How does the iShares COMEX Gold Trust (IAU) generate returns for investors?

The Trust aims for the value of its shares to reflect the price of gold bullion it holds, less its expenses and liabilities. Returns are primarily driven by the fluctuations in the market price of gold. The Trust does not actively trade gold or engage in activities to profit from price changes beyond holding the bullion.

What are the main expenses for the Trust?

The primary expense is the Sponsor's Fee, which is calculated daily at an annualized rate of 0.40% of the adjusted daily net asset value. The Sponsor also covers other administrative expenses such as trustee fees, custodian fees, listing fees, and legal expenses, up to certain limits.

How can an investor buy or sell shares of IAU?

Individual investors cannot directly buy or sell shares with the Trust. Shares are created and redeemed only in large blocks (baskets of 50,000 shares) with 'Authorized Participants' (registered broker-dealers) in exchange for physical gold. These Authorized Participants then sell the shares on the open market (AMEX) to individual investors. Investors can sell their shares on the AMEX through a brokerage account.

What is the significance of the 'redeemable capital shares' line item on the balance sheet?

This line item represents the value of shares that can be redeemed by Authorized Participants. Since shares are issued and redeemed continuously for gold, they are classified as 'redeemable' and are presented at their redemption value, which is the net asset value per share at the period's end. The Trust reflects these shares at redemption value because they are subject to continuous redemption.

IAU 10-Q Quarterly Report Q2 FY2008 — Revenue, Net Income, EPS

Summary

This filing for the iShares COMEX Gold Trust (IAU) for the period ending June 30, 2008, shows a substantial increase in its net asset value, driven by a significant rise in the price of gold and increased share issuance. The Trust's total assets grew to $1.25 billion from $1.00 billion at the end of the previous year, primarily due to the appreciation of its gold bullion holdings. Net income for the six months was $47.9 million, a marked improvement from the previous year, largely attributable to substantial gains on gold distributed for share redemptions. Investors should note that the Trust's performance is directly tied to the price of gold. While the Trust experienced strong growth in its net asset value per share, this was partially offset by sponsor fees. The creation and redemption of shares are handled exclusively through Authorized Participants in exchange for physical gold, not cash. The Trust operates as a passive investment vehicle, aiming to track the price of gold bullion, less expenses.

Key Highlights

1Total assets increased by 24.6% to $1.25 billion as of June 30, 2008, driven by the appreciation of gold bullion.
2Net income for the six months ended June 30, 2008, was $47.9 million, a significant increase from $1.3 million in the prior year's period.
3The Trust experienced a net increase in outstanding shares from 17.95 million to 19.95 million during the first six months of 2008, reflecting strong investor interest.
4Net asset value per share increased by 11% from $82.52 at December 31, 2007, to $91.36 at June 30, 2008, tracking the rise in gold prices.
5Gold bullion is valued at the lower of cost or market, and its fair value is based on the COMEX settlement price for the spot month gold futures contract.
6The Trust's primary expense is the Sponsor's Fee, which accrues daily at an annualized rate of 0.40% of the adjusted daily net asset value.
7Shares are issued and redeemed in aggregations of 50,000 shares directly with Authorized Participants in exchange for physical gold bullion.

ISHARES GOLD TRUST Quarterly Report for Q2 Ended Jun 30, 2008

Summary

Key Highlights

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