10-K: Invesco CurrencyShares Swiss Franc Trust Reports Annual Results for Fiscal Year 2023

The Invesco CurrencyShares Swiss Franc Trust's annual report details the trust's performance, financial condition, and operational activities for the fiscal year ended December 31, 2023.

Summary

• The Invesco CurrencyShares Swiss Franc Trust is a grantor trust that issues shares backed by Swiss Francs.
• The trust's objective is for its shares to reflect the price of Swiss Francs in USD, plus accrued interest, less operating expenses.
• The trust does not engage in active management or use derivative products.
• The trust's primary expense is the sponsor's fee, which is 0.40% annually of the Swiss Francs held.
• For the year ended December 31, 2023, the trust incurred $771,974 in sponsor fees.
• The trust's net comprehensive loss for 2023 was $453,245, impacted by market volatility.
• The trust's assets primarily consist of Swiss Franc deposits held at JPMorgan Chase Bank, N.A., London Branch.
• The interest rate on the primary deposit account was 0.50% as of December 31, 2023.
• The trust distributes excess interest to shareholders monthly, if any, after covering expenses.
• The trust had 1,800,000 shares outstanding as of December 31, 2023.

Sentiment

Score: 4

Explanation: The document highlights a net loss and various risks associated with the trust, indicating a negative sentiment. However, the trust's structure and transparency are positive aspects.

Positives

• The trust provides a simple and cost-effective way for investors to gain exposure to the Swiss Franc.
• The trust is transparent, with its holdings and NAV reported daily on its website.
• The trust's structure is straightforward, with no active management or use of derivatives.
• The trust distributes excess interest to shareholders monthly, if any, after covering expenses.
• The trust has a clear objective to reflect the price of the Swiss Franc in USD.

Negatives

• The trust experienced a net comprehensive loss of $453,245 for the year ended December 31, 2023.
• The trust's value is subject to fluctuations in the price of the Swiss Franc.
• The trust's expenses, primarily the sponsor's fee, can reduce the amount of Swiss Francs represented by each share over time.
• The trust is not actively managed, so it cannot take action to protect against or take advantage of price fluctuations.
• The trust's deposit accounts are not insured by the FDIC or any other federal agency.

Risks

• Fluctuations in the price of the Swiss Franc could materially and adversely affect the value of the shares.
• The trust's expenses may exceed interest earned, leading to a gradual decline in the amount of Swiss Francs represented by each share.
• The interest rate paid by the Depository may not be the best rate available.
• The trust is not actively managed and no attempt will be made to buy or sell Swiss Francs to protect against or to take advantage of fluctuations in the price of the Swiss Franc.
• The shares may trade at a price which is at, above, or below the NAV per share.
• Disruptions in the ability to create and redeem baskets may adversely impact the price of the shares.
• Substantial sales of Swiss Francs by the official sector could adversely affect an investment in the shares.
• International armed conflicts may result in volatility in currency prices that could adversely affect the fund's performance.
• Pandemics and other public health emergencies could disrupt the global economy and adversely impact the trust's performance.
• Changes to United States tariff and trade policies may increase the volatility of foreign exchange rates.
• The deposit accounts are not entitled to payment at any office of JPMorgan Chase Bank, N.A. located in the United States.
• Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940.
• Shareholders do not have the rights enjoyed by investors in certain other financial instruments.
• If the Depository becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant.
• The License Agreement with The Bank of New York Mellon may be terminated by The Bank of New York Mellon in the event of a material breach.
• Shareholders may incur significant fees upon the termination of the Trust.
• The Depository owes no fiduciary duties to the Trust or the Shareholders, is not required to act in their best interest and could resign or be removed by the Sponsor, which would trigger early termination of the Trust.
• The Depositary Trust Agreement may be amended to the detriment of Shareholders without their consent.
• Due to the increased use of technologies, intentional and unintentional cyber attacks pose operational and information security risks.

Future Outlook

The report contains forward-looking statements regarding the potential effects of future developments on the trust, but these are not guarantees of future performance and are subject to various risks and uncertainties, including fluctuations in the price of the Swiss Franc.

Management Comments

• Management of Invesco Specialized Products, LLC, as sponsor of the Invesco CurrencyShares Swiss Franc Trust, is responsible for establishing and maintaining adequate internal control over financial reporting.
• The Sponsor generally oversees the performance of the Trustee and the Trust's principal service providers.

Industry Context

This report reflects the performance of a specific currency trust within the broader context of exchange-traded products and foreign exchange markets. The trust's performance is directly influenced by the Swiss Franc's value and global economic conditions.

Comparison to Industry Standards

• The Invesco CurrencyShares Swiss Franc Trust is similar in structure to other currency-backed exchange-traded products, such as the CurrencyShares Euro Trust (FXE) and the CurrencyShares Japanese Yen Trust (FXY).
• These trusts aim to provide investors with exposure to specific currencies without the complexities of direct foreign exchange trading.
• The sponsor's fee of 0.40% is a common expense structure for these types of products.
• The trust's performance is benchmarked against the Swiss Franc/USD exchange rate, similar to how other currency trusts are benchmarked against their respective currency pairs.
• The trust's passive management approach is standard for these types of investment vehicles, which contrasts with actively managed currency funds.

Management Changes

Related Party Transactions

• The trust pays a sponsor's fee to Invesco Specialized Products, LLC, a related party.

Stakeholder Impact

• Shareholders are exposed to the risks and rewards of the Swiss Franc's price fluctuations.
• Shareholders may receive monthly distributions if interest income exceeds expenses.
• Authorized Participants are able to create and redeem baskets of shares.
• The trust's service providers, including the trustee and depository, are impacted by the trust's operations.

Next Steps

• The trust will continue to operate as a passive investment vehicle, tracking the price of the Swiss Franc.
• The trust will continue to distribute excess interest to shareholders monthly, if any, after covering expenses.
• The sponsor will continue to oversee the performance of the trustee and the trust's principal service providers.

Key Dates

Keywords

Swiss Franc, currency trust, exchange-traded fund, FXF, Invesco, foreign exchange, grantor trust, currency investment, NYSE Arca