NAV and NAV per Share are not measures calculated in accordance with U.S. GAAP. NAV is not intended to be a substitute for the Trust’s Principal Market NAV calculated in accordance with U.S. GAAP, and NAV per Share is not intended to be a substitute for the Trust’s Principal Market NAV per Share calculated in accordance with U.S. GAAP. Prior to February 7, 2024, Principal Market NAV was referred to as NAV and Principal Market NAV per Share was referred to as NAV per Share. Overview of the ZEC Industry and Market Zcash, or ZEC, is a digital asset that is created and transmitted through the operations of the peer-to-peer Zcash Network, a decentralized network of computers that operates on cryptographic protocols. No single entity owns or operates the Zcash Network, the infrastructure of which is collectively maintained by a decentralized user base. The Zcash Network allows people to exchange tokens of value, called ZEC, which are recorded on a public transaction ledger known as a blockchain. The Zcash Network is decentralized in that it does not require governmental authorities, financial institution intermediaries or others, including Electric Coin Company (f/k/a the Zcash Company) (“ECC”) and Zcash Open Development Lab (“ZODL”), to create, transmit or determine the value of ZEC. Rather, ZEC is created and allocated by the Zcash Network protocol through a “mining” process. Although development companies like ECC and ZODL do not control the Zcash Network, they monitor the development of the Zcash Network and offer updates to the ZEC protocol which the public may choose to implement or ignore. ECC and ZODL do not sell, exchange, transmit or retain custody of ZEC for consumers or the public at large. The value of ZEC is determined by the supply of and demand for ZEC on the Digital Asset Markets or in private end-user-to-end-user transactions. Similar to the Bitcoin Network, the Zcash Network operates on a proof-of-work model. New ZEC are created and rewarded to the miners of a block in the Zcash Blockchain for verifying transactions. The Zcash Blockchain is effectively a decentralized database that includes all blocks that have been solved by miners and it is updated to include new blocks as they are solved. Each ZEC transaction is broadcast to the Zcash Network and, when included in a block, recorded in the Zcash Blockchain. As each new block records outstanding ZEC transactions, and outstanding transactions are settled and validated through such recording, the Zcash Blockchain represents a complete, transparent and unbroken history of all transactions of the Zcash Network. Similar to Bitcoin, ZEC can be used to pay for goods and services or can be converted to fiat currencies, such as the U.S. dollar, at rates determined on digital asset trading platforms or in individual end-user-to-end-user transactions under a barter system. Additionally, ZEC is used to pay for transaction fees to miners for verifying transactions on the Zcash Network. The Zcash Network is one of a number of projects intended to enhance blockchain technology. The Zcash Network’s primary enhancement of the blockchain was to add additional layers of privacy to traditional blockchain infrastructure so that users can make transactions that selectively discloses details related to those transactions. ZEC accomplishes this privacy preservation by using zk-SNARKs to protect both the amount and the sender and recipient of the transaction. The result is a private transaction known as a “shielded” transaction. Zcash’s shielded pools are also believed to provide enhanced resistance to certain potential quantum computing attacks that could be used to derive the user’s private key by running Shor’s algorithm on a quantum computer, as they do not expose a user’s public key. By contrast, Bitcoin and Zcash’s unshielded pool does expose a user’s public key. However, the zk-SNARK system itself relies on certain key generation mechanisms that may also be susceptible to quantum computing attacks, and the privacy-preserving features of the Zcash Network make it susceptible to certain unique vulnerabilities not present in transparent blockchains like the Bitcoin Network, resulting in a distinct overall quantum-risk profile for the Zcash network. From the inception of the Zcash Network through June 30, 2026, approximately 45% of Zcash transactions have been unshielded, 45% involved one party utilizing a shielded address, and 10% involved both parties utilizing a shielded address. On October 29, 2018, a Zcash Network upgrade called “Sapling” was activated. The purpose of Sapling was to improve the performance and functionality of shielded transactions to increase mobile, exchange and vendor adoption of shielded transactions and thus the Zcash Network’s overall privacy. The Sapling upgrade also removed a potential vulnerability, inadvertently created during the creation of Zcash, which allowed those charged with creating “shielded pools,” a term used to refer to groups of addresses capable of utilizing privacy-preserving features, to mint new ZEC without being detected. On May 31, 2022, ECC announced the activation of the NU5
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