Summary
The ISHARES GOLD TRUST (IAU) 2006 annual report highlights its primary objective: to provide investors with a cost-effective and accessible way to gain exposure to the price of gold. The Trust holds physical gold, with its shares representing a fractional beneficial interest in the trust's net assets. As of December 31, 2006, the trust's net assets grew significantly to $907,668,832 from $368,339,392 in the prior year, with outstanding shares increasing from 7,150,000 to 14,400,000. The trust is a passive investment vehicle, not actively managed to profit from gold price changes. Its value is directly tied to the market price of gold, less trust expenses. The report details the valuation methodology using COMEX settlement prices and outlines trust expenses, primarily the sponsor's fee (0.40% of net assets), which necessitates the sale of gold to cover costs, thereby gradually reducing the amount of gold per share. Investors should be aware of the inherent risks associated with gold price volatility and the potential for iShares to trade at a discount or premium to their net asset value.
Key Highlights
- 1The Trust's net assets grew by approximately 146.42% to $907,668,832 as of December 31, 2006, from $368,339,392 at the end of 2005.
- 2The number of outstanding iShares increased from 7,150,000 to 14,400,000, reflecting significant investor demand and creation of new shares.
- 3The Trust's objective is to mirror the price of gold owned by the trust, less expenses, providing a simple investment alternative to holding physical gold.
- 4The primary recurring expense is the sponsor's fee, calculated at 0.40% of the trust's net asset value, which is paid through the sale of gold.
- 5The Net Asset Value (NAV) per share rose by 22.34% from $51.52 to $63.03, closely tracking the COMEX Spot Settlement Price increase of 22.84%.
- 6iShares are listed and trade on the AMEX under the symbol "IAU", offering liquidity through traditional brokerage accounts.
- 7The trust is a passive investment vehicle and does not actively manage its gold holdings or engage in hedging activities.