10-Q: Invesco Canadian Dollar Trust Q3 2025: Assets Rise, Income Falls

Invesco CurrencyShares Canadian Dollar Trust reports increased assets to $91.38 million in Q3 2025, despite a significant decline in net comprehensive income and distributions per share compared to the prior year.

Summary

• Total Assets increased to $91,375,313 as of September 30, 2025, from $61,235,812 at December 31, 2024.
• Canadian Dollar deposits, interest bearing, rose to $91,312,662 from $61,159,344.
• Net Comprehensive Income for the three months ended September 30, 2025, was $115,510, a decrease from $300,066 in the same period of 2024.
• Net Comprehensive Income for the nine months ended September 30, 2025, was $348,567, significantly lower than $1,036,055 for the same period in 2024.
• Basic and Diluted Earnings per Share for the three months ended September 30, 2025, was $0.09, down from $0.35 in 2024.
• Basic and Diluted Earnings per Share for the nine months ended September 30, 2025, was $0.30, down from $1.20 in 2024.
• Weighted-average Shares Outstanding increased to 1,307,609 for the three months and 1,167,399 for the nine months ended September 30, 2025, compared to 860,870 and 863,869 respectively in 2024.
• Distributions per Share for the three months ended September 30, 2025, were $0.09, down from $0.36 in 2024.
• Distributions per Share for the nine months ended September 30, 2025, were $0.32, down from $1.25 in 2024.
• The interest rate on Canadian Dollar principal deposits as of September 30, 2025, was an annual nominal rate of 0.71%.
• The Canadian Dollar (CAD/USD) declined in Q3 2025 due to weak employment data, softer inflation, a large miss in Q2 2025 annualized GDP, tariff-related headwinds, and a 0.25% interest rate cut by the Bank of Canada in September.

Sentiment

Score: 3

Explanation: While the Trust saw an increase in total assets and shares outstanding, indicating some demand, its core financial performance metrics (net comprehensive income, EPS, distributions per share, and interest income) significantly deteriorated year-over-year for both the three and nine-month periods. This decline is directly linked to the weakening Canadian Dollar and lower interest rates, which are adverse for a currency trust.

Positives

• Total assets increased significantly to $91.38 million as of September 30, 2025, from $61.24 million at December 31, 2024, indicating growth in the Trust's holdings.
• The number of outstanding Redeemable Capital Shares increased to 1,300,000 as of September 30, 2025, from 900,000 at December 31, 2024, suggesting increased investor interest or capital inflows.
• Management concluded that disclosure controls and procedures were effective, providing reasonable assurance for financial reporting.

Negatives

• Net Comprehensive Income for the three months ended September 30, 2025, decreased by 61.5% to $115,510 from $300,066 in the prior year.
• Net Comprehensive Income for the nine months ended September 30, 2025, decreased by 66.3% to $348,567 from $1,036,055 in the prior year.
• Basic and Diluted Earnings per Share for the three months ended September 30, 2025, fell by 74.3% to $0.09 from $0.35.
• Basic and Diluted Earnings per Share for the nine months ended September 30, 2025, fell by 75% to $0.30 from $1.20.
• Interest Income for the three months ended September 30, 2025, decreased by 42.2% to $209,051 from $361,987.
• Interest Income for the nine months ended September 30, 2025, decreased by 51.5% to $592,891 from $1,222,131.
• Distributions per Share for the three months ended September 30, 2025, decreased by 75% to $0.09 from $0.36.
• Distributions per Share for the nine months ended September 30, 2025, decreased by 74.4% to $0.32 from $1.25.
• The Canadian Dollar (CAD/USD) declined in Q3 2025 due to weak employment data, softer inflation, a large miss in Q2 2025 annualized GDP, tariff-related headwinds, and a 0.25% interest rate cut by the Bank of Canada in September.
• Falling energy prices, with Canada being a major oil exporter, continued to pressure the CAD.

Risks

• **Concentration Risk:** All of the Trust's assets are Canadian Dollars, creating a concentration risk associated with fluctuations in the price of the Canadian Dollar. A decline in the Canadian Dollar to USD exchange rate will have an adverse effect on the value of the Shares.
• **Exchange Rate Volatility:** Factors such as national debt levels, trade deficits, domestic and foreign inflation rates, interest rates, investment and trading activities, and global political/economic events can cause a decline in the price of the Canadian Dollar.
• **Official Sector Sales:** Substantial sales of Canadian Dollars by central banks or other governmental agencies could adversely affect an investment in the Shares.
• **Depository Insolvency Risk:** All of the Trust's Canadian Dollars are held by a single financial institution, JPMorgan Chase Bank, N.A., London Branch, increasing the potential for loss if the Depository becomes insolvent.
• **Regulatory Matters / Tariff and Trade Policies:** Changes to United States tariff and trade policies have increased and may continue to increase foreign exchange rate volatility, which could materially and adversely affect the performance of the Shares.
• **Interest Rate Risk:** The Depository may change the interest rate at which interest accrues on deposits, including reducing it to zero or below, based upon changes in market conditions or the Depository's liquidity needs.

Future Outlook

The report contains forward-looking statements, but explicitly states they are not guarantees of future performance and will not be revised or updated. Factors that may cause actual results to differ include fluctuations in the price of the Canadian Dollar, which directly impacts the value of the Shares. 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.

Management Comments

• "Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report."
• "Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report."
• "The Trust's disclosure controls and procedures were effective to provide reasonable assurance that information the Trust is required to disclose... is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms."
• "There has been no change in internal control over financial reporting... that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting."

Industry Context

The Trust operates as a passive investment vehicle designed to reflect the price of the Canadian Dollar in USD. Its performance is directly tied to the CAD/USD exchange rate, which is influenced by global macroeconomic factors such as interest rate differentials (e.g., Bank of Canada's rate cuts vs. Federal Reserve's stance), commodity prices (particularly oil, given Canada's status as a major exporter), and geopolitical tensions. The decline in the Canadian Dollar in Q3 2025, attributed to weak Canadian economic data, a Bank of Canada rate cut, and falling energy prices, reflects a broader trend of central bank divergence and commodity price sensitivity impacting currency markets.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for direct industry comparison.
• The Trust's objective is to reflect the price of the Canadian Dollar, less expenses. Its performance is therefore benchmarked against the CAD/USD exchange rate.
• The significant decline in net comprehensive income and distributions per share is a direct consequence of the Canadian Dollar's depreciation against the USD and lower interest income, which is a standard outcome for a passive currency trust when its underlying currency weakens.

Corporate Governance

Related Party Transactions

• The Sponsor, Invesco Specialized Products, LLC, is a related party of the Trust.
• The Trust pays the Sponsor a Sponsors fee, which accrues daily at an annual nominal rate of 0.40% of the Canadian Dollars in the Trust and is paid monthly. For the three months ended September 30, 2025, this fee was $93,541, and for the nine months, it was $244,324.

Stakeholder Impact

• **Shareholders:** Directly impacted by the decline in the Canadian Dollar's value against the USD, leading to lower NAV per share, reduced earnings per share, and significantly lower distributions per share. While shares outstanding increased, the overall return for shareholders was negatively affected by currency depreciation.
• **Sponsor (Invesco Specialized Products, LLC):** Benefits from increased assets (Canadian Dollar deposits) as its fee is based on the amount of Canadian Dollars in the Trust. The Sponsors fee increased for both the three and nine-month periods compared to the prior year.

Next Steps

• The Trust will continue to operate as a passive investment vehicle, reflecting the price of the Canadian Dollar.
• Monthly distributions of excess interest, if any, will continue to be made to shareholders.

Key Dates

Recommendation

The Trust's performance is a direct reflection of the Canadian Dollar's value against the USD, less expenses. While the recent quarter shows a significant decline in income and distributions due to CAD weakness and lower interest rates, the Trust's assets have grown, indicating continued investor interest in gaining exposure to the Canadian Dollar. For investors seeking direct exposure to the Canadian Dollar, the Trust fulfills its objective. However, given the current headwinds for the CAD (rate cuts, weak economic data, falling energy prices), a 'hold' recommendation is appropriate for existing investors who believe in the long-term potential of the CAD or are using it for diversification. New investors might wait for more favorable currency trends. The Trust is a passive vehicle, so its performance is purely a function of the underlying currency and its interest rate.

Keywords

Canadian Dollar, Currency ETF, FXC, Invesco, Foreign Exchange, CAD/USD, Grantor Trust, CurrencyShares, SEC Filing, Q3 2025, Financial Report, Exchange Rate, Investment Trust, Passive Investment