How has the Trust's investment in gold performed during this period?

The Trust's investment in gold saw substantial growth. The market value of its gold holdings increased from approximately $3.16 billion as of September 30, 2005, to $7.21 billion as of June 30, 2006. This growth reflects the rising price of gold and increased investor demand, leading to a significant unrealized gain of $1.48 billion.

What are the primary drivers of the Trust's financial performance?

The Trust's performance is primarily driven by the market price of gold. For the nine months ended June 30, 2006, the Trust reported a net gain of $104.5 million. This gain was largely attributable to the appreciation in the value of its gold holdings and gains realized from gold distributed for share redemptions, offsetting operational expenses.

How are the Trust's expenses managed, and are there any fee reductions?

The Trust incurs expenses for custody, trustee, sponsor, and marketing. To manage these, a fee reduction mechanism is in place: if ordinary expenses exceed 0.40% per year of the daily ANAV, the fees paid to the Sponsor and Marketing Agent are reduced. For the nine months ended June 30, 2006, these fees were reduced by $648,226.

Why does the Trust report zero cash flow from operations and zero cash balance?

The Trust's operational model involves selling a portion of its gold holdings to cover ongoing expenses. This process ensures that the Trust minimizes its non-gold assets and maintains its primary objective of reflecting the price of gold. Consequently, cash generated from selling gold to pay expenses is immediately used, resulting in no net cash flow from operations and a zero cash balance at the end of reporting periods.

GLD 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

SPDR Gold Trust (GLD) reported substantial growth in its investment in gold, more than doubling from $2.91 billion in September 2005 to $7.21 billion by June 30, 2006. This growth is primarily driven by significant share creations, indicating strong investor demand for gold exposure. The Trust generated a net gain of $104.6 million for the nine months ending June 30, 2006, a significant improvement from the prior year's period. Total expenses, including custody, trustee, sponsor, and marketing fees, were $16.3 million for the nine-month period, which are managed through fee reductions when ordinary expenses exceed a certain percentage of ANAV, as demonstrated by a $648,226 fee reduction in the same period. The Trust's financial position reflects the underlying gold market's performance, with the market value of its gold holdings significantly exceeding its average cost. Investors should note that while the Trust aims to mirror the price of gold, its shares are subject to gradual erosion of underlying gold per share due to ongoing expenses, even with rising gold prices. The Trust reported no cash flow from operations, as gold is sold to cover expenses, leading to zero cash balances at period end. Overall, the report indicates strong investor interest and a positive performance trend for gold during the period, though the inherent expenses will continue to impact long-term per-share value.

Key Highlights

1Total Assets grew from $2.91 billion (Sept 2005) to $5.86 billion (June 2006), primarily driven by a significant increase in the market value and holdings of gold.
2Investment in Gold (market value) more than doubled from $3.16 billion (Sept 2005) to $7.21 billion (June 2006).
3Net Gain for the nine months ending June 30, 2006, was $104.5 million, a substantial increase compared to the net loss of ($3.2 million) for the comparable period in the prior year.
4Redeemable Shares issued and outstanding increased significantly from 66.9 million to 120.3 million between September 2005 and June 2006, reflecting strong investor inflows.
5Total expenses for the nine months ending June 30, 2006, were $16.3 million, with a notable reduction of $648,226 in Sponsor and Marketing Agent fees due to expense caps.
6The Trust reported zero cash flow from operations, as gold is sold to cover expenses, leading to zero cash balances at period end.
7The market value of gold holdings significantly exceeded the average cost, with an unrealized gain of $1.48 billion as of June 30, 2006.

SPDR GOLD TRUST Quarterly Report for Q3 Ended Jun 30, 2006

Summary

Key Highlights

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