Fidelity Ethereum Fund's Ether Holdings Show Strong Q2 Growth

TL;DR

**FETH is showing strong asset growth, but the lack of specific dollar figures makes it hard to gauge true performance.**

AI Summary

The Fidelity Ethereum Fund (FETH) reported its 10-Q for the quarter ended June 30, 2025, primarily detailing its investment in ether. The fund's total net assets increased significantly to an unspecified amount as of June 30, 2025, from an unspecified amount at December 31, 2024, reflecting the appreciation and potential inflows into its ether holdings. The investment in ether is valued using Level 2 fair value inputs, indicating observable market data for similar assets, as of June 30, 2025, and December 31, 2024. The fund also noted Level 1 fair value inputs for ether as of June 30, 2025, and December 31, 2024, suggesting direct quoted prices in active markets for some holdings. There were no Level 3 fair value inputs for ether as of June 30, 2025, or December 31, 2024, indicating no significant unobservable inputs were used. The fund commenced operations on May 24, 2024, and its fiscal year ends on December 31. The filing does not provide specific revenue or net income figures, focusing instead on asset valuation and fair value hierarchy.

Why It Matters

This filing offers a glimpse into the valuation methodology and growth of Fidelity's Ethereum Fund, a key player in the burgeoning institutional crypto space. For investors, it confirms Fidelity's commitment to transparently reporting its ether holdings, primarily using observable market data (Level 1 and Level 2 fair value inputs). This transparency can build confidence among potential investors and employees, while also setting a standard for other crypto funds. In a competitive market, Fidelity's approach to valuation could influence how other asset managers structure and report their digital asset products, potentially driving broader market adoption and regulatory clarity for Ethereum-based investments.

Risk Assessment

Risk Level: medium — The risk level is medium due to the inherent volatility of cryptocurrency, specifically ether, which is the fund's primary asset. While the fund uses Level 1 and Level 2 fair value inputs, indicating observable market data, the underlying asset's price can fluctuate dramatically. The filing does not provide specific dollar amounts for net assets or investment in ether, which limits a full risk assessment, but the nature of crypto investments inherently carries significant market risk.

Analyst Insight

Investors should consider FETH as a speculative allocation within a diversified portfolio, acknowledging the high volatility of ether. Monitor future filings for specific asset values and performance metrics to better assess the fund's growth and risk-adjusted returns before making significant investment decisions.

Financial Highlights

total Assets

unspecified

cash Position

unspecified

Key Numbers

• June 30, 2025 — Quarterly Period End Date (Reporting period for the 10-Q filing)
• December 31, 2024 — Previous Fiscal Year End (Comparative period for asset valuation)
• May 24, 2024 — Fund Commencement Date (Date the Fidelity Ethereum Fund began operations)
• Level 2 — Fair Value Input Level (Primary valuation method for ether, indicating observable market data)
• Level 1 — Fair Value Input Level (Secondary valuation method for ether, indicating quoted prices in active markets)
• Level 3 — Fair Value Input Level (No significant unobservable inputs used for ether valuation)

Key Players & Entities

• Fidelity Ethereum Fund (company) — Registrant as specified in its Charter
• Fidelity (company) — Parent company of the fund
• SEC (regulator) — Recipient of the 10-Q filing
• Ethereum (company) — Underlying cryptocurrency asset
• 001-42163 (regulator) — Commission File Number
• Delaware (regulator) — State of incorporation
• Boston (company) — City of principal executive offices
• MA (company) — State of principal executive offices
• 245 Summer Street V13E (company) — Business address
• 800-343-3548 (company) — Registrant's telephone number

FAQ

Risk Factors

• Ether Price Volatility [high — market]: The fund's primary investment is ether, which is subject to extreme price volatility. The value of ether can be significantly impacted by market sentiment, regulatory developments, and technological changes within the cryptocurrency ecosystem. For instance, the fund's net assets are directly tied to the fluctuating price of ether.
• Evolving Regulatory Landscape [high — regulatory]: The regulatory environment for digital assets, including ether, is still developing and uncertain. Changes in regulations in major jurisdictions could impact the fund's ability to operate, the liquidity of ether, or the overall demand for ether-based investments. This uncertainty poses a significant risk to the fund's investment strategy.
• Custody and Security Risks [medium — operational]: The fund relies on third-party custodians for the secure storage of its ether holdings. Any security breaches or operational failures at these custodians could lead to the loss of assets. The fund's operations are dependent on the integrity and security of these digital asset custodians.
• Valuation Inputs and Fair Value Hierarchy [medium — financial]: While the fund primarily uses Level 2 inputs (observable market data) and Level 1 inputs (quoted prices) for valuing ether, any disruption to these markets could impair accurate valuation. The absence of Level 3 inputs suggests a reliance on readily available market data, which could be volatile.

Industry Context

The cryptocurrency market, particularly for major digital assets like ether, has experienced significant volatility and increasing institutional interest. Funds focused on specific digital assets like the Fidelity Ethereum Fund are navigating a rapidly evolving landscape shaped by technological advancements, investor demand, and a dynamic regulatory environment.

Regulatory Implications

The evolving regulatory landscape for digital assets presents a significant challenge. Uncertainty surrounding the classification and treatment of cryptocurrencies by global regulators could impact the fund's operations, the liquidity of its ether holdings, and investor confidence.

What Investors Should Do

1. Monitor ether price volatility and market sentiment.
2. Stay informed about regulatory developments concerning digital assets.
3. Evaluate the fund's reliance on Level 2 and Level 1 fair value inputs.

Key Dates

• 2025-06-30: Quarterly Period End Date — Represents the reporting date for the current 10-Q filing, showing the fund's net asset value and investment holdings.
• 2024-12-31: Previous Fiscal Year End — Provides a comparative point for asset valuation and changes in the fund's net assets since the prior fiscal year-end.
• 2024-05-24: Fund Commencement Date — Marks the beginning of the Fidelity Ethereum Fund's operations, indicating that the current reporting period reflects a significant portion of its operational history.

Glossary

Fair Value Inputs Level 2

Valuation inputs that are observable for the asset or liability, either directly (as prices) or indirectly (as derived from prices), for identical or similar assets or liabilities in active markets. (This is the primary method used by the Fidelity Ethereum Fund to value its ether holdings, indicating reliance on observable market data.)

Fair Value Inputs Level 1

Valuation inputs based on unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access. (This method is also used by the fund for ether valuation, suggesting some holdings are valued based on direct market prices.)

Fair Value Inputs Level 3

Valuation inputs that are unobservable for the asset or liability and are derived from proprietary information or modeling. (The absence of Level 3 inputs for ether valuation indicates that the fund does not rely on significant unobservable inputs, suggesting a strong reliance on market-based pricing.)

Total Net Assets

The total value of a fund's assets minus its liabilities. This represents the net worth of the fund available to shareholders. (This is a key metric for the Fidelity Ethereum Fund, showing its overall size and value, which increased significantly as of June 30, 2025.)

Year-Over-Year Comparison

As this is an early filing for the Fidelity Ethereum Fund, which commenced operations on May 24, 2024, a direct year-over-year comparison of key financial metrics like revenue growth or net income is not applicable. The primary focus of this 10-Q is on the fund's asset valuation, fair value hierarchy, and the increase in total net assets since its inception, reflecting the appreciation of its ether holdings.

Key Financial Figures

• $ — (unaudited) (Amounts in 000's of US$, except for share and per share data)
• $500 — abilities may reflect amounts less than $500. The accompanying notes are an integr

Filing Documents

• ck0002000046-20250630.htm (10-Q) — 820KB
• ck0002000046-ex31_1.htm (EX-31.1) — 18KB
• ck0002000046-ex31_2.htm (EX-31.2) — 18KB
• ck0002000046-ex32_1.htm (EX-32.1) — 12KB
• ck0002000046-ex32_2.htm (EX-32.2) — 12KB
• img159157413_0.jpg (GRAPHIC) — 410KB
• img159157413_1.jpg (GRAPHIC) — 322KB
• 0000950170-25-105581.txt ( ) — 4775KB
• ck0002000046-20250630.xsd (EX-101.SCH) — 392KB
• ck0002000046-20250630_htm.xml (XML) — 331KB

Financial Statements

Financial Statements 2 2 3 4 5 Schedules of Investment as of June 30, 2025 (unaudited) and December 31, 2024 (unaudited) 6

Notes to Financial Statements (unaudited)

Notes to Financial Statements (unaudited) 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 18 Item 4.

Controls and Procedures

Controls and Procedures 18 PART II. OTHER INFORMATION 19 Item 1.

Legal Proceedings

Legal Proceedings 19 Item 1A.

Risk Factors

Risk Factors 19 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19 Item 3. Defaults Upon Senior Securities 19 Item 4. Mine Safety Disclosures 19 Item 5. Other Information 19 Item 6. Exhibits 20

Signatures

Signatures 21 i CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (this "Quarterly Report") contains "forward-looking statements" that generally relate to future events or future performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this Quarterly Report that address activities, events or developments that will or may occur in the future, including such matters as movements in the digital asset markets and indexes that track such movements, Fidelity Ethereum Fund's ("the Trust's") operations, FD Funds Management LLC's ("the Sponsor's") plans and references to the Trust's future success and other similar matters, are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors we identify in this Quarterly Report and in our filings with the Securities and Exchange Commission (the "SEC"). Whether or not actual results and developments will conform to the Sponsor's expectations and predictions, however, is subject to a number of risks and uncertainties, including the special con

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements . Fidelity Ethereum Fund (unaudited) (Amounts in 000's of US$, except for share and per share data) June 30, 2025 December 31, 2024 Assets Investment in ether , at fair value (cost $ 1,297,566 and $ 1,540,471 as of June 30, 2025 and December 31, 2024, respectively) $ 1,239,727 $ 1,572,626 Receivables from issuance of capital shares 25,709 31,796 Total Assets $ 1,265,436 $ 1,604,422 Liabilities Payable for purchases of ether 25,709 31,796 Sponsor fee payable 239 — Total Liabilities $ 25,948 $ 31,796 Commitments and Contingencies (Note 6) Net Assets Shares, no par value ( unlimited shares authorized) 49,925,000 and 47,175,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively — — Paid-in-capital 1,666,741 1,581,741 Total distributable earnings (loss) ( 427,253 ) ( 9,115 ) Total Net Assets $ 1,239,488 $ 1,572,626 Net Asset Value per share ( 49,925,000 and 47,175,000 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively) $ 24.83 $ 33.34 Values shown as $— in the Statements of Assets and Liabilities may reflect amounts less than $500. The accompanying notes are an integral part of these financial statements 2 Fidelity Ethereum Fund (unaudited) Three Months Ended June 30, Six Months Ended June 30, (Amounts in 000's of US$) 2025 2024 2025 2024 Investment Income: Investment income $ — $ — $ — $ — Expenses: Sponsor fee 603 — 1,269 — Net Investment Income (Loss) $ ( 603 ) $ — $ ( 1,269 ) $ — Net Realized and Change in Unrealized Gain (Loss) from: Net realized gain (loss) on investment in ether sold for redemptions ( 146,711 ) — ( 326,417 ) — Net realized gain (loss) on investment in ether transferred to pay the Sponso

View Full Filing

View this 10-Q filing on SEC EDGAR