FGDL 10-Q
Franklin Templeton Holdings Trust (FGDL)
Table of Contents
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||
Non-Accelerated Filer |
☒ | Smaller Reporting Company | ||||
| Emerging Growth Company | ||||||
Table of Contents
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This interim 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 gold 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. All 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.
EMERGING GROWTH COMPANY STATUS
The Trust is an “emerging growth company,” as defined in 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 this offering; |
| • | the date on which the Trust has, during the previous three-year period, issued more than $1 billion in non-convertible debt; or |
| • | the date on which the Trust is deemed to be a “large-accelerated filer” (i.e., an issuer that (1) has more than $700 million in outstanding equity held by non-affiliates and (2) has been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for at least 12 calendar months and has filed at least one annual report on Form 10-K.) |
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.
Table of Contents
FRANKLIN RESPONSIBLY SOURCED GOLD ETF
FRANKLIN TEMPLETON HOLDINGS TRUST
Table of Contents
Table of Contents
Page |
||||
5 |
||||
6 |
||||
7 |
||||
8 |
||||
9 |
||||
10 |
||||
15 |
||||
16 |
||||
17 |
||||
18 |
||||
19 |
||||
20 |
||||
September 30, 2024 |
March 31, 2024 |
|||||||
(Unaudited) |
||||||||
| Assets |
||||||||
| Investment in gold, at fair value (a) |
$ | $ | ||||||
| |
|
|
|
|||||
| Total assets |
||||||||
| |
|
|
|
|||||
| Liabilities |
||||||||
| |
||||||||
| |
|
|
|
|||||
| Total liabilities |
||||||||
| |
|
|
|
|||||
| Commitments and contingencies (Note 7) |
||||||||
| |
|
|
|
|||||
| Net assets |
$ | $ | ||||||
| |
|
|
|
|||||
| Shares issued and outstanding (b) |
||||||||
| Net asset value per Share |
$ | $ | ||||||
| (a) | Cost of investment in gold bullion: $ |
| (b) | No par value, unlimited amount authorized. |
Ounces of Gold |
Cost |
Fair Value |
% of Net Assets |
|||||||||||||
Investment in gold |
$ | $ | % | |||||||||||||
Total investments |
$ | $ | % | |||||||||||||
Less liabilities |
( |
) | ( |
)% | ||||||||||||
Net assets |
$ | % | ||||||||||||||
Ounces of Gold |
Cost |
Fair Value |
% of Net Assets |
|||||||||||||
Investment in gold |
$ | $ | % | |||||||||||||
Total investments |
$ | $ | % | |||||||||||||
Less liabilities |
( |
) | ( |
)% | ||||||||||||
Net assets |
$ | % | ||||||||||||||
For the Three Months Ended September 30, |
For the Six Months Ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Expenses |
||||||||||||||||
Sponsor’s fee |
$ | $ | $ | $ | ||||||||||||
Total expenses |
||||||||||||||||
Net investment loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net realized and change in unrealized gain (loss) on investment in gold |
||||||||||||||||
Net realized gain (loss) from gold distributed for the redemption of shares and sold to pay expenses |
||||||||||||||||
Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ( |
) | ||||||||||||
Net realized and change in unrealized gain (loss) on investment in gold |
( |
) | ( |
) | ||||||||||||
Net increase (decrease) in net assets resulting from operations |
( |
) | ( |
) | ||||||||||||
Net increase (decrease) in net assets per Share (a)(b) |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| (a) | Net increase (decrease) in net assets per Share based on average shares outstanding during the period. |
| (b) | The amount shown for a share outstanding may not agree with the change in the aggregate gains and losses on investment for the period because of the timing of transactions in the Fund’s shares in relation to fluctuating market values for the Fund’s underlying investment. |
For the Six Months Ended September 30, 2024 |
For the Six Months Ended September 30, 2023 |
|||||||
| Cash Flows from Operating Activities: |
||||||||
| Proceeds from gold bullion sold to pay expenses |
$ | $ | ||||||
| Expenses - Sponsor’s fee paid |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net cash provided by (used in) operating activities |
||||||||
| |
|
|
|
|||||
| Increase (decrease) in cash |
||||||||
| Cash, beginning of period |
||||||||
| |
|
|
|
|||||
| Cash, end of period |
$ | $ | ||||||
| |
|
|
|
|||||
| Reconciliation of Net Increase (Decrease) in Net Assets Resulting from Operations to Net Cash Provided by (Used in) Operating Activities: |
||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | $ | ( |
) | ||||
| Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: |
||||||||
| Proceeds from gold bullion sold to pay expenses |
||||||||
| Net realized (gain) loss |
( |
) | ( |
) | ||||
| Net change in unrealized (appreciation) depreciation |
( |
) | ||||||
| Change in operating assets and liabilities: |
||||||||
| Sponsor’s fees payable |
( |
) | ||||||
| |
|
|
|
|||||
| Net cash provided by (used in) operating activities |
$ | $ | ||||||
| |
|
|
|
|||||
| Supplemental disclosure of non-cash financing information: |
||||||||
| Gold bullion contributed for Shares issued |
$ | $ | ||||||
| Gold bullion distributed for Shares redeemed |
$ | $ | ( |
) | ||||
For the Three Months Ended September 30, |
For the Six Months Ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Net assets, beginning of period |
$ | $ | $ | $ | ||||||||||||
| Net investment loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net realized gain (loss) from gold distributed for the redemption of shares and sold to pay expenses |
||||||||||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| 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 |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Shares |
Amount^ |
|||||||
| Balance at July 1, 2024 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
||||||||
| |
|
|
|
|||||
| Balance at September 30, 2024 |
$ | |||||||
| |
|
|
|
|||||
Shares |
Amount^ |
|||||||
| Balance at July 1, 2023 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Balance at September 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
| ^ | Dollar amount of balance represents the cumulative fair value of creation of shares less the redemption of shares, at the time of the specific creation or redemption. |
Shares |
Amount^ |
|||||||
| Balance at April 1, 2024 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
||||||||
| |
|
|
|
|||||
| Balance at September 30, 2024 |
$ | |||||||
| |
|
|
|
|||||
| ^ | Dollar amount of balance represents the cumulative fair value of creation of shares l es s the redemption of shares, at the time of the specific creation or redemption. |
Shares |
Amount^ |
|||||||
| Balance at April 1, 2023 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Balance at September 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
| ^ | Dollar amount of balance represents the cumulative fair value of creation of shares less the redemption of shares, at the time of the specific creation or redemption. |
Amount in ounces |
Amount in US$ |
|||||||
| Balance at July 1, 2024 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
||||||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
||||||||
| |
|
|
|
|||||
| Balance at September 30, 2024 |
$ | |||||||
| |
|
|
|
|||||
Amount in ounces |
Amount in US$ |
|||||||
| Balance at July 1, 2023 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
( |
) | ( |
) | ||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ||||||
| |
|
|
|
|||||
| Balance at September 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
Amount in ounces |
Amount in US$ |
|||||||
| Balance at April 1, 2024 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
||||||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
||||||||
| |
|
|
|
|||||
| Balance at September 30, 2024 |
$ | |||||||
| |
|
|
|
|||||
Amount in ounces |
Amount in US$ |
|||||||
| Balance at April 1, 2023 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
( |
) | ( |
) | ||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ||||||
| |
|
|
|
|||||
| Balance at September 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
For the Three Months Ended September 30, |
For the Six Months Ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Net asset value per Share, beginning of period |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net investment loss (a) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net realized and unrealized gain (loss) on investment in gold |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net change in net assets from operations (b) |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net asset value per Share, end of period |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total return, at net asset value (c) |
% | ( |
)% | % | ( |
)% | ||||||||||
| Ratio to average net assets (d) |
||||||||||||||||
| Net investment loss |
( |
)% | ( |
)% | ( |
)% | ( |
)% | ||||||||
| Net expenses |
% | % | % | % | ||||||||||||
| (a) | Calculated using average Shares outstanding. |
| (b) | The amount shown for a share outstanding may not agree with the change in the aggregate gains and losses on investment for the period because of the timing of transactions in the Fund’s shares in relation to fluctuating market values for the Fund’s underlying investment. |
| (c) | Calculation based on the change in net asset value of a Share during the period. Total return for periods of less than a year are not annualized. |
| (d) | Annualized. |
September 30, 2024 |
March 31, 2024 |
|||||||
(Unaudited) |
||||||||
Assets |
||||||||
Investment in gold, at fair value (a) |
$ | $ | ||||||
Total assets |
||||||||
Liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 7) |
||||||||
Net assets |
$ | $ | ||||||
Shares issued and outstanding (b) |
||||||||
Net asset value per Share |
$ | $ | ||||||
| (a) | Cost of investment in gold bullion: $ |
| (b) | No par value, unlimited amount authorized. |
Ounces of Gold |
Cost |
Fair Value |
% of Net Assets |
|||||||||||||
| Investment in gold |
$ | $ | % | |||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total investments |
$ | $ | % | |||||||||||||
| Less liabilities |
( |
) | ( |
)% | ||||||||||||
| |
|
|
|
|||||||||||||
| Net assets |
$ | % | ||||||||||||||
| |
|
|
|
|||||||||||||
Ounces of Gold |
Cost |
Fair Value |
% of Net Assets |
|||||||||||||
| Investment in gold |
$ | $ | % | |||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total investments |
$ | $ | % | |||||||||||||
| Less liabilities |
( |
) | ( |
)% | ||||||||||||
| |
|
|
|
|||||||||||||
| Net assets |
$ | % | ||||||||||||||
| |
|
|
|
|||||||||||||
For the Three Months Ended September 30, |
For the Six Months Ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Expenses |
||||||||||||||||
Sponsor’s fee |
$ | $ | $ | $ | ||||||||||||
Total expenses |
||||||||||||||||
Net investment loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net realized and change in unrealized gain (loss) on investment in gold |
||||||||||||||||
Net realized gain (loss) from gold distributed for the redemption of shares and sold to pay expenses |
||||||||||||||||
Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ( |
) | ||||||||||||
Net realized and change in unrealized gain (loss) on investment in gold |
( |
) | ( |
) | ||||||||||||
Net increase (decrease) in net assets resulting from operations |
( |
) | ( |
) | ||||||||||||
Net increase (decrease) in net assets per Share (a)(b) |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| (a) | Net increase (decrease) in net assets per Share based on average shares outstanding during the period. |
| (b) | The amount shown for a share outstanding may not agree with the change in the aggregate gains and losses on investment for the period because of the timing of transactions in the Fund’s shares in relation to fluctuating market values for the Fund’s underlying investment. |
For the Six Months Ended September 30, 2024 |
For the Six Months Ended September 30, 2023 |
|||||||
| Cash Flows from Operating Activities: |
||||||||
| Proceeds from gold bullion sold to pay expenses |
$ | $ | ||||||
| Expenses - Sponsor’s fee paid |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net cash provided by (used in) operating activities |
||||||||
| |
|
|
|
|||||
| Increase (decrease) in cash |
||||||||
| Cash, beginning of period |
||||||||
| |
|
|
|
|||||
| Cash, end of period |
$ | $ | ||||||
| |
|
|
|
|||||
| Reconciliation of Net Increase (Decrease) in Net Assets Resulting from Operations to Net Cash Provided by (Used in) Operating Activities: |
||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | $ | ( |
) | ||||
| Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: |
||||||||
| Proceeds from gold bullion sold to pay expenses |
||||||||
| Net realized (gain) loss |
( |
) | ( |
) | ||||
| Net change in unrealized (appreciation) depreciation |
( |
) | ||||||
| Change in operating assets and liabilities: |
||||||||
| Sponsor’s fees payable |
( |
) | ||||||
| |
|
|
|
|||||
| Net cash provided by (used in) operating activities |
$ | $ | ||||||
| |
|
|
|
|||||
| Supplemental disclosure of non-cash financing information: |
||||||||
| Gold bullion contributed for Shares issued |
$ | $ | ||||||
| Gold bullion distributed for Shares redeemed |
$ | $ | ( |
) | ||||
For the Three Months Ended September 30, |
For the Six Months Ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Net assets, beginning of period |
$ | $ | $ | $ | ||||||||||||
| Net investment loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net realized gain (loss) from gold distributed for the redemption of shares and sold to pay expenses |
||||||||||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net increase (decrease) in net assets resulting from operations |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| 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 |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Shares |
Amount^ |
|||||||
| Balance at July 1, 2024 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
||||||||
| |
|
|
|
|||||
| Balance at September 30, 2024 |
$ | |||||||
| |
|
|
|
|||||
| ^ | Dollar amount of balance represents the cumulative fair value of creation of shares less the redemption of shares, at the time of the specific creation or redemption. |
Shares |
Amount^ |
|||||||
| Balance at July 1, 2023 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Balance at September 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
| ^ | Dollar amount of balance represents the cumulative fair value of creation of shares less the redemption of shares, at the time of the specific creation or redemption. |
Shares |
Amount^ |
|||||||
| Balance at April 1, 2024 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
||||||||
| |
|
|
|
|||||
| Balance at September 30, 2024 |
$ | |||||||
| |
|
|
|
|||||
| ^ | Dollar amount of balance represents the cumulative fair value of creation of shares less the redemption of shares, at the time of the specific creation or redemption. |
Shares |
Amount^ |
|||||||
| Balance at April 1, 2023 |
$ | |||||||
| Creation of Shares |
||||||||
| Redemption of Shares |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Balance at September 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
| ^ | Dollar amount of balance represents the cumulative fair value of creation of shares l ess t he redemption of shares, at the time of the specific creation or redemption. |
Amount in ounces |
Amount in US$ |
|||||||
| Balance at July 1, 2024 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
||||||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
||||||||
| |
|
|
|
|||||
| Balance at September 30, 2024 |
$ | |||||||
| |
|
|
|
|||||
Amount in ounces |
Amount in US$ |
|||||||
| Balance at July 1, 2023 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
( |
) | ( |
) | ||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ||||||
| |
|
|
|
|||||
| Balance at September 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
Amount in ounces |
Amount in US$ |
|||||||
| Balance at April 1, 2024 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
||||||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
||||||||
| |
|
|
|
|||||
| Balance at September 30, 2024 |
$ | |||||||
| |
|
|
|
|||||
Amount in ounces |
Amount in US$ |
|||||||
| Balance at April 1, 2023 |
$ | |||||||
| Gold received for the creation of Shares |
||||||||
| Gold distributed for the redemption of Shares |
( |
) | ( |
) | ||||
| Principal on gold sales to pay expenses |
( |
) | ( |
) | ||||
| Net realized gain (loss) from gold transferred to pay expenses |
||||||||
| Net change in unrealized appreciation (depreciation) on investment in gold |
( |
) | ||||||
| |
|
|
|
|||||
| Balance at September 30, 2023 |
$ | |||||||
| |
|
|
|
|||||
For the Three Months Ended September 30, |
For the Six Months Ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Net asset value per Share, beginning of period |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net investment loss (a) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net realized and unrealized gain (loss) on investment in gold |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net change in net assets from operations (b) |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net asset value per Share, end of period |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total return, at net asset value (c) |
% | ( |
)% | % | ( |
)% | ||||||||||
| Ratio to average net assets (d) |
||||||||||||||||
| Net investment loss |
( |
)% | ( |
)% | ( |
)% | ( |
)% | ||||||||
| Net expenses |
% | % | % | % | ||||||||||||
| (a) | Calculated using average Shares outstanding. |
| (b) | The amount shown for a share outstanding may not agree with the change in the aggregate gains and losses on investment for the period because of the timing of transactions in the Fund’s shares in relation to fluctuating market values for the Fund’s underlying investment. |
| (c) | Calculation based on the change in net asset value of a Share during the period. Total return for periods of less than a year are not annualized. |
| (d) | Annualized. |
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This information should be read in conjunction with the financial statements and notes included in Item 1 of Part I of this Form 10-Q. This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements involve risks and uncertainties. All statements (other than statements of historical fact) included in this Form 10-Q that address activities, events or developments that may occur in the future, including such matters as future gold prices, gold sales, costs, objectives, changes in commodity prices and market conditions (for gold and the shares), the Fund’s operations, the Sponsor’s plans and references to the Fund’s future success and other similar matters are forward-looking statements. Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and Fund performance, are intended to identify such forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those discussed. Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed therein. We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable basis. However, we make no assurances that management’s estimates, expectations, beliefs, or projections will be achieved or accomplished. These forward-looking statements are based on assumptions about many important factors that could cause actual results to differ materially from those in the forward-looking statements. We do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required by the federal securities laws.
Organization and Trust Overview
The Franklin Templeton Holdings Trust (the “Trust”) was organized as a Delaware statutory trust on April 19, 2021. Franklin Holdings, LLC is the Sponsor of the Trust (the “Sponsor”). The Trust currently offers a single series, the Franklin Responsibly Sourced Gold ETF (the “Fund”). The Fund issues common units of beneficial interest (“Shares”), which represent units of fractional undivided beneficial interest in and ownership of the Fund. The Shares are listed on NYSE Arca, Inc. (“NYSE Arca”) under the symbol “FGDL.” Shares are not obligations of, and are not guaranteed by, the Sponsor or any of its subsidiaries or affiliates. The investment objective of the Fund is for the Shares to reflect the performance of the price of gold bullion, less the Fund’s expenses. The assets of the Fund include only gold bullion and cash, if any.
The Fund seeks to hold only responsibly sourced gold in the Fund’s allocated account. The Fund defines responsibly sourced gold for this purpose as London Good Delivery gold bullion bars that were refined on or after January 1, 2012 (also referred to herein as “post-2012 gold”). All post-2012 gold has been refined in accordance with London Bullion Market Association’s (“LBMA”) Responsible Gold Guidance (the “Gold Guidance”), described further herein. To facilitate this, in transferring gold into and out of the Fund’s allocated account, the Custodian will, on a best efforts basis and subject to available liquidity, seek to allocate post-2012 gold. If, due to a lack of liquidity, the Custodian is unable to allocate post-2012 gold to the Fund’s allocated account, the Custodian will do so as soon as reasonably practicable.
The Fund issues Shares on a continuous basis. Shares are issued by the Fund only in one or more blocks of 50,000 Shares (a block of 50,000 Shares is called a “Creation Unit”) in exchange for gold from Authorized Participants, which is then allocated to the Fund and stored safely by the Custodian. The Fund issues and redeems Creation Units on an ongoing basis at Net Asset Value to Authorized Participants who have entered into an agreement with the Sponsor and the Administrator.
The Fund pays the Sponsor a fee that accrues daily at an annualized rate equal to 0.15% of the daily Net Asset Value of the Fund, paid monthly in arrears (the “Sponsor Fee”). The Sponsor Fee is accrued in and payable in U.S. dollars.
The NAV is computed based upon the total value of the assets of the Fund (i.e., gold and cash) less its liabilities. To determine the Fund’s NAV, the Administrator generally will value the gold bullion held by the Fund on the basis of the LBMA Gold Price PM as published by the IBA. IBA operates electronic auctions for spot, unallocated loco London gold, providing a market-based platform for buyers and sellers to trade. The auctions are run at 10:30 a.m. and 3:00 p.m. London time for gold. The final auction prices are published to the market as the LBMA Gold Price AM and the LBMA Gold Price PM, respectively. The Administrator will calculate the NAV on each day NYSE Arca is open for regular trading, at 12:00 PM New York time. If no LBMA Gold Price (AM or PM) is made on a particular evaluation day or if the LBMA Gold Price PM has not been announced by 12:00 PM New York time on a particular evaluation day, the next most recent LBMA Gold Price AM or PM will be used in the determination of the NAV, unless the Sponsor determines that such price is inappropriate to use as the basis for such determination. If the Sponsor determines that such price is inappropriate to use, it shall identify an alternate basis for evaluation of the gold bullion held by the Fund that the Sponsor determines fairly represents the commercial value of the Fund’s gold bullion.
Once the value of the gold bullion has been determined, the Administrator subtracts all estimated accrued expenses and other liabilities of the Fund from the total value of the gold bullion and any cash of the Fund. The resulting figure is the NAV. The Administrator determines the NAV per Share by dividing the NAV of the Fund by the number of Shares outstanding as of the close of trading on NYSE Arca.
Critical Accounting Policy
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements relies on estimates and assumptions that impact the Fund’s as well as the Trust’s financial position and results of operations. These estimates and assumptions affect the Fund’s as well as the Trust’s application of accounting policies. Below we describe the valuation of gold bullion, a critical accounting policy that we believe is important to understanding the results of operations and financial position. In addition, please refer to Note 2 to the Financial Statements for further discussion of the accounting policies followed by the Fund and the Trust.
The gold bullion held on behalf of the Fund at the vaults of the Gold Custodian is audited each year generally coinciding with the Fund’s financial year end at March 31. On April 2, 2024, Bureau Veritas Commodities UK LTD concluded the audit inspection procedures with respect to the Fund’s gold bullion held by the Gold Custodian. The audit findings did not identify non-conformities.
Results of Operations
At September 30, 2024, the Custodian held 32,699.485 ounces of gold on behalf of the Fund in its vault, with a market value of $85,998,011 (cost: $62,561,734) based on the LBMA Gold Price PM at period end.
For the Three Months Ended September 30, 2024
25
Table of Contents
For the three months ended September 30, 2024, 250,000 Shares were issued in exchange for 3,336.631 ounces of gold and no shares were redeemed. The Fund’s NAV per Share began the period at $31.12 and ended the period at $35.10. The increase in NAV per Share was due to a higher price of gold of $2,629.95 per fine ounce at period end, which represented a increase of 12.83% from $2,330.90 per fine ounce at June 30, 2024.
The change in net assets from operations for the three months ended September 30, 2024 was $8,997,236, which was due to (i) the Sponsor Fee of $(28,305), (ii) net realized gain from gold distributed for the redemption of shares and sold to pay expenses of $6,556 and (iii) a net change in unrealized appreciation (depreciation) on investment in gold of $9,018,985. Other than the Sponsor Fee the Fund had no expenses during the three months ended September 30, 2024.
For the Three Months Ended September 30, 2023
For the three months ended September 30, 2023, (1,050,000) Shares were redeemed in exchange for (14,037.996) ounces of gold. The Fund’s NAV per Share began the period at $25.57 and ended the period at $25.00. The decrease in NAV per Share was due to a lower price of gold of $1,870.50 per fine ounce at period end, which represented a decrease of (2.18)% from $1,912.25 per fine ounce at June 30, 2023.
The change in net assets from operations for the three months ended September 30, 2023 was $(1,329,179), which was due to (i) the Sponsor Fee of $(26,489), (ii) realized gain on sale of gold to pay expenses of $1,507,791 and (iii) a net change in unrealized appreciation (depreciation) on investment in gold of $(2,810,481). Other than the Sponsor Fee the Fund had no expenses during the three months ended September 30, 2023.
For the Six Months Ended September 30, 2024
For the six months ended September 30, 2024, 350,000 Shares were issued and in exchange for 4,672.095 ounces of gold and no shares were redeemed. The Fund’s NAV per Share began the period at $29.57 and ended the period at $35.10. The increase in NAV per Share was due to a higher price of gold of $2,629.95 per fine ounce at period end, which represented a increase of 18.77% from $2,214.35 per fine ounce at March 31, 2024.
The change in net assets from operations for the six months ended September 30, 2024 was $12,207,199, which was due to (i) the Sponsor Fee of $(53,854), (ii) net realized gain from gold distributed for the redemption of shares and sold to pay expenses of $11,770 and (iii) a net change in unrealized appreciation (depreciation) on investment in gold of $12,249,283. Other than the Sponsor Fee the Fund had no expenses during the six months ended September 30, 2024.
For the Six Months Ended September 30, 2023
For the six months ended September 30, 2023, 100,000 Shares were issued in exchange for 1,337.286 ounces of gold and (1,800,000) Shares were redeemed in exchange for (24,067.816) ounces of gold. The Fund’s NAV per Share began the period at $26.48 and ended the period at $25.00. The decrease in NAV per Share was due to a lower price of gold of $1,870.50 per fine ounce at period end, which represented a decrease of (5.52)% from $1,979.70 per fine ounce at March 31, 2023.
The change in net assets from operations for the six months ended September 30, 2023 was $(4,644,402), which was due to (i) the Sponsor Fee of $(65,071), (ii) realized gain on sale of gold to pay expenses of $3,249,259 and (iii) a net change in unrealized appreciation (depreciation) on investment in gold of $(7,828,590). Other than the Sponsor Fee the Fund had no expenses during the six months ended September 30, 2023.
Liquidity and Capital Resources
The Fund is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. The Fund’s only ordinary recurring expense is the fee paid to the Sponsor at an annual rate of 0.15% of the daily net asset value of the Fund. The Sponsor’s annual fee accrues daily and is payable by the Fund monthly in arrears. In exchange for the Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Fund, including but not limited to the following: fees charged by the Administrator, the Custodian and the Trustee, NYSE Arca listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $500,000 per annum in legal fees and expenses and applicable license fees. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Fund in excess of the $500,000 per annum stipulated in the Sponsor Agreement.
The Sponsor is not required to pay any extraordinary or non-routine expenses. Extraordinary expenses are fees and expenses which are unexpected or unusual in nature, such as legal claims and liabilities and litigation costs or indemnification or other unanticipated expenses. Extraordinary fees and expenses also include material expenses which are not currently anticipated obligations of the Fund. The Fund will be responsible for the payment of such expenses to the extent any such expenses are incurred. Routine operational, administrative and other ordinary expenses are not deemed extraordinary expenses. The Fund will sell gold on an as-needed basis to pay the Sponsor’s fee.
The Administrator will, at the direction of the Sponsor, sell the Fund’s gold as necessary to pay the Fund’s expenses not otherwise assumed by the Sponsor. When selling gold to pay the Sponsor’s fee and other expenses, if any, the Administrator endeavors to sell the exact amount of gold needed to pay expenses to minimize the Fund’s holdings of cash. At September 30, 2024, the Trust and the Fund did not have any cash balances.
Off-Balance Sheet Arrangements
At September 30, 2024, the Fund as well as the Trust do not have any off-balance sheet arrangements.
Analysis of Movements in the Price of Gold
As movements in the price of gold are expected to directly affect the price of the Fund’s shares, it is important for investors to understand and follow movements in the price of gold. Past movements in the gold price are not indicators of future movements.
26
Table of Contents
The following chart shows movements in the price of gold based on the LBMA Gold Price PM in U.S. dollars per ounce over the period from July 1, 2024 to September 30, 2024.
The average, high, low and end-of-period gold prices based on the LBMA Gold Price PM for the period are as below:
| Period |
Average | High | Date | Low | Date | End of period | Last business day (1) | |||||||||||||||
| July 1, 2024 to September 30, 2024 |
2,476.30 | 2,663.75 | September 26, 2024 | 2,329.10 | July 1, 2024 | 2,629.95 | September 30, 2024 | |||||||||||||||
| (1) The end of period gold price is the LBMA Gold Price PM on the last business day of the period. |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Fund is a passive investment vehicle. It is not actively managed. The investment objective of the Fund is for the Shares to reflect the performance of the price of gold bullion, less the Fund’s expenses. Accordingly, fluctuations in the price of gold will affect the value of the Fund’s Shares.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The duly authorized officers of the Sponsor, performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded as of the end of the period covered by this report on Form 10-Q that the disclosure controls and procedures of the Trust operated effectively at reasonable assurance levels.
The disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, are recorded, processed, summarized and reported, within the time period specified in the applicable rules and forms, and that such information is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate, to allow timely decisions regarding required disclosure. It is important to note that no set of controls, no matter how reasonably designed, can detect every error.
The duly authorized officers of the Sponsor, performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, have evaluated the effectiveness of the Fund’s disclosure controls and procedures, and have concluded as of the end of the period covered by this report on Form 10-Q that the disclosure controls and procedures of the Fund operated effectively at reasonable assurance levels.
The disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, on behalf of the Fund, are recorded, processed, summarized and reported, within the time period specified in the applicable rules and forms, and that such information is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate, to allow timely decisions regarding required disclosure. It is important to note that no set of controls, no matter how reasonably designed, can detect every error.
Internal Control over Financial Reporting
There were no changes in the Trust’s and the Fund’s internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Trust’s and/or the Fund’s internal control over financial reporting.
27
Table of Contents
Each of the Sarbanes-Oxley certifications included as exhibits to this filing apply with respect to both the operations of both the Fund, as the sole series of the Trust, and the Trust as registrant.
28
Table of Contents
| a) | None. |
| b) | Not applicable. |
| c) | The Fund does not purchase Shares directly from its Shareholders; rather the Fund transacts directly at net asset value only with Authorized Participants. The Fund redeemed no Creation Units to Authorized Participants during the quarter ended September 30, 2024. |
Table of Contents
EXHIBIT INDEX
| Exhibit No. |
Description of Exhibit | |
| 31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2* | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
| * | Filed herewith. |
30
Table of Contents
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities* indicated thereunto duly authorized.
Franklin Holdings, LLC
Sponsor of the Franklin Templeton Holdings Trust (registrant)
| By: | /s/ David Mann | |
| David Mann* | ||
| President and Chief Executive Officer | ||
| (serving in the capacity of principal executive officer) | ||
| By: | /s/ Matthew Hinkle | |
| Matthew Hinkle* | ||
| Chief Financial Officer | ||
| (serving in the capacity of principal financial officer) | ||
Date: November 12, 2024
| * | The registrant is a trust and the person is signing in his capacity as an officer of Franklin Holdings, LLC, the Sponsor of the registrant. |
31