1 unchanged sentence
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, 2021, and its results of operations for the fiscal years ended December 31, 2021 and December 31, 2020.
−Removed: It should be read in conjunction with the “Selected Financial Data” and the accompanying audited financial statements and related notes thereto contained in this report.
+Added: It should be read in conjunction with the audited financial statements and related notes thereto contained in this report.
Cautionary Statement Regarding Forward-Looking Information
17 unchanged sentences
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:
−Removed: The Sponsor is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to the Trust’s liquidity needs.
+Added: Liquidity and Capital Resources
+Added: 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, 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.
8 unchanged sentences
Results of Operations
−Removed: For the year ended December 31, 2020 and the year ended December 31, 2019
−Removed: During the year ended December 31, 2020, an additional 1,150,000 Shares were created in exchange for 114,776,341 Australian Dollars and 400,000 Shares were redeemed in exchange for 39,913,155 Australian Dollars.
−Removed: In addition, 529,228 Australian Dollars were withdrawn to pay the Sponsor’s fee and the interest expense on currency deposits, due to the negative interest rate.
−Removed: As of December 31, 2020, the number of Australian Dollars owned by the Trust was 204,323,450, resulting in a redeemable capital Share value of $157,611,098.
−Removed: During the year ended December 31, 2019, an additional 200,000 Shares were created in exchange for 20,000,018 Australian Dollars and 550,000 Shares were redeemed in exchange for 54,998,678 Australian Dollars.
−Removed: In addition, 11,848 Australian Dollars were withdrawn to pay the portion of the Sponsor’s fee that exceeded interest earned.
−Removed: As of December 31, 2019, the number of Australian Dollars owned by the Trust was 129,989,492, resulting in a redeemable capital Share value of $91,378,070.
−Removed: An increase in the Trust’s redeemable capital Share value from $91,378,070 at December 31, 2019 to $157,611,098 at December 31, 2020, was primarily the result of an increase in the number of Shares outstanding from 1,300,000 at December 31, 2019 to 2,050,000 at December 31, 2020, coupled with an increase in the Closing Spot Rate from 0.7029 at December 31, 2019 to 0.7717 at December 31, 2020.
−Removed: Interest income decreased from $885,616 for the year ended December 31, 2019 to $84,292 for the year ended December 31, 2020, attributable primarily to a decrease in the annual nominal interest rate paid by the Depository, as set forth in the FXA Daily Rate chart above.
−Removed: The Sponsor’s fee accrues daily at an annual nominal rate of 0.40% of the Australian Dollars in the Trust.
−Removed: Due primarily to an increase in the weighted-average Australian Dollars in the Trust, the Sponsor’s fee increased from $412,925 for the year ended December 31, 2019 to $464,501 for the year ended December 31, 2020.
−Removed: Because the annual interest rate paid by the Depository fell briefly below 0.00% and remained at 0.00% during the year ended December 31, 2020 (as set forth in the chart above), the Trust incurred interest expense on currency deposits.
−Removed: Due primarily to a decline in the interest rate (below 0.00%), interest expense on currency deposits increased from $0 for the year ended December 31, 2019 to $18,141 for the year ended December 31, 2020.
−Removed: The only expenses of the Trust during the year ended December 31, 2020 were the Sponsor’s fee and interest expense on currency deposits.
−Removed: The only expense of the Trust during the year ended December 31, 2019 was the Sponsor’s fee.
−Removed: The Trust’s net comprehensive income (loss) for the year ended December 31, 2020 was $(398,350) due to the Sponsor’s fee of $464,501 and interest expense on currency deposits of $18,141 exceeding interest income of $84,292.
−Removed: The Trust’s net comprehensive income (loss) for the year ended December 31, 2019 was $472,691 due to interest income of $885,616 exceeding the Sponsor’s fee of $412,925.
−Removed: Cash dividends per Share decreased from $0.38 per Share for the year ended December 31, 2019 to $0.02 per Share for the year ended December 31, 2020.
−Removed: The decrease in cash dividends per Share was primarily the result of a decrease in the annual nominal interest rate paid by the Depository.
−Removed: Critical Accounting Policies
+Added: During the years ended December 31, 2021 and 2020, 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.
+Added: Although the full and direct impact of COVID-19 on the Trust’s net comprehensive income (loss) during the years ended December 31, 2021 and 2020 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.
+Added: The Australian Dollar (AUD/USD) performed negatively in 2021 as sluggish vaccine rollouts in Australia and the rise of the COVID-19 Delta and Omicron variants weighed on investor sentiment, serving as a headwind for the perceived riskier Australian Dollar.
+Added: A rebound in the U.S.
+Added: Dollar on strong U.S.
+Added: economic recovery and a more hawkish Federal Reserve System (the Fed) also pressured the AUD/USD spot rate.
+Added: Finally, given the Australian Dollar is a commodity currency (commodities account for a large share of Australia’s exports), rallying commodity prices provided support throughout the year, but not enough to reverse losses.
+Added: The Australian Dollar (AUD/USD) ended 2020 with a positive performance, despite initially slipping to a 17-year low in March, at the onset of the COVID-19 pandemic.
+Added: The outlook for the growth-linked currency turned more constructive in the second half of the year, against a backdrop of growing optimism around a global economic recovery, coupled with an environment of globally low interest rates and heightened fiscal support.
+Added: Particularly, given China is one of Australia’s major trading partners, its rapid emergence from the depths of the pandemic provided further optimism for the currency.
+Added: Finally, recovering commodity prices in the second half of the year further supported the commodity currency.
+Added: Additionally, the interest rate paid by the Depository has generally trended downward over the past several years to the current interest rate of 0.00%, as set forth in the FXA Rate Chart above.
+Added: As long as the Sponsor’s fee and the interest expense on currency deposits, if any, exceed interest income, the Trust will incur a net comprehensive loss.
+Added: Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Sponsor’s management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period covered by this report.
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.