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 Swiss Francs:
−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.
4 unchanged sentences
As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor’s fee.
−Removed: Each month the Depository deposits into the secondary deposit account accrued but unpaid interest, if any, and the Trustee withdraws Swiss Francs from the secondary deposit account to pay the accrued Sponsor’s fee for the previous month plus other Trust expenses, if any.
+Added: Each month the Depository deposits into the secondary deposit account accrued but unpaid interest, if any, and the Trustee withdraws Swiss Francs 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).
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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 2,500,000 Shares were created in exchange for 229,209,797 Swiss Francs and 1,050,000 Shares were redeemed in exchange for 96,359,052 Swiss Francs.
−Removed: In addition, 2,082,480 Swiss Francs 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 Swiss Francs owned by the Trust was 259,956,239, resulting in a redeemable capital Share value of $293,802,451.
−Removed: During the year ended December 31, 2019, an additional 500,000 Shares were created in exchange for 46,358,107 Swiss Francs and 950,000 Shares were redeemed in exchange for 88,118,747 Swiss Francs.
−Removed: In addition, 1,759,836 Swiss Francs 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, 2019, the number of Swiss Francs owned by the Trust was 129,187,974, resulting in a redeemable capital Share value of $133,273,946.
−Removed: An increase in the Trust’s redeemable capital Share value from $133,273,946 at December 31, 2019 to $293,802,451 at December 31, 2020, was primarily the result of an increase in the number of Shares outstanding from 1,400,000 at December 31, 2019 to 2,850,000 at December 31, 2020, coupled with an increase in the Closing Spot Rate from 1.033 at December 31, 2019 to 1.131 at December 31, 2020.
−Removed: No interest income was earned during the years ended December 31, 2020 and 2019, due to an annual nominal interest rate which remained at or below 0.00% through those periods, as set forth in the FXF Daily Rate chart above.
−Removed: The Sponsor’s fee accrues daily at an annual nominal rate of 0.40% of the Swiss Francs in the Trust.
−Removed: Due primarily to an increase in the weighted-average Swiss Francs in the Trust, the Sponsor’s fee increased from $592,247 for the year ended December 31, 2019 to $811,111 for the year ended December 31, 2020.
−Removed: Due primarily to an increase in the weighted-average Swiss Francs in the Trust, interest expense on currency deposits increased from $1,131,825 for the year ended December 31, 2019 to $1,547,778 for the year ended December 31, 2020.
−Removed: The only expenses of the Trust during the years ended December 31, 2020 and 2019 were the Sponsor’s fee and interest expense on currency deposits.
−Removed: The Trust’s net comprehensive income (loss) for the year ended December 31, 2020 was $(2,358,889) due to the Sponsor’s fee of $811,111 and interest expense on currency deposits of $1,547,778 exceeding interest income of $0.
−Removed: The Trust’s net comprehensive income (loss) for the year ended December 31, 2019 was $(1,724,072) due to the Sponsor’s fee of $592,247 and interest expense on currency deposits of $1,131,825 exceeding interest income of $0.
−Removed: Cash dividends were not paid by the Trust in the years ended December 31, 2020 and 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: Contrary to 2020, 2021 was a negative year for the Swiss Franc (CHF/USD).
+Added: As the value of the U.S.
+Added: Dollar strengthened throughout 2021, supported in part by an increasingly hawkish Federal Reserve System (the Fed), and the global economy continued to recover, demand for the Swiss Franc gradually subsided.
+Added: Concerns over possible ‘stagflation’ continued to support the Swiss Franc due to the Swiss National Bank’s strict inflation mandates;
+Added: however, this support ultimately failed to provide a significant increase to the value of the Swiss Franc.
+Added: 2020 was a positive year for the Swiss Franc (CHF/USD).
+Added: The currency pair appreciated to the highest level since January 2015 amid concerns over higher-than-normal inflation and a plunging U.S.
+Added: Dollar, resulting from the Fed’s ultra-loose monetary policy.
+Added: Given the Swiss National Bank’s strict inflation mandates and perceived stability of the Swiss government and financial system, investors flocked to the Swiss Franc as a safe haven currency to weather the market chaos.
+Added: Additionally, the interest rate paid by the Depository has generally trended downward over the past several years to the current interest rate of -0.75%, as set forth in the FXF 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.