Reporting and transparency

In order to provide the token holder with the information to make investment decisions, the token issuer provides regular attestation reports to token holders regarding the assets held by the token issuer.

The token attestation reports includes:

• Tokens which have been issued

• Assets held by the token holder

• Valuation of the assets held by the token holder

The supplementary documents includes:

• Underlying Fund Prospectus

• Confirmation of Trust Beneficial Interest

• Subscription Confirmation from third party admin

The information for the reports can be taken from on-chain and off-chain sources. On-chain information can immediately be read from the blockchain. Off chain sources require information from third parties whose supporting documents will be available to token holding. The latency on the information of assets held by the token issuer will be provided by custodians and can be provided within T+5 business days of subscription and redemption dates. Information on the valuation of off-chain assets may take longer to process and may be delayed to T+45 business days.

Asset reporting model¶

In interpreting the attestation reports for asset holdings, we note that it is common for an alternative asset to issue a separate class of shares for each deposit, and that there may be a delay in receiving a NAV for the underlying asset. We illustrate the impact on reporting below.

We take as an example a sample underlying fund which illustrates the complex pricing model for the GROW Heritage Fund versus the Growth Yield Token. In this pricing model each deposit creates a new class of shares which are sold at a price of 1000 USD per share.
Simplified fund example

The custodian buys 100 USD of shares in January. The pricing model of the fund is that each purchase creates a new class of shares at 1000.00 USD per share

• Class January - 100 shares at USD 1000.0

In February the value of Class S1 shares goes up to 1500.00 USD and the custodian buys 500k USD of shares. So the holdings at the end of February

• Class January - 100 shares at USD 1500.00

• Class February - 500 shares at USD 1000.00

Note that the NAV is not known at the time that the funds are deposited.
Basic computations (AUM/NAV)
The AUM and NAV of the fund at the end of February can be calculated as follows if the NAV for the shares in January are available.

AUM = (sum of different share classes * NAV of each share class + cash)

NAV = AUM / number of shares

Example:

• Class January - 100 shares each at USD 1500.00

• Class February - 500 shares each at USD 1000.00

• Cash - 50k USD

Tokens outstanding = 350k

• AUM = 700k USD

• NAV = 2.00 USD

We note that this computation is not possible if the AUM of the January shares are not known at the end of February. In order to accommodate this delay our attestation reports will report the latest available NAV from the underlying with the date of the NAV but will not calculate an AUM or an NAV for the token.

Impact of deposits on reported holdings¶

Assume two token holders deposit funds

Example:

• Deposit #1 = 10k USD

• Deposit #2 = 20k USD

Underlying holdings after token deposit

• Class January - 100 shares each at USD 1500

• Class February - 500 shares each at USD 1000

• Class March - 30 shares each at USD 1000

• Cash - 50k USD

AUM = 730k USD

However to calculate the NAV it will be necessary to compute the tokens that were issued on deposit. Because the NAV of the underlying is not known at the time of deposit, the number of tokens outstanding must be determined by a pricing model at the time the tokens were purchased.

Impact of withdrawal on reported holdings¶

The mechanism that we use to process withdrawals takes into account that there are holdings divided into different classes and that the NAV is not known until the tokens are actually redeemed. Our aim is to keep the withdrawal price at the NAV price, although this requirement may be modified with the agreement of the client.

We will withdraw from different classes using FIFO (first in, first out). FIFO is the standard accounting mechanism for dealing with different assets. We estimate the number of tokens in each class to be withdrawn using an estimated NAV, and that and an extra amount to take into account any possible shift in the NAV,. We then place an order for the tokens to be sold, and cover differences between the withdrawal price and cash via cash reserve. In the event that cash reserve is unable to cover the difference then we perform an additional withdrawal in the next month.

For example, assume we wish to withdraw 5k tokens

So we would need to get USD 10K to cover the withdrawal. So we would need to convert 6666.67 S1 tokens to cover the withdrawal. However because the NAV may change it we may request a withdrawal of 8000 January tokens to cover the withdrawal in case there is an unexpected change in the NAV

Any excess withdrawals will be kept as offchain reserve.