Franklin Templeton Holdings Trust 10-Q/A for FY2024 Q1
Franklin Templeton Holdings Trust (FGDL)
About this 10-Q/A
Franklin Templeton Holdings Trust filed this 10-Q/A on June 7, 2024, covering the quarter ended June 30, 2023 (FY2024 Q1).
Headline figures
Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $3.32M
Table of Contents
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||
| ☒ | Smaller Reporting Company | |||||
| Emerging Growth Company | ||||||
Table of Contents
FRANKLIN RESPONSIBLY SOURCED GOLD ETF
FRANKLIN TEMPLETON HOLDINGS TRUST
Table of Contents
| Part I. FINANCIAL INFORMATION |
Page | |||
| Item 1. Unaudited Financial Statements of the Trust and the Fund |
1 | |||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 | |||
| Item 3. Quantitative and Qualitative Disclosure About Market Risk |
24 | |||
| 24 | ||||
| Part II. OTHER INFORMATION |
||||
| 25 | ||||
| 25 | ||||
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
25 | |||
| 25 | ||||
| 25 | ||||
| 25 | ||||
| 25 | ||||
| 27 | ||||
Table of Contents
| • | the last day of the fiscal year during which the Trust has total annual gross revenues of $1.235 billion or more; |
| • | the last day of the fiscal year following the fifth anniversary of the completion of this offering; |
| • | the date on which the Trust has, during the previous three-year period, issued more than $1 billion in non-convertible debt; or |
| • | the date on which the Trust is deemed to be a “large-accelerated filer” (i.e., an issuer that (1) has more than $700 million in outstanding equity held by non-affiliates and (2) has been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act” for at least 12 calendar months and has filed at least one annual report on Form 10-K.) |
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| 17 | ||||
June 30, 2023 |
March 31, 2023 |
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Assets |
||||||||
Investment in gold, at fair value (a) |
$ | $ | ||||||
Total assets |
||||||||
Liabilities |
||||||||
Commitments and contingent liabilities (Note 7) |
||||||||
Total liabilities |
||||||||
Net assets |
$ | $ | ||||||
Shares issued and outstanding (b) |
||||||||
Net asset value per Share |
$ | $ | ||||||
| (a) | Cost of investment in gold bullion: $ |
| (b) | No par value, unlimited amount authorized. |
June 30, 2023 |
||||||||||||||||
Ounces of Gold |
Cost |
Fair Value |
% of Net Assets |
|||||||||||||
Investment in gold |
$ | $ | % | |||||||||||||
Total investments |
$ | $ | % | |||||||||||||
Liabilities in excess of other assets |
( |
) | ( |
)% | ||||||||||||
Net assets |
$ | % | ||||||||||||||
March 31, 2023 |
||||||||||||||||
Ounces of Gold |
Cost |
Fair Value |
% of Net Assets |
|||||||||||||
Investment in gold |
$ | $ | % | |||||||||||||
Total investments |
$ | $ | % | |||||||||||||
Liabilities in excess of other assets |
( |
) | ( |
)% | ||||||||||||
Net assets |
$ | % | ||||||||||||||
For the Three Months Ended June 30, 2023 |
For the period from May 24, 2022 (Date of inception) to June 30, 2022 |
|||||||
Expenses |
||||||||
Sponsor’s fee |
$ | $ | ||||||
Total expenses |
||||||||
Net investment loss |
( |
) | ( |
) | ||||
Net realized and change in unrealized gain (loss) on investment in gold |
||||||||
Net realized gain (loss) from gold sold for and to pay expenses |
||||||||
Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ( |
) | ||||
Net realized and change in unrealized gain (loss) on investment in gold |
( |
) | ( |
) | ||||
Net increase (decrease) in net assets resulting from operations |
$ | ( |
) | $ | ( |
) | ||
Net increase (decrease) in net assets per Share (a) |
$ | ( |
) | $ | ( |
) | ||
| (a) | Net increase (decrease) in net assets per Share based on average shares outstanding during the period. |
For the Three Months Ended June 30, 2023 |
For the period from May 24, 2022 (Date of inception) to June 30, 2022 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Proceeds from gold bullion sold to pay expenses |
$ | $ | ||||||
Expenses—Sponsor’s fee paid |
( |
) | ||||||
Net cash provided by (used in) operating activities |
||||||||
Increase (decrease) in cash |
||||||||
Cash, beginning of period |
||||||||
Cash, end of period |
$ | $ | ||||||
Reconciliation of Net Increase (Decrease) in Net Assets Resulting from Operations to Net Cash Provided by (Used in) Operating Activities: |
||||||||
Net increase (decrease) in net assets resulting from operations |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: |
||||||||
Proceeds from gold bullion sold to pay expenses |
||||||||
Net realized gain (loss) |
( |
) | ||||||
Net change in unrealized appreciation (depreciation) |
||||||||
Change in operating assets and liabilities: |
||||||||
Sponsor’s fees payable |
( |
) | ||||||
Net cash provided by (used in) operating activities |
$ | $ | ||||||
Supplemental disclosure of non-cash information: |
||||||||
Gold bullion contributed for Shares issued |
$ | $ | ||||||
Gold bullion distributed for Shares redeemed |
$ | ( |
) | $ | ||||
For the Three Months Ended June 30, 2023 |
2022 (Date of inception) to June 30, 2022 |
|||||||
Net assets, beginning of period |
$ | $ | ||||||
Net investment gain (loss) |
( |
) | ( |
) | ||||
Net realized gain (loss) from gold sold to pay expenses |
||||||||
Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ( |
) | ||||
Net decrease in net assets resulting from operations |
( |
) | ||||||
Capital Share Transactions: |
||||||||
Contributions for Shares issued |
(a) | |||||||
Distributions for Shares redeemed |
( |
) | ||||||
Net increase (decrease) in net assets from capital share transactions |
( |
) | ||||||
Net assets, end of period |
$ | $ | ||||||
| (a) | The amount represents the initial Seed Creation. |
Shares |
Amount |
|||||||
| Balance at April 1, 2023 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Balance at June 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
Shares |
Amount |
|||||||
| Balance at May 24, 2022 * |
$ | |||||||
| Creation of Shares ** |
||||||||
| Redemption of Shares |
||||||||
| |
|
|
|
|||||
| Balance at June 30, 2022 |
$ | |||||||
| |
|
|
|
|||||
| * | The date represents the Initial Seed Creation. |
| ** | Includes initial seed creation of |
Amount in ounces |
Amount in US$ |
|||||||
| Balance at April 1, 2023 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
( |
) | ( |
) | ||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ||||||
| |
|
|
|
|||||
| Balance at June 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
Amount in ounces |
Amount in US$ |
|||||||
| Balance at May 24, 2022 * |
$ | |||||||
| Gold received for the creation of Shares ** |
||||||||
| Gold distributed for the redemption of Shares |
||||||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
||||||||
| |
|
|
|
|||||
| Balance at March 31, 2023 |
$ | |||||||
| |
|
|
|
|||||
| * | The date represents the Initial Seed Creation. |
| ** | Includes gold received towards initial seed creation of |
For the Three Months Ended June 30, 2023 |
For the period from May 24, 2022 (Date of inception) to June 30, 2022 |
|||||||
| Net asset value per Share, beginning of period |
$ | $ | (a) | |||||
| |
|
|
|
|||||
| Net investment loss (b) |
( |
) | ( |
) (c) | ||||
| Net realized and unrealized gain (loss) on investment in gold |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net change in net assets from operations |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net asset value per Share, end of period |
$ | $ | ||||||
| |
|
|
|
|||||
| Total return, at net asset value (d) |
( |
)% | ( |
)% | ||||
| Ratio to average net assets (e) |
||||||||
| Net investment loss |
( |
)% | ( |
)% | ||||
| Net expenses |
% | % | ||||||
| (a) | The amount represents the initial Seed Creation. |
| (b) | Calculated using average Shares outstanding. |
| (c) | Amount represents less than $0.01. |
| (d) | Calculation based on the change in net asset value of a Share during the period. Total return for periods of less than a year are not annualized. |
| (e) | Annualized. |
June 30, 2023 |
March 31, 2023 |
|||||||
Assets |
||||||||
Investment in gold, at fair value (a) |
$ | $ | ||||||
Total assets |
||||||||
Liabilities |
||||||||
Commitments and contingent liabilities (Note 7) |
||||||||
Total liabilities |
||||||||
Net assets |
$ | $ | ||||||
Shares issued and outstanding (b) |
||||||||
Net asset value per Share |
$ | $ | ||||||
| (a) | Cost of investment in gold bullion: $ |
| (b) | No par value, unlimited amount authorized. |
June 30, 2023 |
||||||||||||||||
Ounces of Gold |
Cost |
Fair Value |
% of Net Assets |
|||||||||||||
Investment in gold |
$ | $ | % | |||||||||||||
Total investments |
$ | $ | % | |||||||||||||
Liabilities in excess of other assets |
( |
) | ( |
)% | ||||||||||||
Net assets |
$ | % | ||||||||||||||
March 31, 2023 |
||||||||||||||||
Ounces of Gold |
Cost |
Fair Value |
% of Net Assets |
|||||||||||||
Investment in gold |
$ | $ | % | |||||||||||||
Total investments |
$ | $ | % | |||||||||||||
Liabilities in excess of other assets |
( |
) | ( |
)% | ||||||||||||
Net assets |
$ | % | ||||||||||||||
For the Three Months Ended June 30, 2023 |
For the period from May 24, 2022 (Date of inception) to June 30, 2022 |
|||||||
Expenses |
||||||||
Sponsor’s fee |
$ | $ | ||||||
Total expenses |
||||||||
Net investment loss |
( |
) | ( |
) | ||||
Net realized and change in unrealized gain (loss) on investment in gold |
||||||||
Net realized gain (loss) from gold sold for and to pay expenses |
||||||||
Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ( |
) | ||||
Net realized and change in unrealized gain (loss) on investment in gold |
( |
) | ( |
) | ||||
Net increase (decrease) in net assets resulting from operations |
$ | ( |
) | $ | ( |
) | ||
Net increase (decrease) in net assets per Share (a) |
$ | ( |
) | $ | ( |
) | ||
| (a) | Net increase (decrease) in net assets per Share based on average shares outstanding during the period. |
For the Three Months Ended June 30, 2023 |
For the period from May 24, 2022 (Date of inception) to June 30, 2022 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Proceeds from gold bullion sold to pay expenses |
$ | $ | ||||||
Expenses—Sponsor’s fee paid |
( |
) | ||||||
Net cash provided by (used in) operating activities |
||||||||
Increase (decrease) in cash |
||||||||
Cash, beginning of period |
||||||||
Cash, end of period |
$ | $ | ||||||
Reconciliation of Net Increase (Decrease) in Net Assets Resulting from Operations to Net Cash Provided by (Used in) Operating Activities: |
||||||||
Net increase (decrease) in net assets resulting from operations |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: |
||||||||
Proceeds from gold bullion sold to pay expenses |
||||||||
Net realized gain (loss) |
( |
) | ||||||
Net change in unrealized appreciation (depreciation) |
||||||||
Change in operating assets and liabilities: |
||||||||
Sponsor’s fees payable |
( |
) | ||||||
Net cash provided by (used in) operating activities |
$ | $ | ||||||
Supplemental disclosure of non-cash information: |
||||||||
Gold bullion contributed for Shares issued |
$ | $ | ||||||
Gold bullion distributed for Shares redeemed |
$ | ( |
) | $ | ||||
For the Three Months Ended June 30, 2023 |
For the period from May 24, 2022 (Date of inception) to June 30, 2022 |
|||||||
| Net assets, beginning of period |
$ | $ | ||||||
| Net investment gain (loss) |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold sold to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net decrease in net assets resulting from operations |
( |
) | ||||||
| |
|
|
|
|||||
| Capital Share Transactions: |
||||||||
| Contributions for Shares issued |
(a) | |||||||
| Distributions for Shares redeemed |
( |
) | ||||||
| |
|
|
|
|||||
| Net increase (decrease) in net assets from capital share transactions |
( |
) | ||||||
| |
|
|
|
|||||
| Net assets, end of period |
$ | $ | ||||||
| |
|
|
|
|||||
| (a) | The amount represents the initial Seed Creation. |
Shares |
Amount |
|||||||
Balance at April 1, 2023 |
$ | |||||||
Creation of Shares |
||||||||
Redemption of Shares |
( |
) | ( |
) | ||||
Balance at June 30, 2023 |
$ | |||||||
Shares |
Amount |
|||||||
Balance at May 24, 2022 * |
$ | |||||||
Creation of Shares ** |
||||||||
Redemption of Shares |
||||||||
Balance at June 30, 2022 |
$ | |||||||
| * | The date represents the Initial Seed Creation. |
| ** | Includes initial seed creation of |
Amount in ounces |
Amount in US$ |
|||||||
Balance at April 1, 2023 |
$ | |||||||
Gold received for the creation of Shares |
||||||||
Gold distributed for the redemption of Shares |
( |
) | ( |
) | ||||
Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
Net realized gain (loss) from gold transferred to pay expenses |
||||||||
Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ||||||
Balance at June 30, 2023 |
$ | |||||||
Amount in ounces |
Amount in US$ |
|||||||
Balance at May 24, 2022 * |
$ | |||||||
Gold received for the creation of Shares ** |
||||||||
Gold distributed for the redemption of Shares |
||||||||
Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
Net realized gain (loss) from gold transferred to pay expenses |
||||||||
Net change in unrealized appreciation (depreciation) on investment in gold |
||||||||
Balance at March 31, 2023 |
$ | |||||||
| * | The date represents the Initial Seed Creation. |
| ** | Includes gold received towards initial seed creation of |
For the Three Months Ended June 30, 2023 |
For the period from May 24, 2022 (Date of inception) to June 30, 2022 |
|||||||
Net asset value per Share, beginning of period |
$ | $ | (a) | |||||
Net investment loss (b) |
( |
) | ( |
) (c) | ||||
Net realized and unrealized gain (loss) on investment in gold |
( |
) | ( |
) | ||||
Net change in net assets from operations |
( |
) | ( |
) | ||||
Net asset value per Share, end of period |
$ | $ | ||||||
Total return, at net asset value (d) |
( |
)% | ( |
)% | ||||
Ratio to average net assets (e) |
||||||||
Net investment loss |
( |
)% | ( |
)% | ||||
Net expenses |
% | % | ||||||
| (a) | The amount represents the initial Seed Creation. |
| (b) | Calculated using average Shares outstanding. |
| (c) | Amount represents less than $0.01. |
| (d) | Calculation based on the change in net asset value of a Share during the period. Total return for periods of less than a year are not annualized. |
| (e) | Annualized. |
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This information should be read in conjunction with the financial statements and notes included in Item 1 of Part I of this Form 10-Q. This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements involve risks and uncertainties. All statements (other than statements of historical fact) included in this Form 10-Q that address activities, events or developments that may occur in the future, including such matters as future gold prices, gold sales, costs, objectives, changes in commodity prices and market conditions (for gold and the shares), the Fund’s operations (including the effects thereon related to the coronavirus (“COVID-19”) pandemic), the Sponsor’s plans and references to the Fund’s future success and other similar matters are forward-looking statements. Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and Fund performance, are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those discussed. Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed therein. We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable basis. However, we make no assurances that management’s estimates, expectations, beliefs, or projections will be achieved or accomplished. These forward-looking statements are based on assumptions about many important factors that could cause actual results to differ materially from those in the forward-looking statements. Such factors are discussed in: Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q; Part II, Item 1A. Risk Factors of this Form 10-Q, and other parts of this Form 10-Q. We do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required by the federal securities laws.
Organization and Trust Overview
The Franklin Templeton Holdings Trust (the “Trust”) was organized as a Delaware statutory trust on April 19, 2021. Franklin Holdings, LLC is the Sponsor of the Trust (the “Sponsor”). The Trust currently offers a single series, the Franklin Responsibly Sourced Gold ETF (the “Fund”). The Fund issues common units of beneficial interest (“Shares”), which represent units of fractional undivided beneficial interest in and ownership of the Fund. The Shares are listed on NYSE Arca, Inc. (“NYSE Arca”) under the symbol “FGDL”. Shares are not obligations of, and are not guaranteed by, the Sponsor or any of its subsidiaries or affiliates. The investment objective of the Fund is for the Shares to reflect the performance of the price of gold bullion, less the Fund’s expenses. The assets of the Fund include only gold bullion and cash, if any.
The Fund seeks to hold only responsibly sourced gold in the Fund’s allocated account. The Fund defines responsibly sourced gold for this purpose as London Good Delivery gold bullion bars that were refined on or after January 1, 2012 (also referred to herein as “post-2012 gold”). All post-2012 gold has been refined in accordance with London Bullion Market Association’s (“LBMA”) Responsible Gold Guidance (the “Gold Guidance”), described further herein. To facilitate this, in transferring gold into and out of the Fund’s allocated account, the Custodian will, on a best efforts basis and subject to available liquidity, seek to allocate post-2012 gold. If, due to a lack of liquidity, the Custodian is unable to allocate post-2012 gold to the Fund’s allocated account, the Custodian will do so as soon as reasonably practicable.
The Fund issues Shares on a continuous basis. Shares are issued by the Fund only in one or more blocks of 50,000 Shares (a block of 50,000 Shares is called a “Creation Unit”) in exchange for gold from Authorized Participants, which is then allocated to the Fund and stored safely by the Custodian. The Fund issues and redeems Creation Units on an ongoing basis at Net Asset Value to Authorized Participants who have entered into an agreement with the Sponsor and the Administrator.
The Fund pays the Sponsor a fee that accrues daily at an annualized rate equal to 0.15% of the daily Net Asset Value of the Fund, paid monthly in arrears (the “Sponsor Fee”). The Sponsor Fee is accrued in and payable in U.S. dollars.
The NAV is computed based upon the total value of the assets of the Fund (i.e., gold and cash) less its liabilities. To determine the Fund’s NAV, the Administrator generally will value the gold bullion held by the Fund on the basis of the LBMA Gold Price PM as published by the IBA. IBA operates electronic auctions for spot, unallocated loco London gold, providing a market-based platform for buyers and sellers to trade. The auctions are run at 10:30 a.m. and 3:00 p.m. London time for gold. The final auction prices are published to the market as the LBMA Gold Price AM and the LBMA Gold Price PM, respectively. The Administrator will calculate the NAV on each day NYSE Arca is open for regular trading, at 12:00 PM New York time. If no LBMA Gold Price (AM or PM) is made on a particular evaluation day or if the LBMA Gold Price PM has not been announced by 12:00 PM New York time on a particular evaluation day, the next most recent LBMA Gold Price AM or PM will be used in the determination of the NAV, unless the Sponsor determines that such price is inappropriate to use as the basis for such determination. If the Sponsor determines that such price is inappropriate to use, it shall identify an alternate basis for evaluation of the gold bullion held by the Fund that the Sponsor determines fairly represents the commercial value of the Fund’s gold bullion.
Once the value of the gold bullion has been determined, the Administrator subtracts all estimated accrued expenses and other liabilities of the Fund from the total value of the gold bullion and any cash of the Fund. The resulting figure is the NAV. The Administrator determines the NAV per Share by dividing the NAV of the Fund by the number of Shares outstanding as of the close of each day of trading on NYSE Arca.
Critical Accounting Policy
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s as well as the Fund’s financial position and results of operations. These estimates and assumptions affect the Trust’s as well as the Fund’s application of accounting policies. Below we describe the valuation of gold bullion, a critical accounting policy that we believe is important to understanding the results of operations and financial position. In addition, please refer to Note 2 to the Financial Statements for further discussion of the accounting policies followed by the Trust and the Fund.
Results of Operations
At June 30, 2023, the Custodian held 48,807.094 ounces of gold on behalf of the Fund in its vault, with a market value of $93,331,366 (cost: $88,609,880) based on the LBMA PM Gold Price at period end.
For the Three Months Ended June 30, 2023
For the three months ended June 30, 2023, 100,000 Shares were issued in exchange for 1,337.286 ounces of gold and (750,000) Shares were redeemed in exchange for (10,029.82) ounces of gold. The Fund’s NAV per Share began the period at $26.48 and ended the period at $25.57. The decrease in NAV per Share was due to a lower price of gold of $1,912.25 per fine ounce at period end, which represented a decrease of (3.4)% from $1,979.70 per fine ounce at March 31, 2023.
The change in net assets from operations for the three months ended June 30, 2023 was $(3,315,223), which was due to (i) the Sponsor Fee of $(38,582), (ii) realized gain on sale of gold to pay expenses of $1,741,468 and (iii) a net change in unrealized (depreciation) on investment in gold of $(5,018,109). Other than the Sponsor Fee the Fund had no expenses during the three months ended June 30, 2023.
22
Table of Contents
For the Period May 24, 2022 to June 30, 2022
For the period from May 24, 2022 (Date of inception) to June 30, 2022, 100,000 Shares (inclusive of two Creation Units that were created upon the initial seeding of the Fund) were issued in exchange for 1,338.976 ounces of gold. The Fund’s NAV per Share began the period at $25.00 and ended the period at $24.33. The decrease in NAV per Share was due to a lower price of gold of $1,817.00 per fine ounce at period end, which represented a decrease of (2.7)% from $1,867.10 per fine ounce at May 24, 2022.
The change in net assets from operations for the period ended June 30, 2022 was $(67,091), which was due to (i) the Sponsor Fee of $(10) and a net change in unrealized (depreciation) on investment in gold of $(67,081). Other than the Sponsor Fee the Fund had no expenses during the period ended June 30, 2022.
Liquidity and Capital Resources
The Fund is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. The Fund’s only ordinary recurring expense is the fee paid to the Sponsor at an annual rate of 0.15% of the daily net asset value of the Fund. The Sponsor’s annual fee accrues daily and is payable by the Fund monthly in arrears. In exchange for the Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Fund, including but not limited to the following: fees charged by the Administrator, the Custodian and the Trustee, NYSE Arca listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, audit fees and expenses, up to $500,000 per annum in legal fees and expenses and applicable license fees. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Fund in excess of the $500,000 per annum stipulated in the Sponsor Agreement.
The Sponsor is not required to pay any extraordinary or non-routine expenses. Extraordinary expenses are fees and expenses which are unexpected or unusual in nature, such as legal claims and liabilities and litigation costs or indemnification or other unanticipated expenses. Extraordinary fees and expenses also include material expenses which are not currently anticipated obligations of the Fund. The Fund will be responsible for the payment of such expenses to the extent any such expenses are incurred. Routine operational, administrative and other ordinary expenses are not deemed extraordinary expenses. The Fund will sell gold on an as-needed basis to pay the Sponsor’s fee.
The Administrator will, at the direction of the Sponsor, sell the Fund’s gold as necessary to pay the Fund’s expenses not otherwise assumed by the Sponsor. When selling gold to pay the Sponsor’s fee and other expenses, if any, the Administrator endeavors to sell the exact amount of gold needed to pay expenses to minimize the Fund’s holdings of cash. At June 30, 2023, the Fund did not have any cash balances.
The Fund as well as the Sponsor and its service providers are vulnerable to the effects of geopolitical events and the continuation of the war in Ukraine or other hostilities. Geopolitical events and the continuation of the hostilities in Ukraine or other hostilities could disrupt and potentially impact the business activities of the Sponsor and its service providers and have an adverse effect on the Fund.
Global or regional military conflicts or acts of aggression, including Russia’s military invasion of Ukraine in February 2022 as discussed further below, may negatively affect global expectations for economic growth, exacerbate inflationary pressures, disrupt trading markets and/or supply chains and result in protracted volatility, which could have an adverse effect on the value of the Fund’s investments. Specifically, in the aftermath of Russia’s invasion of Ukraine, gold prices experienced increased volatility. The extent and duration of Russia’s military actions and the repercussions of such actions (including any retaliatory actions or countermeasures that may be taken by countries or entities subject to sanctions, including cyber attacks) are impossible to predict. These and any related events could significantly impact the Fund’s performance and the value of an investment in the Fund. On March 7, 2022, the LBMA suspended six Russian gold and silver refiners from its Good Delivery List until further notice in light of sanctions imposed on Russia by the U.S., European Union and other countries in response to Russia’s invasion of Ukraine. As a result, while existing gold bars refiners are considered acceptable, newly minted gold bars produced by such refiners are effectively banned from trading in the loco London market. Russia is a significant producer of gold (estimates indicate Russia produces approximately 330 tonnes of gold per year, accounting for around 9% of global production); however, per the LBMA, as of the end of June 2023, the amount of gold held in London vaults was 8,865 tonnes (a 0.4% decrease on previous month), valued at $545.0 billion, which equates to approximately 709,200 gold bars. Accordingly, as of the date of this report, the Fund does not expect that the suspension of Russian refiners to have a material impact on the supply of LBMA Good Delivery gold available to the Fund and other market participants. Any potential escalation of the conflict could negatively impact the Fund. In addition, similar events in the future, particularly where unanticipated by markets, could cause volatility in precious metals markets and the price of gold and may have a negative impact on the Fund’s performance and the value of an investment in the Shares. Following an announcement at the G7 Summit to collectively ban the import of Russian gold, the UK passed regulations which prohibit the direct or indirect (i) import of gold that originated in Russia, (ii) acquisition of gold that originated in Russia or is located in Russia and (iii) supply or delivery of gold that originated in Russia, all after July 21, 2022. Similarly, US regulations prohibit the import of gold of Russian origin into the United States on or after June 28, 2022 and EU regulations prohibit the direct or indirect import, purchase or transfer of gold if it originates in Russia and has been exported from Russia after July 22, 2022. The responses of countries and political bodies to Russia’s actions, the larger overarching tensions, and Ukraine’s military response and the potential for wider conflict may increase financial market volatility generally, have adverse effects on regional and global economic markets, and cause volatility in the price of gold and the price of the Shares. In addition, the conflict in Ukraine, along with global political fallout and implications including sanctions, shipping disruptions, collateral war damage, and a potential expansion of the conflict beyond Ukraine’s borders, could disturb the gold market. War and other geopolitical events in eastern Europe, including but not limited to Russia and Ukraine, may cause volatility in commodity prices including precious metals prices. These events are unpredictable and may lead to extended periods of price volatility. As of the date of this report, the impact of the conflict in Ukraine, including the regulatory responses to such conflict, have not materially affected the operations of the Fund and have not materially impacted the price of gold or the share price of the Fund.
Analysis of Movements in the Price of Gold
As movements in the price of gold are expected to directly affect the price of the Fund’s shares, it is important for investors to understand and follow movements in the price of gold. Past movements in the gold price are not indicators of future movements.
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The following chart shows movements in the price of gold based on the LBMA PM Gold Price in U.S. dollars per ounce over the period from April 1, 2023 to June 30, 2023.
The average, high, low and end-of-period gold prices based on the LBMA PM Gold Price for are as below:
| Period |
Average | High | Date | Low | Date | End of period | Last business day(1) | |||||||||||||||||||||
| April 1, 2023 to June 30, 2023 |
1,975.93 | 2,048.45 | April 13, 2023 | 1,899.60 | June 29, 2023 | 1,912.25 | June 30, 2023 | |||||||||||||||||||||
| (1) | The end of period gold price is the LBMA PM Gold Price on the last business day of the period. |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Fund is a passive investment vehicle. It is not actively managed. The investment objective of the Fund is for the Shares to reflect the performance of the price of gold bullion, less the Fund’s expenses. Accordingly, fluctuations in the price of gold will affect the value of the Fund’s Shares.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The duly authorized officers of the Sponsor, performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded as of the date of this amended filing on Form 10-Q/A that the disclosure controls and procedures of the Trust operated effectively at reasonable assurance levels.
The disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, are recorded, processed, summarized and reported, within the time period specified in the applicable rules and forms, and that such information is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate, to allow timely decisions regarding required disclosure. It is important to note that no set of controls, no matter how reasonably designed, can detect every error.
The duly authorized officers of the Sponsor, performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, have evaluated the effectiveness of the Fund disclosure controls and procedures, and have concluded as of the date of this amended filing on Form 10-Q/A that the disclosure controls and procedures of the Fund operated effectively at reasonable assurance levels.
The disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, on behalf of the Fund, are recorded, processed, summarized and reported, within the time period specified in the applicable rules and forms, and that such information is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate, to allow timely decisions regarding required disclosure. It is important to note that no set of controls, no matter how reasonably designed, can detect every error.
Internal Control over Financial Reporting
There were no changes in the Trust’s and the Fund’s internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Trust’s and/or the Fund’s internal control over financial reporting.
Each of the Sarbanes-Oxley certifications included as exhibits to this filing apply with respect to both the operations of both the Fund, as the sole series of the Trust, and the Trust as registrant.
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Part II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Trust and/or the Fund may be a party to certain legal proceedings in the ordinary course of business. As of August 11, 2023, the Trust and the Fund are not subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against the Trust or Fund.
Item 1A. Risk Factors
You should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K filed on June 20, 2023 for the fiscal year ended March 31, 2023, which could materially affect our business, financial condition or future results. There have been no material changes in our risk factors from those disclosed in our 2023 Annual Report on Form 10-K.
The risks described in our Annual Report on Form 10-K are not the only risks facing the Trust and the Fund. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
| a) | None. |
| b) | Not applicable. |
| c) | The Fund does not purchase Shares directly from its Shareholders. In connection with its redemption of Creation Units held by Authorized Participants, the Fund redeemed 15 Creation Units (comprising 750,000 Shares) during the quarter ended June 30, 2023. The following table summarizes the redemptions by Authorized Participants during the period: |
| Period |
Total Shares Redeemed |
Average Price Per Share |
||||||
| April 1, 2023 – April 30, 2023 |
400,000 | $ | 26.88 | |||||
| May 1, 2023 – May 31, 2023 |
— | — | ||||||
| June 1, 2023 – June 30, 2023 |
350,000 | 26.20 | ||||||
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
See the Exhibit Index below, which is incorporated by reference herein.
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EXHIBIT INDEX
| Exhibit No. |
Description of Exhibit | |
| 31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2* | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
| * | Filed herewith. |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities* indicated thereunto duly authorized.
| Franklin Holdings, LLC | ||
| Sponsor of the Franklin Templeton Holdings Trust (registrant) | ||
| By: | /s/ David Mann* | |
| David Mann | ||
| President and Chief Executive Officer | ||
| (serving in the capacity of principal executive officer) | ||
| By: | /s/ Matthew Hinkle* | |
| Matthew Hinkle | ||
| Chief Financial Officer | ||
| (serving in the capacity of principal financial officer) | ||
| Date: June 07, 2024 | ||
| * | The registrant is a trust and the person is signing in his capacity as an officer of Franklin Holdings, LLC, the Sponsor of the registrant. |
27
Exhibit 31.1
Certification of Principal Executive Officer
Pursuant to Rule 13a-14(a) and 15d-14(a) Under the Securities Exchange Act of 1934, as amended
I, David Mann, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Franklin Templeton Holdings Trust (the “Trust” or “registrant”) with respect to its series, Franklin Responsibly Sourced Gold ETF (the “Fund”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting |
| By: | /s/ David Mann | |
| David Mann* | ||
| President and Chief Executive Officer | ||
| (serving in the capacity of principal executive officer) |
Date: June 07, 2024
| * | The registrant is a trust and the person is signing in his capacity as an officer of Franklin Holdings, LLC, the Sponsor of the registrant. |
Exhibit 31.2
Certification of Principal Financial Officer
Pursuant to Rule 13a-14(a) and 15d-14(a) Under the Securities Exchange Act of 1934, as amended
I, Matthew Hinkle, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Franklin Templeton Holdings Trust (the “Trust” or “registrant”) with respect to its series, Franklin Responsibly Sourced Gold ETF (the “Fund”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| By: | /s/ Matthew Hinkle | |
| Matthew Hinkle* | ||
| Chief Financial Officer | ||
| (serving in the capacity of principal financial officer) |
Date: June 07, 2024
| * | The registrant is a trust and the person is signing in his capacity as an officer of Franklin Holdings, LLC, the Sponsor of the registrant. |
Exhibit 32.1
Certification of Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Report”) of Franklin Templeton Holdings Trust (the “Registrant”) with respect to its series, Franklin Responsibly Sourced Gold ETF (the “Fund”) as filed with the U.S. Securities and Exchange Commission on the date hereof, I, David Mann, the Principal Executive Officer of the Sponsor of the Registrant, hereby certify, to the best of my knowledge, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| By: |
/s/ David Mann | |
| David Mann* | ||
| President and Chief Executive Officer | ||
| (serving in the capacity of principal executive officer) |
Date: June 7, 2024
| * | The Registrant is a trust and the person is signing in his capacity as an officer of Franklin Holdings, LLC, the Sponsor of the registrant. |
Exhibit 32.2
Certification of Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (the “Report”) of Franklin Templeton Holdings Trust (the “Registrant”) with respect to its series, Franklin Responsibly Sourced Gold ETF (the “Fund”) as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Matthew Hinkle, the Principal Financial Officer of the Sponsor of the Registrant, hereby certify, to the best of my knowledge, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| By: |
/s/ Matthew Hinkle | |
| Matthew Hinkle* | ||
| Chief Financial Officer | ||
| (serving in the capacity of principal financial officer) |
Date: June 07, 2024
| * | The Registrant is a trust and the person is signing in his capacity as an officer of Franklin Holdings, LLC, the Sponsor of the registrant. |