Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
GSG > SEC Filings for GSG > Form 10-K on 28-Feb-2014All Recent SEC Filings

Show all filings for ISHARES S&P GSCI COMMODITY-INDEXED TRUST

Form 10-K for ISHARES S&P GSCI COMMODITY-INDEXED TRUST


28-Feb-2014

Annual Report


Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

This information should be read in conjunction with the financial statements and notes to financial statements included with this report. The discussion and analysis that follows may contain statements that relate to future events or future performance. In some cases, such forward-looking statements can be identified by terminology such as "may," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or the negative of these terms or other comparable terminology. None of the Trust, the Sponsor, the Advisor, the Trustee or the Delaware Trustee assumes responsibility for the accuracy or completeness of any forward-looking statements. None of the Trust, the Sponsor, the Advisor, the Trustee or the Delaware Trustee is under a duty to update any of the forward-looking statements to conform such statements to actual results or to a change in expectations or predictions.

Introduction

The Trust was originally part of a two-tiered structure that transacted in Index Futures through its subsidiary, the iShares® S&P GSCI™ Commodity-Indexed Investing Pool, or the "Investing Pool." Following the close of business on December 31, 2013, the Investing Pool was liquidated and the interests in the Investing Pool held by the Trust and the Investing Pool's manager were redeemed for all assets and liabilities held by the Investing Pool. As a result of the liquidation of the Investing Pool, the Trust now holds and transacts in Index Futures directly. Historical results reflect the Trust's activities, had it conducted its activities directly rather than through the Investing Pool.

As described in Part I above, the Trust seeks to track the results of a fully collateralized investment in futures contracts on an index composed of a diversified group of commodities futures. During the period beginning July 10, 2006 (commencement of operations) and ending on December 31, 2013 (the Trust's most recent fiscal year-end), the Trust's net asset value grew from $7,358,911 at July 10, 2006 to $1,171,092,949 at December 31, 2013. Outstanding Shares in the Trust grew from 150,000 Shares at July 10, 2006 to 36,400,000 Shares at December 31, 2013.

The following chart shows the daily valuation of Index Futures for the period from June 30, 2006 to December 31, 2013:

[[Image Removed]]


Table Of Contents

Results of Operations

The Year Ended December 31, 2013

The Trust's net asset value increased from $1,167,588,732 at December 31, 2012 to $1,171,092,949 at December 31, 2013. The increase in the Trust's net asset value resulted primarily from an increase in outstanding Shares, which rose from 35,550,000 Shares at December 31, 2012 to 36,400,000 Shares at December 31, 2013, a consequence of 8,450,000 Shares (169 Baskets) being created and 7,600,000 Shares (152 Baskets) being redeemed during the year. The Trust's net asset value was partially offset by a decrease in the price of the March 2014 Index Futures from $475.30 at December 31, 2012 to $468.80 at December 31, 2013, a 1.37% decrease.

Net loss for the year ended December 31, 2013 was $31,369,866 resulting from a net investment loss of $7,939,895 and net realized and unrealized losses of $23,429,971. For the year ended December 31, 2013, the Trust had a net realized loss of $69,917 on short-term investments and net realized and unrealized losses of $23,360,054 on futures contracts. Other than the Sponsor's fees of $8,603,032 and brokerage commissions and fees of $1,412, the Trust had no expenses during the year.

The Year Ended December 31, 2012

The Trust's net asset value decreased from $1,313,291,939 at December 31, 2011 to $1,167,588,732 at December 31, 2012. The decrease in the Trust's net asset value was primarily due to a decrease in outstanding Shares, which fell from 39,750,000 at December 31, 2011 to 35,550,000 at December 31, 2012 due to 1,750,000 Shares (35 Baskets) being created and 5,950,000 Shares (119 Baskets) being redeemed during the year. The decrease in the Trust's net asset value was partially offset by an increase in the price of the March 2014 Index Futures from $474.80 at December 31, 2011 to $475.30 at December 31, 2012, a 0.11% increase.

Net loss for the year ended December 31, 2013 was $13,741,405, resulting from a net investment loss of $8,786,838 and net realized and unrealized losses of $4,972,567. For the year ended December 31, 2012, the Trust had a net realized loss of $1,661 on short-term investments and net realized and unrealized losses of $4,970,906 on futures contracts. Other than the Sponsor's fees of $9,733,509 and brokerage commissions and fees of $4,950, the Trust had no expenses during the year.

The Year Ended December 31, 2011

The Trust's net asset value decreased from $1,799,879,995 at December 31, 2010 to $1,313,291,939 at December 31, 2011. The decrease in the Trust's net asset value was primarily due to a decrease in outstanding Shares, which fell from 52,700,000 at December 31, 2010 to 39,750,000 at December 31, 2011 due to 2,600,000 Shares (52 Baskets) being created and 15,550,000 Shares (311 Baskets) being redeemed during the year. The Trust's net asset value was also affected by a decrease in the price of the March 2014 Index Futures from the average purchase price of $501.91 to $474.80 at December 31, 2011, a 5.40% decrease.

This decrease in the Trust's net asset value was partially offset when in February 2011, the Trust began trading in Index Futures expiring in March 2014 in connection with the rolling process from Index Futures expiring in March 2011. The March 2011 Index Futures increased in price from $480.40 at December 31, 2010 to a final sale price of $510.80 in February 2011, a 6.33% increase. For the year ended December 31, 2011, the Trust had a net realized gain on futures contracts of $165,820,763 and brokerage commissions and fees of $761,166 primarily in connection with the rolling process.


Table Of Contents

Liquidity and Capital Resources

The Trust's assets as of December 31, 2013 consist of Index Futures and Collateral Assets used to satisfy applicable margin requirements for those Index Future positions. The Trust does not anticipate any further need for liquidity, because creations and redemptions of Shares generally occur in kind and ordinary expenses are met by cash on hand. Interest earned on the assets posted as collateral is paid to the Trust and is used to pay the Sponsor's fees and purchase additional Index Futures and Collateral Assets, or, in the discretion of the Sponsor, distributed to Shareholders. For the year ended December 31, 2013, interest income was $664,549, while the Sponsor's fees totaled $8,603,032. For the year ended December 31, 2012, interest income was $969,621, while the Sponsor's fees totaled $9,733,509. For the year ended December 31, 2011, interest income was $1,649,850, while the Sponsor's fees totaled $12,185,979. In exchange for a fee based on the net asset value of the Trust, the Sponsor has assumed most of the ordinary expenses incurred by the Trust. In the case of an extraordinary expense and/or insufficient interest income to cover ordinary expenses, however, the Trust could be forced to liquidate its positions in Index Futures and Collateral Assets to pay such expenses. As of December 31, 2013, the market for Index Futures had not developed significant liquidity and the Trust represented substantially all of the long-side open interest in Index Futures. In addition, it is expected that Goldman, Sachs & Co. or its accountholders may represent, directly or indirectly, a substantial portion of the short-side interest in such market. The existence of such a limited number of market participants could cause or exacerbate losses to the Trust if the Trust were required to liquidate its Index Future positions.

The Sponsor is unaware of any other trends, demands, conditions or events that are reasonably likely to result in material changes to the Trust's liquidity needs.

Because the Trust trades Index Futures, its capital is at risk due to changes in the value of the Index Futures or other assets (market risk) or the inability of counterparties to perform (credit risk).

Market Risk

The Trust holds Index Future positions and Collateral Assets to satisfy applicable margin requirements on those Index Future positions. Because of this limited diversification of the Trust's assets, fluctuations in the value of the Index Futures are expected to directly affect the value of the Shares. The value of the Index Futures is expected to track generally the S&P GSCI-ER, although this correlation may not be exact. The S&P GSCI-ER, in turn, reflects the value of a diversified group of commodities. The Trust's exposure to market risk will be influenced by a number of factors, including the lack of liquidity of the Index Future market and activities of other market participants.

Credit Risk

When the Trust purchases or holds Index Futures, it is exposed to the credit risk of a default by the CME's clearing house, which serves as the counterparty to each Index Future position, and of a default by its Clearing FCM. In the case of such a default, the Trust may be unable to recover amounts due to it on its Index Future positions and Collateral Assets posted as margin. The Trust is also exposed to credit risk as a result of its ownership of U.S. Treasury bills.

Off-Balance Sheet Arrangements and Contractual Obligations

The Trust has not used and is not expected to use special purpose entities to facilitate off-balance sheet financing arrangements. The Trust does not have and is not expected to have loan guarantee arrangements or other off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services that are in the interest of the Trust. While the Trust's exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on the Trust's financial position.

Critical Accounting Policies

The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these 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 financial statements of the Trust for further discussion of the Trust's accounting policies.


Table Of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Quantitative Disclosure

The Trust is exposed to commodity price risk through the Trust's holdings of Index Futures. The following table provides information about the Trust's futures contract positions, which are sensitive to changes in commodity prices. As of December 31, 2013, the Trust's open Index Future positions (long) were as follows:

Number of Contracts:                            24,973
Expiration Date:                            March 2014
Weighted-Average Price per Contract:   $        498.95
Notional Amount (Fair Value):          $ 1,170,721,754

The notional amount is calculated using the settlement price for the Index Futures on the CME on December 31, 2013, which was $468.80 per contract, and the $100 multiplier applicable under the contract terms.

Qualitative Disclosure

As described herein, it is the objective of the Trust that the performance of the Shares will correspond generally, but will not necessarily be identical, to the performance of the Index, before payment of expenses and liabilities. The Index itself is intended to reflect the performance of a diversified group of physical commodities, including energy commodities, precious and industrial metal commodities, agricultural commodities and livestock commodities. The Trust obtains this exposure to commodity prices through Index Future positions. As a result, fluctuations in the value of the Index Futures are expected to directly affect the value of the Shares.

The Trust will not engage in any activities designed to obtain a profit from, or ameliorate losses caused by, changes in the level of the Index or the S&P GSCI-ER, or the value of any Collateral Assets. The Trust's exposure to market risk may be influenced by a number of factors, including the lack of liquidity of the Index Future market and activities of other market participants.


Table Of Contents

  Add GSG to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for GSG - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.