Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

This information should be read in conjunction with the financial statements and notes to the financial statements included in Item 1 of Part 1 of this Form 10-Q. The discussion and analysis that follows may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and within the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements may relate to the Trust's financial condition, operations, future performance and business. These statements can be identified by the use of the words "may", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or similar words and phrases. These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception of historical trends, current conditions and expected future developments. Neither the Trust nor the Sponsor is under a duty to update any of the forward-looking statements, to conform such statements to actual results or to reflect a change in management's expectations or predictions.

Introduction

The Trust is a common law trust, formed under the laws of the state of New York on December 30, 2009. The Trust is not managed like a corporation or an active investment vehicle. It does not have any officers, directors, or employees and is administered by the Trustee pursuant to the Trust Agreement. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act. It does not hold or trade in commodity futures contracts, nor is it a commodity pool, or subject to regulation as a commodity pool operator or a commodity trading adviser in connection with issuing Shares.

The Trust holds palladium and is expected to issue Baskets in exchange for deposits of palladium and to distribute palladium in connection with redemptions of Baskets. Shares issued by the Trust represent units of undivided beneficial interest in and ownership of the Trust. The investment objective of the Trust is for the Shares to reflect the performance of the price of palladium bullion, less the Trust's expenses. The Sponsor believes that, for many investors, the Shares will represent a cost effective investment relative to traditional means of investing in palladium.

The Trust issues and redeems Shares only in exchange for palladium and only in aggregations of 12,500 Shares effective June 18, 2024 (Prior to June 18, 2024, the number of Shares that constituted a Basket was 25,000 Shares) or integral multiples thereof (each, a "Basket"), and only in transactions with registered broker-dealers (or other securities market participants not required to register as broker-dealers, such as a bank or other financial institution) that (1) are participants in DTC and (2) have previously entered into an agreement with the Trust governing the terms and conditions of such issuance (such dealers, the "Authorized Participants").

Shares of the Trust trade on the NYSE Arca, Inc. ("NYSE Arca") under the symbol "PALL".

Valuation of Palladium and Computation of Net Asset Value

On each day that the NYSE Arca is open for regular trading, as promptly as practicable after 4:00 p.m. New York time on such day (the "Evaluation Time"), the Trustee evaluates the palladium held by the Trust and determines the NAV of the Trust.

At the Evaluation Time, the Trustee values the Trust's palladium on the basis of that day's LBMA Palladium Price PM or, if no LBMA Palladium Price PM Fix is made on such day, or has not been announced by the Evaluation Time, the LBMA Palladium Price AM announced on that day will be used. If neither price is available for that day, the Trust will value its palladium based on the most recently announced LBMA Palladium Price PM or LBMA Palladium Price AM, unless the Sponsor determines that such price is inappropriate as a basis for evaluation. In the event the Sponsor determines that the applicable LBMA Palladium Price PM or such other publicly available price as the Sponsor may deem fairly represents the commercial value of the Trust's palladium is not an appropriate basis for evaluation of the Trust's palladium, it shall identify an alternative basis for such evaluation to be employed by the Trustee. Neither the Trustee nor the Sponsor shall be liable to any person for the determination that the LBMA Palladium Price PM or such other publicly available price is not appropriate as a basis for evaluation of the Trust's palladium or for any determination as to the alternative basis for such evaluation provided that such determination is made in good faith.

Once the value of the palladium has been determined, the Trustee subtracts all estimated accrued but unpaid fees (other than the fees accruing for such day on which the valuation takes place that are computed by reference to the value of the Trust or its assets), expenses and other liabilities of the Trust from the total value of the palladium and all other assets of the Trust (other than any amounts credited to the Trust's reserve account, if established). The resulting figure is the ANAV of the Trust. The ANAV of the Trust is used to compute the Sponsor's Fee.

All fees accruing for the day on which the valuation takes place that are computed by reference to the value of the Trust or its assets are calculated using the ANAV calculated for such day. The Trustee subtracts from the ANAV the amount of accrued fees so computed for such day and the resulting figure is the NAV of the Trust. The Trustee also determines the NAV per Share by dividing the NAV of the Trust by the number of the Shares outstanding as of the close of trading on the NYSE Arca (which includes the net number of any Shares created or redeemed on such evaluation day).

Any estimate of the accrued but unpaid fees, expenses and liabilities of the Trust for purposes of computing the NAV of the Trust and ANAV made by the Trustee in good faith shall be conclusive upon all persons interested in the Trust and no revision or correction in any computation made under the Trust Agreement will be required by reason of any difference in amounts estimated from those actually paid.

The NAV of the Trust is obtained by subtracting the Trust's liabilities on any day from the value of the palladium owned and receivable by the Trust on that day; the NAV per Share is obtained by dividing the NAV of the Trust on a given day by the number of Shares outstanding on that day.

Recent Events

On April 22, 2026, the Sponsor announce a 5-for-1 forward share split (the "Split") of the Shares issued by the Trust.

The Split will apply to shareholders of record as of the close of the markets on May 14, 2026, and will be payable after the close of the markets on May 15, 2026. The Split will be effective prior to the market open on May 18, 2026, when the Shares of the Registrant will trade at their post-Split prices. The ticker symbol and CUSIP number for the Shares will not change.

The Split will decrease the price per Share of the Registrant with a proportionate increase in the number of Shares outstanding. In the 5-for-1 Split, shareholders will receive five post-Split-Shares for every Share held of record as of the close of the markets on May 14, 2026. The post-Split Shares will be priced at one-fifth the NAV of a pre-Split Share.

The Quarter Ended March 31, 2026

The Trust's NAV decreased from $1,035,462,345 at December 31, 2025 to $789,607,931 at March 31, 2026, a 23.74% decrease for the quarter. The change in the Trust's NAV resulted from a decrease in the price per ounce of palladium, which fell 7.59% from $1,567.00 at December 31, 2025 to $1,448.00 at March 31, 2026 and a decrease in outstanding Shares, which fell from 7,275,000 Shares at December 31, 2025 to 6,012,500 Shares at March 31, 2026, as a result of 625,000 Shares (50 Baskets) being created and 1,887,500 Shares (151 Baskets) being redeemed for the quarter.

The NAV per Share decreased 7.73% from $142.33 at December 31, 2025 to $131.33 at March 31, 2026. The Trust's NAV per Share fell slightly more than the price per ounce of palladium on a percentage basis due to the Sponsor's Fee, which was $1,641,881 for the quarter, or 0.60% of the Trust's ANAV.

The NAV per Share of $191.20 at January 29, 2026 was the highest during the quarter, compared with a low of $124.45 at March 26, 2026.

The decrease in net assets from operations for the quarter ended March 31, 2026 was $77,200,499, resulting from a change in unrealized loss on investment in palladium of $128,792,060 and the Sponsor's Fee of $1,641,881, offset by a realized gain of $423,745 on the transfer of palladium to pay expenses and a realized gain of $52,809,697 on palladium distributed for the redemption of Shares. Other than the Sponsor's Fee, the Trust had no expenses during the quarter ended March 31, 2026.

The Quarter Ended March 31, 2025

The Trust's NAV increased from $354,057,800 at December 31, 2024 to $368,860,564 at March 31, 2025, a 4.18% increase for the quarter. The change in the Trust's NAV resulted from an increase in the price per ounce of palladium, which rose 8.47% from $909.00 at December 31, 2024 to $986.00 at March 31, 2025 and a decrease in outstanding Shares, which fell from 4,262,500 Shares at December 31, 2024 to 4,100,000 Shares at March 31, 2025, as a result of 412,500 Shares (33 Baskets) being created and 575,000 Shares (46 Baskets) being redeemed for the quarter.

The NAV per Share increased 8.32% from $83.06 at December 31, 2024 to $89.97 at March 31, 2025. The Trust's NAV per Share rose slightly less than the price per ounce of palladium on a percentage basis due to the Sponsor's Fee, which was $521,017 for the quarter, or 0.60% of the Trust's ANAV on an annualized basis.

The NAV per Share of $97.78 at February 3, 2025 was the highest during the quarter, compared with a low of $83.80 at February 28, 2025.

The decrease in net assets from operations for the quarter ended March 31, 2025 was $30,027,321, resulting from a realized loss of $177,559 on the transfer of palladium to pay expenses, a realized loss of $14,652,231 on palladium distributed for the redemption of Shares, and the Sponsor's Fee of $521,017, offset by a change in unrealized gain on investment in palladium of $45,378,128. Other than the Sponsor's Fee, the Trust had no expenses during the quarter ended March 31, 2025.

Liquidity & Capital Resources

The Trust is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. In exchange for the Sponsor's Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor's Fee.

The Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust's palladium as necessary to pay the Trust's expenses not otherwise assumed by the Sponsor. The Trustee will not sell palladium to pay the Sponsor's Fee but will pay the Sponsor's Fee through in-kind transfers of palladium to the Sponsor. At March 31, 2026, the Trust did not have any cash balances.

Off-Balance Sheet Arrangements

The Trust is not a party to any off-balance sheet arrangements.

Critical Accounting Policies

The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements relies on estimates and assumptions that impact the Trust's financial position and results of operations. These estimates and assumptions affect the Trust's application of accounting policies. Refer to Note 2 to the Financial Statements for further information on accounting policies.