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and registered in the name of Cede & Co., as nominee for DTC. The global certificates evidence all of the Shares outstanding |
at any time. Under the Trust Agreement, Shareholders are limited to (1) participants in DTC such as banks, brokers, dealers and |
trust companies (DTC Participants), (2) those who maintain, either directly or indirectly, a custodial relationship with a DTC |
Participant (Indirect Participants), and (3) those banks, brokers, dealers, trust companies and others who hold interests in the |
Shares through DTC Participants or Indirect Participants. The Shares are only transferable through the book-entry system of DTC. |
Shareholders who are not DTC Participants may transfer their Shares through DTC by instructing the DTC Participant holding their |
Shares (or by instructing the Indirect Participant or other entity through which their Shares are held) to transfer the Shares. |
Transfers will be made in accordance with standard securities industry practice. Custody |
of the Trust’s Gold Custody |
of the gold bullion deposited with and held by the Trust is provided by the Custodian at the London, England vaults of the Custodian |
or at the Zurich, Switzerland vaults of the Custodian and/or the Zurich Sub-Custodian, and by other sub-custodians on a temporary |
basis. The Custodian is a market maker, clearer and approved weigher under the rules of the LBMA. The |
Custodian is the custodian of the gold bullion credited to the Trust Allocated Account in accordance with the Custody Agreements. |
The Custodian segregates the gold bullion credited to the Trust Allocated Account from any other precious metal it holds or holds |
for others by entering appropriate entries in its books and records, and requires the Zurich Sub-Custodian to also segregate the |
gold bullion that it holds from the other gold held by them for other customers of the Custodian and the Zurich Sub-Custodians’ |
other customers. The Custodian requires the Zurich Sub-Custodian to identify in its books |
and records the Trust as having the rights to the gold bullion credited to its Trust Allocated Account. Under the Custody Agreements, |
the Trustee, the Sponsor and the Trust’s auditors and inspectors may inspect the vaults of the Custodian and the Zurich |
Sub-Custodian. See “ Inspection of Gold ”. The |
Custodian, as instructed by the Trustee on behalf of the Trust, is authorized to accept, on behalf of the Trust, deposits of gold |
in unallocated form. Acting on standing instructions given by the Trustee specified in the Custody Agreements, the Custodian allocates |
or requires the Zurich Sub-Custodian to allocate gold deposited in unallocated form with the Trust by selecting bars of gold bullion |
for deposit to the Trust Allocated Account. All gold bullion allocated to the Trust must conform to the rules, regulations, practices |
and customs of the LBMA, and the Custodian must replace any non-conforming gold bullion with conforming gold bullion as soon as |
practical upon a determination by the Custodian any gold bullion is non-conforming. The |
process of withdrawing gold from the Trust for a redemption of a Basket follows the same general procedure as for depositing gold |
with the Trust for a creation of a Basket, only in reverse. Each transfer of gold between the Trust Allocated Account and |
the Trust Unallocated Account connected with a creation or redemption of a Basket may result in a small amount of gold being |
held in the Trust Unallocated Account after the completion of the transfer. In making deposits and withdrawals between the Trust |
Allocated Account and the Trust Unallocated Account, the Custodian will use commercially reasonable efforts to minimize the amount |
of gold held in the Trust Unallocated Account as of the close of each business day. See "Creation and Redemption of Shares.” United |
States Federal Income Tax Consequences The |
following discussion of the material US federal income tax consequences generally applies to the purchase, ownership and disposition |
of Shares by a US Shareholder (as defined below) and certain US federal income tax consequences that may apply to an investment in |
Shares by a Non-US Shareholder (as defined below). The discussion is based on the United States Internal Revenue Code of 1986 as |
amended (the “Code”). The discussion below is based on the Code, United States Treasury Regulations (“Treasury |
Regulations”) promulgated under the Code and judicial and administrative interpretations of the Code, all as in effect on the |
date of this annual report and all of which are subject to change either prospectively or retroactively. The tax treatment of |
Shareholders may vary depending upon their own particular circumstances. Certain Shareholders (including broker-dealers, traders, |
banks and other financial institutions, insurance companies, real estate investment trusts, tax-exempt entities, Shareholders whose |
functional currency is not the U.S. Dollar or other investors with special circumstances) may be subject to special rules not |
discussed below. In addition, the following discussion applies only to investors who hold Shares as “capital assets” |
within the meaning of Code section 1221 and not as part of a straddle, hedging transaction or a conversion or constructive sale |
transaction. Moreover, the discussion below does not address the effect of any state, local or foreign tax law or any transfer tax |
on an owner of Shares. Purchasers of Shares are urged to consult their own tax advisors with respect to all federal, state, local |
and foreign tax law or any transfer tax considerations potentially applicable to their investment in Shares. 20 For |
purposes of this discussion, a “US Shareholder” is a Shareholder that is: • An |
individual who is a citizen or resident of the United States; • A |
corporation (or other entity treated as a corporation for US federal tax purposes) created or organized in or under the laws of |
the United States or any political subdivision thereof; • An |
estate, the income of which is includible in gross income for US federal income tax purposes regardless of its source; or • A |
trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one |
or more US persons have the authority to control all substantial decisions of the trust. A |
Shareholder that is not a US Shareholder as defined above (other than a partnership, or an entity treated as a partnership for |
US federal tax purposes) generally is considered a “Non-US Shareholder” for purposes of this discussion. For US federal |
income tax purposes, the treatment of any beneficial owner of an interest in a partnership, including any entity treated as a |
partnership for US federal income tax purposes, generally depends upon the status of the partner and upon the activities of the |
partnership. Partnerships and partners in partnerships should consult their tax advisors about the US federal income tax consequences |
of purchasing, owning and disposing of Shares. Taxation |
of the Trust The |
Trust is classified as a “grantor trust” for US federal income tax purposes. As a result, the Trust itself is not |
subject to US federal income tax. Instead, the Trust’s income and expenses “flow through” to the Shareholders, |
and the Trustee reports the Trust’s income, gains, losses and deductions to the Internal Revenue Service (“IRS”) |
on that basis. Taxation |
of US Shareholders Shareholders |
generally are treated, for US federal income tax purposes, as if they directly owned a pro rata share of the underlying assets |
held by the Trust. Shareholders are also treated as if they directly received their respective pro rata share of the Trust’s |
income, if any, and as if they directly incurred their respective pro rata share of the Trust’s expenses. In the case of |
a Shareholder that purchases Shares for cash, its initial tax basis in its pro rata share of the assets held by the Trust at the |
time it acquires its Shares is equal to its cost of acquiring the Shares. In the case of a Shareholder that acquires its Shares |
as part of a creation of a Basket, the delivery of gold to the Trust in exchange for the Shares is not a taxable event to |
the Shareholder, and the Shareholder’s tax basis and holding period for the Shares are the same as its tax basis and holding |
period for the gold delivered in exchange therefore (except to the extent of any cash contributed for such Shares). For purposes |
of this discussion, it is assumed that all of a Shareholder’s Shares are acquired on the same date and at the same price |
per Share. Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple lots of Shares, should |
consult their tax advisors. 21 When |
the Trust sells or transfers gold, for example to pay expenses, a Shareholder generally will recognize gain or loss in an amount |
equal to the difference between (1) the Shareholder’s pro rata share of the amount realized by the Trust upon the sale or |
transfer and (2) the Shareholder’s tax basis for its pro rata share of the gold that was sold or transferred. Such gain |
or loss will generally be long-term or short-term capital gain or loss, depending upon whether the Shareholder has a holding period |
in its Shares of longer than one year. A Shareholder’s tax basis for its share of any gold sold by the Trust generally will |
be determined by multiplying the Shareholder’s total basis for its Shares immediately prior to the sale, by a fraction the |
numerator of which is the amount of gold sold, and the denominator of which is the total amount of the gold held by the Trust |
immediately prior to the sale. After any such sale, a Shareholder’s tax basis for its pro rata share of the gold remaining |
in the Trust will be equal to its tax basis for its Shares immediately prior to the sale, less the portion of such basis allocable |
to its share of the gold that was sold. Upon |
a Shareholder’s sale of some or all of its Shares, the Shareholder will be treated as having sold a pro rata share of the gold |
held in the Trust at the time of the sale. Accordingly, the Shareholder generally will recognize a gain or loss on the sale |
in an amount equal to the difference between (1) the amount realized pursuant to the sale of the Shares, and (2) the Shareholder’s |
tax basis for the Shares sold, as determined in the manner described in the preceding paragraph. A |
redemption of some or all of a Shareholder’s Shares in exchange for the underlying gold represented by the Shares redeemed |
generally will not be a taxable event to the Shareholder. The Shareholder’s tax basis for the gold received in the |
redemption generally will be the same as the Shareholder’s tax basis for the Shares redeemed. The Shareholder’s holding |
period with respect to the gold received should include the period during which the Shareholder held the Shares redeemed. |
A subsequent sale of the gold received by the Shareholder will be a taxable event. An |
Authorized Participant and other investors may be able to re-invest, on a tax-deferred basis, in-kind redemption proceeds received |
from exchange-traded products that are substantially similar to the Trust in the Trust’s Shares. Authorized Participants |
and other investors should consult their tax advisors as to whether and under what circumstances the reinvestment in the Shares |
of proceeds from substantially similar exchange-traded products can be accomplished on a tax-deferred basis. Under |
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