dividend yield overall, and they represented companies that have historically generated a greater return on equity than companies in the MSCI EM Index (Net Returns). In addition, they traded at price-to-earnings multiples that were somewhat cheaper than those in the MSCI EM Index (Net Returns). During the period under review, these factors were not the primary drivers of relative performance, as the market seemed focused on the likely timing of the next move for U.S. interest rates and the efficacy of unconventional monetary policy tools.

The Fund’s exposure to sectors and industries reflects the indirect influence of our multi-factor investment approach, rather than any explicit preferences for particular industries. However, overall industry exposures detracted from the Fund’s relative results during the reporting period. The Fund held a notable underweighting in the Internet software and services industry in the information technology sector, which detracted from performance, and a smaller overweighting in the telecommunication services sector, which was also a drag on returns. Conversely, a significant underweighting in banks in the financials sector made the largest contribution to sector allocation relative performance. Smaller relative

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allocation exposures, including underweighted positions in the capital markets industry in the financials sector, and in the media industry in the consumer discretionary sector, also contributed to relative performance during the period.

The Fund’s country exposures also reflect the indirect influence of our multi-factor investment approach, rather than any explicit preferences for particular markets. During the reporting period, overall country exposures modestly detracted from relative performance. The Fund held a significant underweighting in China, which was a large detractor from relative performance. China was among the strongest markets during the reporting period, helped by further financial market reform, notably the confirmation of a new “Shenzhen-Hong Kong Link” to open up the domestic equity market. Small country exposures, including an underweighted position in Brazil and an overweighted position in Turkey, were modest drags on performance. Offsetting these negative effects to some extent were overweighted positions in Russia and India. We manage the Fund against an unhedged index and accept the currency exposures that arise from our stock holdings. During the period, currency fluctuations contributed to relative return, with the underweighting in China-based companies a major contributor.

Certain individual stocks such as Tencent Holdings⁴and Alibaba Group⁴were notable detractors from the Fund’s relative results, in both cases due to a lack of exposure as the stocks performed strongly. In contrast, Largan Precision made the largest contribution to performance, with SK Hynix making a smaller contribution. In aggregate, individual securities detracted notably from performance, particularly among large-capitalization stocks. However, the overall impact was less severe when viewed in combination with the currency contribution discussed above.

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


Top 10 Holdings
9/30/16
Company	% of Total
*Sector/Industry, Country*	Net Assets
Wisdomtree India Earnings ETF	4.8	%
Diversified Financial Services, India
iShares MSCI India ETF	4.5	%
Diversified Financial Services, India
SK Hynix Inc.	1.4	%
Semiconductors & Semiconductor Equipment,
South Korea
Largan Precision Co. Ltd.	1.4	%
Electronic Equipment, Instruments & Components,
Taiwan
Chunghwa Telecom Co. Ltd.	1.3	%
Diversified Telecommunication Services, Taiwan
Taiwan Semiconductor Manufacturing Co. Ltd.	1.2	%
Semiconductors & Semiconductor Equipment, Taiwan
Rosneft PJSC	1.2	%
Oil, Gas & Consumable Fuels, Russia
Hyundai Mobis Co. Ltd.	1.2	%
Auto Components, South Korea
AAC Technologies Holdings Inc.	1.2	%
Electronic Equipment, Instruments & Components,
China
Ambev SA	1.1	%
Beverages, Brazil

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2016, the end of the reporting period. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

Dina Ting is Vice President and Senior Portfolio Manager of the Global ETFs Group. She is responsible for managing the strategic beta ETFs and helping to bring a new suite of ETFs to the market. Prior to joining Franklin Templeton in 2015, Ms. Ting spent almost 10 years at BlackRock, where she led the Institutional Emerging Markets team that managed more than 70 global equity portfolios for clients worldwide. She also managed a multitude of iShares ETFs covering strategic beta, global real estate, sectors and emerging market strategies. Ms. Ting received an M.S. in Management Science and Engineering from Stanford University and a B.S. in Industrial Engineering from Purdue University. She is a Chartered Financial Analyst (CFA) charterholder.

CFA^®is a trademark owned by CFA Institute.
4. No longer held by period-end.
See www.franklintempletondatasources.com for additional data provider information.

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FRANKLIN LIBERTYQ EMERGING MARKETS ETF

Performance Summary as of September 30, 2016

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

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.

Performance as of 9/30/16¹

Cumulative Total Return²

Average Annual Total Return²

Based on

Total Annual Operating Expenses³

NAV⁴

market price⁵

NAV⁴

market price⁵

(with waiver)

(without waiver)

0.55

0.83

Since Inception (6/1/16)

+9.04

+10.13

+9.04

+10.13

All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic
instability and political developments. Investments in developing markets involve heightened risks related to the same factors, in addition to those associated
with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. The Fund
is designed for the aggressive portion of a well-diversified portfolio. The Fund’s prospectus also includes a description of the main investment risks.

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

1. The Fund has an expense reduction contractually guaranteed through 7/31/17. The Fund also has a fee waiver associated with any investments it makes in a Franklin
Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through its current fiscal year-end. Fund investment results reflect the expense reduc-
tion and fee waiver; without these reductions, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has
not been annualized.
3. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Financial Highlights in this report. In periods of market volatil-
ity, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
4. Assumes reinvestment of distributions based on net asset value.
5. Assumes reinvestment of distributions based on market price.

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Your Fund’s Expenses

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

Actual Fund Expenses

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

Hypothetical Example for Comparison with Other Funds

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

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


					Actual				Hypothetical
			(actual return after expenses)				(5% annual return before expenses)
					Expenses				Expenses
	Beginning		Ending		Paid During		Ending		Paid During
	Account		Account		Period		Account		Period	Net Annualized
	Value 4/1/16		Value 9/30/16		6/1/16–9/30/16^1,2		Value 9/30/16		4/1/16–9/30/16^1,2	Expense Ratio²
$	1,000	$	1,090.80	$	1.91	$	1,022.43	$	2.80	0.55	%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value
over the period indicated, and then multiplied by 184/365 to reflect the one-half year period for Hypothetical expenses. For Actual expenses, the multiplier is 121/365 to reflect
the number of days since inception.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

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Franklin LibertyQ Global Dividend ETF

This semiannual report for Franklin LibertyQ Global Dividend ETF covers the period since the Fund’s inception on June 1, 2016, through September 30, 2016.

Your Fund’s Goal and Main Investments

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

Performance Overview

For the period since inception on June 1, 2016, through September 30, 2016, the Fund posted cumulative total returns of +3.78% based on market price and +3.34% based on net asset value (NAV).²In comparison, the LibertyQ Global Dividend Index delivered a +3.38% total return for the same period, while the MSCI AC World ex-REITs Index (Net Returns) produced a +4.77% total return.³You can find more of the Fund’s performance data in the Performance Summary beginning on page 11.

Investment Strategy

The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Dividend Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the index of 95% or better. A figure of 100% would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the index as closely as possible. However, under various circumstances, it may not be possible or practicable to purchase all of the component securities in their respective weightings in the index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the index, but may not track the index with the same degree of accuracy as would an investment vehicle replicating the entire index. The Fund’s portfolio is reconstituted semiannually following the semian-nual reconstitution of the index.

1. The LibertyQ Global Dividend Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI AC World ex-
REITs Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI AC World ex-REITs Index is a
free float-adjusted market capitalization index that is designed to measure the equity market performance of developed and emerging markets, excluding REIT securities.
2. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the
NAV of the Fund is used as a proxy for the market price to calculate market returns.
3. Source: Factset.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or
sales charges. One cannot invest directly in an index.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI
begins on page 30.

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Top 10 Countries
9/30/16
	% of Total
	Net Assets
United States	32.3	%
United Kingdom	16.4	%
Australia	12.7	%
Canada	10.6	%
Switzerland	3.9	%
Brazil	3.8	%
Japan	3.5	%
Sweden	3.4	%
China	2.4	%
France	2.0	%

Manager’s Discussion

During the period since inception on June 1, 2016, through September 30, 2016, the Fund’s underperformance relative to the MSCI AC World ex-REITs Index (Net Returns) was attributable to the main attributes that the investment strategy targets, namely quality and dividend income. These attributes also accounted for almost two-thirds of the Fund’s active risk, when measured on a prospective tracking-error basis. The positive and negative effects on the Fund’s relative performance from country and industry exposures resulting from our investment approach largely offset each other. The remaining negative impact on returns came from security-specific positions, although the effect was smaller than the elements noted above.

The most significant attribute detracting from relative performance during the review period was the defensive nature of the Fund’s holdings, as the Fund’s overall sensitivity to the direction of broad market moves (i.e., beta) was somewhat lower than that of the MSCI AC World ex-REITs Index (Net Returns). The Fund’s lower sensitivity to the overall direction of the market meant that it lagged the broad market rally that occurred during the period, as ample liquidity drove stock prices higher.

The Fund is designed to be less volatile than the broader equity market, with modeled risk somewhat below that of the


Top 10 Sectors/Industries
9/30/16
	% of Total
	Net Assets
Banks	17.2	%
Pharmaceuticals	13.3	%
Tobacco	5.9	%
Household Products	5.7	%
Diversified Telecommunication Services	5.5	%
Food & Staples Retailing	5.4	%
Personal Products	4.1	%
Semiconductors & Semiconductor Equipment	3.8	%
Wireless Telecommunication Services	3.1	%
Aerospace & Defense	2.9	%

MSCI AC World ex-REITs Index (Net Returns). The Fund’s holdings at period-end had a higher dividend yield overall, and they represented companies that have historically generated a much greater return on equity than companies in the MSCI AC World ex-REITs Index (Net Returns). During the period under review, these factors were not the primary drivers of relative performance, as the market seemed focused on the likely timing of the next move for U.S. interest rates and the efficacy of unconventional global monetary policy tools.

The Fund’s exposure to sectors and industries reflects the indirect influence of our investment approach, rather than any explicit preferences for particular industries. However, overall industry exposures detracted significantly from the Fund’s relative results during the reporting period. The Fund held an underweighting in the Internet software and services industry in the information technology sector, which was the largest drag on performance, while an overweighting in the telecommunication services sector was also a detractor. A notable overweighting in the household and personal goods industry in the consumer discretionary sector enhanced returns, while a modest underweighting to the insurance industry in the financials sector also contributed to performance.

The Fund’s country exposures also reflect the indirect influence of our investment approach, rather than any explicit preferences for particular markets. During the reporting period, overall country exposures contributed meaningfully to returns. The Fund held an underweighting in Japan, which boosted performance as this market was out of favor during the period. A modest overweighted position in Brazil made a meaningful contribution to relative performance, as markets

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FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF

reacted positively to the impeachment of President Dilma Rousseff, which may relieve a period of policy gridlock and allow interest-rate cuts to help lift Brazil out of its worst recession in a century. Offsetting these positive effects, an underweighted position in U.S. stocks was a drag on performance. Other country allocations, including an overweighting in the Netherlands and an underweighting in India, were also modest detractors. We manage the Fund against an unhedged index and accept the currency exposures that arise from our stock holdings. During the period under review, currency fluctuations detracted somewhat from the Fund’s relative return, with an underweighting in Japanese companies a notable drag as the Japanese yen appreciated. Elsewhere, the beneficial impact of an overweighting in U.K. stocks was more than offset by the negative currency effect of the British pound declining following the country’s referendum vote to leave the European Union.

Certain individual stocks such as Bristol Myers Squibb and BT Group were notable detractors from the Fund’s relative results, while China Construction Bank and British American Tobacco made the largest contributions to performance. In aggregate, individual securities detracted from performance modestly, particularly large-capitalization stocks. However, in combination with the currency, industry and country factors discussed above, the overall impact was modest. The Fund’s investment strategy of tilting toward companies with the traits of high and persistent dividend income along with exposure to the quality style factor were the primary determinants of relative performance during the reporting period.

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

Graphic -- Picture -- etf_s1116x11x1.jpg


Top 10 Holdings
9/30/16
Company	% of Total
*Sector/Industry, Country*	Net Assets
BHP Billiton Ltd.	2.4	%
Metals & Mining, Australia
Intel Corp.	2.4	%
Semiconductors & Semiconductor Equipment,
United States
China Construction Bank Corp.	2.4	%
Banks, China
Ambev SA	2.2	%
Beverages, Brazil
The Procter & Gamble Co.	2.1	%
Household Products, United States
Bank of Nova Scotia	2.1	%
Banks, Canada
Eli Lilly & Co.	2.1	%
Pharmaceuticals, United States
British American Tobacco PLC	2.1	%
Tobacco, United Kingdom
Unilever PLC	2.1	%
Personal Products, United Kingdom
Unilever NV, IDR	2.0	%
Personal Products, United Kingdom

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FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF

Performance Summary as of September 30, 2016

Performance as of 9/30/16¹

Cumulative Total Return²

Average Annual Total Return²

Based on

Total Annual Operating Expenses³

NAV⁴

market price⁵

NAV⁴

market price⁵

(with waiver)

(without waiver)

0.45

0.70

Since Inception (6/1/16)

+3.34

+3.78

+3.34

+3.78

30-Day Standardized Yield⁷

Distribution Rate⁶

(with waiver)

(without waiver)

0.82

2.73

2.17

All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic
instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent the Fund focuses on
particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such
areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Companies that have historically paid regular
dividends to shareholders may decrease or eliminate dividend payments in the future. A decrease in dividend payments by an issuer may result in a decrease in
the value of the issuer’s stock and less available income for the Fund. The Fund’s prospectus also includes a description of the main investment risks.

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

1. The Fund has an expense reduction contractually guaranteed through 7/31/17. The Fund also has a fee waiver associated with any investments it makes in a Franklin
Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through its current fiscal year-end. Fund investment results reflect the expense reduc-
tion and fee waiver; without these reductions, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has
not been annualized.
3. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Financial Highlights in this report. In periods of market volatil-
ity, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
4. Assumes reinvestment of distributions based on net asset value.
5. Assumes reinvestment of distributions based on market price.
6. Distribution rate is based on the sum of the past four quarterly dividends, if any, and the NAV per share of $26.07 as of September 30, 2016.
7. The Fund’s 30-day standardized yield is calculated over a trailing 30-day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not
equal the Fund’s actual income distribution rate, which reflects the Fund’s past dividends paid to shareholders.

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Semiannual Report 11

FRANKLIN LIBERTYQ GLOBAL DIVIDEND ETF

Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


					Actual				Hypothetical
			(actual return after expenses)				(5% annual return before expenses)
					Expenses				Expenses
	Beginning		Ending		Paid During		Ending		Paid During
	Account		Account		Period		Account		Period	Net Annualized
	Value 4/1/16		Value 9/30/16		6/1/16–9/30/16^1,2		Value 9/30/16		4/1/16–9/30/16^1,2	Expense Ratio²
$	1,000	$	1,033.40	$	1.52	$	1,022.94	$	2.29	0.45	%

12 Semiannual Report

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Franklin LibertyQ Global Equity ETF

This semiannual report for Franklin LibertyQ Global Equity ETF covers the period since the Fund’s inception on June 1, 2016, through September 30, 2016.

Your Fund’s Goal and Main Investments

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

Performance Overview

For the period since inception on June 1, 2016, through September 30, 2016, the Fund posted cumulative total returns of +5.37% based on market price and +4.50% based on net asset value (NAV).²In comparison, the LibertyQ Global Equity Index delivered a +4.41% total return for the same period, while the MSCI ACWI (Net Returns) produced a +4.76% total return.³You can find more of the Fund’s performance data in the Performance Summary beginning on page 16.

Graphic -- Picture -- etf_s1116x14x1.jpg

Investment Strategy

The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ Global Equity Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the index of 95% or better. A figure of 100% would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the index as closely as possible. However, under various circumstances, it may not be possible or practicable to purchase all of the component securities in their respective weightings in the index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the index, but may not track the index with the same degree of accuracy as would an investment vehicle replicating the entire index. The Fund’s portfolio is reconstituted semiannually following the semian-nual reconstitution of the index.

1. The LibertyQ Global Equity Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI ACWI Index
using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI ACWI Index is a free float-adjusted market
capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.
2. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the
NAV of the Fund is used as a proxy for the market price to calculate market returns.
3. Source: Factset.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or
sales charges. One cannot invest directly in an index.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI
begins on page 34.

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Semiannual Report

FRANKLIN LIBERTYQ GLOBAL EQUITY ETF


Top 10 Countries
9/30/16
	% of Total
	Net Assets
United States	54.6	%
United Kingdom	8.9	%
Japan	4.8	%
Australia	3.7	%
China	3.0	%
Taiwan	2.7	%
South Korea	2.7	%
Canada	2.6	%
Switzerland	2.2	%
India	1.5	%

Manager’s Discussion

During the period since inception on June 1, 2016, through September 30, 2016, the Fund’s modest underperformance relative to the MSCI ACWI (Net Returns) was attributable to the four investment-style factors that the investment strategy targets, namely quality, value, momentum and low volatility. These factors also accounted for more than two-thirds of the Fund’s active risk, when measured on a prospective tracking-error basis. An offsetting contribution to relative returns came from country and industry exposures that were indirect consequences of our multi-factor investment approach. Security-specific positions were a much smaller drag on performance.

The most significant factor influencing relative performance during the review period was the defensive nature of the Fund’s holdings, as the Fund’s overall sensitivity to the direction of broad market moves (i.e., beta) was significantly lower than that of the MSCI ACWI (Net Returns). The Fund had on average only eight-tenths the sensitivity to the overall direction of the market and, as a result, lagged the broad market rally that occurred during the period, as ample liquidity drove stock prices higher. This defensive characteristic of the Fund reflected the factor that identifies stocks with lower-than-average volatility, but also the influence of the other elements of our multi-factor approach.

Among other drivers of relative performance, the stocks that the Fund selected with noticeably lower variability of earnings than the broad market boosted returns during the period. This metric is a key element of our quality factor. Quality includes measures of return on equity, return on assets and financial leverage, and quality makes up half of the overall multi-factor score that drives portfolio construction. The Fund’s relative


Top 10 Sectors/Industries
9/30/16
	% of Total
	Net Assets
Pharmaceuticals	7.4	%
Semiconductors & Semiconductor Equipment	5.9	%
Diversified Telecommunication Services	4.8	%
IT Services	4.8	%
Specialty Retail	4.7	%
Tobacco	4.1	%
Oil, Gas & Consumable Fuels	3.6	%
Household Products	3.5	%
Technology Hardware, Storage & Peripherals	3.5	%
Food & Staples Retailing	3.4	%

performance was hampered somewhat by the value tilt reflected in its holdings, but it benefited modestly from exposure to stocks that exhibited positive price momentum.

The aggregate characteristics of the Fund reflect the four attributes that comprise our multi-factor approach to investing. The Fund is designed to be less volatile than the broader equity market, with modeled risk about four-fifths that of the MSCI ACWI (Net Returns). The Fund’s holdings at period-end had a higher dividend yield overall, and they represented companies that have historically generated a much greater return on equity than companies in the MSCI ACWI (Net Returns). In addition, they traded at price-to-earnings multiples that were slightly cheaper than those of the MSCI ACWI (Net Returns). During the period under review, these factors were not the primary drivers of relative performance, as the market seemed focused on the likely timing of the next move for U.S. interest rates and the efficacy of unconventional monetary policy tools.

The Fund’s exposure to sectors and industries reflects the indirect influence of our multi-factor investment approach, rather than any explicit preferences for particular industries. During the period, overall industry exposures contributed to returns. The Fund held a notable underweighting in the broad financials sector, which significantly enhanced relative returns, while a modest overweighting to the semiconductors industry in the information technology sector also contributed to performance. Conversely, an underweighting to the Internet software and services industry in information technology was the largest detractor from performance, while an overweighting in the telecommunication services sector was also a drag on returns.

14 Semiannual Report

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FRANKLIN LIBERTQ GLOBAL EQUITY ETF

The Fund’s country exposures also reflect the indirect influence of our multi-factor investment approach, rather than any explicit preferences for particular markets. During the reporting period, overall country exposures contributed meaningfully to returns. The Fund held an underweighting in Japan, which boosted performance as this market was out of favor during the period. Similarly, underweighted positions in core eurozone markets (particularly France and Germany) made a meaningful contribution to performance. Offsetting these positive effects to a minor extent, a small overweighted position in Denmark was a drag on performance. We manage the Fund against an unhedged index and accept the currency exposures that arise from our stock holdings. During the period, currency fluctuations detracted modestly from relative return, with an underweighting in Japanese companies a notable drag as the Japanese yen appreciated.

Certain individual stocks such as Novo Nordisk and HSBC Holdings⁴were notable detractors from the Fund’s relative results, whereas Astra Zeneca made the largest contribution to performance, with British American Tobacco making a somewhat smaller contribution. In aggregate, individual securities detracted from performance modestly, particularly large-capitalization stocks.

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

Graphic -- Picture -- etf_s1116x16x1.jpg


Top 10 Holdings
9/30/16
Company	% of Total
*Sector/Industry, Country*	Net Assets
iShares MSCI India ETF	1.5	%
Diversified Financial Services, India
Intel Corp.	1.2	%
Semiconductors & Semiconductor Equipment,
United States
QUALCOMM Inc.	1.1	%
Semiconductors & Semiconductor Equipment,
United States
Apple Inc.	1.1	%
Technology Hardware, Storage & Peripherals,
United States
Taiwan Semiconductor Manufacturing Co. Ltd.	1.1	%
Semiconductors & Semiconductor Equipment, Taiwan
Samsung Electronics Co. Ltd.	1.1	%
Technology Hardware, Storage & Peripherals,
South Korea
Microsoft Corp.	1.1	%
Software, United States
Cisco Systems Inc.	1.1	%
Communications Equipment, United States
Visa Inc.	1.0	%
IT Services, United States
The Procter & Gamble Co.	1.0	%
Household Products, United States

4. No longer held by period-end.
See www.franklintempletondatasources.com for additional data provider information.

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Semiannual Report 15

FRANKLIN LIBERTYQ GLOBAL EQUITY ETF

Performance Summary as of September 30, 2016

Performance as of 9/30/16¹

Cumulative Total Return²

Average Annual Total Return²

Based on

Total Annual Operating Expenses³

NAV⁴

market price⁵

NAV⁴

market price⁵

(with waiver)

(without waiver)

0.35

0.60

Since Inception (6/1/16)

+4.50

+5.37

+4.50

+5.37

All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic
instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent the Fund focuses on
particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such
areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. Performance of the Fund may vary significantly
from the performance of an index, as a result of transaction costs, expenses and other factors. The Fund’s prospectus also includes a description of the main
investment risks.

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

1. The Fund has an expense reduction contractually guaranteed through 7/31/17. The Fund also has a fee waiver associated with any investments it makes in a Franklin
Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through its current fiscal year-end. Fund investment results reflect the expense reduc-
tion and fee waiver; without these reductions, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has
not been annualized.
3. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Financial Highlights in this report. In periods of market volatil-
ity, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
4. Assumes reinvestment of distributions based on net asset value.
5. Assumes reinvestment of distributions based on market price.

16 Semiannual Report

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FRANKLIN LIBERTYQ GLOBAL EQUITY ETF

Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


					Actual				Hypothetical
			(actual return after expenses)				(5% annual return before expenses)
					Expenses				Expenses
	Beginning		Ending		Paid During		Ending		Paid During
	Account		Account		Period		Account		Period	Net Annualized
	Value 4/1/16		Value 9/30/16		6/1/16–9/30/16^1,2		Value 9/30/16		4/1/16–9/30/16^1,2	Expense Ratio²
$	1,000	$	1,045.00	$	1.19	$	1,023.44	$	1.79	0.35	%

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Semiannual Report 17

Franklin LibertyQ International Equity Hedged ETF

This semiannual report for Franklin LibertyQ International Equity Hedged ETF covers the period since the Fund’s inception on June 1, 2016, through September 30, 2016.

Your Fund’s Goal and Main Investments

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

What is a currency forward contract?

A currency forward contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency in exchange for another currency at a specific exchange rate on a future date.

Performance Overview

For the period since inception on June 1, 2016, through September 30, 2016, the Fund posted cumulative total returns of +2.04% based on market price and +1.41% based on net asset value (NAV).²In comparison, LibertyQ International Equity Hedged Index delivered a +1.64% total return

Graphic -- Picture -- etf_s1116x19x1.jpg

for the same period, while the MSCI EAFE 100% Hedged to USD Index (Net Returns) produced a +3.05% total return.³You can find more of the Fund’s performance data in the Performance Summary beginning on page 21.

Investment Strategy

The Fund, using a passive or indexing investment approach, seeks investment results that closely correspond, before fees and expenses, to the performance of the LibertyQ International Equity Hedged Index. The investment manager seeks to achieve, over time, a correlation between the Fund’s performance, before fees and expenses, and that of the index of 95% or better. A figure of 100% would indicate perfect correlation. The Fund’s intention is to replicate the component securities of the index as closely as possible. However, under various circumstances, it may not be possible or

1. The LibertyQ International Equity Hedged Index is a systematic, rules-based proprietary index that is owned and calculated by MSCI Inc. (MSCI). It is based on the MSCI
EAFE Index using a methodology developed with Franklin Templeton to reflect Franklin Templeton’s desired investment strategy. The MSCI EAFE Index is a free float-
adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada.
2. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (6/3/16), the
NAV of the Fund is used as a proxy for the market price to calculate market returns.
3. Source: Factset.
The index is unmanaged and includes reinvestment of any income or distributions (after the deduction of certain withholding taxes). It does not reflect any fees, expenses or
sales charges. One cannot invest directly in an index.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI
begins on page 48.

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FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF


Top 10 Countries
9/30/16
	% of Total
	Net Assets
United Kingdom	26.7	%
Japan	18.9	%
Australia	14.5	%
Switzerland	9.2	%
Spain	4.7	%
Hong Kong	4.6	%
Germany	3.6	%
France	2.9	%
Denmark	2.7	%
Singapore	2.5	%

practicable to purchase all of the component securities in their respective weightings in the index. In these circumstances, the Fund may use a “representative sampling” strategy whereby the Fund would invest in what it believes to be a representative sample of the component securities of the index, but may not track the index with the same degree of accuracy as would an investment vehicle replicating the entire index. The Fund’s portfolio is reconstituted semiannu-ally following the semiannual reconstitution of the index.

Manager’s Discussion

During the period since inception on June 1, 2016, through September 30, 2016, almost all of the Fund’s underperfor-mance relative to the MSCI EAFE 100% Hedged to USD Index (Net Returns) was attributable to the four investment-style factors that the investment strategy targets, namely quality, value, momentum and low volatility. These factors also accounted for almost two-thirds of the Fund’s active risk, when measured on a prospective tracking-error basis. The remaining negative impact on returns came from security-specific positions, although the effect was much less than the effect of the factors noted above.

The most significant factor detracting from relative performance during the review period was the defensive nature of the Fund’s holdings, as the Fund’s overall sensitivity to the direction of broad market moves (i.e., beta) was significantly lower than that of the MSCI EAFE 100% Hedged to USD Index (Net Returns). The Fund had on average about three-fourths the sensitivity to the overall direction of the market and, as a result, lagged the broad market rally that occurred during the period, as ample liquidity drove stock prices higher. This defensive characteristic of the Fund reflected the


Top 10 Sectors/Industries
9/30/16
	% of Total
	Net Assets
Pharmaceuticals	12.0	%
Insurance	8.2	%
Diversified Telecommunication Services	6.8	%
Tobacco	5.5	%
Personal Products	5.0	%
Food & Staples Retailing	4.1	%
Banks	4.1	%
Equity Real Estate Investment Trusts (REITs)	3.7	%
Specialty Retail	3.5	%
Wireless Telecommunication Services	3.4	%

factor that identifies stocks with lower-than-average volatility, as well as the influence of the other elements of our multi-factor approach.

The aggregate characteristics of the Fund reflect the four attributes that comprise our multi-factor approach to investing. The Fund is designed to be less volatile than the broader equity market, with modeled risk less than four-fifths that of the MSCI EAFE 100% Hedged to USD Index (Net Returns). The Fund’s holdings at period-end had a higher dividend yield overall, and they represented companies that have historically generated a greater return on equity than the MSCI EAFE 100% Hedged to USD Index (Net Returns). In addition, they traded at price-to-earnings multiples that were slightly cheaper than the MSCI EAFE 100% Hedged to USD Index (Net Returns). During the period under review, these factors were not the primary drivers of relative performance, as the market seemed focused on the likely timing of the next move for U.S. interest rates and the efficacy of unconventional global monetary policy tools.

The Fund’s exposure to sectors and industries reflects the indirect influence of our multi-factor investment approach, rather than any explicit preferences for particular industries.

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Semiannual Report 19

FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF

However, overall industry exposures detracted from the Fund’s relative results during the reporting period. The Fund held a notable overweighting in the telecommunication services sector, which detracted from performance, and a smaller overweighting in the insurance industry in the financials sector, which was also a drag on returns. Conversely, a significant underweighting in banks in the financials sector was the largest contributor to relative performance. Smaller relative allocation exposures, including an underweighting in the oil and gas industry in the energy sector and an overweighting in the household and personal products industry in the consumer discretionary sector, also contributed during the period.

The Fund’s country exposures also reflect the indirect influence of our multi-factor investment approach, rather than any explicit preferences for particular markets. During the reporting period, overall country exposures contributed to returns. The Fund held a significant underweighting in Japan, which boosted performance as this market was out of favor during the period. Similarly, underweighted positions in core eurozone markets (particularly France and Germany) made a meaningful contribution to relative performance. Offsetting these positive effects to a minor extent, small overweight positions in Denmark and Spain were a drag on performance. We manage the Fund against a currency-hedged index, and seek to hedge all stock holdings to mitigate the impact of currency fluctuations on the Fund’s returns.

Certain individual stocks such as HSBC Holdings⁴and Novo Nordisk were notable detractors from the Fund’s relative results, while Astra Zeneca made the largest contribution to performance, with British American Tobacco making a smaller contribution. In aggregate, individual securities detracted from performance, particularly large-capitalization stocks. However, in combination with the industry and country factors discussed above, the total impact was modest. The Fund’s targeted risk factors were the primary determinants of relative performance during the reporting period.

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

Graphic -- Picture -- etf_s1116x21x1.jpg


Top 10 Holdings
9/30/16
Company	% of Total
*Sector/Industry, Country*	Net Assets
AstraZeneca PLC	2.3	%
Pharmaceuticals, United Kingdom
Nestle SA	2.1	%
Food Products, Switzerland
British American Tobacco PLC	2.1	%
Tobacco, United Kingdom
Unilever PLC	2.1	%
Personal Products, United Kingdom
Unilever NV, IDR	2.1	%
Personal Products, United Kingdom
Westpac Banking Corp.	2.0	%
Banks, Australia
KDDI Corp.	2.0	%
Wireless Telecommunication Services, Japan
GlaxoSmithKline PLC	2.0	%
Pharmaceuticals, United Kingdom
Roche Holding AG	2.0	%
Pharmaceuticals, Switzerland
Reckitt Benckiser Group PLC	1.9	%
Household Products, United Kingdom

4. No longer held by period-end.
See www.franklintempletondatasources.com for additional data provider information.

20 Semiannual Report

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FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF

Performance Summary as of September 30, 2016

Performance as of 9/30/16¹

Cumulative Total Return²

Average Annual Total Return²

Based on

Total Annual Operating Expenses³

NAV⁴

market price⁵

NAV⁴

market price⁵

(with waiver)

(without waiver)

0.40

0.65

Since Inception (6/1/16)

+1.41

+2.04

+1.41

+2.04

All investments involve risks, including possible loss of principal. Special risks are associated with foreign investing, including currency fluctuations, economic
instability and political developments; investments in emerging markets involve heightened risks related to the same factors. To the extent the Fund focuses on
particular countries, regions, industries, sectors or types of investment from time to time, it may be subject to greater risks of adverse developments in such
areas of focus than a fund that invests in a wider variety of countries, regions, industries, sectors or investments. The Fund will attempt to hedge the currency
exposure of non-U.S. dollar denominated securities held in its portfolio by investing in foreign currency forward contracts. Foreign currency forward contracts
do not eliminate movements in the value of non-U.S. currencies and securities but rather allow the Fund to establish a fixed rate of exchange for a future point in
time. Investments in derivatives involve costs and create economic leverage, which may result in significant volatility and cause the Fund to participate in losses
(as well as gains) that significantly exceed the Fund’s initial investment. Currency management strategies could result in losses to the Fund if currencies do not
perform as the investment manager expects. The Fund’s prospectus also includes a description of the main investment risks.

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

1. The Fund has an expense reduction contractually guaranteed through 7/31/17. The Fund also has a fee waiver associated with any investments it makes in a Franklin
Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through its current fiscal year-end. Fund investment results reflect the expense reduc-
tion and fee waiver; without these reductions, the results would have been lower.
2. Total return calculations represent the cumulative and average annual changes in value of an investment over the period indicated. Return for less than one year, if any, has
not been annualized.
3. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Financial Highlights in this report. In periods of market volatil-
ity, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
4. Assumes reinvestment of distributions based on net asset value.
5. Assumes reinvestment of distributions based on market price.

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Semiannual Report 21

FRANKLIN LIBERTYQ INTERNATIONAL EQUITY HEDGED ETF

Your Fund’s Expenses

Actual Fund Expenses

Hypothetical Example for Comparison with Other Funds


					Actual				Hypothetical
			(actual return after expenses)				(5% annual return before expenses)
					Expenses				Expenses
	Beginning		Ending		Paid During		Ending		Paid During
	Account		Account		Period		Account		Period	Net Annualized
	Value 4/1/16		Value 9/30/16		6/1/16–9/30/16^1,2		Value 9/30/16		4/1/16–9/30/16^1,2	Expense Ratio²
$	1,000	$	1,014.10	$	1.34	$	1,023.19	$	2.04	0.40	%

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		FRANKLIN TEMPLETON ETF TRUST


Financial Highlights
Franklin LibertyQ Emerging Markets ETF
		Period Ended
		September 30, 2016
		(unaudited)^a
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period	$	25.66
Income from investment operations^b:
Net investment income^c		0.39
Net realized and unrealized gains (losses)		1.93
Total from investment operations		2.32
Net asset value, end of period	$	27.98

Total return^d		9.04	%

Ratios to average net assets^e
Expenses before waiver and payments by affiliates		1.12	%
Expenses net of waiver and payments by affiliates		0.55	%
Net investment income		4.33	%

Supplemental data
Net assets, end of period (000’s)	$	61,564
Portfolio turnover rate^f		—%

^aFor the period June 1, 2016 (commencement of operations) to September 30, 2016.
^bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases
of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
^cBased on average daily shares outstanding.
^dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset on the last day of the period.
^eRatios are annualized for periods less than one year.
^fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

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The accompanying notes are an integral part of these financial statements. | Semiannual Report 23


FRANKLIN TEMPLETON ETF TRUST




Statement of Investments, September 30, 2016 (unaudited)

Franklin LibertyQ Emerging Markets ETF

	Industry	Shares		Value

Common Stocks 87.3%
Brazil 6.8%
AES Tiete Energia SA	Independent Power and Renewable Electricity Producers	11,402	$	56,188
Ambev SA	Beverages	115,238		703,023
Banco do Brasil S.A	Banks	88,379		620,232
Banco Santander Brasil SA	Banks	15,566		105,407
BB Seguridade Participacoes SA	Insurance	70,201		645,646
CETIP SA-Mercados Organizados	Capital Markets	30,494		402,476
Cielo SA	IT Services	63,994		640,364
EDP-Energias do Brasil SA	Electric Utilities	32,196		142,505
Engie Brasil SA	Independent Power and Renewable Electricity Producers	21,741		257,638
Equatorial Energia SA	Electric Utilities	12,266		189,983
Natura Cosmeticos SA	Personal Products	21,677		208,373
Odontoprev SA	Health Care Providers & Services	38,775		154,319
Transmissora Alianca de Energia
Eletrica SA	Electric Utilities	13,206		85,280

				4,211,434

Chile 0.5%
Aguas Andinas SA, A	Water Utilities	449,796		288,373

China 9.4%
AAC Technologies Holdings Inc	Electronic Equipment, Instruments & Components	71,500		718,600
Agricultural Bank of China Ltd., H	Banks	1,321,000		565,465
Anta Sports Products Ltd	Textiles, Apparel & Luxury Goods	121,000		328,399
Belle International Holdings Ltd	Textiles, Apparel & Luxury Goods	534,000		366,284
China Everbright Bank Co. Ltd., H	Banks	287,000		133,584
China Mobile Ltd	Wireless Telecommunication Services	58,000		701,822
China Vanke Co. Ltd., H	Real Estate Management & Development	100,200		259,674
Chongqing Changan Automobile Co.
Ltd., B	Automobiles	95,100		154,986
Chongqing Rural Commercial Bank Co.
Ltd., H	Banks	206,000		126,958
Dongfeng Motor Group Co. Ltd., H	Automobiles	298,000		297,771
Great Wall Motor Co. Ltd., H	Automobiles	371,500		361,635
Guangdong Investment Ltd	Water Utilities	344,000		546,430
Huaneng Power International Inc., H	Independent Power and Renewable Electricity Producers	232,000		145,076
Jiangsu Expressway Co. Ltd., H	Transportation Infrastructure	168,000		232,204
Longfor Properties Co. Ltd	Real Estate Management & Development	129,500		198,693
Shenzhou International Group
Holdings Ltd	Textiles, Apparel & Luxury Goods	60,000		417,744
Sinopec Engineering Group Co. Ltd., H	Construction & Engineering	124,000		106,638
Sunac China Holdings Ltd	Real Estate Management & Development	149,000		107,198

				5,769,161

Czech Republic 1.0%
CEZ AS	Electric Utilities	16,079		286,604
Komercni Banka AS	Banks	6,861		237,487
O2 Czech Republic AS	Diversified Telecommunication Services	11,919		115,843

				639,934

Hong Kong 0.6%
Sino Biopharmaceutical Ltd	Pharmaceuticals	502,000		337,215

Hungary 1.3%
MOL Hungarian Oil and Gas PLC	Oil, Gas & Consumable Fuels	4,692		289,520
OTP Bank PLC	Banks	19,909		521,220

				810,740

24 Semiannual Report

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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ Emerging Markets ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
India 1.2%
HDFC Bank Ltd.DR, ADR	Banks	2,215	$	159,236
Infosys Ltd.DR, Sponsored ADR	IT Services	7,048		111,217
Wipro Ltd.DR, ADR	IT Services	45,264		439,514

				709,967

Indonesia 4.7%
Hanjaya Mandala Sampoerna Tbk PT	Tobacco	954,800		288,979
Indocement Tunggal Prakarsa Tbk PT	Construction Materials	158,600		210,843
Matahari Department Store Tbk PT	Multiline Retail	287,800		407,410
Semen Indonesia (Persero) Tbk PT	Construction Materials	295,600		228,761
Surya Citra Media Tbk PT	Media	759,200		162,881
Telekomunikasi Indonesia Persero Tbk PT	Diversified Telecommunication Services	2,080,900		687,202
Unilever Indonesia Tbk PT	Household Products	193,200		659,494
United Tractors Tbk PT	Oil, Gas & Consumable Fuels	167,300		226,895

				2,872,465

Malaysia 4.4%
Astro Malaysia Holdings Bhd	Media	169,900		112,157
Berjaya Sports Toto Bhd	Hotels, Restaurants & Leisure	118,100		94,526
British American Tobacco Malaysia Bhd	Tobacco	23,200		275,674
Digi.com Bhd	Wireless Telecommunication Services	512,000		616,554
HAP Seng Consolidated Bhd	Industrial Conglomerates	59,300		110,412
Hartalega Holdings Bhd	Health Care Equipment & Supplies	70,600		79,213
IOI Properties Group Bhd	Real Estate Management & Development	81,100		48,831
Maxis Bhd	Wireless Telecommunication Services	200,300		298,355
Petronas Chemicals Group Bhd	Chemicals	271,000		435,776
Petronas Dagangan Bhd	Oil, Gas & Consumable Fuels	26,400		150,018
Petronas Gas Bhd	Gas Utilities	64,400		340,103
Westports Holdings Bhd	Transportation Infrastructure	136,600		145,006

				2,706,625

Mexico 3.3%
Arca Continental SAB de CV	Beverages	31,435		187,390
Gentera SAB de CV	Consumer Finance	89,597		161,570
Gruma SAB de CV, B	Food Products	22,010		289,934
Grupo Aeroportuario del Pacifico SAB de CV, B	Transportation Infrastructure	37,910		360,638
Grupo Lala SAB de CV	Food Products	39,530		75,430
Kimberly-Clark de Mexico SAB de CV, A	Household Products	190,246		431,146
Wal-Mart de Mexico SAB de CV, V	Food & Staples Retailing	242,969		534,561

				2,040,669

Philippines 0.8%
Globe Telecom Inc	Wireless Telecommunication Services	3,175		133,560
PLDT Inc	Wireless Telecommunication Services	10,910		385,152

				518,712

Poland 0.7%
Energa SA	Electric Utilities	12,764		25,012
Eurocash SA	Food & Staples Retailing	5,253		58,331
PGE Polska Grupa Energetyczna SA	Electric Utilities	110,337		292,610
a Tauron Polska Energia SA	Electric Utilities	54,991		37,356

				413,309

Qatar 2.0%
Barwa Real Estate Co	Real Estate Management & Development	12,570		116,830
Doha Bank QSC	Banks	12,745		130,179
Industries Qatar QSC	Industrial Conglomerates	15,563		461,506

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Semiannual Report 25


FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Emerging Markets ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Qatar (continued)
Qatar Electricity & Water Co. QSC	Multi-Utilities	4,240	$	248,556
Qatar Insurance Co. SAQ	Insurance	12,367		301,874

				1,258,945

Russia 7.8%
Alrosa PJSC	Metals & Mining	311,915		428,120
Gazprom PAO	Oil, Gas & Consumable Fuels	238,675		508,471
LUKOIL PJSC	Oil, Gas & Consumable Fuels	13,847		671,792
b MegaFon PJSC, GDR, Reg S	Wireless Telecommunication Services	11,667		111,420
MMC Norilsk Nickel PJSC	Metals & Mining	3,888		602,437
Mobile TeleSystems PJSC, ADR	Wireless Telecommunication Services	59,165		451,429
b PhosAgro PJSC, GDR , Reg S	Chemicals	12,158		156,838
Rosneft PJSC	Oil, Gas & Consumable Fuels	134,811		735,007
Rostelecom PJSC	Diversified Telecommunication Services	83,950		104,836
Severstal PJSC	Metals & Mining	23,406		281,632
Surgutneftegas OAO	Oil, Gas & Consumable Fuels	402,862		195,514
Tatneft PAO	Oil, Gas & Consumable Fuels	110,535		563,889

				4,811,385

South Africa 6.6%
Brait SE	Capital Markets	25,235		202,743
Fortress Income Fund Ltd., A	Equity Real Estate Investment Trusts (REITs)	94,685		111,890
Life Healthcare Group Holdings Ltd	Health Care Providers & Services	101,676		280,009
Mr. Price Group Ltd	Specialty Retail	31,186		344,149
MTN Group Ltd	Wireless Telecommunication Services	65,665		560,895
Pick ‘N Pay Stores Ltd	Food & Staples Retailing	27,573		137,512
Resilient REIT Ltd	Equity Real Estate Investment Trusts (REITs)	27,520		229,426
Sasol Ltd	Oil, Gas & Consumable Fuels	17,242		471,448
Sibanye Gold Ltd	Metals & Mining	47,465		170,720
The Spar Group Ltd	Food & Staples Retailing	20,367		284,697
Tiger Brands Ltd	Food Products	13,090		361,956
Truworths International Ltd	Specialty Retail	60,014		309,862
Vodacom Group Ltd	Wireless Telecommunication Services	54,414		609,935

				4,075,242

South Korea 14.8%
BGF Retail Co. Ltd	Food & Staples Retailing	836		146,500
Coway Co. Ltd	Household Durables	6,649		575,943
DGB Financial Group Inc	Banks	3,204		26,270
Dongbu Insurance Co. Ltd	Insurance	4,696		290,795
Hana Financial Group Inc	Banks	14,316		362,011
Hankook Tire Co. Ltd	Auto Components	6,541		352,781
Hanon Systems	Auto Components	21,245		239,195
Hanssem Co. Ltd	Household Durables	647		103,393
Hanwha Life Insurance Co. Ltd	Insurance	7,039		36,814
Hyundai Marine & Fire Insurance Co. Ltd	Insurance	6,025		198,308
Hyundai Mobis Co. Ltd	Auto Components	2,883		719,866
Hyundai Wia Corp	Auto Components	1,596		125,495
Industrial Bank of Korea	Banks	9,873		107,125
Kangwon Land Inc	Hotels, Restaurants & Leisure	14,496		517,268
KB Financial Group Inc	Banks	17,308		594,822
KEPCO Plant Service and Engineering Co. Ltd	Commercial Services & Supplies	2,472		129,733
Kia Motors Corp	Automobiles	15,142		579,503
Korea Electric Power Corp	Electric Utilities	10,625		520,951
KT&G Corp	Tobacco	5,610		636,719
Lotte Chemical Corp	Chemicals	823		222,685
NCsoft Corp	Software	1,628		436,804

26 Semiannual Report

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	FRANKLIN TEMPLETON ETF TRUST
	STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Emerging Markets ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
South Korea (continued)
S-1 Corp	Commercial Services & Supplies	2,289	$	210,953
Samsung Electronics Co. Ltd	Technology Hardware, Storage & Peripherals	449		651,475
SK Hynix Inc	Semiconductors & Semiconductor Equipment	24,166		882,075
SK Telecom Co. Ltd	Wireless Telecommunication Services	2,205		452,472

				9,119,956

Taiwan 14.5%
Advantech Co. Ltd	Technology Hardware, Storage & Peripherals	33,000		283,199
Asustek Computer Inc	Technology Hardware, Storage & Peripherals	71,000		633,089
Casetek Holdings Ltd	Technology Hardware, Storage & Peripherals	11,000		40,006
Catcher Technology Co. Ltd	Technology Hardware, Storage & Peripherals	72,000		584,581
Chicony Electronics Co. Ltd	Technology Hardware, Storage & Peripherals	72,150		182,530
Chunghwa Telecom Co. Ltd	Diversified Telecommunication Services	221,000		779,075
Eclat Textile Co. Ltd	Textiles, Apparel & Luxury Goods	22,000		262,494
Far EasTone Telecommunications Co. Ltd	Wireless Telecommunication Services	233,000		550,063
Feng Tay Enterprise Co. Ltd	Textiles, Apparel & Luxury Goods	40,800		180,925
Foxconn Technology Co. Ltd	Technology Hardware, Storage & Peripherals	50,200		147,018
Highwealth Construction Corp	Real Estate Management & Development	77,000		119,140
a Inotera Memories Inc	Semiconductors & Semiconductor Equipment	280,000		246,543
Inventec Corp	Technology Hardware, Storage & Peripherals	237,000		193,559
Largan Precision Co. Ltd	Electronic Equipment, Instruments & Components	7,000		844,140
Nanya Technology Corp	Semiconductors & Semiconductor Equipment	50,000		62,609
Nien Made Enterprise Co. Ltd	Household Durables	11,000		141,599
Novatek Microelectronics Corp. Ltd	Semiconductors & Semiconductor Equipment	77,000		271,442
Phison Electronics Corp	Semiconductors & Semiconductor Equipment	17,000		129,078
President Chain Store Corp	Food & Staples Retailing	72,000		571,948
Realtek Semiconductor Corp	Semiconductors & Semiconductor Equipment	56,000		184,014
a Ruentex Development Co. Ltd	Real Estate Management & Development	55,000		66,939
Ruentex Industries Ltd	Textiles, Apparel & Luxury Goods	39,000		62,708
Siliconware Precision Industries Co	Semiconductors & Semiconductor Equipment	260,000		389,849
Simplo Technology Co. Ltd	Electronic Equipment, Instruments & Components	33,000		108,437
Taiwan Fertilizer Co. Ltd	Chemicals	40,000		53,596
Taiwan Mobile Co. Ltd	Wireless Telecommunication Services	193,000		692,683
Taiwan Semiconductor Manufacturing Co. Ltd	Semiconductors & Semiconductor Equipment	132,000		768,531
Transcend Information Inc	Technology Hardware, Storage & Peripherals	28,000		81,734
Vanguard International Semiconductor Corp	Semiconductors & Semiconductor Equipment	110,000		205,644
Zhen Ding Technology Holding Ltd	Electronic Equipment, Instruments & Components	27,000		59,176

				8,896,349

Thailand 2.2%
Advanced Info Service PCL, NVDR	Wireless Telecommunication Services	127,700		589,668
BEC World PCL, NVDR	Media	165,800		105,270
Bumrungrad Hospital PCL, NVDR	Health Care Providers & Services	37,600		189,356
Central Pattana PCL, NVDR	Real Estate Management & Development	137,600		231,319
Delta Electronics Thailand PCL, NVDR	Electronic Equipment, Instruments & Components	70,700		161,702
Thai Oil PCL, NVDR	Oil, Gas & Consumable Fuels	45,300		89,554

				1,366,869

Turkey 2.6%
BIM Birlesik Magazalar AS	Food & Staples Retailing	27,697		461,971
Eregli Demir ve Celik Fabrikalari AS	Metals & Mining	148,983		205,052
Ford Otomotiv Sanayi AS	Automobiles	8,692		91,708
TAV Havalimanlari Holding AS	Transportation Infrastructure	16,057		66,193
Tofas Turk Otomobil Fabrikasi AS	Automobiles	15,314		111,766
Tupras-Turkiye Petrol Rafinerileri AS	Oil, Gas & Consumable Fuels	11,981		226,787
Turk Telekomunikasyon AS	Diversified Telecommunication Services	38,025		71,850
a Turkcell Iletisim Hizmetleri AS	Wireless Telecommunication Services	105,436		341,182

				1,576,509

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Semiannual Report 27

FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ Emerging Markets ETF (continued)

	Industry	Shares		Value
Common Stocks (continued)
United Arab Emirates 2.1%
Aldar Properties PJSC	Real Estate Management & Development	320,806	$	233,203
Emirates Telecommunications Group Co. PJSC	Diversified Telecommunication Services	126,992		691,489
First Gulf Bank PJSC	Banks	92,037		295,681
National Bank of Abu Dhabi PJSC	Banks	40,715		101,760
				1,322,133
Total Common Stocks
(Cost $52,420,062)				53,745,992
Management Investment Companies 9.3%
India 9.3%
iShares MSCI India ETF	Diversified Financial Services	94,750		2,786,598
Wisdomtree India Earnings ETF	Diversified Financial Services	135,820		2,936,428
Total Management Investment Companies
(Cost $5,495,034)				5,723,026
Preferred Stocks 3.0%
Brazil 0.7%
c Braskem SA, 5.005%, pfd., A	Chemicals	15,451		119,419
c Companhia Energetica de Minas Gerais, 5.872%, pfd	Electric Utilities	96,295		254,309
c Companhia Paranaense de Energia, 3.731%, pfd	Electric Utilities	8,265		85,554
				459,282
Russia 1.1%
c Surgutneftegas OAO, 23.862%, pfd	Oil, Gas & Consumable Fuels	575,795		264,959
c Transneft PJSC, 0.609%, pfd	Oil, Gas & Consumable Fuels	187		400,876
				665,835
South Korea 1.2%
c Hyundai Motor Co., 4.03%, pfd	Automobiles	2,584		235,794
c Hyundai Motor Co., 3.886%, pfd., 2	Automobiles	4,107		393,416
c Samsung Electronics Co. Ltd., 1.632%, pfd	Technology Hardware, Storage & Peripherals	77		90,189
				719,399
Total Preferred Stocks (Cost $1,844,538)				1,844,516
Total Investments
(Cost $59,759,634) 99.6%				61,313,534
Other Assets, less Liabilities 0.4%				249,995
Net Assets 100.0%			$	61,563,529

See Abbreviations on page 66.
^aNon-income-producing.
^bSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States.
Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption
registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2016, the aggregate value of these
securities was $268,258, representing 0.4% of net assets.
^cRate disclosed reflects the yield at September 30, 2016.

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

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		FRANKLIN TEMPLETON ETF TRUST


Financial Highlights
Franklin LibertyQ Global Dividend ETF
		Period Ended
		September 30, 2016
		(unaudited)^a
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period	$	25.43
Income from investment operations^b:
Net investment income^c		0.27
Net realized and unrealized gains (losses)		0.58
Total from investment operations		0.85
Less distributions from net investment income		(0.21	)
Net asset value, end of period	$	26.07

Total return^d		3.34	%

Ratios to average net assets^e
Expenses before waiver and payments by affiliates		1.02	%
Expenses net of waiver and payments by affiliates		0.45	%
Net investment income		3.12	%

Supplemental data
Net assets, end of period (000’s)	$	26,071
Portfolio turnover rate^f		0.67	%

libertyshares.com

The accompanying notes are an integral part of these financial statements. | Semiannual Report 29


FRANKLIN TEMPLETON ETF TRUST




Statement of Investments, September 30, 2016 (unaudited)

Franklin LibertyQ Global Dividend ETF

	Industry	Shares		Value

Common Stocks 98.0%
Australia 12.7%
Amcor Ltd	Containers & Packaging	10,410	$	120,689
BHP Billiton Ltd	Metals & Mining	37,255		638,040
Brambles Ltd	Commercial Services & Supplies	23,790		218,099
Challenger Ltd	Diversified Financial Services	4,440		34,555
Commonwealth Bank of Australia	Banks	8,945		495,590
Flight Centre Travel Group Ltd	Hotels, Restaurants & Leisure	930		25,891
Telstra Corp. Ltd	Diversified Telecommunication Services	85,920		340,587
Wesfarmers Ltd	Food & Staples Retailing	14,970		505,201
Westpac Banking Corp	Banks	22,995		519,285
Woolworths Ltd	Food & Staples Retailing	23,660		421,322

				3,319,259

Belgium 0.3%
Proximus SADP	Diversified Telecommunication Services	2,340		69,910

Brazil 2.2%
Ambev SA	Beverages	92,190		562,416

Canada 10.6%
Bank of Nova Scotia	Banks	10,510		555,948
Canadian Imperial Bank of Commerce	Banks	6,445		498,878
IGM Financial Inc	Capital Markets	1,830		49,320
National Bank of Canada	Banks	6,575		232,733
Power Financial Corp	Insurance	2,835		65,576
Rogers Communications Inc., B	Wireless Telecommunication Services	3,830		162,205
Royal Bank of Canada	Banks	8,500		525,554
TELUS Corp	Diversified Telecommunication Services	2,790		91,900
The Toronto-Dominion Bank	Banks	11,595		513,824
Vermilion Energy Inc	Oil, Gas & Consumable Fuels	1,550		59,936

				2,755,874

China 2.4%
China Construction Bank Corp., H	Banks	860,000		637,575

Denmark 0.7%
Pandora A/S	Textiles, Apparel & Luxury Goods	1,425		172,266

Finland 0.3%
Elisa OYJ	Diversified Telecommunication Services	1,055		38,924
Nokian Renkaat OYJ	Auto Components	1,355		49,413

				88,337

France 2.0%
CNP Assurances	Insurance	1,705		28,655
Sanofi	Pharmaceuticals	6,360		483,448

				512,103

Germany 1.6%
a Deutsche Boerse AG	Capital Markets	2,160		175,137
Hugo Boss AG	Textiles, Apparel & Luxury Goods	1,215		67,213
ProSiebenSat.1 Media SE	Media	4,285		183,566

				425,916

Hong Kong 0.8%
Power Assets Holdings Ltd	Electric Utilities	15,000		146,211
Sino Land Co. Ltd	Real Estate Management & Development	20,000		35,379
SJM Holdings Ltd	Hotels, Restaurants & Leisure	35,000		25,722

				207,312

30 Semiannual Report

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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ Global Dividend ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Japan 3.5%
Daito Trust Construction Co. Ltd	Real Estate Management & Development	2,200	$	351,405
Lawson Inc	Food & Staples Retailing	1,000		78,704
NTT DoCoMo Inc	Wireless Telecommunication Services	19,500		493,349

				923,458
Mexico 0.2%
Kimberly-Clark de Mexico SAB de CV, A	Household Products	24,620		55,795
Netherlands 0.2%
Boskalis Westminster	Construction & Engineering	1,255		44,716
Qatar 0.4%
Qatar National Bank SAQ	Banks	2,185		93,591
Singapore 1.8%
ComfortDelGro Corp. Ltd	Road & Rail	30,000		61,828
Singapore Telecommunications Ltd	Diversified Telecommunication Services	124,000		361,055
StarHub Ltd	Wireless Telecommunication Services	16,000		40,251

				463,134
South Africa 1.3%
Coronation Fund Managers Ltd	Capital Markets	3,250		16,601
FirstRand Ltd	Diversified Financial Services	35,335		122,055
RMB Holdings Ltd	Diversified Financial Services	9,640		41,171
Sanlam Ltd	Insurance	17,100		79,337
The Spar Group Ltd	Food & Staples Retailing	2,665		37,253
Truworths International Ltd	Specialty Retail	9,445		48,766

				345,183
Spain 0.4%
Red Electrica Corp. SA	Electric Utilities	5,125		110,611
Sweden 3.4%
Atlas Copco AB, B	Machinery	7,260		198,630
Hennes & Mauritz AB, B	Specialty Retail	16,270		459,572
Skanska AB, B	Construction & Engineering	4,770		111,520
Telia Co. AB	Diversified Telecommunication Services	28,955		129,847

				899,569
Switzerland 3.9%
Novartis AG	Pharmaceuticals	6,570		517,792
Roche Holding AG	Pharmaceuticals	2,035		505,916

				1,023,708
Taiwan 0.1%
Feng Tay Enterprise Co. Ltd	Textiles, Apparel & Luxury Goods	5,600		24,833
Thailand 0.5%
Advanced Info Service PCL, NVDR	Wireless Telecommunication Services	25,500		117,749
United Kingdom 16.4%
Aberdeen Asset Management PLC	Capital Markets	21,135		89,584
Admiral Group PLC	Insurance	6,270		166,885
BAE Systems PLC	Aerospace & Defense	38,745		263,728
British American Tobacco PLC	Tobacco	8,430		539,863
BT Group PLC	Diversified Telecommunication Services	78,555		396,998
GlaxoSmithKline PLC	Pharmaceuticals	24,415		521,079
ICAP PLC	Capital Markets	7,855		47,559
Marks & Spencer Group PLC	Multiline Retail	17,960		77,246
Provident Financial PLC	Consumer Finance	2,320		91,405
Relx NV	Professional Services	16,120		289,760

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Semiannual Report 31


FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Global Dividend ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
United Kingdom (continued)
Relx PLC	Professional Services	23,470	$	446,033
Sky PLC	Media	12,685		147,312
Smiths Group PLC	Industrial Conglomerates	4,605		87,575
Tate & Lyle PLC	Food Products	5,030		48,939
Unilever NV, IDR	Personal Products	11,565		533,841
Unilever PLC	Personal Products	11,290		535,958

				4,283,765

United States 32.3%
Altria Group Inc	Tobacco	7,835		495,407
Bristol-Myers Squibb Co	Pharmaceuticals	7,085		382,023
Campbell Soup Co	Food Products	2,910		159,177
Chevron Corp	Oil, Gas & Consumable Fuels	4,990		513,571
Cincinnati Financial Corp	Insurance	1,590		119,918
Clorox Co	Household Products	3,000		375,540
Darden Restaurants Inc	Hotels, Restaurants & Leisure	1,310		80,329
E. I. du Pont de Nemours and Co	Chemicals	7,805		522,701
Eli Lilly & Co	Pharmaceuticals	6,740		540,953
H&R Block Inc	Diversified Consumer Services	3,985		92,253
Hasbro Inc	Leisure Products	810		64,257
Intel Corp	Semiconductors & Semiconductor Equipment	16,900		637,975
Johnson & Johnson	Pharmaceuticals	4,430		523,316
Kimberly-Clark Corp	Household Products	3,910		493,208
Leggett & Platt Inc	Household Durables	1,985		90,476
Lockheed Martin Corp	Aerospace & Defense	2,024		485,193
Mattel Inc	Leisure Products	4,905		148,523
Maxim Integrated Products Inc	Semiconductors & Semiconductor Equipment	4,255		169,902
McDonald’s Corp	Hotels, Restaurants & Leisure	3,865		445,866
Microchip Technology Inc	Semiconductors & Semiconductor Equipment	2,935		182,381
Paychex Inc	IT Services	6,490		375,576
Philip Morris International Inc	Tobacco	5,100		495,822
The Procter & Gamble Co	Household Products	6,210		557,348
Seagate Technology PLC	Technology Hardware, Storage & Peripherals	2,580		99,459
Sysco Corp	Food & Staples Retailing	7,580		371,496

				8,422,670

Total Common Stocks
(Cost $25,072,512)				25,559,750

Preferred Stocks (Cost $308,319) 1.6%
Brazil 1.6%
b Itau Unibanco Holding SA, 3.692%, pfd	Banks	37,370		408,570

Total Investments
(Cost $25,380,831) 99.6%				25,968,320
Other Assets, less Liabilities 0.4%				103,135

Net Assets 100.0%			$	26,071,455

See Abbreviations on page 66.
^aNon-income-producing.
^bRate disclosed reflects the yield at September 30, 2016.

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

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		FRANKLIN TEMPLETON ETF TRUST


Financial Highlights
Franklin LibertyQ Global Equity ETF
		Period Ended
		September 30, 2016
		(unaudited)^a
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period	$	25.32
Income from investment operations^b:
Net investment income^c		0.26
Net realized and unrealized gains (losses)		0.88
Total from investment operations		1.14
Net asset value, end of period	$	26.46

Total return^d		4.50	%

Ratios to average net assets^e
Expenses before waiver and payments by affiliates		0.92	%
Expenses net of waiver and payments by affiliates		0.35	%
Net investment income		2.96	%

Supplemental data
Net assets, end of period (000’s)	$	26,456
Portfolio turnover rate^f		0.04	%

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The accompanying notes are an integral part of these financial statements. | Semiannual Report 33


FRANKLIN TEMPLETON ETF TRUST




Statement of Investments, September 30, 2016 (unaudited)

Franklin LibertyQ Global Equity ETF

	Industry	Shares		Value

Common Stocks 97.7%
Australia 3.7%
AGL Energy Ltd	Multi-Utilities	1,865	$	27,188
Amcor Ltd	Containers & Packaging	3,875		44,925
Aristocrat Leisure Ltd	Hotels, Restaurants & Leisure	1,380		16,696
Aurizon Holdings Ltd	Road & Rail	5,050		18,163
Brambles Ltd	Commercial Services & Supplies	5,035		46,159
Caltex Australia Ltd	Oil, Gas & Consumable Fuels	435		11,401
Cimic Group Ltd	Construction & Engineering	135		2,969
Cochlear Ltd	Health Care Equipment & Supplies	225		24,276
CSL Ltd	Biotechnology	1,810		148,206
Dexus Property Group	Equity Real Estate Investment Trusts (REITs)	3,190		22,337
Domino’s Pizza Enterprises Ltd	Hotels, Restaurants & Leisure	100		5,381
Flight Centre Travel Group Ltd	Hotels, Restaurants & Leisure	195		5,429
Goodman Group	Equity Real Estate Investment Trusts (REITs)	2,790		15,543
GPT Group	Equity Real Estate Investment Trusts (REITs)	5,820		22,536
Harvey Norman Holdings Ltd	Multiline Retail	1,970		7,839
Incitec Pivot Ltd	Chemicals	4,570		9,862
James Hardie Industries PLC, CDI	Construction Materials	1,170		18,193
Medibank Private Ltd	Insurance	8,205		15,572
Mirvac Group	Equity Real Estate Investment Trusts (REITs)	6,565		11,254
Platinum Asset Management Ltd	Capital Markets	740		2,849
Qantas Airways Ltd	Airlines	1,035		2,471
REA Group Ltd	Media	195		8,424
Scentre Group	Equity Real Estate Investment Trusts (REITs)	17,200		61,863
Sonic Healthcare Ltd	Health Care Providers & Services	1,160		19,538
Tabcorp Holdings Ltd	Hotels, Restaurants & Leisure	2,520		9,604
Tatts Group Ltd	Hotels, Restaurants & Leisure	4,780		13,351
Telstra Corp. Ltd	Diversified Telecommunication Services	16,580		65,723
TPG Telecom Ltd	Diversified Telecommunication Services	1,070		7,058
Vicinity Centres	Equity Real Estate Investment Trusts (REITs)	9,725		23,591
Wesfarmers Ltd	Food & Staples Retailing	3,580		120,816
Westfield Corp	Equity Real Estate Investment Trusts (REITs)	5,560		41,399
Woodside Petroleum Ltd	Oil, Gas & Consumable Fuels	2,415		52,892
Woolworths Ltd	Food & Staples Retailing	4,450		79,243
				982,751
Austria 0.0%^†
OMV AG	Oil, Gas & Consumable Fuels	350		10,077
Belgium 0.1%
Colruyt SA	Food & Staples Retailing	255		14,145
Proximus SADP	Diversified Telecommunication Services	520		15,536

				29,681
Bermuda 0.1%
Axis Capital Holdings Ltd	Insurance	360		19,559
Brazil 0.8%
AES Tiete Energia SA	Independent Power and Renewable Electricity Producers	410		2,020
Ambev SA	Beverages	15,985		97,518
Banco do Brasil S.A	Banks	2,600		18,247
Banco Santander Brasil SA	Banks	635		4,300
BB Seguridade Participacoes SA	Insurance	2,690		24,740
CETIP SA-Mercados Organizados	Capital Markets	760		10,031
Cielo SA	IT Services	2,990		29,920
EDP-Energias do Brasil SA	Electric Utilities	1,035		4,581
Engie Brasil SA	Independent Power and Renewable Electricity Producers	515		6,103
Equatorial Energia SA	Electric Utilities	385		5,963
JBS SA	Food Products	995		3,620
Natura Cosmeticos SA	Personal Products	485		4,662

34 Semiannual Report

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	FRANKLIN TEMPLETON ETF TRUST
	STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Brazil (continued)
Odontoprev SA	Health Care Providers & Services	860	$	3,423
Transmissora Alianca de Energia
Eletrica SA	Electric Utilities	425		2,745

				217,873

Canada 2.6%
Agrium Inc	Chemicals	355		32,103
Alimentation Couche-Tard Inc., B	Food & Staples Retailing	1,200		58,053
BCE Inc	Diversified Telecommunication Services	440		20,285
Canadian Imperial Bank of Commerce	Banks	595		46,056
Canadian National Railway Co	Road & Rail	2,105		137,360
CCL Industries Inc., B	Containers & Packaging	65		12,494
CI Financial Corp	Capital Markets	760		14,555
Constellation Software Inc	Software	70		31,501
Dollarama Inc	Multiline Retail	405		31,565
Gildan Activewear Inc	Textiles, Apparel & Luxury Goods	675		18,818
H&R Real Estate Investment Trust	Equity Real Estate Investment Trusts (REITs)	515		8,789
The Jean Coutu Group (PJC) Inc., A	Food & Staples Retailing	260		3,982
Linamar Corp	Auto Components	115		4,793
Magna International Inc	Auto Components	1,270		54,424
Metro Inc	Food & Staples Retailing	760		24,906
Peyto Exploration & Development Corp	Oil, Gas & Consumable Fuels	390		10,926
Potash Corp. of Saskatchewan Inc	Chemicals	2,515		40,856
RioCan REIT	Equity Real Estate Investment Trusts (REITs)	520		10,770
Rogers Communications Inc., B	Wireless Telecommunication Services	1,005		42,563
Saputo Inc	Food Products	715		24,803
Shaw Communications Inc., B	Media	1,165		23,801
Smart Real Estate Investment Trust	Equity Real Estate Investment Trusts (REITs)	165		4,438
TELUS Corp	Diversified Telecommunication Services	595		19,599

				677,440

Chile 0.0%^†
Aguas Andinas SA, A	Water Utilities	6,000		3,847
Enersis Americas SA	Electric Utilities	29,375		4,794

				8,641
China 3.0%
AAC Technologies Holdings Inc	Electronic Equipment, Instruments & Components	2,500		25,126
Agricultural Bank of China Ltd., H	Banks	60,000		25,684
Anta Sports Products Ltd	Textiles, Apparel & Luxury Goods	5,000		13,570
Bank of China Ltd., H	Banks	225,000		102,695
Belle International Holdings Ltd	Textiles, Apparel & Luxury Goods	15,000		10,289
China Communications Services Corp.
Ltd., H	Diversified Telecommunication Services	10,000		6,253
China Construction Bank Corp., H	Banks	230,000		170,514
China Everbright Bank Co. Ltd., H	Banks	10,000		4,655
China Mobile Ltd	Wireless Telecommunication Services	17,500		211,757
China Resources Power Holdings Co. Ltd	Independent Power and Renewable Electricity Producers	10,000		17,225
China Vanke Co. Ltd., H	Real Estate Management & Development	3,000		7,775
Chongqing Changan Automobile Co.
Ltd., B	Automobiles	2,500		4,074
Chongqing Rural Commercial Bank Co.
Ltd., H	Banks	10,000		6,163
Dongfeng Motor Group Co. Ltd., H	Automobiles	10,000		9,992
Great Wall Motor Co. Ltd., H	Automobiles	10,000		9,734
Guangdong Investment Ltd	Water Utilities	10,000		15,885
Huaneng Power International Inc., H	Independent Power and Renewable Electricity Producers	10,000		6,253

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Semiannual Report 35


FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
China (continued)
Industrial and Commercial Bank of China Ltd., H	Banks	200,000	$	125,065
Jiangsu Expressway Co. Ltd., H	Transportation Infrastructure	10,000		13,822
Longfor Properties Co. Ltd	Real Estate Management & Development	5,000		7,672
Sinopec Engineering Group Co. Ltd., H	Construction & Engineering	5,000		4,300
Sunac China Holdings Ltd	Real Estate Management & Development	5,000		3,597

				802,100
Czech Republic 0.1%
CEZ AS	Electric Utilities	475		8,467
Komercni Banka AS	Banks	205		7,096
O2 Czech Republic AS	Diversified Telecommunication Services	175		1,701

				17,264
Denmark 1.1%
Coloplast AS, B	Health Care Equipment & Supplies	435		33,745
Novo Nordisk A/S, B	Pharmaceuticals	4,790		199,091
Pandora A/S	Textiles, Apparel & Luxury Goods	400		48,355
a William Demant Holding AS	Health Care Equipment & Supplies	325		6,636

				287,827
Finland 0.4%
Elisa OYJ	Diversified Telecommunication Services	420		15,496
Kone OYJ, B	Machinery	1,030		52,285
Neste Oil OYJ	Oil, Gas & Consumable Fuels	175		7,461
Nokian Renkaat OYJ	Auto Components	305		11,123
Orion OYJ, B	Pharmaceuticals	365		14,393

				100,758
France 0.5%
Cie Generale des Etablissements Michelin	Auto Components	535		59,198
CNP Assurances	Insurance	520		8,739
Hermes International	Textiles, Apparel & Luxury Goods	75		30,532
SCOR SE	Insurance	480		14,926
Societe BIC SA	Commercial Services & Supplies	85		12,576

				125,971
Germany 0.3%
b Covestro AG, 144A	Chemicals	115		6,802
Deutsche Lufthansa AG	Airlines	395		4,397
Hannover Rueck SE	Insurance	195		20,893
Hugo Boss AG	Textiles, Apparel & Luxury Goods	225		12,447
ProSiebenSat.1 Media SE	Media	655		28,059

				72,598
Hong Kong 1.2%
CLP Holdings Ltd	Electric Utilities	2,500		25,835
b HK Electric Investments and HK Electric Investments
Ltd., 144A	Electric Utilities	12,500		12,249
HKT Trust and HKT Ltd	Diversified Telecommunication Services	10,000		14,079
Hongkong Land Holdings Ltd	Real Estate Management & Development	2,500		17,750
Hysan Development Co. Ltd	Real Estate Management & Development	5,000		23,433
Kerry Properties Ltd	Real Estate Management & Development	2,500		8,187
Link REIT	Equity Real Estate Investment Trusts (REITs)	5,000		36,746
MGM China Holdings Ltd	Hotels, Restaurants & Leisure	4,000		6,942
MTR Corp. Ltd	Road & Rail	5,000		27,527
New World Development Co. Ltd	Real Estate Management & Development	15,000		19,495
NWS Holdings Ltd	Industrial Conglomerates	5,000		8,342
PCCW Ltd	Diversified Telecommunication Services	15,000		9,206

36 Semiannual Report

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	FRANKLIN TEMPLETON ETF TRUST
	STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Hong Kong (continued)
Sands China Ltd	Hotels, Restaurants & Leisure	6,000	$	26,032
Sino Biopharmaceutical Ltd	Pharmaceuticals	10,000		6,717
Sino Land Co. Ltd	Real Estate Management & Development	10,000		17,690
SJM Holdings Ltd	Hotels, Restaurants & Leisure	10,000		7,349
Swire Pacific Ltd., A	Real Estate Management & Development	2,500		26,931
Yue Yuen Industrial Holdings Ltd	Textiles, Apparel & Luxury Goods	2,500		10,315

				304,825

Hungary 0.1%
MOL Hungarian Oil and Gas PLC	Oil, Gas & Consumable Fuels	100		6,171
OTP Bank PLC	Banks	540		14,137
Richter Gedeon Nyrt	Pharmaceuticals	380		7,696
				28,004

Indonesia 0.5%
Hanjaya Mandala Sampoerna Tbk PT	Tobacco	25,000		7,566
Indocement Tunggal Prakarsa Tbk PT	Construction Materials	5,500		7,312
Matahari Department Store Tbk PT	Multiline Retail	7,000		9,909
Semen Indonesia (Persero) Tbk PT	Construction Materials	9,500		7,352
Surya Citra Media Tbk PT	Media	19,500		4,184
Telekomunikasi Indonesia Persero Tbk PT	Diversified Telecommunication Services	171,000		56,472
Unilever Indonesia Tbk PT	Household Products	5,500		18,774
United Tractors Tbk PT	Oil, Gas & Consumable Fuels	5,500		7,459

				119,028

Ireland 0.1%
Paddy Power PLC	Hotels, Restaurants & Leisure	135		15,277
Ryanair Holdings PLC	Airlines	195		2,664

				17,941

Israel 0.6%
Azrieli Group Ltd	Real Estate Management & Development	115		5,042
Bezeq Israeli Telecommunication Corp. Ltd	Diversified Telecommunication Services	8,765		16,513
Israel Chemicals Ltd	Chemicals	1,335		5,195
Mizrahi Tefahot Bank Ltd	Banks	425		5,397
a Taro Pharmaceutical Industries Ltd	Pharmaceuticals	35		3,868
Teva Pharmaceutical Industries Ltd	Pharmaceuticals	2,595		124,421

				160,436

Italy 0.1%
Snam SpA	Gas Utilities	6,135		34,031

Japan 4.8%
ABC-Mart Inc	Specialty Retail	500		33,872
Astellas Pharma Inc	Pharmaceuticals	5,500		85,461
Bridgestone Corp	Auto Components	1,500		54,896
CANON Inc	Technology Hardware, Storage & Peripherals	3,000		86,609
Daito Trust Construction Co. Ltd	Real Estate Management & Development	100		15,973
Fuji Heavy Industries Ltd	Automobiles	2,000		74,162
GungHo Online Entertainment Inc	Software	2,000		4,878
Hino Motors Ltd	Machinery	1,000		10,576
Hoya Corp	Health Care Equipment & Supplies	1,000		39,876
Isuzu Motors Ltd	Automobiles	2,000		23,295
ITOCHU Corp	Trading Companies & Distributors	4,000		49,849
Japan Airlines Co. Ltd	Airlines	500		14,610
Japan Tobacco Inc	Tobacco	3,000		122,026
Kakaku.com Inc	Internet Software & Services	500		9,001
KDDI Corp	Wireless Telecommunication Services	5,500		169,185

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Semiannual Report 37


FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Japan (continued)
Mitsubishi Motors Corp	Automobiles	2,000	$	9,263
mixi Inc	Internet Software & Services	500		17,948
Murata Manufacturing Co. Ltd	Electronic Equipment, Instruments & Components	500		64,336
Nippon Telegraph & Telephone Corp	Diversified Telecommunication Services	2,000		91,127
Nitto Denko Corp	Chemicals	500		32,124
NOK Corp	Auto Components	500		10,818
NTT DoCoMo Inc	Wireless Telecommunication Services	4,500		113,850
Oracle Corp. Japan	Software	500		28,095
Otsuka Corp	IT Services	500		23,577
Park24 Co. Ltd	Commercial Services & Supplies	500		16,195
Santen Pharmaceutical Co. Ltd	Pharmaceuticals	1,500		21,967
Sumitomo Rubber Industries Ltd	Auto Components	1,000		14,990
a Tokyo Electric Power Co. Holdings Inc	Electric Utilities	3,000		12,887
Yahoo Japan Corp	Internet Software & Services	5,000		19,849
Yokohama Rubber Co. Ltd	Auto Components	500		7,920

				1,279,215

Luxembourg 0.0%^†
RTL Group SA	Media	120		9,970

Malaysia 0.3%
Astro Malaysia Holdings Bhd	Media	3,500		2,310
Berjaya Sports Toto Bhd	Hotels, Restaurants & Leisure	2,000		1,601
British American Tobacco Malaysia Bhd	Tobacco	500		5,941
Digi.com Bhd	Wireless Telecommunication Services	13,500		16,257
HAP Seng Consolidated Bhd	Industrial Conglomerates	1,500		2,793
Hartalega Holdings Bhd	Health Care Equipment & Supplies	2,500		2,805
IOI Properties Group Bhd	Real Estate Management & Development	6,000		3,613
Maxis Bhd	Wireless Telecommunication Services	4,000		5,958
Petronas Chemicals Group Bhd	Chemicals	8,500		13,668
Petronas Dagangan Bhd	Oil, Gas & Consumable Fuels	1,500		8,524
Petronas Gas Bhd	Gas Utilities	2,500		13,203
Westports Holdings Bhd	Transportation Infrastructure	4,500		4,777

				81,450

Mexico 0.2%
Arca Continental SAB de CV	Beverages	905		5,395
Gentera SAB de CV	Consumer Finance	3,370		6,077
Gruma SAB de CV, B	Food Products	535		7,048
Grupo Aeroportuario del Pacifico SAB de
CV, B	Transportation Infrastructure	1,055		10,036
Grupo Lala SAB de CV	Food Products	960		1,832
Kimberly-Clark de Mexico SAB de CV, A	Household Products	4,540		10,289
Wal-Mart de Mexico SAB de CV, V	Food & Staples Retailing	11,370		25,015

				65,692

Netherlands 0.3%
Aegon NV	Insurance	4,675		17,921
Boskalis Westminster	Construction & Engineering	255		9,086
Koninklijke Ahold Delhaize NV	Food & Staples Retailing	2,310		52,672
				79,679

New Zealand 0.1%
Mercury NZ Ltd	Electric Utilities	1,965		4,351
Meridian Energy Ltd	Independent Power and Renewable Electricity Producers	3,610		6,826
Spark New Zealand Ltd	Diversified Telecommunication Services	7,520		19,741
				30,918

38 Semiannual Report

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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Norway 0.2%
Telenor ASA	Diversified Telecommunication Services	2,125	$	36,452
Yara International ASA	Chemicals	590		19,607

				56,059
Philippines 0.1%
Globe Telecom Inc	Wireless Telecommunication Services	100		4,207
PLDT Inc	Wireless Telecommunication Services	275		9,708

				13,915
Poland 0.1%
Energa SA	Electric Utilities	385		754
Eurocash SA	Food & Staples Retailing	110		1,222
PGE Polska Grupa Energetyczna SA	Electric Utilities	2,980		7,903
Polski Koncern Naftowy Orlen SA	Oil, Gas & Consumable Fuels	675		11,465
a Synthos SA	Chemicals	1,515		1,722
a Tauron Polska Energia SA	Electric Utilities	2,470		1,678

				24,744
Portugal 0.0%^†
Jeronimo Martins SGPS SA	Food & Staples Retailing	660		11,448
Qatar 0.1%
Barwa Real Estate Co	Real Estate Management & Development	475		4,415
Doha Bank QSC	Banks	500		5,107
Industries Qatar QSC	Industrial Conglomerates	430		12,751
Qatar Electricity & Water Co. QSC	Multi-Utilities	60		3,517
Qatar Insurance Co. SAQ	Insurance	310		7,567

				33,357
Romania 0.0%^†
New Europe Property Investments PLC	Real Estate Management & Development	475		5,371
Russia 1.1%
Alrosa PJSC	Metals & Mining	5,920		8,125
Gazprom PAO	Oil, Gas & Consumable Fuels	40,485		86,249
LUKOIL PJSC	Oil, Gas & Consumable Fuels	1,610		78,110
c MegaFon PJSC, GDR, Reg S	Wireless Telecommunication Services	315		3,008
MMC Norilsk Nickel PJSC	Metals & Mining	210		32,539
Mobile TeleSystems PJSC, ADR	Wireless Telecommunication Services	1,920		14,650
c PhosAgro PJSC, GDR , Reg S	Chemicals	155		1,999
Rosneft PJSC	Oil, Gas & Consumable Fuels	3,800		20,718
Rostelecom PJSC	Diversified Telecommunication Services	2,225		2,779
RusHydro PJSC	Electric Utilities	227,965		2,823
Severstal PJSC	Metals & Mining	720		8,663
Surgutneftegas OAO	Oil, Gas & Consumable Fuels	25,165		12,213
Tatneft PAO	Oil, Gas & Consumable Fuels	4,950		25,252

				297,128
Singapore 1.1%
Ascendas REIT	Equity Real Estate Investment Trusts (REITs)	7,000		12,938
Broadcom Ltd	Semiconductors & Semiconductor Equipment	550		94,886
CapitaLand Commercial Trust	Equity Real Estate Investment Trusts (REITs)	6,500		7,580
CapitaLand Mall Trust	Equity Real Estate Investment Trusts (REITs)	7,500		11,937
ComfortDelGro Corp. Ltd	Road & Rail	7,000		14,427
Keppel Corp. Ltd	Industrial Conglomerates	3,500		13,836
Singapore Airlines Ltd	Airlines	1,000		7,708
Singapore Exchange Ltd	Capital Markets	3,500		19,022
Singapore Press Holdings Ltd	Media	5,500		15,369
Singapore Technologies Engineering Ltd	Aerospace & Defense	4,500		10,660

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Semiannual Report 39


FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Singapore (continued)
Singapore Telecommunications Ltd	Diversified Telecommunication Services	26,000	$	75,705
StarHub Ltd	Wireless Telecommunication Services	2,000		5,031
Suntec REIT	Equity Real Estate Investment Trusts (REITs)	5,500		6,918
Yangzijiang Shipbuilding Holdings Ltd	Machinery	8,500		4,676

				300,693

South Africa 0.7%
Brait SE	Capital Markets	735		5,905
Fortress Income Fund Ltd., A	Equity Real Estate Investment Trusts (REITs)	3,930		4,644
Life Healthcare Group Holdings Ltd	Health Care Providers & Services	2,630		7,243
Mr. Price Group Ltd	Specialty Retail	840		9,270
MTN Group Ltd	Wireless Telecommunication Services	4,980		42,538
Pick ‘N Pay Stores Ltd	Food & Staples Retailing	420		2,094
Redefine Properties Ltd	Equity Real Estate Investment Trusts (REITs)	11,760		9,775
Resilient REIT Ltd	Equity Real Estate Investment Trusts (REITs)	770		6,419
Sasol Ltd	Oil, Gas & Consumable Fuels	1,560		42,655
Sibanye Gold Ltd	Metals & Mining	1,155		4,154
The Spar Group Ltd	Food & Staples Retailing	520		7,269
Tiger Brands Ltd	Food Products	390		10,784
Truworths International Ltd	Specialty Retail	1,745		9,010
Vodacom Group Ltd	Wireless Telecommunication Services	1,270		14,236

				175,996

South Korea 2.5%
BGF Retail Co. Ltd	Food & Staples Retailing	20		3,505
Coway Co. Ltd	Household Durables	180		15,592
DGB Financial Group Inc	Banks	530		4,346
Dongbu Insurance Co. Ltd	Insurance	135		8,360
Hankook Tire Co. Ltd	Auto Components	175		9,438
Hanon Systems	Auto Components	525		5,911
Hanssem Co. Ltd	Household Durables	15		2,397
Hanwha Life Insurance Co. Ltd	Insurance	480		2,510
Hyundai Marine & Fire Insurance Co. Ltd	Insurance	190		6,254
Hyundai Mobis Co. Ltd	Auto Components	225		56,181
Hyundai Wia Corp	Auto Components	50		3,932
Industrial Bank of Korea	Banks	475		5,154
Kangwon Land Inc	Hotels, Restaurants & Leisure	375		13,381
KB Financial Group Inc	Banks	600		20,620
KEPCO Plant Service and Engineering Co. Ltd	Commercial Services & Supplies	65		3,411
Kia Motors Corp	Automobiles	920		35,210
Korea Electric Power Corp	Electric Utilities	380		18,632
KT&G Corp	Tobacco	380		43,129
Lotte Chemical Corp	Chemicals	25		6,764
NCsoft Corp	Software	40		10,732
S-1 Corp	Commercial Services & Supplies	55		5,069
S-Oil Corp	Oil, Gas & Consumable Fuels	65		4,792
Samsung Electronics Co. Ltd	Technology Hardware, Storage & Peripherals	200		290,189
SK Hynix Inc	Semiconductors & Semiconductor Equipment	1,790		65,336
SK Telecom Co. Ltd	Wireless Telecommunication Services	60		12,312

				653,157

Spain 1.2%
Banco Santander SA	Banks	34,480		152,941
Distribuidora Internacional de Alimentacion SA	Food & Staples Retailing	1,635		10,126
Enagas SA	Gas Utilities	575		17,301
Endesa SA	Electric Utilities	880		18,869
Industria de Diseno Textil SA	Specialty Retail	3,275		121,455
Zardoya Otis SA	Machinery	570		5,483

				326,175

40 Semiannual Report

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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Sweden 0.6%
Hennes & Mauritz AB, B	Specialty Retail	3,505	$	99,004
ICA Gruppen AB	Food & Staples Retailing	220		7,275
Swedish Match AB	Tobacco	600		22,046
Telia Co. AB	Diversified Telecommunication Services	7,810		35,024

				163,349
Switzerland 2.2%
a Actelion Ltd	Biotechnology	175		30,364
EMS-Chemie Holding AG	Chemicals	30		16,139
Galenica AG	Pharmaceuticals	10		10,635
Geberit AG	Building Products	110		48,271
Kuehne & Nagel International AG	Marine	115		16,727
Partners Group Holding AG	Capital Markets	65		32,855
Roche Holding AG	Pharmaceuticals	995		247,364
a Swiss Life Holding AG	Insurance	100		25,944
a Swiss Prime Site AG	Real Estate Management & Development	220		19,336
Swiss Re AG	Insurance	1,115		100,815
Swisscom AG	Diversified Telecommunication Services	80		38,102

				586,552
Taiwan 2.7%
Chicony Electronics Co. Ltd	Technology Hardware, Storage & Peripherals	5,025		12,713
Chunghwa Telecom Co. Ltd	Diversified Telecommunication Services	15,000		52,878
Far EasTone Telecommunications Co. Ltd	Wireless Telecommunication Services	5,000		11,804
Formosa Petrochemical Corp	Oil, Gas & Consumable Fuels	5,000		15,026
Foxconn Technology Co. Ltd	Technology Hardware, Storage & Peripherals	5,050		14,790
Highwealth Construction Corp	Real Estate Management & Development	5,000		7,736
Hon Hai Precision Industry Co. Ltd	Electronic Equipment, Instruments & Components	33,000		83,170
a Inotera Memories Inc	Semiconductors & Semiconductor Equipment	10,000		8,805
Inventec Corp	Technology Hardware, Storage & Peripherals	10,000		8,167
Lite-On Technology Corp	Technology Hardware, Storage & Peripherals	10,049		14,459
Nanya Technology Corp	Semiconductors & Semiconductor Equipment	5,000		6,261
Novatek Microelectronics Corp. Ltd	Semiconductors & Semiconductor Equipment	5,000		17,626
President Chain Store Corp	Food & Staples Retailing	5,000		39,719
Realtek Semiconductor Corp	Semiconductors & Semiconductor Equipment	5,000		16,430
a Ruentex Development Co. Ltd	Real Estate Management & Development	5,000		6,085
Ruentex Industries Ltd	Textiles, Apparel & Luxury Goods	5,000		8,039
Siliconware Precision Industries Co	Semiconductors & Semiconductor Equipment	5,000		7,497
Simplo Technology Co. Ltd	Electronic Equipment, Instruments & Components	5,000		16,430
Synnex Technology International Corp	Electronic Equipment, Instruments & Components	5,250		5,812
Taiwan Fertilizer Co. Ltd	Chemicals	5,000		6,700
Taiwan Mobile Co. Ltd	Wireless Telecommunication Services	10,000		35,890
Taiwan Semiconductor Manufacturing Co. Ltd	Semiconductors & Semiconductor Equipment	50,000		291,110
Transcend Information Inc	Technology Hardware, Storage & Peripherals	5,000		14,595
Vanguard International Semiconductor Corp	Semiconductors & Semiconductor Equipment	5,000		9,347
Zhen Ding Technology Holding Ltd	Electronic Equipment, Instruments & Components	5,000		10,959

				722,048
Thailand 0.2%
Advanced Info Service PCL, NVDR	Wireless Telecommunication Services	4,000		18,471
BEC World PCL, NVDR	Media	3,500		2,222
Bumrungrad Hospital PCL, NVDR	Health Care Providers & Services	1,000		5,036
Central Pattana PCL, NVDR	Real Estate Management & Development	3,500		5,884
Delta Electronics Thailand PCL, NVDR	Electronic Equipment, Instruments & Components	2,000		4,574
IRPC PCL, NVDR	Oil, Gas & Consumable Fuels	18,500		2,606
Thai Oil PCL, NVDR	Oil, Gas & Consumable Fuels	1,500		2,965

				41,758

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Semiannual Report 41

FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Turkey 0.2%
BIM Birlesik Magazalar AS	Food & Staples Retailing	660	$	11,008
Eregli Demir ve Celik Fabrikalari TAS	Metals & Mining	5,545		7,632
Ford Otomotiv Sanayi AS	Automobiles	145		1,530
TAV Havalimanlari Holding AS	Transportation Infrastructure	470		1,938
Tofas Turk Otomobil Fabrikasi AS	Automobiles	375		2,737
Tupras-Turkiye Petrol Rafinerileri AS	Oil, Gas & Consumable Fuels	330		6,247
Turk Telekomunikasyon AS	Diversified Telecommunication Services	680		1,285
a Turkcell Iletisim Hizmetleri AS	Wireless Telecommunication Services	2,965		9,594

				41,971
United Arab Emirates 0.2%
Aldar Properties PJSC	Real Estate Management & Development	9,735		7,077
Emirates Telecommunications Group Co. PJSC	Diversified Telecommunication Services	4,380		23,850
First Gulf Bank PJSC	Banks	2,555		8,208
National Bank of Abu Dhabi PJSC	Banks	1,605		4,011

				43,146
United Kingdom 8.9%
Admiral Group PLC	Insurance	955		25,419
AstraZeneca PLC	Pharmaceuticals	3,775		245,382
BAE Systems PLC	Aerospace & Defense	9,150		62,282
The Berkeley Group Holdings PLC	Household Durables	300		10,054
British American Tobacco PLC	Tobacco	4,230		270,892
BT Group PLC	Diversified Telecommunication Services	26,005		131,423
Burberry Group PLC	Textiles, Apparel & Luxury Goods	1,365		24,451
Centrica PLC	Multi-Utilities	7,535		22,336
Coca-Cola European Partners PLC	Beverages	325		12,967
Croda International PLC	Chemicals	420		19,008
Delphi Automotive PLC	Auto Components	805		57,413
Direct Line Insurance Group PLC	Insurance	3,970		18,813
Experian PLC	Professional Services	1,390		27,879
GlaxoSmithKline PLC	Pharmaceuticals	12,265		261,767
Hargreaves Lansdown PLC	Capital Markets	895		14,800
Imperial Brands PLC	Tobacco	2,540		131,104
Intertek Group PLC	Professional Services	265		12,010
ITV PLC	Media	14,700		35,746
Marks & Spencer Group PLC	Multiline Retail	4,710		20,258
Mediclinic International PLC	Health Care Providers & Services	620		7,462
Next PLC	Multiline Retail	570		35,363
Persimmon PLC	Household Durables	1,070		25,227
Provident Financial PLC	Consumer Finance	335		13,199
Randgold Resources Ltd	Metals & Mining	140		14,158
Reckitt Benckiser Group PLC	Household Products	1,990		187,801
Relx NV	Professional Services	2,985		53,656
Relx PLC	Professional Services	3,545		67,370
Royal Mail PLC	Air Freight & Logistics	2,760		17,550
The Sage Group PLC	Software	2,770		26,555
SSE PLC	Electric Utilities	2,665		54,282
Tate & Lyle PLC	Food Products	1,475		14,351
Unilever NV, IDR	Personal Products	4,745		219,030
Unilever PLC	Personal Products	3,885		184,428
William Hill PLC	Hotels, Restaurants & Leisure	2,790		11,025
				2,335,461
United States 54.6%
3M Co	Industrial Conglomerates	1,480		260,820
AbbVie Inc	Biotechnology	2,530		159,567
Accenture PLC, A	IT Services	2,230		272,439

42 Semiannual Report

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	FRANKLIN TEMPLETON ETF TRUST
	STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
United States (continued)
Alliant Energy Corp	Electric Utilities	360	$	13,792
Altria Group Inc	Tobacco	4,045		255,765
American Airlines Group Inc	Airlines	260		9,519
American Capital Agency Corp	Mortgage Real Estate Investment Trusts (REITs)	1,380		26,965
American Electric Power Co. Inc	Electric Utilities	685		43,984
Annaly Capital Management Inc	Mortgage Real Estate Investment Trusts (REITs)	3,305		34,703
Apple Inc	Technology Hardware, Storage & Peripherals	2,610		295,060
AT&T Inc	Diversified Telecommunication Services	6,450		261,934
Atmos Energy Corp	Gas Utilities	170		12,660
Avery Dennison Corp	Containers & Packaging	140		10,891
Bed Bath & Beyond Inc	Specialty Retail	515		22,202
Best Buy Co. Inc	Specialty Retail	785		29,971
a Biogen Inc	Biotechnology	460		143,994
The Boeing Co	Aerospace & Defense	1,865		245,695
Broadridge Financial Solutions Inc	IT Services	195		13,219
C.H. Robinson Worldwide Inc	Air Freight & Logistics	495		34,878
CA Inc	Software	940		31,095
Campbell Soup Co	Food Products	670		36,649
a Chipotle Mexican Grill Inc	Hotels, Restaurants & Leisure	90		38,115
Church & Dwight Co. Inc	Household Products	830		39,774
Cincinnati Financial Corp	Insurance	390		29,414
Cisco Systems Inc	Communications Equipment	8,940		283,577
Clorox Co	Household Products	510		63,842
Coach Inc	Textiles, Apparel & Luxury Goods	960		35,098
The Coca-Cola Co	Beverages	5,555		235,088
Colgate-Palmolive Co	Household Products	2,690		199,437
Consolidated Edison Inc	Multi-Utilities	450		33,885
Cummins Inc	Machinery	250		32,038
Darden Restaurants Inc	Hotels, Restaurants & Leisure	190		11,651
Delta Air Lines Inc	Airlines	320		12,595
Dick’s Sporting Goods Inc	Specialty Retail	270		15,314
Dollar General Corp	Multiline Retail	465		32,545
Dr. Pepper Snapple Group Inc	Beverages	595		54,329
a Edwards Lifesciences Corp	Health Care Equipment & Supplies	585		70,528
Eli Lilly & Co	Pharmaceuticals	2,845		228,340
Emerson Electric Co	Electrical Equipment	1,680		91,577
Equifax Inc	Professional Services	270		36,337
Estee Lauder Cos. Inc., Class A	Personal Products	545		48,265
Everest Re Group Ltd	Insurance	130		24,696
Exelon Corp	Electric Utilities	2,505		83,391
Expeditors International of Washington Inc	Air Freight & Logistics	460		23,699
Exxon Mobil Corp	Oil, Gas & Consumable Fuels	2,735		238,711
a F5 Networks Inc	Communications Equipment	200		24,928
Fastenal Co	Trading Companies & Distributors	705		29,455
Foot Locker Inc	Specialty Retail	465		31,490
The Gap Inc	Specialty Retail	850		18,904
Garmin Ltd	Household Durables	385		18,522
General Dynamics Corp	Aerospace & Defense	745		115,594
General Mills Inc	Food Products	1,820		116,262
General Motors Co	Automobiles	2,155		68,464
Genuine Parts Co	Distributors	440		44,198
Gilead Sciences Inc	Biotechnology	2,995		236,964
H&R Block Inc	Diversified Consumer Services	720		16,668
Hasbro Inc	Leisure Products	170		13,486
HCP Inc	Equity Real Estate Investment Trusts (REITs)	995		37,760
The Hershey Co	Food Products	515		49,234
HollyFrontier Corp	Oil, Gas & Consumable Fuels	385		9,433

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Semiannual Report 43

FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
The Home Depot Inc	Specialty Retail	1,910	$	245,779
Hormel Foods Corp	Food Products	985		37,361
HP Inc	Technology Hardware, Storage & Peripherals	5,055		78,504
Illinois Tool Works Inc	Machinery	475		56,924
Ingredion Inc	Food Products	125		16,633
Intel Corp	Semiconductors & Semiconductor Equipment	8,290		312,947
International Business Machines Corp	IT Services	1,690		268,456
International Flavors & Fragrances Inc	Chemicals	205		29,309
Intuit Inc	Software	910		100,109
a Intuitive Surgical Inc	Health Care Equipment & Supplies	100		72,483
Iron Mountain Inc	Equity Real Estate Investment Trusts (REITs)	360		13,511
J.B. Hunt Transport Services Inc	Road & Rail	280		22,719
Johnson & Johnson	Pharmaceuticals	2,180		257,523
Kimberly-Clark Corp	Household Products	1,120		141,277
KLA-Tencor Corp	Semiconductors & Semiconductor Equipment	455		31,718
Kohl’s Corp	Multiline Retail	495		21,656
The Kroger Co	Food & Staples Retailing	2,510		74,497
L Brands Inc	Specialty Retail	620		43,877
Las Vegas Sands Corp	Hotels, Restaurants & Leisure	965		55,526
Leggett & Platt Inc	Household Durables	230		10,483
Linear Technology Corp	Semiconductors & Semiconductor Equipment	880		52,175
Lockheed Martin Corp	Aerospace & Defense	932		223,419
Lowe’s Cos. Inc	Specialty Retail	1,885		136,116
a Lululemon Athletica Inc	Textiles, Apparel & Luxury Goods	165		10,062
LyondellBasell Industries NV, A	Chemicals	1,440		116,150
Marathon Petroleum Corp	Oil, Gas & Consumable Fuels	1,485		60,276
Marsh & McLennan Cos. Inc	Insurance	1,345		90,451
Mastercard Inc., A	IT Services	2,660		270,708
Mattel Inc	Leisure Products	1,035		31,340
Maxim Integrated Products Inc	Semiconductors & Semiconductor Equipment	830		33,142
McCormick & Co. Inc	Food Products	200		19,984
McDonald’s Corp	Hotels, Restaurants & Leisure	1,955		225,529
a Mettler-Toledo International Inc	Life Sciences Tools & Services	80		33,586
a Michael Kors Holdings Ltd	Textiles, Apparel & Luxury Goods	695		32,519
Microsoft Corp	Software	4,955		285,408
Mid-America Apartment Communities Inc	Equity Real Estate Investment Trusts (REITs)	120		11,279
NIKE Inc., B	Textiles, Apparel & Luxury Goods	4,280		225,342
Nordstrom Inc	Multiline Retail	195		10,117
Northrop Grumman Corp	Aerospace & Defense	510		109,114
a O’Reilly Automotive Inc	Specialty Retail	290		81,232
Omnicom Group Inc	Media	365		31,025
Paychex Inc	IT Services	1,065		61,632
PepsiCo Inc	Beverages	2,405		261,592
Pfizer Inc	Pharmaceuticals	7,395		250,469
Philip Morris International Inc	Tobacco	2,460		239,161
Phillips 66	Oil, Gas & Consumable Fuels	1,400		112,770
Pinnacle West Capital Corp	Electric Utilities	275		20,897
Polaris Industries Inc	Leisure Products	205		15,875
The Procter & Gamble Co	Household Products	3,080		276,430
Public Service Enterprise Group Inc	Multi-Utilities	1,545		64,689
Public Storage	Equity Real Estate Investment Trusts (REITs)	530		118,264
QUALCOMM Inc	Semiconductors & Semiconductor Equipment	4,420		302,770
Raytheon Co	Aerospace & Defense	875		119,114
Realty Income Corp	Equity Real Estate Investment Trusts (REITs)	365		24,429
ResMed Inc	Health Care Equipment & Supplies	425		27,536
Robert Half International Inc	Professional Services	305		11,547
Rockwell Automation Inc	Electrical Equipment	200		24,468
Ross Stores Inc	Specialty Retail	1,500		96,450
SCANA Corp	Multi-Utilities	210		15,198

44 Semiannual Report

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	FRANKLIN TEMPLETON ETF TRUST
	STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Scripps Networks Interactive Inc., A	Media	210	$	13,333
Seagate Technology PLC	Technology Hardware, Storage & Peripherals	1,165		44,911
SEI Investments Co	Capital Markets	445		20,296
The Sherwin-Williams Co	Chemicals	270		74,698
Simon Property Group Inc	Equity Real Estate Investment Trusts (REITs)	910		188,379
Skyworks Solutions Inc	Semiconductors & Semiconductor Equipment	575		43,781
The Southern Co	Electric Utilities	2,450		125,685
Southwest Airlines Co	Airlines	470		18,278
Staples Inc	Speciality Retail	2,030		17,357
Starbucks Corp	Hotels, Restaurants & Leisure	4,510		244,171
Sysco Corp	Food & Staples Retailing	1,615		79,151
T. Rowe Price Group Inc	Capital Markets	775		51,538
Target Corp	Multiline Retail	855		58,721
Tesoro Corp	Oil, Gas & Consumable Fuels	175		13,923
Texas Instruments Inc	Semiconductors & Semiconductor Equipment	3,160		221,769
The TJX Cos. Inc	Specialty Retail	2,570		192,185
Total System Services Inc	IT Services	370		17,446
Tyson Foods Inc., A	Food Products	460		34,348
a Ulta Salon Cosmetics & Fragrance Inc	Specialty Retail	165		39,267
a United Continental Holdings Inc	Airlines	155		8,133
United Parcel Service Inc., B	Air Freight & Logistics	2,260		247,154
a United Therapeutics Corp	Biotechnology	135		15,941
UnitedHealth Group Inc	Health Care Providers & Services	1,945		272,300
Valero Energy Corp	Oil, Gas & Consumable Fuels	1,435		76,055
Valspar Corp	Chemicals	115		12,198
VEREIT Inc	Equity Real Estate Investment Trusts (REITs)	2,125		22,036
Verizon Communications Inc	Diversified Telecommunication Services	4,925		256,001
VF Corp	Textiles, Apparel & Luxury Goods	970		54,368
Visa Inc., A	IT Services	3,350		277,045
W.W. Grainger Inc	Trading Companies & Distributors	165		37,099
Wal-Mart Stores Inc	Food & Staples Retailing	3,545		255,665
Waste Management Inc	Commercial Services & Supplies	630		40,169
WEC Energy Group Inc	Multi-Utilities	690		41,317
Westar Energy Inc	Electric Utilities	225		12,769
Western Digital Corp	Technology Hardware, Storage & Peripherals	590		34,497
Western Union Co	IT Services	1,570		32,687
Whole Foods Market Inc	Food & Staples Retailing	485		13,750
Xcel Energy Inc	Electric Utilities	735		30,238
Xilinx Inc	Semiconductors & Semiconductor Equipment	730		39,668
Yum! Brands Inc	Hotels, Restaurants & Leisure	1,490		135,307

				14,446,601

Total Common Stocks
(Cost $24,995,543)				25,842,658

Management Investment Companies
(Cost $370,939) 1.5%
India 1.5%
iShares MSCI India ETF	Diversified Financial Services	13,395		393,947

Preferred Stocks 0.4%
Brazil 0.1%
d Braskem SA, pfd., 5.005%, A	Chemicals	385		2,976
d Companhia Energetica de Minas Gerais, 5.872%, pfd	Electric Utilities	2,740		7,236
d Companhia Paranaense de Energia, 3.731%, pfd	Electric Utilities	375		3,882
d Itausa-Investimentos Itau SA, 4.933%, pfd	Banks	5,850		15,017

				29,111

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Semiannual Report 45

FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ Global Equity ETF (continued)

	Industry	Shares		Value
Preferred Stocks (continued)
Germany 0.0%^†
d Fuchs Petrolub SE, 2.019%, pfd	Chemicals	220	$	10,040
Russia 0.1%
d Surgutneftegas OAO, 23.862%, pfd	Oil, Gas & Consumable Fuels	31,665		14,571
d Transneft PJSC, 0.609%, pfd	Oil, Gas & Consumable Fuels	5		10,719
				25,290
South Korea 0.2%
d Hyundai Motor Co., 4.03%, pfd	Automobiles	75		6,844
d Hyundai Motor Co., 3.886%, pfd., 2	Automobiles	110		10,537
d LG Chem Ltd., 2.766%, pfd	Chemicals	15		2,240
d Samsung Electronics Co. Ltd., 1.632%, pfd	Technology Hardware, Storage & Peripherals	35		40,995
				60,616
Total Preferred Stocks (Cost $113,276)				125,057
Total Investments
(Cost $25,479,758) 99.6%				26,361,662
Other Assets, less Liabilities 0.4%				94,679
Net Assets 100.0%			$	26,456,341

See Abbreviations on page 66.
^†Rounds to less than 0.1% of net assets.
^aNon-income-producing.
^bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers
or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At
September 30, 2016, the aggregate value of these securities was $19,051, representing 0.1% of net assets.
^cSecurity was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States.
Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption
registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At September 30, 2016, the aggregate value of these
securities was $5,007, representing less than 0.1% of net assets.
^dRate disclosed reflects the yield at September 30, 2016.

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

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		FRANKLIN TEMPLETON ETF TRUST


Financial Highlights
Franklin LibertyQ International Equity Hedged ETF
		Period Ended
		September 30, 2016
		(unaudited)^a
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period	$	25.45
Income from investment operations^b:
Net investment income^c		0.23
Net realized and unrealized gains (losses)		0.13
Total from investment operations		0.36
Net asset value, end of period	$	25.81

Total return^d		1.41	%

Ratios to average net assets^e
Expenses before waiver and payments by affiliates		0.98	%
Expenses net of waiver and payments by affiliates		0.40	%
Net investment income		2.66	%

Supplemental data
Net assets, end of period (000’s)	$	25,810
Portfolio turnover rate^f		1.56	%

libertyshares.com

The accompanying notes are an integral part of these financial statements. | Semiannual Report 47


FRANKLIN TEMPLETON ETF TRUST




Statement of Investments, September 30, 2016 (unaudited)

Franklin LibertyQ International Equity Hedged ETF

	Industry	Shares		Value

Common Stocks 99.6%
Australia 14.5%
AGL Energy Ltd	Multi-Utilities	5,490	$	80,033
Amcor Ltd	Containers & Packaging	12,430		144,108
Aristocrat Leisure Ltd	Hotels, Restaurants & Leisure	4,590		55,533
Aurizon Holdings Ltd	Road & Rail	15,640		56,252
Brambles Ltd	Commercial Services & Supplies	16,230		148,792
Caltex Australia Ltd	Oil, Gas & Consumable Fuels	1,420		37,218
Cimic Group Ltd	Construction & Engineering	530		11,656
Coca-Cola Amatil Ltd	Beverages	2,810		22,041
Cochlear Ltd	Health Care Equipment & Supplies	735		79,301
CSL Ltd	Biotechnology	5,695		466,317
Dexus Property Group	Equity Real Estate Investment Trusts (REITs)	9,115		63,824
Domino’s Pizza Enterprises Ltd	Hotels, Restaurants & Leisure	305		16,413
Flight Centre Travel Group Ltd	Hotels, Restaurants & Leisure	615		17,121
Goodman Group	Equity Real Estate Investment Trusts (REITs)	13,895		77,409
GPT Group	Equity Real Estate Investment Trusts (REITs)	16,830		65,169
Harvey Norman Holdings Ltd	Multiline Retail	5,740		22,841
Incitec Pivot Ltd	Chemicals	13,930		30,061
James Hardie Industries PLC, CDI	Construction Materials	3,500		54,425
Medibank Private Ltd	Insurance	26,170		49,666
Mirvac Group	Equity Real Estate Investment Trusts (REITs)	17,960		30,786
Orica Ltd	Chemicals	3,345		38,908
Platinum Asset Management Ltd	Capital Markets	2,430		9,354
Qantas Airways Ltd	Airlines	4,330		10,338
REA Group Ltd	Media	640		27,647
Scentre Group	Equity Real Estate Investment Trusts (REITs)	52,195		187,729
Sonic Healthcare Ltd	Health Care Providers & Services	3,575		60,214
Stockland	Equity Real Estate Investment Trusts (REITs)	19,280		70,229
Tabcorp Holdings Ltd	Hotels, Restaurants & Leisure	7,285		27,763
Tatts Group Ltd	Hotels, Restaurants & Leisure	13,225		36,940
Telstra Corp. Ltd	Diversified Telecommunication Services	53,970		213,937
TPG Telecom Ltd	Diversified Telecommunication Services	3,175		20,944
Vicinity Centres	Equity Real Estate Investment Trusts (REITs)	26,270		63,727
Wesfarmers Ltd	Food & Staples Retailing	11,130		375,610
Westfield Corp	Equity Real Estate Investment Trusts (REITs)	17,115		127,436
Westpac Banking Corp	Banks	23,235		524,705
Woodside Petroleum Ltd	Oil, Gas & Consumable Fuels	7,395		161,961
Woolworths Ltd	Food & Staples Retailing	14,035		249,926
				3,736,334

Austria 0.1%
OMV AG	Oil, Gas & Consumable Fuels	1,215		34,982

Belgium 0.5%
Ageas	Insurance	1,195		43,599
Colruyt SA	Food & Staples Retailing	655		36,333
Proximus SADP	Diversified Telecommunication Services	1,405		41,976

				121,908

Denmark 2.7%
Coloplast AS, B	Health Care Equipment & Supplies	1,325		102,785
Novo Nordisk A/S, B	Pharmaceuticals	9,650		401,091
Pandora A/S	Textiles, Apparel & Luxury Goods	1,190		143,857
Tryg A/S	Insurance	975		19,571
a William Demant Holding AS	Health Care Equipment & Supplies	850		17,357

				684,661

Finland 1.2%
Elisa OYJ	Diversified Telecommunication Services	1,325		48,885

48 Semiannual Report

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	FRANKLIN TEMPLETON ETF TRUST
	STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ International Equity Hedged ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Finland (continued)
Kone OYJ, B	Machinery	3,335	$	169,291
Neste Oil OYJ	Oil, Gas & Consumable Fuels	610		26,008
Nokian Renkaat OYJ	Auto Components	900		32,821
Orion OYJ, B	Pharmaceuticals	1,135		44,758

				321,763

France 2.9%
AXA SA	Insurance	14,515		308,949
Cie Generale des Etablissements Michelin	Auto Components	1,640		181,465
CNP Assurances	Insurance	1,535		25,798
Gecina SA	Equity Real Estate Investment Trusts (REITs)	200		31,500
Hermes International	Textiles, Apparel & Luxury Goods	200		81,419
SCOR SE	Insurance	1,425		44,311
Societe BIC SA	Commercial Services & Supplies	245		36,247
Thales SA	Aerospace & Defense	470		43,306

				752,995

Germany 3.5%
Allianz SE	Insurance	2,945		437,197
b Covestro AG, 144A	Chemicals	370		21,884
Deutsche Lufthansa AG	Airlines	1,395		15,528
Hannover Rueck SE	Insurance	525		56,250
Hugo Boss AG	Textiles, Apparel & Luxury Goods	730		40,383
Muenchener Rueckversicherungs-Gesellschaft
Aktiengesell schaft in Muenchen	Insurance	1,250		233,189
ProSiebenSat.1 Media SE	Media	2,100		89,962

				894,393

Hong Kong 4.6%
Cheung Kong Infrastructure Holdings Ltd	Electric Utilities	5,000		42,999
CLP Holdings Ltd	Electric Utilities	7,500		77,505
Hang Lung Properties Ltd	Real Estate Management & Development	15,000		33,729
b HK Electric Investments and HK Electric Investments
Ltd., 144A	Electric Utilities	25,000		24,497
HKT Trust and HKT Ltd	Diversified Telecommunication Services	20,000		28,159
Hongkong Land Holdings Ltd	Real Estate Management & Development	6,000		42,600
Hysan Development Co. Ltd	Real Estate Management & Development	10,000		46,867
Kerry Properties Ltd	Real Estate Management & Development	7,500		24,562
Li & Fung Ltd	Textiles, Apparel & Luxury Goods	50,000		25,593
Link REIT	Equity Real Estate Investment Trusts (REITs)	17,500		128,611
MGM China Holdings Ltd	Hotels, Restaurants & Leisure	10,000		17,354
MTR Corp. Ltd	Road & Rail	12,500		68,818
New World Development Co. Ltd	Real Estate Management & Development	55,000		71,481
NWS Holdings Ltd	Industrial Conglomerates	20,000		33,368
PCCW Ltd	Diversified Telecommunication Services	40,000		24,549
Power Assets Holdings Ltd	Electric Utilities	12,500		121,842
Sands China Ltd	Hotels, Restaurants & Leisure	24,000		104,127
Sino Land Co. Ltd	Real Estate Management & Development	20,000		35,379
SJM Holdings Ltd	Hotels, Restaurants & Leisure	25,000		18,373
Swire Pacific Ltd., A	Real Estate Management & Development	5,000		53,862
Swire Properties Ltd	Real Estate Management & Development	8,000		23,414
The Wharf Holdings Ltd	Real Estate Management & Development	10,000		72,783
Wheelock and Co. Ltd	Real Estate Management & Development	5,000		29,494
Yue Yuen Industrial Holdings Ltd	Textiles, Apparel & Luxury Goods	7,500		30,944

				1,180,910

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Semiannual Report 49

FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ International Equity Hedged ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Ireland 0.2%
Paddy Power PLC	Hotels, Restaurants & Leisure	480	$	54,320
Ryanair Holdings PLC	Airlines	765		10,450

				64,770

Israel 2.1%
Azrieli Group Ltd	Real Estate Management & Development	280		12,276
Bank Hapoalim B.M	Banks	7,130		40,400
Bezeq Israeli Telecommunication Corp. Ltd	Diversified Telecommunication Services	29,760		56,068
Israel Chemicals Ltd	Chemicals	4,360		16,965
Mizrahi Tefahot Bank Ltd	Banks	965		12,255
a Taro Pharmaceutical Industries Ltd	Pharmaceuticals	105		11,604
Teva Pharmaceutical Industries Ltd	Pharmaceuticals	8,010		384,051

				533,619

Italy 0.5%
Snam SpA	Gas Utilities	19,935		110,581
UnipolSai SpA	Insurance	8,345		13,580

				124,161

Japan 18.9%
ABC-Mart Inc	Specialty Retail	500		33,872
Asahi Kasei Corp	Chemicals	10,000		79,080
Astellas Pharma Inc	Pharmaceuticals	17,000		264,153
Bridgestone Corp	Auto Components	5,500		201,284
CANON Inc	Technology Hardware, Storage & Peripherals	9,500		274,263
Daito Trust Construction Co. Ltd	Real Estate Management & Development	800		127,784
FamilyMart UNY Holdings Co. Ltd	Food & Staples Retailing	500		33,279
Fuji Heavy Industries Ltd	Automobiles	6,500		241,026
GungHo Online Entertainment Inc	Software	6,500		15,854
Hino Motors Ltd	Machinery	2,500		26,441
Hitachi Metals Ltd	Metals & Mining	2,000		24,332
Hoya Corp	Health Care Equipment & Supplies	3,500		139,564
Isuzu Motors Ltd	Automobiles	5,000		58,238
ITOCHU Corp	Trading Companies & Distributors	13,000		162,011
Japan Airlines Co. Ltd	Airlines	1,500		43,831
Japan Tobacco Inc	Tobacco	10,000		406,755
Kakaku.com Inc	Internet Software & Services	1,500		27,003
KAO Corp	Personal Products	4,000		224,796
KDDI Corp	Wireless Telecommunication Services	17,000		522,935
Lawson Inc	Food & Staples Retailing	500		39,352
M3 Inc	Health Care Technology	1,500		50,955
Mitsubishi Gas Chemical Co. Inc	Chemicals	2,500		35,575
Mitsubishi Motors Corp	Automobiles	7,000		32,420
Mitsubishi Tanabe Pharma Corp	Pharmaceuticals	2,000		42,562
mixi Inc	Internet Software & Services	500		17,948
Murata Manufacturing Co. Ltd	Electronic Equipment, Instruments & Components	1,500		193,008
Nippon Telegraph & Telephone Corp	Diversified Telecommunication Services	6,500		296,164
Nitori Co. Ltd	Specialty Retail	700		83,296
Nitto Denko Corp	Chemicals	1,100		70,672
NOK Corp	Auto Components	1,000		21,636
NTT DoCoMo Inc	Wireless Telecommunication Services	13,500		341,549
OBIC Co. Ltd	IT Services	500		26,416
Oracle Corp. Japan	Software	500		28,095
Otsuka Corp	IT Services	500		23,577
Otsuka Holdings Co. Ltd	Pharmaceuticals	3,000		135,950
Park24 Co. Ltd	Commercial Services & Supplies	1,000		32,390
Santen Pharmaceutical Co. Ltd	Pharmaceuticals	3,000		43,934

50 Semiannual Report

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	FRANKLIN TEMPLETON ETF TRUST
	STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ International Equity Hedged ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Japan (continued)
Shimamura Co. Ltd	Specialty Retail	200	$	24,214
SHIMANO Inc	Leisure Products	500		73,668
Shionogi & Co. Ltd	Pharmaceuticals	2,500		127,191
Start Today Co. Ltd	Internet & Catalog Retail	1,500		25,626
Sumitomo Rubber Industries Ltd	Auto Components	2,000		29,981
a Tokyo Electric Power Co. Holdings Inc	Electric Utilities	10,500		45,104
Trend Micro Inc	Software	1,000		34,662
USS Co. Ltd	Specialty Retail	2,000		33,536
Yahoo Japan Corp	Internet Software & Services	12,000		47,637
Yokohama Rubber Co. Ltd	Auto Components	1,500		23,759

				4,887,378

Luxembourg 0.1%
RTL Group SA	Media	380		31,571

Netherlands 0.9%
Aegon NV	Insurance	13,700		52,516
Boskalis Westminster	Construction & Engineering	700		24,941
Koninklijke Ahold Delhaize NV	Food & Staples Retailing	7,000		159,613

				237,070

New Zealand 0.6%
Fletcher Building Ltd	Construction Materials	5,830		45,491
Mercury NZ Ltd	Electric Utilities	5,160		11,426
Meridian Energy Ltd	Independent Power and Renewable Electricity Producers	12,825		24,248
Ryman Healthcare Ltd	Health Care Providers & Services	2,980		20,869
Spark New Zealand Ltd	Diversified Telecommunication Services	24,185		63,490

				165,524

Norway 0.7%
Telenor ASA	Diversified Telecommunication Services	6,705		115,018
Yara International ASA	Chemicals	1,770		58,820

				173,838

Portugal 0.1%
Jeronimo Martins SGPS SA	Food & Staples Retailing	2,030		35,212
Singapore 2.5%
Ascendas REIT	Equity Real Estate Investment Trusts (REITs)	20,000		36,965
CapitaLand Commercial Trust	Equity Real Estate Investment Trusts (REITs)	17,500		20,408
CapitaLand Mall Trust	Equity Real Estate Investment Trusts (REITs)	22,000		35,014
ComfortDelGro Corp. Ltd	Road & Rail	20,500		42,249
Jardine Cycle & Carriage Ltd	Distributors	1,000		31,413
Keppel Corp. Ltd	Industrial Conglomerates	13,000		51,392
Singapore Airlines Ltd	Airlines	2,500		19,271
Singapore Exchange Ltd	Capital Markets	10,500		57,065
Singapore Press Holdings Ltd	Media	14,500		40,519
Singapore Technologies Engineering Ltd	Aerospace & Defense	14,000		33,166
Singapore Telecommunications Ltd	Diversified Telecommunication Services	81,000		235,850
StarHub Ltd	Wireless Telecommunication Services	8,500		21,383
Suntec REIT	Equity Real Estate Investment Trusts (REITs)	17,000		21,383
Yangzijiang Shipbuilding Holdings Ltd	Machinery	22,500		12,377

				658,455

Spain 4.7%
Abertis Infraestructuras SA	Transportation Infrastructure	2,710		42,211
Amadeus IT Group SA, A	IT Services	1,950		97,452
Banco Santander SA	Banks	105,905		469,756

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Semiannual Report 51

FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ International Equity Hedged ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
Spain (continued)
Distribuidora Internacional de Alimentacion SA	Food & Staples Retailing	5,330	$	33,010
Enagas SA	Gas Utilities	1,760		52,958
Endesa SA	Electric Utilities	2,895		62,075
Industria de Diseno Textil SA	Specialty Retail	9,830		364,550
Red Electrica Corp. SA	Electric Utilities	3,595		77,589
Zardoya Otis SA	Machinery	1,680		16,161

				1,215,762

Sweden 2.4%
Atlas Copco AB, B	Machinery	3,235		88,508
Hennes & Mauritz AB, B	Specialty Retail	10,360		292,635
ICA Gruppen AB	Food & Staples Retailing	600		19,840
Skanska AB, B	Construction & Engineering	1,580		36,939
Swedish Match AB	Tobacco	1,900		69,814
Telia Co. AB	Diversified Telecommunication Services	23,335		104,645
				612,381

Switzerland 9.2%
a Actelion Ltd	Biotechnology	590		102,370
EMS-Chemie Holding AG	Chemicals	85		45,727
Galenica AG	Pharmaceuticals	25		26,589
Geberit AG	Building Products	340		149,202
Kuehne & Nagel International AG	Marine	385		55,999
Nestle SA	Food Products	6,885		543,683
Partners Group Holding AG	Capital Markets	185		93,511
Roche Holding AG	Pharmaceuticals	2,050		509,645
a Swiss Life Holding AG	Insurance	250		64,860
a Swiss Prime Site AG	Real Estate Management & Development	575		50,536
Swiss Re AG	Insurance	3,275		296,115
Swisscom AG	Diversified Telecommunication Services	215		102,399
a Zurich Insurance Group AG	Insurance	1,280		330,101

				2,370,737

United Kingdom 26.7%
Admiral Group PLC	Insurance	2,875		76,522
Aggreko PLC	Commercial Services & Supplies	1,990		24,648
AstraZeneca PLC	Pharmaceuticals	9,040		587,618
BAE Systems PLC	Aerospace & Defense	28,940		196,988
Barratt Developments PLC	Household Durables	6,660		42,764
The Berkeley Group Holdings PLC	Household Durables	970		32,509
British American Tobacco PLC	Tobacco	8,440		540,503
BT Group PLC	Diversified Telecommunication Services	79,430		401,420
Burberry Group PLC	Textiles, Apparel & Luxury Goods	4,200		75,235
Centrica PLC	Multi-Utilities	26,750		79,295
Compass Group PLC	Hotels, Restaurants & Leisure	13,410		260,423
Croda International PLC	Chemicals	1,205		54,535
Direct Line Insurance Group PLC	Insurance	11,705		55,467
Experian PLC	Professional Services	7,770		155,839
GKN PLC	Auto Components	7,910		32,911
GlaxoSmithKline PLC	Pharmaceuticals	24,495		522,786
Hargreaves Lansdown PLC	Capital Markets	2,975		49,195
IMI PLC	Machinery	2,155		30,065
Imperial Brands PLC	Tobacco	7,940		409,829
InterContinental Hotels Group PLC	Hotels, Restaurants & Leisure	845		34,905
Intertek Group PLC	Professional Services	825		37,391
ITV PLC	Media	46,585		113,282
J Sainsbury PLC	Food & Staples Retailing	12,250		39,113

52 Semiannual Report

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	FRANKLIN TEMPLETON ETF TRUST
	STATEMENT OF INVESTMENTS (UNAUDITED)




Franklin LibertyQ International Equity Hedged ETF (continued)

	Industry	Shares		Value

Common Stocks (continued)
United Kingdom (continued)
Kingfisher PLC	Specialty Retail	15,075	$	73,806
Marks & Spencer Group PLC	Multiline Retail	14,605		62,816
Mediclinic International PLC	Health Care Providers & Services	1,960		23,589
Mondi PLC	Paper & Forest Products	1,680		35,419
Next PLC	Multiline Retail	1,705		105,779
Persimmon PLC	Household Durables	3,180		74,974
Provident Financial PLC	Consumer Finance	1,025		40,384
Randgold Resources Ltd	Metals & Mining	435		43,990
Reckitt Benckiser Group PLC	Household Products	5,105		481,771
Relx NV	Professional Services	9,305		167,259
Relx PLC	Professional Services	11,130		211,519
Rio Tinto Ltd	Metals & Mining	3,540		139,811
Royal Mail PLC	Air Freight & Logistics	8,580		54,557
The Sage Group PLC	Software	9,485		90,929
SSE PLC	Electric Utilities	8,930		181,889
Tate & Lyle PLC	Food Products	4,345		42,275
Taylor Wimpey PLC	Household Durables	14,740		29,506
Unilever NV, IDR	Personal Products	11,660		538,227
Unilever PLC	Personal Products	11,350		538,807
William Hill PLC	Hotels, Restaurants & Leisure	8,265		32,660
William Morrison Supermarkets PLC	Food & Staples Retailing	17,450		49,393

				6,872,603

Total Common Stocks (Cost $25,532,343)				25,711,027

Preferred Stocks (Cost $24,024) 0.1%
Germany 0.1%
c Fuchs Petrolub SE, 2.019%, pfd	Chemicals	590		26,926

Total Investments (Cost $25,556,367) 99.7%				25,737,953
Other Assets, less Liabilities 0.3%				72,341

Net Assets 100.0%			$	25,810,294

^aNon-income-producing.
^bSecurity was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers
or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust’s Board of Trustees. At
September 30, 2016, the aggregate value of these securities was $46,381, representing 0.2% of net assets.
^cRate disclosed reflects the yield at September 30, 2016.

At September 30, 2016, the Fund had the following forward exchange contracts outstanding. See Note 1(c).


Forward Exchange Contracts
					Contract	Settlement		Unrealized		Unrealized
Currency	Counterparty^aType		Quantity		Amount	Date		Appreciation		Depreciation
OTC Forward Exchange Contracts
Australian Dollar	MSCO	Buy	5,208,234	$	3,985,905	10/04/16	$	—	$	(303	)
Australian Dollar	MSCO	Sell	5,208,234		3,911,319	10/04/16		—		(74,283	)
British Pound	MSCO	Buy	4,717,108		6,127,829	10/04/16		—		(307	)
British Pound	MSCO	Sell	4,717,108		6,182,545	10/04/16		55,023		—
Danish Krone	MSCO	Buy	4,958,612		748,362	10/04/16		—		—
Danish Krone	MSCO	Sell	4,958,612		743,039	10/04/16		—		(5,323	)
Euro	MSCO	Buy	4,068,309		4,571,737	10/04/16		229		—
Euro	MSCO	Sell	4,068,309		4,537,118	10/04/16		—		(34,848	)
Hong Kong Dollar	MSCO	Buy	8,781,801		1,132,153	10/04/16		113		—
Hong Kong Dollar	MSCO	Sell	8,781,801		1,132,401	10/04/16		135		—
Japanese Yen	MSCO	Buy	493,985,326		4,877,901	10/04/16		244		—
Japanese Yen	MSCO	Sell	493,985,326		4,782,980	10/04/16		—		(95,165	)

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Semiannual Report 53

FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


Franklin LibertyQ International Equity Hedged ETF (continued)

Forward Exchange Contracts (continued)
					Contract	Settlement		Unrealized			Unrealized
Currency	Counterparty^aType		Quantity		Amount	Date		Appreciation			Depreciation
OTC Forward Exchange Contracts (continued)
New Zealand Dollar	MSCO	Buy	234,485	$	170,526	10/04/16	$	—		$	(9	)
New Zealand Dollar	MSCO	Sell	234,485		169,871	10/04/16		—			(646	)
Norwegian Krone	MSCO	Buy	1,501,245		187,836	10/04/16		—			—
Norwegian Krone	MSCO	Sell	1,501,245		179,992	10/04/16		—			(7,844	)
Singapore Dollar	MSCO	Buy	933,210		684,516	10/04/16		—			(68	)
Singapore Dollar	MSCO	Sell	933,210		684,605	10/04/16		157			—
Swedish Krona	MSCO	Buy	5,456,066		636,840	10/04/16		—			—
Swedish Krona	MSCO	Sell	5,456,066		637,213	10/04/16		373			—
Swiss Franc	MSCO	Buy	2,299,409		2,371,873	10/04/16		119			—
Swiss Franc	MSCO	Sell	2,299,409		2,344,710	10/04/16		—			(27,282	)
Israeli Shekel	MSCO	Buy	2,069,843		551,700	10/05/16		—			(51	)
Israeli Shekel	MSCO	Sell	2,069,843		547,457	10/05/16		—			(4,192	)
Australian Dollar	MSCO	Sell	5,062,764		3,872,094	11/02/16		169			—
British Pound	MSCO	Sell	4,670,039		6,070,327	11/02/16		180			—
Danish Krone	MSCO	Sell	4,694,150		709,434	11/02/16		—			(1	)
Euro	MSCO	Sell	4,082,153		4,593,601	11/02/16		—			(297	)
Hong Kong Dollar	MSCO	Sell	9,042,400		1,166,056	11/02/16		—			(141	)
Israeli Shekel	MSCO	Sell	1,996,737		532,497	11/02/16		45			—
Japanese Yen	MSCO	Sell	499,440,450		4,937,619	11/02/16		—			(297	)
New Zealand Dollar	MSCO	Sell	227,010		164,891	11/02/16		7			—
Norwegian Krone	MSCO	Sell	1,390,021		173,934	11/02/16		—			(3	)
Singapore Dollar	MSCO	Sell	897,337		658,333	11/02/16		46			—
Swedish Krona	MSCO	Sell	5,309,203		620,592	11/02/16		—			(11	)
Swiss Franc	MSCO	Sell	2,314,963		2,391,944	11/02/16		—			(175	)
Total Forward Exchange Contracts							$	56,840		$	(251,246	)
Net unrealized appreciation (depreciation)							$	(194,406	)

^aMay be comprised of multiple contracts with the same counterparty, currency and settlement date.

See Abbreviations on page 66.

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


								FRANKLIN TEMPLETON ETF TRUST
Financial Statements


Statements of Assets and Liabilities
September 30, 2016 (unaudited)


		Franklin										Franklin
		LibertyQ										LibertyQ
		Emerging			Franklin			Franklin			International
		Markets			LibertyQ Global			LibertyQ Global				Equity
		ETF			Dividend ETF			Equity ETF			Hedged ETF
Assets:
Investments in securities:
Cost – Unaffiliated issuers	$	59,759,634		$	25,380,831		$	25,479,758		$	25,556,367
Value – Unaffiliated issuers	$	61,313,534		$	25,968,320		$	26,361,662		$	25,737,953
Cash		—			12,159			29,919				55,868
Foreign currency, at value (cost $5,207,137, $58,928,
$61,831 and $80,069, respectively)		5,208,384			58,817			61,938				80,104
Receivables:
Investment securities sold		—			—			—				97,769
Capital shares sold		28,777,396			—			—				—
Dividends		33,485			78,900			47,469				78,551
Affiliates		—			2,422			4,516				3,618
Unrealized appreciation on OTC forward
exchange contracts		—			—			—				56,840
Total assets		95,332,799			26,120,618			26,505,504				26,110,703
Liabilities:
Payables:
Investment securities purchased		33,717,277			—			—				—
Management fees		21			—			—				—
Transfer agent fees		11,847			11,847			11,847				11,847
Trustees’ fees and expenses		4,792			4,792			4,792				4,792
Custody fees		5,018			2,209			2,209				2,209
Professional fees		20,965			20,965			20,965				20,965
Reports to shareholders		3,494			3,494			3,494				3,494
Unrealized depreciation on OTC forward
exchange contracts		—			—			—				251,246
Accrued expenses and other liabilities		5,856			5,856			5,856				5,856
Total liabilities		33,769,270			49,163			49,163				300,409
Net assets, at value	$	61,563,529		$	26,071,455		$	26,456,341		$	25,810,294
Net assets consist of:
Paid-in capital	$	59,643,020		$	25,431,686		$	25,326,438		$	25,447,822
Undistributed net investment income		392,746			60,876			256,089				225,096
Net unrealized appreciation (depreciation)		1,569,814			587,280			882,042				(12,816	)
Accumulated net realized gain (loss)		(42,051	)		(8,387	)		(8,228	)			150,192
Net assets, at value	$	61,563,529		$	26,071,455		$	26,456,341		$	25,810,294
Shares outstanding		2,200,000			1,000,000			1,000,000				1,000,000
Net asset value per share	$	27.98		$	26.07		$	26.46			$	25.81

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FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS



Statements of Operations
for the period ended September 30, 2016 (unaudited)^a


											Franklin
		Franklin									LibertyQ
		LibertyQ			Franklin			Franklin			International
		Emerging			LibertyQ Global			LibertyQ Global			Equity
		Markets ETF			Dividend ETF			Equity ETF			Hedged ETF
Investment income:
Dividends (net of foreign taxes of $69,618, $16,646,
$18,389 and $15,520, respectively)	$	442,632		$	309,203		$	286,397		$	258,958
Expenses:
Management fees (Note 3a)		49,886			38,963			30,308			33,862
Transfer agent fees		11,847			11,847			11,847			11,847
Custodian fees		5,018			2,209			2,209			2,209
Reports to shareholders		3,494			3,494			3,494			3,494
Professional fees		20,965			20,965			20,965			20,965
Trustees’ fees and expenses		4,792			4,792			4,792			4,792
Other		5,856			5,856			5,856			5,856
Total expenses		101,858			88,126			79,471			83,025
Expenses waived/paid by affiliates (Note 3c)		(51,972	)		(49,163	)		(49,163	)		(49,163	)
Net expenses		49,886			38,963			30,308			33,862
Net investment income		392,746			270,240			256,089			225,096
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments		226			(7,925	)		(3,710	)		(29,917	)
Foreign currency transactions		(42,277	)		(462	)		(4,518	)		180,109
Net realized gain (loss)		(42,051	)		(8,387	)		(8,228	)		150,192
Net change in unrealized appreciation (depreciation) on:
Investments		1,553,900			587,489			881,904			181,586
Translation of other assets and liabilities denominated
in foreign currencies		15,914			(209	)		138			(194,402	)
Net change in unrealized
appreciation (depreciation)		1,569,814			587,280			882,042			(12,816	)
Net realized and unrealized gain (loss)		1,527,763			578,893			873,814			137,376
Net increase (decrease) in net assets resulting
from operations	$	1,920,509		$	849,133		$	1,129,903		$	362,472

^aFor the period June 1, 2016 (commencement of operations) to September 30, 2016.

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

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FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS


Statements of Changes in Net Assets




											Franklin
		Franklin									LibertyQ
		LibertyQ			Franklin			Franklin			International
		Emerging			LibertyQ Global			LibertyQ Global			Equity
		Markets ETF			Dividend ETF			Equity ETF			Hedged ETF
		Period Ended September 30, 2016 (unaudited)^a
Increase (decrease) in net assets:
Operations:
Net investment income	$	392,746		$	270,240		$	256,089		$	225,096
Net realized gain (loss)		(42,051	)		(8,387	)		(8,228	)		150,192
Net change in unrealized appreciation (depreciation)		1,569,814			587,280			882,042			(12,816	)
Net increase (decrease) in net assets resulting
from operations		1,920,509			849,133			1,129,903			362,472
Distributions to shareholders from net
investment income		—			(209,364	)		—			—
Capital share transactions: (Note 2)		59,643,020			25,431,686			25,326,438			25,447,822
Net increase (decrease) in net assets		61,563,529			26,071,455			26,456,341			25,810,294
Net assets:
Beginning of period		—			—			—			—
End of period	$	61,563,529		$	26,071,455		$	26,456,341		$	25,810,294
Undistributed net investment income included in net
assets, end of period	$	392,746		$	60,876		$	256,089		$	225,096

^aFor the period June 1, 2016 (commencement of operations) to September 30, 2016.

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FRANKLIN TEMPLETON ETF TRUST

Notes to Financial Statements (unaudited)

1. Organization and Significant Accounting Policies

Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end investment company, consisting of five separate funds (Funds), four of which are included in this report and the financial statements of the remaining fund is presented separately, and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Effective June 1, 2016, the Trust began offering shares of Franklin LibertyQ Emerging Markets ETF, Franklin LibertyQ Global Dividend ETF, Franklin LibertyQ Global Equity ETF and Franklin LibertyQ International Equity Hedged ETF. The Trust had no operations prior to its effective date June 1, 2016, other than matters relating to its organization as an open-end management investment company with the Securities and Exchange Commission (the “SEC”), and the sale and issuance of 4,000 shares of the Franklin LibertyQ Global Equity ETF to Franklin Resources, Inc. in exchange for a contribution of $100,000. Each of the Funds are an exchange traded fund (ETF) and seek to provide the investment results that closely correspond, before fees and expenses, to the performance of each Fund’s corresponding underlying index.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Funds’ investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Funds calculate the net asset value (NAV) per share as of 4 p.m. Eastern each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Funds’ administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Funds’ valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Funds to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities and exchange traded funds listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of 4 p.m. Eastern time, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. London time on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

Certain derivative financial instruments (derivatives) trade in the OTC market. The Funds’ pricing services use various techniques including industry standard option pricing models and proprietary discounted cash flow models to determine the fair value of those instruments. The Funds’ net benefit or obligation under the derivative contract, as measured by the fair value of the contract, is included in net assets.

The Funds have procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally,

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Funds. As a result, differences may arise between the value of the Funds’ portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. The VC monitors price movements for significant events following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Funds. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Funds’ portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Funds for financial reporting purposes.

b. Foreign Currency Translation

Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. The Funds may enter into foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Portfolio securities and assets and liabilities denominated in foreign currencies contain risks that those currencies will decline in value relative to the U.S. dollar. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Board.

The Funds do not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments in the Statements of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period.

c. Derivative Financial Instruments

Certain or all Funds invested in derivatives in order to manage risk or gain exposure to various other investments or markets. Derivatives are financial contracts based on an underlying or notional amount, require no initial investment or an initial net investment that is smaller than would normally be required to have a similar response to changes in market factors, and require or permit net settlement. Derivatives contain various risks including the potential inability of the counterparty to fulfill their obligations under the terms of the contract, the potential for an illiquid secondary market, and/or the potential for market movements which expose the Fund to gains or losses in excess of the amounts shown in the Statements of Assets and Liabilities. Realized gain and loss and unrealized appreciation and depreciation on these contracts for the period are included in the Statements of Operations.

Collateral requirements differ by type of derivative. Collateral terms are contract specific for OTC derivatives. For OTC derivatives traded under an ISDA master agreement, posting of collateral is required by either the Fund or the applicable counterparty if the total net exposure of all OTC derivatives with the applicable counterparty exceeds the minimum transfer amount, which typically ranges from $100,000 to $250,000, and can vary depending on the counterparty and the type of the agreement. Generally, collateral is determined at the close of Fund business each day and any additional collateral required due to changes in derivative values may be delivered by the Fund or the counterparty within a few business days. Collateral pledged and/or received by the Fund, if any, is held in segregated accounts with the Fund’s custodian/ counterparty broker and can be in the form of cash and/or securities. Unrestricted cash may be invested according to the Funds’ investment objectives. To the extent that the amounts due to the Fund from its counterparties are not subject to collateralization or are not fully collateralized, the Fund bears the risk of loss from counterparty non-performance.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Significant Accounting Policies (continued)

c. Derivative Financial Instruments (continued)

Certain or all Funds entered into OTC forward exchange contracts primarily to manage and/or gain exposure to certain foreign currencies. A forward exchange contract is an agreement between the Fund and a counterparty to buy or sell a foreign currency at a specific exchange rate on a future date.

See Note 7 regarding other derivative information.

d. Income and Deferred Taxes

It is each Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. Each Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Funds may be subject to foreign taxation related to income received, capital gains on the sale of securities and certain foreign currency transactions in the foreign jurisdictions in which the Funds invest. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Funds invest. When a capital gain tax is determined to apply, certain or all Funds record an estimated deferred tax liability in an amount that would be payable if the securities were disposed of on the valuation date.

Each Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of September 30, 2016, each Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years).

e. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income and realized gain distributions are recorded on the ex-dividend date except for certain dividends from securities where the dividend rate is not available. In such cases, the dividend is recorded as soon as the information is received by the Funds. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with U.S. GAAP. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

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

f. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

g. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

Shares of the Funds are issued and redeemed at their respective NAV only in blocks of 200,000 shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Funds. Once created, shares of the Funds generally trade in the secondary market in amounts

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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

2. Shares of Beneficial Interest (continued)

less than one Creation Unit. The market price of the Funds’ shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and or cash (which may include cash in lieu of certain securities). For the period ended September 30, 2016, all Creation Unit transactions were made in-kind.

Authorized participants pay a transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Funds regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance or redemption of Creation Units and is not charged to or paid by the Funds.

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


		Standard Creation/	Maximum Additional
		Redemption	Charge for
Fund		Transaction Fee	Creations/Redemption^a
Franklin LibertyQ Emerging Markets ETF	$	3,500	5	%
Franklin LibertyQ Global Dividend ETF	$	1,250	3	%
Franklin LibertyQ Global Equity ETF	$	5,000	3	%
Franklin LibertyQ International Equity Hedged ETF	$	2,500	3	%

^aAs a percentage of the net asset value per Creation Unit.

At September 30, 2016, there were an unlimited number of shares authorized (without par value). Transactions in the Funds’ shares were as follows:


	Franklin LibertyQ			Franklin LibertyQ
	Emerging Markets ETF			Global Dividend ETF
	Shares		Amount	Shares		Amount
Period September 30, 2016^a
Shares sold	2,200,000	$	59,643,020	1,000,000	$	25,431,686
Net increase (decrease)	2,200,000	$	59,643,020	1,000,000	$	25,431,686
				Franklin LibertyQ
	Franklin LibertyQ			International Equity
	Global Equity ETF			Hedged ETF
	Shares		Amount	Shares		Amount
Period September 30, 2016^a
Shares sold	1,000,000	$	25,326,438	1,000,000	$	25,447,822
Net increase (decrease)	1,000,000	$	25,326,438	1,000,000	$	25,447,822

^aFor the period June 1, 2016 (commencement of operations) to September 30, 2016.

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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

3. Transactions with Affiliates

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


Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter

a. Management Fees

The Funds pay an investment management fee to Advisers based on the average net assets of each of the Funds as follows:


	Annualized Fee Rate
Franklin LibertyQ Emerging Markets ETF	0.55	%
Franklin LibertyQ Global Dividend ETF	0.45	%
Franklin LibertyQ Global Equity ETF	0.35	%
Franklin LibertyQ International Equity Hedged ETF	0.40	%

b. Administrative Fees

Under an agreement with Advisers, FT Services provides administrative services to the Funds. The fee is paid by Advisers based on each of the Funds’ average daily net assets, and is not an additional expense of the Funds.

c. Waiver and Expense Reimbursements

Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by Franklin LibertyQ Emerging Markets ETF, Franklin LibertyQ Global Dividend ETF, Franklin LibertyQ Global Equity ETF, Franklin LibertyQ International Equity Hedged ETF so that the expenses (excluding acquired fund fees and expenses) for each of the Funds does not exceed 0.55%, 0.45%, 0.35%, and 0.40%, 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 May 31, 2017. Total expenses waived or paid are not subject to recapture subsequent to the Funds’ fiscal year end.

4. Income Taxes

At September 30, 2016, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


											Franklin LibertyQ
		Franklin LibertyQ			Franklin LibertyQ			Franklin LibertyQ			International
		Emerging Markets			Global Dividend			Global Equity			Equity Hedged
		ETF			ETF			ETF			ETF

Cost of investments	$	59,759,634		$	25,380,831		$	25,479,758		$	25,556,367

Unrealized appreciation	$	2,320,732		$	1,243,991		$	1,455,787		$	1,126,501
Unrealized depreciation		(766,832	)		(656,502	)		(573,883	)		(944,915	)
Net unrealized appreciation
(depreciation)	$	1,553,900		$	587,489		$	881,904		$	181,586

Differences between income and/or capital gains as determined on a book basis and a tax basis are primarily due to differing treatment of foreign currency transactions.

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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

5. Investment Transactions

Purchases and sales of investments (excluding short term securities and in-kind transactions) for the period ended September 30, 2016, were as follows:


													Franklin LibertyQ
		Franklin LibertyQ			Franklin LibertyQ				Franklin LibertyQ				International
		Emerging Markets			Global Dividend				Global Equity				Equity Hedged
			ETF				ETF				ETF				ETF

Purchases	$	28,127,453				$	1,073,135			$	1,905,154			$	595,239
Sales		$	—			$	174,099			$	10,057			$	401,340

In-kind transactions associated with creation and redemptions for the period ended September 30, 2016, were as follows:

													Franklin LibertyQ
		Franklin LibertyQ			Franklin LibertyQ				Franklin LibertyQ				International
		Emerging Markets			Global Dividend				Global Equity				Equity Hedged
			ETF				ETF				ETF				ETF

Cost of Securities Received	$	31,632,181		$	24,489,721			$	23,588,604			$	25,393,017
Value of Securities Delivered		$	—		$		—		$		—		$		—

6. Concentration of Risk

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

7. Other Derivative Information

At September 30, 2016, the Funds’ investments in derivative contracts are reflected in the Statements of Assets and Liabilities as follows:


	Asset Derivatives			Liability Derivatives

Derivative Contracts
Not Accounted for as	Statements of Assets and			Statements of Assets and
Hedging Instruments	Liabilities Location		Fair Value	Liabilities Location		Fair Value
Franklin LibertyQ International Equity
Hedged ETF
Foreign exchange contracts	Unrealized appreciation on	$	56,840	Unrealized depreciation on	$	251,246
	OTC forward exchange			OTC forward exchange
	contracts			contracts

For the period ended September 30, 2016, the effect of derivative contracts in the Funds’ Statements of Operations was as follows:


							Net Change in
							Unrealized
Derivative Contracts			Net Realized				Appreciation
Not Accounted for as	Statements of		Gain (Loss)		Statements of		(Depreciation)
Hedging Instruments	Operations Locations		for the Period		Operations Locations		for the Period
Franklin LibertyQ International
Equity Hedged ETF
	Net realized gain (loss) from:				Net change in unrealized
					appreciation (depreciation) on:
	Foreign currency	$	180,957	^a	Translation of other assets	$	(194,406	)^a
	transactions				and liabilities denominated
					in foreign currencies

^aForward exchange contracts are included in net realized gain (loss) from foreign currency transactions and net change in unrealized appreciation (depreciation) translation of
other assets and liabilities denominated in foreign currencies in the Statement of Operations.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

7. Other Derivative Information (continued)

For the period ended September 30, 2016, the average month end fair value of derivatives represented 1.1% of average month end net assets. The average month end number of open derivative contracts for the period was 21.

At September 30, 2016, the Funds’ OTC derivative assets and liabilities are as follows:


		Gross and Net Amounts
		of Assets and Liabilities
		Presented in the
		Statements of
		Assets and Liabilities

		Assets^a		Liabilities^a
Franklin LibertyQ International Equity Hedged ETF
Derivatives
Forward Exchange Contracts	$	56,840	$	251,246

^aAbsent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities.

At September 30, 2016, the Funds’ OTC derivative assets, which may be offset against the Funds’ OTC derivative liabilities and collateral received from the counterparty, are as follows:


				Amounts Not Offset in the
				Statements of Assets and Liabilities

		Gross and Net
		Amounts of Assets				Financial
		Presented in the		Financial		Instruments	Cash
		Statements of		Instruments		Collateral	Collateral	Net Amount (Not
		Assets and Liabilities		Available for Offset		Received	Received	less than zero)
Franklin LibertyQ
International Equity Hedged
ETF
Counterparty
MSCO	$	56,840	$	(56,840	)	$ —	$ —	$ —

At September 30, 2016, the Funds’ OTC derivative liabilities, which may be offset against the Funds’ OTC derivative assets and collateral pledged to the counterparty, are as follows:


				Amounts Not Offset in the
				Statements of Assets and Liabilities

		Gross and Net
		Amounts of Liabilities				Financial
		Presented in the		Financial		Instruments	Cash
		Statements of		Instruments		Collateral	Collateral		Net Amount (Not
		Assets and Liabilities		Available for Offset		Pledged	Pledged		less than zero)
Franklin LibertyQ
International Equity Hedged
ETF
Counterparty
MSCO	$	251,246	$	(56,840	)	$ —	$ —	$	194,406

See note 1(c) regarding derivative financial instruments.

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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

8. Fair Value Measurements

The Funds follow a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Funds’ own market assumptions (unobservable inputs). These inputs are used in determining the value of the Funds’ financial instruments and are summarized in the following fair value hierarchy:

Level 1 – quoted prices in active markets for identical financial instruments
Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, 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.

For movements between the levels within the fair value hierarchy, the Funds have adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of September 30, 2016, in valuing the Funds’ assets and liabilities carried at fair value, is as follows:


		Level 1		Level 2	Level 3		Total

Franklin LibertyQ Emerging Markets ETF
Assets:
Investments in Securities:
Equity Investments^a,b	$	61,313,534	$	—	$ —	$	61,313,534

Franklin LibertyQ Global Dividend ETF
Assets:
Investments in Securities:
Equity Investments^a,b	$	25,968,320	$	—	$ —	$	25,968,320

Franklin LibertyQ Global Equity ETF
Assets:
Investments in Securities:
Equity Investments^a,b	$	26,361,662	$	—	$ —	$	26,361,662

Franklin LibertyQ International Equity Hedged ETF
Assets:
Investments in Securities:
Equity Investments^a,b	$	25,737,953	$	—	$ —	$	25,737,953
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	56,840	$ —	$	56,840

Liabilities:
Other Financial Instruments:
Forward Exchange Contracts	$	—	$	251,246	$ —	$	251,246

^aIncludes common and preferred stocks as well as management investment companies.
^bFor detailed categories, see the accompanying Statement of Investments.

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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

9. Subsequent Events

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


ABBREVIATIONS

Counterparty
MSCO	Morgan Stanley
Selected Portfolio
ADR	American Depository Receipt
CDI	Clearing House Electronic Subregister System Depositary Interest
ETF	Exchange Traded Fund
GDR	Global Depositary Receipt
IDR	International Depositary Receipt
NVDR	Non Voting Depositary Receipt
REIT	Real Estate Investment Trust

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FRANKLIN TEMPLETON ETF TRUST

Shareholder Information

Board Approval of Investment Management Agreement

At a meeting held on April 18, 2016, the Board of Trustees (Board), including a majority of non-interested or independent Trustees, approved, for each of the separate funds in Franklin Templeton ETF Trust, the investment management agreements with Franklin Advisers, Inc. (FAV) as investment manager. The Board noted that the forms of such agreements are substantially the same as the standard forms of investment management agreement that include administration services for other funds in the Franklin Templeton family of funds (“FTI Funds”). The Board considered the qualifications of the personnel of FAV who would be responsible for managing and advising the Funds and the specific terms and fees of the Investment Management Agreements and management’s voluntary agreement to waive or assume certain expenses of the Funds for a period of time.

The Board considered various materials relating to the Investment Management Agreements, including (1) copies of the proposed forms of Investment Management Agreement; (2) the biographies of the portfolio managers; and (3) information describing the fee payments under the Investment Management Agreements.

The Board also was provided with information relating to proposed expenses for the Funds, including comparative data provided by Morningstar, Inc. (“Morningstar”), an independent organization, which compared the Funds’ expenses with those of other funds deemed comparable to the Funds as selected by Morningstar, including funds in the actively managed ETF category.

In determining that the terms of the proposed Agreements were fair and reasonable, the Board took into account several factors including, but not limited to, the following: (1) the nature and quality of the services to be provided by FAV to the Funds under the proposed Investment Management Agreements; (2) FAV’s experience as managers of other funds and accounts, including those within the FTI complex; (3) FAV’s strength and reputation within the industry; (4) the fairness of the compensation under the proposed Investment Management Agreements; (5) the comparative pricing structure (including fee waivers and the estimated expense ratio to be borne by shareholders) of the Funds; (6) the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of FAV; and (7) FAV’s compliance capabilities, as demonstrated by, among other things, their policies and procedures designed to prevent violations of the Federal securities laws.

The Board approved the Code of Ethics and Compliance Policies and Procedures of FAV, which are identical to those of other Franklin Templeton investment managers. In considering such materials, the Independent Trustees received assistance and advice from and met separately with their Independent Legal Counsel.

The following sets forth some of the primary information and factors relevant to the Board’s decision to approve the Investment Management Agreements. This discussion of the information and factors considered by the Board (including the information and factors discussed above) is not intended to be exhaustive, but rather summarizes certain factors considered by the Board. In view of the wide variety of factors considered, the Board did not, unless otherwise noted, find it practicable to quantify or otherwise assign relative weights to the foregoing factors. In addition, individual Trustees may have assigned different weights to various factors.

NATURE, EXTENT AND QUALITY OF SERVICES. The Trustees reviewed the nature, extent and quality of the services to be provided by FAV (the “Managers”). In this regard, they reviewed the Funds’ proposed investment goals and the Managers’ proposed investment strategies and ability to implement such investment strategies (including, but not limited to, FAV’s trading practices and investment decision processes). The Trustees reviewed the Funds’ portfolio managers, including their background and skills as well as their expertise in managing other funds within the FTI complex.

Based on their review, the Trustees were satisfied with the nature and quality of the overall services to be provided by FAV to the Funds and their shareholders and were confident in the abilities of the Managers to implement their proposed investment strategies and to provide quality services to the Funds and their shareholders.

INVESTMENT PERFORMANCE. The Board noted that, as the Funds had not yet commenced investment operations, there was no investment performance for the Funds. The Board also considered the proposed performance benchmarks for the Funds and how such benchmarks would be utilized to measure performance of FAV.

COMPARATIVE EXPENSES. The Board considered the cost of the services to be provided by FAV (and their affiliates) from their respective relationships with the Funds. The Board noted that FAV (and their affiliates) could not report any financial results from their relationships with the Funds because the Funds had not yet commenced investment operations, and thus, the Board could not evaluate the Managers’

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Semiannual Report 67

FRANKLIN TEMPLETON ETF TRUST

SHAREHOLDER INFORMATION

(or their affiliates’) profitability with respect to the Funds. The Board considered that FAV will provide general investment management and administrative services to the Funds for a fee equal to an annual rate of:

0.35% of the value of the average daily net assets of the Global Equity ETF
0.40% of the value of the average daily net assets of the International Hedged ETF
0.55% of the value of the average daily net assets of the Emerging Markets ETF
0.45% of the value of the average daily net assets of the Dividend ETF

Further, the Board noted that FAV will waive or assume certain expenses so that the total operating expenses for each Fund (excluding acquired fund fees and expenses and certain non-routine expenses) do not exceed (and could be less than) the amounts in the proposed fee table for a period of at least one year from the date of each Fund’s initial prospectus.

ECONOMIES OF SCALE. The Board considered economies of scale that may be realized by FAV and their affiliates as the Funds grow larger and the extent to which they are shared with shareholders of the Funds. The Board noted that the overall investment management agreement fee schedule includes breakpoints that provide for such sharing, though it is not anticipated that the Funds will generate significant, if any, profit for FAV and/or their affiliates for some time.

In considering the appropriateness of the investment management fee to be charged to the Funds, the Board reviewed and considered the nature, extent and quality of the overall investment management services expected to be provided by FAV, as more fully discussed above, as well as the fairness of the proposed compensation. The Board further considered the extent to which FAV may derive ancillary benefits from fund operations. Consideration was also given to the information provided by Morningstar, Inc. on other funds in the Funds peer groups as selected by Morningstar (“Comparable Funds”) and that FAV’s management fee and total expense ratio, including waivers, are at or below the median of the fees and expenses of Comparable Funds for the Global Equity ETF, International Hedged ETF and Dividend ETF, including waivers. Only the Emerging Markets ETF is above the median of its peers, but the Board accepted management’s explanation of this fee in light of the nature of the Fund and its investment strategy.

Based upon its consideration of all these factors, the Board determined that the investment management fee structure was fair and reasonable.

Proxy Voting Policies and Procedures

The Trust’s investment manager has established Proxy Voting Policies and Procedures (Policies) that the Trust uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Trust’s complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at (954) 527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Premium/Discount Information

Information about the differences between the daily market price on the secondary market for the shares of the Funds and the Funds’ net asset value may be found on the Funds’ website at libertyshares.com.

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SEMIANNUAL REPORT

Franklin Liberty U.S. Low Volatility ETF

This semiannual report for Franklin Liberty U.S. Low Volatility ETF covers the period since the Fund’s inception on September 20, 2016, through September 30, 2016.

Your Fund’s Goal and Main Investments

The Fund seeks capital appreciation with an emphasis on lower volatility. Under normal market conditions, the Fund invests as least 80% of its net assets in U.S. investments.

Performance Overview

For the period since inception on September 20, 2016, through September 30, 2016, the Fund posted cumulative total returns of +0.52% based on market price and +1.08% based on net asset value (NAV).¹In comparison, the Russell 1000^®Index produced a +1.42% total return for the same period.²You can find more of the Fund’s performance data in the Performance Summary beginning on page 5.

Economic and Market Overview

During the period since the Fund’s inception on September 20, 2016, through September 30, 2016, unemployment levels stayed low and the unemployment rate ended the month of September at 5.0%.³The U.S. Federal Reserve (Fed) kept its target interest rate unchanged at 0.25–0.50% at its September meeting, boosting investor confidence. The broad U.S. equity market, as measured by the Standard & Poor’s^®500 Index, rose slightly during the period. U.S. stocks benefited from mostly upbeat economic data and better corporate earnings in the U.S., signs of improvement in the Chinese and European economies, and ongoing easy-money policies from key central banks.


Top 10 Sectors/Industries
9/30/16
	% of Total
	Net Assets
Information Technology	20.6	%
Health Care	14.2	%
Financials	13.2	%
Consumer Discretionary	12.6	%
Industrials	9.8	%
Consumer Staples	9.5	%
Energy	7.0	%
Real Estate	4.0	%
Materials	3.2	%
Utilities	3.2	%

Investment Strategy

The Fund invests primarily in equity securities (principally common stocks) of U.S. companies.⁴The Fund seeks capital appreciation while providing a lower level of volatility than the broader equity market as measured by the Russell 1000^®Index, meaning the Fund seeks returns that fluctuate less than the returns of the Russell 1000^®Index. We apply a fundamentally driven “bottom-up” research process to identify stocks that exhibit strong fundamental characteristics and screen for stocks with the lowest realized volatility scores, based on our proprietary quantitative model, relative to their corresponding sectors. Risk considerations are incorporated into the final stock selection process.

Manager’s Discussion

Given the short time period, we caution against assigning too much weight to the Fund’s performance for the period; however, there were a few notable developments within the period.

1. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/22/16),
the NAV of the Fund is used as a proxy for the market price to calculate market returns.
2. Source: Morningstar. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell^®is a trade-
mark of Russell Investment Group.
The index is unmanaged and includes reinvestment of any income or distributions. It does not reflect any fees, expenses or sales charges. One cannot invest directly in an
index, and an index is not representative of the Fund’s portfolio.
3. Source: Bureau of Labor Statistics.
4. “U.S. companies” are those that (i) are organized under the laws of, or have a principal office in, or for whose securities the principal trading market is, the U.S.; (ii) derive
50% or more of their total revenue or profit from either goods or services produced, or sales made, in the U.S.; or (iii) have 50% or more of their assets in the U.S.
See www.franklintempletondatasources.com for additional data provider information.
The dollar value, number of shares or principal amount, and names of all portfolio holdings are listed in the Fund’s Statement of Investments (SOI). The SOI
begins on page 8.

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Several sectors provided strong returns during the reporting period, including information technology, energy and consumer staples. In the information technology sector, Accenture was the strongest contributor to returns after it posted strong earnings for its fiscal fourth quarter, driven by strength in its fast growing digital, cloud and security services businesses.

Our energy sector investments generally performed strongly during the period as major oil producers reached a preliminary agreement on a production cut and output cap. The continued decline in U.S. inventories and growth in U.S. oil demand further supported the sector, and Schlumberger, Occidental Petroleum, Chevron and Exxon Mobil all contributed to returns over the period.

The consumer staples sector also contributed to performance, led by McCormick & Co. as the global spice and seasonings company reported strong earnings growth for its fiscal third quarter due to increased profits.

In contrast, the utilities and consumer discretionary sectors detracted from performance. The utilities sector was pressured after commentary from the Fed increased the market’s assessment of the probability of an interest-rate increase before the end of 2016. Within the sector, Dominion Resources, Southern Company, Xcel Energy and DTE Energy hindered results.

The weakness in the consumer discretionary sector was driven by primarily NIKE and Leggett & Platt. Global footwear and apparel maker NIKE detracted from performance after reporting earnings for its fiscal first quarter. Revenue and sales growth at the company was overshadowed by softer North American futures orders. Diversified furnishings manufacturer Leggett & Platt also detracted from performance after a disappointing business update from a competitor led to weakness in the broader furnishings industry.

Wells Fargo detracted from performance in the financials sector as reports surfaced that it secretly opened unauthorized accounts on behalf of customers. The stock remained under pressure as several major business partners


Top 10 Holdings
9/30/16
Company	% of Total
*Sector/Industry*	Net Assets
McCormick & Co. Inc.	1.6	%
Consumer Staples
Kimberly-Clark Corp.	1.6	%
Consumer Staples
PepsiCo Inc.	1.6	%
Consumer Staples
Colgate-Palmolive Co.	1.6	%
Consumer Staples
The Procter & Gamble Co.	1.6	%
Consumer Staples
The Coca-Cola Co.	1.5	%
Consumer Staples
Accenture PLC	1.5	%
Information Technology
DaVita Inc.	1.5	%
Health Care
Becton Dickinson and Co.	1.4	%
Health Care
Danaher Corp.	1.4	%
Health Care

announced that they are re-evaluating doing business with the bank.

Thank you for your participation in Franklin Liberty U.S. Low Volatility ETF. We look forward to serving your future investment needs.

Graphic -- Picture -- etf2_s1116x4x1.jpg

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CFA^®is a trademark owned by CFA Institute.

Semiannual Report 3

FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF

The foregoing information reflects our analysis, opinions and portfolio holdings as of September 30, 2016, the end of the reporting period. The way we implement our main investment strategies and the resulting portfolio holdings may change depending on factors such as market and economic conditions. These opinions may not be relied upon as investment advice or an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but the investment manager makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.

Todd Brighton is a vice president and research analyst/ portfolio manager for Franklin Equity Group. Mr. Brighton analyzes equity and equity-linked investments for the Core/Hybrid team and specializes in the development of volatility-based strategies. Mr. Brighton joined Franklin Templeton Investments in 2000. His prior responsibilities included the trading of equities, equity derivatives, convertibles and high yield bonds. Mr. Brighton earned his B.S. degree in managerial economics from the University of California, Davis. He is a Chartered Financial Analyst (CFA) charterholder and a member of the CFA Institute and the CFA Society of San Francisco.

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FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF

Performance Summary as of September 30, 2016

Net asset value or “NAV” is the value of one share of a fund as calculated in accordance with the standard formula for valuing mutual fund shares. The price used to calculate market return (Market Price) is determined by using the midpoint between the highest bid and the lowest offer on the primary stock exchange on which shares of a fund are listed for trading, as of the time that such fund’s NAV is calculated. Since shares of the Fund did not trade in the secondary market until after the Fund’s inception, for the period from inception to the first day of secondary trading (9/22/16), the NAV of the Fund is used as a proxy for the Market Price to calculate market returns. Market and NAV returns assume that dividends and capital gain distributions have been reinvested at Market Price and NAV.

Performance as of 9/30/16¹

Cumulative Total Return²

Average Annual Total Return²

Based on

Total Annual Operating Expenses³

NAV⁴

market price⁵

NAV⁴

market price⁵

(with waiver)

(without waiver)

0.50

0.70

Since Inception (9/20/16)

+1.08

+0.52

+1.08

+0.52

All investments involve risks, including possible loss of principal. The market values of stocks owned by the Fund will go up or down, sometimes rapidly or
unpredictably. There can be no guarantee that the Fund’s volatility strategy will be successful, and achieving the Fund’s volatility strategy does not mean the
Fund will achieve a positive or competitive return. The volatility strategy can also be expected to limit the Fund’s participation in market price appreciation when
compared to similar funds that do not attempt this strategy. Smaller and midsize-company stocks have historically experienced more price volatility than larger
company stocks, especially over the short term. The Fund is actively managed but there is no guarantee that the manager’s investment decisions will produce
the desired results. The Fund’s prospectus also includes a description of the main investment risks.

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

1. The Fund has an expense reduction contractually guaranteed through 9/19/17. The Fund also has a fee waiver associated with any investments it makes in a Franklin
Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through its current fiscal year-end. Fund investment results reflect the expense reduc-
tion and fee waiver; without these reductions, 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. Figures are as stated in the Fund’s current prospectus and may differ from the expense ratios disclosed in the Financial Highlights in this report. In periods of market volatil-
ity, assets may decline significantly, causing total annual Fund operating expenses to become higher than the figures shown.
4. Assumes reinvestment of distributions based on net asset value.
5. Assumes reinvestment of distributions based on market price.

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FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF

Your Fund’s Expenses

Actual Fund Expenses

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

Hypothetical Example for Comparison with Other Funds

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


					Actual				Hypothetical
			(actual return after expenses)				(5% annual return before expenses)
					Expenses				Expenses
	Beginning		Ending		Paid During		Ending		Paid During
	Account		Account		Period		Account		Period	Net Annualized
	Value 4/1/16		Value 9/30/16		9/20/16–9/30/16^1,2		Value 9/30/16		4/1/16–9/30/16^1,2	Expense Ratio²
$	1,000	$	1,010.80	$	0.14	$	1,022.68	$	2.55	0.50	%

1. Expenses are equal to the annualized expense ratio for the six-month period as indicated above—in the far right column—multiplied by the simple average account value
over the period indicated, and then multiplied by 184/365 to reflect the one-half year period for Hypothetical expenses. For Actual expenses, the multiplier is 10/365 to reflect
the number of days since inception.
2. Reflects expenses after fee waivers and expense reimbursements. Does not include acquired fund fees and expenses.

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		FRANKLIN TEMPLETON ETF TRUST


Financial Highlights
Franklin Liberty U.S. Low Volatility ETF
		Period Ended
		September 30, 2016
		(unaudited)^a
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period	$	25.05
Income from investment operations^b:
Net investment income^c		0.01
Net realized and unrealized gains (losses)		0.26
Total from investment operations		0.27
Net asset value, end of period	$	25.32

Total return^d		1.08	%

Ratios to average net assets^e
Expenses before waiver and payments by affiliates		2.29	%
Expenses net of waiver and payments by affiliates		0.50	%
Net investment income		1.69	%

Supplemental data
Net assets, end of period (000’s)	$	5,063
Portfolio turnover rate^f		—%

^aFor the period September 20, 2016 (commencement of operations) to September 30, 2016.
^bThe amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and repurchases
of Creation Unit Fund shares in relation to income earned and/or fluctuating fair value of the investments of the Fund.
^cBased on average daily shares outstanding.
^dTotal return is not annualized for periods less than one year. Total return is calculated assuming an initial investment made at the net asset value at the beginning of the
period, reinvestment of all dividends and distributions at net asset value during the period, and redemption at net asset on the last day of the period.
^eRatios are annualized for periods less than one year.
^fPortfolio turnover rate excludes the value of portfolio securities received or delivered as a result of processing capital share transactions in Creation Units.

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FRANKLIN TEMPLETON ETF TRUST




Statement of Investments, September 30, 2016 (unaudited)

Franklin Liberty U.S. Low Volatility ETF

	Shares		Value

Common Stocks 99.9%
Consumer Discretionary 12.6%
Comcast Corp., A	744	$	49,357
The Home Depot Inc	388		49,928
Leggett & Platt Inc	1,004		45,762
Lowe’s Cos. Inc	688		49,681
McDonald’s Corp	426		49,143
NIKE Inc., B	892		46,964
a NVR Inc	30		49,196
a O’Reilly Automotive Inc	178		49,860
Starbucks Corp	924		50,025
Target Corp	712		48,900
The TJX Cos. Inc	656		49,056
Twenty-First Century Fox Inc., B	2,018		49,925
The Walt Disney Co	530		49,216
			637,013
Consumer Staples 9.5%
The Coca-Cola Co	1,850		78,292
Colgate-Palmolive Co	1,080		80,071
Kimberly-Clark Corp	638		80,477
McCormick & Co. Inc	808		80,736
PepsiCo Inc	738		80,272
The Procter & Gamble Co	882		79,160
			479,008
Energy 7.0%
Chevron Corp	702		72,250
EQT Corp	966		70,151
Exxon Mobil Corp	820		71,569
Occidental Petroleum Corp	972		70,878
Schlumberger Ltd	906		71,248
			356,096
Financials 13.2%
The Allstate Corp	896		61,985
Arthur J. Gallagher & Co	1,210		61,553
Chubb Ltd	480		60,312
Erie Indemnity Co., A	608		62,058
Intercontinental Exchange Inc	214		57,643
The Progressive Corp	1,944		61,236
RenaissanceRe Holdings Ltd	510		61,282
The Travelers Cos. Inc	524		60,024
U.S. Bancorp	1,410		60,475
W. R. Berkley Corp	1,050		60,648
Wells Fargo & Co	1,314		58,184
			665,400
Health Care 14.2%
Becton Dickinson and Co	406		72,970
Danaher Corp	930		72,903
a DaVita Inc	1,122		74,131
DENTSPLY SIRONA Inc	1,196		71,078
Johnson & Johnson	608		71,823
a Laboratory Corp. of America Holdings	530		72,865
Medtronic PLC	830		71,712
Pfizer Inc	2,122		71,872
Stryker Corp	624		72,640
Teleflex Inc	408		68,564
			720,558
Industrials 9.8%
3M Co	232		40,885
General Dynamics Corp	270		41,893

8 Semiannual Report

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FRANKLIN TEMPLETON ETF TRUST
STATEMENT OF INVESTMENTS (UNAUDITED)


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

	Shares		Value

Common Stocks (continued)
Industrials (continued)
General Electric Co	1,398	$	41,409
Honeywell International Inc	360		41,973
Illinois Tool Works Inc	352		42,184
Lockheed Martin Corp	170		40,752
Nielsen Holdings PLC	786		42,106
Northrop Grumman Corp	194		41,506
Raytheon Co	300		40,839
Republic Services Inc	812		40,966
United Parcel Service Inc., B	384		41,994
United Technologies Corp	410		41,656
			498,163
Information Technology 20.6%
Accenture PLC, A	620		75,746
a Alphabet Inc., A	86		69,149
a ANSYS Inc	744		68,902
Apple Inc	602		68,056
Automatic Data Processing Inc	790		69,678
Cisco Systems Inc	2,206		69,974
a Fiserv Inc	690		68,634
Intel Corp	1,842		69,536
International Business Machines Corp	442		70,212
Intuit Inc	628		69,086
Mastercard Inc., A	686		69,814
Microsoft Corp	1,202		69,235
Motorola Solutions Inc	904		68,957
Oracle Corp	1,744		68,504
Visa Inc., A	830		68,641
			1,044,124
Materials 3.2%
Air Products and Chemicals Inc	274		41,193
Bemis Co. Inc	784		39,992
Ecolab Inc	342		41,628
Praxair Inc	340		41,082
			163,895
Real Estate 4.0%
American Tower Corp	454		51,452
Boston Properties Inc	366		49,882
DDR Corp	2,800		48,804
Weingarten Realty Investors	1,268		49,427
			199,565
Telecommunication Services 2.6%
AT&T Inc	1,602		65,057
Verizon Communications Inc	1,254		65,183
			130,240
Utilities 3.2%
Dominion Resources Inc	542		40,255
DTE Energy Co	436		40,840
The Southern Co	786		40,322
Xcel Energy Inc	988		40,645
			162,062

Total Investments (Cost $5,005,550) 99.9%			5,056,124
Other Assets, less Liabilities 0.1%			7,346

Net Assets 100.0%		$	5,063,470

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Semiannual Report 9


FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS



Statements of Changes in Net Assets


Franklin Liberty U.S. Low Volatility ETF
		Period Ended
		September 30, 2016
		(unaudited)^a
Increase (decrease) in net assets:
Operations:
Net investment income	$	2,346
Net change in unrealized appreciation (depreciation)		50,574
Net increase (decrease) in net assets resulting from operations		52,920
Capital share transactions: (Note 2)		5,010,550
Net increase (decrease) in net assets		5,063,470
Net assets:
Beginning of period		—
End of period	$	5,063,470
Undistributed net investment income included in net assets, end of period	$	2,346

^aFor the period September 20, 2016 (commencement of operations) to September 30, 2016.

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

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FRANKLIN TEMPLETON ETF TRUST
FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF

Notes to Financial Statements (unaudited)

1. Organization and Significant Accounting Policies

Franklin Templeton ETF Trust (Trust) is registered under the Investment Company Act of 1940 (1940 Act) as an open-end investment company, consisting of five separate funds and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP). Franklin Liberty U.S. Low Volatility ETF (Fund) is included in this report. The financial statements of the remaining funds in the Trust are presented separately. Effective September 20, 2016, the Fund commenced operations. Fund is an exchange traded fund (ETF) and is actively managed, thus it is not designed to track an index.

The following summarizes the Fund’s significant accounting policies.

a. Financial Instrument Valuation

The Fund’s investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Trust’s Board of Trustees (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation Committee (VC). The VC provides administration and oversight of the Fund’s valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.

b. Income Taxes

It is the Fund’s policy to qualify as a regulated investment company under the Internal Revenue Code. The Fund intends to distribute to shareholders substantially all of its taxable income and net realized gains to relieve it from federal income and excise taxes. As a result, no provision for U.S. federal income taxes is required.

The Fund may recognize an income tax liability related to its uncertain tax positions under U.S. GAAP when the uncertain tax position has a less than 50% probability that it will be sustained upon examination by the tax authorities based on its technical merits. As of September 30, 2016, the Fund has determined that no tax liability is required in its financial statements related to uncertain tax positions for any open tax years (or expected to be taken in future tax years).

c. Security Transactions, Investment Income, Expenses and Distributions

Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Estimated expenses are accrued daily. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with U.S. GAAP. These differences

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Semiannual Report 13

FRANKLIN TEMPLETON ETF TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

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

may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods.

d. Accounting Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

e. Guarantees and Indemnifications

Under the Trust’s organizational documents, its officers and trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust, on behalf of the Fund, enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. Currently, the Trust expects the risk of loss to be remote.

2. Shares of Beneficial Interest

Shares of the Fund are issued and redeemed at their respective NAV only in blocks of 100,000 shares or multiples thereof (Creation Units). Only certain large institutional investors (Authorized Participants) may engage in creation or redemption transactions directly with the Fund. Once created, shares of the Fund generally trade in the secondary market in amounts less than one Creation Unit. The market price of the Fund shares will be based on the price in the secondary market which may be at, above or below the most recent NAV. Creation Units may be issued and redeemed in exchange for a designated portfolio of securities and/or cash (which may include cash in lieu of certain securities). For the period ended September 30, 2016, all Creation Unit transactions were made in-kind.

Authorized participants pay a transaction fee to the shareholder servicing agent when purchasing or redeeming Creation Units of the Fund regardless of the number of Creation Units that are being created or redeemed on the same day by the Authorized Participant. The standard transaction fee is imposed to offset transfer and other transaction costs associated with the issuance or redemption of Creation Units and is not charged to or paid by the Fund.

In addition, for cash Creation Unit transactions, a variable fee for creation and redemption transactions may be charged to the Authorized Participant to cover certain brokerage, tax, foreign exchange, execution, market impact and other costs and expenses related to the execution of trades. During the period ended September 30, 2016, no variable fees were charged.


		Standard Creation and	Maximum		Maximum Additional
		Redemption	Additional Charge		Charge For
Fund		Transaction Fee	for Creations^a		Redemptions^a

Franklin Liberty U.S. Low Volatility ETF	$	500	3	%	2	%

^aAs a percentage of the net asset value per Creation Unit.

At September 30, 2016, there were an unlimited number of shares authorized (without par value). Transactions in the Fund’s shares were as follows:


	Period Ended
	September 30, 2016^a
	Shares		Amount
Shares sold	200,000	$	5,010,550
Net increase (decrease)	200,000	$	5,010,550

^aFor the period September 20, 2016 (commencement of operations) to September 30, 2016.

14 Semiannual Report

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FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

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

3. Transactions with Affiliates

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


Subsidiary	Affiliation
Franklin Advisers, Inc. (Advisers)	Investment manager
Franklin Templeton Services, LLC (FT Services)	Administrative manager
Franklin Templeton Distributors, Inc. (Distributors)	Principal underwriter

a. Management Fees

The Fund pays an investment management fee to Advisers of 0.50% per year of the average daily net assets of the Fund.

b. Administrative Fees

Under an agreement with Advisers, FT Services provides administrative services to the Fund. The fee is paid by Advisers based on the Fund’s average daily net assets, and is not an additional expense of the Fund.

c. Waiver and Expense Reimbursements

Advisers has contractually agreed in advance to waive or limit its fees and to assume as its own expense certain expenses otherwise payable by the Fund so that the expenses (excluding acquired fund fees and expenses) of the Fund do not exceed 0.50% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until September 19, 2017.

4. Income Taxes

At September 30, 2016, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:


Cost of investments	$	5,005,550
Unrealized appreciation	$	68,542
Unrealized depreciation		(17,968	)
Net unrealized appreciation (depreciation)	$	50,574

5. Investment Transactions

Purchases and sales of investments (excluding short term securities) for the period ended September 30, 2016, aggregated $0 and $0, respectively. Purchases and sales of investments excludes securities received/delivered from in-kind transactions of $5,005,550 and $0, respectively.

6. Fair Value Measurements

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s 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 Fund’s own assumptions in determining the fair value of financial instruments)

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Semiannual Report 15

FRANKLIN TEMPLETON ETF TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

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

6. Fair Value Measurements (continued)

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

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

At September 30, 2016, all of the Fund’s investments in financial instruments carried at fair value were valued using Level 1 inputs. For detailed categories, see the accompanying Statement of Investments.

7. Subsequent Events

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

16 Semiannual Report

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FRANKLIN TEMPLETON ETF TRUST

FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF

Shareholder Information

Board Approval of Investment Management Agreement

At a meeting held on April 18, 2016, the Board of Trustees (Board), including a majority of non-interested or independent Trustees, approved, for the Franklin Liberty U.S. Low Volatility Fund, a series of Franklin Templeton ETF Trust, the investment management agreements with Franklin Advisers, Inc. (FAV) as investment manager. The Board noted that the forms of such agreements are substantially the same as the standard forms of investment management agreement that include administration services for other funds in the Franklin Templeton family of funds (“FTI Funds”). The Board considered the qualifications of the personnel of FAV who would be responsible for managing and advising the Fund and the specific terms and fees of the Investment Management Agreements and management’s voluntary agreement to waive or assume certain expenses of the Funds for a period of time.

The Board also was provided with information relating to proposed expenses for the Fund, including comparative data provided by Morningstar, Inc. (“Morningstar”), an independent organization, which compared the Funds’ expenses with those of other funds deemed comparable to the Fund as selected by Morningstar, including funds in the actively managed ETF category.

In determining that the terms of the proposed Agreements were fair and reasonable, the Board took into account several factors including, but not limited to, the following: (1) the nature and quality of the services to be provided by FAV to the Fund under the proposed Investment Management Agreements; (2) FAV’s experience as managers of other funds and accounts, including those within the FTI complex; (3) FAV’s strength and reputation within the industry; (4) the fairness of the compensation under the proposed Investment Management Agreements; (5) the comparative pricing structure (including fee waivers and the estimated expense ratio to be borne by shareholders) of the Fund; (6) the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of FAV; and (7) FAV’s compliance capabilities, as demonstrated by, among other things, their policies and procedures designed to prevent violations of the Federal securities laws.

NATURE, EXTENT AND QUALITY OF SERVICES. The Trustees reviewed the nature, extent and quality of the services to be provided by FAV (the “Managers”). In this regard, they reviewed the Fund’s proposed investment goals and the Managers’ proposed investment strategies and ability to implement such investment strategies (including, but not limited to, FAV’s trading practices and investment decision processes). The Trustees reviewed the Fund’s portfolio managers, including their background and skills as well as their expertise in managing other funds within the FTI complex.

Based on their review, the Trustees were satisfied with the nature and quality of the overall services to be provided by FAV to the Fund and their shareholders and were confident in the abilities of the Managers to implement their proposed investment strategies and to provide quality services to the Funds and their shareholders.

INVESTMENT PERFORMANCE. The Board noted that, as the Fund had not yet commenced investment operations, there was no investment performance for the Fund. The Board also considered the proposed performance benchmarks for the Fund and how such benchmarks would be utilized to measure performance of FAV.

COMPARATIVE EXPENSES. The Board considered the cost of the services to be provided by FAV (and their affiliates) from their respective relationships with the Fund. The Board noted that FAV (and their affiliates) could not report any financial results from their relationships with the Fund because the Fund had not yet commenced investment operations, and thus, the Board could not evaluate the Managers’

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Semiannual Report 17

FRANKLIN TEMPLETON ETF TRUST

FRANKLIN LIBERTY U.S. LOW VOLATILITY ETF

SHAREHOLDER INFORMATION

(or their affiliates’) profitability with respect to the Fund. The Board considered that FAV will provide general investment management and administrative services to the Fund for a fee equal to an annual rate of:

0.50% of the value of the average daily net assets of the Low Volatility ETF

Further, the Board noted that FAV will waive or assume certain expenses so that the total operating expenses for the Fund (excluding acquired fund fees and expenses and certain non-routine expenses) do not exceed (and could be less than) the amounts in the proposed fee table for a period of at least one year from the date of the Fund’s initial prospectus.

ECONOMIES OF SCALE. The Board considered economies of scale that may be realized by FAV and their affiliates as the Fund grow larger and the extent to which they are shared with shareholders of the Funds. The Board noted that the overall investment management agreement fee schedule includes breakpoints that provide for such sharing, though it is not anticipated that the Fund will generate significant, if any, profit for FAV and/or their affiliates for some time.

In considering the appropriateness of the investment management fee to be charged to the Fund, the Board reviewed and considered the nature, extent and quality of the overall investment management services expected to be provided by FAV, as more fully discussed above, as well as the fairness of the proposed compensation. The Board further considered the extent to which FAV may derive ancillary benefits from fund operations. Consideration was also given to the information provided by Morningstar, Inc. on other funds in the Fund peer groups as selected by Morningstar (“Comparable Funds”) and that FAV’s management fee and total expense ratio, including waivers, are at or below the median of the fees and expenses of Comparable Funds for the Low Volatility ETF, including waivers.

Based upon its consideration of all these factors, the Board determined that the investment management fee structure was fair and reasonable.

Proxy Voting Policies and Procedures

request to: Franklin Templeton Companies, LLC, 300 S.E. 2nd Street, Fort Lauderdale, FL 33301, Attention: Proxy Group. Copies of the Trust’s proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission’s website at sec.gov and reflect the most recent 12-month period ended June 30.

Quarterly Statement of Investments

The Trust, on behalf of the Fund, files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling (800) SEC-0330.

Premium/Discount Information

Information about the differences between the daily market price on the secondary market for the shares of the Fund and the Fund’s net asset value may be found on the Fund’s web-site at libertyshares.com.

18 Semiannual Report

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Item 2. Code of Ethics.

(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.

(d) N/A

(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.

Item 3. Audit Committee Financial Expert.

(a)(1) The Registrant has an audit committee financial expert serving on its audit committee.

(2) The audit committee financial expert is John B. Wilson and he is “independent” as defined under the relevant Securities and Exchange Commission Rules and Releases.

Item 4. Principal Accountant Fees and Services. N/A

Item 5. Audit Committee of Listed Registrants. N/A

Item 6. Schedule of Investments. N/A

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. N/A

Item 8. Portfolio Managers of Closed-End Management Investment Companies. N/A

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. N/A

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that would require disclosure herein.

Item 11. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

(b) Changes in Internal Controls. There have been no changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR.

Item 12. Exhibits.

(a) (1) Code of Ethics

(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FRANKLIN TEMPLETON ETF TRUST

By /s/Laura F. Fergerson

Laura F. Fergerson

Chief Executive Officer – Finance and Administration

Date November 25, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By /s/Laura F. Fergerson

Laura F. Fergerson

Chief Executive Officer – Finance and Administration

Date November 25, 2016

By /s/Gaston Gardey

Gaston Gardey

Chief Financial Officer and Chief Accounting Officer

Date November 25, 2016

Franklin Templeton ETF Trust – ‘N-CSRS’ for 9/30/16

On: Friday, 12/2/16, at 3:17pm ET · Effective: 12/2/16 · For: 9/30/16 · Accession #: 1655589-16-45 · File #: 811-23124

Previous ‘N-CSRS’: None · Next: ‘N-CSRS’ on 12/1/17 for 9/30/17 · Latest: ‘N-CSRS/A’ on 4/16/24 for 9/30/23

Certified Semi-Annual Shareholder Report by a Management Investment Company — Form N-CSR
Filing Table of Contents

N-CSRS — Ftetf Ncsrs Pe:09-30-16

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference


Contents

Semiannual Report
Economic and Market Overview	2
Franklin LibertyQ Emerging Markets ETF	3
Franklin LibertyQ Global Dividend ETF	8
Franklin LibertyQ Global Equity ETF	13
Franklin LibertyQ International Equity Hedged ETF	18
Financial Highlights and Statements of Investments	23
Financial Statements	55
Notes to Financial Statements	58
Shareholder Information	67


FRANKLIN TEMPLETON ETF TRUST
FINANCIAL STATEMENTS



Statement of Assets and Liabilities
September 30, 2016 (unaudited)



Franklin Liberty U.S. Low Volatility ETF
Assets:
Investments in securities:
Cost – Unaffiliated issuers	$	5,005,550
Value – Unaffiliated issuers	$	5,056,124
Cash		5,000
Receivables:
Dividends		3,038
Affiliates		1,788
Total assets		5,065,950
Liabilities:
Payables:
Transfer agent fees		1,004
Trustees’ fees and expenses		27
Custody fees		7
Professional fees		1,214
Reports to shareholders		182
Accrued expenses and other liabilities		46
Total liabilities		2,480
Net assets, at value	$	5,063,470
Net assets consist of:
Paid-in capital	$	5,010,550
Undistributed net investment income		2,346
Net unrealized appreciation (depreciation)		50,574
Net assets, at value	$	5,063,470
Shares outstanding		200,000
Net asset value per share	$	25.32

This ‘N-CSRS’ Filing	Date	Other Filings

	9/19/17
	5/31/17
Filed on / Effective on:	12/2/16
	11/25/16
For Period End:	9/30/16	497K, NSAR-A
	9/20/16
	6/1/16	485APOS, 497
	4/18/16
		List all Filings

Franklin Templeton ETF Trust – ‘N-CSRS’ for 9/30/16

On: Friday, 12/2/16, at 3:17pm ET · Effective: 12/2/16 · For: 9/30/16 · Accession #: 1655589-16-45 · File #: 811-23124

Previous ‘N-CSRS’: None · Next: ‘N-CSRS’ on 12/1/17 for 9/30/17 · Latest: ‘N-CSRS/A’ on 4/16/24 for 9/30/23

Certified Semi-Annual Shareholder Report by a Management Investment Company — Form N-CSRFiling Table of Contents

N-CSRS — Ftetf Ncsrs Pe:09-30-16

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Certified Semi-Annual Shareholder Report by a Management Investment Company — Form N-CSR
Filing Table of Contents