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What changed in Invesco CurrencyShares Australian Dollar Trust's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Invesco CurrencyShares Australian Dollar Trust's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+36 added−32 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Invesco CurrencyShares Australian Dollar Trust's 2023 10-K

36 paragraphs added · 32 removed · 24 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Trust incurred $367,429 for the year ended December 31, 2022 in Sponsor’s fees. The Trustee The Bank of New York Mellon, a banking corporation with trust powers organized under the laws of the State of New York, serves as the Trustee. The Trustee is responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational records.
Biggest changeThe Trust incurred $290,525 for the year ended December 31, 2023 in Sponsor’s fees. The Trustee The Bank of New York Mellon, a banking corporation with trust powers organized under the laws of the State of New York, serves as the Trustee. The Trustee is responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational records.
This amount is based on the combined NAV per Share of 2 the number of Shares included in the Baskets being created or redeemed, determined on the day the order to create or redeem Baskets is accepted by the Trustee. Only Authorized Participants may place orders to create and redeem Baskets.
This amount is based on the combined NAV per Share of the number of Shares included in the Baskets being created or redeemed, determined on the day the order to create or redeem Baskets is accepted by the Trustee. Only Authorized Participants may place orders to create and redeem Baskets.
The Trustee must terminate the Trust at the request of the holders of at least 75% of the outstanding Shares. Creation and Redemption of Shares The creation and redemption of Baskets requires the delivery to the Trust or the distribution by the Trust of the amount of Australian Dollars represented by the Baskets being created or redeemed.
The Trustee must terminate the Trust at the request of the holders of at least 75% of the outstanding Shares. 2 Creation and Redemption of Shares The creation and redemption of Baskets requires the delivery to the Trust or the distribution by the Trust of the amount of Australian Dollars represented by the Baskets being created or redeemed.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeConsequently, the price of the Australian Dollar could decline, which would adversely affect an investment in the Shares. REGULATORY MATTERS Changes to United States tariff and trade policies may increase the volatility of foreign exchange rates. This volatility could materially and adversely affect the performance of the Shares.
Biggest changeREGULATORY MATTERS Changes to United States tariff and trade policies may increase the volatility of foreign exchange rates. This volatility could materially and adversely affect the performance of the Shares. There have been ongoing discussions and commentary regarding potential significant changes to United States trade policies, treaties and tariffs.
Cyber security failures or breaches of the Trust’s third party service providers (including, but not limited to, the Trustee and the Sponsor) have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, the inability of Shareholders or Authorized Participants to transact business in Shares and Baskets respectively, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs.
Cyber security failures or breaches of the Trust’s third party service providers (including, but not limited 7 to, the Trustee and the Sponsor) have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, the inability of Shareholders or Authorized Participants to transact business in Shares and Baskets respectively, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs.
All other investors that desire to purchase or sell Shares must do so through NYSE Arca or in other markets, if any, in which the Shares are traded. 5 INSOLVENCY OR TERMINATION OF THE DEPOSITORY OR TRUST If the Depository becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant.
All other investors that desire to purchase or sell Shares must do so through NYSE Arca or in other markets, if any, in which the Shares are traded. INSOLVENCY OR TERMINATION OF THE DEPOSITORY OR TRUST If the Depository becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant.
The inability to purchase and redeem Baskets could result 4 in the Shares trading at a premium or discount to the NAV of the Trust. Such a premium or discount could be significant, depending upon the nature or duration of the impairment. Substantial sales of Australian Dollars by the official sector could adversely affect an investment in the Shares.
The inability to purchase and redeem Baskets could result in the Shares trading at a premium or discount to the NAV of the Trust. Such a premium or discount could be significant, depending upon the nature or duration of the impairment. Substantial sales of Australian Dollars by the official sector could adversely affect an investment in the Shares.
For example, the resulting delay would adversely affect the value of the Shareholder’s redemption distribution if the 6 NAV were to decline during the delay. In the Depositary Trust Agreement, the Sponsor and the Trustee disclaim any liability for any loss or damage that may result from any such rejection.
For example, the resulting delay would adversely affect the value of the Shareholder’s redemption distribution if the NAV were to decline during the delay. In the Depositary Trust Agreement, the Sponsor and the Trustee disclaim any liability for any loss or damage that may result from any such rejection.
If the License Agreement is terminated and one or more of The Bank of New York Mellon’s patent applications issue as patents, then The Bank of New York Mellon may claim that the operation of the Trust violates its patent or patents and seek an injunction forcing the Trust to cease operation and the Shares to cease trading.
If the License Agreement is terminated and one or 6 more of The Bank of New York Mellon’s patent applications issue as patents, then The Bank of New York Mellon may claim that the operation of the Trust violates its patent or patents and seek an injunction forcing the Trust to cease operation and the Shares to cease trading.
In addition, the Trust may, in its discretion, suspend the creation of Baskets for any reason and at any time. If the process for creating or redeeming Shares is impaired for any reason, Authorized Participants and their clients or customers may not be able to purchase and redeem Baskets.
In addition, the Trust may, in its discretion, suspend the creation of Baskets for any reason and at any time. If the process for creating or redeeming Shares is impaired for any reason, Authorized Participants and 4 their clients or customers may not be able to purchase and redeem Baskets.
In addition, a service provider that has experienced a cyber security incident may divert resources normally devoted to servicing the Trust to addressing the incident, which would be likely to have an adverse effect on the Trust’s operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 7 ITEM 2.
In addition, a service provider that has experienced a cyber security incident may divert resources normally devoted to servicing the Trust to addressing the incident, which would be likely to have an adverse effect on the Trust’s operations. 8 ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
Neither the Shares nor the Deposit Accounts and the Australian Dollars deposited in them are deposits insured against loss by the FDIC, any other federal agency of the United States or the Financial Services Compensation Scheme of England.
Neither the Shares nor the Deposit Accounts and the Australian Dollars deposited in them are deposits insured against loss by the FDIC, any other federal agency of the United States or the Financial Services Compensation Scheme of England. 5 Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940.
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There have been ongoing discussions and commentary regarding potential significant changes to United States trade policies, treaties and tariffs.
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Consequently, the price of the Australian Dollar could decline, which would adversely affect an investment in the Shares. International Armed Conflicts May Result in Volatility in Currency Prices that Could Adversely Affect the Fund's Performance.
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Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940.
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As a result of increasingly interconnected global economies and financial markets, armed conflict between countries or in a geographic region, for example the current conflicts between Russia and Ukraine in Europe and Hamas and Israel in the Middle East, may impact the value of the currencies held by the Fund.
Removed
COVID-19 PANDEMIC The ongoing COVID-19 pandemic continues to impact global, regional and national economies in unexpected and unpredictable ways that could materially and adversely affect the value of the Shares.
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Such conflicts, and other corresponding events, have had, and could continue to have, severe effects on regional and global economic and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. Pandemics and other public health emergencies could disrupt the global economy and adversely impact the Trust's performance.
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The ongoing COVID-19 pandemic continues to have material adverse effects on the global economy and has increased economic uncertainty and financial market volatility and caused a decline in consumer and business confidence.
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The impact of the COVID-19 pandemic was extensive in many aspects of society. The outbreak resulted in a significant number of deaths, adversely impacted global commercial activity, and led to significant uncertainty and disruptions in the global economy and financial markets.
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No assurance can be given that the disruption will end soon or that the value of the Shares will not be affected materially and adversely by the pandemic and its ongoing global economic impact. Escalation or prolonged continuation of the pandemic could exacerbate other risk factors identified in this Report and materially and adversely affect the value of the Shares.
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Many countries reacted by instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores and other public venues. Businesses also implemented similar precautionary measures. While restrictions have eased, it is possible that they may be reinstated in the future in response to new variants or new public health emergencies.
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PROPERTIES The Trust does not own or use physical properties in the conduct of its business. The Sponsor’s headquarters are located at 3500 Lacey Road, Suite 700, Downers Grove, Illinois 60515. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 8 PART II
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Such measures, as well as the general uncertainty surrounding the dangers and impact of a future public health crisis, may result in significant disruption in supply chains and economic activity. Consumer, corporate and financial confidence may be materially adversely affected by a future outbreak. Such erosion of confidence may lead to or extend to a localized or global economic downturn.
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Future pandemics and other public health emergencies could exacerbate political, social, and economic risks and result in significant breakdowns, delays, and other disruptions to the economy, with potential corresponding results on the value of the currency held by the Trust, which may adversely affect an investment in the Shares.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(c) Although the Trust did not redeem Shares directly from its shareholders, the Trust redeemed Baskets from Authorized Participants during the three months ended December 31, 2022 as follows: Period of Redemption Total Number of Shares Redeemed Average Price Paid per Share October 1, 2022 to October 31, 2022 100,000 $ 63.78 November 1, 2022 to November 30, 2022 50,000 $ 64.66 December 1, 2022 to December 31, 2022 100,000 $ 67.03 Total 250,000 $ 65.26 ITEM 6.
Biggest change(c) Although the Trust did not redeem Shares directly from its shareholders, the Trust redeemed Baskets from Authorized Participants during the three months ended December 31, 2023 as follows: Period of Redemption Total Number of Shares Redeemed Average Price Paid per Share October 1, 2023 to October 31, 2023 — $ — November 1, 2023 to November 30, 2023 — $ — December 1, 2023 to December 31, 2023 100,000 $ 67.48 Total 100,000 $ 67.48 ITEM 6.
Holders As of January 31, 2023, the Trust had 68 holders of record of its Shares. Sales of Unregistered Securities and Use of Proceeds of Registered Securities (a) There have been no unregistered sales of the Shares. No Shares are authorized for issuance by the Trust under equity compensation plans. (b) Not applicable.
Holders As of January 31, 2024, the Trust had 66 holders of record of its Shares. Sales of Unregistered Securities and Use of Proceeds of Registered Securities (a) There have been no unregistered sales of the Shares. No Shares are authorized for issuance by the Trust under equity compensation plans. (b) Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDistributions paid during the current reporting period follow (annualized yield reflects the estimated annual yield an investor would receive if a monthly distribution stayed the same for the entire year going forward, and is calculated by annualizing the monthly distribution and dividing by the Trust NAV for the dates listed below): FXA Distribution History Date Value NAV Yield Annualized Yield 10/3/2022 $ 0.00029 $ 63.64 0.00% 0.01% 11/1/2022 $ 0.01558 $ 63.31 0.02% 0.29% 12/1/2022 $ 0.01710 $ 66.30 0.03% 0.31% Results of Operations During the years ended December 31, 2022 and 2021, the Trust’s net comprehensive income (loss) was, in part, impacted by market volatility and uncertainty caused by the novel coronavirus known as COVID-19, which is considered to be an unusual or infrequent event.
Biggest changeDistributions paid during the current reporting period follow (annualized yield reflects the estimated annual yield an investor would receive if a monthly distribution stayed the same for the entire year going forward, and is calculated by annualizing the monthly distribution and dividing by the Trust NAV for the dates listed below): FXA Distribution History Date Value NAV Yield Annualized Yield 10/2/2023 $ 0.06754 $ 63.95 0.11% 1.28% 11/1/2023 $ 0.06886 $ 62.74 0.11% 1.29% 12/1/2023 $ 0.06942 $ 65.70 0.11% 1.29% Results of Operations During the years ended December 31, 2023 and 2022, the Trust's net comprehensive income (loss) was, in part, impacted by market volatility resulting from the US banking sector turmoil, ambiguity around the Federal Reserve's tightening cycle, and rising geopolitical concerns from the conflict in the Middle East, for 2023, and uncertainty caused by the novel coronavirus known as COVID-19, as well as the Russia-Ukraine conflict, for 2022, which are considered to be unusual or infrequent events.
In addition to the description below, please refer to Note 3 to the financial statements for further discussion of our accounting policies. The functional currency of the Trust is the Australian Dollar in accordance with ASC 830, Foreign Currency Translation.
In addition to the description below, please refer to Note 3 to the financial statements for further discussion of our accounting policies. The functional currency of the Trust is the Australian Dollar in accordance with ASC 830, Foreign Currency Translation. 15
The chart illustrates movements in the price of the Australian Dollar in USD and is based on the Closing Spot Rate: 10 NAV per Share; Valuation of the Australian Dollar The following chart illustrates the movement in the price of the Shares based on (1) NAV per Share, (2) the “bid” and “ask” midpoint offered on NYSE Arca and (3) the Closing Spot Rate, expressed as a multiple of 100 Australian Dollars: Liquidity and Capital Resources The Trust does not have any material cash requirements as of the end of the latest fiscal period.
The chart illustrates movements in the price of the Australian Dollar in USD and is based on the Closing Spot Rate: 12 NAV per Share; Valuation of the Australian Dollar The following chart illustrates the movement in the price of the Shares based on (1) NAV per Share, (2) the “bid” and “ask” midpoint offered on NYSE Arca and (3) the Closing Spot Rate, expressed as a multiple of 100 Australian Dollars: Liquidity and Capital Resources The Trust does not have any material cash requirements as of the end of the latest fiscal period.
As long as the Sponsor’s fee and the interest expense on currency deposits, if any, exceed interest income, the Trust will incur a net comprehensive loss.
As long as the interest income, if any, exceed the Sponsor's fee and the interest expense on currency deposits, the Trust will incur a net comprehensive income.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The following discussion and analysis was prepared to supplement information contained in the accompanying financial statements and is intended to explain certain items regarding the Trust's financial condition as of December 31, 2022, and its results of operations for the fiscal years ended December 31, 2022 and December 31, 2021.
Introduction The following discussion and analysis was prepared to supplement information contained in the accompanying financial statements and is intended to explain certain items regarding the Trust's financial condition as of December 31, 2023, and its results of operations for the fiscal years ended December 31, 2023 and December 31, 2022.
Despite being the best performing G10 currency in Q1, supported by massive gains across the commodities complex following Russia’s invasion of Ukraine, the Australian Dollar (AUD/USD) failed to keep its positive performance through Q2 and Q3, succumbing to recession-fears driven dollar strength and the sharp commodities selloff (especially in Q3).
For 2022, despite being the best performing G10 currency in the first quarter, supported by massive gains across the commodities complex following Russia’s invasion of Ukraine, the Australian Dollar (AUD/USD) failed to keep its positive performance through the second and third quarter, succumbing to recession-fears driven dollar strength and the sharp commodities selloff (especially in the third quarter).
The interest rate in effect as of December 31, 2022 was an annual nominal rate of 0.87%. The following chart provides the daily rate paid by the Depository since December 31, 2017: 11 In exchange for a fee, the Sponsor bears most of the expenses incurred by the Trust.
The interest rate in effect as of December 31, 2023 was an annual nominal rate of 1.92%. The following chart provides the daily rate paid by the Depository since December 31, 2018: 13 14 In exchange for a fee, the Sponsor bears most of the expenses incurred by the Trust.
Although the full and direct impact of COVID-19 on the Trust’s net comprehensive income (loss) during the years ended December 31, 2022 and 2021 cannot be known, it is believed that COVID-19 has impacted the Closing Spot Rate, the interest rate paid by the Depository, and the global economy and markets generally, including the number of Shares created and redeemed by the Trust.
Although the full and direct impact of the COVID-19 pandemic, the Russia-Ukraine conflict, the US banking sector turmoil, and the Israel-Gaza conflict on the Trust's net comprehensive income (loss) during the years ended December 31, 2023 and 2022 cannot be known, it is believed that they have each independently impacted the Closing Spot Rate, the interest rate paid by the Depository, and the global economy and markets generally, including the number of Shares created and redeemed by the Trust.
Additionally, the interest rate paid by the Depository has generally trended downward over the past several years, slightly offset by improvements this quarter to the current interest rate of 0.87%, as set forth in the FXA Rate Chart above.
Additionally, the interest rate paid by the Depository has generally trended upward over the past year from zero, to the current interest rate of 1.92%, as set forth in the FXA Rate Chart above.
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The Australian Dollar (AUD/USD) performed negatively in 2021 as sluggish vaccine rollouts in Australia and the rise of the COVID-19 Delta and Omicron variants weighed on investor sentiment, serving as a headwind for the perceived riskier Australian Dollar. A rebound in the U.S. Dollar on strong U.S. economic recovery and a more hawkish U.S.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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Federal Reserve System (the “Fed”) also pressured the AUD/USD spot rate. Finally, given the Australian Dollar is a commodity currency (commodities account for a large share of Australia’s exports), rallying commodity prices provided support throughout the year, but not enough to reverse losses.
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The Australian dollar (AUD/USD) ended 2023 flat. In the first quarter, despite its strong January rally as Australian inflation surged to a 33-year high, raising prospects for more aggressive rate hikes from the Reserve Bank of Australia (RBA), and the US dollar weakened, the AUD flipped into losses through the rest of the quarter on the plunge in commodities.
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Broad commodities have continued to trend lower through the second quarter, pressured by macro concerns and China’s disappointing recovery, while the USD has remained somewhat supported as the market awaited more clarity on the Fed’s rate hike path forward, both generally bearish for the AUD.
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While commodities prices finally started to rebound in the third quarter, renewed dollar strength stole the show, pushing the AUD lower.
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Like many other currencies, however, the fourth quarter marked significant gains due to US dollar weakness – unlike the Fed, which was expected to shift to rate cuts, the RBA had left open the door for further rate hikes, providing a further boost for its currency.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Trust does not hold securities and does not invest in derivative instruments. 12
Biggest changeThe Trust does not hold securities and does not invest in derivative instruments. 16

Other FXA 10-K year-over-year comparisons