What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-07 · 34 added, 32 removed, 67 unchanged (50% of the section changed)

46 unchanged sentences

Interest on the primary deposit account, if any, accrues daily and is paid monthly.

The interest rate in effect as of June 30, 2025 was an annual nominal rate of 1.52%.

The following chart provides the daily rate paid by the Depository since June 30, 2020:

The interest rate in effect as of September 30, 2025 was an annual nominal rate of 1.32%.

The following chart provides the daily rate paid by the Depository since September 30, 2020:

In exchange for a fee, the Sponsor bears most of the expenses incurred by the Trust.

10 unchanged sentences

These estimates and assumptions affect the Trust’s application of accounting policies.

In addition, please refer to Note 3 to the financial statements of the Trust for further discussion of the Trust’s accounting policies and Item 7 – Management’s Discussions and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates included in the Trust's Annual Report on Form 10-K for the year ended December 31, 2024.

There were no material estimates, which involve a significant level of estimation uncertainty and had or are reasonably likely to have had a material impact on the Trust’s financial condition, used in the preparation of these financial statements.

Results of Operations

During the three and six months ended June 30, 2025 and 2024, the Trust's net comprehensive income (loss) was, in part, impacted by market volatility resulting from global tariff gyrations and mounting U.S.

economic concerns for 2025, and expectations around the Federal Reserve (the “Fed”) easing and heightened geopolitical concerns for 2024, which are considered to be unusual or infrequent events.

During the three and nine months ended September 30, 2025 and 2024, the Trust's net comprehensive income (loss) was, in part, impacted by market volatility resulting from global tariff gyrations and mounting U.S.

economic uncertainty for 2025, and expectations around the Federal Reserve (the “Fed”) easing and heightened geopolitical concerns for both 2024 and 2025, which are considered to be unusual or infrequent events.

Although the full and direct impact of global tariffs, U.S.

economic concerns, Fed easing expectations and rising geopolitical tensions, on the Trust's net comprehensive income (loss) during the three and six months ended June 30, 2025 and 2024, 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 Australian dollar (AUD/USD) edged higher in the second quarter of 2025, supported mostly by U.S.

dollar weakness, though weak commodity prices capped those gains given Australia is a significant exporter.

Domestically, the Reserve Bank of Australia (RBA) cut its cash rate by 25 basis points in May to 3.85%, citing easing inflationary pressures.

However, the RBA maintained a cautious, data-dependent outlook amid persistent global uncertainties.

While the rate cut provided some support to domestic growth expectations, the AUD’s gains were tempered by investor caution and mixed signals from global economic data.

The slight bounce in energy prices on the back of Middle East tensions in June also failed to provide sustained support.

The Australian Dollar (AUD/USD) experienced positive performance in the second quarter of 2024, even despite gains in the

Strong Australian retail sales data in May further fueled inflation fears, raising bets for a potential rate hike;

inflation had come in above forecasts three months in a row.

In comparison, several global central banks had already started their

easing cycles, leaving further rate hikes out of the picture.

Higher interest rates tend to boost the country’s currency.

continued to gain with Fed rate cut expectations further delayed.

The Australian dollar (AUD/USD) was higher in the first half of 2025, mostly supported by U.S.

dollar weakness, but weak commodity performance was a headwind.

Global tariff uncertainty and a slowdown in Chinese demand weighed on Australia’s export driven economy in the first quarter.

While sentiment improved a bit in the second quarter as energy prices bounced on escalating tensions in the Middle East and trade war fears eased a bit with the U.S.-China trade truce, broader risk appetite remained fragile, limiting the AUD’s advance despite a softer dollar.

The Reserve Bank of Australia’s decision to cut rates in May, while signaling a cautious and data-dependent stance, added a boost to sentiment, but investor caution persisted.

The Australian Dollar (AUD/USD) ended the first half of 2024 lower than the previous quarter.

economic concerns, Fed easing expectations and rising geopolitical tensions, on the Trust's net comprehensive income (loss) during the three and nine months ended September 30, 2025 and 2024, 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 Australian dollar (AUD/USD) closed the third quarter of 2025 with a gain.

The Reserve Bank of Australia (RBA) kept rates unchanged in July rather than delivering the expected 25 basis point cut, which was seen as a deferral of policy easing.

This supported the AUD given how skewed market pricing had been towards a rate cut, though the RBA did cut by 25 basis points in August, driven by softer labor market data.

The volatility and downtrend in energy prices was also a headwind, but improved broader risk appetite, ongoing strength in the Chinese yuan – China is a key trading partner for Australia – and the comparatively deeper easing cycle being carried out by the Fed provided support for the AUD while weighing on the USD.

The Australian dollar (AUD/USD) experienced positive performance in the third quarter of 2024, mostly gaining on U.S.

The Fed finally kicked off its easing cycle while the Reserve Bank of Australia (RBA) kept rates steady

as it still battled with a tight labor market and sticky inflation.

However, the downturn in commodities and the overhang from the

Chinese economic lull have been persisting headwinds for the Aussie, since China is their largest export partner.

The significant risk

off move at the end of July also dealt a heavy blow to the riskier currency, with investors instead turning to safe haven currencies like

the Swiss franc.

The Australian dollar (AUD/USD) posted strong gains year-to-date through the third quarter of 2025, underpinned by U.S.

dollar weakness.

The AUD intermittently experienced volatility due to its close relationship with commodities, particularly in April, as tariff uncertainty and dampened demand weighed on Australia's export-driven economy.

However, this was offset by rising energy prices following escalating geopolitical tensions in the second quarter, and improvements in risk appetite and temporarily easing trade tensions between China and the U.S.

in the third quarter.

Rate cuts by the RBA added some downward pressure to the AUD, but this was largely mitigated by the RBA's tone of caution and guidance towards a slow and steady pace of easing, in comparison with the U.S.’s expected deeper easing cycle.

The Australian dollar (AUD/USD) ended the first three quarters of 2024 positive.

In the first quarter, U.S.

moves drove the bulk of the price action, though escalated geopolitical tensions also pressured investors’ risk appetite – the AUD is

generally considered a riskier currency compared to the haven USD.

The Fed’s higher-for-longer rhetoric and stickier-than-expected

dollar moves drove the bulk of the price action, though escalated geopolitical tensions also pressured investors’ risk appetite;

the Aussie is considered a risky currency.

The Fed’s higher-for-longer rhetoric and stickier-than-expected U.S.

inflation pushed out expectations for U.S.

Specific to the AUD, the sluggish recovery in China also served as a headwind given the country is Australia’s largest export partner.

However, the pair did rebound significantly in the second quarter as strong Australian retail sales raised bets that the Reserve Bank of Australia (RBA) could hike rates.

In contrast, many global central banks had already kicked off their easing cycles.

Additionally, the interest rate paid by the Depository has generally trended downward over the past year with the current interest rate of 1.52%, as set forth in the FXA Rate Chart above.

rate cuts, providing support for the U.S.

However, the pair did rebound significantly in the second and third quarter – strong domestic retail sales in the second quarter raised bets that the RBA could hike rates while many global central banks had already kicked off their easing cycles.

In the third quarter, the pair gained on U.S.

dollar weakness as the Fed began cutting rates, though the persisting downtrend in commodities and China pessimism capped the upside for the Aussie.

Additionally, the interest rate paid by the Depository has generally trended downward over the past year to current interest rate of 1.32%, as set forth in the FXA Rate Chart above.

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.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis