Grayscale CoinDesk Crypto 5 ETF 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, our audited financial statements and related notes included elsewhere in this Annual Report, which have been prepared in accordance with U.S. GAAP. The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Annual Report, particularly in “Item 1A. Risk Factors” and “Forward-Looking Statements.” Fund Overview The Fund is a passive entity that is managed and administered by the Manager and does not have any officers, directors or employees. The Fund holds Fund Components and, from time to time on a periodic basis, issues Creation Baskets in exchange for deposits of Fund Components. As a passive investment vehicle, the Fund’s investment objective is for the value of the Shares to reflect the value of the Fund Components held by the Fund, determined by reference to the Digital Asset Reference Rates and weightings within the Fund, less the Fund’s expenses and other liabilities. The Fund is not managed like a business corporation or an active investment vehicle. As of June 30, 2021 , 2020, and 2019, the Fund had unlimited Shares authorized and 15,837,800, 6,029,000 and 3,103,600 Shares issued and outstanding, respectively. As of June 30, 2021 2020 2019 Number of Shares authorized Unlimited Unlimited Unlimited Number of Shares outstanding 15,837,800 6,029,000 3,103,600 Number of Shares freely tradable(1) 5,825,506 2,542,541 0 Number of beneficial holders owning at least 100 Shares(2) 131 42 64 Number of holders of record(2) 131 42 64 (1) Includes the total number of unrestricted Shares not held directly or indirectly by an officer, director, any person who is the beneficial owner of more than 10% of the total Shares outstanding, or anyone who controls, is controlled by or is under common control with such person, or any immediate family members of officers, directors and control persons. Freely tradable Shares inclusive of holders with more than 10% of total Shares outstanding was 5,825,506, 2,542,541, and 0 as of June 30, 2021 , 2020, and 2019, respectively. (2) Includes Cede & Co. as nominee for DTC for the Shares traded on OTCQX. Therefore, this number does not include the individual holders who have bought/sold Shares on OTCQX or transferred their eligible Shares to their brokerage accounts. Critical Accounting Policies and Estimates Investment Transactions and Revenue Recognition The Fund considers investment transactions to be the receipt of Fund Components for Share creations and the delivery of Fund Components for Share redemptions or for payment of expenses in Fund Components. At this time, the Fund is not accepting redemption requests from shareholders. The Fund records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Manager’s Fee in the Fund Components. Principal Market and Fair Value Determination To determine which market is the Fund’s principal market for each Fund Component (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Fund’s NAV, the Fund follows FASB ASC 820-10, which outlines the application of fair value accounting. ASC 820-10 determines fair value to be the price that would be received for each Fund Component in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Fund to assume that each Fund Component is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. 86 The Fund only receives Fund Components from the Authorized Participant and does not itself transact on any Digital Asset Markets. Therefore, the Fund looks to the Authorized Participant when assessing entity-specific and market-based volume and level of activity for Digital Asset Markets. The Authorized Participant transacts in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets, each as defined in the FASB ASC Master Glossary. The Authorized Participant, as a related party of the Manager, provides information about the Digital Asset Markets on which it transacts to the Fund. In determining which of the eligible Digital Asset Markets is the Fund’s principal market for each Fund Component, the Fund reviews these criteria in the following order: • First, the Fund reviews a list of each Digital Asset Markets and excludes any Digital Asset Markets that are non-accessible to the Fund and the Authorized Participant. The Fund or the Authorized Participant does not have access to the Digital Asset Exchange Markets that do not have a BitLicense and has access only to non-Digital Asset Exchange Markets that the Authorized Participant reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market. • Second, the Fund sorts the remaining Digital Asset Markets from high to low by entity-specific and market-based volume and level of activity of each Fund Component traded on each Digital Asset Market in the trailing twelve months. • Third, the Fund then reviews intra-day pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market. • Fourth, the Fund then selects a Digital Asset Market as its principal market for such Fund Component based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Fund, Exchange Markets have the greatest volume and level of activity for the Fund Components. The Fund therefore looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market for each Fund Component. As a result of the analysis, an Exchange Market has been selected as the Fund’s principal market for each Fund Component. The Fund determines its principal market for each Fund Component (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Fund has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Fund’s determination of its principal market for each Fund Component. The cost basis of the investment in each Fund Component recorded by the Fund for financial reporting purposes is the fair value of the Fund Component at the time of transfer. The cost basis recorded by the Fund may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors. Investment Company Considerations The Fund is an investment company for GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services —Investment Companies . The Fund uses fair value as its method of accounting for digital assets in accordance with its classification as an investment company for accounting purposes. The Fund is not a registered investment company under the Investment Company Act. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material. Review of Financial Results Financial Highlights for the Years Ended June 30, 2021, 2020 and 2019 (All amounts in the following table and the subsequent paragraphs, except Share, per Share, each Fund Component and price of each Fund Component amounts, are in thousands) For the Year Ended June 30, 2021 2020 2019 Net realized and unrealized gain (loss) on investments in digital assets $ 263,317 $ (3,629 ) $ 7,100 Net increase (decrease) in net assets resulting from operations $ 256,330 $ (4,347 ) $ 6,752 Net assets $ 367,308 $ 32,374 $ 22,622 87 Net realized and unrealized gain on investment in digital assets for the year ended June 30, 2021 was $263,317, which includes a realized gain of $4,649 on the transfer of digital assets to pay the Manager’s Fee, a realized gain of $2,644 as a result of the quarterly rebalance of digital assets, and net change in unrealized appreciation on investment in digital assets of $256,024. Net increase in net assets resulting from operations was $256,330 for the year ended June 30, 2021, which consisted of the net realized and unrealized gain on investment in digital assets, less the Manager’s Fee of $6,987. Net assets increased to $367,308 at June 30, 2021, a 1,035% increase for the year. The increase in net assets resulted from the contribution of approximately 4,669 BTC, 27,048 ETH, 10,327,654 XRP, 4,697 BCH, 15,310 LTC, and 253 LINK with a total value of $78,604 to the Fund in connection with Share creations, partially offset by the withdrawal of 171 BTC, 1,015 ETH, 186,462 XRP, 172 BCH, 582 LTC and 947 LINK to pay the foregoing Manager’s Fee. Net realized and unrealized loss on investment in digital assets for the year ended June 30, 2020 was ($3,629), which includes a realized loss of ($147) on the transfer of digital assets to pay the Manager’s Fee, net change in unrealized depreciation on Manager’s Fee payable of $57 and net change in unrealized depreciation on investment in digital assets of ($3,539). Net decrease in net assets resulting from operations was ($4,347) for the year ended June 30, 2020, which consisted of the net realized and unrealized loss on investment in digital assets, plus the Manager’s Fee of $718. Net assets increased to $32,374 at June 30, 2021, a 43% increase for the year. The increase in net assets resulted from the contribution of approximately 1,424 BTC, 8,231 ETH, 3,298,241 XRP, 1,433 BCH and 4,652 LTC with a total value of $14,099 to the Fund in connection with Share creations, partially offset by the withdrawal of 78 BTC, 450 ETH, 180,308 XRP, 100 BCH and 254 LTC to pay the foregoing Manager’s Fee. Net realized and unrealized gain on investment in digital assets for the year ended June 30, 2019 was $7,100, which includes a realized loss of ($198) on the transfer of digital assets to pay the Manager’s Fee, net change in unrealized appreciation on the Manager’s Fee payable of ($78) and net change in unrealized appreciation on investment in digital assets of $7,376. Net increase in net asset resulting from operations was $6,752 for the year ended June 30, 2019, which consisted of the net realized and unrealized gain on investment in digital assets, less the Manager’s Fee of $348. Net assets increased to $22,622 at June 30, 2019, a 113% increase for the year. The increase in net assets resulted from the contribution of approximately 603 BTC, 3,488 ETH, 1,397,706 XRP, 607 BCH and 1,972 LTC with a total value of $5,241 to the Fund in connection with Share creations, partially offset by the withdrawal of 36 BTC, 212 ETH, 84,989 XRP, 17 BCH and 120 LTC to pay the foregoing Manager’s Fee. Off-Balance Sheet Arrangements The Fund is not a party to any off-balance sheet arrangements. Cash Resources and Liquidity The Fund has not had a cash balance at any time since inception. When selling Fund Components and/or Forked Assets to pay Additional Fund Expenses, the Manager endeavors to sell the exact number of Fund Components and/or Forked Assets needed to pay expenses in order to minimize the Fund’s holdings of assets other than the Fund Components. As a consequence, the Manager expects that the Fund will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting period. In exchange for the Manager’s Fee, the Manager has agreed to assume most of the expenses incurred by the Fund. As a result, the only ordinary expense of the Fund during the periods covered by this Annual Report was the Manager’s Fee. The Fund is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs. 88 Selected Operating Data (All Fund Component balances are rounded to the nearest whole number) For the Year Ended June 30, 2021 2020 2019 (All Fund Component balances are rounded to the nearest whole number) BTC: Opening balance 2,891 1,545 978 Creations 4,669 1,424 603 Portfolio rebalancing 1, 2 (49 ) - - Manager's Fee, related party (171 ) (78 ) (36 ) Closing balance 7,340 2,891 1,545 Accrued but unpaid Manager's Fee, related party - - (11 ) Net closing balance 7,340 2,891 1,534 ETH: Opening balance 16,713 8,932 5,656 Creations 27,048 8,231 3,488 Portfolio rebalancing 1, 2 2,542 - - Manager's Fee, related party (1,015 ) (450 ) (212 ) Closing balance 45,288 16,713 8,932 Accrued but unpaid Manager's Fee, related party - - (66 ) Net closing balance 45,288 16,713 8,866 XRP: Opening balance 6,697,006 3,579,073 2,266,356 Creations 10,327,654 3,298,241 1,397,706 Portfolio rebalancing 1 (16,838,198 ) - - Manager's Fee, related party (186,462 ) (180,308 ) (84,989 ) Closing balance - 6,697,006 3,579,073 Accrued but unpaid Manager's Fee, related party - - (26,310 ) Net closing balance - 6,697,006 3,552,763 BCH: Opening balance 2,910 1,577 987 Creations 4,697 1,433 607 Portfolio rebalancing 1, 2 (55 ) - - Manager's Fee, related party (172 ) (100 ) (17 ) Closing balance 7,380 2,910 1,577 Accrued but unpaid Manager's Fee, related party - - (33 ) Net closing balance 7,380 2,910 1,544 LTC: Opening balance 9,447 5,049 3,197 Creations 15,310 4,652 1,972 Portfolio rebalancing 1, 2 2,010 - - Manager's Fee, related party (582 ) (254 ) (120 ) Closing balance 26,185 9,447 5,049 Accrued but unpaid Manager's Fee, related party - - (37 ) Net closing balance 26,185 9,447 5,012 89 For the Year Ended June 30, 2021 2020 2019 LINK: Opening balance - - - Creations 253 - - Portfolio rebalancing 2 154,022 - - Manager's Fee, related party (947 ) - - Closing balance 153,328 - - Accrued but unpaid Manager's Fee, related party - - - Net closing balance 153,328 - - As of June 30, 2021 2020 2019 Prices of digital assets on principal market: BTC $ 34,764.81 $ 9,134.09 $ 11,237.68 ETH $ 2,243.98 $ 224.96 $ 301.42 XRP 1 N/A $ 0.18 $ 0.40 BCH $ 520.99 $ 221.14 $ 414.00 LTC $ 141.61 $ 41.15 $ 129.14 LINK 2 $ 19.28 N/A N/A NAV per Share $ 23.19 $ 5.37 $ 7.29 Digital Asset Reference Rates: BTC $ 35,042.77 $ 9,156.26 $ 11,532.62 ETH $ 2,156.06 $ 226.56 $ 307.40 XRP 1 N/A $ 0.18 $ 0.41 BCH $ 517.51 $ 223.73 $ 424.31 LTC $ 141.65 $ 41.55 $ 131.09 LINK 2 $ 19.06 N/A N/A Digital Asset Holdings per Share $ 23.07 $ 5.39 $ 7.47 (1) Effective January 4, 2021, the Fund removed XRP from the Fund’s portfolio and sold the XRP holdings to purchase additional tokens of the remaining Fund Components in proportion to their respective weightings . (2) Effective April 2, 2021, the Manager adjusted the Fund’s portfolio by selling the existing Fund Components in proportion to their respective weightings and using the cash proceeds to purchase Chainlink (LINK) in accordance with the Fund’s construction criteria. For accounting purposes, the Fund reflects creations and the Fund Components receivable with respect to such creations on the date of receipt of a notification of a creation but does not issue Shares until the requisite number of Fund Components is received. At this time, the Fund is not accepting redemption requests from shareholders. Subject to receipt of regulatory approval from the SEC and approval by the Manager in its sole discretion, the Fund may in the future operate a redemption program. The Fund currently has no intention of seeking regulatory approval to operate an ongoing redemption program. As of June 30, 2021, the Fund had a net closing balance with a value of $365,308,303, based on the Digital Asset Reference Rates (non-GAAP methodology). As of June 30, 2021, the Fund had a total market value of $367,308,138, based on the principal market prices. As of June 30, 2020, the Fund had a net closing balance with a value of $32,483,418, based on the Digital Asset Reference Rates (non-GAAP methodology). As of June 30, 2020, the Fund had a total market value of $32,374,401, based on the principal market prices. As of June 28, 2019 (the last business day on which a Creation Basket could have been originated), the Fund had a net closing balance with a total value of $22,735,747, based on the Digital Asset Reference Rates (non-GAAP methodology). As of June 30, 2019, the Fund had a net closing balance with a value of $23,191,688, based on the Digital Asset Reference Rates (non-GAAP methodology). As of June 30, 2019, the Fund had a total market value of $22,622,057, based on the principal market prices. Historical Fund Component Prices 90 As movements in the price of each Fund Component will directly affect the price of the Shares, investors should understand recent movements in the price of each Fund Component. Investors, however, should also be aware that past movements in each of the Fund Component prices are not indicators of future movements. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world. The following chart illustrates the movement in the Digital Asset Holdings per Share (non-GAAP) versus the Fund’s GAAP NAV per Share from February 1, 2018 (the first Creation Basket of the Fund) to June 30, 2021. For more information on the determination of the Fund’s Digital Asset Holdings, see “Overview of the Digital Asset Industry and Market—Fund Component Value— Digital Asset Exchange Valuation.” Bitcoin The Digital Asset Reference Rate for Bitcoin is an Index Price for Bitcoin. The following table illustrates the movements in the Index Price for Bitcoin from the beginning of the Fund’s operations on February 1, 2018 to June 30, 2021. Since the beginning of the Fund’s operations, the Index Price has ranged from $3,228.07 to $63,357.52, with the straight average being $13,925.15 through June 30, 2021. The Manager has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group. High Low Period Average Index Price Date Index Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 8,288.09 $ 11,510.58 3/5/2018 $ 5,892.99 6/29/2018 $ 6,279.35 $ 5,892.99 Twelve months ended June 30, 2019 $ 5,716.83 $ 12,630.88 6/26/2019 $ 3,228.07 12/14/2018 $ 11,532.62 $ 11,364.93 Twelve months ended June 30, 2020 $ 8,811.80 $ 12,681.53 7/10/2019 $ 5,050.07 3/16/2020 $ 9,156.26 $ 9,156.26 Twelve months ended June 30, 2021 $ 29,577.43 $ 63,357.52 4/14/2021 $ 9,094.60 7/3/2020 $ 35,042.77 $ 35,042.77 February 1, 2018 to June 30, 2021 $ 13,925.15 $ 63,357.52 4/14/2021 $ 3,228.07 12/14/2018 $ 35,042.77 $ 35,042.77 The following table illustrates the movements in the Digital Asset Market price of Bitcoin, as reported on the Fund’s principal market for Bitcoin, from the beginning of the Fund’s operations on February 1, 2018 to June 30, 2021. Since the beginning of the Fund’s operations, the price of Bitcoin has ranged from $3,164.61 to $63,466.92, with the straight average being $13,963.04: 91 High Low Period Average Digital Asset Market Price Date Digital Asset Market Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 8,308.68 $ 11,770.00 2/20/2018 $ 5,879.99 6/29/2018 $ 6,323.24 $ 5,879.99 Twelve months ended June 30, 2019 $ 5,746.81 $ 13,849.81 6/26/2019 $ 3,164.61 12/14/2018 $ 11,237.68 $ 12,323.00 Twelve months ended June 30, 2020 $ 8,812.73 $ 12,514.00 7/9/2019 $ 4,950.39 3/16/2020 $ 9,134.09 $ 9,134.09 Twelve months ended June 30, 2021 $ 29,667.40 $ 63,466.92 4/15/2021 $ 9,031.09 7/5/2020 $ 34,764.81 $ 34,764.81 February 1, 2018 to June 30, 2021 $ 13,963.04 $ 63,466.92 4/15/2021 $ 3,164.61 12/14/2018 $ 34,764.81 $ 34,764.81 Ethereum The Digital Asset Reference Rate for Ethereum is an Index Price for Ethereum. The following table illustrates the movements in the Index Price for Ethereum from the beginning of the Fund’s operations on February 1, 2018 to June 30, 2021. Since the beginning of the Fund’s operations, the Index Price has ranged from $84.31 to $4,190.44, with the straight average being $555.15 through June 30, 2021. The Manager has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group. High Low Period Average Index Price Date Index Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 639.56 $ 1,058.37 2/1/2018 $ 370.86 4/6/2018 $ 441.67 $ 409.08 Twelve months ended June 30, 2019 $ 211.59 $ 498.18 7/18/2018 $ 84.31 12/14/2018 $ 307.40 $ 297.03 Twelve months ended June 30, 2020 $ 190.27 $ 312.37 7/9/2019 $ 114.54 3/16/2020 $ 226.56 $ 226.56 Twelve months ended June 30, 2021 $ 1,229.91 $ 4,190.44 5/12/2021 $ 226.89 7/3/2020 $ 2,156.06 $ 2,156.06 February 1, 2018 to June 30, 2021 $ 555.15 $ 4,190.44 5/12/2021 $ 84.31 12/14/2018 $ 2,156.06 $ 2,156.06 The following table illustrates the movements in the Digital Asset Market price of Ethereum, as reported on the Fund’s principal market for Ethereum, from the beginning of the Fund’s operations on February 1, 2018 to June 30, 2021. Since the beginning of the Fund’s operations, the price of Ethereum has ranged from $82.34 to $4,089.92, with the straight average being $556.95: High Low Period Average Digital Asset Market Price Date Digital Asset Market Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 637.68 $ 1,013.98 2/1/2018 $ 371.20 4/6/2018 $ 442.95 $ 408.90 Twelve months ended June 30, 2019 $ 212.06 $ 499.21 7/17/2018 $ 82.34 12/14/2018 $ 301.42 $ 310.35 Twelve months ended June 30, 2020 $ 190.50 $ 310.47 7/8/2019 $ 110.29 3/16/2020 $ 224.96 $ 224.96 Twelve months ended June 30, 2021 $ 1,236.12 $ 4,089.92 5/12/2021 $ 225.27 7/5/2020 $ 2,243.98 $ 2,243.98 February 1, 2018 to June 30, 2021 $ 556.95 $ 4,089.92 5/12/2021 $ 82.34 12/14/2018 $ 2,243.98 $ 2,243.98 XRP The Digital Asset Reference Rate for XRP is an Index Price for XRP. The following table illustrates the movements in the Index Price for XRP from the beginning of the Fund’s operations on February 1, 2018 to January 3, 2021, after which XRP was removed from the Fund. Since the beginning of the Fund’s operations, the Index Price for XRP has ranged from $0.14 to $1.12, with the straight average being $0.36 through January 3, 2021. The Manager has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group. 92 High Low Period Average Index Price Date Index Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 0.72 $ 1.12 2/15/2018 $ 0.44 6/29/2018 $ 0.46 $ 0.44 Twelve months ended June 30, 2019 $ 0.38 $ 0.57 10/1/2018 $ 0.26 9/12/2018 $ 0.41 $ 0.41 Twelve months ended June 30, 2020 $ 0.24 $ 0.40 7/9/2019 $ 0.14 3/16/2020 $ 0.18 $ 0.18 July 1, 2020 to January 3, 2021 $ 0.30 $ 0.67 11/25/2020 $ 0.18 7/2/2020 $ 0.22 $ 0.22 February 1, 2018 to January 3, 2021 $ 0.36 $ 1.12 2/15/2018 $ 0.14 3/16/2020 $ 0.22 $ 0.22 The following table illustrates the movements in the Digital Asset Market price of XRP, as reported on the Fund’s principal market for XRP, from the beginning of the Fund’s operations on February 1, 2018 to January 3, 2021. Since the beginning of the Fund’s operations, the price of XRP has ranged from $0.14 to $1.17, with the straight average being $0.36: High Low Period Average Digital Asset Market Price Date Digital Asset Market Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 0.72 $ 1.17 2/17/2018 $ 0.43 6/29/2018 $ 0.46 $ 0.43 Twelve months ended June 30, 2019 $ 0.37 $ 0.58 9/21/2018 $ 0.26 9/11/2018 $ 0.40 $ 0.42 Twelve months ended June 30, 2020 $ 0.24 $ 0.40 7/8/2019 $ 0.14 3/16/2020 $ 0.18 $ 0.18 July 1, 2020 to January 3, 2021 $ 0.30 $ 0.71 11/24/2020 $ 0.17 7/2/2020 $ 0.23 $ 0.22 February 1, 2018 to January 3, 2021 $ 0.36 $ 1.17 2/17/2018 $ 0.14 3/16/2020 $ 0.23 $ 0.22 Effective January 4, 2021, the Fund removed XRP from the Fund’s portfolio and sold the XRP holdings to purchase additional tokens of the remaining Fund Components in proportion to their respective weightings. See “Item 15. Financial Statements and Exhibits – Note 4. Portfolio Rebalancing” for a description of the portfolio rebalancing. Bitcoin Cash The Digital Asset Reference Rate for Bitcoin Cash is an Index Price for Bitcoin Cash. The following table illustrates the movements in the Index Price for Bitcoin Cash from the beginning of the Fund’s operations on February 1, 2018 to June 30, 2021. Since the beginning of the Fund’s operations, the Index Price Bitcoin Cash has ranged from $83.82 to $1,646.79, with the straight average being $448.84 through June 30, 2021. The Manager has not observed a material difference between the Index Price and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group. High Low Period Average Index Price Date Index Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 1,078.67 $ 1,646.79 5/7/2018 $ 621.74 4/6/2018 $ 733.45 $ 661.15 Twelve months ended June 30, 2019 $ 359.24 $ 863.54 7/18/2018 $ 83.82 12/14/2018 $ 424.31 $ 415.92 Twelve months ended June 30, 2020 $ 274.89 $ 483.25 2/14/2020 $ 164.44 3/13/2020 $ 223.73 $ 223.73 Twelve months ended June 30, 2021 $ 454.04 $ 1,505.55 5/12/2021 $ 211.26 9/24/2020 $ 517.51 $ 517.51 February 1, 2018 to June 30, 2021 $ 448.84 $ 1,646.79 5/7/2018 $ 83.82 12/14/2018 $ 517.51 $ 517.51 The following table illustrates the movements in the Digital Asset Market price of Bitcoin Cash, as reported on the Fund’s principal market for Bitcoin Cash, from the beginning of the Fund’s operations on February 1, 2018 to June 30, 2021. Since the beginning of the Fund’s operations, the price of Bitcoin Cash has ranged from $76.78 to $1,719.00, with the straight average being $449.69: High Low Period Average Digital Asset Market Price Date Digital Asset Market Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 1,080.64 $ 1,719.00 5/6/2018 $ 607.20 4/6/2018 $ 725.11 $ 659.54 Twelve months ended June 30, 2019 $ 361.64 $ 850.91 7/24/2018 $ 76.78 12/15/2018 $ 414.00 $ 436.73 Twelve months ended June 30, 2020 $ 274.41 $ 493.09 2/14/2020 $ 168.00 3/16/2020 $ 221.14 $ 221.14 Twelve months ended June 30, 2021 $ 454.20 $ 1,465.48 5/6/2021 $ 208.40 9/23/2020 $ 520.99 $ 520.99 February 1, 2018 to June 30, 2021 $ 449.69 $ 1,719.00 5/6/2018 $ 76.78 12/15/2018 $ 520.99 $ 520.99 93 Litecoin The Digital Asset Reference Rate for Litecoin is an Index Price for Litecoin. The following table illustrates the movements in the Index Price from the beginning of the Fund’s operations on February 1, 2018 to June 30, 2021. Since the beginning of the Fund’s operations, the Index Price for Litecoin has ranged from $22.81 to $391.06, with the straight average being $90.94 through June 30, 2021. The Manager has not observed a material difference between the Index Price for Litecoin and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group. High Low Period Average Index Price Date Index Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 144.45 $ 239.52 2/20/2018 $ 74.65 6/29/2018 $ 80.29 $ 74.65 Twelve months ended June 30, 2019 $ 62.51 $ 138.93 6/12/2019 $ 22.81 12/14/2018 $ 131.09 $ 115.82 Twelve months ended June 30, 2020 $ 58.78 $ 121.38 7/9/2019 $ 32.75 3/13/2020 $ 41.55 $ 41.55 Twelve months ended June 30, 2021 $ 129.63 $ 391.06 5/10/2021 $ 41.23 7/3/2020 $ 141.65 $ 141.65 February 1, 2018 to June 30, 2021 $ 90.94 $ 391.06 5/10/2021 $ 22.81 12/14/2018 $ 141.65 $ 141.65 The following table illustrates the movements in the Digital Asset Market price of Litecoin, as reported on the Fund’s principal market for Litecoin, from the beginning of the Fund’s operations on February 1, 2018 to June 30, 2021. Since the beginning of the Fund’s operations, the price of Litecoin has ranged from $22.47 to $371.96, with the straight average being $91.16: High Low Period Average Digital Asset Market Price Date Digital Asset Market Price Date End of period Last business day February 1, 2018 to June 30, 2018 $ 144.89 $ 242.51 2/20/2018 $ 73.19 6/29/2018 $ 79.71 $ 73.19 Twelve months ended June 30, 2019 $ 62.90 $ 141.89 6/22/2019 $ 22.47 12/14/2018 $ 129.14 $ 120.57 Twelve months ended June 30, 2020 $ 58.75 $ 125.11 7/4/2019 $ 32.27 3/16/2020 $ 41.15 $ 41.15 Twelve months ended June 30, 2021 $ 129.85 $ 371.96 5/11/2021 $ 40.81 7/2/2020 $ 141.61 $ 141.61 February 1, 2018 to June 30, 2021 $ 91.16 $ 371.96 5/11/2021 $ 22.47 12/14/2018 $ 141.61 $ 141.61 Chainlink The Digital Asset Reference Rate for Chainlink is an Index Price for Chainlink. The following table illustrates the movements in the Index Price from the addition of the token to the Fund’s portfolio on April 2, 2021 to June 30, 2021. Since the token was added to the Fund’s portfolio, the Index Price for Chainlink has ranged from $16.73 to $50.40, with the straight average being $31.73 through June 30, 2021. The Manager has not observed a material difference between the Index Price for Chainlink and average prices from the constituent Digital Asset Exchanges included in the relevant index individually or as a group. High Low Period Average Index Price Date Index Price Date End of period Last business day April 2, 2021 to June 30, 2021 $ 31.73 $ 50.40 5/10/2021 $ 16.73 6/26/2021 $ 19.06 $ 19.06 The following table illustrates the movements in the Digital Asset Market price of Chainlink, as reported on the Fund’s principal market for Chainlink, from the addition of the token to the Fund’s portfolio on April 2, 2021 to June 30, 2021. Since the addition of the token to the Fund’s portfolio, the price of Chainlink has ranged from $16.47 to $50.43, with the straight average being $31.76: High Low Period Average Digital Asset Market Price Date Digital Asset Market Price Date End of period Last business day April 2, 2021 to June 30, 2021 $ 31.76 $ 50.43 5/9/2021 $ 16.47 6/26/2021 $ 19.28 $ 19.28 Effective April 2, 2021, the Manager adjusted the Fund’s portfolio in connection with its quarterly review by selling the existing Fund Components in proportion to their respective weightings and using the cash proceeds to purchase Chainlink (LINK) in accordance 94 with the Fund Construction Criteria. See “Item 15. Financial Statements and Exhibits – Note 4 . Portfolio Rebalancing ” for a description of the portfolio rebalancing. Secondary Market Trading The Fund’s Shares have been quoted on OTCQX under the symbol GDLC since November 22, 2019. The Fund’s previous trading symbol was “GDLCF” on OTCQX and was changed to “GDLC” on April 14, 2020. The price of the Shares as quoted on OTCQX has varied significantly from the Digital Asset Holdings per Share. From November 22, 2019 to June 30, 2021, the maximum premium of the closing price of the Shares quoted on OTCQX over the value of the Fund’s Digital Asset Holdings per Share was 297% and the average premium was 54%. Moreover, the closing price of the Shares as, quoted on OTCQX at 4:00 p.m., New York time, on each business day, has been quoted at a discount on 19 days. As of June 30, 2021, the Fund’s shares were quoted on OTCQX at a discount of 4% to the Fund’s Digital Asset Holdings per Share. The following table sets out the range of high and low closing prices for the Shares as reported by OTCQX, the Fund’s NAV per Share and the Fund’s Digital Asset Holdings per Share for each of the quarters since November 22, 2019. High Low OTCQX NAV per Share (1) Digital Asset Holdings per Share (2) OTCQX NAV per Share (1) Digital Asset Holdings per Share (2) Calendar Year 2019 Fourth quarter $ 8.55 $ 4.67 $ 4.60 $ 5.00 $ 3.90 $ 4.00 Calendar Year 2020 First quarter $ 8.42 $ 6.57 $ 6.47 $ 4.15 $ 2.99 $ 3.06 Second quarter $ 7.94 $ 5.84 $ 5.85 $ 3.62 $ 3.72 $ 3.77 Third quarter $ 29.00 $ 7.72 $ 7.58 $ 6.20 $ 5.32 $ 5.35 Fourth quarter $ 24.25 $ 16.41 $ 16.22 $ 10.18 $ 6.38 $ 6.38 Calendar Year 2021 First quarter $ 45.27 $ 35.31 $ 34.69 $ 20.65 $ 16.45 $ 16.44 Second quarter $ 52.00 $ 40.13 $ 40.40 $ 20.01 $ 20.32 $ 20.26 (1) The NAV is calculated using the fair value of the Fund Components based on the price provided by the Digital Asset Market that the Fund considers each Fund Component’s principal market. (2) The Fund’s Digital Asset Holdings are derived from the Digital Reference Rate of each Fund Component as of 4:00 p.m., New York time, on the valuation date. See “ Item 1. Business—Investment Objective .” The following chart sets out the historical closing prices for the Shares as reported by OTCQX and the Fund’s Digital Asset Holdings per Share. GDLC Premium/(Discount): GDLC Share Price vs. Digital Asset Holdings per Share ($) 95 The following chart sets out the historical premium and discount for the Shares as reported by OTCQX and the Fund’s Digital Asset Holdings per Share. GDLC Premium/(Discount): GDLC Share Price vs. Digital Asset Holdings per Share (%) Jumpstart Our Business Startups Act of 2012 The JOBS Act permits the Fund, as an “emerging growth company,” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. The Fund has elected to “opt out” of this provision and, as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.