Key Highlights

● STHH traded down 0.72% at $9.62 in Friday's October 16 intraday session.

● The fund invests at least 95% of net assets in STMicroelectronics ADRs.

● Currency forwards and swaps hedge the Euro-Dollar exchange rate for STHH holders.

● STHH charges a net 0.19% expense ratio under an expense limitation agreement.

The STMicroelectronics NV ADRhedged ETF (NYSE American:STHH), which combines a core allocation in American Depositary Receipts of STMicroelectronics N.V. (NYSE:STM) with over-the-counter currency forwards and foreign exchange swaps, traded down 0.72% at $9.62 in intraday trading on Friday, October 16. By completely neutralizing EUR/USD currency swings, STHH allows dollar-based investors to capture the pure local currency equity performance of STMicroelectronics. It opened at $9.55 against a previous close of $9.69, and its 52-week range runs from $4.33 to $16.26.

Investing in premier European microelectronics innovators, such as French-Italian semiconductor titan STMicroelectronics N.V., a world leader in silicon carbide (SiC) power semiconductors and automotive microcontrollers, exposes North American investors to unhedged foreign exchange volatility. When US investors purchase conventional ADRs, dollar returns are hostage to the Euro-Dollar exchange rate: if the Euro depreciates against the Dollar, unhedged investors suffer severe currency drag, eroding equity gains earned on Euronext Paris and Milan. The fund addresses this transatlantic friction.

Legal Architecture & Single-Stock Trust Structure

STHH is registered under the Investment Company Act of 1940 as an open-end management investment company, operating as an actively managed series of Tidal Trust II. The fund is advised by Tidal Investments LLC in collaboration with ADRhedged, a specialized financial sponsor focused on currency-immunized international single-stock investing. The fund launched in March 2025.

Under federal securities regulations, STHH is classified as 'non-diversified' because its assets are concentrated in the securities and related derivatives of a single corporate issuer. The 1940 Act structure provides essential investor protections, including third-party custody of underlying ADRs, daily portfolio transparency, and clean Form 1099 tax reporting for shareholders.

Portfolio Composition: Physical ADRs vs. Currency Forward Swaps

STHH's portfolio architecture is focused and transparent. Under normal market conditions, the fund invests at least 95% of its net assets in American Depositary Receipts of STMicroelectronics N.V., which trade on the New York Stock Exchange under the ticker STM. Each ADR represents ownership in one ordinary share of STMicroelectronics deposited with an international custodian bank.

The remaining portion of fund assets is deployed into over-the-counter currency forward contracts and foreign exchange swaps with major institutional financial counterparties. These derivative contracts systematically hedge against fluctuations in the exchange rate between the US Dollar and the Euro. If the Euro weakens, gains from the currency hedge offset the downward currency pressure on the ADR, locking in local equity returns.

Cost Structure, Contractual Expense Caps & Financing Mechanics

STHH carries an attractive contractual expense profile. The fund charges a net annual operating expense ratio of 0.19%, facilitated by an expense limitation agreement wherein the advisor absorbs operational expenses exceeding this threshold.

Underlying derivative financing costs also matter. Forward currency pricing reflects the interest rate differential between the Federal Reserve's policy rate and the European Central Bank's deposit rate (covered interest parity). When US interest rates exceed European rates, holding a long-dollar currency hedge typically yields an implicit interest rate premium, reducing structural hedging drag.

Performance Dissection: Silicon Carbide & Industrial Recovery

Performance over the past year reflected surging global demand for STMicroelectronics' proprietary silicon carbide power modules, which are indispensable for electric vehicle powertrains, solar inverters, and high-voltage AI datacenter power supplies.

Comparing STHH's performance against unhedged STMicroelectronics ADRs highlights the effectiveness of currency immunization. During periods when the US Dollar rallied against the Euro, STHH consistently outperformed unhedged ADRs by the precise margin of the Euro's decline, proving the value of eliminating currency noise.

Distribution Profile, Pass-Through Income & Taxation

STHH distributes dividend income annually, passing through ordinary cash dividends paid by STMicroelectronics N.V. on its common stock, net of foreign dividend withholding taxes and currency settlement expenses. The fund carried a 30-day SEC yield of approximately 0.55% as of October 2026.

From a taxation standpoint, STHH provides standard Form 1099-DIV reporting. Dividends qualify as qualified dividend income (QDI) for eligible US investors, and the fund avoids the administrative complexities of Schedule K-1 partnership forms.

Secondary Market Liquidity & Lead Market Making

STHH benefits from active market making supported by lead market makers, including Virtu Americas LLC. Secondary market liquidity is directly anchored to the deep liquidity of the underlying STMicroelectronics ADRs on the NYSE and the multi-trillion-dollar liquidity of the spot EUR/USD currency market.

Authorized participants can seamlessly arbitrate any pricing discrepancies between STHH’s secondary market price and its real-time indicative net asset value by simultaneously trading the underlying ADRs and offsetting currency contracts, ensuring the fund trades near fair value throughout the trading day.

Primary Investment Risks: Single-Stock Concentration & Counterparty Exposure

While STHH eliminates foreign exchange risk, it magnifies idiosyncratic corporate risks. The fund carries 100% single-stock concentration risk: shareholders are completely exposed to operational setbacks at STMicroelectronics, including automotive production slowdowns, EV adoption pauses, and silicon carbide wafer fab yield challenges.

Additionally, the fund is exposed to derivative counterparty risk. Because currency swaps trade over-the-counter rather than on centralized exchanges, a default by a derivative counterparty during severe financial market stress could disrupt the currency hedge.

Euro-Neutral Exposure to One Chipmaker

The STMicroelectronics NV ADRhedged ETF invests at least 95% of net assets in STMicroelectronics ADRs and places the remainder in over-the-counter currency forwards and swaps.

When the Euro weakens, gains on those currency contracts offset the downward pressure on the ADR, locking in local equity returns.