EZET 10-Q
Franklin Ethereum Trust (EZET)
10-Q
2026-08-14
For: 2026-06-30
View Original
Added on
August 14, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended June 30, 2026
or
Commission File Number: 001-042169
Franklin ETHEREUM ETF
A Series of Franklin ethereum Trust
SPONSORED BY FRANKLIN HOLDINGS, LLC
(Exact name of registrant as specified in its charter)
| | | |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
(650 ) 312-2000
(Address of principal executive offices, telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | | |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
| | ☒ | Smaller Reporting Company | |
| Emerging Growth Company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The registrant had 2,700,000 outstanding shares as of August 3, 2026.
Documents Incorporated by Reference: None.
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q includes statements which relate to future events or future performance. In some cases, you can identify such forward-looking statements by terminology such as “may,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this report that address activities, events or developments that may occur in the future, including such matters as changes in commodity prices and market conditions (for ether and the Shares), the Fund’s operations, the Sponsor’s plans and references to the Fund’s future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by the Sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to a number of risks and uncertainties, including the special considerations discussed in this report, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Consequently, all the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized, will result in the expected consequences to, or have the expected effects on, the Fund’s operations or the value of the Shares. None of the Trust, the Fund, the Sponsor, or the Trustee or their respective affiliates is under a duty to update any of the forward-looking statements to conform such statements to actual results or to a change in the Sponsor’s expectations or predictions, other than as required by applicable laws.
EMERGING GROWTH COMPANY STATUS
The Trust is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as the Trust is an emerging growth company, the Trust may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in the Fund’s periodic reports and audited financial statements in its prospectus, exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on “golden parachute” compensation and exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless otherwise determined by the SEC, any new audit rules adopted by the Public Company Accounting Oversight Board.
Under the JOBS Act, the Trust will remain an emerging growth company until the earliest of:
●
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 its initial public 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” (generally, an issuer that (1) has more than $700 million in outstanding equity held by non-affiliates and (2) has been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for at least 12 calendar months and has filed at least one annual report on Form 10-K.)
The JOBS Act also provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards.
FRANKLIN ETHEREUM ETF
FRANKLIN ETHEREUM TRUST
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Table of Contents
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Part I. FINANCIAL INFORMATION
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Page
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| 27 | |
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| 30 | |
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Part II. OTHER INFORMATION
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| 31 | |
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| 31 | |
| 31 | |
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| 33 | |
Part I. FINANCIAL INFORMATION
FRANKLIN ETHEREUM ETF
FRANKLIN ETHEREUM TRUST
Index to Unaudited Financial Statements
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| 8 | |
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| 17 | |
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| 19 | |
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| 21 |
FRANKLIN ETHEREUM TRUST
| June 30, 2026 | March 31, 2026 | |||||||
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Assets
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||||||||
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Investment in ether, at fair value(a)
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$ | $ | ||||||
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Total assets
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Liabilities
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Sponsor’s fee payable
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Total liabilities
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Commitments and contingent liabilities (Note 7)
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Net assets
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$ | $ | ||||||
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Shares issued and outstanding(b)
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||||||||
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Net asset value per Share
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$ | $ |
(a)
(b)
See accompanying notes to the unaudited combined financial statements.
FRANKLIN ETHEREUM TRUST
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June 30, 2026
|
||||||||||||||||
| Quantity of ether | Cost | Fair Value |
Fair Value as a % of Net Assets | |||||||||||||
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Investment in ether
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$ | $ | % | |||||||||||||
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Total investments
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$ | $ | % | |||||||||||||
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Less liabilities
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( | ) | ( | )% | ||||||||||||
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Net assets
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$ | % |
|
March 31, 2026
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||||||||||||||||
| Quantity of ether | Cost | Fair Value |
Fair Value as a % of Net Assets | |||||||||||||
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Investment in ether
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$ | $ | % | |||||||||||||
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Total investments
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$ | $ | % | |||||||||||||
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Less liabilities
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( | ) | ( | )% | ||||||||||||
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Net assets
|
$ | % |
See accompanying notes to the unaudited combined financial statements.
FRANKLIN ETHEREUM TRUST
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For the Three Months Ended June 30, 2026 |
For the Three Months Ended June 30, 2025 | |||||||
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Expenses
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||||||||
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Sponsor’s fee
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$ | $ | ||||||
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Less waiver
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||||||||
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Total expenses
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||||||||
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Net investment loss
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( | ) | ( | ) | ||||
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Net realized and change in unrealized gain (loss) on investment in ether:
|
||||||||
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Net realized gain (loss) from ether sold for the redemption of shares and sold to pay expenses
|
( | ) | ( | ) | ||||
|
Net change in unrealized appreciation (depreciation) on investment in ether
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( | ) | ||||||
|
Net realized and change in unrealized gain (loss) on investment in ether
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( | ) | ||||||
|
Net increase (decrease) in net assets resulting from operations
|
$ | ( | ) | $ | ||||
|
Net increase (decrease) in net assets per Share(a)
|
$ | ( | ) | $ |
(a)
See accompanying notes to the unaudited combined financial statements.
FRANKLIN ETHEREUM TRUST
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For the Three Months Ended June 30, 2026 |
For the Three Months Ended June 30, 2025 | |||||||
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Cash Flows from Operating Activities:
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||||||||
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Net increase (decrease) in net assets resulting from operations
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$ | ( | ) | $ | ||||
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Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
|
||||||||
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Purchases of ether
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( | ) | ( | ) | ||||
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Sales of ether
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Net realized gain (loss) on investment in ether
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Net change in unrealized appreciation (depreciation) on investment in ether
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( | ) | ||||||
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Change in operating assets and liabilities:
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||||||||
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Sponsor’s fee payable
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( | ) | ||||||
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Net cash provided by (used in) operating activities
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$ | ( | ) | $ | ( | ) | ||
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Cash Flows from Financing Activities:
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||||||||
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Proceeds from issuance of Shares
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||||||||
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Payments on Shares redeemed
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( | ) | ( | ) | ||||
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Net cash provided by (used in) financing activities
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Cash
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Net increase in cash
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Cash, beginning of period
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||||||||
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Cash, end of period
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$ | $ |
See accompanying notes to the unaudited combined financial statements.
FRANKLIN ETHEREUM TRUST
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For the Three Months Ended June 30, 2026 |
For the Three Months Ended June 30, 2025 | |||||||
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Net assets, beginning of period
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$ | $ | ||||||
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Net investment loss
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( | ) | ( | ) | ||||
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Net realized gain (loss) on investment in ether
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( | ) | ( | ) | ||||
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Net change in unrealized appreciation (depreciation) on investment in ether
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( | ) | ||||||
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Net increase (decrease) in net assets resulting from operations
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( | ) | ||||||
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Increase (decrease) in net assets from capital share transactions:
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Contributions for Shares issued
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Distributions for Shares redeemed
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( | ) | ( | ) | ||||
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Net increase (decrease) in net assets from capital share transactions
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Net assets, end of period
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$ | $ |
See accompanying notes to the unaudited combined financial statements.
FRANKLIN ETHEREUM TRUST
1. ORGANIZATION
The Franklin Ethereum Trust (the “Trust”) was formed as a Delaware statutory trust on February 8, 2024, and is governed by the provisions of Second Amended and Restated Agreement and Declaration of Trust dated as of August 7, 2026 (the “Declaration of Trust”). The Trust is not registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and is not a commodity pool for purposes of the Commodity Exchange Act (“CEA”). The accompanying combined financial statements relate to the Trust, as registrant, and the one series that it currently offers, the Franklin Ethereum ETF (the “Fund”) presented on a combined basis. Separate, series-level financial statements are provided for the Fund in another section of this report. The Trust had no operations prior to the Fund’s launch, other than matters relating to its organization and the registration of the Fund under the Securities Act of 1933, as amended (the “Securities Act”). The Sponsor of the Trust and the Fund (the “Sponsor”) is Franklin Holdings, LLC. The Sponsor is a Delaware limited liability company formed on July 21, 2021. The Sponsor is not subject to regulation by the U.S. Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator with respect to the Fund, or a commodity trading advisor with respect to the Fund. The Fund issues shares (the “Shares”), which represent units of fractional undivided beneficial interest in the Fund. The Shares of the Fund are listed on the Cboe BZX Exchange, Inc. (“Cboe BZX Exchange” or the “Exchange”).
The Fund seeks to reflect generally the performance of the price of ether before payment of the Fund's expenses. The Shares are intended to offer a convenient means of making an investment similar to an investment in ether relative to acquiring, holding and trading ether directly on a peer-to-peer or other basis or via a digital asset platform. The Shares have been designed to remove obstacles associated with the complexities and operational burdens involved in a direct investment in ether by providing an investment with a value that reflects the price of the ether owned by the Fund at such time, less the Fund's expenses. The Fund is not a proxy for a direct investment in ether. Rather, the Shares are intended to provide a cost-effective alternative means of obtaining investment exposure through the securities markets that is similar to an investment in ether.
BNY Mellon Asset Servicing, a division of The Bank of New York Mellon, or “BNYM,” is the Fund’s Administrator (the “Administrator”) and Transfer Agent (the “Transfer Agent”). BNYM also serves as the custodian of the Fund’s cash (the “Cash Custodian”). The Administrator is generally responsible for the day-to-day administration of the Fund, including the calculation of the Fund’s net asset value (“NAV”) per Share. The Ether Custodian is responsible for safekeeping the ether owned by the Fund. The Ether Custodian is Coinbase Custody Trust Company, LLC (“Coinbase Custody”). Coinbase Inc., an affiliate of the Ether Custodian, is the Fund’s Prime Broker (“Prime Broker”). CSC Delaware Trust Company, a subsidiary of the Corporation Service Company (the “Trustee”), is the sole trustee of the Trust. Franklin Distributors, LLC is the marketing agent of the Fund (the “Marketing Agent”).
The Fund issues and redeems Shares only to certain eligible financial institutions called Authorized Participants and only in one or more blocks of 50,000 Shares (“Creation Units”). Creation Units are directly redeemable only by Authorized Participants. Creation Units may be issued and redeemed in exchange for an amount of ether and/or cash. The Shares are listed and traded on the Exchange under the ticker symbol “EZET.” The market price of the Shares may be different than the Fund’s NAV per Share. The Fund issues and redeems Shares in Creation Units on a continuous basis at the applicable NAV per Share on the transaction order date. Except when aggregated in Creation Units, the Shares are not redeemable securities.
The Trust is an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act (the “JOBS Act”), subject to reduced public company reporting requirements under U.S. federal securities laws.
The accompanying Combined Statements of Assets and Liabilities and Combined Schedules of Investments at June 30, 2026 and March 31, 2026 and the Combined Statements of Operations, Combined Statements of Cash Flows and Combined Statements of Changes in Net Assets for the periods ended June 30, 2026 and June 30, 2025, have been prepared on behalf of the Trust, as registrant, combined with its one currently offered series, the Fund, and for the Fund separately (included below in a separate section of this report), and are unaudited. In the opinion of management of the Sponsor of the Trust, all adjustments (which include only normal recurring adjustments) necessary to state fairly the financial position and results of operations for all periods stated have been made. In addition, interim period results are not necessarily indicative of results for a full-year period. These financial statements and the notes thereto should be read in conjunction with the Trust’s and the Fund's financial statements included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
The fiscal year end of the Trust and the Fund is March 31st.
2. SIGNIFICANT ACCOUNTING POLICIES
In preparing financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”), management of the Sponsor makes estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amount of revenue and expenses reported during the period. Actual results could differ from these estimates.
The accompanying unaudited financial statements were prepared in accordance with GAAP for interim financial information and with the instructions for Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
The following is a summary of significant accounting policies followed by the Trust and the Fund.
2.1.
Basis of Presentation
The Sponsor has determined that the Trust and Fund falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that solely for accounting purposes, the Trust is classified as an Investment Company as defined in ASC 946. The Trust is not registered as an investment company under the Investment Company Act and is not required to register under such act.
The financial statements are presented for the Trust, as the registrant, combined with the Fund. Financial statements for the Fund presented at the series level are provided separately in this report. For the periods presented, there were no balances or activity for the Trust except for the Fund’s operations, as its sole series. These notes to the financial statements relate to the Trust, as the registrant, combined with the Fund. The debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Fund are enforceable only against the assets of the Fund and not against the assets of the Trust generally or any other series that the Trust may establish.
2.2.
Calculation of NAV and NAV per Share
The Sponsor has the exclusive authority to determine the Fund’s net asset value (“NAV”). The Sponsor has delegated to the Administrator the responsibility to calculate the NAV of the Fund, based on a pricing source selected by the Sponsor. In determining the Fund’s NAV, the Administrator generally will value the ether held by the Fund based on the Index, unless the Sponsor in its sole discretion determines that the Index is unreliable. The CME CF Ether-Dollar Reference Rate – New York Variant for the Ether – U.S. Dollar trading pair (the “CF Benchmarks Index”) shall constitute the Index, unless the CF Benchmarks Index is not available or the Sponsor in its sole discretion determines the CF Benchmarks Index is unreliable as the Index and therefore determines not to use the CF Benchmarks Index as the Index. If the CF Benchmarks Index is not available or the Sponsor determines, in its sole discretion, that the CF Benchmarks Index is unreliable (referred to herein as a “Fair Value Event”), the Fund’s holdings may be fair valued by the Sponsor.
On each Business Day, as soon as practicable after 4:00 PM Eastern Time (“ET”), the Administrator evaluates the ether held by the Fund as reflected by the CF Benchmarks Index and determines the NAV of the Fund. For purposes of making these calculations, a Business Day means any day other than a day when the Cboe BZX Exchange is closed for regular trading. The Trust’s periodic financial statements may not utilize this net asset value of the Trust to the extent the methodology used to calculate the Index is deemed not to be consistent with GAAP.
2.3.
Valuation of Ether
The Trust’s financial statements are prepared in accordance with GAAP for interim financial information. Ether is priced at 11:59:59 PM ET. The Trust determines the fair value of ether based on the price provided by the ether market that the Trust considers its “principal market” as of 11:59:59 PM ET on the valuation date. This fair value price is referred to as “Principal Market Price.” With respect to the Fund’s ether holdings, the Trust follows the provisions of the Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) and utilizes an exchange-traded price from the Fund’s principal market (or in the absence of a principal market, the most advantageous market) for ether as of the Fund’s financial statement measurement date.
ASC 820 established a hierarchy that prioritized inputs to valuation techniques used to measure fair value. The three levels of inputs are:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and
Level 3: Inputs that are unobservable for the asset or liability, including the Fund’s assumptions used in determining the fair value of investments.
As of June 30, 2026 and March 31, 2026, the value of the ether held by the Fund was categorized as Level 1.
2.4.
Fees, Expenses and Realized Gains (Losses)
The Trust’s only ordinary recurring expense is the Sponsor’s fee. 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: the fees charged by the Administrator, the Marketing Agent, the Custodians (the Cash Custodian and Ether Custodian, collectively) and the Trustee, Cboe BZX Exchange listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and expenses, and up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor paid the costs of the Fund’s organization and the initial offering costs and may not seek reimbursement of such costs. Ether transactions are accounted for on a trade date basis. Realized gains or losses from the sale or disposition of ether are determined on a specific identification basis and recognized in the Combined Statements of Operations in the period in which the sale or disposition occurs, respectively.
The Sponsor’s fee is accrued daily at an annualized rate equal to 0.19 % (i.e., 0.19 %/365 days) of the net asset value of the Fund and is payable at least quarterly in arrears in U.S. dollars. The Sponsor may, at its sole discretion and from time to time, waive all or a portion of the Sponsor’s fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. The Fund will sell ether as needed to pay the Sponsor’s fee. The Fund bears transaction costs, including any Ethereum network fees or other similar transaction fees, in connection with any sales of ether necessary to pay the Sponsor’s fee, as well as other Fund expenses (if any) that are not assumed by the Sponsor (expenses assumed by the Sponsor are specified above). Any Ethereum network fees and similar transaction fees incurred in connection with the creation or redemption of Creation Units are borne by the Authorized Participant. For the quarter ended June 30, 2026, the Fund accrued the Sponsor’s Fee of $19,638 .
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 is 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. In addition, the Fund may incur certain other non-recurring expenses that are not assumed by the Sponsor (expenses assumed by the Sponsor are described above), including but not limited to, taxes and governmental charges, any applicable brokerage commissions, Ethereum network fees and similar transaction fees that qualify as extraordinary or non-routine expenses as described above, financing fees, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Fund to protect the Fund or the interests of Shareholders (including, for example, in connection with any fork of the Ethereum blockchain, any Incidental Rights and any IR Virtual Currency), any indemnification of the Cash Custodian, Ether Custodian, Prime Broker, Administrator or other agents, service providers or counterparties of the Trust or the Fund and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters or legal expenses in excess of $500,000 per year. 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. To the extent that the Sponsor does not voluntarily assume such fees and expenses, they will be the responsibility of the Fund. The Fund’s organizational and offering costs are borne by the Sponsor and, as such, are the sole responsibility of the Sponsor. The Sponsor may not seek reimbursement or otherwise require the Fund, the Trust, the Trustee, or any Shareholder to assume any liability, duty or obligation in connection with any such organizational and offering costs. Because the Fund does not have any income, it will need to sell ether to cover the Sponsor’s fee and expenses not assumed by the Sponsor, if any. Fund expenses not assumed by the Sponsor shall accrue daily and be payable by the Fund to the Sponsor at least quarterly in arrears. The Fund may also be subject to other liabilities (for example, as a result of litigation) that have also not been assumed by the Sponsor. The only source of funds to cover those liabilities will be sales of ether held by the Fund. Even if there are no expenses other than those assumed by the Sponsor, and there are no other liabilities of the Fund, the Fund will still need to sell ether to pay the Sponsor’s fee. The result of these sales is a decrease in the amount of ether represented by each Share.
There have been no extraordinary or non-routine expenses during the periods presented.
2.5.
Ether Receivable and Payable
Ether receivable or payable represents the quantity of Ether covered by contractually binding orders for the creation or redemption of Shares respectively, where the Ether has not yet been transferred to or from the Fund's account. Generally, ownership of the Ether is transferred within one business day of the trade date.
2.6.
Income Taxes
The Fund is classified as a “grantor trust” for United States federal income tax purposes. As a result, the Trust and the Fund are not subject to United States federal income tax. Instead, the Fund’s income, gains, losses, and expenses will “flow through” to the Shareholders, and the Administrator reports these to the Internal Revenue Service on that basis.
The Sponsor has analyzed applicable tax laws and regulations and their application to the Trust and the Fund as of June 30, 2026 and March 31, 2026, and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
2.7.
Creation and Redemption of Shares
The Fund issues and redeems Creation Units on a continuous basis. Creation Units may be issued and redeemed in exchange for an amount of ether and/or cash as determined by the Administrator on each day that Cboe BZX Exchange is open for regular trading.
For cash creation transactions, the amount of cash required to be delivered to the Fund will equal the amount of cash needed to purchase the amount of ether represented by the Creation Unit(s) being created, as calculated by the Administrator, plus applicable fees, costs and adjustments. For cash redemption transactions, the Sponsor will arrange for the ether represented by the Creation Unit(s) being redeemed to be sold and the cash proceeds, after applicable fees, costs and adjustments, distributed. No Shares are issued until the corresponding amount of ether has been received in the Fund’s Trading Balance. Creation Units may be created or redeemed only by Authorized Participants, who pay (1) a transaction fee for each order to create or redeem Creation Units; (2) transfer, processing and other transaction costs charged by the Ether Custodian in connection with the issuance or redemption of Creation Units for such order; and (3) any other expenses, taxes, charges or adjustments.
Creation Units will be sold at a per-Share offering price that will vary depending on, among other things, the price of ether and the trading price of the Shares on the Cboe BZX Exchange at the time of the offer. Shares offered at different times may have different offering prices.
Changes in the Shares for the quarter from April 1, 2026 to June 30, 2026 are as follows:
| Shares | Amount# | |||||||
|
Balance at April 1, 2026
|
$ | |||||||
|
Creation of Shares
|
||||||||
|
Redemption of Shares
|
( | ) | ( | ) | ||||
|
Balance at June 30, 2026
|
$ |
Changes in the Shares for the quarter from April 1, 2025 to June 30, 2025 are as follows:
| Shares | Amount# | |||||||
|
Balance at April 1, 2025
|
$ | |||||||
|
Creation of Shares
|
||||||||
|
Redemption of Shares
|
( | ) | ( | ) | ||||
|
Balance at June 30, 2025
|
$ |
#
3. INVESTMENT IN ETHER
The following represents the changes in quantity of ether held and the respective fair value during the quarter April 1, 2026 to June 30, 2026:
| Quantity of Ether | Amount in US$ | |||||||
|
Balance at April 1, 2026
|
$ | |||||||
|
Ether purchased for the creation of Shares
|
||||||||
|
Ether sold for the redemption of Shares
|
( | ) | ( | ) | ||||
|
Principal on ether sales to pay expenses
|
( | ) | ( | ) | ||||
|
Net realized gain (loss) from ether sold for the redemption of shares and sold to pay expenses
|
- | ( | ) | |||||
|
Net change in unrealized appreciation (depreciation) on investment in ether
|
- | ( | ) | |||||
|
Balance at June 30, 2026
|
$ |
The following represents the
changes in quantity of ether held and the respective fair value during the quarter
April 1, 2025 to June 30, 2025:
| Quantity of Ether | Amount in US$ | |||||||
|
Balance at April 1, 2025
|
$ | |||||||
|
Ether purchased for the creation of Shares
|
||||||||
|
Ether sold for the redemption of Shares
|
( | ) | ( | ) | ||||
|
Principal on ether sales to pay expenses
|
( | ) | ( | ) | ||||
|
Net realized gain (loss) from ether sold for the redemption of shares and sold to pay expenses
|
- | ( | ) | |||||
|
Net change in unrealized appreciation (depreciation) on investment in ether
|
- | |||||||
|
Balance at June 30, 2025
|
$ |
4. RELATED PARTIES
The Sponsor of the Trust is Franklin Holdings, LLC. The Sponsor is responsible for establishing the Trust and for the registration of the Shares. The Sponsor generally oversees the performance of the Fund’s principal service providers but does not exercise day-to-day oversight over such service providers. The Sponsor, with assistance and support from the Administrator, is responsible for preparing and filing periodic reports on behalf of the Trust and the Fund with the SEC and will provide any required certification for such reports. The Sponsor has designated the independent registered public accounting firm of the Trust on behalf of the Fund and may from time to time employ legal counsel for the Fund.
Franklin Distributors, LLC serves as the Marketing Agent of the Fund. The Sponsor and the Marketing Agent are affiliates, and each is considered to be a related party to the Trust and the Fund. Franklin Resources, Inc. (“FRI”) is the ultimate parent company of the Sponsor and the Marketing Agent. FRI is the holding company for various subsidiaries that together are referred to as Franklin Templeton.
The Sponsor is a related party of the Trust and the Fund. The Fund pays the Sponsor a unitary fee for services performed pursuant to the Sponsor Agreement. The Marketing Agent is an affiliate of the Sponsor. Expenses payable to the Marketing Agent, if any, are paid by the Sponsor out of the Sponsor’s fee.
The Trust also considers Franklin Resources, Inc., the ultimate parent company of the Sponsor, to be a related party of the Trust and the Fund. As of June 30, 2026, no shares of the Fund were held by a related party.
5. CONCENTRATION OF RISK
The Fund holds only ether and cash, which creates a concentration risk associated with fluctuations in the price of ether. Accordingly, a decline in the price of ether will have an adverse effect on the value of the Shares of the Fund. The trading prices of ether have experienced extreme volatility in recent periods and may continue to fluctuate significantly. Extreme volatility in the future, including substantial, sustained, or rapid declines in the trading prices of ether, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value. Factors adversely impacting the value of ether and the Shares may include an increase in the global ether supply or a decrease in global ether demand; market conditions of, and overall sentiment towards, the digital assets and blockchain technology industry; trading activity on digital asset platforms, which, in many cases, may be unregulated or subject to regulation by a relevant jurisdiction but potentially non-compliant with such regulations or may be subject to manipulation; the adoption of ether as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development of the open-source software protocol of the Ethereum network, and their ability to meet user demands; manipulative trading activity on digital asset platforms, which in many cases are largely unregulated and substantially less regulated relative to securities markets; and forks in the Ethereum network, among other things.
6. COMBINED FINANCIAL HIGHLIGHTS
|
For the Three Months Ended June 30, 2026 |
For the Three Months Ended June 30, 2025 | |||||||
|
Net asset value per Share, beginning of period
|
$ | $ | ||||||
|
Net investment loss(a)
|
( | ) | ( | ) | ||||
|
Net realized and unrealized gain (loss) on investment in ether(b)
|
( | ) | ||||||
|
Net change in net assets from operations
|
( | ) | ||||||
|
Net asset value per Share, end of period
|
$ | $ | ||||||
|
Total return, at net asset value(c)
|
( | )% | % | |||||
|
Ratio to average net assets(d)
|
||||||||
|
Net investment loss
|
( | )% | ( | )% | ||||
|
Gross expenses
|
% | % | ||||||
|
Net expenses
|
% | % |
(a)
(b)
(c)
(d)
7. COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, the Trust, on behalf of the Fund, may enter into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the Sponsor and its shareholders, members, directors, affiliates, officers, employees and subsidiaries are indemnified by the Trust against certain liabilities. The Fund has also agreed to indemnify certain of its other service providers, including the Administrator, the Marketing Agent, the Custodians and the Trustee (including its officers, affiliates, directors, employees, and agents), for certain liabilities incurred by such parties in connection with their respective agreements to provide services for the Fund.
The Sponsor will not be liable to the Trust, the Trustee or any Shareholder for any action taken or for refraining from taking any action in good faith, or for errors in judgment or for depreciation or loss incurred by reason of the sale of any ether or other assets of the Fund or the Trust. However, the preceding liability exclusion will not protect the Sponsor against any liability resulting from its own gross negligence, bad faith, or willful misconduct.
The Sponsor and each of its shareholders, members, directors, officers, employees, affiliates and subsidiaries will be indemnified by the Trust and held harmless against any losses, liabilities or expenses incurred in the performance of its duties under the Declaration of Trust without gross negligence, bad faith, or willful misconduct. The Sponsor may rely in good faith on any paper, order, notice, list, affidavit, receipt, evaluation, opinion, endorsement, assignment, draft or any other document of any kind prima facie properly executed and submitted to it by the Trustee, the Trustee’s counsel or by any other person for any matters arising under the Declaration of Trust. The Sponsor shall in no event be deemed to have assumed or incurred any liability, duty, or obligation to any Shareholder or to the Trustee other than as expressly provided for in the Declaration of Trust. Such indemnity includes payment from the Trust of the costs and expenses incurred in defending against any indemnified claim or liability under the Declaration of Trust.
The Trustee will not be liable or accountable to the Trust or any other person or under any agreement to which the Trust or any series of the Trust is a party, except for the Trustee’s breach of its obligations pursuant to the Declaration of Trust or its own willful misconduct, bad faith or gross negligence. The Trustee and each of the Trustee’s officers, affiliates, directors, employees, and agents will be indemnified by the Trust from and against any losses, claims, taxes, damages, reasonable expenses, and liabilities incurred with respect to the creation, operation or termination of the Trust, the execution, delivery or performance of the Declaration of Trust or the transactions contemplated thereby; provided that the indemnified party acted without willful misconduct, bad faith or gross negligence.
9. OPERATING SEGMENTS
The Fund, which is the sole series of the Trust, and the Trust operate as a operating segment, which is an investment portfolio. Executive officers of the Fund’s Sponsor perform the functions of the Chief Operating Decision Maker (CODM), evaluating fund-wide results and performance under a unified investment strategy. The CODM uses these measures to assess fund performance and allocate resources effectively. Internal reporting provided to the CODM aligns with the accounting policies and measurement principles used in the financial statements.
For information regarding segment assets, segment profit or loss, and significant expenses, refer to the Combined Statements of Assets and Liabilities and the Combined Statements of Operations, along with the related Notes to the Combined Financial Statements. The Combined Schedules of Investments provide details of the Fund’s investments that generate returns such as realized and unrealized gains or losses. Performance metrics and expense ratios are disclosed in the Combined Financial Highlights.
10. SUBSEQUENT EVENTS
The Trust and the Fund have evaluated subsequent events through the issuance of the financial statements and determined that no such events have occurred that require disclosure.
FRANKLIN ETHEREUM ETF
A SERIES OF FRANKLIN ETHEREUM TRUST
| June 30, 2026 | March 31, 2026 | |||||||
|
Assets
|
||||||||
|
Investment in ether, at fair value(a)
|
$ | $ | ||||||
|
Total assets
|
||||||||
|
Liabilities
|
||||||||
|
Sponsor’s fee payable
|
||||||||
|
Total liabilities
|
||||||||
|
Commitments and contingent liabilities (Note 7)
|
||||||||
|
Net assets
|
$ | $ | ||||||
|
Shares issued and outstanding(b)
|
||||||||
|
Net asset value per Share
|
$ | $ |
(a)
Cost of investment in ether: $69,224,878 at June 30, 2026 and $69,199,790 at March 31, 2026.
(b)
No par value, unlimited amount authorized.
See accompanying notes to the unaudited financial statements.
FRANKLIN ETHEREUM ETF
A SERIES OF FRANKLIN ETHEREUM TRUST
|
June 30, 2026
|
||||||||||||||||
| Quantity of ether | Cost | Fair Value |
Fair Value as a % of Net Assets | |||||||||||||
|
Investment in ether
|
$ | $ | % | |||||||||||||
|
Total investments
|
$ | $ | % | |||||||||||||
|
Less liabilities
|
( | ) | ( | )% | ||||||||||||
|
Net assets
|
$ | % |
|
March 31, 2026
|
||||||||||||||||
| Quantity of ether | Cost | Fair Value |
Fair Value as a % of Net Assets | |||||||||||||
|
Investment in ether
|
$ | $ | % | |||||||||||||
|
Total investments
|
$ | $ | % | |||||||||||||
|
Less liabilities
|
( | ) | ( | )% | ||||||||||||
|
Net assets
|
$ | % |
See accompanying notes to the unaudited financial statements.
FRANKLIN ETHEREUM ETF
A SERIES OF FRANKLIN ETHEREUM TRUST
|
For the Three
Months Ended June 30, 2026 |
For the Three
Months Ended June 30, 2025 | |||||||
|
Expenses
|
||||||||
|
Sponsor’s fee
|
$ | $ | ||||||
|
Less waiver
|
||||||||
|
Total expenses
|
||||||||
|
Net investment loss
|
( | ) | ( | ) | ||||
|
Net realized and change in unrealized gain (loss) on investment in
ether:
|
||||||||
|
Net realized gain (loss)
from ether sold for the redemption of shares and sold to pay expenses
|
( | ) | ( | ) | ||||
|
Net change in unrealized
appreciation (depreciation) on investment in ether
|
( | ) | ||||||
|
Net realized and change in unrealized gain (loss) on investment in
ether
|
( | ) | ||||||
|
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.
See accompanying notes to the unaudited financial statements.
FRANKLIN ETHEREUM ETF
A SERIES OF FRANKLIN ETHEREUM TRUST
|
For the Three
Months Ended June 30, 2026 |
For the Three
Months Ended June 30, 2025 | |||||||
|
Cash Flows from 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:
|
||||||||
|
Purchases of ether
|
( | ) | ( | ) | ||||
|
Sales of ether
|
||||||||
|
Net realized gain (loss) on investment in ether
|
||||||||
|
Net change in unrealized appreciation (depreciation) on investment in ether
|
( | ) | ||||||
|
Change in operating assets and liabilities:
|
||||||||
|
Sponsor’s fee payable
|
( | ) | ||||||
|
Net cash provided by (used in) operating activities
|
$ | ( | ) | $ | ( | ) | ||
|
Cash Flows from Financing Activities:
|
||||||||
|
Proceeds from issuance of Shares
|
||||||||
|
Payments on Shares redeemed
|
( | ) | ( | ) | ||||
|
Net cash provided by (used in) financing activities
|
||||||||
|
Cash
|
||||||||
|
Net increase in cash
|
||||||||
|
Cash, beginning of period
|
||||||||
|
Cash, end of period
|
$ | $ | ||||||
See accompanying notes to the unaudited financial statements.
FRANKLIN ETHEREUM ETF
A SERIES OF FRANKLIN ETHEREUM TRUST
|
For the Three
Months Ended June 30, 2026 |
For the Three
Months Ended June 30, 2025 | |||||||
|
Net assets, beginning of period
|
$ | $ | ||||||
|
Net investment loss
|
( | ) | ( | ) | ||||
|
Net realized gain (loss) on investment in ether
|
( | ) | ( | ) | ||||
|
Net change in unrealized appreciation (depreciation) on investment in ether
|
( | ) | ||||||
|
Net increase (decrease) in net assets resulting from operations
|
( | ) | ||||||
|
Increase (decrease) in net assets from capital share transactions:
|
||||||||
|
Contributions for Shares issued
|
||||||||
|
Distributions for Shares redeemed
|
( | ) | ( | ) | ||||
|
Net increase (decrease) in net assets from capital share transactions
|
||||||||
|
Net assets, end of period
|
$ | $ | ||||||
See accompanying notes to the unaudited financial statements.
FRANKLIN ETHEREUM ETF
A SERIES OF FRANKLIN ETHEREUM TRUST
1. ORGANIZATION
The Franklin Ethereum Trust (the “Trust”) was formed as a Delaware statutory trust on February 8, 2024, and is governed by the provisions of Second Amended and Restated Agreement and Declaration of Trust dated as of August 7, 2026 (the “Declaration of Trust”). The Trust is not registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and is not a commodity pool for purposes of the Commodity Exchange Act (“CEA”). The accompanying financial statements relate to the one series that the Trust currently offers, the Franklin Ethereum ETF (the “Fund”). Separate financial statements and accompanying notes are provided for the Trust, as registrant, on a combined basis with the Fund in another section of this report. The Trust had no operations prior to the Fund’s launch, other than matters relating to its organization and the registration of the Fund under the Securities Act of 1933, as amended (the “Securities Act”). The Sponsor of the Trust and the Fund (the “Sponsor”) is Franklin Holdings, LLC. The Sponsor is a Delaware limited liability company formed on July 21, 2021. The Sponsor is not subject to regulation by the U.S. Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator with respect to the Fund, or a commodity trading advisor with respect to the Fund. The Fund issues shares (the “Shares”), which represent units of fractional undivided beneficial interest in the Fund. The Shares of the Fund are listed on the Cboe BZX Exchange, Inc. (“Cboe BZX Exchange” or the “Exchange”).
The Fund seeks to reflect generally the performance of the price of ether before payment of the Fund's expenses. The Shares are intended to offer a convenient means of making an investment similar to an investment in ether relative to acquiring, holding and trading ether directly on a peer-to-peer or other basis or via a digital asset platform. The Shares have been designed to remove obstacles associated with the complexities and operational burdens involved in a direct investment in ether by providing an investment with a value that reflects the price of the ether owned by the Fund at such time, less the Fund's expenses. The Fund is not a proxy for a direct investment in ether. Rather, the Shares are intended to provide a cost-effective alternative means of obtaining investment exposure through the securities markets that is similar to an investment in ether.
BNY Mellon Asset Servicing, a division of The Bank of New York Mellon, or “BNYM,” is the Fund’s Administrator (the “Administrator”) and Transfer Agent (the “Transfer Agent”). BNYM also serves as the custodian of the Fund’s cash (the “Cash Custodian”). The Administrator is generally responsible for the day-to-day administration of the Fund, including the calculation of the Fund’s net asset value (“NAV”) per Share. The Ether Custodian is responsible for safekeeping the ether owned by the Fund. The Ether Custodian is Coinbase Custody Trust Company, LLC (“Coinbase Custody”). Coinbase Inc., an affiliate of the Ether Custodian, is the Fund’s Prime Broker (“Prime Broker”). CSC Delaware Trust Company, a subsidiary of the Corporation Service Company (the “Trustee”), is the sole trustee of the Trust. Franklin Distributors, LLC is the marketing agent of the Fund (the “Marketing Agent”).
The Fund issues and redeems Shares only to certain eligible financial institutions called Authorized Participants and only in one or more blocks of 50,000 Shares (“Creation Units”). Creation Units are directly redeemable only by Authorized Participants. Creation Units may be issued and redeemed in exchange for an amount of ether and/or cash. The Shares are listed and traded on the Exchange under the ticker symbol “EZET.” The market price of the Shares may be different than the Fund’s NAV per Share. The Fund issues and redeems Shares in Creation Units on a continuous basis at the applicable NAV per Share on the transaction order date. Except when aggregated in Creation Units, the Shares are not redeemable securities.
The Fund is an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act (the “JOBS Act”), subject to reduced public company reporting requirements under U.S. federal securities laws.
The accompanying Statements of Assets and Liabilities and Schedules of Investments at June 30, 2026 and March 31, 2026 and the Statements of Operations, Statements of Cash Flows and Statements of Changes in Net Assets for the periods ended June 30, 2026 and June 30, 2025, have been prepared on behalf of the Trust, as registrant, combined with its one currently offered series, the Fund (included above in a separate section of this report), and for the Fund separately, and are unaudited. In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position and results of operations for all periods stated have been made. In addition, interim period results are not necessarily indicative of results for a full-year period. These financial statements and the notes thereto should be read in conjunction with the Fund's financial statements included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
The fiscal year end of the Trust and the Fund is March 31st.
2. SIGNIFICANT ACCOUNTING POLICIES
In preparing financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”), management of the Sponsor makes estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amount of revenue and expenses reported during the period. Actual results could differ from these estimates.
The accompanying unaudited financial statements were prepared in accordance with GAAP for interim financial information and with the instructions for Form 10-Q and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).
The following is a summary of significant accounting policies followed by the Trust and the Fund.
2.1.
Basis of Presentation
The Sponsor has determined that the Trust and Fund falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that solely for accounting purposes, the Trust is classified as an Investment Company as defined in ASC 946. The Trust is not registered as an investment company under the Investment Company Act and is not required to register under such act.
The financial statements are presented for the Fund, which is the sole series of the Trust. Financial statements and accompanying notes for the Trust, as the registrant, combined with the Fund are provided separately in this report. For the periods presented, there were no balances or activity for the Trust except for the Fund’s operations, as its sole series. These notes to the financial statements relate to the Fund, which is the sole series of the Trust. The debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Fund are enforceable only against the assets of the Fund and not against the assets of the Trust generally or any other series that the Trust may establish.
2.2.
Calculation of NAV and NAV per Share
The Sponsor has the exclusive authority to determine the Fund’s net asset value (“NAV”). The Sponsor has delegated to the Administrator the responsibility to calculate the NAV of the Fund, based on a pricing source selected by the Sponsor. In determining the Fund’s NAV, the Administrator generally will value the ether held by the Fund based on the Index, unless the Sponsor in its sole discretion determines that the Index is unreliable. The CME CF Ether-Dollar Reference Rate – New York Variant for the Ether – U.S. Dollar trading pair (the “CF Benchmarks Index”) shall constitute the Index, unless the CF Benchmarks Index is not available or the Sponsor in its sole discretion determines the CF Benchmarks Index is unreliable as the Index and therefore determines not to use the CF Benchmarks Index as the Index. If the CF Benchmarks Index is not available or the Sponsor determines, in its sole discretion, that the CF Benchmarks Index is unreliable (referred to herein as a “Fair Value Event”), the Fund’s holdings may be fair valued by the Sponsor.
On each Business Day, as soon as practicable after 4:00 PM Eastern Time (“ET”), the Administrator evaluates the ether held by the Fund as reflected by the CF Benchmarks Index and determines the NAV of the Fund. For purposes of making these calculations, a Business Day means any day other than a day when the Cboe BZX Exchange is closed for regular trading. The Fund’s periodic financial statements may not utilize this net asset value of the Fund to the extent the methodology used to calculate the Index is deemed not to be consistent with GAAP.
2.3.
Valuation of Ether
The Fund’s financial statements are prepared in accordance with GAAP for interim financial information. Ether is priced at 11:59:59 PM ET. The Trust determines the fair value of ether based on the price provided by the ether market that the Trust considers its “principal market” as of 11:59:59 PM ET on the valuation date. This fair value price is referred to as “Principal Market Price.” With respect to the Fund’s ether holdings, the Trust follows the provisions of the Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) and utilizes an exchange-traded price from the Fund’s principal market (or in the absence of a principal market, the most advantageous market) for ether as of the Fund’s financial statement measurement date.
ASC 820 established a hierarchy that prioritized inputs to valuation techniques used to measure fair value. The three levels of inputs are:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and
Level 3: Inputs that are unobservable for the asset or liability, including the Fund’s assumptions used in determining the fair value of investments.
As of June 30, 2026 and March 31, 2026, the value of the ether held by the Fund was categorized as Level 1.
2.4.
Fees, Expenses and Realized Gains (Losses)
The Fund’s only ordinary recurring expense is the Sponsor’s fee. 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: the fees charged by the Administrator, the Marketing Agent, the Custodians (the Cash Custodian and Ether Custodian, collectively) and the Trustee, Cboe BZX Exchange listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and expenses, and up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor paid the costs of the Fund’s organization and the initial offering costs and may not seek reimbursement of such costs. Ether transactions are accounted for on a trade date basis. Realized gains or losses from the sale or disposition of ether are determined on a specific identification basis and recognized in the Statements of Operations in the period in which the sale or disposition occurs, respectively.
The Sponsor’s fee is accrued daily at an annualized rate equal to 0.19 % (i.e., 0.19 %/365 days) of the net asset value of the Fund and is payable at least quarterly in arrears in U.S. dollars. The Sponsor may, at its sole discretion and from time to time, waive all or a portion of the Sponsor’s fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. The Fund will sell ether as needed to pay the Sponsor’s fee. The Fund bears transaction costs, including any Ethereum network fees or other similar transaction fees, in connection with any sales of ether necessary to pay the Sponsor’s fee, as well as other Fund expenses (if any) that are not assumed by the Sponsor (expenses assumed by the Sponsor are specified above). Any Ethereum network fees and similar transaction fees incurred in connection with the creation or redemption of Creation Units are borne by the Authorized Participant. For the quarter ended June 30, 2026, the Fund accrued the Sponsor’s Fee of $19,638 .
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 is 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. In addition, the Fund may incur certain other non-recurring expenses that are not assumed by the Sponsor (expenses assumed by the Sponsor are described above), including but not limited to, taxes and governmental charges, any applicable brokerage commissions, Ethereum network fees and similar transaction fees that qualify as extraordinary or non- routine expenses as described above, financing fees, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Fund to protect the Fund or the interests of Shareholders (including, for example, in connection with any fork of the Ethereum blockchain, any Incidental Rights and any IR Virtual Currency), any indemnification of the Cash Custodian, Ether Custodian, Prime Broker, Administrator or other agents, service providers or counterparties of the Trust or the Fund and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters or legal expenses in excess of $500,000 per year. 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. To the extent that the Sponsor does not voluntarily assume such fees and expenses, they will be the responsibility of the Fund. The Fund's organizational and offering costs are borne by the Sponsor and, as such, are the sole responsibility of the Sponsor. The Sponsor may not seek reimbursement or otherwise require the Fund, the Trust, the Trustee, or any Shareholder to assume any liability, duty or obligation in connection with any such organizational and offering costs. Because the Fund does not have any income, it will need to sell ether to cover the Sponsor’s fee and expenses not assumed by the Sponsor, if any. Fund expenses not assumed by the Sponsor shall accrue daily and be payable by the Fund to the Sponsor at least quarterly in arrears. The Fund may also be subject to other liabilities (for example, as a result of litigation) that have also not been assumed by the Sponsor. The only source of funds to cover those liabilities will be sales of ether held by the Fund. Even if there are no expenses other than those assumed by the Sponsor, and there are no other liabilities of the Fund, the Fund will still need to sell ether to pay the Sponsor’s fee. The result of these sales is a decrease in the amount of ether represented by each Share.
There have been no extraordinary or non-routine expenses during the periods presented.
2.5.
Ether Receivable and Payable
Ether receivable or payable represents the quantity of Ether covered by contractually binding orders for the creation or redemption of Shares respectively, where the Ether has not yet been transferred to or from the Fund's account. Generally, ownership of the Ether is transferred within one business day of the trade date.
2.6.
Income Taxes
The Fund is classified as a “grantor trust” for United States federal income tax purposes. As a result, the Trust and the Fund are not subject to United States federal income tax. Instead, the Fund’s income, gains, losses, and expenses will “flow through” to the Shareholders, and the Administrator reports these to the Internal Revenue Service on that basis.
The Sponsor has analyzed applicable tax laws and regulations and their application to the Trust and the Fund as of June 30, 2026 and March 31, 2026, and does not believe that there are any uncertain tax positions that require recognition of a tax liability.
2.7.
Creation and Redemption of Shares
The Fund issues and redeems Creation Units on a continuous basis. Creation Units may be issued and redeemed in exchange for an amount of ether and/or cash as determined by the Administrator on each day that Cboe BZX Exchange is open for regular trading.
For cash creation transactions, the amount of cash required to be delivered to the Fund will equal the amount of cash needed to purchase the amount of ether represented by the Creation Unit(s) being created, as calculated by the Administrator, plus applicable fees, costs and adjustments. For cash redemption transactions, the Sponsor will arrange for the ether represented by the Creation Unit(s) being redeemed to be sold and the cash proceeds, after applicable fees, costs and adjustments, distributed. No Shares are issued until the corresponding amount of ether has been received in the Fund’s Trading Balance. Creation Units may be created or redeemed only by Authorized Participants, who pay (1) a transaction fee for each order to create or redeem Creation Units; (2) transfer, processing and other transaction costs charged by the Ether Custodian in connection with the issuance or redemption of Creation Units for such order; and (3) any other expenses, taxes, charges or adjustments.
Creation Units will be sold at a per-Share offering price that will vary depending on, among other things, the price of ether and the trading price of the Shares on the Cboe BZX Exchange at the time of the offer. Shares offered at different times may have different offering prices.
Changes in the Shares for the quarter from April 1, 2026 to June 30, 2026 are as follows:
| Shares | Amount# | |||||||
|
Balance at April 1, 2026
|
$ | |||||||
|
Creation of Shares
|
||||||||
|
Redemption of Shares
|
( | ) | ( | ) | ||||
|
Balance at June 30, 2026
|
$ | |||||||
Changes in the Shares for the quarter from April 1, 2025 to June 30, 2025 are as follows:
| Shares | Amount# | |||||||
|
Balance at April 1, 2025
|
$ | |||||||
|
Creation of Shares
|
||||||||
|
Redemption of Shares
|
( | ) | ( | ) | ||||
|
Balance at June 30, 2025
|
$ | |||||||
#
3. INVESTMENT IN ETHER
The following represents the changes in quantity of ether held and the respective fair value during the quarter April 1, 2026 to June 30, 2026:
|
Quantity of Ether
|
Amount in US$
| |||||||
|
Balance at April 1, 2026
|
$ | |||||||
|
Ether purchased for the creation of Shares
|
||||||||
|
Ether sold for the redemption of Shares
|
( | ) | ( | ) | ||||
|
Principal on ether sales to pay expenses
|
( | ) | ( | ) | ||||
|
Net realized gain (loss) from ether sold for the redemption of shares and sold to pay expenses
|
- | ( | ) | |||||
|
Net change in unrealized appreciation (depreciation) on investment in ether
|
- | ( | ) | |||||
|
Balance at June 30, 2026
|
$ | |||||||
The following represents the changes in quantity of ether held and the respective fair value during the quarter April 1, 2025 to June 30, 2025 :
| Quantity of Ether | Amount in US$ | |||||||
|
Balance at April 1, 2025
|
$ | |||||||
|
Ether purchased for the creation of Shares
|
||||||||
|
Ether sold for the redemption of Shares
|
( | ) | ( | ) | ||||
|
Principal on ether sales to pay expenses
|
( | ) | ( | ) | ||||
|
Net realized gain (loss) from ether sold for the redemption of shares and sold to pay expenses
|
- | ( | ) | |||||
|
Net change in unrealized appreciation (depreciation) on investment in ether
|
- | |||||||
|
Balance at June 30, 2025
|
$ | |||||||
4. RELATED PARTIES
The Sponsor of the Trust is Franklin Holdings, LLC. The Sponsor is responsible for establishing the Trust and for the registration of the Shares. The Sponsor generally oversees the performance of the Fund’s principal service providers but does not exercise day-to-day oversight over such service providers. The Sponsor, with assistance and support from the Administrator, is responsible for preparing and filing periodic reports on behalf of the Trust and the Fund with the SEC and will provide any required certification for such reports. The Sponsor has designated the independent registered public accounting firm of the Trust on behalf of the Fund and may from time to time employ legal counsel for the Fund.
Franklin Distributors, LLC serves as the Marketing Agent of the Fund. The Sponsor and the Marketing Agent are affiliates, and each is considered to be a related party to the Trust and the Fund. Franklin Resources, Inc. (“FRI”) is the ultimate parent company of the Sponsor and the Marketing Agent. FRI is the holding company for various subsidiaries that together are referred to as Franklin Templeton.
The Sponsor is a related party of the Trust and the Fund. The Fund pays the Sponsor a unitary fee for services performed pursuant to the Sponsor Agreement. The Marketing Agent is an affiliate of the Sponsor. Expenses payable to the Marketing Agent, if any, are paid by the Sponsor out of the Sponsor’s fee.
The Trust also considers Franklin Resources, Inc., the ultimate parent company of the Sponsor, to be a related party of the Trust and the Fund. As of June 30, 2026, no shares of the Fund were held by a related party.
5. CONCENTRATION OF RISK
The Fund holds only ether and cash, which creates a concentration risk associated with fluctuations in the price of ether. Accordingly, a decline in the price of ether will have an adverse effect on the value of the Shares of the Fund. The trading prices of ether have experienced extreme volatility in recent periods and may continue to fluctuate significantly. Extreme volatility in the future, including substantial, sustained, or rapid declines in the trading prices of ether, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value. Factors adversely impacting the value of ether and the Shares may include an increase in the global ether supply or a decrease in global ether demand; market conditions of, and overall sentiment towards, the digital assets and blockchain technology industry; trading activity on digital asset platforms, which, in many cases, may be unregulated or subject to regulation by a relevant jurisdiction but potentially non-compliant with such regulations or may be subject to manipulation; the adoption of ether as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development of the open-source software protocol of the Ethereum network, and their ability to meet user demands; manipulative trading activity on digital asset platforms, which in many cases are largely unregulated and substantially less regulated relative to securities markets; and forks in the Ethereum network, among other things.
6. FINANCIAL HIGHLIGHTS
|
For the Three Months Ended June 30, 2026 |
For the Three Months Ended June 30, 2025 | |||||||
|
Net asset value per Share, beginning of period
|
$ | $ | ||||||
|
Net investment loss(a)
|
( | ) | ( | ) | ||||
|
Net realized and unrealized gain (loss) on investment in ether(b)
|
( | ) | ||||||
|
Net change in net assets from operations
|
( | ) | ||||||
|
Net asset value per Share, end of period
|
$ | $ | ||||||
|
Total return, at net asset value(c)
|
( | )% | % | |||||
|
Ratio to average net assets(d)
|
||||||||
|
Net investment loss
|
( | )% | ( | )% | ||||
|
Gross expenses
|
% | % | ||||||
|
Net expenses
|
% | % | ||||||
(a)
(b)
(c)
(d)
7. COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, the Trust, on behalf of the Fund, may enter into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred.
8. INDEMNIFICATION
Under the Trust’s organizational documents, the Sponsor and its shareholders, members, directors, affiliates, officers, employees and subsidiaries are indemnified by the Trust against certain liabilities. The Fund has also agreed to indemnify certain of its other service providers, including the Administrator, the Marketing Agent, the Custodians and the Trustee (including its officers, affiliates, directors, employees, and agents), for certain liabilities incurred by such parties in connection with their respective agreements to provide services for the Fund.
The Sponsor will not be liable to the Trust, the Trustee or any Shareholder for any action taken or for refraining from taking any action in good faith, or for errors in judgment or for depreciation or loss incurred by reason of the sale of any ether or other assets of the Fund or the Trust. However, the preceding liability exclusion will not protect the Sponsor against any liability resulting from its own gross negligence, bad faith, or willful misconduct.
The Sponsor and each of its shareholders, members, directors, officers, employees, affiliates and subsidiaries will be indemnified by the Trust and held harmless against any losses, liabilities or expenses incurred in the performance of its duties under the Declaration of Trust without gross negligence, bad faith, or willful misconduct. The Sponsor may rely in good faith on any paper, order, notice, list, affidavit, receipt, evaluation, opinion, endorsement, assignment, draft or any other document of any kind prima facie properly executed and submitted to it by the Trustee, the Trustee’s counsel or by any other person for any matters arising under the Declaration of Trust. The Sponsor shall in no event be deemed to have assumed or incurred any liability, duty, or obligation to any Shareholder or to the Trustee other than as expressly provided for in the Declaration of Trust. Such indemnity includes payment from the Trust of the costs and expenses incurred in defending against any indemnified claim or liability under the Declaration of Trust.
The Trustee will not be liable or accountable to the Trust or any other person or under any agreement to which the Trust or any series of the Trust is a party, except for the Trustee’s breach of its obligations pursuant to the Declaration of Trust or its own willful misconduct, bad faith or gross negligence. The Trustee and each of the Trustee’s officers, affiliates, directors, employees, and agents will be indemnified by the Trust from and against any losses, claims, taxes, damages, reasonable expenses, and liabilities incurred with respect to the creation, operation or termination of the Trust, the execution, delivery or performance of the Declaration of Trust or the transactions contemplated thereby; provided that the indemnified party acted without willful misconduct, bad faith or gross negligence.
9. OPERATING SEGMENTS
The Fund, which is the sole series of the Trust, and the Trust operate as a operating segment, which is an investment portfolio. Executive officers of the Fund’s Sponsor perform the functions of the Chief Operating Decision Maker (CODM), evaluating fund-wide results and performance under a unified investment strategy. The CODM uses these measures to assess fund performance and allocate resources effectively. Internal reporting provided to the CODM aligns with the accounting policies and measurement principles used in the financial statements.
For information regarding segment assets, segment profit or loss, and significant expenses, refer to the Statements of Assets and Liabilities and the Statements of Operations, along with the related Notes to the Financial Statements. The Schedules of Investments provide details of the Fund’s investments that generate returns such as realized and unrealized gains or losses. Performance metrics and expense ratios are disclosed in the Financial Highlights.
10. SUBSEQUENT EVENTS
The Trust and the Fund have evaluated subsequent events through the issuance of the financial statements and determined that no such events have occurred that require disclosure.
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 the Trust’s and the Fund’s operations, the Sponsor’s plans and references to the Trust’s and 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. 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 Ethereum Trust (the “Trust”) was formed as a Delaware statutory trust on February 8, 2024, and is governed by the provisions of Second Amended and Restated Agreement and Declaration of Trust dated as of August 7, 2026. The Trust is not registered as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and is not a commodity pool for purposes of the Commodity Exchange Act (“CEA”). The Trust currently offers a single series, the Franklin Ethereum ETF (the “Fund”), which is the sole series of the Trust. The Sponsor of the Trust and the Fund (the “Sponsor”) is Franklin Holdings, LLC. The Sponsor is not subject to regulation by the U.S. Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator with respect to the Fund, or a commodity trading advisor with respect to the Fund. The Fund issues Shares (the “Shares”), which represent units of fractional undivided beneficial interest in and ownership of the Fund. The Shares of the Fund are listed on the Cboe BZX Exchange, Inc. (“Cboe BZX Exchange” or the “Exchange”).
The Fund seeks to reflect generally the performance of the price of ether before payment of the Fund's expenses. The Shares are intended to offer a convenient means of making an investment similar to an investment in ether relative to acquiring, holding and trading ether directly on a peer-to-peer or other basis or via a digital asset platform. The Shares have been designed to remove obstacles associated with the complexities and operational burdens involved in a direct investment in ether by providing an investment with a value that reflects the price of the ether owned by the Fund at such time, less the Fund's expenses. The Fund is not a proxy for a direct investment in ether. Rather, the Shares are intended to provide a cost-effective alternative means of obtaining investment exposure through the securities markets that is similar to an investment in ether. The Fund is a passive investment vehicle and is not a leveraged product. The Sponsor does not actively manage the ether held by the Fund.
The Fund issues and redeems Shares only to eligible financial institutions called Authorized Participants and only in one or more blocks of 50,000 Shares (“Creation Units”). Creation Units are redeemable only by Authorized Participants. Creation Units may be issued and redeemed in exchange for an amount of ether and/or cash. The Shares are listed and traded on the Exchange under the ticker symbol “EZET.” The market price of the Shares may be different than the Fund’s NAV per Share. The Fund issues and redeems Shares in Creation Units on a continuous basis at the applicable NAV per Share on the transaction order date.
The Fund’s only ordinary recurring expense is the Sponsor’s fee. 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: the fees charged by the Administrator, the Marketing Agent, the Custodians and the Trustee, Cboe BZX Exchange listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and expenses, and up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor paid the costs of the Fund’s organization and the initial offering costs, and may not seek reimbursement of such costs.
The Sponsor’s fee is accrued daily at an annualized rate equal to 0.19% (i.e., 0.19%/365 days) of the net asset value of the Fund and is payable at least quarterly in arrears in U.S. dollars. The Sponsor may, at its sole discretion and from time to time, waive all or a portion of the Sponsor’s fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. The Fund will sell ether as needed to pay the Sponsor’s fee. The Fund bears transaction costs, including any Ethereum network fees or other similar transaction fees, in connection with any sales of ether necessary to pay the Sponsor’s fee, as well as other Fund expenses (if any) that are not assumed by the Sponsor (expenses assumed by the Sponsor are specified above). Any Ethereum network fees and similar transaction fees incurred in connection with the creation or redemption of Creation Units are borne by the Authorized Participant. The Sponsor’s Fee accrued for the period ended June 30, 2026 were $19,638. In the future, if the Sponsor decides to waive all or a portion of the Sponsor’s Fee, Shareholders will be notified in a prospectus supplement, in the Fund’s periodic reports, and/or on the Fund’s website.
The Fund is an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act (the “JOBS Act”), subject to reduced public company reporting requirements under U.S. federal securities laws.
The NAV of the Trust is used by the Trust in its day-to-day operations to measure the net value of the Trust’s assets. The NAV is calculated on each business day and is equal to the aggregate value of the Trust’s assets less its liabilities based on the Index price. In determining the NAV of the Trust on any business day, the Administrator will calculate the price of the ether held by the Trust as of 4:00 p.m. ET on such day. The Administrator will also calculate the “NAV per Share” of the Trust, which equals the NAV of the Trust divided by the number of outstanding Shares. For purposes of making these calculations, a business day means any day other than a day when the Exchange is closed for regular trading.
The Administrator will rely on the Index as the index price to be used when determining NAV. However, determining the value of the Trust’s ether using the Index is not in accordance with GAAP, and therefore is not used in the Trust’s financial statements. The Trust’s ether is carried, for financial statement purposes, at fair value, as required by GAAP. The Trust determines the fair value of ether based on the price provided by the ether market that the Trust considers its “principal market” as of 11:59:59 p.m., ET on the valuation date (the “Principal Market Price”). The net asset value of the Trust determined on a GAAP basis is referred to as the “Principal Market NAV” and the net asset value of the Trust per Share determined on a GAAP basis is referred to as the “Principal Market NAV per Share.”
NAV and NAV per Share are not measures calculated in accordance with GAAP and are not intended as substitutes for Principal Market NAV and Principal Market NAV per Share, respectively.
Critical Accounting Policies
The Trust’s and the Fund’s 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 Fund’s and the Trust’s financial position and results of operations. These estimates and assumptions affect the Fund’s and the Trust’s application of accounting policies. A description of the valuation of Ether, a critical accounting policy that is important to understanding the results of operations and financial position of the Trust and the Fund is presented in the Trust’s Annual Report on Form 10-K in the section entitled “Calculation of NAV, Valuation of Ether and The CF Benchmarks Index.” In addition, please refer to Note 2 to the financial statements included in this report for further discussion of the Trust’s and the Fund’s accounting policies.
Discussion of Operations
At June 30, 2026, the Custodian held 20,464.3242 ether on behalf of the Fund, with a market value of $32,599,873 (cost: $69,224,878) based on the Principal Market Price at quarter end.
Results of Operations for the quarter ended June 30, 2026
For the three months ended June 30, 2026, 150,000 Shares were issued in exchange for 1,137.1708 ether and 100,000 Shares were redeemed in exchange for 758.1693 ether. The Fund’s NAV per Share began the period at $15.94 and ended the period at $12.07. The 24.28% decrease in the Fund's NAV from $15.94 at March 31, 2026 to $12.07 at June 30, 2026 is directly related to the 24.21% decrease in the price of ether. The Fund’s NAV decreased slightly more than the price of ether on a percentage basis due to the Sponsor’s fee of $19,638 for the quarter.
Net realized and change in unrealized loss on investment in ether for the three months ended June 30, 2026, was approximately $10,608,420 which includes a net realized loss from ether sold for the redemption of shares and sold to pay expenses of $945,762 and net change in unrealized depreciation on investment in ether of approximately $9,662,658. Net realized and change in unrealized loss on investment in ether for the period was driven by ether price depreciation from $2,101.84 per ether as of March 31, 2026 to $1,593.01 per ether as of June 30, 2026. Net decrease in net assets resulting from operations was approximately $10,628,058 for the three months ended June 30, 2026, which consisted of the net realized and change in unrealized loss on investment in ether of $10,608,420 and the Sponsor Fee of $19,638. Net assets decreased to approximately $32,594,461 on June 30, 2026. The decrease in net assets primarily resulted from the aforementioned ether price movement, net capital share increase of approximately $991,854, and a net decrease resulting from operations of $10,628,058.
Results of Operations for the quarter ended June 30, 2025
At June 30, 2025, the Custodian held 14,053.0027 ether on behalf of the Fund, with a market value of $35,136,863 (cost: $42,429,783) based on the Principal Market Price at quarter end.
For the quarter ended June 30, 2025, 450,000 Shares were issued in exchange for 3,417.9518 ether and 150,000 Shares were redeemed in exchange for 1,145.1553 ether. The Fund’s NAV per Share began the period at $13.94 and ended the period at $18.99. The 36.23% increase in the Fund's NAV from $13.94 at March 31, 2025 to $18.99 at June 30, 2025 is directly related to the 36.27% increase in the price of ether. The Fund’s NAV increased slightly less than the price of ether on a percentage basis due to the Sponsor’s fee of $13,393 for the quarter.
Net realized and change in unrealized gain on investment in ether for the quarter ended June 30, 2025 was approximately $7,200,320, which includes a net realized loss on investment in ether sold for redemptions of $1,744,386 and net change in unrealized appreciation on investment in ether of approximately $8,944,706. Net realized and change in unrealized gain on investment in ether for the period was driven by ether price appreciation from $1,834.80 per ether as of March 31, 2025 to $2,500.31 per ether as of June 30, 2025. Net increase in net assets resulting from operations was approximately $7,186,927 for the quarter ended June 30, 2025, which consisted of the net realized and change in unrealized gain on investment in ether of $7,200,320 offset by the Sponsor’s fee of $13,393. Net assets increased to approximately $35,123,473 on June 30, 2025. The increase in net assets primarily resulted from a net increase resulting from operations of $7,186,927, which was primarily driven by the aforementioned ether price appreciation, and net capital share transactions of approximately $6,331,148.
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 Sponsor’s fee. 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: the fees charged by the Administrator, the Marketing Agent, the Custodians and the Trustee, Cboe BZX Exchange listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and expenses, and up to $500,000 per annum in ordinary legal fees and expenses. The Sponsor paid the costs of the Fund’s organization and the initial offering costs, and may not seek reimbursement of such costs. The Sponsor is not required to pay any extraordinary or non-routine expenses.
The Sponsor’s fee is accrued daily at an annualized rate equal to 0.19% (i.e., 0.19%/365 days) of the net asset value of the Fund and is payable at least quarterly in arrears in U.S. dollars. The Sponsor may, at its sole discretion and from time to time, waive all or a portion of the Sponsor’s fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. The Fund will sell ether as needed to pay the Sponsor’s fee. In the future, if the Sponsor decides to waive all or a portion of the Sponsor’s fee, Shareholders will be notified in a prospectus supplement or on the Sponsor’s website for the Fund.
The Fund will sell ether on an as-needed basis to pay the Sponsor’s fee. The Fund bears transaction costs, including any Ethereum network fees or other similar transaction fees, in connection with any sales of ether necessary to pay the Sponsor’s fee, as well as other Fund expenses (if any) that are not assumed by the Sponsor (expenses assumed by the Sponsor are specified above). Any Ethereum network fees and similar transaction fees incurred in connection with the creation or redemption of Creation Units are borne by the Authorized Participant.
Off-Balance Sheet Arrangements
As of June 30, 2026 and March 31, 2026, the Fund as well as the Trust did not have any off-balance sheet arrangements.
Analysis of Movements in the Price of Ether
As movements in the price of ether 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 Ether. Past movements in the ether price are not indicators of future movements.
The following chart shows movements in the price of ether based on the CME CF Ether-Dollar Reference Rate - New York Variant for the Ether – U.S. Dollar trading pair (the “CF Benchmarks Index”) in U.S. dollars per unit over the period from April 1, 2026 to June 30, 2026.
The average, high, low and end-of-period ether prices based on the CME CF Ether-Dollar Reference Rate - New York Variant are as below:
|
Period
|
Average | High | Date | Low | Date | End of period(1) | Last business day | |
|
April 1, 2026 to June 30, 2026
|
2,054.73 | 2,427.74 | April 17, 2026 | 1,556.20 | June 5, 2026 | 1,576.51 | June 30, 2026 |
(1) The end of period ether price is the CME CF Ether-Dollar Reference Rate - New York Variant on the last business day of the period.
The Fund is a passive investment vehicle and is not a leveraged product. The Sponsor does not actively manage the ether held by the Fund. This means that the Sponsor does not sell ether at times when its price is high or acquire ether at low prices in the expectation of future price increases. The Fund will not utilize leverage, derivatives or similar instruments or transactions in seeking to meet its investment objective. The investment objective of the Fund is to seek to reflect generally the performance of the price of ether before payment of the Fund's expenses. Fluctuations in the price of ether will affect the value of the Fund's shares.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Principal Financial Officer of the Sponsor, who perform functions similar to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had officers, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer of the Sponsor, the Sponsor conducted an evaluation of the Trust’s disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e) as of June 30, 2026 and concluded that the disclosure controls and procedures operated effectively at reasonable levels of assurance.
The Trust, on behalf of the Fund, maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Trust’s Exchange Act reports with respect to the Fund is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Principal Financial Officer of the Sponsor, who perform functions similar to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had officers, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer of the Sponsor, the Sponsor conducted an evaluation of the Trust’s disclosure controls and procedures with respect to the Fund, as defined under Exchange Act Rule 13a-15(e) as of June 30, 2026 and concluded that the disclosure controls and procedures operated effectively at reasonable levels of assurance.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.
Change in 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 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 the operations of both the Fund, as the sole series of the Trust, and the Trust as registrant.
PART II – OTHER INFORMATION
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 14, 2026, the Trust and the Fund are not subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against the Trust or Fund.
You should carefully consider the factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended March 31, 2026, 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 2026 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.
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 2 Creation Units (comprising 100,000 Shares) during the quarter ended June 30, 2026. The following table summarizes the redemptions by Authorized Participants during the period:
| Period |
Total Shares Redeemed |
Average Price Per Share | |||||||
| April 1, 2026 – April 30, 2026 | 100,000 | $ | 16.79 | ||||||
| May 1, 2026 – May 31, 2026 | - | - | |||||||
| June 1, 2026 - June 30, 2026 | - | - |
None.
Not applicable.
No officers or directors of the Sponsor have adopted terminated
See the Exhibit Index below, which is incorporated by reference herein.
(1)
Filed herewith.
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 Ethereum Trust (registrant)
|
By:
|
|
/s/ David Mann*
|
|
|
|
|
David Mann
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(serving in the capacity of principal executive officer)
|
|
|
By:
|
|
/s/ Christopher Kings*
|
|
|
|
|
Christopher Kings
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(serving in the capacity of principal financial officer)
|
|
Date: August 14, 2026
* 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.
33