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What changed in Invesco CurrencyShares Japanese Yen Trust's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Invesco CurrencyShares Japanese Yen 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.

+42 added−35 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Invesco CurrencyShares Japanese Yen Trust's 2023 10-K

42 paragraphs added · 35 removed · 27 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeITEM 1. BUSINESS Overview The Invesco CurrencyShares ® Japanese Yen Trust (the “Trust”) is a grantor trust that was formed on February 1, 2007. The Shares began trading on the New York Stock Exchange under the ticker symbol “FXY” on February 13, 2007. The primary listing of the Shares was transferred to NYSE Arca, Inc.
Biggest changeITEM 1. B USINESS. Overview The Invesco CurrencyShares® Japanese Yen Trust (the “Trust”) is a grantor trust that was formed on February 1, 2007. The Shares began trading on the New York Stock Exchange under the ticker symbol “FXY” on February 13, 2007. The primary listing of the Shares was transferred to NYSE Arca, Inc.
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.
This amount is based on the combined NAV per Share of the 2 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 Shares do not entitle their holders to any conversion or pre-emptive rights or, except as described herein, any redemption or distribution rights. 2 Voting and Approvals Shareholders have no voting rights under the Depositary Trust Agreement, except in limited circumstances.
The Shares do not entitle their holders to any conversion or pre-emptive rights or, except as described herein, any redemption or distribution rights. Voting and Approvals Shareholders have no voting rights under the Depositary Trust Agreement, except in limited circumstances.
The Trust incurred $698,605 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.
The Trust incurred $956,975 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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeConsequently, the price of the Japanese Yen 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.
In addition, the Japanese Yen may not maintain its long-term value in terms of purchasing power in the future. When the price of the Japanese Yen declines, the Sponsor expects the price of a Share to decline as well. 3 The Japanese Yen/USD exchange rate, like foreign exchange rates in general, can be volatile and difficult to predict.
In addition, the Japanese Yen may not maintain its long-term value in terms of purchasing power in the future. When the price of the Japanese Yen declines, the Sponsor expects the price of a Share to decline as well. The Japanese Yen/USD exchange rate, like foreign exchange rates in general, can be volatile and difficult to predict.
To accomplish these ends, the Investment Company Act requires the safekeeping and proper 5 valuation of fund assets, restricts greatly transactions with affiliates, limits leveraging, and imposes governance requirements as a check on fund management. The Trust is not registered as an investment company under the Investment Company Act and is not required to register under that act.
To accomplish these ends, the Investment Company Act requires the safekeeping and proper valuation of fund assets, restricts greatly transactions with affiliates, limits leveraging, and imposes governance requirements as a check on fund management. The Trust is not registered as an investment company under the Investment Company Act and is not required to register under that act.
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 Japanese Yen by the official sector could adversely affect an investment in the Shares.
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 Japanese Yen by the official sector could adversely affect an investment in the Shares.
Consequently, if the Trust incurs expenses in USD, the Trust’s Japanese Yen may be sold at a time when the Japanese Yen price is low, resulting in a negative effect on the value of the Shares. 4 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 Japanese Yen may be sold at a time when the Japanese Yen 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.
In that case, the Trust might be forced to terminate and liquidate, which would adversely affect Shareholders. 6 Shareholders may incur significant fees upon the termination of the Trust. The occurrence of any one of several events would either require the Trust to terminate or permit the Sponsor to terminate the Trust.
In that case, the Trust might be forced to terminate and liquidate, which would adversely affect Shareholders. Shareholders may incur significant fees upon the termination of the Trust. The occurrence of any one of several events would either require the Trust to terminate or permit the Sponsor to terminate 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.
If interest earned by the Trust does not exceed the Trust’s expenses, the Trustee will withdraw Japanese Yen from the Trust to pay these excess expenses, which will reduce the amount of Japanese Yen represented by each Share on an ongoing basis and may result in adverse tax consequences for Shareholders.
The resulting volatility in the Japanese Yen/USD exchange rate could materially and adversely affect the performance of the Shares. 3 If interest earned by the Trust does not exceed the Trust’s expenses, the Trustee will withdraw Japanese Yen from the Trust to pay these excess expenses, which will reduce the amount of Japanese Yen represented by each Share on an ongoing basis and may result in adverse tax consequences for Shareholders.
Any amendment that increases fees or charges (other than taxes and other governmental charges, registration fees or other expenses), or that otherwise prejudices any substantial existing rights of Shareholders, will not become effective until 30 days after written notice is given to Shareholders.
Any amendment that increases fees or charges (other than taxes and other governmental charges, registration fees or other expenses), or that otherwise prejudices any substantial existing rights of Shareholders, will not become effective until 30 days after written notice is given to Shareholders. 7 OTHER RISKS Due to the increased use of technologies, intentional and unintentional cyber attacks pose operational and information security risks.
Neither the Shares nor the Deposit Accounts and the Japanese Yen 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 Japanese Yen 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.
Also, governments from time to time intervene in the currency markets, directly and by regulation, in order to influence prices directly. These events and actions are unpredictable. The resulting volatility in the Japanese Yen/USD exchange rate could materially and adversely affect the performance of the Shares.
Also, governments from time to time intervene in the currency markets, directly and by regulation, in order to influence prices directly. These events and actions are unpredictable.
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.
Removed
There have been ongoing discussions and commentary regarding potential significant changes to United States trade policies, treaties and tariffs.
Added
Consequently, the price of the Japanese Yen could decline, which would adversely affect an investment in the Shares. International Armed Conflicts May Result in Market Volatility that Could Adversely Affect the Fund's Performance.
Removed
Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940.
Added
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.
Removed
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.
Added
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.
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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.
Removed
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. 7 OTHER RISKS Due to the increased use of technologies, intentional and unintentional cyber attacks pose operational and information security risks.
Added
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.
Added
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 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. 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
Biggest changeITEM 2. PRO PERTIES. 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. 9 PA R T II

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 $ 63.07 November 1, 2022 to November 30, 2022 250,000 $ 63.34 December 1, 2022 to December 31, 2022 200,000 $ 69.01 Total 550,000 $ 65.35 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 — $ — Total — $ — ITEM 6.
Holders As of January 31, 2023, the Trust had 84 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 86 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 changeThe Trust did not pay any distributions during the quarter ended December 31, 2022. 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 changeResults 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.
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.
The interest rate in effect as of December 31, 2022 was an annual nominal rate of -0.20%. 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 -0.20%. 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.
Federal Reserve System (the “Fed”) increasingly hawkish stance. In addition, given Japan is a net energy importer, elevated commodity prices/ soaring global inflation resulting from the war in Ukraine continued to heavily pressure the currency pair. However, the JPY was salvaged to end the year by a weakening USD and easing inflation pressures.
In addition, given Japan is a net energy importer, elevated commodity prices/ soaring global inflation resulting from the war in Ukraine continued to heavily pressure the currency pair. However, the JPY was salvaged to end the year by a weakening USD and easing inflation pressures.
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.
The chart illustrates movements in the price of the Japanese Yen in USD and is based on the Closing Spot Rate: NAV per Share; Valuation of the Japanese Yen 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 10,000 Japanese Yen. 10 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 Japanese Yen in USD and is based on the Closing Spot Rate: 11 NAV per Share; Valuation of the Japanese Yen 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 10,000 Japanese Yen.
The Japanese Yen (JPY/USD) depreciated by over 20% against the US dollar in the first three quarters of 2022 before making a decent recovery in Q4. The currency pair went into freefall in Q2 and accelerated even lower in Q3, hitting the lowest since 1990, as the Bank of Japan’s commitment to its ultra-loose policies further diverged from the U.S.
The currency pair went into freefall in Q2 and accelerated even lower in Q3, hitting the lowest since 1990, as the Bank of Japan’s commitment to its ultra-loose policies further diverged from the U.S. Federal Reserve System (the “Fed”) increasingly hawkish stance.
Removed
In 2021, the Japanese Yen (JPY/USD) was the worst performing G10 currency, slumping over 10% and posting its worst year since 2014. The JPY/USD currency pair was largely weighed down by a rebounding U.S. Dollar as a hawkish Fed signaled earlier than expected rate hikes (higher interest rates are typically bullish for the country’s currency).
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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Adding to the Japanese Yen’s bearishness is the Bank of Japan’s comparatively dovish policies, with expectations that they would maintain the ultra-loose policy for the remainder of 2022.
Added
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.
Added
The Trust did not pay any distributions during the year ended December 31, 2023.
Added
The Japanese yen (JPY/USD) continued its decline in 2023, now down nearly 30% in the last three years.
Added
While in mid-Jan, the yen did surge on speculation that the Bank of Japan (BoJ) was going to change its ultra-loose monetary and yield curve control policies after the BoJ allowed the key long-term government bond yield to move in a wider range, the central bank quickly defied this with its announcement to remain status quo.
Added
As a result of this and a strengthening dollar through February and early March, the currency pair plunged. While the yen did recover quite significantly for the remainder of March as the dollar weakened on U.S. banking sector turmoil, prices returned to tumbling in the second quarter.
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Like the first quarter, the BoJ remained ultra-committed to its dovish monetary policy while other central banks hiked, causing global interest rate differentials to the JPY to widen even further. Third quarter was a continuation of the same “ultra-low” narrative, though renewed U.S. dollar strength added additional pressure.
Added
While the pair did recover significantly in the fourth quarter, much of it was a factor of the weakening U.S. dollar. The Japanese Yen (JPY/USD) depreciated by over 20% against the US dollar in the first three quarters of 2022 before making a decent recovery in Q4.

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. 13

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