# Fidelity Ethereum Fund: Form 10-Q for the period ended Mar 31, 2025

- Company: [Fidelity Ethereum Fund](/companies/feth.md) (CIK 2000046)
- Form: 10-Q
- Filed: 2025-05-09
- Accepted by EDGAR: May 9, 2025, 15:41 ET
- Period: 2025-03-31
- Accession: 0000950170-25-067925
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/2000046/000095017025067925/ck0002000046-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/2000046/000095017025067925/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$665.3m | us-gaap:ProfitLoss |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $148.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Share repurchases | 3 months, 2025-01-01 to 2025-03-31 | $529.8m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | at 2025-03-31 | $740.5m | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $6.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $733.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 15,644 characters.

*The following discussion and analysis of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, our unaudited financial statements and related notes included elsewhere in this Quarterly Report, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable. Our actual results could differ materially from those discussed in these forward-looking statements.*

### Overview of the Trust

Fidelity Ethereum Fund (the “Trust”) is an exchange-traded product that issues shares of beneficial interest (the “Shares”) that trade on the Cboe BZX Exchange, Inc. (the “Exchange”). The Trust’s investment objective is to seek to track the performance of ether, as measured by the performance of Fidelity Ethereum Reference Rate (“the Index”), adjusted for the Trust’s expenses and other liabilities. The Index is constructed using ether price feeds from eligible ether spot markets and a volume-weighted median price (“VWMP”) methodology, calculated every 15 seconds based on VWMP spot market data over rolling sixty-minute increments. The Index is designed to reflect the performance of ether in U.S. dollars. In seeking to achieve its investment objective, the Trust holds ether and values its Shares daily based on the same methodology used to calculate the Index. The Trust is sponsored by FD Funds Management LLC (the “Sponsor”), a wholly owned subsidiary of FMR LLC.

The Trust is passively managed and does not pursue active management investment strategies. The Trust will not participate in the proof-of-stake validation mechanism of the Ethereum network (i.e., the Trust will not “stake” its ether) to earn additional ether or seek other means of generating income from its Ether Holdings. The Sponsor believes that the Shares are designed to provide investors with a cost-effective and convenient way to invest in ether without purchasing, holding and trading ether directly. The Trust sells and redeems Shares only with Authorized Participants in exchange for cash and only in blocks of 25,000 Shares.

The Shareholders of the Trust take no part in the management or control, and have no voice in, the Trust’s operations or business. Except in limited circumstances, Shareholders have no voting rights under the Trust Agreement.

**Valuation of Ether and Computation of Net Asset Value (“**NAV”)

For purposes of calculating the Trust’s net asset value (“Trust’s NAV”) per Share, the Trust’s holdings of ether are valued using the same methodology as used to calculate the Index.

The Trust’s NAV per Share is calculated by:

- taking the fair market value of its total assets based on the volume-weighted median price of ether used for the calculation of the Index;
- subtracting any liabilities; and
- dividing that total by the total number of outstanding Shares.

The Administrator calculates the Trust’s NAV once each Exchange trading day. The Trust’s NAV for a normal trading day is released after 4:00 p.m. Eastern time (“EST”). Trading during the core trading session on the Exchange typically closes at 4:00 p.m. EST. However, the Trust’s NAVs are not officially struck until after 4:00 p.m. EST. The pause after 4:00 p.m. EST provides an opportunity for the Sponsor to algorithmically detect, flag, investigate, and correct unusual pricing should it occur. The Sponsor has established a Valuation Committee to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Valuation Committee. If the Valuation Committee determines in good faith that the Index does not reflect an accurate ether price, then the Valuation Committee instructs the Administrator to employ an alternative method to determine the fair value of the Trust’s assets. In determining an alternative fair value method, the Valuation Committee generally considers such criteria as observable market-based inputs, including market quotations and last sale information from third-party pricing services and/or trading platforms on which ether are traded. The Valuation Committee’s selection of third-party pricing services used considers the qualifications, experience, and history of the pricing services and whether their valuation methodologies and procedures are reasonably designed to produce prices that reflect fair value under the prevailing market conditions.

In addition, in order to provide updated information relating to the Trust for use by Shareholders and market professionals, a third-party financial data provider will calculate and disseminate throughout the core trading session on each trading day an updated intraday indicative value (“IIV”). The IIV will be calculated based on the Trust’s ether holdings and any other assets expected to comprise that day’s Trust’s NAV calculation. The third-party financial data provider will use the Blockstream Crypto Data Feed Streaming Level 1 as the pricing source for the spot ether. The Blockstream Crypto Data Feed Streaming Level 1 calculates an average of current ether price levels of the ether trading platforms that are available on its feed. The Trust will provide an IIV per Share updated every 15 seconds, as calculated by the Exchange or a third-party financial data provider during the Exchange’s regular trading hours of 9:30 a.m. to 4:00 p.m. EST (“Regular Trading Hours”). The IIV disseminated during Regular Trading Hours should not be viewed as an actual real-time update of the Trust’s NAV, which will be calculated only once at the end of each trading day as described herein.

### Critical Accounting Policies and Estimates

### Principal Market and Fair Value Determination

The Trust’s periodic financial statements are prepared in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”). ASC Topic 820 requires the fair value measurement of ether to assume that transactions take place in the principal market or, in the absence of a principal market, the most advantageous market, for ether that the Trust has access to. The Trust may buy and sell ether through brokered, dealer, over-the-counter, exchange or other markets. The Sponsor determines in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP. The Trust engaged a third-party pricing service to obtain an exchange-traded price from a principal market for ether, which was determined and designated based on its consideration of several exchange characteristics, including oversight, and the volume and frequency of trades. The exchange-traded price from the principal market on the periodic financial statements is as of 11:59:59 p.m. EST on the Trust’s financial statement measurement date.

### Results of Operations

The Trust’s commencement of operations was July 23, 2024. The Trust had no operations prior to July 23, 2024, other than matters relating to its organization and the registration of the Shares under the Securities Act of 1933 (the “1933 Act”).

### The Quarter Ended March 31, 2025

The Trust’s net assets decreased from approximately $1.6 billion as of December 31, 2024, to $0.7 billion as of March 31, 2025. The change in the Trust’s net assets was driven by a decrease in outstanding Shares, which fell from 47,175,000 as of December 31, 2024 to 40,025,000 as of March 31, 2025 as a result of 19,500,000 Shares (780 Baskets) being redeemed and 12,350,000 Shares (494 Baskets) being created, coupled with a decrease in the price of ether, which fell 44.96% from $3,333.60 as of December 31, 2024 to $1,834.80 as of March 31, 2025.

The Trust’s NAV per Share decreased 45.16% from $33.44 on December 31, 2024 to $18.34 on March 31, 2025.

The Trust’s NAV per Share of $36.93 at January 06, 2025, was the highest during the three months ended March 31, 2025, compared with a low of $18.34 at March 31, 2025.

The quantity of ether owned by the Trust and held by the ether custodian decreased from 471,750 as of December 31, 2024, to 400,086 as of March 31, 2025. The decrease in quantity resulted from net redemptions of Shares during the quarter which corresponded to net sales of ether.

The net decrease in net assets resulting from operations for the three months ended March 31, 2025, was $0.7 billion, primarily resulting from a net unrealized depreciation on investment in ether of $0.5 billion and a net realized loss of $0.2 billion from the sale of the investment in ether for the redemption of Shares.

### Cash Resources and Liquidity

The Trust does not hold a cash balance except in connection with the issuance and redemption of Baskets or to pay expenses not assumed by the Sponsor. To the extent the Trust does not have available cash to facilitate redemptions or pay expenses not assumed by the Sponsor, the Trust will sell ether. When selling ether on behalf of the Trust, the Sponsor endeavors to minimize the Trust’s holdings of assets other than ether. As a consequence, the Sponsor expects that the Trust will have an immaterial amount of cash flow from its operations and that its cash balance will be insignificant at the end of each reporting period. The Trust’s only sources of cash are proceeds from the sale of Baskets and ether.

In exchange for the Sponsor Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. The Sponsor contractually waived the Sponsor Fee until December 31, 2024. On January 1, 2025, the Sponsor Fee began accruing at an annual rate of 0.25% of the Trust’s Ether Holdings.

### Off Balance Sheet Arrangements and Contractual Obligations

The Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off balance sheet financing arrangements and has no loan guarantee arrangements or off balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services for the Trust. While the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on a Trust’s financial position.

Sponsor Fee payments made to the Sponsor are calculated as a fixed percentage of the Trust’s Ether Holdings. As such, the Sponsor cannot anticipate the payment amounts that will be required under these arrangements for future periods as the Trust’s Ether Holdings are not known until a future date.

### Selected Operating Data

|  | March 31, 2025 |
| --- | ---: |
| Price of ether on principal market (1) | $1,834.80 |
| NAV per Share (2) | $18.34 |

(1) The Trust performed an assessment of the principal market at 11:59:59 p.m., EST, on March 31, 2025.

(2) The NAV per Share was calculated using the fair value of ether based on the principal market price at 11:59:59 p.m., EST, on March 31, 2025.

|  | March 31, 2025 (Last Business Day) |
| --- | ---: |
| Index price (3) | $1,834.80 |
| Trust’s NAV per Share (3) | $18.34 |

(3) The Trust’s NAV per Share is derived from the Index Price as represented by the Index as of 4:00 p.m., EST, on the last business day of the period. The Trust’s NAV per Share is calculated using a non-GAAP methodology. Refer to the “Overview of the Trust” and “Valuation of Ether and Computation of Net Asset Value” sections of Item 2 herein for a description of the Index methodology and calculation of the Trust’s NAV per Share. The ether spot markets included in the Index as of the last business day of the period were Bitstamp, Coinbase, Crypto.com, Gemini, Kraken, and LMAX Digital.

As of 4:00 p.m., EST, on the last business day of the quarter ended March 31, 2025, the Trust’s total value of ether based on the Index Price (non-GAAP methodology) was $734,078,020 and the total market value of the Trust’s ether based on the price of ether at 4:00 p.m., EST, in the principal market was $731,089,376.

|  | December 31, 2024 |
| --- | ---: |
| Price of ether on principal market (1) | $3,333.60 |
| NAV per Share (2) | $33.34 |

(1) The Trust performed an assessment of the principal market at 11:59:59 p.m., EST, on December 31, 2024.

(2) The NAV per Share was calculated using the fair value of ether based on the principal market price at 11:59:59 p.m., EST, on December 31, 2024.

|  | December 31, 2024 (Last Business Day) |
| --- | ---: |
| Index price (3) | $3,344.41 |
| Trust’s NAV per Share (3) | $33.44 |

(3) The Trust’s NAV per Share is derived from the Index Price as represented by the Index as of 4:00 p.m., EST, on the last business day of the period. The Trust’s NAV per Share is calculated using a non-GAAP methodology. Refer to the “Overview of the Trust” and “Valuation of Ether and Computation of Net Asset Value” sections of Item 7 herein for a description of the Index methodology and calculation of the Trust’s NAV per Share. The ether spot markets included in the Index as of the last business day of the period were Bitstamp, Coinbase, Gemini, itBit, Kraken, and LMAX Digital.

As of 4:00 p.m., EST, on the last business day of the quarter ended December 31, 2024, the Trust’s total value of ether based on the Index Price (non-GAAP methodology) was $1,577,725,418 and the total market value of the Trust’s ether based on the price of ether at 4:00 p.m., EST, in the principal market was $1,575,833,700.

### Analysis of Price Movements

Investors should understand the relationship between the Index Price (non-GAAP measurement of the price of ether), the Trust’s NAV per Share (non-GAAP measurement of the price of ether affected by non-ether net assets, such as the Sponsor Fee), the Trust’s market price per share, and ether’s principal market price. Investors should also be aware that past movements are not indicators of future movements. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world.

The following chart illustrates the movement in the Index Price, the principal market price, and the Trust’s NAV per Share during the three months ended March 31, 2025.

During the three months ended March 31, 2025, the Index Price has ranged from $1,817.09 on March 29, 2025, to $3,692.75 on January 6, 2025. The Sponsor has not observed a material difference between the Index Price and average prices from the constituent ether spot markets individually or as a group.

During the three months ended March 31, 2025, the 11:59:59 p.m. EST market price of ether, as reported on the Trust’s principal market, has ranged from $1,798.50 on March 30, 2025, to $3,674.12 on January 6, 2025.

Shares trade in the secondary market on the Exchange. Shares may trade in the secondary market at prices that are lower or higher relative to the Trust’s NAV per Share. The amount of the discount or premium in the trading price relative to the Trust’s NAV per Share may be influenced by various factors, including the number of Shareholders who seek to purchase or sell Shares in the secondary market and the liquidity of ether. The following chart sets out the historical closing prices for the Shares as reported by the Exchange and the Trust’s NAV per Share during the three months ended March 31, 2025.

## Controls and procedures

As filed, 1,035 characters.

### Disclosure Controls and Procedures

### (a) Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended, we, under the supervision and with the participation of our President (principal executive officer) and Treasurer (principal financial and accounting officer), carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report and determined that our disclosure controls and procedures are effective as of the end of the period covered by the Quarterly Report.

### (b) Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 188 characters.

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in our Prospectus dated July 22, 2024 (Registration No. 333-278249).

Filed May 9, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-067925. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.