10-QPeriod: Q1 FY2006

ISHARES GOLD TRUST Quarterly Report for Q1 Ended Mar 31, 2006

Filed May 15, 2006For Securities:IAU

Summary

The iShares COMEX Gold Trust (IAU) reported its first quarter results for 2006, ending March 31, 2006. The Trust's primary asset is gold bullion, and its objective is to track the price of gold, less expenses. During the quarter, the Trust saw significant growth, with its net assets increasing by 80.00% to approximately $663 million, driven by a substantial increase in the number of outstanding shares. This growth was also supported by a favorable rise in the COMEX Spot Settlement Price for gold, which increased by 12.51% during the period. The Trust experienced a net loss of $488,124 for the quarter, primarily due to Sponsor's fees of $540,091, which slightly outweighed a net gain of $51,967 from gold sales to cover expenses. Despite the net loss, the Trust's net asset value per share increased by 12.40% to $57.91, closely mirroring the movement in gold prices. The Trust's structure involves the continuous issuance and redemption of shares in exchange for physical gold bullion, managed by authorized participants.

Key Highlights

  • 1Net assets grew by 80.00% to $663.02 million as of March 31, 2006, from $368.34 million at December 31, 2005.
  • 2Outstanding shares increased significantly from 7.15 million to 11.45 million during the quarter, reflecting robust investor demand for gold exposure.
  • 3The COMEX Spot Settlement Price for gold rose by 12.51%, from $517.10 to $581.80, positively impacting the Trust's asset value.
  • 4Net asset value per share increased by 12.40% to $57.91, closely tracking the movement in gold prices.
  • 5The Trust reported a net loss of $488,124 for the quarter, primarily due to Sponsor's fees of $540,091.
  • 6The Trust's primary asset is gold bullion, valued at $538.64 million as of March 31, 2006, with a market value of $645.86 million.
  • 7The Trust operates as a passive investment vehicle, aiming to reflect the price of gold bullion less liabilities and expenses.

Frequently Asked Questions

The primary purpose of the iShares COMEX Gold Trust is to provide investors with a way to gain exposure to the price movements of gold bullion. Its objective is for the value of its shares to reflect, at any given time, the price of the gold bullion it holds, less the Trust's expenses and liabilities.

The Trust's returns are directly tied to the price of gold bullion. As the price of gold increases, the net asset value of the Trust and its shares tend to increase, and vice versa. The Trust does not actively trade or manage its gold holdings to generate profit beyond tracking the underlying commodity price.

The main driver of the Trust's net loss of $488,124 for the quarter ended March 31, 2006, was the Sponsor's fees, which amounted to $540,091. This expense slightly outweighed the net gain of $51,967 realized from the sale of gold bullion to cover Trust expenses.

Shares of the Trust are created and redeemed by 'Authorized Participants,' which are registered broker-dealers. These transactions occur in exchange for physical gold bullion, not cash, and are done in large aggregations of 50,000 shares. Individual investors cannot directly buy or sell shares with the Trust.