How does the iShares COMEX Gold Trust (IAU) derive its value?

The Trust's 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 net asset value per share is calculated daily by subtracting accrued fees, expenses, and liabilities from the fair value of the gold bullion and dividing by the number of outstanding shares.

What are the main expenses incurred by the Trust?

The primary expense for the Trust is the Sponsor's fee, which accrues daily at an annualized rate of 0.40% of the adjusted daily net asset value. The Sponsor also agrees to cover other administrative and marketing expenses, such as trustee fees, custodian fees, listing fees, and audit expenses.

How are shares of the Trust created and redeemed?

Shares are issued and redeemed continuously in aggregations of 50,000 shares. These transactions occur only with Authorized Participants (registered broker-dealers) in exchange for physical gold bullion, not cash. Individual investors cannot directly create or redeem shares with the Trust.

What is the 'lower of cost or market' accounting method used for gold bullion?

The Trust values its gold bullion at the lower of its average cost or its market value. Market value is determined by the COMEX Spot Settlement Price. If the market value falls below the average cost, an adjustment is made to reflect this lower value on the financial statements.

IAU 10-Q Quarterly Report Q2 FY2007 — Revenue, Net Income, EPS

Summary

This 10-Q filing for the iShares COMEX Gold Trust (IAU) for the period ending June 30, 2007, provides an update on the Trust's financial position and performance. The Trust's primary asset is gold bullion, valued at approximately $956.7 million at fair value as of June 30, 2007. The Trust operates as a passive investment vehicle, aiming for its share value to reflect the price of gold bullion held, less expenses. During the quarter, the Trust saw an increase in outstanding shares due to creations and no redemptions, though the net asset value per share experienced a slight decrease reflecting a dip in the COMEX Spot Settlement Price of gold. For investors, the key takeaway is the Trust's direct correlation to gold prices, with its performance being largely driven by the fluctuations in the gold market. The Sponsor's fee is the primary expense, which slightly impacted the net asset value per share relative to the gold price movement. The Trust continues to operate as a mechanism for investors to gain exposure to gold without direct physical ownership, with shares issued and redeemed in exchange for gold bullion through Authorized Participants.

Key Highlights

1The Trust's primary asset is gold bullion, with a fair value of $956.7 million as of June 30, 2007.
2Net asset value per share decreased by 2.34% during the quarter ended June 30, 2007, from $65.73 to $64.19, largely due to a 2.25% decrease in the COMEX Spot Settlement Price of gold.
3Outstanding shares increased from 14.5 million to 14.9 million during the quarter due to share creations by Authorized Participants, with no shares being redeemed.
4The Trust reported a net loss of $762,068 for the quarter ended June 30, 2007, primarily driven by Sponsor's fees of $970,603.
5For the six months ended June 30, 2007, the Trust's net asset value grew by 5.36%, with a net income of $1,330,106.
6The Trust is treated as a grantor trust for federal income tax purposes, meaning gains and losses are passed through to shareholders.
7The Sponsor's fee is set at an annualized rate of 0.40% of the adjusted daily net asset value, and the Sponsor covers most administrative and marketing expenses.

ISHARES GOLD TRUST Quarterly Report for Q2 Ended Jun 30, 2007

Summary

Key Highlights

Frequently Asked Questions