What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-07 · 29 added, 18 removed, 65 unchanged (42% 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 March 31, 2026 was an annual nominal rate of 1.72%.

The following chart provides the daily rate paid by the Depository since March 31, 2021:

The interest rate in effect as of June 30, 2026 was an annual nominal rate of 1.92%.

The following chart provides the daily rate paid by the Depository since June 30, 2021:

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

13 unchanged sentences

Results of Operations

During the three months ended March 31, 2026 and 2025, the Trust’s net comprehensive income (loss) was, in part, impacted by periods of market volatility associated with evolving global macroeconomic and geopolitical conditions, which are considered to be unusual or infrequent events.

For the three months ended March 31, 2026, these conditions included heightened geopolitical tensions, ongoing trade and fiscal policy uncertainty, and shifting expectations regarding the pace and timing of monetary policy actions by central banks, including the Federal Reserve (the “Fed”).

For the three months ended March 31, 2025, contributors to market volatility included concerns surrounding global economic growth, inflation dynamics, and expectations related to potential changes in monetary policy.

Although the full and direct impact of these conditions on the Trust’s net comprehensive income (loss) during the three months ended March 31, 2026 and 2025 cannot be known, it is believed that they may have independently affected the Closing Spot Rate, the interest rate paid by the Depository, and global economic and market conditions generally, including the number of Shares created and redeemed by the Trust.

The Australian Dollar (AUD) posted a gain in the first quarter of 2026, supported by high interest rates in Australia, which typically increases demand for the currency.

Higher short‑term rates also boosted income on cash holdings, contributing positively to overall Fund performance.

The Australian Dollar further benefited from elevated energy prices amid the ongoing conflict with Iran, given Australia’s role as a major commodity and energy exporter.

Although the currency moved up and down against the U.S.

dollar during the quarter, steady investor inflows and the benefit of higher yields helped limit the impact of these swings.

The Australian Dollar (AUD/USD) ended the first quarter of 2025 close to flat despite significant U.S.

dollar (USD) weakness.

This was partially due to global tariff uncertainty reducing risk appetite, as the AUD is generally seen as a riskier currency, but also the intensifying trade war between U.S.

China is Australia’s largest export partner, so any headwinds to the Chinese economy, will likely also have negative cascading effects.

The downturn in commodities also exerted downward pressure since Australia has an export-oriented economy.

Additionally, the interest rate paid by the Depository has generally remained flat over the past year to the current interest rate of 1.72%, 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.

During the three and six months ended June 30, 2026 and 2025, the Trust’s net comprehensive income (loss) was, in part, impacted by periods of market volatility associated with evolving global macroeconomic and geopolitical conditions, which are considered to be unusual or infrequent events.

For the three and six months ended June 30, 2026, these conditions included heightened geopolitical tensions, ongoing trade and fiscal policy uncertainty, and shifting expectations regarding the pace and timing of monetary policy actions by central banks, including the Federal Reserve.

For the three and six months ended June 30, 2025, contributors to market volatility included concerns surrounding global economic growth, inflation dynamics, and expectations related to potential changes in monetary policy.

Although the full and direct impact of these conditions on the Trust’s net comprehensive income (loss) during the three and six months ended June 30, 2026 and 2025 cannot be known, it is believed that they may have independently affected the Closing Spot Rate, the interest rate paid by the Depository, and global economic and market conditions generally, including the number of Shares created and redeemed by the Trust.

The Australian Dollar (AUD) delivered positive performance during the second quarter of 2026, supported by elevated commodity prices and a relatively hawkish domestic monetary policy backdrop.

Rising Middle East tensions boosted energy and commodity prices early in the quarter, benefiting Australia’s commodity-linked economy and supporting the currency.

The Reserve Bank of Australia (“RBA”) also raised its cash rate to 4.35% in May amid persistent inflation pressures, reinforcing support for the AUD.

However, gains were partially offset by strength in the U.S.

Dollar (“USD”) and expectations that U.S.

interest rates would remain higher for longer.

Later in the quarter, easing geopolitical tensions and progress toward a U.S.-Iran ceasefire improved global risk sentiment, providing an additional tailwind for the growth-sensitive Australian dollar.

The Australian dollar (AUD/USD) edged higher in the second quarter of 2025, supported mostly by USD weakness, though weak commodity prices capped those gains given Australia is a significant exporter.

Domestically, the 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) delivered positive performance year-to-date through the second quarter of 2026, supported by Australia's relatively high interest rates, elevated commodity prices, and improving risk sentiment.

During the first quarter, the currency benefited from strong investor demand for higher-yielding assets, while rising energy prices linked to the conflict in the Middle East provided an additional tailwind given Australia's role as a major commodity and energy exporter.

In the second quarter, support for the AUD continued as the RBA raised its cash rate to 4.35% amid persistent inflation pressures, reinforcing the currency’s yield advantage.

Higher energy and commodity prices also remained supportive, although gains were partially offset by strength in the USD.

Later in the second quarter, easing geopolitical tensions and progress toward a U.S.-Iran ceasefire further improved global risk sentiment, providing additional support for the growth-sensitive AUD.

The Australian dollar (AUD/USD) was higher in the first half of 2025, mostly supported by USD 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 RBA’s decision to cut rates in May, while signaling a cautious and data-dependent stance, added a boost to sentiment, but investor caution persisted.

Additionally, the interest rate paid by the Depository has generally remained flat over the past year to the current interest rate at 1.92%, as set forth in the FXA Rate Chart above.

As long as the interest income, if any, exceeds the Sponsor’s fee and the interest expense on currency deposits, the Trust will incur a net comprehensive income.

Quantitative and Qualitati ve Disclosures About Market Risk.

2 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