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WITE > SEC Filings for WITE > Form 10-Q on 8-Nov-2013All Recent SEC Filings

Show all filings for ETFS WHITE METALS BASKET TRUST

Form 10-Q for ETFS WHITE METALS BASKET TRUST


8-Nov-2013

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This information should be read in conjunction with the unaudited condensed financial statements and notes to the unaudited condensed financial statements included in Item 1 of Part 1 of this Form 10-Q. The discussion and analysis that follows may contain forward-looking statements with respect to the Trust's financial conditions, operations, future performance and business. These statements can be identified by the use of the words "may", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or similar words and phrases. These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception of historical trends, current conditions and expected future developments. Neither the Trust nor the Sponsor is under a duty to update any of the forward looking statements, to conform such statements to actual results or to reflect a change in management's expectations or predictions.

Introduction

The Trust is a common law trust, formed under the laws of the state of New York on November 29, 2010. The Trust is not managed like a corporation or an active investment vehicle. It does not have any officers, directors, or employees and is administered by the Trustee pursuant to the Trust Agreement. The Trust is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such act. It will not hold or trade in commodity futures contracts, nor is it a commodity pool, subject to regulation as a commodity pool operator or a commodity trading adviser in connection with issuing Shares.

The Trust holds Bullion (consisting of silver, platinum and palladium in specified proportions) and is expected to issue Baskets in exchange for deposits of Bullion, and to distribute Bullion in connection with redemptions of Baskets. Shares issued by the Trust represent units of undivided beneficial interest in and ownership of the Trust. The investment objective of the Trust is for the Shares to reflect the performance of the price of silver, platinum and palladium in the proportions held by the Trust, less the Trust's expenses. The Trust holds Bullion in a ratio such that for every 1.0 ounces of silver, it holds 0.01 ounces of platinum and 0.008 ounces of palladium. The Sponsor believes that, for many investors, the Shares will represent a cost effective investment relative to traditional means of investing in Bullion.

The Trust issues and redeems Shares only with Authorized Participants in exchange for Bullion, only in aggregations of 50,000 or integral multiples thereof. A list of current Authorized Participants is available from the Sponsor or the Trustee. Shares of the Trust trade on the New York Stock Exchange (the "NYSE") Arca under the symbol "WITE".

Valuation of Bullion and Computation of Net Asset Value

On each business day that the NYSE Arca is open for regular trading, as soon as practicable after 4:00 p.m., New York time, on such day (the "Evaluation Time"), the Trustee values the Bullion held by the Trust and determines both the ANAV and the NAV of the Trust.

At the Evaluation Time, the Trustee values the Trust's Bullion on the basis of that day's "London Fix" for such metal (the applicable fix for each metal of the price of an ounce of such metal and is performed in London, England by fixing members of the London Bullion Market Association ("LBMA") or London Platinum and Palladium Market ("LPPM"), as applicable), or if no London Fix is made for a metal on such day or has not been announced by the Evaluation Time, the next most recent London Fix for such metal determined prior to the Evaluation Time will be used, unless the Sponsor determines that such price is inappropriate as a basis for Evaluation. In the case this determination is made, the Sponsor will identify an alternative basis for such evaluation to be used by the Trustee.

Silver held by the Trust will typically be valued on the basis of the price of an ounce of silver as set at approximately 12:00 noon London time and performed in London, England by the three market making members of the LBMA. Platinum held by the Trust will typically be valued on the basis of the price of an ounce of platinum as set by the afternoon session of the twice daily fix of the price of an ounce of platinum which starts at 2:00 PM London, England time and is performed in London by the four fixing members of the LPPM. Palladium held by the Trust will typically be valued on the basis of the price of an ounce of palladium as set by the afternoon session of the twice daily fix of the price of an ounce of palladium which starts at 2:00 PM London, England time and is performed in London by the four fixing members of the LPPM.

Once the value of Bullion held by the Trust has been determined, the Trustee subtracts all estimated accrued but unpaid fees and other liabilities of the Trust from the total value of the Bullion and all other assets of the Trust. The resulting figure is the ANAV of the Trust. The ANAV is used to compute the Sponsor's Fee. The Trustee then subtracts from the ANAV the amount of Sponsor's Fees computed for such day to determine the net asset value ("NAV") of the Trust. The Trustee also determines the NAV per Share by dividing the NAV of the Trust by the number of Shares outstanding as of the close of trading on the NYSE Arca.


ETFS WHITE METALS BASKET TRUST

The Quarter Ended September 30, 2013

The NAV of the Trust is obtained by subtracting the Trust's liabilities on any day from the value of the Bullion owned and receivable by the Trust on that day; the NAV per Share is obtained by dividing the NAV of the Trust on a given day by the number of Shares outstanding on that day.

The Trust's NAV increased from $25,621,608 at June 30, 2013 to $28,627,325 at September 30, 2013, an 11.73% increase for the quarter. The increase in the Trust's NAV resulted primarily from an increase in the price per ounce of silver, platinum and palladium in the proportions held by the Trust (the "Proportionate Price"), which rose 11.90% during the quarter.

There were no creations or redemptions of Shares during the quarter, therefore, both at June 30, 2013 and September 30, 2013 there were 700,000 Shares outstanding.

NAV per Share increased 11.75% from $36.60 at June 30, 2013 to $40.90 at September 30, 2013. The Trust's NAV per Share rose slightly less than the Proportionate Price on a percentage basis due to Sponsor's Fees, which were $44,418 for the quarter, or 0.60% of the Trust's assets on an annualized basis.

The NAV per Share of $45.22 at August 28, 2013 was the highest during the quarter, compared with a low of $37.36 at July 5, 2013.

Net gain from operations for the quarter ended September 30, 2013 was $2,479,686, resulting from an unrealized gain of $2,530,868 on investment in Bullion, offset by a net loss of $6,764 on the transfer of Bullion to pay expenses and Sponsor's Fees of $44,418. Other than the Sponsor's Fee, the Trust had no expenses during the quarter ended September 30, 2013.

The Nine Months Ended September 30, 2013

The Trust's NAV decreased from $37,605,438 at December 31, 2012 to $28,627,325 at September 30, 2013, a 23.87% decrease for the period. The decrease in the Trust's NAV resulted primarily from a decrease in the Proportionate Price which fell 18.07% and a decrease in outstanding Shares, which fell from 750,000 Shares at December 31, 2012 to 700,000 Shares at September 30, 2013, a result of 100,000 Shares (2 Baskets) being created and 150,000 Shares (3 Baskets) being redeemed during the period.

NAV per Share decreased 18.43% from $50.14 at December 31, 2012 to $40.90 at September 30, 2013. The Trust's NAV per Share fell slightly more than the Proportionate Price on a percentage basis due to Sponsor's Fees, which were $156,274 for the period, or 0.60% of the Trust's assets on an annualized basis.

The NAV per Share of $54.51 at February 7, 2013 was the highest during the period, compared with a low of $36.37 at June 27, 2013.

Net loss from operations for the period ended September 30, 2013 was $5,287,026, resulting from a net loss of $1,646 on the transfer of Bullion to pay expenses, a loss of $494,907 on Bullion distributed for the redemption of Shares, an unrealized loss of $4,634,199 on investment in Bullion and Sponsor's Fees of $156,274. Other than the Sponsor's Fee, the Trust had no expenses during the period ended September 30, 2013.


ETFS WHITE METALS BASKET TRUST

Liquidity & Capital Resources

The Trust is not aware of any trends, demands, commitments, events or uncertainties that are reasonably likely to result in material changes to its liquidity needs. In exchange for the Sponsor's Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor's Fee.

The Trustee will, at the direction of the Sponsor or in its own discretion, sell the Trust's Bullion (only in the specified proportion of silver, platinum and palladium held by the Trust) as necessary to pay the Trust's expenses not otherwise assumed by the Sponsor. The Trustee will not sell Bullion to pay the Sponsor's Fee but will pay the Sponsor's Fee through in-kind transfers of Bullion to the Sponsor. At September 30, 2013 the Trust did not have any cash balances.

Off-Balance Sheet Arrangements

The Trust has no off-balance sheet arrangements.

Critical Accounting Policies

The unaudited condensed financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited condensed financial statements relies on estimates and assumptions that impact the Trust's financial position and results of operations. These estimates and assumptions affect the Trust's application of accounting policies. In addition, please refer to Note 2 to the unaudited condensed financial statements for further discussion of accounting policies.

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