Fidelity Ethereum Fund

What they do

The Trust issues shares that trade on the Cboe BZX Exchange, representing fractional undivided beneficial interest in the Trust's ether holdings. Its investment objective is to track the performance of ether, as measured by the Index, adjusted for expenses and liabilities. The Trust holds ether with the custodian Fidelity Digital Assets, N.A., and does not stake its ether or invest in derivatives. Shares are created and redeemed only in baskets of 25,000 shares, in exchange for cash or ether.

Revenue drivers

• Sponsor fee — The Trust earns revenue through a sponsor fee, which is accrued daily and paid in ether, based on the Trust's net asset value. The fee is the primary source of income for the Sponsor, FD Funds Management LLC.
• Net asset value growth — The Trust's assets and revenue vary with the price of ether and the number of shares outstanding. Higher ether prices and greater share issuance increase the asset base on which the sponsor fee is calculated.

Recent performance

For fiscal year 2025, the Trust reported a net loss of $422.3 million and operating cash flow of negative $1.04 billion. As of June 30, 2026, total assets were $758.8 million, total liabilities were $160,000, and shareholder equity was $758.6 million. The Trust held no cash or cash equivalents as of that date. These figures reflect the Trust's ongoing operations and the impact of ether price movements.

Strategy

The Trust is passively managed and does not pursue active management strategies, use leverage, or invest in derivatives. Its strategy is to hold ether and value shares daily using the Index methodology. The Sponsor may, in good faith, employ alternative valuation methods if the Index does not reflect an accurate ether price. The Trust does not participate in staking or other income-generating activities.

Risks

• Ether price volatility — Extreme volatility in the trading price of ether could materially adversely affect the value of the Shares, and the Shares could lose all or substantially all of their value.
• New asset class — Digital assets like ether are a relatively new asset class, and the medium-to-long term value of the Shares depends on blockchain technology development, usership, and regulatory stability.
• No active management — The Trust is not actively managed and will not take actions to mitigate the impact of volatility in the price of ether.
• Custody and regulatory risks — All ether is held by a single custodian, Fidelity Digital Assets, N.A., and the digital asset market lacks standardized regulation, which could reduce confidence and increase risks.

Outlook

Management does not provide specific forward-looking guidance, but the Trust expects to continue its passive tracking of the Index. The Sponsor will continue to monitor valuation methodologies and may adjust fair value procedures if market conditions warrant. The Trust's performance will remain tied to ether price movements and overall digital asset market conditions.