Franklin Ethereum Trust 10-K

Item 9A. Controls and Procedures 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 performs 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 March 31, 2025 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 performs 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 March 31, 2025 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 fourth fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Trust’s and the Fund’s internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. 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. Item 9B. Other Information No officers or directors of the Sponsor have adopted , modified, or terminated trading plans under either a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933) for the three-month period ended March 31, 2025. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 47 Table of Contents PART III Item 10. Directors, Executive Officers, and Corporate Governance The Trust does not have any directors, officers, or employees. The following persons, in their respective capacities as directors or executive officers of the Sponsor, a Delaware limited liability company, perform certain functions with respect to the Trust that, if the Trust had directors or executive officers, would typically be performed by them. David Mann – President and Chief Executive Officer Matthew Hinkle – Chief Financial Officer Vivek Pai – Chief Accounting Officer and Treasurer Todd Mathias – Vice President Julie Patel – Vice President and Secretary Navid Tofigh – Vice President and Assistant Secretary Lindsey Hicks – Assistant Treasurer Ajay Narayan – Assistant Treasurer Jeff White – Assistant Treasurer The Trust does not have a code of ethics as it does not have any directors, officers, or employees. The Sponsor has a code of ethics (the “Code of Ethics”) that applies to its executive officers, including its Principal Executive Officer, Principal Financial Officer and Treasurer, who perform certain functions with respect to the Trust that, if the Trust had executive officers would typically be performed by them. The Code of Ethics is available at https://www.franklinresources.com/governance/corporate-governance-documents. The Sponsor’s Code of Ethics is intended to be a codification of the business and ethical principles that guide the Sponsor, and to deter wrongdoing, to promote (1) honest and ethical conduct (including the ethical handling of actual or apparent conflicts of interest), (2) full, fair, accurate, timely and understandable disclosure in public reports, documents and communications, (3) compliance with applicable laws and governmental rules and regulations, (4) the prompt internal reporting of violations of the Code of Ethics and (5) accountability for adherence to the Code of Ethics. Item 11. Executive Compensation The Trust does not have any directors or executive officers. The only ordinary expense paid by the Fund is the Sponsor’s fee. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance under Equity Compensation Plans: Not applicable. Security Ownership of Certain Beneficial Owners and Management: a.) Not applicable. b.) Not applicable. Item 13. Certain Relationships and Related Transactions and Director Independence Not applicable. Item 14. Principal Accounting Fees and Services Fees for services performed by PricewaterhouseCoopers LLP (“PwC”), as paid by the Sponsor from the Sponsor fee, for the period ended March 31, 2025, were: 2025* Audit fees $ 120,000 Audit-related fees — Tax fees — All other fees — Total $ 120,000 * For the period from July 23, 2024 (Commencement of Operations) to March 31, 2025. In the table above, in accordance with the SEC’s definitions and rules, Audit Fees are fees paid to PwC for professional services for the audit of the Trust’s and the Fund’s financial statements included in the Form 10-K and review of financial statements included in the Forms 10-Q, and for services that are normally provided by the accountants in connection with regulatory filings or engagements. Audit Related Fees are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Trust’s and the Fund’s financial statements. 48 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules Financial Statements See Index to Financial Statements on Page F-1 for a list of the financial statements being filed herein. Exhibit Index Listed below are the exhibits which are filed or furnished as part of this annual report on Form 10-K (according to the number assigned to them in Item 601 of Regulation S-K): Exhibit No. Description of Document 31.1(1) Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 31.2(1) Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 32.1(1) Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U. S. C. 1350) 32.2(1) Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U. S. C. 1350) 97.1(1) Compensation Recovery Policy 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Extension Presentation Linkbase (1) Filed herewith. Item 16. Form 10-K Summary None. 49 Table of Contents GLOSSARY OF DEFINED TERMS In this Annual Report, each of the following quoted terms has the meanings set forth after such term: “Administration Agreement” — The Fund Administration and Accounting Agreement between the Administrator and the Fund. “Administrator” — The Bank of New York Mellon. “Affiliate” — Any affiliates of the Sponsor and the Marketing Agent (including Franklin Resources, Inc., each of its affiliates, directors, partners, trustees, managing members, officers and employees). “airdrop” — An occurrence where holders of a particular digital asset may be entitled to claim a certain amount of a new digital asset for free, based on the fact that they hold such particular digital asset. “API” - Application Programming Interface. “Article 8” — Article 8 of the New York Uniform Commercial Code. “ASC Topic 820” - The Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures.” “Authorized Participant” — A person who, at the time of submitting an order to create or redeem one or more Creation Units (i) is a registered broker-dealer, (ii) is a DTC Participant or an Indirect Participant, and (iii) has in effect a valid Authorized Participant Agreement. “Authorized Participant Agreement” — An agreement entered into by an Authorized Participant, the Sponsor and the Administrator that provides the procedures for the creation and redemption of Creation Units. “BitLicense” — A business license under 23 New York Codes, Rules and Regulations (NYCRR) Part 200. “BMR” —The UK Benchmarks Regulation. “BNYM” — The Bank of New York Mellon. “Business Day” — Any day other than: (1) a Saturday or a Sunday, or (2) a day on which the Cboe BZX Exchange is closed for regular trading. “BSA” - U.S. Bank Secrecy Act, as amended. “Cash Custodian” — The Bank of New York Mellon. “Cboe BZX Exchange” — Cboe BZX Exchange, Inc. “CBDCs” — Digital forms of legal tender, called central bank digital currencies, introduced by central banks in various countries. “CB Return Cure” - the failure of any Coinbase Entity to sell or withdraw or transfer the Fund’s ether in accordance with the Fund’s instructions within the time periods set forth in the Prime Broker Agreement and such failure is not cured within two (2) business days following the Fund providing written notice to the relevant Coinbase Entity. “CF Benchmarks Index” — The CME CF Ether-Dollar Reference Rate - New York Variant for Ether - U.S. Dollar Trading pair. “CFPB” — The Consumer Financial Protection Bureau. “CFTC” — The U.S. Commodity Futures Trading Commission. “Client Account” — Other accounts for clients, such as registered and unregistered funds and owners of separately managed accounts that various divisions and units within Franklin Templeton manage or advise. “CME” – Chicago Mercantile Exchange. “Code” — The United States Internal Revenue Code of 1986, as amended. “Code of Ethics” — The codification of the Sponsor's business and ethical principles that applies to its executive officers. “Coinbase Entities” — The Prime Broker, Ether Custodian and Trade Credit Lender. “Commodity Exchange Act” or “CEA” — The United States Commodity Exchange Act of 1936, as amended. “Connected Trading Venue” — A venue (including third-party venues and the Prime Broker’s own execution venue) where the Prime Broker executes orders to buy and sell ether on behalf of the Fund. “Consensus Client” – A consensus-layer client software program. “Constituent Platforms” — The constituent digital asset platforms of the CF Benchmarks Index, which are chosen by the Index Administrator and could change over time. “Creation Ether Amount” - The amount of ether to be purchased by the Fund which the Sponsor will adjust as determined on each Business Day as promptly as practicable after 4:00 p.m. ET, by multiplying the NAV by the number of Shares in each Creation Unit (50,000) and dividing the resulting product by that day’s CF Benchmarks Index. 50 Table of Contents “Creation Unit” — A block of 50,000 Shares. “Creation Unit Deposit Amount” — The amount of cash to be delivered in a creation which BNYM will adjust as determined on each Business Day as promptly as practicable after 4:00 p.m. ET, by multiplying the NAV by the number of Shares in each Creation Unit (50,000). “CTA” - The Consolidated Tape Association. “Custodian Agreement” — The agreement, governed by New York law, between the Fund and the Ether Custodian regarding the custody of the Fund’s ether. “Custodians” —The Cash Custodian and Ether Custodian, collectively. “Custodians’ Fee" — The fees payable to the Custodians. “CVC” - Convertible currency. “DAOs” - Decentralized autonomous organizations. “DApps” - Short for decentralized applications, which consistent with common usage, refers to all applications which are built on the Ethereum network or other blockchains, whether or not decentralized in fact. “Declaration of Trust” — The Agreement and Declaration of Trust dated as of May 30, 2024, among the Sponsor, the Trust and the Trustee. “DeFi” - Decentralized finance. “DFPI” — The California Department of Financial Protection and Innovation. “DOL” — The U.S. Department of Labor. “DSTA” — The Delaware Statutory Trust Act. “DTC” — The Depository Trust Company. “DTC Participant” — An entity that has an account with DTC. “ECI” — Income that is treated as “effectively connected” with the conduct of a trade or business in the United States. “EDRTI” — CME CF Ether-Dollar Real Time Index. “ERISA” — The Employee Retirement Income Security Act of 1974, as amended. “ETHUSD_RR” – CME CF Ether-Dollar Reference Rate. “ET” — Eastern Time Zone. “ETH” - The currency code for ether. “Ethereum blockchain” - The blockchain ledger for ether. “Ethereum Classic” or “ETC” — The original blockchain, now referred to as “Ethereum Classic” with the digital asset on that blockchain now referred to as Ethereum Classic, or ETC. “Ethereum Client” - software application that implements the Ethereum network specification, communicates with the Ethereum network and allows them to act as a node in the network to the new specification. “Ether Custodian” or “Coinbase Custody” – Coinbase Custody Trust Company, LLC. “Ethereum Foundation” - A Swiss non-profit organization, was set up to oversee the protocol’s development. “Ethereum network” - Ethereum blockchain and any digital asset network, including the Ethereum peer-to-peer network. “Ether Trading Counterparty” — Designated third parties who are not registered broker-dealers and transact in ether pursuant to written agreements with the Fund. “EthSuisse” - Ethereum Switzerland GmbH. “Exchange Act” — The United States Securities Exchange Act of 1934, as amended. “Execution Client” - An execution-layer client software program. “Fair Value Event” - An event which occurs if the CF Benchmarks Index is not available or the Sponsor determines, in its sole discretion, that the CF Benchmarks Index is unreliable. “FBO” — For the benefit of. 51 Table of Contents “FBO Account” – An omnibus account in the Prime Broker’s name FBO its customers at each of multiple FDIC-insured banks. “FCA” — The Financial Conduct Authority of the United Kingdom. “FDAP” — A Non-U.S. Shareholder’s allocable share of U.S. source dividend, interest, rental and other “fixed or determinable annual or periodical gains, profits and income.” “FDIC” — The Federal Deposit Insurance Corporation. “FinCen” — The U.S. Department of the Treasury Financial Crimes Enforcement Network. “FINRA” — The Financial Industry Regulatory Authority. “Fork” — A non-backward compatible change to the original Ethereum blockchain and the source code of the original Ethereum network which results in the original Ethereum network and the original Ethereum blockchain existing side-by-side, but incompatible, with a new network and a new blockchain, and leads to the creation of a new asset running on the new blockchain. “FTX” — FTX Trading Ltd. “GAAP” — The U.S. generally accepted accounting principles. “Genesis” — Genesis Global Capital, LLC and its affiliates. “gwei” - Fractions of an ether smaller than .0000000001. “Hard fork” — A permanent split in a network’s blockchain that separates an existing blockchain network into two networks, each with its own digital asset, blockchain and source code, which are not backwards compatible. “IIV” - Intraday indicative value per share. “Incidental Rights” — Any virtual currency (for avoidance of doubt, other than ether) or other asset or right that the Fund may be entitled to or come into possession of rights to acquire, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Fund’s ownership of ether and arise without any action of the Fund, or of the Sponsor, Administrator or other service provider on behalf of the Fund. “Index” — The CF Benchmarks Index shall constitute the Index, unless the CF Benchmarks Index is not available or the Sponsor in its sole discretion determines not to use the CF Benchmarks Index as the Index. “Index Administrator” —CF Benchmarks Ltd. “Indirect Participant” — An entity that has access to the DTC clearing system by clearing securities through, or maintaining a custodial relationship with, a DTC Participant. “Initial Seed Shares” —$100,000 in Shares, comprising 4,000 Shares at a per-Share price equal to $25.00, delivered on May 21, 2024 to the Seed Capital Investor. “In-Kind Regulatory Approval” - The necessary regulatory approval to permit the Fund to create and redeem Shares in-kind for ether. “Investment Company Act” — The United States Investment Company Act of 1940, as amended. “IR Virtual Currency” — A virtual currency acquired through Incidental Rights. “IRA” — Individual retirement account. “IRS” — The United States Internal Revenue Service. “JOBS Act”— The Jumpstart Our Business Startups Act. “KYC” - Know your customer. “Money Market Fund” - A money market fund that is in compliance with Rule 2a-7 under the Investment Company Act of 1940 and rated “AAA” by S&P (or the equivalent from any eligible rating service). “MSB” — A U.S.-based platform registered as a money services business with FinCen. “MEV” - Maximal Extractable Value. “MiCA” - Markets in Crypto-Assets. “NAV” — Net asset value per Share. “NBMM” – Non-bank market maker. “NFA” — National Futures Association. “NFTs” - Non-Fungible tokens. 52 Table of Contents “Non-U.S. Shareholder” — A Shareholder that is (or is treated as), for U.S. federal income tax purposes: (1) a nonresident alien individual, (2) a foreign corporation or (3) an estate or trust whose income is not subject to U.S. federal income tax on a net income basis. “Notice” — The 2014 notice released by the IRS. “NYDFS” — The New York State Department of Financial Services. “OCC” — The Office of the Comptroller of the Currency. “OFAC” — The Office of Foreign Assets Control. “Order Book” - A list of buy and sell orders with associated limit prices and sizes that have not yet been matched. “OTC” – Over the counter. “Oversight Committee” - The Oversight Committee of the Index Administrator. “Person” - Any natural person or any limited liability company, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. “Plan Assets Regulation” — Regulation 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA. “Plans” — Any (a) employee benefit plan and certain other plans and arrangements, including individual retirement accounts and annuities, (b) Keogh plans and certain collective investment funds or insurance company general or separate accounts in which such plans or arrangements are invested, that are subject to Title I of ERISA and/or Section 4975 of the Code. “Prime Broker Agreement” — The agreement between the Sponsor, Trustee and the Prime Broker. “Prime Broker” — Coinbase Inc., an affiliate of the Ether Custodian. “Relevant Coinbase Entities” — The Prime Broker and its parent. “Relevant Pair” - The relevant cryptocurrency base asset against the corresponding quote asset, including markets where the quote asset is made fungible with accepted assets. “Relevant Transaction” — Any cryptocurrency versus U.S. dollar spot trade that occurs during the observation window between 3:00 p.m. and 4:00 p.m. ET on a Constituent Platform in the ETH/USD pair that is reported and disseminated by a Constituent Platform through its publicly available API and observed by the Index Administrator. “Ruling & FAQs” — The revenue ruling and set of “Frequently Asked Questions” released by the IRS in 2019. “Sarbanes-Oxley Act” — The Sarbanes–Oxley Act of 2002. “SEC” — The Securities and Exchange Commission of the United States, or any successor governmental agency in the United States. “Secondary Index” – Lukka Digital Asset Reference Rate—Ethereum. “Securities Act” — The United States Securities Act of 1933, as amended. “Seed Capital Investor” — Franklin Resources, Inc. “Seed Creation Units” — 100,000 Shares delivered to the Seed Capital Investor on June 27, 2024 in exchange for cash which the Fund used to purchase 760 ether at the price of $3,446.37 per ether on June 27, 2024, (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor) all at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $2,619,241.20 (an amount representing 760 ether). “Settlement Deadline” — 6:00 p.m. ET of the calendar day immediately following the day the Trade Credit was extended by the Trade Credit Lender to the Fund or, if such day is not a business day, on the next business day. “Shareholders” — Owners of beneficial interests in the Shares. “Shares” — Units of fractional undivided beneficial interest in the net assets of the Fund. "SIPC" — The Securities Investor Protection Corporation. “Sponsor” — Franklin Holdings, LLC, an indirect subsidiary of Franklin Resources, Inc. “Sponsor’s Fee” — The fees of the Sponsor accrues daily at an annualized rate equal to 0.19% of the net asset value of the Fund and is payable at least quarterly in arrears in U.S. dollars or in-kind or any combination thereof. The Sponsor may, at its 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. For a six-month period commencing on the day the Shares are initially listed on the Exchange to January 31, 2025, the Sponsor waived the entire Sponsor's Fee on the first $10.0 billion of the Fund's assets. 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 Sponsor’s website for the Fund. “SVB” — Silicon Valley Bank. 53 Table of Contents “Trade Credit Lender” — Coinbase Credit, Inc. “Trade Credit” — The Fund may borrow ether or cash as a credit on a short-term basis from the Trade Credit Lender pursuant to the Trade Financing Agreement. “Trade Financing Agreement” — The Coinbase Credit Post-Trade Financing Agreement. “Trading Balance” — A trading account at which, pursuant to the Prime Broker Agreement, a portion of the Fund’s ether holdings and cash holdings from time to time may be held with the Prime Broker, including in connection with the sale of ether to pay the Sponsor’s Fee and Fund expenses not assumed by the Sponsor. “Trading Platform” — The Prime Broker's execution platform where the Sponsor may place an order. “Transaction Parties” — The Sponsor, the Trustee, the Custodians and any of their respective affiliates. “Transfer Agency and Service Agreement” The agreement between the Fund and BNYM to perform transfer agency services. “Transfer Agent” — The Bank of New York Mellon. “Treasury Regulations” — Tax regulations issued by the IRS. “Trust” — Franklin Ethereum Trust, a Delaware statutory trust formed pursuant to the Agreement and Declaration of Trust. “Trustee” — CSC Delaware Trust Company, a subsidiary of Corporation Service Company. “UBTI” — Unrelated business taxable income. “USD” - The currency code the US Dollar. “USDC” — US Dollar Coin. “U.S. Shareholder” — A Shareholder that is (1) an individual who is treated as a citizen or resident of the United States for U.S. federal income tax purposes; (2) a corporation (or an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (3) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or (4) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust. “Vault Balance” — Accounts storing the Fund’s ether that are required to be segregated from the assets held by the Ether Custodian as principal and the assets of its other customers. “VWAP” - Volume Weight Average Prices. “VWMP” - Volume Weight Median Prices. 54 Table of Contents Franklin Ethereum ETF Franklin Ethereum Trust index to financial statements Page Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, PCAOB # 238 ) for Franklin Ethereum Trust F-2 Combined Statement of Assets and Liabilities at March 31, 2025 for Franklin Ethereum Trust F-3 Combined Schedule of Investments at March 31, 2025 for Franklin Ethereum Trust F-4 Combined Statement of Operations for the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025 for Franklin Ethereum Trust F-5 Combined Statement of Cash Flows for the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025 for Franklin Ethereum Trust F-6 Combined Statement of Changes in Net Assets for the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025 for Franklin Ethereum Trust F-7 Combined Notes to Financial Statements for Franklin Ethereum Trust F-8 Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, PCAOB #238) for Franklin Ethereum ETF F-14 Statement of Assets and Liabilities at March 31, 2025 for Franklin Ethereum ETF F-15 Schedule of Investments at March 31, 2025 for Franklin Ethereum ETF F-16 Statement of Operations for the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025 for Franklin Ethereum ETF F-17 Statement of Cash Flows for the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025 for Franklin Ethereum ETF F-18 Statement of Changes in Net Assets for the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025 for Franklin Ethereum ETF F-19 Notes to Financial Statements for Franklin Ethereum ETF F-20 Table of Contents Report of Independent Registered Public Accounting Firm To the Sponsor of Franklin Ethereum Trust Opinion on the Financial Statements We have audited the accompanying combined statement of assets and liabilities, including the combined schedule of investments, of Franklin Ethereum Trust and Franklin Ethereum ETF (the “Trust”), as of March 31, 2025 and the related combined statements of operations, cash flows, and changes in net assets for the period July 23, 2024 (date of commencement of operations) through March 31, 2025, including the related notes (collectively referred to as the “combined financial statements”). In our opinion, the combined financial statements present fairly, in all material respects, the financial position of the Trust as of March 31, 2025, and the results of its operations, its cash flows and changes in its net assets for the period July 23, 2024 (date of commencement of operations) through March 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These combined financial statements are the responsibility of the Sponsor’s management. Our responsibility is to express an opinion on the Trust’s combined financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of these combined financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the combined financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the combined financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP San Francisco, California June 27, 2025 We have served as the Trust’s auditor since 2024. F-2 Table of Contents FRANKLIN ETHEREUM TRUST COMBINED STATEMENT OF ASSETS AND LIABILITIES March 31, 2025* Assets Investment in ether, at fair value (a) $ 21,614,322 Total assets 21,614,322 Liabilities Sponsor's fee payable 8,924 Total Liabilities 8,924 Commitments and contingencies (Note 7) Net assets $ 21,605,398 Shares issued and outstanding (b) 1,550,000 Net asset value per Share $ 13.94 * No comparative period presented as the Fund’s operations commenced on July 23, 2024. (a) Cost of investment in ether: $ 37,851,948 at March 31, 2025. (b) No par value, unlimited amount authorized. See accompanying notes to the combined financial statements. F-3 Table of Contents FRANKLIN ETHEREUM TRUST COMBINED SCHEDULE OF INVESTMENTS March 31, 2025* Quantity of ether Cost Fair Value Fair Value as a % of Net Assets Investment in ether 11,780.2062 $ 37,851,948 $ 21,614,322 100.04 % Total investments 11,780.2062 $ 37,851,948 $ 21,614,322 100.04 % Less liabilities ( 8,924 ) ( 0.04 ) % Net assets 21,605,398 100.00 % * No comparative period presented as the Fund’s operations commenced on July 23, 2024. See accompanying notes to the combined financial statements. F-4 Table of Contents FRANKLIN ETHEREUM TRUST COMBINED STATEMENT OF OPERATIONS For the period July 23, 2024 (Date of commencement of operations) through March 31, 2025* Expenses Sponsor's fee $ 44,677 Less waiver ( 35,753 ) Total expenses 8,924 Net investment loss ( 8,924 ) Net realized and change in unrealized gain (loss) on investment in ether Net realized gain (loss) on investment in ether ( 995,550 ) Net change in unrealized appreciation (depreciation) on investment in ether ( 16,238,402 ) Net realized and change in unrealized gain (loss) on investment in ether ( 17,233,952 ) Net increase (decrease) in net assets resulting from operations ( 17,242,876 ) Net increase (decrease) in net assets per Share (a)(b) $ ( 10.85 ) * No comparative period presented as the Fund’s operations commenced on July 23, 2024. (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. See accompanying notes to the combined financial statements. F-5 Table of Contents FRANKLIN ETHEREUM TRUST COMBINED STATEMENT OF CASH FLOWS For the period July 23, 2024 (Date of commencement of operations) through March 31, 2025* Cash Flows from Operating Activities: Net increase (decrease) in net assets resulting from operations $ ( 17,242,876 ) Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: Purchases of ether ( 42,553,442 ) Sales of ether 6,326,233 Net realized (gain) loss on investment in ether 995,550 Net change in unrealized (appreciation) depreciation on investment in ether 16,238,402 Change in operating assets and liabilities: Sponsor’s fee payable 8,924 Net cash provided by (used in) operating activities $ ( 36,227,209 ) Cash Flows from Financing Activities: Proceeds from issuance of Shares $ 42,553,442 Payments on Shares redeemed ( 6,326,233 ) Net cash provided by (used in) financing activities $ 36,227,209 Cash Net increase in cash $ – Cash, beginning of period – Cash, end of period $ – * No comparative period presented as the Fund’s operations commenced on July 23, 2024. See accompanying notes to the combined financial statements. F-6 Table of Contents FRANKLIN ETHEREUM TRUST COMBINED STATEMENT OF CHANGES IN NET ASSETS For the period July 23, 2024 (Date of commencement of operations) through March 31, 2025*^ Net assets, beginning of period $ 2,621,065 Net investment loss ( 8,924 ) Net realized gain (loss) on investment in ether ( 995,550 ) Net change in unrealized appreciation (depreciation) on investment in ether ( 16,238,402 ) Net increase (decrease) in net assets resulting from operations ( 17,242,876 ) Increase (decrease) in net assets from capital share transactions: Contributions for Shares issued 42,553,442 Distributions for Shares redeemed ( 6,326,233 ) Net increase (decrease) in net assets resulting from capital share transactions 36,227,209 Net assets, end of period $ 21,605,398 * No comparative period presented as the Fund’s operations commenced on July 23, 2024. ^ On May 21, 2024, Franklin Resources Inc. (the “Seed Capital Investor”), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at per-Share price equal to $ 25.00 (the “Initial Seed Shares”). Delivery of the Initial Seed Shares was made on May 21, 2024. Total proceeds to the Fund from the sale of the Initial Seed Shares were $100,000. On June 27, 2024, the Initial Seed Shares were redeemed for $100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $2,619,241.20 (an amount representing 760 ether). Further, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. See accompanying notes to the combined financial statements. F-7 Table of Contents FRANKLIN ETHEREUM TRUST COMBINED NOTES TO FINANCIAL STATEMENTS 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 an Amended and Restated Agreement and Declaration of Trust dated as of May 30, 2024 (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 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 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. 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. 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. 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 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 are issued and redeemed in exchange for 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 Shares in Creation Units on a continuous basis at the applicable NAV per Share on the creation 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 Securities Act, and, as such, the Trust may elect to comply with certain reduced public company reporting requirements. On May 21, 2024, Franklin Resources Inc. (the “Seed Capital Investor”), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at a per-Share price equal to $ 25.00 (the “Initial Seed Shares”). Delivery of the Initial Seed Shares was made on May 21, 2024. Total proceeds to the Fund from the sale of the Initial Seed Shares were $ 100,000 . On June 27, 2024, the Initial Seed Shares were redeemed for $ 100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $ 2,619,241.20 (an amount representing 760 ether). As noted above, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. The accompanying combined financial statements 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). The fiscal year 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 audited financial statements were prepared in accordance with GAAP for and with the instructions for Form 10-K 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 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 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. Individual, series-level financial statements for the Fund are presented separately within this report. F-8 Table of Contents 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 p.m. 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 Fund’s financial statements are prepared in accordance GAAP for annual financial information. Ether is priced at 11:59:59PM ET. 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. On March 31, 2025, the value of the ether held by the Fund was categorized as Level 1. The cost basis of the investment in ether recorded by the Trust on behalf of the Fund for financial reporting purposes is the fair value of ether at the time of purchase. 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: 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 will 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 % of the net asset value of the Fund and is payable at least quarterly in arrears in U.S. dollars or in-kind or any combination thereof. 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 period from July 23, 2024 (the day the Shares were initially listed on the Exchange) to January 31, 2025, the Sponsor agreed to waive the entire Sponsor’s Fee on the first $ 10.0 billion of the Fund’s assets. For the period July 23, 2024 to March 31, 2025, the Fund accrued the Sponsor’s Fee of $( 44,677 ) less waiver of $ 35,753 . The net Sponsor’s Fee payable for the period post waiver was $( 8,924 ). 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. 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 will 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. F-9 Table of Contents 2.5. O rg anizational and Offering Costs The Trust’s and the Fund’s organizational and offering costs are borne by the Sponsor and, as such, are the sole responsibility of the Sponsor. The Sponsor will 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. 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, gain, 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 March 31, 2025, 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 are issued or redeemed in exchange for an amount of cash as determined by the Administrator on each day that Cboe BZX Exchange is open for regular trading. For 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 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. The Authorized Participants will deliver only cash to create Shares and will receive only cash when redeeming Shares. Further, Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive ether as part of the creation or redemption process or otherwise direct the Fund or a third-party with respect to purchasing, holding, delivering, or receiving ether as part of the creation or redemption process. The Fund will create Shares by receiving ether from a third-party that is not the Authorized Participant and the Fund—not the Authorized Participant—is responsible for selecting the third-party to deliver the ether. Further, the third-party will not be acting as an agent of the Authorized Participant with respect to the delivery of the ether to the Fund or acting at the direction of the Authorized Participant with respect to the delivery of the ether to the Fund. The Fund will redeem shares by delivering ether to a third-party that is not the Authorized Participant and the Fund—not the Authorized Participant—is responsible for selecting the third-party to receive the ether. Further, the third-party will not be acting as an agent of the Authorized Participant with respect to the receipt of the ether from the Fund or acting at the direction of the Authorized Participant with respect to the receipt of the ether from the Fund. The third-party will be unaffiliated with the Fund and the Sponsor. 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 BXZ Exchange Inc. at the time of the offer. Shares offered at different times may have different offering prices. Prior to the commencement of the Fund’s investment operations on July 23, 2024, there was no public market for the Shares. Changes in the Shares for the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025* are as follows: Shares Amount # Balance at July 23, 2024 (Date of Commencement of operations) 100,000 $ 2,620,289 ^ Creation of Shares 1,750,000 42,553,442 Redemption of Shares ( 300,000 ) ( 6,326,233 ) Balance at March 31, 2025 1,550,000 $ 38,847,498 # 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. * No comparative period presented as the Fund’s operations commenced on July 23, 2024. ^ On May 21, 2024, Franklin Resources Inc. (the “Seed Capital Investor”), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at a per-Share price equal to $ 25.00 (the “Initial Seed Shares”). Delivery of the Initial Seed Shares was made on May 21, 2024. Total proceeds to the Fund from the sale of the Initial Seed Shares were $ 100,000 . On June 27, 2024, the Initial Seed Shares were redeemed for $ 100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $ 2,619,241.20 (an amount representing 760 ether). Further, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. The Seed Capital Investor will act as a statutory underwriter with respect to the Seed Creation Units. 2.8. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. ASU 2023-08 is effective for annual and interim reporting periods beginning after December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. The Trust and the Fund have adopted this new guidance with no material impact on its financial statements and disclosures as the Trust uses fair value as its method of accounting for ether in accordance with its classification as an investment company for accounting purposes. F-10 Table of Contents 3. INVESTMENT IN ETHER The following represents the changes in quantity of ether held and the respective fair value during the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025*: Quantity of ether Amount in US$ Balance at July 23, 2024 (Date of Commencement of operations) 760.0000 $ 2,621,065 ^ Ether purchased for the creation of Shares 13,300.0000 42,553,442 Ether sold for the redemption of Shares ( 2,279.7938 ) ( 6,326,233 ) Principal on ether sales to pay expenses - - Net realized gain (loss) from ether sold for the redemption of shares - ( 995,550 ) Net change in unrealized appreciation (depreciation) on investment in ether - ( 16,238,402 ) Balance at March 31, 2025 11,780.2062 $ 21,614,322 * No comparative period presented as the Fund’s operations commenced on July 23, 2024. ^ On May 21, 2024, Franklin Resources Inc. (the “Seed Capital Investor”), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at a per-Share price equal to $ 25.00 (the “Initial Seed Shares”). Delivery of the Initial Seed Shares was made on May 21, 2024. Total proceeds to the Fund from the sale of the Initial Seed Shares were $ 100,000 . On June 27, 2024, the Initial Seed Shares were redeemed for $ 100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $ 2,619,241.20 (an amount representing 760 ether). Further, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. The Seed Capital Investor will act as a statutory underwriter with respect to the Seed Creation Units. 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 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 Investments. 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 through 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 March 31, 2025, 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; and forks in the Ethereum network, among other things. F-11 Table of Contents 6. FINANCIAL HIGHLIGHTS For the period July 23, 2024 (Date of commencement of operations) through March 31, 2025* Net asset value per Share, beginning of year $ 26.21 (a) Net investment loss (b) $ ( 0.01 ) Net realized and unrealized gain (loss) on investment in ether ( 12.26 ) Net change in net assets from operations (c) ( 12.27 ) Net asset value per Share, end of year $ 13.94 Total return, at net asset value (d)(e) ( 46.81 )% Ratio to average net assets (f) Net investment loss ( 0.04 )% Gross expenses 0.19 % Net expenses 0.04 % * No comparative period presented as the Fund’s operations commenced on July 23, 2024. (a) The amount shown represents the NAV per share at commencement of the Fund’s investment operations. This amount includes proceeds to the Fund from the initial ether seed creation transaction conducted on June 27, 2024. Prior to June 27, 2024, 4,000 shares were acquired on May 21, 2024 at per share value of $ 25 . Total proceeds to the Fund from the sale of the Initial Seed Shares were $ 100,000 . On June 27, 2024, the Initial Seed Shares were redeemed for $ 100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $ 2,619,241.20 (an amount representing 760 ether). (b) Calculated using average Shares outstanding. (c) 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. (d) Percentage is not annualized. (e) Total Return at NAV is calculated assuming an initial investment made at the NAV at the beginning of the period, and redemption of Shares at NAV on the last day of the period. Total Return at NAV as shown above includes adjustments in accordance with U.S. GAAP. (f) Annualized. 7. COMMITMENTS AND CONTINGENCIES 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 Trust and the Fund have adopted the Financial Accounting Standards Board (FASB`) Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. The update is limited to disclosure requirements and does not impact the Trust or the Fund's financial position or results of operations. The Fund, which is the sole series of the Trust, and the Trust operate as a single 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. F-12 Table of Contents For information regarding segment assets, segment profit or loss, and significant expenses, refer to the Combined Statement of Assets and Liabilities and the Combined Statement of Operations, along with the related Combined Notes to Financial Statements. The Combined Schedule 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. F-13 Table of Contents Report of Independent Registered Public Accounting Firm To the Sponsor of Franklin Ethereum Trust and Shareholders of Franklin Ethereum ETF Opinion on the Financial Statements We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Franklin Ethereum ETF (the “Fund”), as of March 31, 2025 and the related statements of operations, cash flows and changes in net assets for the period July 23, 2024 (date of commencement of operations) through March 31, 2025, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of March 31, 2025, and the results of its operations, its cash flows and changes in its net assets for the period July 23, 2024 (date of commencement of operations) through March 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Sponsor’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP San Francisco, California June 27, 2025 We have served as the Fund’s auditor since 2024. F-14 Table of Contents FRANKLIN ETHEREUM ETF A SERIES OF FRANKLIN ETHEREUM TRUST STATEMENT OF ASSETS AND LIABILITIES March 31, 2025* Assets Investment in ether, at fair value (a) $ 21,614,322 Total assets 21,614,322 Liabilities Sponsor's fee payable 8,924 Total Liabilities 8,924 Commitments and contingencies (Note 7) Net assets $ 21,605,398 Shares issued and outstanding (b) 1,550,000 Net asset value per Share $ 13.94 * No comparative period presented as the Fund’s operations commenced on July 23, 2024. (a) Cost of investment in ether: $37,851,948 at March 31, 2025. (b) No par value, unlimited amount authorized. See accompanying notes to the financial statements. F-15 Table of Contents FRANKLIN ETHEREUM ETF A SERIES OF FRANKLIN ETHEREUM TRUST SCHEDULE OF INVESTMENTS March 31, 2025* Quantity of ether Cost Fair Value Fair Value as a % of Net Assets Investment in ether 11,780.2062 $ 37,851,948 $ 21,614,322 100.04 % Total investments 11,780.2062 $ 37,851,948 $ 21,614,322 100.04 % Less liabilities ( 8,924 ) ( 0.04 )% Net assets $ 21,605,398 100.00 % * No comparative period presented as the Fund’s operations commenced on July 23, 2024. See accompanying notes to the financial statements. F-16 Table of Contents FRANKLIN ETHEREUM ETF A SERIES OF FRANKLIN ETHEREUM TRUST STATEMENT OF OPERATIONS For the period July 23, 2024 (Date of commencement of operations) through March 31, 2025* Expenses Sponsor's fee $ 44,677 Less waiver ( 35,753 ) Total expenses 8,924 Net investment loss ( 8,924 ) Net realized and change in unrealized gain (loss) on investment in ether Net realized gain (loss) on investment in ether ( 995,550 ) Net change in unrealized appreciation (depreciation) on investment in ether ( 16,238,402 ) Net realized and change in unrealized gain (loss) on investment in ether ( 17,233,952 ) Net increase (decrease) in net assets resulting from operations ( 17,242,876 ) Net increase (decrease) in net assets per Share (a)(b) $ ( 10.85 ) * No comparative period presented as the Fund’s operations commenced on July 23, 2024. (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. See accompanying notes to the financial statements. F-17 Table of Contents FRANKLIN ETHEREUM ETF A SERIES OF FRANKLIN ETHEREUM TRUST STATEMENT OF CASH FLOWS For the period July 23, 2024 (Date of commencement of operations) through March 31, 2025* Cash Flows from Operating Activities: Net increase (decrease) in net assets resulting from operations $ ( 17,242,876 ) Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: Purchases of ether ( 42,553,442 ) Sales of ether 6,326,233 Net realized (gain) loss on investment in ether 995,550 Net change in unrealized (appreciation) depreciation on investment in ether 16,238,402 Change in operating assets and liabilities: Sponsor’s fee payable 8,924 Net cash provided by (used in) operating activities $ ( 36,227,209 ) Cash Flows from Financing Activities: Proceeds from issuance of Shares $ 42,553,442 Payments on Shares redeemed ( 6,326,233 ) Net cash provided by (used in) financing activities $ 36,227,209 Cash Net increase in cash $ – Cash, beginning of period – Cash, end of period $ – * No comparative period presented as the Fund’s operations commenced on July 23, 2024. See accompanying notes to the financial statements. F-18 Table of Contents FRANKLIN ETHEREUM ETF A SERIES OF FRANKLIN ETHEREUM TRUST STATEMENT OF CHANGES IN NET ASSETS For the period July 23, 2024 (Date of commencement of operations) through March 31, 2025*^ Net assets, beginning of period $ 2,621,065 Net investment loss ( 8,924 ) Net realized gain (loss) on investment in ether ( 995,550 ) Net change in unrealized appreciation (depreciation) on investment in ether ( 16,238,402 ) Net increase (decrease) in net assets resulting from operations ( 17,242,876 ) Increase (decrease) in net assets from capital share transactions: Contributions for Shares issued 42,553,442 Distributions for Shares redeemed ( 6,326,233 ) Net increase (decrease) in net assets resulting from capital share transactions 36,227,209 Net assets, end of period $ 21,605,398 * No comparative period presented as the Fund’s operations commenced on July 23, 2024. ^ On May 21, 2024, Franklin Resources Inc. (the “Seed Capital Investor”), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at per-Share price equal to $25.00 (the “Initial Seed Shares”). Delivery of the Initial Seed Shares was made on May 21, 2024. Total proceeds to the Fund from the sale of the Initial Seed Shares were $100,000. On June 27, 2024, the Initial Seed Shares were redeemed for $100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $2,619,241.20 (an amount representing 760 ether). Further, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. See accompanying notes to the financial statements. F-19 Table of Contents FRANKLIN ETHEREUM ETF A SERIES OF FRANKLIN ETHEREUM TRUST NOTES TO FINANCIAL STATEMENTS 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 an Amended and Restated Agreement and Declaration of Trust dated as of May 30, 2024 (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”). 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 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. 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. 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. 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 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 are issued and redeemed in exchange for 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 Shares in Creation Units on a continuous basis at the applicable NAV per Share on the creation 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 Securities Act, and, as such, the Fund may elect to comply with certain reduced public company reporting requirements. On May 21, 2024, Franklin Resources Inc. (the “Seed Capital Investor”), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at a per-Share price equal to $ 25.00 (the “Initial Seed Shares”). Delivery of the Initial Seed Shares was made on May 21, 2024. Total proceeds to the Fund from the sale of the Initial Seed Shares were $ 100,000 . On June 27, 2024, the Initial Seed Shares were redeemed for $ 100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $ 2,619,241.20 (an amount representing 760 ether). As noted above, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. The fiscal year 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 audited financial statements were prepared in accordance with GAAP and with the instructions for Form 10-K 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 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 financial statements are presented for the Fund, which is the sole series of the Trust. Financial statements 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. Combined financial statements for the Trust as registrant, and the Fund are presented separately within this report. 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. F-20 Table of Contents On each Business Day, as soon as practicable after 4:00 p.m. 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 GAAP for annual financial information. Ether is priced at 11:59:59PM ET. 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. On March 31, 2025, the value of the ether held by the Fund was categorized as Level 1. The cost basis of the investment in ether recorded by the Trust on behalf of the Fund for financial reporting purposes is the fair value of ether at the time of purchase. 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: 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 will 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 % of the net asset value of the Fund and is payable at least quarterly in arrears in U.S. dollars or in-kind or any combination thereof. 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 period from July 23, 2024 (the day the Shares were initially listed on the Exchange) to January 31, 2025, the Sponsor agreed to waive the entire Sponsor’s Fee on the first $ 10.0 billion of the Fund’s assets. For the period July 23, 2024 to March 31, 2025, the Fund accrued the Sponsor’s Fee of $( 44,677 ) less waiver of $ 35,753 . The net Sponsor’s Fee payable for the period post waiver was $( 8,924 ). The Sponsor is not required to pay any extraordinary or non-routine expenses. The Fund will be responsible for the payment of such expenses to the extent any such expenses are incurred. 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. 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 will 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. O rg anizational and Offering Costs The Trust’s and the Fund’s organizational and offering costs are borne by the Sponsor and, as such, are the sole responsibility of the Sponsor. The Sponsor will 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. F-21 Table of Contents 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, gain, 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 March 31, 2025, 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 are issued or redeemed in exchange for an amount of cash as determined by the Administrator on each day that Cboe BZX Exchange is open for regular trading. For 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 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. The Authorized Participants will deliver only cash to create Shares and will receive only cash when redeeming Shares. Further, Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive ether as part of the creation or redemption process or otherwise direct the Fund or a third-party with respect to purchasing, holding, delivering, or receiving ether as part of the creation or redemption process. The Fund will create Shares by receiving ether from a third-party that is not the Authorized Participant and the Fund—not the Authorized Participant—is responsible for selecting the third-party to deliver the ether. Further, the third-party will not be acting as an agent of the Authorized Participant with respect to the delivery of the ether to the Fund or acting at the direction of the Authorized Participant with respect to the delivery of the ether to the Fund. The Fund will redeem shares by delivering ether to a third-party that is not the Authorized Participant and the Fund—not the Authorized Participant—is responsible for selecting the third-party to receive the ether. Further, the third-party will not be acting as an agent of the Authorized Participant with respect to the receipt of the ether from the Fund or acting at the direction of the Authorized Participant with respect to the receipt of the ether from the Fund. The third-party will be unaffiliated with the Fund and the Sponsor. 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 BXZ Exchange Inc. at the time of the offer. Shares offered at different times may have different offering prices. Prior to the commencement of the Fund’s investment operations on July 23, 2024, there was no public market for the Shares. Changes in the Shares for the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025* are as follows: Shares Amount # Balance at July 23, 2024 (Date of Commencement of operations) 100,000 $ 2,620,289 ^ Creation of Shares 1,750,000 42,553,442 Redemption of Shares ( 300,000 ) ( 6,326,233 ) Balance at March 31, 2025 1,550,000 $ 38,847,498 # 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. * No comparative period presented as the Fund’s operations commenced on July 23, 2024. ^ On May 21, 2024, Franklin Resources Inc. (the “Seed Capital Investor”), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at a per-Share price equal to $ 25.00 (the “Initial Seed Shares”). Delivery of the Initial Seed Shares was made on May 21, 2024. Total proceeds to the Fund from the sale of the Initial Seed Shares were $ 100,000 . On June 27, 2024, the Initial Seed Shares were redeemed for $ 100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $ 2,619,241.20 (an amount representing 760 ether). Further, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. The Seed Capital Investor will act as a statutory underwriter with respect to the Seed Creation Units. 2.8. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 is intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. ASU 2023-08 is effective for annual and interim reporting periods beginning after December 15, 2024. Early adoption is permitted for both interim and annual financial statements that have not yet been issued. The Trust and the Fund have adopted this new guidance with no material impact on its financial statements and disclosures as the Trust uses fair value as its method of accounting for ether in accordance with its classification as an investment company for accounting purposes. F-22 Table of Contents 3. INVESTMENT IN ETHER The following represents the changes in quantity of ether held and the respective fair value during the period from July 23, 2024 (Date of Commencement of operations) to March 31, 2025*: Quantity of ether Amount in US$ Balance at July 23, 2024 (Date of Commencement of operations) 760.0000 $ 2,621,065 ^ Ether purchased for the creation of Shares 13,300.0000 42,553,442 Ether sold for the redemption of Shares ( 2,279.7938 ) ( 6,326,233 ) Principal on ether sales to pay expenses - - Net realized gain (loss) from ether sold for the redemption of shares - ( 995,550 ) Net change in unrealized appreciation (depreciation) on investment in ether - ( 16,238,402 ) Balance at March 31, 2025 11,780.2062 $ 21,614,322 * No comparative period presented as the Fund’s operations commenced on July 23, 2024. ^ On May 21, 2024, Franklin Resources Inc. (the “Seed Capital Investor”), an affiliate of the Sponsor, subject to conditions, purchased 4,000 Shares at a per-Share price equal to $ 25.00 (the “Initial Seed Shares”). Delivery of the Initial Seed Shares was made on May 21, 2024. Total proceeds to the Fund from the sale of the Initial Seed Shares were $ 100,000 . On June 27, 2024, the Initial Seed Shares were redeemed for $ 100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $ 2,619,241.20 (an amount representing 760 ether). Further, the transaction and other costs incurred in connection with the Seed Creation Units were paid by the Seed Capital Investor and not borne by the Fund. The Seed Capital Investor will act as a statutory underwriter with respect to the Seed Creation Units. 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 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 Investments. 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 through 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 March 31, 2025, 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; and forks in the Ethereum network, among other things. F-23 Table of Contents 6. FINANCIAL HIGHLIGHTS For the period July 23, 2024 (Date of commencement of operations) through March 31, 2025* Net asset value per Share, beginning of year $ 26.21 (a) Net investment loss (b) $ ( 0.01 ) Net realized and unrealized gain (loss) on investment in ether ( 12.26 ) Net change in net assets from operations (c) ( 12.27 ) Net asset value per Share, end of year $ 13.94 Total return, at net asset value (d)(e) ( 46.81 )% Ratio to average net assets (f) Net investment loss ( 0.04 )% Gross expenses 0.19 % Net expenses 0.04 % * No comparative period presented as the Fund’s operations commenced on July 23, 2024. (a) The amount shown represents the NAV per share at commencement of the Fund’s investment operations. This amount includes proceeds to the Fund from the initial ether seed creation transaction conducted on June 27, 2024. Prior to June 27, 2024, 4,000 shares were acquired on May 21, 2024 at per share value of $ 25 . Total proceeds to the Fund from the sale of the Initial Seed Shares were $ 100,000 . On June 27, 2024, the Initial Seed Shares were redeemed for $ 100,000 and the Seed Capital Investor purchased two creation units in a cash transaction comprised of a total of 100,000 Shares at a per-Share price based on 380 ether per Creation Unit (or 0.0076 ether per Share), for a total of 760 ether (the “Seed Creation Units”). The cash proceeds to the Fund from the sale of the Seed Creation Units were used by the Fund to purchase 760 ether at the price of $ 3,446.37 per ether on June 27, 2024 (exclusive of transaction and other costs incurred in connection with the conversion of the cash proceeds to ether, which were paid by the Seed Capital Investor). Thus, the ultimate total proceeds to the Fund from the sale of the Seed Creation Units were $ 2,619,241.20 (an amount representing 760 ether). (b) Calculated using average Shares outstanding. (c) 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. (d) Percentage is not annualized. (e) Total Return at NAV is calculated assuming an initial investment made at the NAV at the beginning of the period, and redemption of Shares at NAV on the last day of the period. Total Return at NAV as shown above includes adjustments in accordance with U.S. GAAP. (f) Annualized. 7. COMMITMENTS AND CONTINGENCIES 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 Trust and the Fund have adopted the Financial Accounting Standards Board (FASB`) Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. The update is limited to disclosure requirements and does not impact the Trust or the Fund's financial position or results of operations. The Fund, which is the sole series of the Trust, and the Trust operate as a single 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 Statement of Assets and Liabilities and the Statement of Operations, along with the related Notes to Financial Statements. The Schedule 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. F-24 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 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/ Matthew Hinkle Matthew Hinkle* Chief Financial Officer (serving in the capacity of principal financial officer) Date: June 27, 2025 * 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.