> For the complete documentation index, see [llms.txt](https://docs.fractit.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.fractit.com/the-protocol/nav-calculation.md).

# NAV Calculation

***

### The formula

```
NAV per Token = (Custody Value + Cash Balances − Accrued Liabilities) ÷ Total Token Supply
```

| Component           | Definition                                                                                           |
| ------------------- | ---------------------------------------------------------------------------------------------------- |
| Custody Value       | Marked-to-market value of all constituent shares held by the SPV, using DFM official closing prices  |
| Cash Balances       | Uninvested subscription proceeds and dividend receipts held pending deployment                       |
| Accrued Liabilities | Management fee accruals, broker execution fees, and other operational costs accrued but not yet paid |
| Total Token Supply  | Total number of DFMREIT tokens in circulation at the time of calculation                             |

***

### Indicative vs. official NAV

|                  | Indicative NAV                     | Official NAV                        |
| ---------------- | ---------------------------------- | ----------------------------------- |
| Update frequency | Real-time during DFM trading hours | Daily, after market close           |
| Data source      | Live DFM market prices             | DFM official closing prices         |
| Purpose          | Platform display, AMM reference    | Subscription and redemption pricing |

When DFM is closed, the last published official NAV is shown as the reference value. The AMM market price may trade at a premium or discount to this value — that spread is displayed in real-time on the platform at all times.

***

### Fees in the NAV

| Fee              | Rate       | Treatment                                            |
| ---------------- | ---------- | ---------------------------------------------------- |
| Management fee   | 0.25% p.a. | Accrued daily and reflected in the NAV               |
| Subscription fee | 0.50%      | Deducted at issuance — tokens issued net of this fee |
| Redemption fee   | 0.50%      | Deducted from the payout at the time of redemption   |

The AMM trading fee (0.25% per swap) does not affect the NAV. It is paid directly to Liquidity Providers at the time of each trade.

***

### Premium and discount

The AMM secondary market price may diverge from the indicative NAV. This is normal, particularly outside DFM trading hours.

Natural arbitrage keeps the spread contained over time:

* **Discount (AMM price < NAV):** Profitable to buy cheap tokens on AMM and redeem at NAV during the next window → AMM price rises.
* **Premium (AMM price > NAV):** Profitable to subscribe at NAV during market hours and sell on AMM → AMM price falls.

The current premium or discount is always displayed on the platform before any trade or subscription is confirmed.