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

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Paragraph-level year-over-year comparison of Invesco CurrencyShares Canadian 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.

+41 added−38 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

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

41 paragraphs added · 38 removed · 28 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Trust incurred $466,642 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.
Biggest changeThe Trust incurred $353,671 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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeJPMorgan Chase Bank, N.A. will not be required to repay the deposit if its London branch cannot repay the deposit due to an act of war, insurrection or civil strife or an action by a foreign government or instrumentality (whether de jure or de facto ) in England.
Biggest changeJPMorgan Chase Bank, N.A. will not be required to repay the deposit if its London branch cannot repay the deposit due to an act of war, insurrection or civil strife or an action by a foreign government or instrumentality (whether de jure or de facto) in England. 5 Shareholders do not have the protections associated with ownership of a demand deposit account insured in the United States by the Federal Deposit Insurance Corporation or the protection provided for bank deposits under English law.
The Investment Company Act is designed to protect investors by preventing: insiders from managing investment companies to their benefit and to the detriment of public investors; the issuance of securities having inequitable or discriminatory provisions; the management of investment companies by irresponsible persons; the use of unsound or misleading methods of computing earnings and 5 asset value; changes in the character of investment companies without the consent of investors; and investment companies from engaging in excessive leveraging.
The Investment Company Act is designed to protect investors by preventing: insiders from managing investment companies to their benefit and to the detriment of public investors; the issuance of securities having inequitable or discriminatory provisions; the management of investment companies by irresponsible persons; the use of unsound or misleading methods of computing earnings and asset value; changes in the character of investment companies without the consent of investors; and investment companies from engaging in excessive leveraging.
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. 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. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Consequently, if the Trust incurs expenses in 4 USD, the Trust’s Canadian Dollars may be sold at a time when the Canadian Dollar price is low, resulting in a negative effect on the value of the Shares. The Shares may trade at a price which is at, above, or below the NAV per Share.
Consequently, if the Trust incurs expenses in USD, the Trust’s Canadian Dollars may be sold at a time when the Canadian Dollar price is low, resulting in a negative effect on the value of the Shares. The Shares may trade at a price which is at, above, or below the NAV per Share.
The License Agreement provides that either party may provide notice of intent to terminate 6 the License Agreement in the event the other party commits a material breach.
The License Agreement provides that either party may provide notice of intent to terminate the License Agreement in the event the other party commits a material breach.
ITEM 1A. RISK FACTORS You should consider carefully the risks described below before making an investment decision. You should also refer to the other information included in this report, including the Trust’s financial statements and the related notes . ECONOMIC CONDITIONS The value of the Shares relates directly to the value of the Canadian Dollars held by the Trust.
ITEM 1A. RISK FACTORS You should consider carefully the risks described below before making an investment decision. You should also refer to the other informa tion included in this report, including the Trust’s financial statements and the related notes. ECONOMIC CONDITIONS The value of the Shares relates directly to the value of the Canadian Dollars held by the Trust.
Further, under U.S. law, in the case of the insolvency of JPMorgan Chase Bank, N.A., the claims of creditors in respect of accounts (such as the Trust’s Deposit Accounts) that are maintained with an overseas branch of JPMorgan Chase Bank, N.A. or with a local cash correspondent will be subordinate to claims of creditors in respect of accounts maintained with JPMorgan Chase Bank, N.A. in the U.S., greatly increasing the risk that the Trust and the Trust’s beneficiaries would suffer a loss.
Further, under U.S. law, in the case of the insolvency of JPMorgan Chase Bank, N.A., the claims of creditors in respect of accounts (such as the Trust’s Deposit Accounts) that are maintained with an overseas branch of JPMorgan Chase Bank, N.A. or with a local cash correspondent will be subordinate to claims of creditors in respect of accounts maintained with JPMorgan Chase Bank, N.A. in the U.S., greatly increasing the risk that the Trust and the Trust’s beneficiaries would suffer a loss. 6 The License Agreement with The Bank of New York Mellon may be terminated by The Bank of New York Mellon in the event of a material breach.
Several factors may affect the price of the Canadian Dollar, including: • Sovereign debt levels and trade deficits; • Domestic and foreign inflation rates and interest rates and investors’ expectations concerning those rates; • Currency exchange rates; • Investment and trading activities of mutual funds, hedge funds and currency funds; and • Global, regional or national political, economic or financial events and situations. 3 In addition, the Canadian Dollar may not maintain its long-term value in terms of purchasing power in the future.
Several factors may affect the price of the Canadian Dollar, including: • Sovereign debt levels and trade deficits; • Domestic and foreign inflation rates and interest rates and investors’ expectations concerning those rates; • Currency exchange rates; • Investment and trading activities of mutual funds, hedge funds and currency funds; and • Global, regional or national political, economic or financial events and situations.
Disruptions in the ability to create and redeem Baskets may adversely impact the price of the Shares. It is generally expected that the public trading price per Share will track the NAV per Share closely over time.
As a result, the Shares might trade at prices at, above or below the NAV per Share. 4 Disruptions in the ability to create and redeem Baskets may adversely impact the price of the Shares. It is generally expected that the public trading price per Share will track the NAV per Share closely over time.
The NAV per Share fluctuates with changes in the market value of the Trust’s assets. The market price of Shares can be expected to fluctuate in accordance with changes in the NAV per Share, but also in response to market supply and demand. As a result, the Shares might trade at prices at, above or below the NAV per Share.
The NAV per Share fluctuates with changes in the market value of the Trust’s assets. The market price of Shares can be expected to fluctuate in accordance with changes in the NAV per Share, but also in response to market supply and demand.
With the increased use of technologies such as the Internet and the dependence on computer systems to perform necessary business functions, the Trust is susceptible to operational and information security risks. In general, cyber incidents can result from deliberate attacks or unintentional events.
OTHER RISKS Due to the increased use of technologies, intentional and unintentional cyber attacks pose operational and information security risks. With the increased use of technologies such as the Internet and the dependence on computer systems to perform necessary business functions, the Trust is susceptible to operational and information security risks.
Cyber attacks include, but are not limited to gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites.
Cyber attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites.
When the price of the Canadian Dollar declines, the Sponsor expects the price of a Share to decline as well. The Canadian Dollar/USD exchange rate, like foreign exchange rates in general, can be volatile and difficult to predict. This volatility could materially and adversely affect the performance of the Shares.
In addition, the Canadian Dollar may not maintain its long-term value in terms of purchasing power in the future. When the price of the Canadian Dollar declines, the Sponsor expects the price of a Share to decline as well. 3 The Canadian Dollar/USD exchange rate, like foreign exchange rates in general, can be volatile and difficult to predict.
Consequently, the price of the Canadian 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.
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. There have been ongoing discussions and commentary regarding potential significant changes to United States trade policies, treaties and tariffs.
The License Agreement with The Bank of New York Mellon may be terminated by The Bank of New York Mellon in the event of a material breach. Termination of the License Agreement might lead to early termination and liquidation of the Trust.
Termination of the License Agreement might lead to early termination and liquidation of the Trust.
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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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This volatility could materially and adversely affect the performance of the Shares.
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Shareholders do not have the protections associated with ownership of a demand deposit account insured in the United States by the Federal Deposit Insurance Corporation or the protection provided for bank deposits under English law.
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Consequently, the price of the Canadian 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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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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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.
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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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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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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 7 and its ongoing global economic impact.
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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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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. OTHER RISKS Due to the increased use of technologies, intentional and unintentional cyber attacks pose operational and information security risks.
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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 S AFETY 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.
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In general, cyber incidents can result from 7 deliberate attacks or unintentional events. Cyber attacks include, but are not limited to gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.

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 50,000 $ 72.36 November 1, 2022 to November 30, 2022 200,000 $ 73.05 December 1, 2022 to December 31, 2022 100,000 $ 71.86 Total 350,000 $ 72.61 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 250,000 $ 71.64 November 1, 2023 to November 30, 2023 200,000 $ 71.05 December 1, 2023 to December 31, 2023 50,000 $ 73.49 Total 500,000 $ 71.59 ITEM 6.
Holders As of January 31, 2023, the Trust had 67 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 65 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): FXC Distribution History Date Value NAV Yield Annualized Yield 10/3/2022 $ 0.03576 $ 71.17 0.05 % 0.61 % 11/1/2022 $ 0.06321 $ 71.71 0.09 % 1.04 % 12/1/2022 $ 0.08359 $ 72.17 0.12 % 1.41 % 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): FXC Distribution History Date Value NAV Yield Annualized Yield 10/2/2023 $ 0.14175 $ 72.43 0.20 % 2.38 % 11/1/2023 $ 0.14335 $ 70.54 0.20 % 2.39 % 12/1/2023 $ 0.14183 $ 72.22 0.20 % 2.39 % 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.
The chart illustrates movements in the price of the Canadian Dollar in USD and is based on the Closing Spot Rate: 10 NAV per Share; Valuation of the Canadian 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 Canadian Dollars: Liquidity and Capital Resources The Sponsor is not aware of any known trends, demands, commitments, events or uncertainties that will result in, or are reasonably likely to result in, material changes to the Trust’s liquidity and capital resources needs.
The chart illustrates movements in the price of the Canadian Dollar in USD and is based on the Closing Spot Rate: 11 NAV per Share; Valuation of the Canadian 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 Canadian Dollars: Liquidity and Capital Resources The Sponsor is not aware of any known trends, demands, commitments, events or uncertainties that will result in, or are reasonably likely to result in, material changes to the Trust’s liquidity and capital resources needs.
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 Canadian 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 Canadian Dollar in accordance with ASC 830, Foreign Currency Translation. 13
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.
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, 2023, and its results of operations for the fiscal years ended December 31, 2023 and December 31, 2022.
However, dollar strength in Q2 and Q3 amid growing recession fears, boosting safe haven demand, and a more hawkish U.S. Federal Reserve System (the “Fed”) heavily weighed on the currency pair, while falling crude oil prices removed the soft floor for the CAD.
However, dollar strength in the second and third quarter amid growing recession fears, boosting safe haven demand, and a more hawkish U.S. Federal Reserve System (the “Fed”) heavily weighed on the currency pair, while falling crude oil prices removed the soft floor for the CAD.
The Canadian Dollar (CAD/USD) posted a loss in 2022. As the only G10 currency to gain against the US dollar in 2021, the CAD continued its positive performance through the first quarter of the year, benefiting from surging oil prices resulting from the war in Ukraine and anticipation for more hawkish monetary policies from the Bank of Canada.
As the only G10 currency to gain against the US dollar in 2021, the CAD continued its positive performance through the first quarter of the year, benefiting from surging oil prices resulting from the war in Ukraine and anticipation for more hawkish monetary policies from the Bank of Canada.
The interest rate in effect as of December 31, 2022 was an annual nominal rate of 1.80%. 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 2.76%. The following chart provides the daily rate paid by the Depository since December 31, 2018: 12 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 year to the current interest rate of 1.80%, as set forth in the FXC Rate Chart above.
Though prices rebounded a bit in the fourth quarter amid easing dollar pressure, it wasn’t enough to fully counter earlier losses. Additionally, the interest rate paid by the Depository has generally trended upward over the past year from sub-zero, to the current interest rate of 2.76%, as set forth in the FXC Rate Chart above.
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Though prices rebounded a bit in Q4 amid easing dollar pressure, it wasn’t enough to fully counter earlier losses. 2021 was a positive year for the Canadian Dollar (CAD/USD), closing out as the only G10 currency to have advanced against the U.S. Dollar, which posted its best year since 2015.
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The Canadian Dollar (CAD/USD) ended 2023 slightly higher. While the CAD did gain a bit in the first half of the first quarter, as the US dollar weakened further on expectations for a softer Fed stance, the pair fell sharply from mid-Feb to mid-Mar, with the dollar rebounding on signs of continued strength in the US labor market and inflation.
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CAD/USD strength was bolstered by the Canadian economy's strong economic rebound and market expectations that the Bank of Canada would be one of the most aggressive among the G10 countries in tightening monetary policy in 2022, potentially even surpassing the Fed.
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Struggling commodity prices also capped the upside for the currency given the country is a major exporter of crude oil. However, the currency pair did rebound in the second half of March amid a weaker USD and the boost in energy prices.
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Strengthening energy prices throughout the year also provided a boost for the currency pair, as oil is one of Canada’s major exports.
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In the second quarter, while the pair was pretty range bound in April and May, the CAD really gained in June supported by the hawkish repricing of the BoC’s interest rate expectations while the US Fed paused. Despite its resilience, renewed dollar strength heavily pressured the pair in the third quarter, though the rebound in energy commodities limited the downside.
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In the fourth quarter, with the US dollar weakening on growing Fed rate cut expectations, the pair managed to recover significantly, reversing all earlier losses. The Canadian Dollar (CAD/USD) posted a loss in 2022.

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. 14

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