Franklin FTSE Japan ETF (FLJP) DEF 14CInformation statement

          This Notice of Internet Availability of Information Statement is being mailed beginning on or about June 29, 2023, to shareholders of record of the Fund as of June 7, 2023.  Householding is an option available to certain Fund investors. Householding is a method of delivery, based on the preference of the individual investor, in which a single copy of certain shareholder documents can be delivered to investors who share the same address, even if their accounts are registered under different names. Householding for the Fund is available through certain broker-dealers.  If you are interested in enrolling in householding and receiving a single copy of the Notice of Internet Availability of Information Statement and other shareholder documents, please contact your broker-dealer. If you are currently enrolled in householding and wish to change your householding status, please contact your broker-dealer. The Information Statement will be available online until at least September 27, 2023.  A paper or e-mail copy of the full Information Statement may be obtained, without charge, by contacting the Fund at (800) DIAL BEN /(800) 342-5236.  If you would like to receive a paper or e-mail copy of the full Information Statement, you must request one.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

Franklin u.S. cORE bOND etf

A SERIES OF franklin templeton etf Trust

One Franklin Parkway

San Mateo, California 94403-1906

INFORMATION STATEMENT

This Information Statement describes a recent change involving the investment management of the Franklin U.S. Core Bond ETF (the “Fund”), a series of Franklin Templeton ETF Trust (the “Trust”).  At a meeting held on March 3, 2023 (the “Meeting”), the Trust’s Board of Trustees (the “Board” or the “Trustees”), on behalf of the Fund, approved a new sub-advisory agreement between Franklin Advisers, Inc. (“Advisers”), the Fund’s investment manager, and Franklin Templeton Institutional, LLC (“FT Institutional”) effective March 31, 2023, pursuant to which FT Institutional supports Advisers in providing investment advice to the Fund. Advisers has the ultimate responsibility, subject to oversight by the Board, to oversee the Fund’s sub-advisor(s) and recommend their hiring, termination and replacement.  Pursuant to exemptive relief granted by the U.S. Securities and Exchange Commission (the “SEC”), Advisers is permitted to appoint and replace both affiliated and unaffiliated sub-advisors, and enter into, amend and terminate sub-advisory agreements without obtaining prior shareholder approval, but subject to the approval of the Board (the “Manager of Managers Structure”).

This Information Statement is being made available via the internet beginning on or about June 29, 2023 to all shareholders of record of the Fund as of June 7, 2023 (the “Record Date”). The Information Statement will be available online at https://franklintempletonprod.widen.net/s/hhwj5cgjdf/flcb_stmt until at least September 27, 2023.  A paper or e-mail copy of this Information Statement may be obtained, without charge, by contacting the Fund at (800) DIAL BEN/(800) 342-5236. 

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.  

Why am I receiving this Information Statement?

This Information Statement is being furnished to you by the Board to inform shareholders of a recent change in the investment management of the Fund.  The Board, upon the recommendation of Advisers, has approved a new sub-advisory agreement between Advisers and FT Institutional (the “New Sub-Advisory Agreement”).  Advisers and FT Institutional are both wholly owned subsidiaries of Franklin Resources, Inc. (“FRI”). This Information Statement provides details regarding FT Institutional, the New Sub-Advisory Agreement and the reasons the Board approved the appointment of FT Institutional as a new sub-advisor to the Fund. 

What is the Manager of Managers Structure?

The Board has authorized the Fund to operate in a Manager of Managers Structure. Under the Manager of Managers Structure, Advisers has the ultimate responsibility, subject to oversight by the Board, to oversee the Fund’s sub-advisor(s) and recommend their hiring, termination and replacement. Advisers also, subject to the review and oversight of the Board, sets the Fund’s overall investment strategy; evaluates, selects and recommends sub-advisor(s) to manage all or a portion of the Fund’s assets; and implements procedures reasonably designed to ensure that each sub-advisor complies with the Fund’s investment goal, policies and restrictions. Subject to review and oversight by the Board, Advisers will allocate and, when appropriate, reallocate the Fund’s assets among sub-advisors, and will monitor and evaluate each sub-advisor’s performance. 

The use of the Manager of Managers Structure with respect to the Fund is subject to certain conditions that are set forth in SEC exemptive relief and no-action letter guidance issued by the SEC staff.  One condition is that the Fund, by providing this Information Statement, must inform shareholders of the hiring of any new sub-advisor within ninety (90) days after the hiring. 

APPOINTMENT OF FT INSTITUTIONAL AS THE SUB-ADVISOR TO THE FUND

Why was FT Institutional appointed as the New Sub-Advisor?

Advisers recommended, and the Board approved, the appointment of FT Institutional as the sub-advisor to the Fund to enable Josh Lohmeier, an employee of FT Institutional, to serve as an additional portfolio manager of the Fund. Advisers recommended to add Mr. Lohmeier to the portfolio management team because management believes Mr. Lohmeier’s credit background adds complementary expertise to the team.

Has the addition of FT Institutional increased the Fund’s fees and expenses?

No.  The addition of FT Institutional as the sub-advisor to the Fund has had no impact on the investment management fees charged to the Fund or the fees paid by Fund’s shareholders, because the fees paid by Advisers to FT Institutional are deducted from the fees paid by the Fund to Advisers.  The addition of FT Institutional as the sub-advisor to the Fund has not materially changed the manner in which the Fund seeks to achieve its investment goal or the level of services that are provided to the Fund.

Information about FT Institutional

           FT Institutional is an SEC registered investment adviser located at 280 Park Avenue, New York, NY 10017-1274. FT Institutional is a limited liability company and is a direct, wholly owned subsidiary of FRI. Together, FT Institutional and its affiliates manage, as of May 31, 2023, over $1.40 Trillion in assets, and have been in the investment management business since 1947. FRI is a publicly owned holding company with its principal offices located at One Franklin Parkway, San Mateo, California 94403-1906. The principal stockholders of FRI are Charles B. Johnson and Rupert H. Johnson, Jr., who owned approximately 19.8% and 20.8%, respectively, of its outstanding shares as of December 9, 2022. The shares deemed to be beneficially owned by Charles B. Johnson include certain shares held by three private charitable foundations for which he is a trustee, of which he disclaims beneficial ownership. The shares deemed to be beneficially owned by Rupert H. Johnson, Jr. include certain shares held by a private charitable foundation for which he is a trustee or by his spouse, of which he disclaims beneficial ownership.

The names and principal occupations of the principal executive officers of FT Institutional, as of the Record Date, are set forth below. The business address of each person is 280 Park Avenue, New York, NY 10017-1274.

Exhibit A lists other U.S. registered investment companies that FT Institutional manages or subadvises with investment objectives and strategies similar to the Fund.  Exhibit A also sets forth information about these U.S. registered investment companies, the investment management or subadvisory fees received by FT Institutional, the net assets of each investment company, and whether FT Institutional has waived, reduced, or otherwise agreed to reduce its compensation under its applicable investment advisory or subadvisory contract.

material terms of the NEW sub-advisory agreement

Below is a summary of the material terms of the New Sub-Advisory Agreement. This summary is qualified in its entirety by reference to the New Sub-Advisory Agreement, a copy of which is attached as Exhibit B. The terms of the New Sub-Advisory Agreement are substantially identical to the terms and conditions of sub-advisory agreements previously approved by the Board for other series of the Trust with a sub-adviser providing discretionary investment advisory services.

Services.  Subject to the overall policies, direction and review of the Board and to the instructions and supervision of Advisers, FT Institutional provides certain investment advisory services with respect to securities, investments and cash equivalents in the Fund. Advisers will continue to have full responsibility for all investment advisory services provided to the Fund, including determining the manner in which any voting rights, right to consent to corporate action and any other rights pertaining to the investment securities within the Fund shall be exercised. Both Advisers and FT Institutional may place all purchase and sale orders on behalf of the Fund.

            Management Fees.  Advisers compensates FT Institutional for providing investment advisory, research and related services to the Fund.  Advisers pays FT Institutional for its services from the investment management fees it receives from the Fund. 

Payment of Expenses. During the term of the New Sub-Advisory Agreement, FT Institutional will pay all expenses incurred by it in connection with the services provided by FT Institutional under the New Sub-Advisory Agreement other than the cost of securities (including brokerage commissions, if any) purchased for the Fund. Advisers and the Fund will be responsible for all of their respective expenses and liabilities.

Brokerage.  In performing the services described above, FT Institutional shall use its best efforts to obtain for the Fund the most favorable price and execution available. Subject to prior authorization of appropriate policies and procedures by the Board, FT Institutional may, to the extent authorized by law and in accordance with the terms of the Fund’s investment management agreement, prospectus and statement of additional information, cause the Fund to pay a broker who provides brokerage and research services an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker would have charged for effecting that transaction, in recognition of the brokerage and research services that such broker provides, viewed in terms of either the particular transaction or FT Institutional’s overall responsibilities with respect to accounts managed by FT Institutional. FT Institutional may use for the benefit of its other clients any such brokerage and research services that FT Institutional obtains from brokers or dealers. To the extent authorized by applicable law, FT Institutional shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of such action.

Continuance.  The New Sub-Advisory Agreement will remain in effect for two years after its effective date of March 31, 2023, unless earlier terminated. As provided therein, the New Sub-Advisory Agreement is thereafter renewable annually (i) by a vote of the Board or (ii) by a vote of a majority of the outstanding voting securities of the Fund, as defined in the Investment Company Act of 1940 (the “1940 Act”), provided that in either event the continuance is also approved by a vote of the majority of the Board who are not parties to the New Sub-Advisory Agreement or “interested persons,” as defined in the 1940 Act, of any party to the New Sub-Advisory Agreement or the Fund (“Independent Trustees”), in accordance with the 1940 Act and any rules, interpretations or orders thereunder.

            Termination.  The New Sub-Advisory Agreement may be terminated at any time, without payment of any penalty, (i) by the Board upon written notice to Advisers and FT Institutional or by vote of a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act,  or (ii) by Advisers or FT Institutional upon at least sixty (60) days’ written notice to the other party. The New Sub-Advisory Agreement shall terminate automatically in the event of any assignment thereof and in the event of any termination or assignment of the investment management agreement between Advisers and the Fund. (“Assignment” has the meaning set forth in the 1940 Act.)

Standard of Care.  Under the New Sub-Advisory Agreement, in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of its obligations or duties under the New Sub-Advisory Agreement on the part of FT Institutional, neither FT Institutional nor any of its directors, officers, employees or affiliates shall be subject to liability to Advisers, the Trust or the Fund or to any shareholder of the Fund for any error of judgment or mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund.

Notwithstanding the foregoing, to the extent that Advisers is found by a court of competent jurisdiction, or the SEC or any other regulatory agency, to be liable to the Fund or any shareholder (a “liability”) for any acts undertaken by FT Institutional pursuant to authority delegated to it by Advisers, FT Institutional shall indemnify Advisers and each of its affiliates, officers, directors and employees (each, a “Franklin Indemnified Party”) from, against, for and in respect of all losses, damages, costs and expenses incurred by a Franklin Indemnified Party with respect to such liability, together with all legal and other expenses reasonably incurred by any such Franklin Indemnified Party, in connection with such liability.

What factors did the Board consider when approving the New Sub-Advisory Agreement?

At a meeting held on March 3, 2023 (the “Meeting”), the Board of Trustees (the “Board”) of Franklin Templeton ETF Trust (the “Trust”), including a majority of the trustees who are not “interested persons” as defined in the Investment Company Act of 1940 (the “Independent Trustees”), reviewed and approved a new investment sub-advisory agreement between Franklin Advisers, Inc. (the “Manager”), the Fund’s investment manager, and Franklin Templeton Institutional, LLC (the “Sub-Adviser”), an affiliate of the Manager, on behalf of the Fund (Sub-Advisory Agreement), for an initial two-year period.  The Independent Trustees received advice from and met separately with Independent Trustee counsel in considering whether to approve the Sub-Advisory Agreement.

The Board reviewed and considered information provided by the Manager at the Meeting with respect to the Sub-Advisory Agreement. The Board also reviewed and considered the factors it deemed relevant in approving the Sub-Advisory Agreement, including, but not limited to: (i) the nature, extent, and quality of the services to be provided by the Sub-Adviser; and (ii) the costs of the services to be provided by the Sub-Adviser.  The Board further reviewed and considered information provided by management showing the expected impact of hiring the Sub-Adviser on the Manager’s profitability consistent with the Order (as defined below). The Board also considered that management proposed that the Board approve the Sub-Advisory Agreement in order to facilitate portfolio management team changes, effective March 2023.  The Board reviewed and further considered the form of Sub-Advisory Agreement and the terms of the Sub-Advisory Agreement, which were discussed at the Meeting, noting that the terms and conditions of the Sub-Advisory Agreement were substantially identical to the terms and conditions of sub-advisory agreements for other Franklin Templeton (“FT”) mutual funds.

In approving the Sub-Advisory Agreement, the Board, including a majority of the Independent Trustees, determined that the hiring of the Sub-Adviser is in the best interests of the Fund and its shareholders and does not involve a conflict of interest from which the Manager or Sub-Adviser derives an inappropriate advantage. The Board also determined that the terms of the Sub-Advisory Agreement are fair and reasonable. While attention was given to all information furnished, the following discusses some primary factors relevant to the Board’s determination.

Nature, Extent and Quality of Services

The Board reviewed and considered information regarding the nature, extent and quality of investment management services to be provided by the Sub-Adviser and currently being provided by the Manager and its affiliates to the Fund and its shareholders.  In doing so, the Board noted that the Fund employs a “manager of managers” structure pursuant to an exemptive order (Order) granted to the Manager by the U.S. Securities and Exchange Commission, whereby the Manager and the Fund may, without shareholder approval, enter into sub-advisory agreements with sub-advisers that are indirect or direct wholly owned subsidiaries of Franklin Resources, Inc. (FRI).  In particular, with respect to the Sub-Adviser, the Board took into account that the new portfolio manager proposed to serve as a portfolio manager for the Fund is an employee of the Sub-Adviser.  The Board reviewed and considered information regarding the nature, quality and extent of investment sub-advisory services to be provided by the Sub-Adviser to the Fund and its shareholders under the Sub-Advisory Agreement; the Sub-Adviser’s experience as a manager of other funds and accounts, including those within the FT organization; the personnel, operations, financial condition, and investment management capabilities, methodologies and resources of the Sub-Adviser and the Sub-Adviser’s capabilities, as demonstrated by, among other things, its policies and procedures reasonably designed to prevent violations of the federal securities laws.

The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a fund that is part of the FT family of funds. The Board noted the financial position of FRI, the parent of the Manager and the Sub-Adviser, and its commitment to the mutual fund business as evidenced by its reassessment of fund offerings in response to the market environment and project initiatives and capital investments relating to the services provided to the Fund by the FT organization. The Board specifically noted FT’s commitment to being a global leader in stewardship and sustainability.

Following consideration of such information, the Board was satisfied with the nature, extent and quality of services to be provided by the Sub-Adviser to the Fund and its shareholders.

Fund Performance

The Board noted its review and consideration of and conclusions made regarding the performance results of the Fund in connection with the May 2022 annual contract renewal (Annual Contract Renewal) of the Fund’s investment management agreement and at regular Board meetings throughout the year. The Board further noted that there was no performance of the Sub-Adviser to evaluate with respect to the Fund as the Sub-Adviser had not yet provided any services to the Fund.

Comparative Fees and Expenses

The Board reviewed and considered information regarding the investment sub-advisory fee to be charged by the Sub-Adviser. The Board noted that the addition of the Sub-Adviser will have no impact on the amount of management fees that are currently paid by the Fund as the Sub-Adviser will be paid by the Manager out of the management fee that the Manager receives from the Fund.  The Board further noted that the allocation of the fee between the Manager and the Sub-Adviser reflected the services to be provided by the Sub-Adviser. The Board concluded that the proposed investment sub-advisory fee to be paid to the Sub-Adviser is reasonable.

Management Profitability and Economies of Scale

The Board noted management’s belief that the Manager’s profitability is not expected to materially change as a result of the addition of the Sub-Adviser. The Board determined that its conclusions regarding profitability and economies of scale reached in connection with the Annual Contract Renewal of the investment management agreement with the Manager had not changed as a result of the proposal to approve the Sub-Advisory Agreement.

Conclusion

Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board unanimously approved the Sub-Advisory Agreement for an initial two-year period.

ADDITIONAL INFORMATION ABOUT THE TRUST

The Investment Manager

Advisers currently serves as the Fund’s investment manager pursuant to an investment management agreement dated October 1, 2021, between the Trust, on behalf of the Fund, and Advisers (the “Management Agreement”). The Management Agreement was initially approved by the Board, including the Independent Trustees, on September 8, 2021 and most recently renewed on May 11, 2023. Advisers’ principal offices are located at One Franklin Parkway, San Mateo, California 94403-1906. Advisers is an indirect, wholly owned subsidiary of FRI. Further information about FRI and its principal shareholders can be found above under “INFORMATION ABOUT FT INSTITUTIONAL.”

The Trustees who are interested persons of Advisers or its affiliates and certain officers of the Trust who are shareholders of FRI are not compensated by the Trust or the Fund for their services, but may receive indirect remuneration due to their participation in management, advisory and other fees received by Advisers and its affiliates from the Fund.

The Trust employs Advisers to manage the investment and reinvestment of the Fund’s assets, to administer its affairs and to provide or procure, as applicable, administrative and other services, subject to the oversight of the Board.  Under the Management Agreement, Advisers has the authority to make all determinations with respect to the investment of the Fund’s assets and the purchase and sale of its investment securities. Advisers also may place orders for the execution of the Fund’s securities transactions. In addition, Advisers has the authority and discretion to delegate its investment management responsibilities through the appointment of one or more sub-advisors. In allocating the Fund’s assets, Advisers has discretion to not allocate any assets to one or more sub-advisors at any time.

The Fund pays Advisers a unified management fee for managing the Fund’s assets. Pursuant to the investment management agreement, Advisers reimburses the Fund for all acquired fund fees and expenses (such as those associated with the Fund’s investment in a Franklin Templeton money fund)  and pays all of the ordinary operating expenses of the Fund, except for (i) the Fund’s management fee, (ii) payments under the Fund’s Rule 12b-1 plan (if any), (iii) brokerage expenses (including any costs incidental to transactions in portfolio securities or instruments), (iv) taxes, (v) interest (including borrowing costs and dividend expenses on securities sold short and overdraft charges), (vi) litigation expenses (including litigation to which the Trust or the Fund may be a party and indemnification of the trustees and officers with respect thereto), and (vii) other non-routine or extraordinary expenses. The fee is equal to the following annual rate of the average daily net assets of the Fund: 0.15%.

           For the fiscal year ended March 31, 2023 the Fund paid Advisers an effective management fee equal to 0.14% of the Fund’s average net assets for managing the Fund’s assets. For the fiscal year ended March 31, 2023, the investment management fees paid by the Fund totaled $2,117,794.

Advisers, not the Fund, compensates FT Institutional for sub-advisory services rendered to the Fund out of the unified management fee paid by the Fund.

The Administrator

The administrator for the Fund is Franklin Templeton Services, LLC (“FT Services”), with offices at One Franklin Parkway, San Mateo, California 94403-1906.  FT Services is an indirect, wholly owned subsidiary of FRI and is an affiliate of Advisers and the Fund’s principal underwriter. Advisers pays FT Services a monthly fee equal to 105% of the internal costs incurred by FT Services for providing administrative services to the Fund. Advisers also reimburses FT Services for fees paid by FT Services to any third-party service provider for sub-administration and other services contemplated by the agreement between Advisers and FT Services. The fee is paid by Advisers and is not an additional expense of the Fund. State Street Bank and Trust Company, 1 Heritage Drive, Mail Stop OHD0100, North Quincy, MA 02171, has an agreement with FT Services to provide certain sub-administrative services for the Fund.

The Principal Underwriter

The principal underwriter for the Fund is Franklin Distributors, LLC, One Franklin Parkway, San Mateo, California 94403­1906.  The Board has adopted a plan pursuant to Rule 12b-1 for the Fund that allows the Fund to pay distribution fees of up to 0.25% per year, to those who sell and distribute Fund shares and provide other services to shareholders. However, the Board has determined not to authorize payment of a Rule 12b-1 plan fee at this time and no Rule 12b-1 plan fee is currently charged to the Fund.

The Transfer Agent

The transfer agent and dividend-paying agent for the Fund is State Street Bank and Trust Company, located at One Congress Street, Suite 1, Boston, MA 02114-2016. 

Other Matters

The Fund’s audited financial statements and annual report for its last completed fiscal year, and any subsequent semi-annual report to shareholders, are available free of charge.  To obtain a copy, please call (800) DIAL BEN/(800) 342-5236 or send a written request to Franklin Templeton Investor Services, LLC, P.O. Box 33030, St. Petersburg, Florida 33733-8030.

Principal Shareholders

The outstanding shares of the Fund as of June 7, 2023, are 70,850,000.

Although the Trust does not have information concerning the beneficial ownership of shares held in the names of the Depository Trust Company (DTC) participants, as of June 7, 2023, the name, address and percentage ownership of each DTC participant that owned of record 5% or more of the outstanding shares of the Fund are listed on Exhibit C.

In addition, to the knowledge of the Trust’s management, as of June 7, 2023, no Trustee of the Trust owned 1% or more of the outstanding shares of the Fund.  The Trustees and officers, as a group, of the Trust owned less than 1% of the outstanding shares of the Fund.

Contacting the Board

If a shareholder wishes to send a communication to the Board, such correspondence should be in writing and addressed to the Board at the Trust’s offices, One Franklin Parkway, San Mateo, California 94403-1906, Attention: Secretary. The correspondence will be given to the Board for review and consideration.

 EXHIBIT A

Comparable Funds Advised or Sub-Advised by FT Institutional

None

EXHIBIT B

SUB-ADVISORY AGREEMENT

FRANKLIN TEMPLETON ETF TRUST

On behalf of

FRANKLIN U.S. core BOND ETF

THIS SUB-ADVISORY AGREEMENT (the “Agreement”), effective as of March 31, 2023, is made between FRANKLIN ADVISERS, INC., a California corporation (“FAV”), and FRANKLIN TEMPLETON INSTITUTIONAL, LLC, a Delaware limited liability company (“FT Institutional”).

WITNESSETH

WHEREAS, FAV and FT Institutional are each registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and are engaged in the business of supplying investment management services, as an independent contractor;

WHEREAS, FAV, pursuant to an investment management agreement (“Investment Management Agreement”), has been retained to render investment management services to Franklin U.S. Core Bond ETF (the “Fund”), a series of Franklin Templeton ETF Trust (the “Trust”), an investment management company registered with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, FAV desires to retain FT Institutional to render investment advisory, research and related services to the Fund pursuant to the terms and provisions of this Agreement, and FT Institutional is interested in furnishing said services.

NOW, THEREFORE, in consideration of the covenants and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound hereby, mutually agree as follows:

1. FAV hereby retains FT Institutional, and FT Institutional hereby accepts such engagement, to furnish certain investment advisory services with respect to the assets of the Fund, as more fully set forth herein.

(a) Subject to the overall policies, direction and review of the Trust’s Board of Trustees (the “Board” or “Trustees”) and to the instructions and supervision of FAV, FT Institutional agrees to provide certain investment advisory services with respect to securities and investments and cash equivalents in the Fund. FAV will continue to have full responsibility for all investment advisory services provided to the Fund, including determining the manner in which any voting rights, rights to consent to corporate action and any other rights pertaining to the investment securities within the Fund shall be exercised.

(b) Both FAV and FT Institutional may place all purchase and sale orders on behalf of the Fund.

(c) Unless otherwise instructed by FAV or the Board, and subject to the provisions of this Agreement and to any guidelines or limitations specified from time to time by FAV or by the Board, FT Institutional shall report daily all transactions effected by FT Institutional on behalf of the Fund to FAV and to other entities as reasonably directed by FAV or the Board.

(d) For the term of this Agreement, FT Institutional shall provide the Board at least quarterly, in advance of the regular meetings of the Board, a report of its activities hereunder on behalf of the Fund and its proposed strategy for the next quarter, all in such form and detail as requested by the Board. Any team members shall also be available to attend such meetings of the Board as the Board may reasonably request.

(e) In performing its services under this Agreement, FT Institutional shall adhere to the Fund’s investment objective, policies and restrictions as contained in the Fund’s Prospectus and Statement of Additional Information, and in the Trust’s Agreement and Declaration of Trust, and to the investment guidelines most recently established by FAV and shall comply with the provisions of the 1940 Act and the rules and regulations of the SEC thereunder in all material respects and with the applicable provisions of the United States Internal Revenue Code of 1986, as amended.

(f) In carrying out its duties hereunder, FT Institutional shall comply with all reasonable instructions of the Fund or FAV in connection therewith.

2. In performing the services described above, FT Institutional shall use its best efforts to obtain for the Fund the most favorable price and execution available. Subject to prior authorization of appropriate policies and procedures by the Board, FT Institutional may, to the extent authorized by law and in accordance with the terms of the Fund’s Investment Management Agreement, Prospectus and Statement of Additional Information, cause the Fund to pay a broker who provides brokerage and research services an amount of commission for effecting a portfolio investment transaction in excess of the amount of commission another broker would have charged for effecting that transaction, in recognition of the brokerage and research services that such broker provides, viewed in terms of either the particular transaction or FT Institutional’s overall responsibilities with respect to accounts managed by FT Institutional. FT Institutional may use for the benefit of its other clients any such brokerage and research services that FT Institutional obtains from brokers or dealers. To the extent authorized by applicable law, FT Institutional shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of such action.

3. (a) FAV shall pay to FT Institutional a monthly fee in U.S. dollars equal to 34% of the net investment advisory fee payable by the Fund to FAV (the “Net Investment Advisory Fee”), calculated daily, as compensation for the services rendered and obligations assumed by FT Institutional during the preceding month.

For purposes of this Agreement, the Net Investment Advisory Fee payable by the Fund to FAV shall equal (i) 96% of an amount equal to the total investment management fees payable to FAV, minus any Fund fees and/or expenses paid, waived or reimbursed by FAV, including as part of the Fund’s unitary management fee structure pursuant to the investment management agreement between FAV and the Trust, on behalf of the Fund, minus (ii) any fees payable by FAV to Franklin Templeton Services, LLC for fund administrative services.

The sub-advisory fee under this Agreement shall be payable on the first business day of the first month following the effective day of this Agreement and shall be reduced by the amount of any advance payments made by FAV relating to the previous month.

(b) If this Agreement is terminated prior to the end of any month, the monthly fee shall be prorated for the portion of any month in which this Agreement is in effect which is not a complete month according to the proportion which the number of calendar days in the month during which the Agreement is in effect bears to the total number of calendar days in the month, and shall be payable within 10 days after the date of termination.

4. It is understood that the services provided by FT Institutional are not to be deemed exclusive. FAV acknowledges that FT Institutional may have investment responsibilities, render investment advice to, or perform other investment advisory services to other investment companies and clients, which may invest in the same type of securities as the Fund (collectively, “Clients”). FAV agrees that FT Institutional may give advice or exercise investment responsibility and take such other action with respect to such Clients which may differ from advice given or the timing or nature of action taken with respect to the Fund. In providing services, FT Institutional may use information furnished by others to FAV and FT Institutional in providing services to other such Clients.

5. FT Institutional agrees to use its best efforts in performing the services to be provided by it pursuant to this Agreement.

6. During the term of this Agreement, FT Institutional will pay all expenses incurred by it in connection with the services to be provided by it under this Agreement other than the cost of securities (including brokerage commissions, if any) purchased for the Fund. The Fund and FAV will be responsible for all of their respective expenses and liabilities.

7. FT Institutional shall, unless otherwise expressly provided and authorized, have no authority to act for or represent FAV or the Fund in any way, or in any way be deemed an agent for FAV or the Fund.

8. FT Institutional will treat confidentially and as proprietary information of the Fund all records and other information relative to the Fund and prior, present or potential shareholders, and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where FT Institutional may be exposed to civil or criminal contempt proceedings for failure to comply when requested to divulge such information by duly constituted authorities, or when so requested by the Fund.

9. This Agreement shall become effective as of the date first written above and shall continue in effect for two years. If not sooner terminated, this Agreement shall continue in effect for successive periods not exceeding 12 months each thereafter, provided that each such continuance shall be specifically approved at least annually by the vote of a majority of the Trustees who are not parties to this Agreement or “interested persons” (as defined in the 1940 Act) of any such party, in accordance with the 1940 Act and any rules, interpretations or orders thereunder, and either the vote of (a) a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act, or (b) a majority of the Trustees as a whole.

10. (a) Notwithstanding the foregoing, this Agreement may be terminated (i) at any time, without the payment of any penalty, by the Board upon written notice to FAV and FT Institutional, or by vote of a majority of the outstanding voting securities of the Fund, as defined in the 1940 Act, or (ii) by FAV or FT Institutional upon not less than sixty (60) days’ written notice to the other party.

(b) This Agreement shall terminate automatically in the event of any assignment thereof and in the event of any termination or assignment of the Investment Management Agreement between FAV and the Fund. (“Assignment” has the meaning set forth in the 1940 Act.)

11. (a) In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of its obligations or duties hereunder on the part of FT Institutional, neither FT Institutional nor any of its directors, officers, employees or affiliates shall be subject to liability to FAV, the Trust or the Fund or to any shareholder of the Fund for any error of judgment or mistake of law or any other act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security by the Fund.

(b) Notwithstanding paragraph 11(a), to the extent that FAV is found by a court of competent jurisdiction, or the SEC or any other regulatory agency, to be liable to the Fund or any shareholder (a “liability”) for any acts undertaken by FT Institutional pursuant to authority delegated as described in Paragraph 1(a), FT Institutional shall indemnify FAV and each of its affiliates, officers, directors and employees (each a “Franklin Indemnified Party”) harmless from, against, for and in respect of all losses, damages, costs and expenses incurred by a Franklin Indemnified Party with respect to such liability, together with all legal and other expenses reasonably incurred by any such Franklin Indemnified Party, in connection with such liability.

(c) No provision of this Agreement shall be construed to protect any director or officer of FAV or FT Institutional from liability in violation of Sections 17(h) or (i), respectively, of the 1940 Act.

12. In compliance with the requirements of Rule 31a-3 under the 1940 Act, FT Institutional hereby agrees that all records which it maintains for the Fund are the property of the Fund and further agrees to surrender promptly to the Fund, or to any third party at the Fund’s direction, any of such records upon the Fund’s request. FT Institutional further agrees to preserve for periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.

13. Upon termination of FT Institutional’s engagement under this Agreement or at the Fund’s direction, FT Institutional shall forthwith deliver to the Fund, or to any third party at the Fund’s direction, all records, documents and books of accounts which are in the possession or control of FT Institutional and relate directly and exclusively to the performance by FT Institutional of its obligations under this Agreement; provided, however, that FT Institutional shall be permitted to keep such records or copies thereof for such periods of time as are necessary to comply with applicable laws, in which case FT Institutional shall provide the Fund or a designated third party with copies of such retained documents unless providing such copies would contravene such rules, regulations and laws.

Termination of this Agreement or FT Institutional’s engagement hereunder shall be without prejudice to the rights and liabilities created hereunder prior to such termination.

14. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, in whole or in part, the other provisions hereof shall remain in full force and effect. Invalid provisions shall, in accordance with the intent and purpose of this Agreement, be replaced by such valid provisions which in their economic effect come as closely as legally possible to such invalid provisions.

15. Any notice or other communication required to be given pursuant to this Agreement shall be in writing and given by personal delivery, pre-paid registered mail or nationally-recognized overnight delivery service, or by facsimile transmission and shall be effective upon receipt. Notices and communications shall be given:

(i) to FAV:
One Franklin Parkway

San Mateo, CA 94403-1906

Facsimile: (650) 525-7141

(ii) to FT Institutional:
280 Park Avenue

New York, NY 10017-1274

Facsimile: (212) 632-3019

16. This Agreement shall be interpreted in accordance with and governed by the laws of the State of California.

17. FT Institutional acknowledges that it has received notice of and accepts the limitations of the Trust’s liability as set forth in its Agreement and Declaration of Trust. FT Institutional agrees that the Trust’s obligations hereunder shall be limited to the assets of the Fund; that no other series of the Trust shall be liable with respect to this Agreement or in connection with the matters contemplated herein; and that FT Institutional shall not seek satisfaction of any such obligation from any shareholders of the Trust or Fund; from any trustee, officer, employee or agent of the Trust; or from any other series of the Trust.

18. Where the effect of a requirement of the 1940 Act reflected in any provision of the Agreement is revised by rule, interpretation or order of the SEC, such provision shall be deemed to incorporate the effect of such rule, interpretation or order.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on March 27, 2023.

FRANKLIN ADVISERS, INC.

By:    /s/Patrick O’Connor

Name:  Patrick O’Connor

Title:    Senior Vice President

FRANKLIN TEMPLETON INSTITUTIONAL, LLC

By: /s/Phillip Portera

Name:  Phillip Portera

Title:    Senior Vice President

EXHIBIT C

Depository Trust Company participants that owned of record 5% or more of the outstanding shares of Franklin U.S. Core Bond ETF as of June 7, 2023

* For the benefit of its customer(s)

FLCB STMT 06/23