10-Q: Fidelity Solana Fund Reports Q1 2026 Performance

Fidelity Solana Fund's net assets decreased by $16.5 million in Q1 2026, primarily due to a significant drop in SOL's market value, despite an increase in outstanding shares.

Summary

• The Fidelity Solana Fund reported a net decrease in assets of $16.5 million for the quarter ended March 31, 2026, bringing total net assets to $97.4 million.
• This decrease was primarily driven by a 33.16% decline in the price of Solana (SOL) from $124.73 to $83.37 during the quarter.
• The Net Asset Value (NAV) per share also fell by 32.84% from $14.66 to $9.84.
• Despite the asset decline, the number of outstanding shares increased by 2.125 million, reaching 9.9 million shares, due to a significant issuance of new shares.
• The fund experienced a net unrealized depreciation of $46.2 million and a net realized loss of $6.5 million from investment activities.
• The fund generated $1.4 million in net investment income from staking rewards.
• The fund made its initial cash distribution of staking income on February 17, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant decline in NAV and total assets, driven by the sharp drop in SOL's price, despite positive aspects like fee waivers and increased share issuance.

Positives

• The number of outstanding shares increased by 2.125 million, indicating investor interest and capital inflow.
• The fund generated $1.4 million in net investment income from staking rewards.
• The Sponsor has waived its fees and staking fees on the first $1 billion of Trust assets until May 18, 2026, reducing expenses for investors.
• The fund made its initial cash distribution of staking income, providing returns to shareholders.

Negatives

• Net assets decreased by $16.5 million, from $113.9 million to $97.4 million.
• The Net Asset Value (NAV) per share decreased by 32.84% from $14.66 to $9.84.
• The fund experienced a net unrealized depreciation of $46.2 million on its investment in SOL.
• A net realized loss of $6.5 million was incurred from the sale of SOL for redemptions and distributions.
• The price of SOL decreased by 33.16% during the quarter.

Risks

• The fund's investment strategy is concentrated in a single asset (SOL), exposing it to significant market risks associated with SOL and digital assets.
• Disruptions in staking activities by node operators could adversely impact the fund's operations.
• Inadequate hardware or software used by node operators could lead to missed staking rewards, penalties, or loss of SOL.
• Staked SOL is inaccessible during unstaking periods, creating liquidity risks that the Sponsor manages.
• The fund relies on a limited number of node operators for staking activities.
• The fund's NAV per share can be affected by non-SOL net assets, such as Sponsor Fees.
• Shares may trade at a discount or premium to NAV in the secondary market, influenced by factors like shareholder demand and SOL liquidity.

Future Outlook

The fund aims to track the performance of Solana (SOL), adjusted for expenses, and benefit from staking rewards. The Sponsor has waived fees for a period, which is expected to benefit investors. The fund intends to continue making cash distributions at least quarterly to comply with IRS safe harbor conditions for grantor trusts that stake digital assets.

Management Comments

• The Sponsor believes that the Shares are designed to provide investors with a cost-effective and convenient way to invest in SOL without purchasing, holding and trading SOL directly.
• The Sponsor has established a Valuation and Liquidity Committee to carry out day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process.
• The Sponsor does not make forward-looking statements unless it believes it has a reasonable basis for doing so, but cannot guarantee their accuracy.

Industry Context

StockSavvy.ai notes that the Fidelity Solana Fund's performance is directly tied to the volatile digital asset market, specifically Solana (SOL). The fund's strategy of staking SOL to generate rewards is a common approach in the crypto ETP space, aiming to provide yield in addition to asset appreciation. The fee waivers by the sponsor are a competitive tactic to attract assets under management in a growing but crowded market.

Comparison to Industry Standards

• The fund's NAV per share decreased by 32.40% (at NAV) for the quarter, reflecting the broader market downturn in digital assets during Q1 2026. This performance is comparable to other digital asset-focused ETFs and funds that experienced significant drawdowns.
• The fund's expense ratio, net of waivers, is effectively 0.00% during the waiver period, which is highly competitive compared to other digital asset ETPs, many of which have expense ratios ranging from 0.50% to 2.00%.
• The staking reward rate, while not explicitly compared to industry peers, is presented as an annualized rate, with net rates for March 2026 at 5.27%, which is a key differentiator for yield-seeking investors in the digital asset space.

Legal Proceedings

• None reported.

Related Party Transactions

• The Trust is sponsored by FD Funds Management LLC, a wholly-owned subsidiary of FMR LLC.
• Fidelity Service Company, Inc. serves as the Administrator.
• Fidelity Distributors Company LLC serves as the Distributor.
• Fidelity Product Services LLC serves as the Index Provider.
• All fees and expenses related to services performed by the Administrator, Distributor, and Index Provider are borne by the Sponsor.
• The Sponsor is entitled to a staking fee of 15% of the staking rewards received by the Trust.
• The Sponsor has waived its Sponsor Fee and Staking Fees on the first $1 billion of Trust assets for a specified period.

Stakeholder Impact

• Shareholders experienced a significant decrease in the value of their investment due to the decline in SOL's price and the fund's NAV.
• The fee waivers by the Sponsor benefit shareholders by reducing the effective expense ratio.
• The increase in outstanding shares suggests continued investor interest and potential for future growth if SOL's price recovers.

Next Steps

• The Trust intends to continue making cash distributions at least quarterly.
• The Sponsor may extend the fee waiver period at its sole discretion.
• The fund will continue to stake SOL to generate staking rewards, subject to network conditions and liquidity management.

Key Dates

Recommendation

The fund's performance is heavily tied to the volatility of Solana (SOL). While the fee waivers and staking rewards offer some appeal, the significant NAV decline and market risk associated with a single digital asset warrant a cautious approach. Investors should monitor SOL's price action and the fund's ability to manage its assets effectively. A 'hold' recommendation reflects the current uncertainty and the direct correlation to the underlying digital asset's performance.

Keywords

Fidelity Solana Fund, Solana, SOL, Digital Assets, Cryptocurrency, Exchange Traded Product, Staking Rewards, SEC Filing, 10-Q, Quarterly Report, NAV, FD Funds Management LLC