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Item 2. Management’s Discussion and Analysis

2026-08-12 compared with 2026-05-15 · 101 added, 222 removed, 19 unchanged (94% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

This information should

be read in conjunction with the financial statements and notes included in Item 1 of Part I of this Form 10-Q.

This Form 10-Q contains

“forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange

Act, and such forward-looking statements involve risks and uncertainties.

All statements (other than statements of historical fact)

included in this Form 10-Q that address activities, events or developments that may occur in the future, the Trust’s operations,

the Sponsor’s plans and references to the Trust’s future success and other similar matters are forward-looking statements.

Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,”

“predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with

respect to future events and Trust performance, are intended to identify such forward-looking statements.

These forward-looking statements

are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control,

and actual results could differ materially from those discussed.

Forward-looking statements involve risks and uncertainties that could

cause actual results or outcomes to differ materially from those expressed therein.

We express our estimates, expectations, beliefs,

and projections in good faith and believe them to have a reasonable basis.

However, we make no assurances that management’s estimates,

expectations, beliefs, or projections will be achieved or accomplished.

These forward-looking statements are based on assumptions about

many important factors that could cause actual results to differ materially from those in the forward-looking statements.

We do not intend

to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required

by the federal securities law s.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This information should be read in conjunction with the financial statements and notes included in Item 1 of Part I of this Form 10-Q.

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and such forward-looking statements involve risks and uncertainties.

All statements (other than statements of historical fact) included in this Form 10-Q that address activities, events or developments that may occur in the future, the Trust’s operations, the Sponsor’s plans and references to the Trust’s future success and other similar matters are forward-looking statements.

Words such as “could,” “would,” “may,” “expect,” “intend,” “estimate,” “predict,” and variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and Trust performance, are intended to identify such forward-looking statements.

These forward-looking statements are only predictions, subject to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those discussed.

Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed therein.

We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable basis.

However, we make no assurances that management’s estimates, expectations, beliefs, or projections will be achieved or accomplished.

These forward-looking statements are based on assumptions about many important factors that could cause actual results to differ materially from those in the forward-looking statements.

We do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future, except as required by the federal securities law s.

Organization and Trust Overview

The 21Shares Sui ETF (the

“Trust”) is a Delaware statutory trust, formed on January 7, 2025, pursuant to the DSTA.

CSC Delaware Trust Company, serves

as the trustee of the Trust.

The 21Shares Sui ETF (the “Trust”) is a Delaware statutory trust, formed on January 7, 2025, pursuant to the DSTA.

The Trust operates pursuant to the Trust Agreement.

The Trust was initially registered with the name of Jura Pentium Trust 5.

The Trust changed its name from

Jura Pentium Trust 5 to 21Shares Sui ETF on April 23, 2025.

The Trust is not registered as an investment company under the 1940 Act and

is not a commodity pool for purposes of the Commodity Exchange Act.

The Trust changed its name from Jura Pentium Trust 5 to 21Shares Sui ETF on April 23, 2025.

The Trust is not registered as an investment company under the 1940 Act and is not a commodity pool for purposes of the Commodity Exchange Act.

The Trust is managed and controlled by the Sponsor.

The Sponsor is

a limited liability company formed in the state of Delaware on June 16, 2021, and is a wholly owned subsidiary of 21co Holdings

The Sponsor is a limited liability company formed in the state of Delaware on June 16, 2021, and is a wholly owned subsidiary of 21co Holdings Limited.

The ultimate parent company of 21co Holdings Limited is FalconX.

The Sponsor is not subject to regulation by the Commodity Futures

Trading Commission as a commodity pool operator with respect to the Trust, or a commodity trading advisor with respect to the Trust.

Coinbase, Anchorage, and

BitGo are the custodians for the Trust and hold all of the Trust’s SUI on the Trust’s behalf.

The Transfer Agent, the Administrator,

and the Cash Custodian, is Bank of New York Mellon.

The Sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator with respect to the Trust, or a commodity trading advisor with respect to the Trust.

The Trust is an exchange-traded fund that issues common shares of beneficial interest representing fractional undivided beneficial interests in its net assets that trade on the Exchange.

The Shares are listed for trading on the Exchange under the ticker symbol “TSUI”.

The Trust’s investment

objective is to seek to track the performance of SUI, as measured by the performance of the CME CF Sui - Dollar Reference Rate—New

York Variant (the “Pricing Benchmark”), adjusted for the Trust’s expenses and other liabilities, and to reflect rewards

from staking a portion of the Trust’s SUI, to the extent the Sponsor in its sole discretion determines that the Trust may do so

without undue legal or regulatory risk, such as, without limitation, the risk of jeopardizing the Trust’s ability to qualify as

a grantor trust for U.S.

The Trust’s investment objective is to seek to track the performance of SUI, as measured by the performance of the CME CF Sui - Dollar Reference Rate—New York Variant (the “Pricing Benchmark”), adjusted for the Trust’s expenses and other liabilities, and to reflect rewards from staking a portion of the Trust’s SUI, to the extent the Sponsor in its sole discretion determines that the Trust may do so without undue legal or regulatory risk, such as, without limitation, the risk of jeopardizing the Trust’s ability to qualify as a grantor trust for U.S.

Federal income tax purposes.

In seeking to achieve its investment objective, the Trust holds SUI and values

its Shares daily as of 4:00 p.m.

In seeking to achieve its investment objective, the Trust holds SUI and the Administrator values the Shares daily as of 4:00 p.m.

ET based on the Pricing Benchmark.

Pursuant to a subscription agreement, on November

18, 2025, the Sui Foundation, a Cayman Islands foundation company, purchased from the Trust 1,000,000 Shares for an aggregate purchase

price of 10,000,000 SUI tokens.

On February 23, 2026, the

Seed Capital Investor, subject to conditions, purchased the Initial Seed Creation Baskets.

Total proceeds to the Trust from the sale

of the Initial Seed Creation Baskets were $348,573.

Delivery of the Initial Seed Creation Baskets was made on February 24, 2026.

Initial Seed Creation Baskets were redeemed for cash on March 4, 2026.

The Trust issues Shares

only in Creation Baskets of 10,000 or multiples thereof.

Creation Baskets are issued and redeemed in exchange for cash.

Individual Shares

will not be redeemed by the Trust but are listed and traded on the Exchange under the ticker symbol “TSUI.” The Trust issues

Shares in Creation Baskets on a continuous basis at the applicable NAV per Share on the creation order date.

The Trust pays the unitary

Sponsor fee of 0.30% of the Trust’s NAV (the “Sponsor Fee”).

The Sponsor Fee is paid by the Trust to the Sponsor as

compensation for services performed under the Trust Agreement.

The Trust incurred Sponsor Fee for the three months ended March 31, 2026

and the period from November 18, 2025 (date of initial seeding) through March 31, 2026 of $4,070 and $4,070, respectively.

Fee accrues daily and is payable in SUI weekly in arrears.

The Administrator calculates the Sponsor Fee on a daily basis by applying a

0.30% annualized rate to the Trust’s NAV, and the amount of SUI payable in respect of each daily accrual is determined by reference

to the Pricing Benchmark.

The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary

expenses) out of the Sponsor Fee.

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.

The Trust’s staking

model aims to maximize the portion of the Trust’s SUI available for staking while controlling for liquidity and redemption risks.

The model determines an optimal utilization rate by balancing expected yield against potential costs (including borrowing costs during

redemptions, assuming we have access to suitable credit).

The Staking Services Provider exercises no discretion as to the amount

of the Trust’s SUI to be staked or the timing of the Trust’s Staking Activities.

While the Trust may stake a maximum of 100%

of its SUI holdings, the amount of SUI that remains unstaked is determined based on the Trust’s utilization rate analysis, and accordingly

may vary from time to time.

Based on utilization rate analysis applied to historical data, the Trust generally intends to stake between

70% and 90% of the SUI it holds, although the amount of SUI that is staked may be lesser or greater from time to time.

The precise percentage

to be staked is based on the estimated liquidity needs of the Trust and other factors, as determined by the Sponsor.

The rewards owed or paid

to the Staking Services Provider reduces the amount of SUI rewards that are generated from the Trust’s Staking Activities that

are available in the assets of the Trust.

Each Staking Services Provider that generates staking rewards is entitled to compensation determined

as a portion of the staking rewards, which is generally expected to be determined by a low single-digit percentage of the overall rewards

amount (the “Staking Provider Consideration”).

The Staking Provider Consideration is paid directly to the Staking Services

Provider from the staking rewards or indirectly through the Custodians’ own accounts.

The Trust pays 25% of the staking rewards

generated by the Trust’s Staking Activities after deduction of the Staking Provider Consideration to the Sponsor, and retains the

The Trust intends to pay

cash distributions at least quarterly to Shareholders to distribute staking rewards earned by the Trust.

The amount of any distribution,

if any, will depend on the staking rewards actually earned by the Trust during each quarter and cannot be predicted with certainty.

amount of staking rewards earned will vary based on factors including, but not limited to, the amount of SUI held by the Trust, the percentage

of the Trust’s SUI that is staked, network staking participation rates, protocol reward rates on the Sui Network, and network conditions.

Accordingly, there can be no assurance as to the amount of distributions that will be paid in any quarter, and it is possible that no

distributions will be paid in a given quarter if insufficient staking rewards are earned.

On June 30, 2026, the Sponsor provided notice to the Pricing Benchmark Provider of the termination, effective August 31, 2026, of the licensing agreement between the Sponsor and the Pricing Benchmark Provider relating to the use of the Pricing Benchmark.

The Sponsor intends to enter into a licensing agreement with FTSE on or about August 24, 2026, whereby FTSE will provide each of the Sponsor, the Trust, and their affiliates a non-exclusive, non-transferable, non-sub-licensable, worldwide license to access, view and use FTSE index data to develop, create, calculate, settle, maintain or support and market the Trust.

Accordingly, the change in pricing benchmark provider is not expected to have a material impact on the Trust's net asset value, the fair value measurement of the Trust's SUI, or the Trust's results of operations, and does not represent a change in accounting principle.

The change will be applied prospectively from the date the successor benchmark becomes effective.

Pursuant to a subscription agreement, on November 18, 2025, the Sui Foundation, a Cayman Islands foundation company, purchased from the Trust 1,000,000 (500,000 Shares as retroactively adjusted for the Share Split) Shares for an aggregate purchase price of 10,000,000 SUI tokens.

On February 23, 2026, the Seed Capital Investor, subject to conditions, purchased the Seed Creation Baskets.

Total proceeds to the Trust from the sale of the Seed Creation Baskets were $348,574.

Delivery of the Seed Creation Baskets was made on February 24, 2026.

These Seed Creation Baskets were redeemed for cash on March 4, 2026.

The Trust issues Shares only in Creation Baskets of 10,000 or multiples thereof.

Creation Baskets are issued and redeemed in exchange for cash or in-kind for SUI.

Individual Shares will not be redeemed by the Trust but are listed and traded on the Exchange under the ticker symbol “TSUI.” The Trust issues Shares in Creation Baskets on a continuous basis at the applicable NAV per Share on the creation order date.

The Trust pays the unitary Sponsor fee of 0.30% of the Trust’s NAV (the “Sponsor Fee”).

The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement.

The Trust incurred Sponsor Fee for the three months ended June 30, 2026 and the period from November 18, 2025 (date of initial seeding) through June 30, 2026 of $11,228 and $15,298, respectively.

The Sponsor Fee accrues daily and is payable in SUI weekly in arrears.

The Administrator calculates the Sponsor Fee on a daily basis by applying an annualized rate to the Trust’s NAV, and the amount of SUI payable in respect of each daily accrual is determined by reference to the Pricing Benchmark.

The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee.

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.

The Trust’s staking model aims to maximize the portion of the Trust’s SUI available for staking while controlling for liquidity and redemption risks.

The model determines an optimal utilization rate by balancing expected yield against potential costs (including borrowing costs during redemptions, assuming we have access to suitable credit).

The Staking Services Provider exercises no discretion as to the amount of the Trust’s SUI to be staked or the timing of the Trust’s Staking Activities.

While the Trust may stake a maximum of 100% of its SUI holdings, the amount of SUI that remains unstaked is determined based on the Trust’s utilization rate analysis, and accordingly may vary from time to time.

Based on utilization rate analysis applied to historical data, the Trust generally intends to stake between 70% and 90% of the SUI it holds, although the amount of SUI that is staked may be lesser or greater from time to time.

The precise percentage to be staked is based on the estimated liquidity needs of the Trust and other factors, as determined by the Sponsor.

The rewards owed or paid to the Staking Services Provider reduce the amount of SUI rewards that are generated from the Trust’s Staking Activities that are available in the assets of the Trust.

Each Staking Services Provider that generates staking rewards is entitled to compensation determined as a portion of the staking rewards, which is generally determined by a low single-digit percentage of the overall rewards amount (the “Staking Provider Consideration”).

The Staking Provider Consideration is paid directly to the Staking Services Provider from the staking rewards or indirectly through the Custodians’ own accounts.

The Trust pays 25% of the staking rewards generated by the Trust’s Staking Activities after deduction of the Staking Provider Consideration to the Sponsor, and retains the remainder.

The Trust intends to pay cash distributions at least quarterly to Shareholders to distribute staking rewards earned by the Trust.

The amount of any distribution, if any, will depend on the staking rewards actually earned by the Trust during each quarter and cannot be predicted with certainty.

The amount of staking rewards earned will vary based on factors including, but not limited to, the amount of SUI held by the Trust, the percentage of the Trust’s SUI that is staked, network staking participation rates, protocol reward rates on the Sui Network, and network conditions.

Accordingly, there can be no assurance as to the amount of distributions that will be paid in any quarter, and it is possible that no distributions will be paid in a given quarter if insufficient staking rewards are earned.

Calculation of NAV and NAV per Share

The NAV of the Trust is used

by the Trust in its day-to-day operations to measure the net value of the Trust’s assets.

The NAV is calculated on each day other

than a day when the Exchange is closed for regular trading (a “Business Day”) and is equal to the aggregate value of the

Trust’s assets less its liabilities based on the Pricing Benchmark price.

In determining the NAV of the Trust on any Business Day,

the Administrator calculates the price of the SUI held by the Trust as of 4:00 p.m.

The NAV of the Trust is used by the Trust in its day-to-day operations to measure the net value of the Trust’s assets.

The NAV is calculated on each Business Day and is equal to the aggregate value of the Trust’s assets less its liabilities based on the Pricing Benchmark price.

In determining the NAV of the Trust on any Business Day, the Administrator calculates the price of the SUI held by the Trust as of 4:00 p.m.

ET on such day.

The Administrator also calculates

the “NAV per Share” of the Trust, which equals the NAV of the Trust divided by the number of outstanding Shares.

In addition to calculating

NAV and NAV per Share, for purposes of the Trust’s financial statements, the Trust determines the net asset value of the Trust

determined on a GAAP basis (the “Principal Market NAV”) and net asset value of the Trust per Share determined on a GAAP basis

(the “Principal Market NAV per Share”) on each valuation date for such financial statements.

The determination of the Principal

Market NAV and Principal Market NAV per Share is identical to the calculation of NAV and NAV per Share, respectively, except that the

value of SUI is determined using the fair value of SUI based on the price in the SUI market that the Trust considers its “principal

market” as of 4:00 p.m.

The Administrator also calculates the “NAV per Share” of the Trust, which equals the NAV of the Trust divided by the number of outstanding Shares.

In addition to calculating NAV and NAV per Share, for purposes of the Trust’s financial statements, the Trust determines the net asset value of the Trust determined on a GAAP basis (the “Principal Market NAV”) and net asset value of the Trust per Share determined on a GAAP basis (the “Principal Market NAV per Share”) on each valuation date for such financial statements.

The determination of the Principal Market NAV and Principal Market NAV per Share is identical to the calculation of NAV and NAV per Share, respectively, except that the value of SUI is determined using the fair value of SUI based on the price in the SUI market that the Trust considers its “principal market” as of 4:00 p.m.

ET on the valuation date, rather than using the Pricing Benchmark.

NAV and NAV per Share are

not measures calculated in accordance with GAAP and are not intended as substitutes for Principal Market and Principal Market NAV per

Share, respectively.

NAV and NAV per Share are not measures calculated in accordance with GAAP and are not intended as substitutes for Principal Market NAV and Principal Market NAV per Share, respectively.

Critical Accounting Estimates

The financial statements

and accompanying notes are prepared in accordance with GAAP.

The preparation of these financial statements relies on estimates and assumptions

that impact the Trust’s financial position and results of operations.

These estimates and assumptions affect the Trust’s

application of accounting policies.

The financial statements and accompanying notes are prepared in accordance with GAAP.

The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations.

These estimates and assumptions affect the Trust’s application of accounting policies.

Below is a summary of accounting policies on cash and investment valuation.

There were no material

estimates involving a significant level of estimation uncertainty that had or are reasonably likely to have had a material impact on

the Trust’s financial condition used in the preparation of the financial statements.

In addition, please refer to Note 2 to the

Financial Statements included in this report for further discussion of the Trust’s accounting policies.

Cash includes non-interest

bearing, non-restricted cash maintained with one financial institution that does not exceed U.S.

There were no material estimates involving a significant level of estimation uncertainty that had or are reasonably likely to have had a material impact on the Trust’s financial condition used in the preparation of the financial statements.

In addition, please refer to Note 2 to the Financial Statements included in this report for further discussion of the Trust’s accounting policies.

Cash includes non-interest bearing, non-restricted cash maintained with one financial institution that does not exceed U.S.

federally insured limits.

Investment Valuation

The Trust’s policy

is to value investments held at fair value.

The Trust’s policy is to value investments held at fair value.

The Trust follows the provisions of ASC 820, Fair Value Measurements (“ASC 820”).

ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used

to measure fair value.

ASC 820 determines fair value to be the price that would be received for SUI in a current sale, which assumes

an exit price resulting from an orderly transaction between market participants on the measurement date.

ASC 820-10 requires the assumption

that SUI is sold in its principal market to market participants (or in the absence of a principal market, the most advantageous market).

The Trust utilizes an exchange traded price from the Trust’s

principal market for SUI as of 4:00 p.m.

ASC 820 provides guidance for determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value.

ASC 820 determines fair value to be the price that would be received for SUI in a current sale, which assumes an exit price resulting from an orderly transaction between market participants on the measurement date.

ASC 820-10 requires the assumption that SUI is sold in its principal market to market participants (or in the absence of a principal market, the most advantageous market).

The Trust utilizes an exchange traded price from the Trust’s principal market for SUI as of 4:00 p.m.

ET on the Trust’s financial statement measurement date.

Results of Operations

For the Three Months Ended March 31, 2026 *

The Trust's NAV increased from $13,921,170 on December 31, 2025 to

$15,092,444 on March 31, 2026.

On a per-share basis, the NAV per Share decreased from $27.84 on December 31, 2025 (as retroactively adjusted

to reflect the 2-for-1 reverse share split effective February 22, 2026) to $17.55 on March 31, 2026, a decline of 36.96%.

Despite a 36.69%

decline in the price of SUI from $1.39 on December 31, 2025 to $0.88 on March 31, 2026, the Trust's total NAV increased due to a net increase

in SUI holdings as a result of 380,000 new Shares (38 Baskets) being created and 20,000 Shares (2 Baskets) being redeemed during the quarter,

as well as Staking Rewards earned during the period.

The Trust had 97.69% of its SUI holdings staked as of March 31, 2026, with an average

of 68.58% staked on a daily basis during the period from February 24, 2026 (commencement of investment operations) through March 31, 2026.

Net decrease in net assets resulting from operations for the three

months ended March 31, 2026 was $(5,671,108), resulting from a net change in unrealized depreciation on investment in SUI of $(5,423,352),

a net realized loss of $(259,094) from SUI sold for redemptions, and a net realized loss of $(1,814) from SUI sold to pay the Sponsor

Fee, partially offset by net investment income of $12,798, a net realized gain of $59 on in-kind liabilities paid, and a net change in

unrealized appreciation on Sponsor Fee payable of $295.

Net investment income comprised staking income of $22,491, less the Sponsor Fee

of $4,070 and the Staking Fee of $5,623.

Other than the Sponsor Fee and Staking Fee, the Trust had no other expenses during the quarter.

* No comparative statement has been provided as this is the first

fiscal year of the Trust’s operations.

For the period from November 18, 2025 (date

of initial seeding) through March 31, 2026 *

The Trust commenced operations on November 18, 2025 when the Sui Foundation,

a Cayman Islands foundation company, purchased 500,000 Shares (as retroactively adjusted to reflect the 2-for-1 reverse share split effective

February 22, 2026) for an aggregate purchase price of 10,000,000 SUI tokens at a NAV per Share of $33.72.

The price of SUI declined 47.93%

from $1.69 on November 18, 2025 to $0.88 on March 31, 2026, resulting in a NAV per Share decrease from $33.72 to $17.55, a decline of

Net decrease in net assets resulting from operations for the period

was $(8,612,768), resulting from a net change in unrealized depreciation on investment in SUI of $(8,365,012), a net realized loss of

$(259,094) from SUI sold for redemptions, and a net realized loss of $(1,814) from SUI sold to pay the Sponsor Fee, partially offset by

net investment income of $12,798, a net realized gain of $59 on in-kind liabilities paid, and a net change in unrealized appreciation

on Sponsor Fee payable of $295.

Net investment income comprised staking income of $22,491, less the Sponsor Fee of $4,070 and the Staking

Fee of $5,623.

Other than the Sponsor Fee and Staking Fee, the Trust had no other expenses during the period.

* No comparative statement has been provided as this is the first

fiscal year of the Trust’s operations.

For the Three Months Ended June 30, 2026 *

The Trust’s NAV decreased from $15,092,444 on March 31, 2026 to $12,637,858 on June 30, 2026, a decrease of 16.26%.

The decrease resulted primarily from a 20.45% decline in the price of SUI, which fell from $0.88 on March 31, 2026 to $0.70 on June 30, 2026, partially offset by a net increase in Shares outstanding from 860,000 on March 31, 2026 to 910,000 on June 30, 2026, reflecting 170,000 Shares (17 Creation Baskets) created and 120,000 Shares (12 Creation Baskets) redeemed during the quarter.

The Trust had 94.75% of its SUI holdings staked as of June 30, 2026, with an average of 95.74% staked on a daily basis during the quarter.

Net decrease in net assets resulting from operations for the three months ended June 30, 2026 was $(3,362,720), consisting of a net change in unrealized depreciation on investment in SUI of $(2,203,432), a net realized loss of $(1,160,477) on SUI sold for the redemption of Shares, a net realized loss of $(7,436) on SUI sold to pay the Sponsor Fee, and a net realized loss of $(16,498) on SUI sold for distributions, partially offset by net investment income of $23,426, a net realized gain of $81 on in-kind liabilities paid, and a net change in unrealized appreciation on the Sponsor Fee payable of $1,616.

Net investment income comprised Staking Rewards of $46,205, less the Sponsor Fee of $11,228 and the Staking Fee of $11,551.

In addition to net assets resulting from operations, the Trust paid total staking income distributions of $53,101 ($0.048174 per Share on May 14, 2026 and $0.016531 per Share on June 29, 2026) to Shareholders during the quarter.

Except for the Sponsor Fee and the Staking Fee, the Trust had no other expenses during the three months ended June 30, 2026.

* No comparative statement has been provided as this is the first fiscal year of the Trust’s operations.

For the period from November 18, 2025 (date of initial seeding) through June 30, 2026 *

The Trust commenced operations on November 18, 2025 when the Sui Foundation, a Cayman Islands foundation company, purchased 500,000 Shares (as retroactively adjusted to reflect the 2-for-1 reverse share split effective February 22, 2026) for an aggregate purchase price of 10,000,000 SUI tokens at a NAV per Share of $33.72.

The price of SUI declined 58.58% from $1.69 on November 18, 2025 to $0.70 on June 30, 2026, resulting in a NAV per Share decrease from $33.72 to $13.89, a decline of 58.81%.

Net decrease in net assets resulting from operations for the period was $(11,975,488), resulting from a net change in unrealized depreciation on investment in SUI of $(10,568,444), a net realized loss of $(1,419,555) from SUI sold for redemptions, a net realized loss of $(9,266) from SUI sold to pay the Sponsor Fee, and a net realized loss of $(16,498) from SUI sold for distributions, partially offset by net investment income of $36,224, a net realized gain of $140 on in-kind liabilities paid, and a net change in unrealized appreciation on Sponsor Fee payable of $1,911.

Net investment income comprised Staking Rewards of $68,696, less the Sponsor Fee of $15,298 and the Staking Fee of $17,174.

Except for the Sponsor Fee and Staking Fee, the Trust had no other expenses during the period.

* No comparative statement has been provided as this is the first fiscal year of the Trust’s operations.

Liquidity and Capital Resources

The Trust is not aware of any trends, demands, commitments, events,

or uncertainties that are reasonably likely to result in material changes to its liquidity needs.

The Trust’s only ordinary recurring

expenses are the Sponsor Fee and the Staking Fee.

In exchange for the Sponsor Fee, the Sponsor has agreed to assume the ordinary fees

and expenses incurred by the Trust, including but not limited to the following:

fees charged by the Administrator, the Custodians, the

Transfer Agent and the Trustee, the Marketing Fee, the Exchange’s listing fees, typical maintenance and transaction fees of the

Depository Trust Company (“DTC”), SEC registration fees, printing and mailing costs, website fees, tax reporting fees, audit

fees, license fees and expenses, up to $100,000 per annum in ordinary legal fees and expenses.

The Sponsor bears expenses in connection

with the Trust’s organization and initial offering costs.

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 Trust.

The Trust will be responsible for

the payment of such expenses to the extent any such expenses are incurred.

Routine operational, administrative, and other ordinary expenses

are not deemed extraordinary expenses.

The Trust will sell SUI on an as-needed basis to pay the Sponsor Fee.

Off-Balance Sheet Arrangements

The Trust does not have any

The Trust is not aware of any trends, demands, commitments, events, or uncertainties that are reasonably likely to result in material changes to its liquidity needs.

The Trust’s only ordinary recurring expenses are the Sponsor Fee and the Staking Fee.

In exchange for the Sponsor Fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Trust, including but not limited to the following:

fees charged by the Administrator, the Custodians, the Transfer Agent and the Trustee, the Marketing Fee, the Exchange’s listing fees, typical maintenance and transaction fees of the Depository Trust Company (“DTC”), SEC registration fees, printing and mailing costs, website fees, tax reporting fees, audit fees, license fees and expenses, up to $100,000 per annum in ordinary legal fees and expenses.

The Sponsor bears expenses in connection with the Trust’s organization and initial offering costs.

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 Trust.

The Trust will be responsible for the payment of such expenses to the extent any such expenses are incurred.

Routine operational, administrative, and other ordinary expenses are not deemed extraordinary expenses.

The Trust will sell SUI on an as-needed basis to pay the Sponsor Fee and the Staking Fee.

Off-Balance Sheet Arrangements

Quantitative and Qualitative Disclosures

about Market Risks

The Trust is a smaller reporting

company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required under this

The Trust does not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosures about Market Risks

The Trust is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis