10-KPeriod: FY2010

ISHARES GOLD TRUST Annual Report, Year Ended Dec 31, 2010

Filed February 25, 2011For Securities:IAU

Summary

The ISHARES GOLD TRUST (IAU) 2010 10-K report reveals a year of significant growth, with the Trust's net asset value increasing by 90.38% to $5.3 billion, driven by both an increase in outstanding Shares and a rise in the price of gold. Key operational highlights include a substantial increase in outstanding Shares from 260 million to 387 million, reflecting strong investor demand for gold exposure. The Trust's objective remains to mirror the price of gold bullion it holds, less expenses. The change in custodian from The Bank of Nova Scotia to The Bank of New York Mellon in September 2010 and the adoption of the London PM Fix for gold valuation are notable operational shifts. Investors should note that while the Trust aims to track gold prices, its net asset value per share increased slightly less than the price of gold due to sponsor fees, though the Trust's expenses are relatively low, with the Sponsor covering most administrative costs.

Financial Highlights

10 data points
Beta

Net Income

$32.30M

EPS (Diluted)

$0.22

Total Assets

$3.57B

Cash & Equivalents

$0.00

Financial Statements
Beta
Operating Expenses$11.11M
Net Income$32.30M
EPS (Basic)$0.22
Shares Outstanding (Basic)147.80M

Key Highlights

  • 1The Trust's net asset value grew by 90.38% from $2.79 billion in 2009 to $5.32 billion in 2010.
  • 2Outstanding Shares increased significantly from 260 million to 386.95 million by year-end 2010.
  • 3The value of gold held by the Trust was revalued using the London PM Fix starting December 9, 2010.
  • 4The Trust experienced a net income of $32.3 million for the year ended December 31, 2010.
  • 5The Trust underwent a ten-for-one share split effective June 23, 2010.
  • 6The Sponsor's fee accounted for the primary recurring expense, totaling $11.1 million for 2010.

Frequently Asked Questions

The primary objective of the iShares Gold Trust is for the value of its Shares to reflect, at any given time, the price of the gold bullion owned by the Trust, less the Trust's expenses and liabilities, divided by the number of outstanding Shares. It is designed as a passive investment vehicle to provide investors with a cost-effective way to gain exposure to the price of gold.

As of December 9, 2010, the Trustee values the Trust's gold holdings based on the price fixed by the London Gold Market Fixing Ltd. in the afternoon (London time) of the valuation day (the 'London PM Fix'). Prior to this date, the value was based on the COMEX settlement price for the nearest-to-maturity gold futures contract.

The primary recurring expense is the Sponsor's fee, which is accrued daily at an annualized rate of 0.25% of the Trust's net asset value. The Sponsor, BlackRock Asset Management International Inc., has agreed to assume most of the Trust's administrative and marketing expenses, including the Trustee's fee, Custodian's fees, listing fees, SEC registration fees, and audit fees, up to certain limits. Any expenses not assumed by the Sponsor, such as certain legal fees exceeding $100,000 annually, taxes, and governmental charges, are paid from the Trust's assets, which may necessitate the sale of gold.

The Trust underwent a ten-for-one share split effective June 23, 2010, meaning existing shareholders received ten times the number of shares. While the Trust aims to track gold prices, its net asset value per share may increase slightly less than the price of gold on a percentage basis due to the accrual of the Sponsor's fee and any other trust expenses. To maintain the Share's value without a corresponding increase in the gold price, the amount of gold backing each share decreases over time due to these expenses being paid through gold sales. Investors should monitor the price of gold and the Trust's expense ratio to understand potential impacts on their investment returns.