Franklin Solana Trust

The Franklin Solana Trust operates in the digital asset industry, specifically focused on providing investment exposure to Solana, a digital asset that launched in 2020 ¹. The industry is characterized by extreme volatility, with Solana exhibiting a historical annualized volatility of 121.67% ² and a maximum annual price decrease of -95.34% ³. The Solana Network has experienced several high-profile outages, including a 17-hour disruption in September 2021 ⁴, a nearly 19-hour outage in February 2023 ⁵, and a 5-hour outage in February 2024 ⁶. The digital asset markets experienced a significant dislocation in October 2025, referred to as the 'October 2025 Flash Crash,' which involved liquidations of up to $20 billion ⁷ in collateral across various digital assets. The industry faces ongoing regulatory uncertainty in the U.S., and the Solana Network is still developing its governance and scaling solutions, including a planned hard fork called 'Alpenglow' announced in May 2025 ⁸.

The Fund faces competition from alternative digital assets and smart contract platforms, including Ethereum, Avalanche, and Cardano ⁹, which could negatively impact demand for Solana. The Fund's competitive positioning is based on its design to remove the complexities and operational burdens of a direct investment in Solana, offering a cost-effective alternative means of obtaining investment exposure through the securities markets. The Fund's timing in reaching the market and its fee structure relative to other competitor Solana products could have a detrimental effect on the scale and sustainability of the Fund ¹⁰. The Fund's shares are listed on NYSE Arca under the ticker symbol 'SOEZ' ¹¹, and as of March 31, 2026, the Fund had four authorized participants: Jane Street Capital, LLC, Virtu Americas LLC, Macquarie Capital (USA) Inc., and J.P. Morgan Securities LLC ¹².

The Fund generates revenue through its investment objective to reflect the performance of the price of Solana and rewards from staking as much of the Fund's Solana as is practicable, up to 100% ¹³. The Fund is a passive investment vehicle and does not actively manage its Solana holdings; it does not utilize leverage, derivatives, or similar instruments. The Fund's only ordinary recurring expense is the fee paid to the Sponsor at an annual rate of 0.19% ¹⁴ of the daily net asset value. The Fund issues and redeems shares only in Creation Units of 50,000 ¹⁵ shares or multiples thereof, and only authorized participants may purchase or redeem Creation Units. The Fund expects to receive Staking Rewards in the form of Solana, which may be treated as income for U.S. federal income tax purposes ¹⁶.

The Fund's assets consist primarily of Solana held by the Solana Custodian, Coinbase Custody Trust Company, LLC ¹⁷, and cash. The Solana Custodian keeps custody of all of the Fund's Solana in the Vault Balance, which is held in cold storage, with private keys stored in air-gapped storage facilities globally. A portion of the Fund's Solana and cash may be temporarily held with the Prime Broker, Coinbase Inc. ¹⁸, in the Trading Balance for creations, redemptions, and payment of expenses. The Fund's Solana in the Vault Balance is held in segregated wallets and is not commingled with the Solana Custodian's or its affiliates' assets ¹⁹. The Fund's cash is held by the Cash Custodian, The Bank of New York Mellon ²⁰. The Fund also engages in staking activities through the Staking Provider, Coinbase Crypto ²¹, under a Staking Services Agreement with an initial term of two years ²², which automatically renews at the end of successive 12-month periods unless terminated.

The Fund's investment objective is to reflect generally the performance of the price of Solana and rewards from staking as much of the Fund's Solana as is practicable, up to 100% ²³, to the extent the Sponsor determines the Fund may do so without undue legal or regulatory risk, including without adversely affecting the Fund's status as a grantor trust for U.S. federal income tax purposes. The Fund's net asset value is calculated based on the CME CF Solana-Dollar Reference Rate — New York Variant ²⁴, which is the Index, unless the Sponsor determines it is unreliable. The Index is calculated by aggregating the notional value of Solana trading activity across major spot Solana platforms, including Kraken, Gemini, Coinbase, LMAX Digital, Bitstamp, and Crypto.com ²⁵, which are the Constituent Platforms as of the end of the reporting period. The Index is designed based on the IOSCO Principles for Financial Benchmarks and is a Registered Benchmark under the UK Benchmark Regulations ²⁶. The Sponsor may, in its sole discretion, waive all or a portion of the Sponsor's fee for stated periods; for a period from December 3, 2025 ²⁷ to May 31, 2026 ²⁸, the Sponsor waived the entire Sponsor's Fee on the first $5.0 billion ²⁹ of the Fund's assets.

The Fund's shares began trading on the NYSE Arca on December 3, 2025 ³⁰. The Fund had 650,000 ³¹ outstanding shares as of June 9, 2026. The Fund entered into a Master Purchase and Sale Agreement for Digital Assets with JSCT, LLC (Jane Street) ³² and a Liquidity Provider Agreement with Virtu Financial Singapore Pte., Ltd. (Virtu) ³³ to allow the Fund to enter into spot purchase or sale transactions in Solana. As of March 31, 2026, the Fund had four authorized participants: Jane Street Capital, LLC, Virtu Americas LLC, Macquarie Capital (USA) Inc., and J.P. Morgan Securities LLC ³⁴. The Sponsor waived the entire Sponsor's Fee on the first $5.0 billion ³⁵ of the Fund's assets for a period from the initial listing date of December 3, 2025 ³⁶ to May 31, 2026 ³⁷. The Fund's organizational and offering costs are borne by the Sponsor and will not be reimbursed ³⁸.

The Fund's only ordinary recurring expense is the Sponsor's fee at an annual rate of 0.19% ³⁹ of the daily net asset value. The Sponsor assumes ordinary fees and expenses, including up to $500,000 ⁴⁰ per annum in ordinary legal fees and expenses. The Fund sells Solana as needed to pay the Sponsor's fee and any expenses not assumed by the Sponsor. The Sponsor also paid the costs of the Fund's organization and the initial offering costs and may not seek reimbursement ⁴¹. The Fund's cash redemption procedures involve a settlement period generally expected to be trade date plus three business days (T+3) ⁴², unless an earlier settlement is practicable. The Fund's in-kind redemption procedures also generally expect settlement on T+3 ⁴³. The Fund may suspend the acceptance of purchase orders or the right of redemption under certain circumstances, including when the Sponsor determines that delivery, disposal, or evaluation of Solana is not reasonably practicable ⁴⁴.

The Fund's primary growth vector is its investment objective to reflect the performance of the price of Solana and rewards from staking as much of the Fund's Solana as is practicable, up to 100% ⁴⁵. The Fund seeks to provide a cost-effective alternative means of obtaining investment exposure through the securities markets that is similar to an investment in Solana, designed to remove the obstacles of direct investment. The Fund intends to stake as much of its Solana as possible through one or more Staking Providers, with Coinbase Crypto serving as the initial Staking Provider ⁴⁶. The Fund expects to receive Staking Rewards in the form of Solana, which may be treated as income for U.S. federal income tax purposes ⁴⁷. The Sponsor intends to convert Staking Rewards to cash and distribute such amounts to shareholders on a monthly basis, with distributions generally calculated on a three-month lagged basis ⁴⁸.

The Fund's growth also depends on the development and adoption of the Solana Network. The Solana Network has been implementing software upgrades such as QUIC TPU, stake-weighted QoS, localized fee markets, sharding, token-22, token extensions, and Firedancer ⁴⁹. A significant upcoming planned hard fork called 'Alpenglow' was announced in May 2025 ⁵⁰, aiming to reduce transaction finality time and enhance network security. In 2025, Solana attracted approximately 4,100 ⁵¹ new developers. The Fund's ability to grow is also tied to the acceptance of Solana as a means of payment and the continued development of decentralized applications and smart contracts on the Solana Network, which require Solana to pay gas fees ⁵².

The Fund's margin and cost outlook is primarily defined by its fee structure. The Fund's only ordinary recurring expense is the Sponsor's fee at an annual rate of 0.19% ⁵³ of the daily net asset value. The Sponsor assumes ordinary fees and expenses, including up to $500,000 ⁵⁴ per annum in ordinary legal fees and expenses. The Sponsor may, at its sole discretion, waive all or a portion of the Sponsor's fee for stated periods; for a period from December 3, 2025 ⁵⁵ to May 31, 2026 ⁵⁶, the Sponsor waived the entire Sponsor's Fee on the first $5.0 billion ⁵⁷ of the Fund's assets. The Fund bears transaction costs, including any Solana network fees or other similar transaction fees, in connection with sales of Solana necessary to pay the Sponsor's fee and other Fund expenses not assumed by the Sponsor ⁵⁸.

The Fund's operational outlook depends on its service providers. The Solana Custodian, Coinbase Custody Trust Company, LLC ⁵⁹, keeps custody of the Fund's Solana in cold storage, with private keys stored in air-gapped storage facilities globally. The Prime Broker, Coinbase Inc. ⁶⁰, holds a portion of the Fund's Solana and cash temporarily in the Trading Balance for creations, redemptions, and payment of expenses. The Fund's Solana in the Vault Balance is held in segregated wallets and is not commingled ⁶¹. The Fund's cash is held by the Cash Custodian, The Bank of New York Mellon ⁶². The Staking Provider, Coinbase Crypto ⁶³, provides staking services under a Staking Services Agreement with an initial term of two years ⁶⁴, which automatically renews at the end of successive 12-month periods unless terminated. The Fund may hold unstaked Solana to pay expenses, liquidate Staking Rewards, or facilitate creation and redemption activity ⁶⁵.

The Sponsor paid the costs of the Fund's organization and the initial offering costs and may not seek reimbursement ⁶⁶. The Sponsor assumes ordinary fees and expenses, including up to $500,000 ⁶⁷ per annum in ordinary legal fees and expenses. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Fund in excess of the $500,000 ⁶⁸ per annum stipulated in the Sponsor Agreement. The Fund's only ordinary recurring expense is the Sponsor's fee at an annual rate of 0.19% ⁶⁹ of the daily net asset value. The Fund does not have a policy on share repurchases or dividends, but the Sponsor intends to convert Staking Rewards to cash and distribute such amounts to shareholders on a monthly basis ⁷⁰.

The Fund faces significant headwinds from the extreme volatility of digital asset prices. Solana has exhibited a historical annualized volatility of 121.67% ⁷¹ and a maximum annual price decrease of -95.34% ⁷². Over the past year ending March 31, 2026, Solana's highest price was $247.63 ⁷³ on September 18, 2025, and its lowest price was $78.18 ⁷⁴ on February 5, 2026. The digital asset markets experienced the 'October 2025 Flash Crash,' which included liquidations of up to $20 billion ⁷⁵ in collateral. The Solana Network has suffered several outages, including a 17-hour disruption in September 2021 ⁷⁶, a nearly 19-hour outage in February 2023 ⁷⁷, and a 5-hour outage in February 2024 ⁷⁸. The Fund is not actively managed and will not take any actions to mitigate the impacts of volatility ⁷⁹.

Regulatory uncertainty is a major constraint. Digital asset markets in the U.S. exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of Solana or the Shares ⁸⁰. The treatment of digital currency for U.S. federal, state, and local income tax purposes is uncertain ⁸¹. The treatment of Staking Activities under U.S. federal securities laws may be unsettled ⁸². The Fund's ability to stake Solana may be affected by regulatory or legal developments ⁸³. The Fund may refrain from staking some or all of its Solana if, in the Sponsor's determination, staking would interfere with the Fund's ability to continue satisfying the Staking Requirement or in other exceptional circumstances ⁸⁴.

The value of the Shares is subject to extreme volatility in the price of Solana, which has exhibited a historical annualized volatility of 121.67% ⁸⁵ and a maximum annual price decrease of -95.34% ⁸⁶. Over the past year ending March 31, 2026, Solana's price ranged from a high of $247.63 ⁸⁷ to a low of $78.18 ⁸⁸. The digital asset markets experienced the 'October 2025 Flash Crash,' involving liquidations of up to $20 billion ⁸⁹ in collateral. Staking activities carry a risk of loss of Solana tokens through 'slashing' penalties, and staked Solana is subject to protocol-defined warm-up, activation, and withdrawal periods during which it is temporarily locked and inaccessible ⁹⁰. The Fund's Solana held in the Trading Balance with the Prime Broker represents an omnibus claim on the Prime Broker's Solana held on behalf of clients, and the Fund does not have an identifiable claim to any particular Solana in the Trading Balance ⁹¹. The Solana Custodian's liability is limited to the greater of the aggregate fees paid in the 12-month period or the value of the supported digital assets on deposit, with an aggregate liability cap of $100,000,000 ⁹² per cold storage address. The Fund's ability to create and redeem Shares may be adversely affected if the Custodian Agreement, Prime Broker Agreement, or Staking Provider Agreement is terminated or if a service provider fails to perform ⁹³.

The Sponsor's message emphasizes that the Fund is a passive investment vehicle designed to provide a cost-effective alternative means of obtaining investment exposure to Solana through the securities markets, removing the complexities and operational burdens of a direct investment. The Sponsor does not actively manage the Solana held by the Fund and will not sell Solana at times when its price is high or acquire Solana at low prices in expectation of future price increases ⁹⁴. The Fund seeks to reflect generally the performance of the price of Solana and rewards from staking as much of the Fund's Solana as is practicable, up to 100% ⁹⁵, to the extent the Sponsor determines the Fund may do so without undue legal or regulatory risk. The Sponsor's strategic priorities include maintaining the Fund's status as a grantor trust for U.S. federal income tax purposes, managing staking activities to generate Staking Rewards while mitigating risks such as slashing penalties and liquidity constraints from staking lock-up periods, and ensuring the Fund's operational resilience through its service providers, including the Solana Custodian, Prime Broker, and Staking Provider. The Sponsor has waived the entire Sponsor's Fee on the first $5.0 billion ⁹⁶ of the Fund's assets for a period from December 3, 2025 ⁹⁷ to May 31, 2026 ⁹⁸ to help the Fund achieve scale.