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 British Pounds Sterling:
−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.
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Results of Operations
−Removed: For the years ended December 31, 2020 and December 31, 2019
−Removed: During the year ended December 31, 2020, an additional 950,000 Shares were created in exchange for 91,946,141 British Pounds Sterling and 1,150,000 Shares were redeemed in exchange for 111,354,285 British Pounds Sterling.
−Removed: In addition, 304,912 British Pounds Sterling were withdrawn to pay the portion of the Sponsor’s fee that exceeded interest earned.
−Removed: As of December 31, 2020, the number of British Pounds Sterling owned by the Trust was 106,331,789, resulting in a redeemable capital Share value of $145,299,977.
−Removed: During the year ended December 31, 2019, an additional 1,250,000 Shares were created in exchange for 121,214,247 British Pounds Sterling and 1,050,000 Shares were redeemed in exchange for 101,821,260 British Pounds Sterling.
−Removed: In addition, 54,267 British Pounds Sterling were withdrawn to pay the portion of the Sponsor’s fee that exceeded interest earned.
−Removed: As of December 31, 2019, the number of British Pounds Sterling owned by the Trust was 126,044,845, resulting in a redeemable capital Share value of $166,971,382.
−Removed: A decrease in the Trust’s redeemable capital Share value from $166,971,382 at December 31, 2019 to $145,299,977 at December 31, 2020, was primarily the result of a decrease in the number of Shares outstanding from 1,300,000 at December 31, 2019 to 1,100,000 at December 31, 2020, offset by an increase in the Closing Spot Rate from 1.3248 at December 31, 2019 to 1.367 at December 31, 2020.
−Removed: Interest income decreased from $497,896 for the year ended December 31, 2019 to $105,533 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 FXB Daily Rate chart above, coupled with a decrease in the weighted-average British Pounds Sterling in the Trust.
−Removed: The Sponsor’s fee accrues daily at an annual nominal rate of 0.40% of the British Pounds Sterling in the Trust.
−Removed: Due primarily to a decrease in the weighted-average British Pounds Sterling in the Trust, the Sponsor’s fee decreased from $567,982 for the year ended December 31, 2019 to $536,621 for the year ended December 31, 2020.
−Removed: The only expense of the Trust during the years ended December 31, 2020 and December 31, 2019 was the Sponsor’s fee.
−Removed: The Trust’s net comprehensive income (loss) for the year ended December 31, 2020 was $(431,088), due to the Sponsor’s fee of $536,621 exceeding interest income of $105,533.
−Removed: The Trust’s net comprehensive income (loss) for the year ended December 31, 2019 was $(70,086), due to the Sponsor’s fee of $567,982 exceeding interest income of $497,896.
−Removed: Cash dividends were not paid by the Trust in the years ended December 31, 2020 and December 31, 2019, as the Trust’s interest income did not exceed the Trust’s expenses during those periods.
−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 British Pound Sterling (GBP/USD) ended 2021 with a slightly negative performance, as tightening restrictions to curb the spread of the COVID-19 Omicron variant in the United Kingdom threatened to derail the Bank of England’s rate hike plans.
+Added: In the first half of 2021, an improving domestic economic growth outlook and gradual reopenings, driven by the United Kingdom’s speedy vaccine rollout and a general firming in the market’s risk appetite (which tends to weigh on the U.S.
+Added: Dollar given its perception as one of the world’s safe haven currencies), helped the GBP/USD currency pair recover to nearly the highest level since 2018, before giving up all its gains to the COVID-19 Omicron variant in late 2021.
+Added: The British Pound Sterling (GBP/USD) ended 2020 with a positive performance, despite plunging to an over 35-year low right at the onset of the COVID-19 pandemic.
+Added: As lockdowns were put into place, spooked investors aggressively ditched the British Pound Sterling for the U.S.
+Added: Dollar, which is generally perceived as one of the world’s safe haven currencies, while concerns over the lack of progress in post-Brexit talks added further downward pressure.
+Added: However, the GBP/USD currency pair gradually recovered through the year supported by a falling U.S.
+Added: Dollar and improving risk sentiment.
+Added: In addition, growing optimism around Brexit talks and Britain’s then-new Brexit deal with the European Union at the end 2020, left the GBP/USD currency pair at the highest level since mid-2018.
+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 FXB 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.