COtwo Advisors Physical European Carbon Allowance Trust

What they do

The Trust was formed as a Delaware statutory trust on January 12, 2023 and is governed by a Trust Agreement between COtwo Advisors LLC (Sponsor) and Wilmington Trust, National Association (Trustee). Its assets consist solely of EU Carbon Emission Allowances for stationary installations (EUAs) and cash, with EUAs held at the European Union Registry. Shares are issued only in 50,000-share Baskets to Authorized Participants in exchange for EUAs or cash, and are listed for trading on NYSE Arca under the symbol CTWO.

Revenue drivers

• EUA price exposure — The Trust's investment objective is for Shares to reflect the price of EUAs, less expenses; it invests substantially all assets in EUAs on a non-discretionary basis, so performance is driven by EUA price movements.
• Basket issuance/redemption activity — Shares are created and redeemed in 50,000-share Baskets at NAV per Share with Authorized Participants, providing the mechanism for the Trust to acquire or dispose of EUAs and cash.
• Cash held for fees and redemptions — The Trust may hold cash in connection with cash purchases and redemptions and to pay the Sponsor's Management Fee and other Trust expenses not assumed by the Sponsor.
• Sponsor fee arrangement — The Trust pays the Sponsor a Sponsor Fee; in exchange the Sponsor assumes routine operational, administrative and other ordinary expenses of the Trust, including Trustee, administrator, custodian, transfer agent and marketing agent fees, listing fees, SEC registration fees, printing, audit and routine legal expenses.

Recent performance

As of May 31, 2026, the Trust reported total assets of $1.8 million, total liabilities of $1,160, and shareholder equity of $1.8 million, with cash and equivalents of $13,754. The latest balance sheet reflects a small, single-asset trust whose holdings consist of EUAs and cash. The 10-Q notes the initial Form S-1 was declared effective on April 29, 2025, two Baskets representing 100,000 shares were issued on June 17, 2025, and the Trust began trading on NYSE Arca on June 20, 2025. No revenue figures for the Trust were provided in the excerpts.

Strategy

The Trust intends to achieve its objective by investing substantially all of its assets in EUAs on a non-discretionary basis, without regard to whether EUA prices are rising or falling. It will not attempt to speculatively sell EUAs at high prices or acquire them at low prices in expectation of future increases. It will not attempt to avoid losses or hedge exposure arising from changes in the price of EUAs. The Trust is not registered as an investment company under the 1940 Act and is not a commodity pool under the Commodity Exchange Act.

Risks

• EUA price risk — The Trust invests substantially all assets in EUAs on a non-discretionary basis and does not hedge, so Share value will move with EUA prices.
• Regulatory and program risk — The EU ETS is administered by the European Commission, and changes to the cap, allocation or rules could affect EUA supply, demand and price.
• Creation/redemption and liquidity risk — Shares are issued and redeemed only in 50,000-share Baskets through Authorized Participants, and individual Shares are not redeemable by the Trust.
• Counterparty and service provider risk — The Trust relies on the Sponsor, Trustee, Transfer Agent, Administrator, Cash Custodian and Marketing Agent, and pays the Sponsor a fee while the Sponsor assumes routine expenses.

Outlook

The excerpted filings do not include specific forward guidance on EUA prices or Trust performance. The Trust states it will continue to pursue its objective by investing substantially all assets in EUAs on a non-discretionary basis. Management notes the Trust is subject to risks and uncertainties described in its filings, and the Sponsor undertakes no obligation to update forward-looking statements except as required by law.