Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statement Regarding Forward-Looking Information
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “outlook” and “estimate” and other similar words. Forward-looking statements are based upon our current expectations and beliefs concerning future developments and their potential effects on us. Such forward-looking statements are not guarantees of future performance. Various factors may cause our actual results to differ materially from those expressed in our forward-looking statements. These factors include fluctuations in the price of the Australian Dollar, as the value of the Shares relates directly to the value of the Australian Dollars held by the Trust and price fluctuations could materially adversely affect an investment in the Shares. Readers are urged to review the “Risk Factors” section contained in the Trust’s most recent Annual Report on Form 10-K for a description of other risks and uncertainties that may affect an investment in the Shares.
Neither Invesco Specialized Products, LLC (the “Sponsor”) nor any other person assumes responsibility for the accuracy or completeness of forward-looking statements contained in this report. The forward-looking statements are made as of the date of this report and will not be revised or updated to reflect actual results or changes in the Sponsor’s expectations or predictions.
Overview/Introduction
The Invesco CurrencyShares® Australian Dollar Trust (the “Trust”) is a grantor trust that was formed on June 8, 2006. The Shares began trading on the New York Stock Exchange under the ticker symbol “FXA” on June 26, 2006. The primary listing of the Shares was transferred to NYSE Arca, Inc. (“NYSE Arca”) on October 30, 2007. The Trust issues shares (the “Shares”) in blocks of 50,000 (a “Basket”) in exchange for deposits of Australian Dollars and distributes Australian Dollars in connection with the redemption of Baskets.
The investment objective of the Trust is for the Shares to reflect the price in USD of the Australian Dollar plus accrued interest, if any, less the expenses of the Trust’s operations. The Shares are intended to offer investors an opportunity to participate in the market for the Australian Dollar through an investment in securities. The Shares are intended to provide institutional and retail investors with a simple, cost-effective means of gaining investment benefits similar to those of holding the Australian Dollar. The Shares are bought and sold on NYSE Arca like any other exchange-listed security. The Shares are backed by the assets of the Trust, which does not hold or use derivative products. The Trust is a passive investment vehicle and does not have any officers, directors or employees. The Trust does not engage in any activities designed to obtain profit from, or ameliorate losses caused by, changes in the price of the Australian Dollar. Investing in the Shares does not insulate the investor from certain risks, including price volatility. The value of the holdings of the Trust is reported on the Trust’s website, www.invesco.com/etfs, each business day.
Definition of Net Asset Value
The Trustee calculates, and the Sponsor publishes, the Trust’s Net Asset Value (“NAV”) each business day. To calculate the NAV, the Trustee adds to the amount of Australian Dollars in the Trust at the end of the preceding day accrued but unpaid interest, if any, Australian Dollars receivable under pending purchase orders and the value of other Trust assets, and subtracts the accrued but unpaid Sponsor’s fee, Australian Dollars payable under pending redemption orders and other Trust expenses and liabilities, if any. The NAV is expressed in USD based on the Australian Dollar/USD exchange rate as determined by The WM Company at 4:00 PM (London time / London fixing) (the “Closing Spot Rate”) on each day that NYSE Arca is open for regular trading. If, on a particular evaluation day, the Closing Spot Rate has not been determined and announced by 6:00 PM (London time), then the most recent Closing Spot Rate is used to determine the NAV of the Trust unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate to use as the basis for the valuation.
The Trustee also determines the NAV per Share, which equals the NAV of the Trust divided by the number of outstanding Shares. The NAV of the Trust and the NAV per Share are published by the Sponsor on each day that NYSE Arca is open for regular trading and are posted on the Trust’s website, www.invesco.com/etfs.
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Movements in the Price of the Australian Dollar
The investment objective of the Trust is for the Shares to reflect the price in USD of the Australian Dollar plus accrued interest, if any, less the expenses of the Trust’s operations. The Shares are intended to provide institutional and retail investors with a simple, cost-effective means of gaining investment benefits similar to those of holding Australian Dollars. Each outstanding Share represents a proportional interest in the Australian Dollars held by the Trust. The following chart provides recent trends on the price of the Australian Dollar. The chart illustrates movements in the price of the Australian Dollar in USD and is based on the Closing Spot Rate:
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:
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Liquidity and Capital Resources
The Trust does not have any material cash requirements as of the end of the latest fiscal period. 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 Trust’s Depository, JPMorgan Chase Bank, N.A., London Branch, primarily maintains two deposit accounts for the Trust, a primary deposit account that may earn interest and a secondary deposit account that does not earn interest. Interest on the primary deposit account, if any, accrues daily and is paid monthly. 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. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor’s fee. Each month the Depository deposits into the secondary deposit account accrued but unpaid interest, if any, and the Trustee withdraws Australian Dollars from the secondary deposit account to pay the accrued Sponsor’s fee for the previous month plus other Trust expenses (including, without limitation, expenses resulting from negative interest rates), if any. When the interest deposited, if any, exceeds the sum of the Sponsor’s fee for the prior month plus other Trust expenses, if any, the Trustee converts the excess into USD at the prevailing market rate and distributes the USD as promptly as practicable to Shareholders on a pro-rata basis (in accordance with the number of Shares that they own). Distributions 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
4/1/2026
$
0.07140
$
67.86
0.11%
1.24%
5/1/2026
$
0.07860
$
71.24
0.11%
1.34%
6/1/2026
$
0.09135
$
71.30
0.13%
1.51%
Critical Accounting Estimates
The financial statements and accompanying notes are prepared in accordance with U.S. GAAP. The preparation of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations. 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 Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 2, 2026.
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.
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Results of Operations
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.
Item 3. Quantitative and Qualitati ve Disclosures About Market Risk.
Except as described above with respect to fluctuations in the Australian Dollar/USD exchange rate and changes in the nominal annual interest rate paid by the Depository on Australian Dollars held by the Trust, the Trust is not subject to market risk. The Trust does not hold securities and does not invest in derivative instruments.
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