Filed pursuant to Rule 424(b)(3)
Registration Statement No.
333-276822
Shares
of abrdn Physical Silver Shares ETF |
| |
| abrdn
Silver ETF Trust |
The
abrdn Silver ETF Trust (Trust) issues abrdn Physical Silver Shares ETF (Shares) which represent units of fractional undivided beneficial
interest in and ownership of the Trust. abrdn ETFs Sponsor LLC is the sponsor of the Trust (Sponsor), The Bank of New York Mellon is
the trustee of the Trust (Trustee), and JPMorgan Chase Bank, N.A. is the custodian of the Trust (Custodian). The Trust intends to issue
additional Shares on a continuous basis.
The
Shares may be purchased from the Trust only in one or more blocks of 50,000 Shares (a block of 50,000 Shares is called a Basket). The
Trust issues Shares in Baskets to certain authorized participants (Authorized Participants) on an ongoing basis as described in “Plan
of Distribution.” Baskets will be offered continuously at the net asset value (NAV) for 50,000 Shares on the day that an order
to create a Basket is accepted by the Trustee. The Trust will not issue fractions of a Basket.
The
Shares trade on the NYSE Arca under the symbol “SIVR.”
Investing
in the Shares involves significant risks. See “Risk Factors” starting on page 6.
Neither
the Securities and Exchange Commission (SEC) nor any state securities commission has approved or disapproved of the securities offered
in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
Shares are neither interests in nor obligations of the Sponsor or the Trustee.
The
Trust issues Shares from time to time in Baskets, as described in “Creation and Redemption of Shares.” It is expected that
the Shares will be sold to the public at varying prices to be determined by reference to, among other considerations, the price of silver
and the trading price of the Shares on the NYSE Arca at the time of each sale.
The
date of this prospectus is February 12, 2024.
TABLE
OF CONTENTS
This
prospectus, including the materials incorporated by reference herein, contains information you should consider when making an investment
decision about the Shares. You may rely on the information contained in this prospectus. The Trust and the Sponsor have not authorized
any person to provide you with different information and, if anyone provides you with different or inconsistent information, you should
not rely on it. This prospectus is not an offer to sell the Shares in any jurisdiction where the offer or sale of the Shares is not permitted.
The
Shares are not registered for public sale in any jurisdiction other than the United States.
STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and within the Private Securities Litigation Reform Act of 1995,
as amended. These forward-looking statements may relate to the Trust’s financial conditions, results of operations, plans, objectives,
future performance and business. Statements preceded by, followed by or that include words such as “may,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential” or similar expressions are intended to identify some of the forward-looking statements. All statements (other
than statements of historical fact) included in this prospectus that address activities, events or developments that will or may occur
in the future, including such matters as changes in commodity prices and market conditions (for silver and the Shares), the Trust’s
operations, the Sponsor’s plans and references to the Trust’s future success and other similar matters are forward-looking
statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain
assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments,
as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s
expectations and predictions, however, is subject to a number of risks and uncertainties, including the special considerations discussed
in this prospectus, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes,
made by governmental authorities or regulatory bodies, and other world economic and political developments. See “Risk Factors.”
Consequently, all the forward-looking statements made in this prospectus are qualified by these cautionary statements, and there can
be no assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized,
that they will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of
the Shares. 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 the Sponsor’s expectations or predictions.
GLOSSARY
OF DEFINED TERMS
In
this prospectus, each of the following quoted terms have the meanings set forth after such term:
“Allocated
Account Agreement”—The agreement between the Trustee and the Custodian which establishes the Trust Allocated Account. The
Allocated Account Agreement and the Unallocated Account Agreement are sometimes referred to together as the “Custody Agreements.”
“ANAV”—Adjusted
NAV. See “Description of the Trust Agreement—Valuation of Silver, Definition of Net Asset Value and Adjusted Net Asset Value”
for a description of how the ANAV of the Trust is calculated. The ANAV of the Trust is used to calculate the fees of the Sponsor.
“Authorized
Participant”—A person who (1) is a registered broker-dealer or other securities market participant such as a bank or other
financial institution which is not required to register as a broker-dealer to engage in securities transactions, (2) is a participant
in DTC, (3) has entered into an Authorized Participant Agreement with the Trustee and the Sponsor and (4) has established an Authorized
Participant Unallocated Account. Only Authorized Participants may place orders to create or redeem one or more Baskets.
“Authorized
Participant Agreement”—An agreement entered into by each Authorized Participant, the Sponsor and the Trustee which provides
the procedures for the creation and redemption of Baskets and for the delivery of silver and any cash required for such creations and
redemptions.
“Authorized
Participant Unallocated Account”—An unallocated silver account loco London established with the Custodian or a bank clearing
loco London Silver by an Authorized Participant. Each Authorized Participant’s Authorized Participant Unallocated Account is used
to facilitate the transfer of silver deposits and silver redemption distributions between the Authorized Participant and the Trust in
connection with the creation and redemption of Baskets.
“Authorized
Participant Unallocated Bullion Account Agreement”—The agreement between an Authorized Participant and the Custodian or a
bank clearing loco London Silver which establishes the Authorized Participant Unallocated Account.
“Basket”—A
block of 50,000 Shares is called a “Basket.”
“Book
Entry System”—The Federal Reserve Treasury Book Entry System for United States and federal agency securities.
“CEA”—Commodity
Exchange Act of 1936, as amended.
“CFTC”—Commodity
Futures Trading Commission, an independent agency with the mandate to regulate commodity futures, options, swaps and derivatives markets
in the United States.
“Clearing
Agency”—Any clearing agency or similar system other than the Book Entry System or DTC.
“Code”—The
United States Internal Revenue Code of 1986, as amended.
“Creation
Basket Deposit”—The total deposit required to create a Basket. The deposit will be an amount of silver and cash, if any,
that is in the same proportion to the total assets of the Trust (net of estimated accrued but unpaid fees, expenses and other liabilities)
on the date an order to purchase one or more Baskets is properly received as the number of Shares comprising the number of Baskets to
be created in respect of the deposit bears to the total number of Shares outstanding on the date such order is properly received.
“Custodian”
or “JPMorgan”—JPMorgan Chase Bank, N.A., a national banking association and a market maker, clearer and approved weigher
under the rules of the LBMA. JPMorgan is the custodian of the Trust’s silver.
“Custody
Agreements”—The Allocated Account Agreement together with the Unallocated Account Agreement.
“Custody
Rules”—The rules, regulations, practices and customs of the LBMA, the Bank of England or any applicable regulatory body which
apply to silver made available in physical form by the Custodian.
“DTC”—The
Depository Trust Company. DTC is a limited purpose trust company organized under New York law, a member of the US Federal Reserve System
and a clearing agency registered with the SEC. DTC acts as the securities depository for the Shares.
“DTC
Participant”—A participant in DTC, such as a bank, broker, dealer or trust company.
“Evaluation
Time”—The time at which the Trustee evaluates the silver held by the Trust and determines both the NAV and the ANAV of the
Trust, which is currently as promptly as practicable after 4:00 p.m., New York
time,
on each day other than (1) a Saturday or Sunday or (2) any day on which the NYSE Arca is not open for regular trading.
“Exchange”
or “NYSE Arca”—NYSE Arca, Inc., the venue where Shares are listed and traded.
“FCA”—The
Financial Conduct Authority, an independent non-governmental body which exercises statutory regulatory power under the FSM Act and which
regulates the major participating members of the LBMA in the United Kingdom.
“FINRA”—The
Financial Industry Regulatory Authority, Inc.
“FSM
Act”—The Financial Services and Markets Act 2000.
“Good
Delivery—Silver Bar”—Silver in bar form with a minimum fineness and purity of 99.9% weighing between 750 and 1,100
troy ounces. One troy ounce equals 31.103 grams meeting the London Good Delivery Standards.
“IBA”
– ICE Benchmark Administration, the authorized benchmark administrator responsible for the LBMA Silver Price.
“Indirect
Participants”—Those banks, brokers, dealers, trust companies and others who maintain, either directly or indirectly, a custodial
relationship with a DTC Participant.
“LBMA”—The
London Bullion Market Association. The LBMA is the trade association that acts as the coordinator for activities conducted on behalf
of its members and other participants in the London bullion market. In addition to coordinating market activities, the LBMA acts as the
principal point of contact between the market and its regulators. A primary function of the LBMA is its involvement in the promotion
of refining standards by maintenance of the “Good Delivery List,” which is the list of LBMA accredited refiners of gold and
silver. Further, the LBMA coordinates market clearing and vaulting, promotes good trading practices and develops standard documentation.
The major participating members of the LBMA are regulated by the FCA in the United Kingdom under the FSM Act.
“LBMA
Silver Price” (previously named the “London Silver Price”)—The price for an ounce of silver set by LBMA-authorized
participating bullion banks or market makers in the electronic, tradeable and auditable over-the-counter auction administered by IBA
at approximately 12:00 noon London time, on each London business day and disseminated by major market vendors. See “Operation of
the Silver Bullion Markets–The Silver Bullion Market” for a description of the operation of the LBMA Silver Price electronic
auction process.
“loco
London” or “loco London Silver”—Silver (capitalize). physically held in London that meets the specifications for weight, dimensions, fineness (or purity), identifying marks (including
the assay stamp of a LBMA acceptable refiner) and appearance set forth in “The Good Delivery Rules for Gold and Silver Bars”
published by the LBMA.
“London
Good Delivery Standards” or “Good Delivery Standards”—The specifications for weight, dimensions, fineness (or
purity), identifying marks and appearance of silver bars as set forth in “The Good Delivery Rules for Gold and Silver Bars”
published by the LBMA. The London Good Delivery Standards as of the date of this Prospectus are described in “Operation of the
Silver Bullion Market—The Silver Bullion Market.”
“Marketing
Agent”— ALPS Distributors, Inc., a Colorado corporation.
“NAV”—Net
asset value. See “Description of the Trust Agreement—Valuation of Silver, Definition of Net Asset Value and Adjusted Net
Asset Value” for a description of how the NAV of the Trust and the NAV per Share are calculated.
“NFA”—
The National Futures Association, a futures association and self-regulatory organization organized under the CEA and CFTC regulations
with the mandate to regulate intermediaries trading in futures, swaps and options.
“OTC”—The
global Over-the-Counter market for the trading of silver which consists of transactions in spot, forwards, and options and other derivatives.
“Securities
Act”—The Securities Act of 1933, as amended.
“Shareholders”—Owners
of beneficial interests in the Shares.
“Shares”—Units
of fractional undivided beneficial interest in and ownership of the Trust which are issued by the Trust and named “abrdn Physical
Silver Shares ETF.”
“Sponsor”—abrdn
ETFs Sponsor LLC, a Delaware limited liability company.
“Sponsor’s
Fee”—The remuneration due to the Sponsor in exchange for which the Sponsor has agreed to assume the ordinary administrative
and marketing expenses that the Trust is expected to incur. The fee accrues daily and is payable in-kind in silver monthly in arrears.
“tonne”—One
metric tonne which is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.
“Trust”—The
abrdn Silver ETF Trust, a common law trust, formed on July 20, 2009 under New York law pursuant to the Trust Agreement.
“Trust
Agreement”—The Depositary Trust Agreement between the Sponsor and the Trustee under which the Trust is formed and which sets
forth the rights and duties of the Sponsor, the Trustee and the Custodian.
“Trust
Allocated Account”—The allocated silver account of the Trust established with the Custodian by the Allocated Account Agreement.
The Trust Allocated Account is used to hold the silver deposited with the Trust in allocated form (i.e., as individually identified
bars of silver).
“Trustee”
or “BNYM”—The Bank of New York Mellon, a banking corporation organized under the laws of the State of New York with
trust powers. BNYM is the trustee of the Trust.
“Trust
Unallocated Account”—The unallocated silver account of the Trust established with the Custodian by the Unallocated Account
Agreement. The Trust Unallocated Account is used to facilitate the transfer of silver deposits and silver redemption distributions between
Authorized Participants and the Trust in connection with the creation and redemption of Baskets and the sale of silver made by the Trustee
for the Trust.
“Unallocated
Account Agreement”—The agreement between the Trustee and the Custodian which establishes the Trust Unallocated Account. The
Allocated Account Agreement and the Unallocated Account Agreement are sometimes referred to together as the “Custody Agreements.”
“US
Shareholder”—A Shareholder that is (1) an individual who is a citizen or resident of the United States; (2) 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; (3) an estate, the income of which is includible in gross income for US federal income tax purposes
regardless of its source; or (4) 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.
PROSPECTUS
SUMMARY
This
is only a summary of the prospectus and, while it contains material information about the Trust and its Shares, it does not contain or
summarize all of the information about the Trust and the Shares contained in this prospectus which is material and/or which may be important
to you. You should read this entire prospectus, including “Risk Factors” beginning on page 6, and the materials incorporated
by reference herein, before making an investment decision about the Shares.
Trust
Structure
The
Trust is a common law trust, formed on July 20, 2009 under New York law pursuant to the Trust Agreement. The name of the Trust is abrdn
Silver ETF Trust (known as Aberdeen Standard Silver ETF Trust prior to March 31, 2022 and ETFS Silver Trust prior to October 1, 2018).
The name of the Trust’s Shares is abrdn Physical Silver Shares ETF (known as Aberdeen Standard Physical Silver Shares ETF prior
to March 31, 2022 and ETFS Physical Silver Shares prior to October 1, 2018). The Trust holds silver and from time to time issues Baskets
in exchange for deposits of silver and distributes silver in connection with redemptions of Baskets. The investment objective of the
Trust is for the Shares to reflect the performance of the price of physical silver, less the Trust’s expenses. The Sponsor believes
that, for many investors, the Shares represent a cost-effective investment in silver. The material terms of the Trust Agreement are discussed
in greater detail under the section “Description of the Trust Agreement.” The Shares represent units of fractional undivided
beneficial interest in and ownership of the Trust and are traded under the ticker symbol “SIVR” on the NYSE Arca.
The
Trust’s Sponsor is abrdn ETFs Sponsor LLC (known as Aberdeen Standard Investments ETFs Sponsor LLC, prior to March 1, 2022, and
ETF Securities USA LLC prior to October 1, 2018), a Delaware limited liability company formed on June 17, 2009. Prior to April 27,
2018, the Sponsor was wholly-owned by ETF Securities Limited, a Jersey, Channel Islands based company. Effective April 27, 2018, ETF
Securities Limited sold its membership interest in the Sponsor to abrdn Inc. (known as Aberdeen Standard Investments Inc. prior to January
1, 2022), a Delaware corporation. As a result of the sale, abrdn Inc. became the sole member of the Sponsor. abrdn Inc. is a wholly-owned
indirect subsidiary of abrdn plc, which together with its affiliates and subsidiaries is collectively referred to as “abrdn.”
The Trust is governed by the Trust Agreement. Under the Delaware Limited Liability Company Act and the governing documents of the Sponsor,
abrdn Inc., the sole member of the Sponsor, is not responsible for the debts, obligations and liabilities of the Sponsor solely by reason
of being the sole member of the Sponsor.
The
Sponsor arranged for the creation of the Trust and is generally responsible for the ongoing registration of the Shares for their public
offering in the United States and the listing of the Shares on the NYSE Arca. The Sponsor has agreed to assume the organizational expenses
of the Trust and the following administrative and marketing expenses incurred by the Trust: the Trustee’s monthly fee and out-of-pocket
expenses, the Custodian’s fee and expenses reimbursable under the Custody Agreements, Exchange listing fees, SEC registration fees,
printing and mailing costs, audit fees and up to $100,000 per annum in legal expenses.
The
Trustee is The Bank of New York Mellon. The Trustee is generally responsible for the day-to-day administration of the Trust. This includes
(1) transferring the Trust’s silver as needed to pay the Sponsor’s Fee in silver (silver transfers for payment of the Sponsor’s
Fee are expected to occur approximately monthly in the ordinary course), (2) calculating the NAV of the Trust and the NAV per Share,
(3) receiving and processing orders from Authorized Participants to create and redeem Baskets and coordinating the processing of such
orders with the Custodian and The Depository Trust Company (“DTC”) and (4) selling the Trust’s silver as needed to
pay any extraordinary Trust expenses that are not assumed by the Sponsor. The general role, responsibilities and regulation of the Trustee
are further described in “The Trustee.”
The
Custodian is JPMorgan Chase Bank, N.A. The Custodian is responsible for the safekeeping of the Trust’s silver deposited with it
by Authorized Participants in connection with the creation of Baskets. The Custodian also facilitates the transfer of silver in and out
of the Trust through silver accounts it maintains for Authorized Participants and the Trust. The Custodian is a market maker, clearer
and approved weigher under the rules of the London Bullion Market Association (“LBMA”). The Custodian holds the Trust’s
loco London allocated silver in its London, England vaulting premises on a segregated basis. The general role, responsibilities and regulation
of the Custodian are further described in “The Custodian” and “Custody of the Trust’s Silver.”
Detailed
descriptions of certain specific rights and duties of the Trustee and the Custodian are set forth in “Description of the Trust
Agreement” and “Description of the Custody Agreements.”
Trust
Overview
The
investment objective of the Trust is for the Shares to reflect the performance of the price of physical silver, less the Trust’s
expenses. The Shares are designed for investors who want a cost-effective and convenient way to invest in silver with minimal credit
risk.
The
Trust is one of several exchange-traded products (ETPs) that seek to track the price of physical silver bullion (Silver ETPs). Some of
the distinguishing features of the Trust and its Shares include holding of physical silver bullion, vaulting of Trust silver in London,
the experience of the Sponsor’s management team, the use of JPMorgan Chase Bank, N.A. as Custodian, third-party vault inspection
and the allocation of almost all of the Trust’s silver. See “Business of the Trust.”
Investing
in the Shares does not insulate the investor from certain risks, including price volatility. See “Risk Factors.”
Principal
Offices
The
Sponsor’s office is c/o abrdn ETFs Sponsor LLC, 1900 Market Street, Suite 200, Philadelphia, PA 19103 and its telephone number
is 844-383-7289. The Trustee has a Trust office at 240 Greenwich Street, New York, NY 10286. The Custodian is located at 25 Bank Street,
Canary Wharf, London, E14 5JP, United Kingdom.
THE
OFFERING
| Offering |
The
Shares represent units of fractional undivided beneficial interest in and ownership of the Trust. |
| |
|
| Use
of proceeds |
Proceeds
received by the Trust from the issuance and sale of Baskets, including the Shares (as described on the front page of this prospectus),
consist of silver deposits and, possibly from time to time, cash. Pursuant to the Trust Agreement, during the life of the Trust such
proceeds will only be (1) held by the Trust, (2) distributed to Authorized Participants in connection with the redemption of Baskets
or (3) disbursed to pay the Sponsor’s Fee or sold as needed to pay the Trust’s expenses not assumed by the Sponsor. |
| |
|
| Exchange
symbol |
SIVR |
| |
|
| CUSIP |
003264108 |
| |
|
| Creation
and redemption |
The
Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 50,000 Shares).
The creation and redemption of Baskets requires the delivery to the Trust or the distribution by the Trust of the amount of silver
and any cash represented by the Baskets being created or redeemed, the amount of which will be based on the combined NAV of the number
of Shares included in the Baskets being created or redeemed. On July 20, 2009, the Trust’s formation date, the initial amount
of silver required for deposit with the Trust to create Shares was 100,000 troy ounces per Basket. The number of troy ounces of silver
required to create a Basket or to be delivered upon the redemption of a Basket gradually decreases over time, due to the accrual
of the Trust’s expenses and the sale or delivery of the Trust’s silver to pay the Trust’s expenses. See “Business
of the Trust—Trust Expenses.” Baskets may be created or redeemed only by Authorized Participants, who pay a transaction
fee to the Trustee for each order to create or redeem Baskets and may sell the Shares included in the Baskets they create to other
investors. The Trust will not issue fractions of a Basket. See “Creation and Redemption of Shares” for more details. |
| |
|
| Net
Asset Value |
The
NAV of the Trust is the aggregate value of the Trust’s assets less its liabilities (which include estimated accrued but unpaid
fees and expenses). In determining the NAV of the Trust, the Trustee values the silver held by the Trust on the basis of the price
of an ounce of silver as set by LBMA-authorized participating bullion banks or market makers in an electronic, tradeable and auditable
over-the-counter auction administered by IBA at approximately 12:00 noon London, England time, and disseminated by major market vendors
(LBMA Silver Price). See “Operation of the Silver Bullion Market” for a description of the operation of the LBMA Silver
Price electronic auction market process. The Trustee determines the NAV of the Trust on each day the NYSE Arca is open for regular
trading, as promptly as practicable after 4:00 p.m. New York time. If no LBMA Silver Price is made on a particular evaluation day
or has not been announced by 4:00 p.m. New York time on a particular evaluation day, the next most recent LBMA Silver Price will
be used in the determination of the NAV of the Trust, unless the Sponsor determines that such price is inappropriate to use as basis
for such determination. The Trustee also determines the NAV per Share, which equals the NAV of the Trust, divided by the number of
outstanding Shares. |
| |
|
| Trust
expenses |
The
Trust’s only ordinary recurring charge is expected to be the remuneration due to the Sponsor (“Sponsor’s Fee”).
In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume the ordinary administrative and marketing expenses that
the Trust is expected to incur The Sponsor pays the costs of the Trust’s sale of the Shares, including the applicable SEC registration
fees. |
| |
|
| Secondary
Market Trading |
While
the Trust’s investment objective is for the Shares to reflect the performance of the price of physical silver, less the Trust’s
expenses, only Authorized Participants can buy or sell Shares at NAV per Share. Shares may trade in the secondary market on the NYSE
Arca at prices that are lower or higher relative to their NAV. The amount of the discount or premium in the trading price relative
to the NAV per Share may be influenced by non-concurrent trading hours between the NYSE Arca and the London silver bullion market.
While the Shares trade on the NYSE Arca until 4:00 p.m. New York time, liquidity in the global silver market will be reduced after
the close of the Commodity Exchange, Inc. (COMEX), a member of the CME Group of exchanges (CME Group) at 1:30 p.m. New York time.
As a result, during these time periods , trading spreads, and the resulting premium or discount, on the Shares may widen. |
| Sponsor’s
Fee |
The
Sponsor’s Fee accrues daily at an annualized rate equal to 0.45% of the adjusted NAV (“ANAV”) of the Trust and
is payable in-kind in silver monthly in arrears. The Sponsor, from time to time, may waive all or a portion of the Sponsor’s
Fee at its discretion. The Sponsor is under no obligation to continue a waiver, and, if such waiver is not continued, the Sponsor’s
Fee will thereafter be paid in full. The Sponsor has voluntarily agreed to waive a portion of the Sponsor’s Fee to reduce the
Sponsor’s Fee to 0.30% of the ANAV of the Trust through February 28, 2027. This fee waiver has been in existence
since the Trust was formed. Although the Sponsor has no current intention of doing so, because the fee waiver is voluntary, the Sponsor
may revert to the 0.45% fee prior to February 28, 2027. Should the Sponsor choose to revert to the 0.45% fee (or an amount higher
than 0.30% but no greater than 0.45% annualized), prior to February 28, 2027, it will provide Shareholders with at least 30 days’
prior written notice of such change through either a prospectus supplement to its registration statement or through a report furnished
on Form 8-K. See “Description of the Trust Agreement - Amendments.” In the future, the Sponsor may continue
its fee waiver, waive a larger or smaller portion of its fee or discontinue its fee waiver. The Trustee, from time to
time, delivers silver in such quantity as may be necessary to permit payment of the Sponsor’s Fee and sells silver in such
quantity as may be necessary to permit payment in cash of Trust expenses not assumed by the Sponsor. The Trustee is authorized to
sell silver at such times and in the smallest amounts required to permit such cash payments as they become due, it being the intention
to avoid or minimize the Trust’s holdings of assets other than silver. Accordingly, the amount of silver to be sold varies
from time to time depending on the level of the Trust’s expenses and the market price of silver. See “Business of the
Trust—Trust Expenses.” |
| |
|
| |
Each
delivery or sale of silver by the Trust to pay the Sponsor’s Fee or other expenses will be a taxable event to Shareholders.
See “United States Federal Income Tax Consequences—Taxation of US Shareholders.” |
| |
|
| Termination
events |
The
Trustee will terminate and liquidate the Trust if one of the following events occurs: |
| ● |
the
Shares are delisted from the NYSE Arca and are not approved for listing on another national securities exchange within five business
days of their delisting; |
| ● |
Shareholders
acting in respect of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust; |
| ● |
60
days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign and a successor trustee has not
been appointed and accepted its appointment; |
| ● |
the
SEC determines that the Trust is an investment company under the Investment Company Act of 1940 and the Trustee has actual knowledge
of that determination; |
| ● |
the
aggregate market capitalization of the Trust, based on the closing price for the Shares, was less than $350 million (as adjusted
for inflation by reference to the US Consumer Price Index) at any time after the first anniversary after the Trust’s formation
and the Trustee receives, within six months after the last trading date on which the aggregate market capitalization of the Trust
was less than $350 million, notice from the Sponsor of its decision to terminate the Trust; |
| ● |
the
CFTC determines that the Trust is a commodity pool under the CEA and the Trustee has actual knowledge of that determination; |
| ● |
the
Trust fails to qualify for treatment, or ceases to be treated, for US federal income tax purposes, as a grantor trust, and the Trustee
receives notice from the Sponsor that the Sponsor determines that, because of that tax treatment or change in tax treatment, termination
of the Trust is advisable; |
| ● |
60
days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository
which is willing to act in such capacity; or |
| ● |
the
Trustee elects to terminate the Trust after the Sponsor is deemed conclusively to have resigned effective immediately as a result
of the Sponsor being adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property being appointed, or a trustee
or liquidator or any public officer taking charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation. |
| |
|
| |
Upon
the termination of the Trust, the Trustee will sell the Trust’s silver and, after paying or making provision for the Trust’s
liabilities, distribute the proceeds to Shareholders surrendering Shares. See “Description of the Trust Agreement—Termination
of the Trust.” |
| Authorized
Participants |
Baskets
may be created or redeemed only by Authorized Participants. Each Authorized Participant must (1) be a registered broker-dealer or
other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer
to engage in securities transactions, (2) be a participant in DTC, (3) have entered into an agreement with the Trustee and the Sponsor
(Authorized Participant Agreement) and (4) have established an unallocated silver account with the Custodian or a bank clearing loco
London Silver (Authorized Participant Unallocated Account). The Authorized Participant Agreement provides the procedures for the
creation and redemption of Baskets and for the delivery of silver and any cash required for such creations or redemptions. A list
of the current Authorized Participants can be obtained from the Trustee or the Sponsor. See “Creation and Redemption of Shares”
for more details. |
| Clearance
and settlement |
The
Shares are evidenced by one or more global certificates that the Trustee issues to DTC. The Shares are available only in book entry
form. Shareholders may hold their Shares through DTC, if they are participants in DTC, or indirectly through entities that are participants
in DTC. |
Summary
of Financial Condition
As
of the close of business on January 29, 2024, the NAV of the Trust, which represents the value of the silver deposited into and held
by the Trust less any liabilities of the Trust, was $1,027,370,645 and the NAV per Share was $22.02.
RISK
FACTORS
You
should consider carefully the risks described below before making an investment decision. You should also refer to the other information
included in this prospectus, including the Trust’s financial statements and the related notes, as reported in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2022 and our subsequent Quarterly Reports on Form 10-Q, which are incorporated by
reference herein.
RISKS
RELATED TO SILVER
The
value of the Shares relates directly to the value of the silver held by the Trust and fluctuations in the price of silver could materially
adversely affect an investment in the Shares.
The
Shares are designed to mirror as closely as possible the performance of the price of physical silver, and the value of the Shares relates
directly to the value of the silver held by the Trust, less the Trust’s liabilities (including estimated accrued but unpaid expenses).
The price of physical silver has fluctuated widely over the past several years, as discussed below. Several factors may affect the price
of silver, including:
| ● | A
change in economic conditions, such as a recession, can adversely affect the price of silver.
Silver is used in a wide range of industrial applications, and an economic downturn could
have a negative impact on its demand and, consequently, its price and the price of the Shares; |
| ● | Investors’
expectations with respect to the rate of inflation; |
| ● | Currency
exchange rates; |
| ● | Investment
and trading activities of hedge funds and commodity funds; |
| ● | Global
or regional political, economic or financial events and situations; and |
| ● | A
significant change in investor interest, including in response to online campaigns or other
activities specifically targeting investments in silver. |
In
addition, investors should be aware that there is no assurance that silver will maintain its long-term value in terms of purchasing power
in the future. In the event that the price of silver declines, the Sponsor expects the value of an investment in the Shares to decline
proportionately.
The
price of physical silver has fluctuated widely over the past several years.
The
price of physical silver, and the value of the Shares, has been highly volatile and could continue to be subject to wide fluctuations
in response to various factors. The silver market in general has experienced extreme price and volume fluctuations that have often been
unrelated or disproportionate to factors such as silver’s uses in jewelry, technology, and industrial applications, or cost and
production levels in major silver-producing countries such as China, Mexico, and Peru. In particular, supply chain disruptions resulting
from the COVID-19 pandemic, armed conflict and investor speculation have significantly contributed to price and volume fluctuations over
the past several years. See “Overview of the Silver Industry – Historical Chart of
the Price of Silver” for discussion of the fluctuation of silver prices.
Several
factors may have the effect of causing a decline in the price of silver and a corresponding decline in the price of Shares. Among them:
| ● | A
significant increase in silver hedging activity by silver producers. Should there be an increase
in the level of hedge activity of silver producing companies, it could cause a decline in
world silver prices, adversely affecting the price of the Shares. |
| ● | A
significant change in the attitude of speculators, investors and central banks towards silver.
Should the speculative community take a negative view towards silver, it could cause a decline
in world silver prices, negatively impacting the price of the Shares. |
| ● | A
widening of interest rate differentials between the cost of money and the cost of silver
could negatively affect the price of silver which, in turn, could negatively affect the price
of the Shares. |
| ● | A
combination of rising money interest rates and a continuation of the current low cost of
borrowing silver could improve the economics of selling silver forward. This could result
in an increase in hedging by silver mining companies and short selling by speculative interests,
which would negatively affect the price of silver. Under such circumstances, the price of
the Shares would be similarly affected. |
Conversely,
several factors may trigger a temporary increase in the price of silver prior to your investment in the Shares. If that is the case,
you will be buying Shares at prices affected by the temporarily high prices of silver, and you may incur losses when the causes for the
temporary increase disappear.
Crises
may motivate large-scale sales of silver which could decrease the price of silver and adversely affect an investment in the Shares.
The
possibility of large-scale distress sales of silver in times of crisis may have a short-term negative impact on the price of silver and
adversely affect an investment in the Shares. For example, the 2008 financial credit crisis resulted in significantly depressed prices
of silver largely due to a slowdown in demand in silver for industrial use and forced sales and deleveraging from institutional investors
as expectations of economic growth slumped. Crises in the future may impair silver’s price performance which would, in turn, adversely
affect an investment in the Shares.
The
price of silver may be affected by the sale of ETVs tracking the silver market.
To
the extent existing exchange traded vehicles (ETVs) tracking the silver market represent a significant proportion of demand for physical
silver, large redemptions of the securities of these ETVs could negatively affect physical silver prices and the price and NAV of the
Shares.
RISKS
RELATED TO THE SHARES
The
Shares and their value could decrease if unanticipated operational or trading problems arise.
There
may be unanticipated problems or issues with respect to the mechanics of the Trust’s operations and the trading of the Shares that
could have a material adverse effect on an investment in the Shares. In addition, although the Trust is not actively “managed”
by traditional methods, to the extent that unanticipated operational or trading problems or issues arise, the Sponsor’s past experience
and qualifications may not be suitable for solving these problems or issues.
Discrepancies,
disruptions or unreliability of the LBMA Silver Price could impact the value of the Trust’s silver and the market price of the
Shares.
The
Trustee values the Trust’s silver pursuant to the LBMA Silver Price. In the event that the LBMA Silver Price proves to be an inaccurate
benchmark, or the LBMA Silver Price varies materially from the prices determined by other mechanisms for valuing silver, the value of
the Trust’s silver and the market price of the Shares could be adversely impacted. Any future developments in the LBMA Silver Price,
to the extent it has a material impact on the LBMA Silver Price, could adversely impact the value of the Trust’s silver and the
market price of the Shares. It is possible that electronic failures or other unanticipated events may occur that could result in delays
in the announcement of, or the inability of the benchmark to produce, the LBMA Silver Price on any given date. Furthermore, any actual
or perceived disruptions that result in the perception that the LBMA Silver Price is vulnerable to actual or attempted manipulation could
adversely affect the behavior of market participants, which may have an effect on the price of silver. If the LBMA Silver Price is unreliable
for any reason, the price of silver and the market price for the Shares may decline or be subject to greater volatility.
If
the process of creation and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions
intended to keep the price of the Shares closely linked to the price of silver may not exist and, as a result, the price of the Shares
may fall.
If
the processes of creation and redemption of Shares (which depend on timely transfers of silver to and by the Custodian) encounter any
unanticipated difficulties, potential market participants who would otherwise be willing to purchase or redeem Baskets to take advantage
of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying silver may not
take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect. If this is the case, the
liquidity of Shares may decline and the price of the Shares may fluctuate independently of the price of silver and may fall. Additionally,
redemptions could be suspended for any period during which (1) the NYSE Arca is closed (other than customary weekend or holiday closings)
or trading on the NYSE Arca is suspended or restricted, or (2) an emergency exists as a result of which delivery, disposal or evaluation
of the silver is not reasonably practicable.
A
possible “short squeeze” due to a sudden increase in demand of Shares that largely exceeds supply may lead to price volatility
in the Shares.
Investors
may purchase Shares to hedge existing silver exposure or to speculate on the price of silver. Speculation on the price of silver may
involve long and short exposures. To the extent aggregate short exposure exceeds the number of Shares available for purchase (for example,
in the event that large redemption requests by Authorized Participants dramatically affect Share liquidity), investors with short exposure
may have to pay a premium to repurchase Shares for delivery to Share lenders. Those repurchases may in turn, dramatically increase the
price of the Shares until additional Shares are created through the creation process. This is often referred to as a “short squeeze.”
A short squeeze could lead to volatile price movements in Shares that are not directly correlated to the price of silver.
The
liquidity of the Shares may be affected by the withdrawal from participation of one or more Authorized Participants.
In
the event that one or more Authorized Participants having substantial interests in Shares or otherwise responsible for a significant
portion of the Shares’ daily trading volume on the Exchange withdraw from participation, the liquidity of the Shares will likely
decrease which could adversely affect the market price of the Shares and result in Shareholders incurring a loss on their investment.
Shareholders
do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act
of 1940 or the protections afforded by the CEA.
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. Consequently, Shareholders do not have the regulatory protections provided to investors in investment companies. The Trust does
not and will not hold or trade in commodity futures contracts, “commodity interests” or any other instruments regulated by
the CEA, as administered by the CFTC and the NFA. Furthermore, the Trust is not a commodity pool for purposes of the CEA, and neither
the Sponsor nor the Trustee is subject to regulation by the CFTC as a commodity pool operator or a commodity trading advisor in connection
with the Trust or the Shares. Consequently, Shareholders do not have the regulatory protections provided to investors in CEA-regulated
instruments or commodity pools operated by registered commodity pool operators or advised by registered commodity trading advisors.
The
Trust may be required to terminate and liquidate at a time that is disadvantageous to Shareholders.
If
the Trust is required to terminate and liquidate, such termination and liquidation could occur at a time which is disadvantageous to
Shareholders, such as when the price of silver is lower than the price of silver at the time when Shareholders purchased their Shares.
In such a case, when the Trust’s silver is sold as part of the Trust’s liquidation, the resulting proceeds distributed to
Shareholders will be less than if silver prices were higher at the time of sale.
The
lack of an active trading market for the Shares may result in losses on investment at the time of disposition of the Shares.
Although
Shares are listed for trading on the NYSE Arca, it cannot be assumed that an active trading market for the Shares will be maintained.
If an investor needs to sell Shares at a time when no active market for Shares exists, such lack of an active market will most likely
adversely affect the price the investor receives for the Shares (assuming the investor is able to sell them).
Shareholders
do not have the rights enjoyed by investors in certain other vehicles.
As
interests in an investment trust, the Shares have none of the statutory rights normally associated with the ownership of shares of a
corporation (including, for example, the right to bring “oppression” or “derivative” actions). In addition, the
Shares have limited voting and distribution rights (for example, Shareholders do not have the right to elect directors or approve amendments
to the Trust Agreement, and do not receive dividends).
An
investment in the Shares may be adversely affected by competition from other methods of investing in silver.
The
Trust competes with other financial vehicles, including traditional debt and equity securities issued by companies in the silver industry
and other securities backed by or linked to silver, direct investments in silver and investment vehicles similar to the Trust. Market
and financial conditions, and other conditions beyond the Sponsor’s control, may make it more attractive to invest in other financial
vehicles or to invest in silver directly, which could limit the market for the Shares and reduce the liquidity of the Shares.
The
amount of silver represented by each Share will decrease over the life of the Trust due to the recurring deliveries of silver necessary
to pay the Sponsor’s Fee in-kind and potential sales of silver to pay in cash the Trust expenses not assumed by the Sponsor. Without
increases in the price of silver sufficient to compensate for that decrease, the price of the Shares will also decline proportionately
over the life of the Trust.
The
amount of silver represented by each Share decreases each day by the Sponsor’s Fee. In addition, although the Sponsor has agreed
to assume all organizational and certain administrative and marketing expenses incurred by the Trust (the Trustee’s monthly fee
and out-of-pocket expenses, the Custodian’s fee and reimbursement of the Custodian’s expenses under the Custody Agreements,
Exchange listing fees, SEC registration fees, printing and mailing costs, audit fees and up to $100,000 per annum in legal expenses),
in exceptional cases certain Trust expenses may need to be paid by the Trust. Because the Trust does not have any income, it must either
make payments in-kind by deliveries of silver (as is the case with the Sponsor’s Fee) or it must sell silver to obtain cash (as
in the case of any exceptional expenses). The result of these sales of silver and recurring deliveries of silver to pay the Sponsor’s
Fee in-kind is a decrease in the amount of silver represented by each Share. New deposits of silver, received in exchange for new Shares
issued by the Trust, will not reverse this trend.
A
decrease in the amount of silver represented by each Share results in a decrease in each Share’s price even if the price of silver
does not change. To retain the Share’s original price, the price of silver must increase. Without that increase, the lesser amount
of silver represented by the Share will have a correspondingly lower price. If this increase does not occur, or is not sufficient to
counter the lesser amount of silver represented by each Share, Shareholders will sustain losses on their investment in Shares.
An
increase in Trust expenses not assumed by the Sponsor, or the existence of unexpected liabilities affecting the Trust, will require the
Trustee to sell larger amounts of silver, and will result in a more rapid decrease of the amount of silver represented by each Share
and a corresponding decrease in its value.
The
sale of the Trust’s silver to pay expenses not assumed by the Sponsor, or unexpected liabilities affecting the Trust, at a time
of low silver prices could adversely affect the value of the Shares.
The
Trustee sells silver held by the Trust to pay Trust expenses not assumed by the Sponsor on an as-needed basis irrespective of then-current
silver prices. The Trust is not actively managed and no attempt will be made to buy or sell silver to protect against or to take advantage
of fluctuations in the price of silver. Consequently, the Trust’s silver may be sold at a time when the price of silver is low,
resulting in the sale of more silver than would be required if the Trust sold when prices were higher. The sale of the Trust’s
silver to pay expenses not assumed by the Sponsor, or unexpected liabilities affecting the Trust, at a time of low silver prices could
adversely affect the value of the Shares.
The
value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor or the Trustee under the Trust Agreement.
Under
the Trust Agreement, each of the Sponsor and the Trustee has a right to be indemnified from the Trust for any liability or expense it
incurs without gross negligence, bad faith, willful misconduct, willful malfeasance or reckless disregard on its part. That means the
Sponsor or the Trustee may require the assets of the Trust to be sold in order to cover losses or liability suffered by it. Any sale
of that kind would reduce the NAV of the Trust and the value of the Shares.
The
Shares may trade at a price which is at, above or below the NAV per Share and any discount or premium in the trading price relative to
the NAV per Share may widen as a result of non-concurrent trading hours between the NYSE Arca, London and COMEX.
The
Shares may trade at, above or below the NAV per Share. The NAV per Share fluctuates with changes in the market value of the Trust’s
assets. The trading price of the Shares fluctuates in accordance with changes in the NAV per Share as well as market supply and demand.
The amount of the discount or premium in the trading price relative to the NAV per Share may be influenced by non-concurrent trading
hours between the NYSE Arca and the major silver markets. While the Shares trade on the NYSE Arca until 4:00 p.m. New York time, liquidity
in the market for silver will be reduced after the close of the major world silver markets, including London and the COMEX. As a result,
during these time periods, trading spreads, and the resulting premium or discount on the Shares, may widen.
RISKS
RELATED TO THE CUSTODY OF SILVER
The
Trust’s silver may be subject to loss, damage, theft or restriction on access.
There
is a risk that part or all of the Trust’s silver could be lost, damaged or stolen. Access to the Trust’s silver could also
be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). Any of these events may adversely
affect the operations of the Trust and, consequently, an investment in the Shares.
The
Trust’s lack of insurance protection and the Shareholders’ limited rights of legal recourse against the Trust, the Trustee,
the Sponsor, the Custodian and any sub-custodian exposes the Trust and its Shareholders to the risk of loss of the Trust’s silver
for which no person is liable.
The
Trust does not insure its silver. The Custodian maintains insurance with regard to its business on such terms and conditions as it considers
appropriate in connection with its custodial obligations and is responsible for all costs, fees and expenses arising from the insurance
policy or policies. The Trust is not a beneficiary of any such insurance and does not have the ability to dictate the existence, nature
or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian maintains adequate insurance or any insurance with
respect to the silver held by the Custodian on behalf of the Trust. In addition, the Custodian and the Trustee do not require any direct
or indirect sub-custodians to be insured or bonded with respect to their custodial activities or in respect of the silver held by them
on behalf of the Trust. Further, Shareholders’ recourse against the Trust, the Trustee and the Sponsor under New York law, the
Custodian under English law, and any other sub-custodians under the law governing their custody operations is limited. Consequently,
a loss may be suffered with respect to the Trust’s silver which is not covered by insurance and for which no person is liable in
damages.
The
Custodian’s limited liability under the Custody Agreements and English law may impair the ability of the Trust to recover losses
concerning its silver and any recovery may be limited, even in the event of fraud, to the market value of the silver at the time the
fraud is discovered.
The
liability of the Custodian is limited under the Custody Agreements. Under the Custody Agreements between the Trustee and the Custodian
which establish the Trust Unallocated Account and the Trust Allocated Account, the Custodian is only liable for losses that are the direct
result of its own negligence, fraud or willful default in the performance of its duties. Any such liability is further limited to the
market value of the silver lost or damaged at the time such negligence, fraud or willful default is discovered by the Custodian, provided
the Custodian notifies the Trust and the Trustee promptly after discovery of the loss or damage. Under each Authorized Participant Unallocated
Bullion Account Agreement (between the Custodian and an Authorized Participant establishing an Authorized Participant Unallocated Account),
the Custodian is not contractually or otherwise liable for any losses suffered by any Authorized Participant or Shareholder that are
not the direct result of its own gross negligence, fraud or willful default in the performance of its duties under such agreement, and
in no event will its liability exceed the market value of the balance in the Authorized Participant Unallocated Account at the time such
gross negligence, fraud or willful default is discovered by the Custodian. For any Authorized Participant Unallocated Bullion Account
Agreement between an Authorized Participant and another bank clearing loco London Silver, the liability of the bank clearing loco London
Silver to the Authorized Participant may be greater or lesser than the Custodian’s liability to the Authorized Participant described
in the preceding sentence, depending on the terms of the agreement. In addition, the Custodian will not be liable for any delay in performance
or any non-performance of any of its obligations under the Allocated Account Agreement, the Unallocated Account Agreement or the Authorized
Participant Unallocated Bullion Account Agreement by reason of any cause beyond its reasonable control, including acts of God, war or
terrorism. As a result, the recourse of the Trustee or a Shareholder, under English law, is limited. Furthermore, under English common
law, the Custodian or any other sub-custodian will not be liable for any delay in the performance or any non-performance of its custodial
obligations by reason of any cause beyond its reasonable control.
The
obligations of the Custodian and English sub-custodians are governed by English law, which may frustrate the Trust in attempting to seek
legal redress against the Custodian or any sub-custodian concerning its silver.
The
obligations of the Custodian under the Custody Agreements and the Authorized Participant Unallocated Bullion Account Agreements are governed
by English law. The Custodian may enter into arrangements with English sub-custodians for the temporary custody or holding of the Trust’s
silver, which arrangements may also be governed by English law. The Trust is a New York common law trust. Any United States, New York
or other court situated in the United States may have difficulty interpreting English law (which, insofar as it relates to custody arrangements,
is largely derived from court rulings rather than statute), LBMA rules or the customs and practices in the London custody market. It
may be difficult or impossible for the Trust to sue a sub-custodian in a United States, New York or other court situated in the United
States. In addition, it may be difficult, time consuming and/or expensive for the Trust to enforce in a foreign court a judgment rendered
by a United States, New York or other court situated in the United States.
The
Trust may not have adequate sources of recovery if its silver is lost, damaged, stolen or destroyed.
If
the Trust’s silver is lost, damaged, stolen or destroyed under circumstances rendering a party liable to the Trust, the responsible
party may not have the financial resources sufficient to satisfy the Trust’s claim. For example, as to a particular event of loss,
the only source of recovery for the Trust might be limited to the Custodian or one or more sub-custodians or, to the extent identifiable,
other responsible third parties (e.g., a thief or terrorist), any of which may not have the financial resources (including liability
insurance coverage) to satisfy a valid claim of the Trust.
Shareholders
and Authorized Participants lack the right under the Custody Agreements to assert claims directly against the Custodian and any sub-custodian.
Neither
the Shareholders nor any Authorized Participant have a right under the Custody Agreements to assert a claim of the Trust against the
Custodian or any sub-custodian. Claims under the Custody Agreements may only be asserted by the Trustee on behalf of the Trust.
Because
the Trustee does not, and the Custodian has limited obligations to, oversee or monitor the activities of sub-custodians who may hold
the Trust’s silver, failure by the sub-custodians to exercise due care in the safekeeping of the Trust’s silver could result
in a loss to the Trust.
Under
the Allocated Account Agreement described in “Description of the Custody Agreements”, the Custodian may appoint from time
to time one or more sub-custodians to hold the Trust’s silver on a temporary basis pending delivery to the Custodian. The Custodian
is not currently using a sub-custodian as of the date of this Prospectus, but may use LBMA market-making members that provide bullion
vaulting and clearing services to third parties. The Custodian is required under the Allocated Account Agreement to use reasonable care
in appointing sub-custodians, making the Custodian liable only for negligence or bad faith in the selection of such sub-custodians, and
has an obligation to use commercially reasonable efforts to obtain delivery of the Trust’s silver from any sub-custodians appointed
by the Custodian. Otherwise, the Custodian is not liable for the acts or omissions of its sub-custodians. These sub-custodians may in
turn appoint further sub-custodians, but the Custodian is not responsible for the appointment of these further sub-custodians. The Custodian
does not undertake to monitor the performance by sub-custodians of their custody functions or their selection of further sub-custodians.
The Trustee does not monitor the performance of the Custodian other than to review the reports provided by the Custodian pursuant to
the Custody Agreements and does not undertake to monitor the performance of any sub-custodian. Furthermore, the Trustee may have no right
to visit the premises of any sub-custodian for the purposes of examining the Trust’s silver or any records maintained by the sub-custodian,
and no sub-custodian will be obligated to cooperate in any review the Trustee may wish to conduct of the facilities, procedures, records
or creditworthiness of such sub-custodian. In addition, the ability of the Trustee to monitor the performance of the Custodian may be
limited because under the Allocated Account Agreement and the Unallocated Account Agreement the Trustee has only limited rights to visit
the premises of the Custodian for the purpose of examining the Trust’s silver and certain related records maintained by the Custodian.
See “Custody of the Trust’s Silver” for more information about sub-custodians that may hold the Trust’s silver.
The
obligations of any sub-custodian of the Trust’s silver are not determined by contractual arrangements but by LBMA rules and London
bullion market customs and practices, which may prevent the Trust’s recovery of damages for losses on its silver custodied with
sub-custodians.
There
are expected to be no written contractual arrangements between sub-custodians that hold the Trust’s silver and the Trustee or the
Custodian because traditionally such arrangements are based on the LBMA’s rules and on the customs and practices of the London
bullion markets. In the event of a legal dispute with respect to or arising from such arrangements, it may be difficult to define such
customs and practices. The LBMA’s rules may be subject to change outside the control of the Trust. Under English law, neither the
Trustee nor the Custodian would have a supportable breach of contract claim against a sub-custodian for losses relating to the safekeeping
of silver. If the Trust’s silver is lost or damaged while in the custody of a sub-custodian, the Trust may not be able to recover
damages from the Custodian or the sub-custodian. Whether a sub-custodian will be liable for the failure of sub-custodians appointed by
it to exercise due care in the safekeeping of the Trust’s silver will depend on the facts and circumstances of the particular situation.
Shareholders cannot be assured that the Trustee will be able to recover damages from sub-custodians whether appointed by the Custodian
or by another sub-custodian for any losses relating to the safekeeping of silver by such sub-custodian.
Silver
bullion allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a
Basket is issued against such silver, the Trust may suffer a loss.
Neither
the Trustee nor the Custodian independently confirms the fineness of the physical silver allocated to the Trust in connection with the
creation of a Basket. The silver bullion allocated to the Trust by the Custodian may be different from the reported fineness or weight
required by the LBMA’s standards for silver bars delivered in settlement of a silver trade (London Good Delivery Standards), the
standards required by the Trust. If the Trustee nevertheless issues a Basket against such silver, and if the Custodian fails to satisfy
its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.
Silver
held in the Trust’s unallocated silver account and any Authorized Participant’s unallocated silver account is not segregated
from the Custodian’s assets. If the Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust
or any Authorized Participant. In addition, in the event of the Custodian’s insolvency, there may be a delay and costs incurred
in identifying bullion held in the Trust’s allocated silver account.
Silver
which is part of a deposit for a purchase order or part of a redemption distribution is held for a time in the Trust Unallocated Account
and, previously or subsequently, in the Authorized Participant Unallocated Account of the purchasing or redeeming Authorized Participant.
During those times, the Trust and the Authorized Participant, as the case may be, have no proprietary rights to any specific bars of
silver held by the Custodian and each is an unsecured creditor of the Custodian with respect to the amount of silver held in such unallocated
accounts. In addition, if the Custodian fails to allocate the Trust’s silver in a timely manner, in the proper amounts or otherwise
in accordance with the terms of the Unallocated Account Agreement, or if a sub-custodian fails to so segregate silver held by it on behalf
of the Trust, unallocated silver will not be segregated from the Custodian’s assets, and the Trust will be an unsecured creditor
of the Custodian with respect to the amount so held in the event of the insolvency of the Custodian. In the event the Custodian becomes
insolvent, the Custodian’s assets might not be adequate to satisfy a claim by the Trust or the Authorized Participant for the amount
of silver held in their respective unallocated silver accounts.
In
the case of the insolvency of the Custodian, a liquidator may seek to freeze access to the silver held in all of the accounts held by
the Custodian, including the Trust Allocated Account. Although the Trust would be able to claim ownership of properly allocated silver,
the Trust could incur expenses in connection with asserting such claims, and the assertion of such a claim by the liquidator could delay
creations and redemptions of Baskets.
In
issuing Baskets, the Trustee relies on certain information received from the Custodian which is subject to confirmation after the Trustee
has relied on the information. If such information turns out to be incorrect, Baskets may be issued in exchange for an amount of silver
which is more or less than the amount of silver which is required to be deposited with the Trust.
The
Custodian’s definitive records are prepared after the close of its business day. However, when issuing Baskets, the Trustee relies
on information reporting the amount of silver credited to the Trust’s accounts which it receives from the Custodian during the
business day and which is subject to correction during the preparation of the Custodian’s definitive records after the close of
business. If the information relied upon by the Trustee is incorrect, the amount of silver actually received by the Trust may be more
or less than the amount required to be deposited for the issuance of Baskets.
GENERAL
RISKS
The
Trust relies on the information and technology systems of the Trustee, the Custodian, the Marketing Agent and the Sponsor, which could
be adversely affected by information systems interruptions, cybersecurity attacks or other disruptions which could have a material adverse
effect on the Trust’s record keeping and operations.
The
Custodian, the Trustee, the Marketing Agent and the Sponsor depend upon information technology infrastructure, including network, hardware
and software systems to conduct their business as it relates to the Trust. A cybersecurity incident, or a failure to protect their computer
systems, networks and information against cybersecurity threats, could result in a loss of information and adversely impact their ability
to conduct their business, including their business on behalf of the Trust. Despite implementation of network and other cybersecurity
measures, their security measures may not be adequate to protect against all cybersecurity threats.
War,
a major terrorist attack and other geopolitical events, including but not limited to the war between Russia and Ukraine, disease outbreaks
or public health emergencies (as declared by the World Health Organization), the continuation or expansion of war or other hostilities,
or a prolonged government shutdown may cause volatility in the price of silver due to the importance of a country or region to the silver
markets, market access restrictions imposed on some local silver producers and refiners, potential impacts to global transportation and
shipping and other supply chain disruptions. These events are unpredictable and may lead to extended periods of price volatility.
The
operations of the Trust, the exchanges, brokers and counterparties with which the Trust does business, and the markets in which the Trust
does business, could be severely disrupted in the event of war, a major terrorist attack and other geopolitical events, including but
not limited to, the war between Russia and Ukraine, disease outbreaks or public health emergencies (as declared by the World Health Organization),
the continuation or expansion of war or other hostilities, or a prolonged government shutdown. Such events may cause volatility in the
price of silver due to the importance of a country or region to the silver markets, market access restrictions imposed on some local
silver producers and refiners, or potential impacts to global transportation, shipping and other supply chain disruptions.
In
late February 2022, Russia invaded Ukraine, significantly amplifying already existing geopolitical tensions among Russia and other countries
in the region and in the West. The responses of countries and political bodies to Russia’s actions, the larger overarching tensions,
and Ukraine’s military response and the potential for wider conflict may increase financial market volatility generally, have severe
adverse effects on regional and global economic markets, and cause volatility in the price of silver and the price of the Trust’s
Shares. The conflict in Ukraine, along with global political fallout and implications including sanctions, shipping disruptions, collateral
war damage, and a potential expansion of the conflict beyond Ukraine’s borders, could disturb the silver markets. Russia is one
of the world’s largest producers of several precious metals, including silver. On March 7,
2022, the LBMA suspended its accreditation of five Russian refiners of silver. New
productions by such refiners will no longer be accepted as Good Delivery by the LBMA until further notice.
The bars these refiners previously produced will still be considered Good Delivery, consistent with past suspensions of refiners by the
LBMA. Fewer suppliers to the LBMA may lead to a lower supply of Good Delivery silver and further volatility in the price of silver. See
“Overview of the Silver Industry” for additional discussion of silver prices and world silver supply and demand over time,
including a discussion of how the Russian silver refiners’ accreditation has impacted the silver market and how Russia’s
production levels have impacted silver prices subsequent to the suspension. War and other geopolitical events in eastern Europe, including
but not limited to Russia and Ukraine, may cause volatility in commodity prices including precious metals prices. These events are unpredictable
and may lead to extended periods of price volatility.
The
Trust may be negatively impacted by the effects of the spread of illnesses or other public health emergencies on the global economy and
the markets and service providers relevant to the performance of the Trust
The
COVID-19 pandemic has adversely affected the economies of many nations and the entire global economy as well as individual issuers, assets
and capital markets and could continue to, and other future public health emergencies could, have serious negative effects on social,
economic and financial systems, including significant uncertainty and volatility in the financial markets. For instance, the suspension
of operations of mines, refineries and vaults that extract, produce or store silver, restrictions on travel that delay or prevent the
transportation of silver and an increase in demand for silver may disrupt supply chains for silver, which could cause secondary market
spreads to widen and compromise the Trust’s ability to settle transactions on time. Any inability of the Trust to issue or redeem
Shares or the Custodian or any sub-custodian to receive or deliver silver as a result of an infectious disease outbreak or public health
emergency will negatively affect the Trust’s operations. Future infectious illness outbreaks or other public health emergencies
could have similar or other unforeseen impacts and may exacerbate pre-existing political, social and economic risks in certain countries
or globally, which could adversely affect the value of the Shares.
A
significant resurgence of the COVID-19 pandemic or other future public health emergencies could increase the Trust’s costs and
affect liquidity in the market for silver, as well as the correlation between the price of the Shares and the net asset value of the
Trust, any of which could adversely affect the value of your Shares. In addition, the COVID-19 pandemic or other future public health
emergencies could impair the information technology and other operational systems upon which the Trust’s service providers, including
the Sponsor, the Trustee and the Custodian, rely, and could otherwise disrupt the ability of employees of the Trust’s service providers
to perform essential tasks on behalf of the Trust. Governmental and quasi-governmental authorities and regulators throughout the world
have at times responded to major economic disruptions with a variety of fiscal and monetary policy changes, including, but not limited
to, direct capital infusions into companies and other issuers, new monetary tools and lower interest rates. An unexpected or sudden reversal
of these policies, or the ineffectiveness of these policies, is likely to increase volatility in the market for silver, which could adversely
affect the price of the Shares.
Further,
the COVID-19 pandemic or other future public health emergencies could interfere with or prevent the operation of the electronic auction
hosted by IBA to determine the LBMA Silver Price, which the Trustee uses to value the silver held by the Trust and calculate the net
asset value of the Trust. The COVID-19 pandemic or other future public health emergencies could also cause the closure of futures exchanges,
which could eliminate the ability of Authorized Participants to hedge purchases of Baskets, increasing trading costs of Shares and resulting
in a sustained premium or discount in the Shares. Each of these outcomes would negatively impact the Trust.
Potential
conflicts of interest may arise among the Sponsor or its affiliates and the Trust.
Conflicts
of interest may arise among the Sponsor and its affiliates, on the one hand, and the Trust and its Shareholders, on the other hand. As
a result of these conflicts, the Sponsor may favor its own interests and the interests of its affiliates over the Trust and its Shareholders.
As an example, the Sponsor, its affiliates and their officers and employees are not prohibited from engaging in other businesses or activities,
including those that might be in direct competition with the Trust.
USE
OF PROCEEDS
Proceeds
received by the Trust from the issuance and sale of Baskets, including the Shares (which are described on the front page of this prospectus)
consist of silver deposits and, possibly from time to time, cash. Pursuant to the Trust Agreement, during the life of the Trust such
proceeds will only be (1) held by the Trust, (2) distributed to Authorized Participants in connection with the redemption of Baskets
or (3) disbursed to pay the Sponsor’s Fee or sold as needed to pay the Trust’s expenses not assumed by the Sponsor.
OVERVIEW
OF THE SILVER INDUSTRY
Introduction
This
section provides a brief introduction to the silver industry by looking at some of the key participants and detailing the primary sources
of demand and supply.
The
Silver Industry
Market
Participants.
The
participants in the world silver market may be classified in the following sectors: the mining and producer sector, the banking sector,
the official sector, the investment sector, and the manufacturing sector. A brief description of each follows.
Mining
and Producer
Sector.
This
group includes mining companies that specialize in silver and silver production, mining companies that produce silver as a by-product
of other production (such as a copper or gold producer), scrap merchants and recyclers.
According to The Silver Institute’s World Silver Survey 2023, the top 20 silver-producing
countries are set forth in the table below. As the World Silver Survey 2023 was published in April 2023, information for 2023 is not
available as of the date of this Prospectus.
| Million
ounces |
2021 |
2022 |
Y/Y |
| Mexico |
196.0 |
199.2 |
2% |
| China |
112.9 |
111.8 |
-1% |
| Peru |
115.5 |
107.0 |
-7% |
| Poland |
42.0 |
42.4 |
1% |
| Chile |
41.2 |
41.9 |
2% |
| Russia |
39.0 |
41.1 |
6% |
| Bolivia |
41.5 |
38.7 |
-7% |
| Australia |
42.8 |
38.5 |
-10% |
| United
States |
32.6 |
32.4 |
-1% |
| Argentina |
27.9 |
30.9 |
11% |
| India |
22.2 |
22.3 |
1% |
| Kazakhstan |
15.0 |
14.8 |
-1% |
| Sweden |
13.9 |
14.8 |
6% |
| Indonesia |
10.2 |
11.4 |
11% |
| Canada |
9.1 |
8.7 |
-5% |
| Morocco |
8.0 |
8.5 |
6% |
| Uzbekistan |
6.8 |
7.0 |
3% |
| Turkey |
5.5 |
4.7 |
-14% |
| Dominican
Republic |
3.4 |
2.9 |
-16% |
| Panama |
2.5 |
2.8 |
12% |
| Others |
39.7 |
40.4 |
2% |
| Total |
827.6 |
822.4 |
-1% |
Source:
Metals Focus |
|
|
|
Banking
Sector.
Bullion
banks provide a variety of services to the silver market and its participants, thereby facilitating interactions between other parties.
Services provided by the bullion banking community include traditional banking products as well as mine financing, physical silver purchases
and sales, hedging and risk management, inventory management for industrial users and consumers and silver leasing.
The
Official Sector.
There
are no official statistics published by the International Monetary Fund, Bank of International Settlements, or national banks on silver
holdings by national governments. The main reason for this is that silver is generally not recognized as a reserve asset. Consequently,
there are very limited silver stocks held by governments. According to The Silver Institute’s World Silver Survey 2023, the identifiable
silver bullion inventories are set forth in the table below. As the World Silver Survey 2023 was published in April 2023, information
for 2023 is not available as of the date of this Prospectus.
| |
|
|
|
|
| Identifiable
Silver Bullion Inventories* |
| |
| Million
ounces |
2020 |
2021 |
2022 |
Y/Y |
| London
Vaults |
1,080.5 |
1,161.5 |
840.9 |
-28% |
| COMEX |
396.5 |
355.7 |
299.0 |
-16% |
| Shanghai
Gold Exchange (SGE) |
130.0 |
73.9 |
69.0 |
-7% |
| Shanghai
Futures Exchange (SHFE) |
95.2 |
75.9 |
69.2 |
-9% |
| Total |
1,702.3 |
1,666.9 |
1,278.1 |
-23% |
| *
Year-end; Source: Metals Focus, LBMA, COMEX, SGE, SHFE |
The
Investment
Sector.
This
sector includes the investment and trading activities of both professional and private investors and speculators. These participants
range from large hedge and mutual funds to day-traders on futures exchanges, and retail-level coin collectors.
The
Manufacturing
Sector.
The
fabrication and manufacturing sector represents all the commercial and industrial users of silver. Industrial applications comprise the
largest use of silver. The jewelry and silverware sector is the second largest, followed by the photographic industry (although the latter
has been declining over a number of years as a result of the spread of digital photography).
World
Silver Supply and
Demand 2014-2023
The
following table sets forth a summary of the world silver supply and demand for the period from 2014 to 2023 and is based on information
reported by the World Silver Survey 2023, published by The Silver Institute .
As the World Silver Survey 2023 was published in April 2023, the table below includes forecasted information for 2023 as of the date
of publication. As of the date of this Prospectus, final figures (i.e., non-forecasted) for 2023 are not yet available.
| Silver
Supply and Demand |
| Year
on Year |
| Million
ounces |
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 |
2023F |
2022 |
2023F |
| Supply |
|
|
|
|
|
|
|
|
|
|
|
|
| Mine
Production |
882.0 |
896.8 |
899.8 |
863.6 |
850.3 |
836.6 |
782.2 |
827.6 |
822.4 |
842.1 |
-1% |
2% |
| Recycling |
160.4 |
146.9 |
145.6 |
147.0 |
148.5 |
148.0 |
166.0 |
175.3 |
180.6 |
181.1 |
3% |
0% |
| Net
Hedging Supply |
10.7 |
2.2 |
- |
- |
- |
13.9 |
8.5 |
- |
- |
- |
na |
na |
| Net
Official Sector Sales |
1.2 |
1.1 |
1.1 |
1.0 |
1.2 |
1.0 |
1.2 |
1.5 |
1.7 |
1.7 |
13% |
-1% |
| Total
Supply |
1,054.2 |
1,046.9 |
1,046.4 |
1,011.7 |
1,000.0 |
999.5 |
957.9 |
1,004.5 |
1,004.7 |
1024.9 |
0% |
2% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Demand |
|
|
|
|
|
|
|
|
|
|
|
|
| Industrial |
440.9 |
443.4 |
477.4 |
515.3 |
511.2 |
509.7 |
488.7 |
528.2 |
556.5 |
576.4 |
5% |
4% |
| Electrical
& Electronic |
269.8 |
272.3 |
308.9 |
339.7 |
331.0 |
327.3 |
321.8 |
351.0 |
371.5 |
382.3 |
6% |
3% |
| …of
which photovoltaics |
48.4 |
54.1 |
93.7 |
101.8 |
92.5 |
97.8 |
100.0 |
110.0 |
140.3 |
161.1 |
28% |
15% |
| Brazing
Alloys & Solders |
53.3 |
51.0 |
49.0 |
50.8 |
51.9 |
52.3 |
47.4 |
50.4 |
49.0 |
49.8 |
-3% |
2% |
| Other
Industrials |
117.8 |
120.1 |
119.5 |
124.8 |
128.3 |
130.1 |
119.4 |
126.8 |
136.0 |
144.4 |
7% |
6% |
| Photography |
41.0 |
38.2 |
34.7 |
32.4 |
31.4 |
30.7 |
26.9 |
27.7 |
27.5 |
26.4 |
-1% |
-4% |
| Jewelry |
193.5 |
202.5 |
189.1 |
196.2 |
203.1 |
201.4 |
150.5 |
181.5 |
243.1 |
199.5 |
29% |
-15% |
| Silverware |
53.5 |
58.3 |
53.5 |
59.4 |
67.1 |
61.3 |
31.2 |
40.7 |
73.5 |
55.7 |
80% |
-24% |
| Net
Physical Investment |
283.0 |
309.3 |
212.9 |
155.8 |
165.5 |
187.0 |
204.8 |
274.0 |
332.9 |
309.0 |
22% |
-7% |
| Net
Hedging Demand |
- |
- |
12.0 |
1.1 |
7.4 |
- |
- |
3.5 |
17.9 |
- |
409% |
na |
| Total
Demand |
1,011.9 |
1,051.7 |
979.7 |
960.2 |
985.7 |
990.0 |
901.9 |
1,055.6 |
1,242.4 |
1,167.0 |
18% |
-6% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Market
Balance |
42.3 |
-4.8 |
66.7 |
51.5 |
14.4 |
9.5 |
56.0 |
-51.1 |
-237.7 |
-142.1 |
365% |
-40% |
| Net
Investment in ETPS |
-0.3 |
-17.1 |
53.9 |
7.2 |
-21.4 |
83.3 |
331.1 |
64.9 |
-125.8 |
-30.0 |
na |
-76% |
| Market
Balance less ETPs |
42.6 |
12.3 |
12.9 |
44.3 |
35.8 |
-73.8 |
-275.1 |
-116.1 |
-111.9 |
-112.1 |
-4% |
0% |
| Silver
Price (US$/oz, London price) |
19.08 |
15.68 |
17.14 |
17.05 |
15.71 |
16.21 |
20.55 |
25.14 |
21.73 |
21.30 |
-14% |
-2% |
| Source:
Metals Focus |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The
following are some of the main characteristics of the silver market illustrated by the table.
The
balance between silver supply and demand is a fundamental driver of its price. Silver has some of the same drivers of investment demand
as gold, in that it can be used as a hedge against inflation or currency devaluation, or for portfolio diversification as an alternative
currency. As such, silver investment demand may be influenced by interest rates. Silver, unlike gold, has a significant demand for industrial
applications, such as electronics, solar panels, and medical equipment, due to its unique properties, such as high thermal and electrical
conductivity.
New
mine production accounts for approximately 82% of total silver supply. Recycled silver accounts for around 18%.
Industrial
applications and jewelry demand accounted for over 64% of total demand in 2022. Photography has been taking a lower share of overall
silver demand, falling from 4% in 2014 to 2% in 2022, while photovoltaic demand has risen in recent years, accounting for 11% in 2022.
Net physical investment (i.e. in coins and bars) accounted for 27% of demand in 2022, up from a low of 16% in 2017.
Historical
Chart of the Price of Silver
The
price of silver is volatile and fluctuations are expected to have a direct impact on the value of the Shares. However, movements in the
price of silver in the past are not a reliable indicator of future movements. Movements may be influenced by various factors, including
announcements from central banks regarding a country’s reserve silver holdings, agreements among central banks, political uncertainties
around the world, and economic concerns.
The
following chart illustrates the movements in the price of an ounce of silver in U.S. Dollars from December 31, 2012, to December 31,
2023, and is based on information provided by Bloomberg :
Source:
Bloomberg, abrdn. Chart data from 12/31/2012 to 12/31/2023.
The
following is a discussion of the movements in the price of silver illustrated by the table:
Starting
in early 2011, when prices peaked at $48.44 per ounce, silver prices began a downward trend, albeit with multiple upwards rallies
(that have often lasted several months). The rise in the value of the U.S. Dollar, sluggish industrial growth and a tame inflation
environment (which led some investors to revise their expectations of the effects of monetary expansion) were some of the drivers
behind the fall in silver prices from 2011 to 2019. Silver reversed course in 2020, as prices rose 46.75%, closing at $26.49 per
ounce, making it the top performer of the four precious metals (gold, silver, platinum, and palladium). In 2021, silver took a
slight step back after its historic performance in 2020, as it returned -13% (as of December 31, 2021). Throughout 2021, silver took a backseat to riskier asset classes, such as equities, which was one of the reasons for its negative
performance during the year.
2022
was a volatile year for silver. On March 7, 2022, in response to Russia’s invasion of Ukraine, the LBMA suspended five Russian
silver refiners. Fewer suppliers to the LBMA may lead to a lower supply of Good Delivery silver and further volatility in the price of
silver. See “Risk Factors— War, a major terrorist attack and other geopolitical events, including but not limited to the
war between Russia and Ukraine…may lead to extended periods of price volatility” for additional information regarding the
LBMA’s suspension of the Russian silver refiners. The price of silver reached as high as $26.41 per ounce in the weeks following
Russia’s invasion of Ukraine, up more than 13% from the end of 2021, as the invasion, and the threat of sanctions on Russian exports,
including silver, pushed prices higher. The price of silver fell as low as $17.81 per ounce at the beginning of September 2022, as the
risk of diminishing global economic growth, and aggressive interest rate hikes by the U.S. Federal Reserve caused the U.S. Dollar to strengthen,
and silver prices to weaken, in sympathy with a slowing economy. The potential of a weakening U.S. Dollar, amidst low silver inventory
levels and a reopening Chinese economy, sparked a rally in the fourth quarter of 2022 that saw the price of silver climb 25.9% over the quarter to close
the year at $23.95 per ounce as of December 31, 2022. Despite the volatile year, in 2022 the price of silver rose 2.8% above its 2021
closing price.
The
strong demand and reduced supply trends that were prevalent towards the end of 2022 were expected to continue in 2023; however,
economic and geopolitical factors continued to drive volatility in the price of silver over the course of the year. While the spot
price remained relatively flat to start the year, a disappointing Chinese economic recovery drove the price as low as $20.09 on
March 10, 2023, before a U.S. banking crisis increased the likelihood of U.S. policy rate cuts and drove the spot price as high as
$25.84 per ounce on May 5, 2023, as investors turned to silver in anticipation of lower interest rates. However, the subsequent
interest rate hike in May contributed to the price of silver falling as low as $22.34 per ounce on June 23, 2023. The price of
silver continued to fluctuate throughout the third quarter of 2023 as a weaker dollar pushed the spot price back above $25 per ounce
on July 19, 2023; however, the U.S. Federal Reserve’s final interest rate hike of the year on July 26 increased the
probability of a policy rate mistake, given mixed economic news, leading the price to close as low as $22.55 per ounce on September
28, 2023. The spot price of silver continued to fall at the start of the fourth quarter of 2023, reaching as low as $21.06 per ounce on October 3,
2023, before the U.S. Treasury shifted issuance to short duration bonds, lowering 10-year yields. As Treasury market yields moved
lower, removing the risk of excessive policy-rate tightening, the price climbed to $23.22 per ounce on October 20, 2023. The spot
price of silver remained relatively steady over the next few weeks before speculation of potential interest rate cuts in the U.S.
and Chinese economic stimulus drove the spot price of silver as high as $25.17 per ounce on December 4, 2023. The price of silver
ultimately ended the year at $23.79 per ounce on December 29, 2023, down -0.65% for the year, as market participants were
disappointed by the lack of economic stimulus in China.
OPERATION
OF THE
SILVER BULLION MARKET
The
global trade
in silver consists
of OTC
transactions
in spot,
forwards,
and options
and other
derivatives,
together
with exchange-traded
futures
and options.
Global
Over-The-Counter
Market
The
OTC market
trades on
a 24-hour
per day
continuous
basis and
accounts for
most
global silver
trading.
Market
makers,
as well as others
in the OTC market,
trade with
each other
and with
their clients
on a principal-to-principal
basis.
All risks
and issues
of credit
are between
the parties
directly
involved
in the transaction.
Market
makers include the market-making members of the LBMA, the trade association that acts as the coordinator for activities conducted on
behalf of its members and other participants in the London bullion market. The eleven market-making members of the LBMA are: BNP Paribas
SA, Citibank N.A., HSBC Bank Plc, Goldman Sachs International, ICBC Standard Bank Plc, JPMorgan Chase Bank, Merrill Lynch International
Bank Limited, Morgan Stanley & Co. International Plc, Standard Chartered Bank, Toronto-Dominion Bank and UBS AG.
The
main centers of the OTC market are London, Zurich and New York for silver. Mining companies, central banks, manufacturers of jewelry
and industrial products, together with investors and speculators, tend to transact their business through one of these market centers.
Centers such as Dubai and several cities in the Far East also transact substantial OTC market business, typically involving jewelry and
small bars of silver (1 kilogram or less) and will hedge their exposure by selling into one of these main OTC centers. Bullion dealers
have offices around the world and most of the world’s major bullion dealers are either members or associate members of the LBMA.
In
the OTC market
for silver,
the standard
size of trades
between
market
makers
is 100,000 ounces.
Liquidity
in the OTC market can vary from time to time during the course of the 24-hour trading day. Fluctuations in liquidity are reflected in
adjustments to dealing spreads—the differential between a dealer’s “buy” and “sell” prices. The period
of greatest liquidity in the silver markets generally occurs at the time of day when trading in the European time zones overlaps with
trading in the United States, which is when OTC market trading in London, New York, Zurich and other centers coincides with futures and
options trading on the COMEX, a designated contract market within the CME Group. This period lasts for approximately four hours each
New York business day morning.
The
Silver Bullion Market
The
London Silver Bullion
Market
Although
the market for physical silver is distributed globally, most OTC market trades are cleared through London. In addition to coordinating
market activities, the LBMA acts as the principal point of contact between the market and its regulators. A primary function of the LBMA
is its involvement in the promotion of refining standards by maintenance of the “Good Delivery List,” which is a list of
LBMA accredited refiners of silver. The LBMA also coordinates market clearing and vaulting, promotes good trading practices and develops
standard documentation.
The unit of trade in London is the troy ounce,
whose conversion between grams is: 1,000 grams is equivalent to 32.1507465 troy ounces, and 1 troy ounce is equivalent to 31.1034768
grams. A Silver Good Delivery Bar is acceptable for delivery in settlement of a transaction on the OTC market. A Silver Good
Delivery Bar must contain between 750 troy ounces and 1,100 troy ounces of silver with a minimum fineness (or purity) of 999.0 parts
per 1,000. A Silver Good Delivery Bar must also bear the stamp of one of the refiners who are on the LBMA-approved list. Unless
otherwise specified, the silver spot price always refers to that of a Silver Good Delivery Bar. Business is generally conducted
over the phone and through electronic dealing systems.
On
July 14, 2017, the LBMA announced that ICE Benchmark Administration (“IBA”) had been selected to be the third-party administrator
for the “LBMA Silver Price.” Effective from October 2, 2017, IBA is providing the auction platform and methodology as well
as the overall administration and governance for the LBMA Silver Price benchmark. IBA operates an “equilibrium auction”,
which is an electronic, tradable and auditable, OTC auction for LBMA-authorized participating silver bullion banks or market makers and
sponsored clients of direct participants (“silver participants”) that establishes a reference silver price for that day’s
trading, often referred to as the “LBMA Silver Price.” The LBMA Silver Price equilibrium auction operated by CME Group Inc.
and Thomson Reuters prior to October 2, 2017 was selected by the LBMA as the silver valuation replacement for the London silver fix previously
determined by the London Silver Market Fixing Ltd. that was discontinued on August 14, 2014. The LBMA Silver Price has become a widely
used benchmark for daily silver prices and is quoted by various financial information sources as the London silver fix was previously.
The
LBMA Silver Price is the result of an “equilibrium auction” because it establishes a price for a troy ounce of Silver Good
Delivery Bars that clears the maximum amount of bids and offers for silver entered by order-submitting silver participants each day.
IBA uses ICE’s front-end system, WebICE, as the technology platform that allows direct participants, as well as sponsored clients
of direct participants, to manage their orders in the auction in real time via their own desktops. As the IBA electronic silver auction
market develops, IBA expects to admit additional silver participants to the order submission process. The benchmark is published when
the auction finishes, typically a few minutes after 12:00 noon (London time).
At
the opening of each auction, IBA in the role of auction chairman (“Chairman”) announces an opening price (in U.S. Dollars),
that takes into account current market conditions and begins auction rounds, with an expected duration of at least 30 seconds each. During
each auction round, participants may enter the volume they wish to buy or sell at that price, and such orders will be part of the price
formation. Aggregate bid and offer volume is shown live on WebICE. At the end of each auction round, the total net volume is calculated.
If this “imbalance” is larger than the imbalance tolerance (normally 500,000 oz.) then the Chairman sets a new price (based
on the current market conditions, and the direction and magnitude of the imbalance in the round) and begins a new auction round. If the
imbalance is less than the tolerance, then the auction is complete with all volume tradeable at that price. The price is then set in
U.S. Dollars and also converted into other currencies, including Australian Dollars, British Pounds, Canadian Dollars, Euros, Onshore
and Offshore Yuan, Indian Rupees, Japanese Yen, Malaysian Ringgit, Russian Rubles, Singapore Dollars, South African Rand, Swiss Francs,
New Taiwan Dollars, Thai Baht and Turkish Lira. The auction is run at 12:00 noon (London time).
During
the auction, the price at the start of each round, and the volumes at the end of each round are available through major market data vendors.
As soon as the auction finishes, the final prices and volumes are available through major market data vendors. IBA also publishes transparency
reports, detailing the prices, volumes and times for each round of the auction. These transparency reports are available through major
market data vendors and IBA when the auction finishes. The process can also be observed real-time through a WebICE screen. The auction
mechanism provides a complete audit trail.
As
of August 1, 2017, there were seven direct participants in the LBMA Silver Price administered by CME Group and Thomson Reuters. As of
the date of this Prospectus, there are 13 direct participants participating in the auction process that determines the LBMA Silver Price.
Since
April 1, 2015, the LBMA Silver Price has been regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom
(“UK”). IBA is authorized as a regulated benchmark administrator by the FCA. Under the UK benchmark regulation, the governance
structure for a regulated benchmark must include an Oversight Committee, made up of market participants, industry bodies, direct participant
representatives, infrastructure providers and the administrator (i.e., IBA). Through the Oversight Committee the LBMA continues to have
significant involvement in the oversight of the auction process, including, among other matters, changes to the methodology and accreditation
of direct participants. The price discovery process for the LBMA Silver Price is subject to surveillance by IBA. IBA has been formally
assessed against the IOSCO Principles for Financial Benchmarks (the “IOSCO Principles”). In order to meet the IOSCO Principles,
the price discovery used for the LBMA Silver Price benchmark is auditable and transparent.
The
LBMA Silver Price is viewed as a full and fair representation of all market interest at the conclusion of the auction. IBA’s auction
process is similar to CME Group’s auction process, which in turn was similar to the non-electronic process previously used to establish
the London silver fix where the London silver fix process adjusted the silver price up or down until all the buy and sell orders are
matched, at which time the price was declared fixed. Nevertheless, the LBMA Silver Price has several advantages over the previous London
silver fix. IBA’s auction process is fully transparent in real-time to direct participants and sponsored clients and, at the close
of each auction, to the general public. IBA’s auction process is also fully auditable since an audit trail exists for every change
made in the process. Moreover, the audit trail and active surveillance of the auction process by IBA, as well as the FCA’s oversight
of IBA, deters manipulative and abusive conduct in establishing each day’s LBMA Silver Price.
Effective August
15, 2014, the Sponsor determined that the London silver fix, which ceased to be published as of that date, would be an inappropriate
basis for valuing silver bullion received upon purchase of the Trust’s Shares, delivered upon redemption of the Trust’s Shares
and otherwise held by the Trust on a daily basis, and that the LBMA Silver Price is an appropriate alternative for determining the value
of the Trust’s silver each trading day. The Sponsor also determined that the LBMA Silver Price fairly represents the
commercial value of silver bullion held by the Trust and that the “Benchmark Price” (as defined in the Trust
Agreement) as of any day is the LBMA Silver Price for such day.
Futures
Exchanges
The
most significant silver futures exchanges are the COMEX, a designated contract market with the CME Group, and the Tokyo Commodity Exchange
(“TOCOM”). Futures exchanges seek to provide a neutral, regulated marketplace for the trading of derivatives contracts on
commodities. Futures contracts are defined by the exchange for each commodity. For each commodity traded, this contract specifies the
precise quality and quantity standards. The contract’s terms and conditions also define the location and timing of physical delivery.
An
exchange does not buy or sell those contracts, but seeks to offer a transparent forum where members, on their own behalf or on the behalf
of customers, can trade the contracts in a safe, efficient and orderly manner. During regular trading hours at the COMEX, the commodity
contracts are traded on CME Globex system, an electronic auction in which all bids, offers and trades must be publicly announced to all
members and upon execution, centrally cleared. Electronic trading is offered by the exchange (except for a short break in the evening)
almost 24 hours a day, six days a week.
In
addition to the public nature of the pricing, futures exchanges in the United States are regulated at two levels: internal and external
governmental supervision. The internal is performed through self-regulation and consists of regular monitoring of the following: the
central algorithmic matching process to ensure that it is conducted in conformance with all exchange rules; the orderly trading and settlement
of futures and options; the financial condition of all exchange member firms to ensure that they continuously meet financial commitments;
and the volume positions of commercial and non-commercial customers to ensure that physical delivery and other commercial commitments
can be met, and that pricing is not being improperly affected by the size of any particular customer positions. External governmental
oversight is performed by the CFTC, which reviews all the rules and regulations of United States futures exchanges and clearing houses
and monitors their enforcement.
Market
Regulation
The
global silver markets are overseen and regulated by both governmental and self-regulatory organizations. In addition, certain trade associations
have established rules and protocols for market practices and participants. In the United Kingdom, responsibility for the regulation
of the financial market participants, including the major participating members of the LBMA, falls under the authority of the FCA as
provided by the Financial Services and Markets Act 2000 (“FSM Act”). Under this act, all UK-based banks, together with other
investment firms, are subject to a range of requirements, including fitness and properness, capital adequacy, liquidity, and systems
and controls.
The
FCA is responsible for regulating investment products, including derivatives, and those who deal in investment products. Regulation of
spot, commercial forwards, and deposits of silver not covered by the FSM Act is provided for by The London Code of Conduct for Non-Investment
Products, which was established by market participants in conjunction with the Bank of England.
The
TOCOM has authority to perform financial and operational surveillance on its members’ trading activities, scrutinize positions
held by members and large-scale customers, and monitor the price movements of futures markets by comparing them with cash and other derivative
markets’ prices. To act as a Futures Commission Merchant Broker on the TOCOM, a broker must obtain a license from Japan’s
Ministry of Economy, Trade and Industry, the regulatory authority that oversees the operations of the TOCOM.
The
CFTC regulates trading in commodity contracts, such as futures, options and swaps. In addition, under the CEA, the CFTC has jurisdiction
to prosecute manipulation and fraud in any commodity (including precious metals) traded in interstate commerce as spot as well as deliverable
forwards. The CFTC is the exclusive regulator of U.S. commodity exchanges and clearing houses.
Not
A Regulated Commodity
Pool
The
Trust
does not
trade in silver
futures
or options contracts
on the
COMEX
or on any
other futures
exchange
and does not enter into swaps or options contracts on silver and does not trade other commodity contracts that would qualify as “commodity
interests.” The Trust
takes delivery
of physical
silver that complies
with the LBMA
silver delivery
rules as
applicable. Because
the Trust
does not
trade in silver
futures
contracts
on any futures
exchange
the Trust
is not
regulated by
the CFTC
under the
CEA as a “commodity
pool,” and
is not operated
by a CFTC-regulated
commodity
pool operator.
Investors
in the Trust
do not
receive the
regulatory
protections
afforded
to investors
in regulated
commodity
pools, nor
may the
COMEX or
any futures
exchange
enforce
its rules
with respect
to the Trust’s
activities.
In addition,
investors
in the Trust
do not
benefit
from
the protections
afforded
to investors
in silver futures
contracts
on regulated
futures
exchanges.
BUSINESS
OF THE TRUST
The
activities of the Trust are limited to (1) issuing Baskets in exchange for the silver deposited with the Custodian as consideration,
(2) delivering silver as necessary to cover the Sponsor’s Fee and selling silver as necessary to pay Trust expenses not assumed
by the Sponsor and other liabilities and (3) delivering silver in exchange for Baskets surrendered for redemption. The Trust is not actively
managed. It does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price
of silver.
Trust
Objective
The
investment objective of the Trust is for the Shares to reflect the performance of the price of physical silver, less the Trust’s
expenses. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in
silver. An investment in physical silver requires expensive and sometimes complicated arrangements in connection with the assay, transportation,
warehousing and insurance of the metal. Although the Shares are not the exact equivalent of an investment in silver, they provide investors
with an alternative that allows a level of participation in the silver market through the securities market.
Strategy
Behind the Shares
The
Shares are intended to offer investors an opportunity to participate in the silver market through an investment in securities. The logistics
of storing and insuring silver are dealt with by the Custodian and the related expenses are built into the price of the Shares. Therefore,
the investor does not have any additional tasks or costs over and above those associated with dealing in any other publicly traded security.
The
Shares are intended to provide institutional and retail investors with a simple and cost-efficient means, with minimal credit risk, of
gaining investment benefits similar to those of holding physical silver bullion. The Shares offer an investment that is:
| ● |
Easily
Accessible and Relatively Cost Efficient. Investors can access the silver market through a traditional brokerage account. The
Sponsor believes that investors will be able to more effectively implement strategic and tactical asset allocation strategies that
use silver by using the Shares instead of using the traditional means of purchasing, trading and holding silver and for many investors,
transaction costs related to the Shares will be lower than those associated with the purchase, storage and insurance of physical
silver. |
| |
|
| ● |
Exchange
Traded and Transparent. The Shares trade on the NYSE Arca, providing investors with an efficient means to implement various investment
strategies. The Shares are eligible for margin accounts and are backed by the assets of the Trust and the Trust does not hold or
employ any derivative securities. Furthermore, the value of the Trust’s holdings are reported on the Trust’s website
daily. |
| |
|
| ● |
Minimal
Credit Risk. The Shares represent an interest in physical silver owned by the Trust (other than an amount held in unallocated
form not sufficient to make up a whole bar, or amounts of silver which are held temporarily in unallocated form to effect a creation
or redemption of Shares). Physical silver of the Trust in the Custodian’s possession is not subject to borrowing arrangements
with third parties. Other than the silver temporarily being held in an unallocated silver account with the Custodian, the physical
silver of the Trust is not subject to counterparty or credit risks. See “Risk Factors—Silver held in the Trust’s
unallocated silver account and any Authorized Participant’s unallocated silver account is not segregated from the Custodian’s
assets....” This contrasts with most other financial products that gain exposure to silver through the use of derivatives that
are subject to counterparty and credit risks. |
The
Trust differentiates itself from competing Silver ETPs in the following ways:
| ● |
Location
of Silver Vault.
The Trust’s
Custodian holds
silver bullion in
a secure
vault
in London.
This custodial
arrangement
differentiates
the Trust
from
other Silver
ETPs,
which may
custody
bullion
in locations
such as the
United States,
Canada,
the United
Kingdom
or Switzerland
or which
may use
financial
instruments
to seek their
investment
objectives.
The geographic
and political
considerations
of owning
silver in London
may appeal
to certain investors. |
| |
|
| ● |
Experienced
Management Team. The Sponsor has operated the Trust since its inception on July 20, 2009. The management team of the Sponsor
has established a long track record of operating precious metals ETPs backed by physical gold, silver, platinum and palladium. Prior
to April 27, 2018, the Sponsor was wholly-owned by ETF Securities Limited, a Jersey, Channel Islands based company. Effective
April 27, 2018, ETF Securities Limited sold its membership interest in the Sponsor to abrdn Inc. See “Prospectus
Summary—Trust Structure” for more information regarding abrdn Inc.’s acquisition of the Trust’s Sponsor. |
| ● |
Silver
Bar List.
In
the interests
of transparency,
the Custodian
maintains
a list of
the uniquely
identifiable
silver bars held
by the
Trust.
This list is updated daily and published at www.abrdn.com/usa/etf. Although some precious
metals ETPs that custody physical bullion, such as the Trust, may utilize similar disclosure, United States and non-United States
precious metals ETPs that do not hold silver in allocated form do not maintain inventory reports of silver holdings. |
| |
|
| ● |
Vault
Inspection. The Sponsor has contracted with a specialist bullion assaying firm to normally provide biannual inspections of the
silver bars held on behalf of the Trust. Under normal circumstances, one inspection will be conducted at the end of each calendar
year and the other at random, with the consent of the Custodian, on a date selected by the assaying firm. The inspections may be
conducted in person or by performing other appropriate procedures. Other Silver ETPs may not allow third party inspections of bullion
bar holdings. |
| |
|
| ● |
Custodian.
The Custodian of the Trust’s silver is JPMorgan Chase Bank, N.A. The Custodian may be different for other Silver ETPs. |
| |
|
| ● |
Allocated
Silver.
The Trust
holds physical
silver in allocated
form
with the
Custodian
in the Custodian’s
London
vaulting
premises.
The physical
allocated silver
of the
Trust
is not subject
to counterparty
or credit
risks. A small
portion of
the Trust’s
physical silver
bullion,
which
amount
is not expected
to exceed 1,100 ounces of silver on
any given
day, is
held in unallocated
form.
This may
differ
from
other
Silver ETPs
that provide
bullion
exposure
through
other means,
such as the use
of financial
instruments.
|
| |
|
| ● |
Structure.
The
Shares intend
to track the
performance
of the
price of silver,
less the
Trust’s
expenses.
The Trust
seeks to achieve
this objective
by holding
physical
silver bullion. This
structure
may be
different
from
other precious
metal ETPs that
seek to track
the performance
of the
price of physical
silver through
the use
of commodity
futures
contracts
or through
derivatives.
|
| |
|
| ● |
Sponsor’s
Fee. The Sponsor’s Fee associated with the Trust is a competitive factor that may influence an investor’s decision
to purchase Shares. |
Secondary
Market Trading
While
the Trust’s investment objective is for the Shares to reflect the performance of the price of physical silver, less the Trust’s
expenses, the Shares may trade in the secondary market on the NYSE Arca at prices that are lower or higher relative to their NAV per
Share. The amount of the discount or premium in the trading price relative to the NAV per Share may be influenced by non-concurrent trading
hours between the NYSE Arca and the COMEX and the London silver bullion markets. While the Shares trade on the NYSE Arca until 4:00 p.m.
New York time, liquidity in the global silver markets will be reduced after the close of the COMEX at 1:30 p.m. New York time. As a result,
during these time periods, trading spreads, and the resulting premium or discount, on the Shares may widen.
Trust
Expenses
The
Trust’s only ordinary recurring expense is the Sponsor’s Fee. In exchange for the Sponsor’s Fee, the Sponsor has agreed
to assume the organizational expenses of the Trust and the following administrative and marketing expenses incurred by the Trust: the
Trustee’s monthly fee and out-of-pocket expenses, the Custodian’s fee and reimbursement of the Custodian’s expenses
under the Custody Agreements, Exchange listing fees, SEC registration fees, printing and mailing costs, audit fees and up to $100,000
per annum in legal expenses.
The
Sponsor’s Fee accrues daily at an annualized rate equal to 0.45% of the ANAV of the Trust and is payable monthly in arrears. The
Sponsor, from time to time, may temporarily waive all or a portion of the Sponsor’s Fee at its discretion. The Sponsor has voluntarily
agreed to waive a portion of the Sponsor’s Fee to reduce the Sponsor’s Fee to 0.30% of the ANAV of the Trust through February
28, 2027. This fee waiver has been in existence since the Trust was formed. Although the Sponsor has no current intention of doing so,
because the fee waiver is voluntary, the Sponsor may revert to the 0.45% fee prior to February 28, 2027. Should the Sponsor choose to
revert to the 0.45% fee (or an amount higher than 0.30% but no greater than 0.45% annualized), prior to February 28, 2027, it will provide
Shareholders with at least 30 days’ prior written notice of such change through either a prospectus supplement to its registration
statement or through a report furnished on Form 8-K. See “Description of the Trust Agreement - Amendments.” In the future,
the Sponsor may continue its fee waiver, waive a larger or smaller portion of its fee or discontinue its fee waiver. If, at any point
in the future, the Sponsor does not continue its partial fee waiver, the full Sponsor’s Fee will accrue and be paid to the Sponsor
for subsequent periods. The Sponsor is under no obligation to continue to waive all or part of the Sponsor’s Fee on an ongoing
basis.
Furthermore, the Sponsor may, in its sole discretion, agree to rebate all or a portion of the Sponsor’s Fee attributable to Shares
held by certain institutional investors subject to minimum shareholding and lock up requirements as determined by the Sponsor to foster
stability in the Trust’s asset levels. Any such rebate will be subject to negotiation and written agreement between the Sponsor
and the investor on a case-by-case basis. The Sponsor is under no obligation to provide any rebates of the Sponsor’s Fee. Neither
the Trust nor the Trustee will be a party to any Sponsor’s Fee rebate arrangements negotiated by the Sponsor. Any Sponsor's Fee
rebate shall be paid by the Sponsor and not from the assets of the Trust.
The
Sponsor’s Fee is paid by delivery of silver to an account maintained by the Custodian for the Sponsor on an unallocated basis,
monthly on the first business day of the month in respect of fees payable for the prior month. The delivery is of that number of ounces
of silver which equals the daily accrual of the Sponsor’s Fee for such prior month calculated at the LBMA Silver Price.
The
Trustee will, when directed by the Sponsor, and, in the absence of such direction, may, in its discretion, sell silver in such quantity
and at such times as may be necessary to permit payment in cash of Trust expenses not assumed by the Sponsor. The Trustee is authorized
to sell silver at such times and in the smallest amounts required to permit such payments as they become due, it being the intention
to avoid or minimize the Trust’s holdings of assets other than silver. Accordingly, the amount of silver to be sold will vary from
time to time depending on the level of the Trust’s expenses and the market price of silver. The Custodian is authorized to purchase
from the Trust, at the request of the Trustee, silver needed to cover Trust expenses not assumed by the Sponsor at the price used by
the Trustee to determine the value of the silver held by the Trust on the date of the sale.
Cash
held by the Trustee pending payment of the Trust’s expenses will not bear any interest. Each delivery or sale of silver by the
Trust to pay the Sponsor’s Fee or other Trust expenses will be a taxable event to Shareholders. See “United States Federal
Income Tax Consequences—Taxation of US Shareholders.”
Impact
of Trust Expenses on the Trust’s Net Asset Value
The
Trust delivers silver to the Sponsor to pay the Sponsor’s Fee and sells silver to raise the funds needed for the payment of all
Trust expenses not assumed by the Sponsor. The purchase price received as consideration for such sales is the Trust’s sole source
of funds to cover its liabilities. The Trust does not engage in any activity designed to derive a profit from changes in the price of
silver. Silver not needed to redeem Baskets, or to cover the Sponsor’s Fee and Trust expenses not assumed by the Sponsor, is held
in physical form by the Custodian (except for residual amounts of silver not exceeding 1,100 ounces, the maximum weight to make one Silver
Good Delivery Bar, which will be held in unallocated form by the Custodian on behalf of the Trust). As a result of the recurring deliveries
of silver necessary to pay the Sponsor’s Fee in-kind and potential sales of silver to pay in cash the Trust expenses not assumed
by the Sponsor, the NAV of the Trust and, correspondingly, the fractional amount of physical silver represented by each Share will decrease
proportionately over the life of the Trust. New deposits of silver, received in exchange for additional new Baskets issued by the Trust,
will not reverse this trend.
Hypothetical
Expense Example
The
following table, prepared by the Sponsor, illustrates the anticipated impact of the deliveries and sales of silver discussed above on
the fractional amount of silver represented by each outstanding Share for three years. It assumes that the only dispositions of silver
will be those deliveries needed to pay the Sponsor’s Fee and that the price of silver and the number of Shares remain constant
during the three-year period covered. The table does not show the impact of any extraordinary expenses the Trust may incur. Any such
extraordinary expenses, if and when incurred, will accelerate the proportional decrease in the fractional amount of silver represented
by each Share.
| | |
Sponsor Fee of 0.45% | | |
Sponsor Fee of 0.30% after Voluntary Waiver* | |
| | |
Year | | |
Year | |
| | |
| 1 | | |
| 2 | | |
| 3 | | |
| 1 | | |
| 2 | | |
| 3 | |
| Hypothetical silver price per ounce | |
$ | 25.00 | | |
$ | 25.00 | | |
$ | 25.00 | | |
$ | 25.00 | | |
$ | 25.00 | | |
$ | 25.00 | |
| Sponsor’s Fee* | |
| 0.45 | % | |
| 0.45 | % | |
| 0.45 | % | |
| 0.30 | % | |
| 0.30 | % | |
| 0.30 | % |
| Shares of Trust, beginning | |
| 100,000 | | |
| 100,000 | | |
| 100,000 | | |
| 100,000 | | |
| 100,000 | | |
| 100,000 | |
| Ounces of silver in Trust, beginning | |
| 100,000.00 | | |
| 99,550.00 | | |
| 99,102.03 | | |
| 100,000.00 | | |
| 99,700.00 | | |
| 99,400.90 | |
| Beginning adjusted net asset value of the Trust | |
$ | 2,500,000 | | |
$ | 2,488,750 | | |
$ | 2,477,551 | | |
$ | 2,500,000 | | |
$ | 2,492,500 | | |
$ | 2,485,023 | |
| Beginning NAV per share | |
$ | 25.00 | | |
$ | 24.89 | | |
$ | 24.78 | | |
$ | 25.00 | | |
$ | 24.93 | | |
$ | 24.85 | |
| Ounces of silver to be delivered to cover the Sponsor’s Fee** | |
| 450.00 | | |
| 447.98 | | |
| 445.96 | | |
| 300.00 | | |
| 299.10 | | |
| 298.20 | |
| Ounces of silver in Trust, ending | |
| 99,550.00 | | |
| 99,102.03 | | |
| 98,656.07 | | |
| 99,700.00 | | |
| 99,400.90 | | |
| 99,102.70 | |
| Ending adjusted net asset value of the Trust | |
$ | 2,488,750 | | |
$ | 2,477,551 | | |
$ | 2,466,402 | | |
$ | 2,492,500 | | |
$ | 2,485,023 | | |
$ | 2,477,567 | |
| Ending NAV per share | |
$ | 24.89 | | |
$ | 24.78 | | |
$ | 24.66 | | |
$ | 24.93 | | |
$ | 24.85 | | |
$ | 24.78 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
*
The Sponsor has voluntarily agreed to waive a portion of the Sponsor’s Fee to reduce the Sponsor’s Fee to 0.30% of the ANAV
of the Trust through February 28, 2027. See further discussion of the voluntary waiver under “BUSINESS OF THE TRUST – Trust
Expenses,” above.
**
The calculation assumes that the sale of silver and the payment of the Sponsor’s Fee occur only at the end of each year even though
in actuality sales occur monthly to cover the Sponsor’s Fee, which is accrued daily and payable monthly in arrears.
DESCRIPTION
OF THE TRUST
The
Trust is a common law trust, formed on July 20, 2009 under New York law pursuant to the Trust Agreement The name of the Trust is abrdn
Silver ETF Trust (known as Aberdeen Standard Silver ETF Trust prior to March 31, 2022 and ETFS Silver Trust prior to October 1, 2018).
The Trust holds silver and is expected from time to time to issue Baskets in exchange for deposits of silver and to distribute silver
in connection with redemptions of Baskets. The investment objective of the Trust is for the Shares to reflect the performance of the
price of physical silver, less the Trust’s expenses. The Sponsor believes that, for many investors, the Shares represent a cost-effective
investment relative to traditional means of investing in silver. The material terms of the Trust Agreement are discussed under “Description
of the Trust Agreement.” The Shares represent units of fractional undivided beneficial interest in and ownership of the Trust.
The Trust is not managed like a corporation or an active investment vehicle. The silver held by the Trust will only be delivered to pay
the Sponsor’s Fee, distributed to Authorized Participants in connection with the redemption of Baskets or sold (1) on an as-needed
basis to pay Trust expenses not assumed by the Sponsor, (2) in the event the Trust terminates and liquidates its assets, or (3) as otherwise
required by law or regulation. The delivery or sale of silver to pay fees and expenses by the Trust is a taxable event to Shareholders.
See “United States Federal Income Tax Consequences—Taxation of US Shareholders.”
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. The Trust does not hold or trade in commodity futures contracts, “commodity interests” or any other instruments regulated
by the CEA, as administered by the CFTC or NFA. The Trust is not a commodity pool for purposes of the CEA, and neither the Sponsor nor
the Trustee is subject to regulation as a commodity pool operator or a commodity trading advisor in connection with the Trust or Shares.
The
Trust creates and redeems Shares from time to time but only in Baskets (a Basket equals a block of 50,000 Shares). The number of outstanding
Shares is expected to increase and decrease from time to time as a result of the creation and redemption of Baskets. The creation and
redemption of Baskets requires the delivery to the Trust or the distribution by the Trust of the amount of silver and any cash represented
by the Baskets being created or redeemed. The total amount of silver and any cash required for the creation of Baskets is based on the
combined NAV of the number of Baskets being created or redeemed. The number of ounces of silver required to create a Basket or to be
delivered upon a redemption of a Basket gradually decreases over time. This is because the Shares comprising a Basket represent a decreasing
amount of silver due to the delivery or sale of the Trust’s silver to pay the Sponsor’s Fee or the Trust’s expenses
not assumed by the Sponsor. Baskets may be created or redeemed only by Authorized Participants, who pay a transaction fee of $500 for
each order to create or redeem Baskets. Authorized Participants may sell to other investors all or part of the Shares included in the
Baskets they purchase from the Trust. See “Plan of Distribution.”
The
Trustee determines the NAV of the Trust on each day that the NYSE Arca is open for regular trading, as promptly as practicable after
4:00 p.m. New York time. The NAV of the Trust is the aggregate value of the Trust’s assets less its estimated accrued but unpaid
liabilities (which include accrued expenses). In determining the Trust’s NAV, the Trustee values the silver held by the Trust based
on the LBMA Silver Price for an ounce of silver, or such other publicly available price as the Sponsor may deem fairly represents the
commercial value of the Trust’s silver. The Trustee also determines the NAV per Share. If on a day when the Trust’s NAV is
being calculated the LBMA Silver Price is not available or has not been announced by 4:00 p.m. New York time, the silver price from the
next most recent LBMA Silver Price is used, unless the Sponsor determines that such price is inappropriate to use.
The
Trust’s assets consist of allocated silver bullion, silver credited to an unallocated silver account and, from time to time, cash,
which is used to pay expenses not assumed by the Sponsor. Except for the transfer of silver in or out of the Trust Unallocated Account
in connection with the creation or redemption of Baskets, upon a delivery of silver to pay the Sponsor’s Fee or upon a sale of
silver to pay the Trust’s expenses not assumed by the Sponsor, it is anticipated that only a small amount of unallocated silver
will be held in the Trust Unallocated Account. Cash held by the Trust will not generate any income. Each Share represents a proportional
interest, based on the total number of Shares outstanding, in the silver and any cash held by the Trust, less the Trust’s liabilities
(which include accrued but unpaid fees and expenses). The Sponsor expects that the secondary market trading price of the Shares will
fluctuate over time in response to the price of silver. In addition, the Sponsor expects that the trading price of the Shares will reflect
the estimated accrued but unpaid expenses of the Trust.
Investors
may obtain on a 24-hour basis silver pricing information based on the spot price for an ounce of silver from various financial information
service providers. Current spot prices are also generally available with bid/ask spreads from silver bullion dealers. In addition, the
Trust’s website (www.abrdn.com/usa/etf) provides ongoing pricing information for silver
spot prices and the Shares. Market prices for the Shares are available from a variety of sources including brokerage firms, information
websites and other information service providers. The NAV of the Trust is published by the Sponsor on each day that the NYSE Arca is
open for regular trading and is posted on the Trust’s website.
The
Trust has no fixed termination date.
THE
SPONSOR
The
Trust’s Sponsor is abrdn ETFs Sponsor LLC (known as Aberdeen Standard Investments ETFs Sponsor LLC prior to March 1, 2022, and
ETF Securities USA LLC prior to October 1, 2018), a Delaware limited liability company formed on June 17, 2009.
The
Sponsor’s office is located at c/o abrdn ETFs Sponsor LLC, 1900 Market Street, Suite 200, Philadelphia, PA 19103. Prior to April
27, 2018, the Sponsor was wholly-owned by ETF Securities Limited, a Jersey, Channel Islands based company. Effective April 27, 2018,
ETF Securities Limited sold its membership interest in the Sponsor to abrdn Inc. (Aberdeen Standard Investments Inc. prior to January
1, 2022), a Delaware corporation. As a result of the sale, abrdn Inc. became the sole member of the Sponsor. abrdn Inc. is a wholly-owned
indirect subsidiary of Standard Life Aberdeen plc, which together with its affiliates and subsidiaries, is collectively referred to as
“abrdn.” Under the Delaware Limited Liability Company Act and the governing documents of the Sponsor, the sole member of
the Sponsor, abrdn Inc., is not responsible for the debts, obligations and liabilities of the Sponsor solely by reason of being the sole
member of the Sponsor.
The
Sponsor’s Role
The
Sponsor arranged for the creation of the Trust and is responsible for the ongoing registration of the Shares for their public offering
in the United States and the listing of the Shares on the NYSE Arca. The Sponsor has agreed to assume the organizational expenses of
the Trust and the following administrative and marketing expenses incurred by the Trust: the Trustee’s monthly fee and out-of-pocket
expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses under the Custody Agreements, Exchange listing
fees, SEC registration fees, printing and mailing costs, audit fees and up to $100,000 per annum in legal expenses. The Sponsor also
paid the costs of the Trust’s organization and the initial sale of the Shares, including the applicable SEC registration fees.
The
Sponsor does not exercise day-to-day oversight over the Trustee or the Custodian. The Sponsor may remove the Trustee and appoint a successor
Trustee (1) if the Trustee ceases to meet certain objective requirements (including the requirement that it have capital, surplus and
undivided profits of at least $150 million); (2) if, having received written notice of a material breach of its obligations under the
Trust Agreement, the Trustee has not cured the breach within 30 days; or (3) if the Trustee refuses to consent to the implementation
of an amendment to the Trust’s initial Internal Control Over Financial Reporting. The Sponsor also has the right to replace the
Trustee during the 90 days following any merger, consolidation or conversion in which the Trustee is not the surviving entity or, in
its discretion, on the fifth anniversary of the creation of the Trust or on any subsequent third anniversary thereafter. The Sponsor
also has the right to approve any new or additional custodian that the Trustee may wish to appoint and any new or additional sub-custodian
that the Custodian may wish to appoint.
The
Sponsor or one of its affiliates or agents (1) develops a marketing plan for the Trust on an ongoing basis, (2) prepares marketing
materials regarding the Shares, including the content of the Trust’s website and (3) executes the marketing plan for the Trust.
THE
TRUSTEE
The
Bank of New York Mellon, a banking corporation organized under the laws of the State of New York with trust powers (“BNYM”),
serves as the Trustee. BNYM has a trust office at 2 Hanson Place, Brooklyn, New York 11217. BNYM is subject to supervision by the New
York State Financial Services Department and the Board of Governors of the Federal Reserve System. Information regarding creation and
redemption Basket composition, NAV of the Trust, transaction fees and the names of the parties that have each executed an Authorized
Participant Agreement may be obtained from BNYM. A copy of the Trust Agreement is available for inspection at BNYM’s trust office
identified above. Under the Trust Agreement, the Trustee is required to have capital, surplus and undivided profits of at least $150
million.
The
Trustee’s Role
The
Trustee is generally responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational records.
The Trustee’s principal responsibilities include (1) transferring the Trust’s silver as needed to pay the Sponsor’s
Fee in silver (silver transfers are expected to occur approximately monthly in the ordinary course), (2) valuing the Trust’s silver
and calculating the NAV of the Trust and the NAV per Share, (3) receiving and processing orders from Authorized Participants to create
and redeem Baskets and coordinating the processing of such orders with the Custodian and DTC, (4) selling the Trust’s silver as
needed to pay any extraordinary Trust expenses that are not assumed by the Sponsor, (5) when appropriate, making distributions of cash
or other property to Shareholders, and (6) receiving and reviewing reports from or on the Custodian’s custody of and transactions
in the Trust’s silver. The Trustee shall, with respect to directing the Custodian, act in accordance with the instructions of the
Sponsor. If the Custodian resigns, the Trustee shall appoint an additional or replacement custodian selected by the Sponsor.
The
Trustee intends to regularly communicate with the Sponsor to monitor the overall performance of the Trust. The Trustee does not monitor
the performance of the Custodian or any other sub-custodian other than to review the reports provided by the Custodian pursuant to the
Custody Agreements. The Trustee, along with the Sponsor, liaises with the Trust’s legal, accounting and other professional service
providers as needed. The Trustee assists and supports the Sponsor with the preparation of all periodic reports required to be filed with
the SEC on behalf of the Trust.
The
Trustee’s monthly fees and out-of-pocket expenses are paid by the Sponsor.
Affiliates
of the Trustee may from time to time act as Authorized Participants or purchase or sell silver or Shares for their own account, as agent
for their customers and for accounts over which they exercise investment discretion. Affiliates of the Trustee are subject to the same
transaction fee as other Authorized Participants.
THE
CUSTODIAN
JPMorgan
Chase Bank, N.A. (“JPMorgan”) serves as the Custodian of the Trust’s silver. JPMorgan is a national banking association
organized under the laws of the United States of America. JPMorgan is subject to supervision by the Federal Reserve Bank of New York
and the Federal Deposit Insurance Corporation. JPMorgan’s London office is regulated by the FCA and is located at 25 Bank Street,
Canary Wharf London, E14 5JP, United Kingdom. JPMorgan . is a subsidiary of JPMorgan Chase & Co. While the U.K. operations of the
Custodian are regulated by the FCA, the custodial services provided by the Custodian and any sub-custodian are presently not a regulated
activity subject to the supervision and rules of the FCA.
The
Custodian’s Role
The
Custodian is responsible for the safekeeping of the Trust’s silver deposited with it by Authorized Participants in connection with
the creation of Baskets. The Custodian is also responsible for selecting sub-custodians, if any. The Custodian facilitates the transfer
of silver in and out of the Trust through the unallocated silver accounts it maintains for each Authorized Participant and the unallocated
and allocated silver accounts it maintains for the Trust. The Custodian holds at its London, England vault premises the Trust’s
allocated silver. The Custodian is responsible for allocating specific bars of physical silver to the Trust’s allocated silver
account. The Custodian provides the Trustee with regular reports detailing the silver transfers in and out of the Trust’s unallocated
and allocated silver accounts and identifying the silver bars held in the Trust’s allocated silver account.
The
Custodian’s fees and expenses under the Custody Agreements are paid by the Sponsor.
The
Custodian and its affiliates may from time to time act as Authorized Participants or purchase or sell silver or Shares for their own
account, as agent for their customers and for accounts over which they exercise investment discretion. Affiliates of the Custodian are
subject to the same transaction fee as other Authorized Participants.
Inspection
of Silver
Under
the Custody Agreements, the Custodian allows the Sponsor and the Trustee, and their auditors and inspectors, and shall procure that
any sub-custodian that it appoints allows, access, under normal circumstances, to its premises during normal business hours to examine
the Trust’s silver held there and such records as they may reasonably require to perform their respective duties to Shareholders.
Any such access is subject to execution of a confidentiality agreement and agreement to the Custodian’s security procedures, and
such inspections are at the Trust’s expense and performed a minimum of two times per calendar year. With respect to the Trust Unallocated
Account, additional visits to the Custodian’s premises in any calendar year shall require the consent of the Custodian, which consent
may not be withheld unreasonably.
The
Sponsor has exercised its right to visit the Custodian in order to examine the silver and the records maintained by the Custodian. An
inspection was most recently conducted by Bureau Veritas Commodities UK Ltd, a leading commodity inspection and testing company retained
by the Sponsor, as of July 7, 2023. The results can be found on www.abrdn.com/usa/etf.
There
can be no guarantee that the Sponsor or the Trust’s auditors and inspectors will be able to perform physical inspections of the
Trust’s silver as planned. Local policies, regulations, or ordinances, as well as polices or restrictions adopted by the Custodian
or any other sub-custodian, may temporarily prevent, or otherwise impair the ability of, the Sponsor or the Trust’s auditors and
inspectors, from performing a physical inspection of the Trust’s silver on a desired date. In those situations, the Sponsor or
the Trust’s auditors and inspectors may seek to verify the silver held by the Trust by alternate means, including through virtual
inspections of the Trust’s silver and/or a review of pertinent records.
DESCRIPTION
OF THE SHARES
General
The
Trustee is authorized under the Trust Agreement to create and issue an unlimited number of Shares. The name of the Trust’s Shares
is abrdn Physical Silver Shares ETF (known as Aberdeen Standard Physical Silver Shares ETF prior to March 31, 2022, and ETFS Physical
Silver Shares prior to October 1, 2018). The Trustee creates Shares only in Baskets (a Basket equals a block of 50,000 Shares) and only
upon the order of an Authorized Participant. The Shares represent units of fractional undivided beneficial interest in and ownership
of the Trust and have no par value. Any creation and issuance of Shares above the amount registered on the Trust’s then-current
and effective registration statement with the SEC will require the registration of such additional Shares.
Description
of Limited Rights
The
Shares do not represent a traditional investment and Shareholders should not view them as similar to “shares” of a corporation
operating a business enterprise with management and a board of directors. Shareholders do not have the statutory rights normally associated
with the ownership of shares of a corporation, including, for example, the right to bring “oppression” or “derivative”
actions. All Shares are of the same class with equal rights and privileges. Each Share is transferable, is fully paid and non-assessable
and entitles the holder to vote on the limited matters upon which Shareholders may vote under the Trust Agreement. The Shares do not
entitle their holders to any conversion or pre-emptive rights, or, except as provided below, any redemption rights or rights to distributions.
Distributions
If
the Trust is terminated and liquidated, the Trustee will distribute to the Shareholders any amounts remaining after the satisfaction
of all outstanding liabilities of the Trust and the establishment of such reserves for applicable taxes, other governmental charges and
contingent or future liabilities as the Trustee shall determine. Shareholders of record on the record date fixed by the Trustee for a
distribution will be entitled to receive their pro rata portion of any distribution.
Voting
and Approvals
Under
the Trust Agreement, Shareholders have no voting rights, except in limited circumstances. The Trustee may terminate the Trust upon the
agreement of Shareholders owning at least 75% of the outstanding Shares. In addition, certain amendments to the Trust Agreement require
advance notice to the Shareholders before the effectiveness of such amendments, but no Shareholder vote or approval is required for any
amendment to the Trust Agreement.
Redemption
of the Shares
The
Shares may only be redeemed by or through an Authorized Participant and only in Baskets. See “Creation and Redemption of Shares”
for details on the redemption of the Shares.
Book
Entry Form
Individual
certificates will not be issued for the Shares. Instead, one or more global certificates are deposited by the Trustee with DTC 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 are made in accordance with standard securities industry practice.
CUSTODY
OF THE TRUST’S SILVER
Custody
of the physical silver deposited with and held by the Trust is provided by the Custodian at its London, England vaults and by 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 physical silver credited to Trust Allocated Account in accordance with the Custody Agreements. The
Custodian segregates the physical silver 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.
The
Custodian, as instructed by the Trustee on behalf of the Trust, is authorized to accept, on behalf of the Trust, deposits of silver in
unallocated form. Acting on standing instructions specified in the Custody Agreements, the Custodian allocates silver deposited in unallocated
form with the Trust by selecting bars of silver for deposit to the Trust Allocated Account. All physical silver allocated to the Trust
must conform to the rules, regulations, practices and customs of the LBMA, and the Custodian must replace any non-conforming physical
silver with conforming physical silver as soon as practical upon a determination by the Custodian that any physical silver is non-conforming.
The
process
of withdrawing
silver from
the Trust
for a redemption
of a Basket
is the same
general
procedure
as for depositing
silver with
the Trust
for a creation
of a Basket,
only in
reverse.
Each transfer
of silver 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 silver 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 silver held
in the
Trust
Unallocated Account
as of the close
of each business
day.
See “Creation
and Redemption
of Shares.”
DESCRIPTION
OF THE CUSTODY AGREEMENTS
The
Allocated Account Agreement between the Trustee and the Custodian establishes the Trust Allocated Account. The Unallocated Account Agreement
between the Trustee and the Custodian establishes the Trust Unallocated Account. These agreements are sometimes referred to together
as the “Custody Agreements” in this prospectus. The following is a description of the material terms of the Custody Agreements.
As the Custody Agreements are similar in form, they are discussed together, with material distinctions between the agreements noted.
Reports
The
Custodian provides the Trustee with reports for each business day, no later than the following business day, identifying the movements
of silver in and out of the Trust Allocated Account and the credits and debits of silver to the Trust Unallocated Account and containing
sufficient information to identify each bar of silver held in the Trust Allocated Account and whether the Custodian has possession of
such bar. The Custodian also provides the Trustee with monthly statements of account for the Trust Allocated Account and the Trust Unallocated
Account as of the last business day of each month. Under the Custody Agreements, a “business day” generally means any day
that is a “London Business Day,” when commercial banks generally and the London silver market are open for the transaction
of business in London.
The
Custodian’s records of all deposits to and withdrawals from, and all debits and credits to, the Trust Allocated Account and the
Trust Unallocated Account which are to occur on a business day, and all end of business day account balances in the Trust Allocated Account
and Trust Unallocated Account, are stated as of the close of the Custodian’s business (usually 4:00 p.m. London time) on such business
day.
Sub-custodians
Under
the Allocated Account Agreement, the Custodian may select sub-custodians solely for the temporary holding of silver for it until transported
to the Custodian’s London vault premises. These sub-custodians may in turn select other sub-custodians to perform their duties,
including temporarily holding silver for them, but the Custodian is not responsible for (and therefore has no liability in relation to)
the selection of those other sub-custodians. The Allocated Account Agreement requires the Custodian to use reasonable care in selecting
any sub-custodian and provides that, except for the Custodian’s obligation to use commercially reasonable efforts to obtain delivery
of silver held by any other sub-custodians when necessary, the Custodian is not liable for the acts or omissions, or for the solvency,
of any sub-custodian that it selects unless the selection of that sub-custodian was made negligently or in bad faith.
The
Custodian is not currently using a sub-custodian as of the date of this Prospectus, but may use LBMA market-making members that provide
bullion vaulting and clearing services to third parties. Under the Allocated Account Agreement, the Custodian will notify the Trustee
if it selects any additional sub-custodians or stops using any sub-custodian it has previously selected.
Location
and Segregation of Silver; Access
Silver
held for the Trust Allocated Account by the Custodian is held at the Custodian’s London vault premises. Silver may be temporarily
held for the Trust Allocated Account by sub-custodians selected by the Custodian and by sub-custodians of sub-custodians in vaults located
in England or in other locations. Where the physical silver is held for the Trust Allocated Account by a sub-custodian, the Custodian
agrees to use commercially reasonable efforts to promptly arrange for the delivery of any such physical silver held on behalf of the
Trust to the Custodian’s London vault premises at the Custodian’s own cost and risk.
The
Custodian segregates by identification in its books and records the Trust’s silver in the Trust Allocated Account from any other
silver which it owns or holds for others and requires and any sub-custodians it selects to so segregate the Trust’s silver held
by them. This requirement reflects the current custody practice in the London silver bullion market, and under the Allocated Account
Agreement, the Custodian is deemed to have communicated such requirement by virtue of its participation in the London bullion market.
The Custodian’s books and records are expected, as a matter of current London silver market custody practice, to identify each
bar of silver held in the Trust Allocated Account in its own vault by refiner, assay or fineness, serial number and gross and fine weight.
Any sub-custodians selected by the Custodian are also expected, as a matter of current industry practice, to identify in their books
and records each bar of silver held for the Custodian by serial number and such sub-custodians may use other identifying information.
Under
the Custody Agreements, the Custodian allows the Sponsor and the Trustee, and their auditors and inspectors, and shall procure that any
sub-custodian that it appoints allows, access, under normal circumstances, to its premises during normal business hours to examine the
Trust’s silver held there and such records as they may reasonably require to perform their respective duties to Shareholders. Any
such access is subject to execution of a confidentiality agreement and agreement to the Custodian’s security procedures, and such
inspections are at the Trust’s expense and performed a minimum of two times per calendar year. With respect to the Trust Unallocated
Account, additional visits to the Custodian’s premises in any calendar year shall require the consent of the Custodian, which consent
may not be withheld unreasonably.
Transfers
into the Trust Unallocated Account
The
Custodian credits to the Trust Unallocated Account the amount of silver it receives from the Trust Allocated Account, an Authorized Participant
Unallocated Account or from other third-party unallocated accounts for credit to the Trust Unallocated Account. Unless otherwise agreed
by the Custodian in writing, the only silver the Custodian accepts for credit to the Trust Unallocated Account is silver that the Trustee
has transferred from the Trust Allocated Account, an Authorized Participant Unallocated Account or a third-party unallocated account.
Transfers
from the Trust Unallocated Account
The
Custodian transfers silver from the Trust Unallocated Account only in accordance with the Trustee’s instructions to the Custodian.
A transfer of silver from the Trust Unallocated Account may only be made (1) by transferring silver to an Authorized Participant Unallocated
Account; (2) by transferring silver to the Trust Allocated Account; (3) by transferring silver to pay the Sponsor’s Fee; (4) by
making silver available for collection at the Custodian’s vault premises or at such other location as the Custodian may direct,
at the Trust’s expense and risk; (5) by delivering silver to such location as the Trustee directs, at the Trust’s expense
and risk; or (6) by transfer to an account maintained by the Custodian or by a third-party on an unallocated basis in connection with
the sale of silver or other transfers permitted under the Trust Agreement. Transfers made pursuant to clauses (4), (5) and (6) will be
made only on an exceptional basis, with transfers under clause (6) expected to include transfers made in connection with a sale of silver
to pay expenses of the Trust not paid by the Sponsor or with the liquidation of the Trust. Any silver made available in physical form
will be in a form which complies with the rules, regulations, practices and customs of the LBMA, the Bank of England or any applicable
regulatory body (Custody Rules) or in such other form as may be agreed between the Trustee and the Custodian, and in all cases all silver
made available will comprise one or more whole silver bars, selected by the Custodian.
The
Custodian uses commercially reasonable efforts to transfer silver from the Trust Unallocated Account to the Trust Allocated Account by
2:00 p.m. London time on each business day. In doing so, the Custodian shall identify bars of a weight most closely approximating, but
not exceeding, the balance in the Trust Unallocated Account and shall transfer such weight from the Trust Unallocated Account to the
Trust Allocated Account.
Transfers
into the Trust Allocated Account
The
Custodian receives transfers of silver into the Trust Allocated Account only at the Trustee’s instructions given pursuant to the
Unallocated Account Agreement by debiting silver from the Trust Unallocated Account and crediting such silver to the Trust Allocated
Account.
Transfers
from the Trust Allocated Account
The
Custodian transfers silver from the Trust Allocated Account only in accordance with the Trustee’s instructions. Generally, the
Custodian transfers silver from the Trust Allocated Account only by debiting silver from the Trust Allocated Account and crediting the
silver to the Trust Unallocated Account.
Right
to Refuse Transfers or Amend Transfer Procedures
The
Custodian may refuse to accept instructions to transfer silver to or from the Trust Unallocated Account and the Trust Allocated Account
if in the Custodian’s opinion they are or may be contrary to the rules, regulations, practices and customs of the LBMA, or the
Bank of England or contrary to any applicable law. The Custodian may amend the procedures for transferring silver to or from the Trust
Unallocated Account or for the physical withdrawal of silver from the Trust Unallocated Account or the Trust Allocated Account or impose
such additional procedures in relation to the transfer of silver to or from the Trust Unallocated Account as the Custodian may from time
to time consider necessary due to a change in rules of the LBMA, the Bank of England or a banking or regulatory association governing
the Custodian. The Custodian will notify the Trustee within a commercially reasonable time before the Custodian amends these procedures
or imposes additional ones.
The
Custodian receives no fee under the Unallocated Account Agreement.
Trust
Unallocated Account Credit and Debit Balances
No
interest will be paid by the Custodian on any credit balance to the Trust Unallocated Account. The Trust Unallocated Account may not
at any time have a debit or negative balance.
Exclusion
of Liability
The
Custodian uses reasonable care in the performance of its duties under the Custody Agreements and is only responsible for any loss or
damage suffered by the Trust as a direct result of any negligence, fraud or willful default in the performance of its duties. The Custodian’s
liability under the Allocated Account Agreement is further limited to the market value of the silver lost or damaged at the time such
negligence, fraud or willful default is discovered by the Custodian, provided that the Custodian promptly notifies the Trustee after
any discovery of such lost or damaged silver. The Custodian’s liability under the Unallocated Account Agreement is further limited
to the amount of the silver lost or damaged at the time such negligence, fraud or willful default is discovered by the Custodian, provided
that the Custodian promptly notifies the Trustee after any discovery of such lost or damaged silver.
Furthermore,
the Custodian has no duty to make or take or to require any sub-custodian selected by it to make or take any special arrangements or
precautions beyond those required by the Custody Rules or as specifically set forth in the Custody Agreements.
Indemnity
The
Trustee will, solely out of the Trust’s assets, indemnify the Custodian (on an after tax basis) on demand against all costs and
expenses, damages, liabilities and losses which the Custodian may suffer or incur in connection with the Custody Agreements, except to
the extent that such sums are due directly to the Custodian’s negligence, willful default or fraud.
Insurance
The
Custodian maintains such insurance for its business, including its bullion and custody business, as it deems appropriate in connection
with its custodial and other obligations and is responsible for all costs, fees and expenses arising from the insurance policy or policies
attributable to its relationship with the Trust. The Trust is not a beneficiary of any such insurance and does not have the ability to
dictate the existence, nature or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian maintains adequate
insurance or any insurance with respect to the silver held by the Custodian on behalf of the Trust. Consistent with industry standards,
the Custodian maintains a group insurance policy that covers all metal types held in its and its sub-custodians’ vaults for the
accounts of all its customers for a variety of events. The Trustee and the Sponsor may, subject to confidentiality restrictions, be provided
with details of this insurance coverage from time to time upon reasonable prior notice.
Force
Majeure
The
Custodian is not liable for any delay in performance or any non-performance of any of its obligations under the Custody Agreements by
reason of any cause beyond its reasonable control, including acts of God, war or terrorism.
Termination
The
Custody Agreements had an initial term from March 29, 2019, to December 31, 2021, and continue thereafter on the same terms until amended
in writing or unless terminated by the parties. The Trustee and the Custodian may each terminate any Custody Agreement for any reason
upon 90 business days’ prior notice. The Custody Agreements may also be terminated with immediate effect as follows: (1) by the
Trustee, if the Custodian ceases to offer the services contemplated by either Custody Agreement to its clients or proposed to withdraw
from the silver bullion business; (2) by the Trustee or the Custodian, if it becomes unlawful for the Custodian or the Trustee to be
a party to either Custody Agreement or for the Custodian to provide or the Trustee or Trust to receive the services thereunder; (3) by
the Custodian, if the Custodian determines in its reasonable view that the Trust is insolvent or faces impending insolvency; (4) by the
Trustee, if the Trustee determines in its sole view that the Custodian is insolvent or faces impending insolvency; (5) by the Trustee,
if the Trust is to be terminated; or (6) by the Trustee or the Custodian, if either of the Custody Agreements ceases to be in full force
and effect.
If
redelivery arrangements acceptable to the Custodian for the silver held in the Trust Allocated Account are not made, the Custodian may
continue to store the silver and continue to charge for its fees and expenses, and, after six months from the termination date, the Custodian
may sell the silver and account to the Trustee for the proceeds. If arrangements acceptable to the Custodian for redelivery of the balance
in the Trust Unallocated Account are not made, the Custodian may continue to charge for its fees and expenses payable under the Allocated
Account Agreement, and, after six months from the termination date, the Custodian may close the Trust Unallocated Account and account
to the Trustee for the proceeds.
Amendments
The
Trustee and the Custodian entered into the Custody Agreements with effect on and from March 29, 2019. On
March 11, 2022, the Trustee, the Custodian and the Sponsor entered into amendments to the Custody Agreements (the “Custody
Amendments”) as approved and directed by the Sponsor on behalf of the Trust. The Custody
Amendments reflect (1) the changes in the name of the Trust, effective March 31, 2022, from Aberdeen Standard Silver ETF Trust to abrdn
Silver ETF Trust and the change in the name of Shares, effective March 31, 2022, from Aberdeen Standard Physical Silver Shares ETF to
abrdn Physical Silver Basket Shares ETF; (2) the change in the name of the Sponsor from “Aberdeen Standard Investments ETFs Sponsor
LLC” to “abrdn ETFs Sponsor LLC,” which occurred on March 1, 2022; and (3) the addition of a new “Replacement
of Bullion” section, which requires that, upon a determination by the Custodian that any silver credited to the Trust Allocated
Account does not comply with the Good Delivery Standards, the Custodian shall as soon as practical replace such silver with silver that
complies with the Good Delivery Standards. No other material changes to the Custody Agreements were made in connection with the
Custody Amendments.
Governing
Law
The
Custody Agreements are governed by English law. The Trustee and the Custodian both consent to the non-exclusive jurisdiction of the courts
of the State of New York and the federal courts located in the borough of Manhattan in New York City. Such consent is not required for
any person to assert a claim of New York jurisdiction over the Trustee or the Custodian.
CREATION
AND REDEMPTION OF SHARES
The
Trust creates and redeems Shares from time to time, but only in one or more Baskets (a Basket equals a block of 50,000 Shares). The creation
and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of the amount of physical
silver and any cash represented by the Baskets being created or redeemed, the amount of which is based on the combined NAV of the number
of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received.
Authorized
Participants are the only persons that may place orders to create and redeem Baskets. Authorized Participants must be (1) registered
broker-dealers or other securities market participants, such as banks and other financial institutions, which are not required to register
as broker-dealers to engage in securities transactions, and (2) participants in DTC. To become an Authorized Participant, a person must
enter into an Authorized Participant Agreement with the Sponsor and the Trustee. The Authorized Participant Agreement provides the procedures
for the creation and redemption of Baskets and for the delivery of the silver and any cash required for such creations and redemptions.
The Authorized Participant Agreement and the related procedures attached thereto may be amended by the Trustee and the Sponsor, without
the consent of any Shareholder or Authorized Participant. Authorized Participants pay a transaction fee of $500 to the Trustee for each
order they place to create or redeem one or more Baskets. Authorized Participants who make deposits with the Trust in exchange for Baskets
receive no fees, commissions or other form of compensation or inducement of any kind from either the Sponsor or the Trust for serving
as an Authorized Participant, and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale
or resale of Shares.
Authorized
Participants are cautioned that some of their activities will result in their being deemed participants in a distribution in a manner
which would render them statutory underwriters and subject them to the prospectus-delivery and liability provisions of the Securities
Act, as described in “Plan of Distribution.”
Prior
to initiating any creation or redemption order, an Authorized Participant must have entered into an agreement with the Custodian or a
bank clearing loco London Silver to establish an Authorized Participant Unallocated Account in London (Authorized Participant Unallocated
Bullion Account Agreement). Silver held in Authorized Participant Unallocated Accounts is typically not segregated from the Custodian’s
or other bank clearing loco London Silver’s assets, as a consequence of which an Authorized Participant will have no proprietary
interest in any specific bars of silver held by the Custodian or the clearing bank. Credits to its Authorized Participant Unallocated
Account are therefore at risk of the Custodian’s or other bank clearing loco London Silver’s insolvency. No fees will be
charged by the Custodian for the use of the Authorized Participant Unallocated Account as long as the Authorized Participant Unallocated
Account is used solely for silver transfers to and from the Trust Unallocated Account and the Custodian (or one of its affiliates) receives
compensation for maintaining the Trust Allocated Account. Authorized Participants should be aware that the Custodian’s liability
threshold under the Authorized Participant Unallocated Bullion Account Agreement is generally gross negligence, not negligence, which
is the Custodian’s liability threshold under the Trust’s Custody Agreements.
As
the terms of the Authorized Participant Unallocated Bullion Account Agreement differ in certain respects from the terms of the Trust
Unallocated Account Agreement, potential Authorized Participants should review the terms of the Authorized Participant Unallocated Bullion
Account Agreement carefully. A copy of the Authorized Participant Agreement may be obtained by potential Authorized Participants from
the Trustee.
Certain
Authorized Participants are expected to have the facility to participate directly in the physical silver market and the silver futures
market. In some cases, an Authorized Participant may from time to time acquire silver from or sell silver to its affiliated silver trading
desk, which may profit in these instances. Each Authorized Participant must be registered as a broker-dealer under the Securities Exchange
Act of 1934 (Exchange Act) and regulated by FINRA or be exempt from being or otherwise not be required to be so regulated or registered,
and be qualified to act as a broker or dealer in the states or other jurisdictions where the nature of its business so requires. Certain
Authorized Participants are regulated under federal and state banking laws and regulations. Each Authorized Participant has its own set
of rules and procedures, internal controls and information barriers as it determines is appropriate in light of its own regulatory regime.
Authorized
Participants may act for their own accounts or as agents for broker-dealers, custodians and other securities market participants that
wish to create or redeem Baskets. An order for one or more Baskets may be placed by an Authorized Participant on behalf of multiple clients.
As of the date of this prospectus, Goldman Sachs & Co., HSBC Securities (USA) Inc., J.P. Morgan Securities Inc., Mizuho Securities
USA LLC, Merrill Lynch Professional Clearing Corporation, Morgan Stanley & Co. Inc., Scotia Capital (USA) Inc., UBS Securities LLC
and Virtu Americas, LLC have each signed an Authorized Participant Agreement with the Trust and, upon the effectiveness of such
agreement, may create and redeem Baskets as described above. Persons interested in purchasing Baskets should contact the Sponsor or the
Trustee to obtain the contact information for the Authorized Participants. Shareholders who are not Authorized Participants will only
be able to redeem their Shares through an Authorized Participant.
All
silver is delivered to the Trust and distributed by the Trust in unallocated form through credits and debits between Authorized Participant
Unallocated Accounts and the Trust Unallocated Account. Silver transferred from an Authorized Participant Unallocated Account to the
Trust in unallocated form will first be credited to the Trust Unallocated Account. Thereafter, the Custodian will allocate specific bars
of silver representing the amount of silver credited to the Trust Unallocated Account (to the extent such amount is representable by
silver bars) to the Trust Allocated Account. The movement of silver is reversed for the distribution of silver to an Authorized Participant
in connection with the redemption of Baskets.
All
physical silver represented by a credit to any Authorized Participant Unallocated Account and to the Trust Unallocated Account and all
silver bullion held in the Trust Allocated Account with the Custodian must be of at least a minimum fineness (or purity) of 999.0 parts
per 1,000 (99.9%) and otherwise conform to the rules, regulations practices and customs of the LBMA, including the specifications for
a Silver Good Delivery Bar.
Under
the Authorized Participant Agreement, the Sponsor has agreed to indemnify the Authorized Participants against certain liabilities, including
liabilities under the Securities Act.
The
following description of the procedures for the creation and redemption of Baskets is only a summary and an investor should refer to
the relevant provisions of the Trust Agreement and the form of Authorized Participant Agreement for more detail, each of which is attached
as an exhibit to the registration statement of which this prospectus is a part. See “Where You Can Find More Information”
for information about where you can obtain the registration statement.
Creation
Procedures
On
any business day, an Authorized Participant may place an order with the Trustee to create one or more Baskets. Creation and redemption
orders are accepted on “business days” the NYSE Arca is open for regular trading. Settlements of such orders requiring receipt
or delivery, or confirmation of receipt or delivery, of silver in the United Kingdom or another jurisdiction will occur on “business
days” when (1) banks in the United Kingdom or another jurisdiction and (2) the London silver markets are regularly open for business.
If such banks or the London silver markets are not open for regular business for a full day, such a day will only be a “business
day” for settlement purposes if the settlement procedures can be completed by the end of such day. Redemption settlements including
silver deliveries loco London may be delayed longer than two, but no more than five, business days following the redemption order date.
Settlement of orders requiring receipt or delivery, or confirmation of receipt or delivery, of Shares will occur, after confirmation
of the applicable silver delivery, on “business days” when the NYSE Arca is open for regular trading. Purchase orders must
be placed no later than 3:59:59 p.m. on each business day the NYSE Arca is open for regular trading. In the event of a level 3 market-wide
circuit breaker resulting in a trading halt for the remainder of the trading day, the time of the market-wide trading halt is considered
the close of regular trading and no creation orders for the current trade date will be accepted after that time (the “cutoff”).
Orders placed after the cutoff will be deemed to be rejected and will not be processed. Orders should be placed in proper form on the
following business day. The day on which the Trustee receives a valid purchase order is the purchase order date.
By
placing a purchase order, an Authorized Participant agrees to deposit silver with the Trust. Prior to the delivery of Baskets for a purchase
order, the Authorized Participant must also have wired to the Trustee the non-refundable transaction fee due for the purchase order.
Determination
of required deposits
The
amount of the required silver deposit is determined by dividing the number of ounces of silver held by the Trust by the number of Baskets
outstanding, as adjusted for the amount of silver constituting estimated accrued but unpaid fees and expenses of the Trust.
Fractions
of a fine ounce of silver smaller than 0.001 of a fine ounce which are included in the silver deposit amount are disregarded in the foregoing
calculation. All questions as to the composition of a Creation Basket Deposit will be finally determined by the Trustee. The Trustee’s
determination of the Creation Basket Deposit shall be final and binding on all persons interested in the Trust.
Delivery
of required deposits
An
Authorized Participant who places a purchase order is responsible for crediting its Authorized Participant Unallocated Account with the
required silver deposit amount by the second business day in London following the purchase order date. Upon receipt of the silver deposit
amount, the Custodian, after receiving appropriate instructions from the Authorized Participant and the Trustee, will transfer on the
second business day following the purchase order date the silver deposit amount from the Authorized Participant Unallocated Account to
the Trust Unallocated Account and the Trustee will direct DTC to credit the number of Baskets ordered to the Authorized Participant’s
DTC account. The expense and risk of delivery, ownership and safekeeping of silver until such silver has been received by the Trust shall
be borne solely by the Authorized Participant. The Trustee may accept delivery of physical silver by such other means as the Sponsor,
from time to time, may determine with the Trustee to be acceptable for the Trust, provided that the same is disclosed in a prospectus
relating to the Trust filed with the SEC pursuant to Rule 424 under the Securities Act. If silver is to be delivered other than as described
above, the Sponsor is authorized to establish such procedures and to appoint such custodians and establish such custody accounts in addition
to those described in this prospectus, as the Sponsor determines to be desirable.
Acting
on standing instructions given by the Trustee, the Custodian will transfer the silver deposit amount from the Trust Unallocated Account
to the Trust Allocated Account by transferring silver bars from its inventory to the Trust Allocated Account. The Custodian will use
commercially reasonable efforts to complete the transfer of silver to the Trust Allocated Account prior to the time by which the Trustee
is to credit the Basket to the Authorized Participant’s DTC account; if, however, such transfers have not been completed by such
time, the number of Baskets ordered will be delivered against receipt of the silver deposit amount in the Trust Unallocated Account,
and all Shareholders will be exposed to the risks of unallocated silver to the extent of that silver deposit amount until the Custodian
completes the allocation process. See “Risk Factors—Silver held in the Trust’s unallocated silver account and any Authorized
Participant’s unallocated silver account is not segregated from the Custodian’s assets....”
Because
silver is only allocated in multiples of whole bars, the amount of silver allocated from the Trust Unallocated Account to the Trust Allocated
Account may be less than the total fine ounces of silver credited to the Trust Unallocated Account. Any balance will be held in the Trust
Unallocated Account. The Custodian uses commercially reasonable efforts to minimize the amount of silver held in the Trust Unallocated
Account; no more than 1,100 troy ounces of silver (maximum weight to make one Silver Good Delivery Bar) is expected to be held in the
Trust Unallocated Account at the close of each business day.
Rejection
of purchase orders
The
Trustee may reject a purchase order or a Creation Basket Deposit if such order or Creation Basket Deposit is not presented in proper
form as described in the Authorized Participant Agreement or if the fulfillment of the order, in the opinion of counsel, might be unlawful.
None of the Trustee, the Sponsor or the Custodian will be liable for the rejection of any purchase order or Creation Basket Deposit.
Redemption
Procedures
The
procedures by which an Authorized Participant can redeem one or more Baskets mirror the procedures for the creation of Baskets. On any
business day, an Authorized Participant may place an order with the Trustee to redeem one or more Baskets. Redemption orders must be
placed no later than 3:59:59 p.m. on each business day the NYSE Arca is open for regular trading. In the event of a level 3 market-wide
circuit breaker resulting in a trading halt for the remainder of the trading day, the time of the market-wide trading halt is considered
the close of regular trading and no redemption orders for the current trade date will be accepted after that time (the “cutoff”).
Orders placed after the cutoff will be deemed to be rejected and will not be processed. Orders should be placed in proper form on the
following business day. A redemption order so received is effective on the date it is received in satisfactory form by the Trustee. The
redemption procedures allow Authorized Participants to redeem Baskets and do not entitle an individual Shareholder to redeem any Shares
in an amount less than a Basket, or to redeem Baskets other than through an Authorized Participant.
By
placing a redemption order, an Authorized Participant agrees to deliver the Baskets to be redeemed through DTC’s book entry system
to the Trust not later than the second business day following the effective date of the redemption order. Prior to the delivery of the
redemption distribution for a redemption order, the Authorized Participant must also have wired to the Trustee the non-refundable transaction
fee due for the redemption order.
Determination
of redemption distribution
The
redemption distribution from the Trust consists of a credit to the redeeming Authorized Participant’s Authorized Participant Unallocated
Account representing the amount of the silver held by the Trust evidenced by the Shares being redeemed. Fractions of a fine ounce of
silver included in the redemption distribution smaller than 0.001 of a fine ounce are disregarded. Redemption distributions will be subject
to the deduction of any applicable tax or other governmental charges which may be due.
Delivery
of redemption distribution
The
redemption distribution due from the Trust will be delivered to the Authorized Participant on or before the fifth business day following
a loco London redemption order date if, by 10:00 a.m. New York time on the second business day after the loco London redemption order
date, the Trustee’s DTC account has been credited with the Baskets to be redeemed. If a loco swap or physical transfer is necessary
to effect a loco London redemption, the redemption distribution due from the Trust will be delivered to the Authorized Participant on
or before the fifth business day following such a loco London redemption order date if, by 10:00 a.m. New York time on the second business
day after the loco London redemption order date, the Trustee’s DTC account has been credited with the Baskets to be redeemed. In
the event that, by 10:00 a.m. New York time on the second business day following the order date of a redemption order, the Trustee’s
DTC account has not been credited with the total number of Shares corresponding to the total number of Baskets to be redeemed pursuant
to such redemption order, the Trustee shall send to the Authorized Participant and the Custodian via fax or electronic mail message notice
of such fact and the Authorized Participant shall have two business days following receipt of such notice to correct such failure. If
such failure is not cured within such two business day period, the Trustee (in consultation with the Sponsor) will cancel such redemption
order and will send via fax or electronic mail message notice of such cancellation to the Authorized Participant and the Custodian, and
the Authorized Participant will be solely responsible for all costs incurred by the Trust, the Trustee or the Custodian related to the
cancelled order. The Trustee is also authorized to deliver the redemption distribution notwithstanding that the Baskets to be redeemed
are not credited to the Trustee’s DTC account by 10:00 a.m. New York time on the second business day following the redemption order
date if the Authorized Participant has collateralized its obligation to deliver the Baskets through DTC’s book entry system on
such terms as the Sponsor and the Trustee may from time to time agree upon.
The
Custodian transfers the redemption silver amount from the Trust Allocated Account to the Trust Unallocated Account and, thereafter, to
the redeeming Authorized Participant’s Authorized Participant Unallocated Account. The Authorized Participant and the Trust are
each at risk in respect of silver credited to their respective unallocated accounts in the event of the Custodian’s insolvency.
See “Risk Factors—Silver held in the Trust’s unallocated silver account and any Authorized Participant’s unallocated
silver account is not segregated from the Custodian’s assets....”
As
with the allocation of silver to the Trust Allocated Account which occurs upon a purchase order, if in transferring silver from the Trust
Allocated Account to the Trust Unallocated Account in connection with a redemption order there is an excess amount of silver transferred
to the Trust Unallocated Account, the excess over the silver redemption amount will be held in the Trust Unallocated Account. The Custodian
uses commercially reasonable efforts to minimize the amount of silver held in the Trust Unallocated Account; no more than 1,100 ounces
of silver (maximum weight to make one Silver Good Delivery Bar) is expected to be held in the Trust Unallocated Account at the close
of each business day.
Suspension
or rejection of redemption orders
The
Trustee may, in its discretion, and will when directed by the Sponsor, suspend the right of redemption, or postpone the redemption settlement
date, (1) for any period during which the NYSE Arca is closed other than customary weekend or holiday closings, or trading on the NYSE
Arca is suspended or restricted or (2) for any period during which an emergency exists as a result of which delivery, disposal or evaluation
of silver is not reasonably practicable. None of the Sponsor, the Trustee or the Custodian are liable to any person or in any way for
any loss or damages that may result from any such suspension or postponement.
The
Trustee will reject a redemption order if the order is not in proper form as described in the Authorized Participant Agreement or if
the fulfillment of the order, in the opinion of its counsel, might be unlawful.
Creation
and Redemption Transaction Fee
To
compensate the Trustee for services in processing the creation and redemption of Baskets, an Authorized Participant is required to pay
a transaction fee to the Trustee of $500 per order to create or redeem Baskets. An order may include multiple Baskets. The transaction
fee may be reduced, increased or otherwise changed by the Trustee with the consent of the Sponsor. From time to time, the Trustee, with
the consent of the Sponsor, may waive all or a portion of the applicable transaction fee. The Trustee shall notify DTC of any agreement
to change the transaction fee and will not implement any increase in the fee for the redemption of Baskets until 30 days after the date
of the notice.
Tax
Responsibility
Authorized
Participants are responsible for any transfer tax, sales or use tax, recording tax, value added tax or similar tax or governmental charge
applicable to the creation or redemption of Baskets, regardless of whether or not such tax or charge is imposed directly on the Authorized
Participant, and agree to indemnify the Sponsor, the Trustee and the Trust if they are required by law to pay any such tax, together
with any applicable penalties, additions to tax or interest thereon.
DESCRIPTION
OF THE TRUST AGREEMENT
The
Trust operates under the terms of the Trust Agreement, dated as of July 20, 2009 between the Sponsor and the Trustee. A copy of the Trust
Agreement is available for inspection at the Trustee’s office. The following is a description of the material terms of the Trust
Agreement.
The
Sponsor
This
section summarizes some of the important provisions of the Trust Agreement which apply to the Sponsor. For a general description of the
Sponsor’s role concerning the Trust, see “The Sponsor—The Sponsor’s Role.”
Liability
of the Sponsor and indemnification
The
Sponsor will not be liable to the Trustee or any Shareholder for any action taken or for refraining from taking any action in good faith,
or for errors in judgment or for depreciation or loss incurred by reason of the sale of any silver or other assets of the Trust. However,
the preceding liability exclusion will not protect the Sponsor against any liability resulting from its own gross negligence, willful
misconduct or bad faith in the performance of its duties.
The
Sponsor and its members, managers, directors, officers, employees, affiliates (as such term is defined under the Securities Act) and
subsidiaries shall be indemnified from the Trust and held harmless against any loss, liability or expense incurred without (1) gross
negligence, bad faith, willful misconduct or willful malfeasance on the part of such indemnified party arising out of or in connection
with the performance of its obligations under the Trust Agreement and under each other agreement entered into by the Sponsor in furtherance
of the administration of the Trust (including, without limiting the scope of the foregoing, the Custody Agreements and any Authorized
Participant Agreement) or any actions taken in accordance with the provisions of the Trust Agreement or (2) reckless disregard on the
part of such indemnified party of its obligations and duties under the Trust Agreement. Such indemnity shall include payment from the
Trust of the costs and expenses incurred by such indemnified party in defending itself against any claim or liability in its capacity
as Sponsor. Any amounts payable to an indemnified party may be payable in advance or shall be secured by a lien on the Trust. The Sponsor
may, in its discretion, undertake any action which it may deem necessary or desirable in respect of the Trust Agreement and the interests
of the Shareholders and, in such event, the legal expenses and costs of any such actions shall be expenses and costs of the Trust and
the Sponsor shall be entitled to be reimbursed therefor by the Trust.
The
Sponsor may rely on all information provided by the Trustee for securities filings, including a free writing prospectus or marketing
materials. If such information is incorrect or omits material information and is the foundation for a claim against the Sponsor, the
Sponsor may be entitled to indemnification from the Trust.
Successor
sponsors
If
the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator
or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then, in any such case, the Trustee may terminate and liquidate the Trust and distribute its remaining assets. The Trustee
has no obligation to appoint a successor sponsor or to assume the duties of the Sponsor and will have no liability to any person because
the Trust is or is not terminated as described in the preceding sentence.
The
Trustee
This
section summarizes some of the important provisions of the Trust Agreement which apply to the Trustee. For a general description of the
Trustee’s role concerning the Trust, see “The Trustee—The Trustee’s Role.”
Qualifications
of the Trustee
The
Trustee and any successor trustee must be (1) a bank, trust company, corporation or national banking association organized and doing
business under the laws of the United States or any of its states, and authorized under such laws to exercise corporate trust powers;
(2) a participant in DTC or such other securities depository as shall then be acting with respect to the Shares; and (3) unless counsel
to the Sponsor, the appointment of which is acceptable to the Trustee, determines that such requirement is not necessary for the exception
under section 408(m)(3)(B) of the United States Internal Revenue Code of 1986, as amended (Code), to apply, a banking institution as
defined in Code section 408(n). The Trustee and any successor trustee must have, at all times, an aggregate capital, surplus, and undivided
profits of at least $150 million.
General
duty of care of Trustee
The
Trustee is a fiduciary under the Trust Agreement; provided, however, that the fiduciary duties and responsibilities and liabilities of
the Trustee are limited by, and are only those specifically set forth in, the Trust Agreement. For limitations of the fiduciary duties
of the Trustee, see the limitations on liability set forth in “The Trustee—Limitation on Trustee’s liability”
and “The Trustee—Trustee’s liability for custodial services and agents.”
Limitation
on Trustee’s liability
The
Trustee will not be liable for the disposition of silver or moneys, or in respect of any evaluation which it makes under the Trust Agreement
or otherwise, or for any action taken or omitted or for any loss or injury resulting from its actions or its performance or lack of performance
of its duties under the Trust Agreement in the absence of gross negligence, willful misconduct or bad faith on its part. In no event
will the Trustee be liable for acting in accordance with or conclusively relying upon any instruction, notice, demand, certificate or
document (1) from the Sponsor or a Custodian or any entity acting on behalf of either which the Trustee believes is given as authorized
by the Trust Agreement or a Custody Agreement, respectively; or (2) from or on behalf of any Authorized Participant which the Trustee
believes is given pursuant to or is authorized by an Authorized Participant Agreement (provided that the Trustee has complied with the
verification procedures specified in the Authorized Participant Agreement). In no event will the Trustee be liable for acting or omitting
to act in reliance upon the advice of or information from legal counsel, accountants or any other person believed by it in good faith
to be competent to give such advice or information. In addition, the Trustee will not be liable for any delay in performance or for the
non-performance of any of its obligations under the Trust Agreement by reason of causes beyond its reasonable control, including acts
of God, war or terrorism. The Trustee will not be liable for any indirect, consequential, punitive or special damages, regardless of
the form of action and whether or not any such damages were foreseeable or contemplated, or for an amount in excess of the value of the
Trust’s assets.
Trustee’s
liability for custodial services and agents
The
Trustee will not be answerable for the default of the Custodian or any other custodian of the Trust’s silver employed at the direction
of the Sponsor or selected by the Trustee with reasonable care. The Trustee does not monitor the performance of the Custodian or any
other sub-custodian other than to review the reports provided by the Custodian pursuant to the Custody Agreements. The Trustee may also
employ custodians for Trust assets other than silver, agents, attorneys, accountants, auditors and other professionals and shall not
be answerable for the default or misconduct of any of them if they were selected with reasonable care. The fees and expenses charged
by custodians for the custody of silver and related services, agents, attorneys, accountants, auditors or other professionals, and expenses
reimbursable to any custodian under a custody agreement authorized by the Trust Agreement, exclusive of fees for services to be performed
by the Trustee, are expenses of the Sponsor or the Trust. Fees paid for the custody of assets other than silver are an expense of the
Trustee.
Taxes
The
Trustee will not be personally liable for any taxes or other governmental charges imposed upon the silver or its custody, moneys or other
Trust assets, or on the income therefrom or the sale or proceeds of the sale thereof, or upon it as Trustee or upon or in respect of
the Trust or the Shares which it may be required to pay under any present or future law of the United States of America or of any other
taxing authority having jurisdiction in the premises. For all such taxes and charges and for any expenses, including counsel’s
fees, which the Trustee may sustain or incur with respect to such taxes or charges, the Trustee will be reimbursed and indemnified out
of the Trust’s assets and the payment of such amounts shall be secured by a lien on the Trust.
Indemnification
of the Trustee
The
Trustee, its directors, employees and agents shall be indemnified from the Trust and held harmless against any loss, liability or expense
(including, but not limited to, the reasonable fees and expenses of counsel) arising out of or in connection with the performance of
its obligations under the Trust Agreement and under each other agreement entered into by the Trustee in furtherance of the administration
of the Trust (including, without limiting the scope of the foregoing, the Custody Agreements and any Authorized Participant Agreement,
including the Trustee’s indemnification obligations under these agreements) or by reason of the Trustee’s acceptance of the
Trust incurred without (1) gross negligence, bad faith, willful misconduct or willful malfeasance on the part of such indemnified party
in connection with the performance of its obligations under the Trust Agreement or any such other agreement or any actions taken in accordance
with the provisions of the Trust Agreement or any such other agreement or (2) reckless disregard on the part of such indemnified party
of its obligations and duties under the Trust Agreement or any such other agreement. Such indemnity shall include payment from the Trust
of the costs and expenses incurred by such indemnified party in defending itself against any claim or liability in its capacity as Trustee.
Any amounts payable to an indemnified party may be payable in advance or shall be secured by a lien on the Trust.
Indemnity
for actions taken to protect the Trust
The
Trustee is under no obligation to appear in, prosecute or defend any action that in its opinion may involve it in expense or liability,
unless it is furnished with reasonable security and indemnity against the expense or liability. The Trustee’s costs resulting from
the Trustee’s appearance in, prosecution of or defense of any such action are deductible from and will constitute a lien against
the Trust’s assets. Subject to the preceding conditions, the Trustee shall, in its discretion, undertake such action as it may
deem necessary to protect the Trust and the rights and interests of all Shareholders pursuant to the terms of the Trust Agreement.
Protection
for amounts due to Trustee
If
any fees or costs owed to the Trustee under the Trust Agreement are not paid when due by the Sponsor, the Trustee may sell or otherwise
dispose of any Trust assets (including silver) and pay itself from the proceeds provided, however, that the Trustee may not charge to
the Trust unpaid fees owed to the Trustee by the Sponsor in excess of the fees payable to the Sponsor by the Trust without regard to
any waiver by the Sponsor of its fees. As security for all obligations owed to the Trustee under the Trust Agreement, the Trustee is
granted a continuing security interest in, and a lien on, the Trust’s assets and all Trust distributions.
Holding
of Trust property other than silver
The
Trustee holds and records the ownership of the Trust’s assets in a manner so that it is owned by the Trust and the Trustee as trustee
thereof for the benefit of the Shareholders for the purposes of, and subject to and limited by the terms and conditions set forth in,
the Trust Agreement. Other than issuance of the Shares, the Trust shall not issue or sell any certificates or other obligations or, except
as provided in the Trust Agreement, otherwise incur, assume or guarantee any indebtedness for money borrowed.
All
moneys held by the Trustee shall be held by it, without interest thereon or investment thereof, as a deposit for the account of the Trust.
Such monies held shall be deemed segregated by maintaining such monies in an account or accounts for the exclusive benefit of the Trust.
The Trustee may also employ custodians for Trust assets other than silver, agents, attorneys, accountants, auditors and other professionals
and shall not be answerable for the default or misconduct of any such custodians, agents, attorneys, accountants, auditors and other
professionals if such custodians, agents, attorneys, accountants, auditors or other professionals shall have been selected with reasonable
care. Any Trust assets other than silver or cash are held by the Trustee either directly or through the Federal Reserve/Treasury Book
Entry System for United States and federal agency securities (Book Entry System), DTC, or through any other clearing agency or similar
system (Clearing Agency), if available. The Trustee will have no responsibility or liability for the actions or omissions of the Book
Entry System, DTC or any Clearing Agency. The Trustee shall not be liable for ascertaining or acting upon any calls, conversions, exchange
offers, tenders, interest rate changes, or similar matters relating to securities held at DTC.
Resignation,
discharge or removal of Trustee; successor trustees
The
Trustee may at any time resign as Trustee by written notice of its election so to do, delivered to the Sponsor, and such resignation
shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment.
The
Sponsor may remove the Trustee in its discretion on the fifth anniversary of the date of the Trust Agreement by written notice delivered
to the Trustee at least 90 days prior to such date or, thereafter, on the last day of any subsequent three-year period by written notice
delivered to the Trustee at least 90 days prior to such date.
The
Sponsor may also remove the Trustee at any time if the Trustee (1) ceases to be a Qualified Bank (as defined below), (2) is in material
breach of its obligations under the Trust Agreement and fails to cure such breach within 30 days after receipt of written notice from
the Sponsor or Shareholders acting on behalf of at least 25% of the outstanding Shares specifying such default and requiring the Trustee
to cure such default, or (3) fails to consent to the implementation of an amendment to the Trust’s initial Internal Control Over
Financial Reporting deemed necessary by the Sponsor and, after consultations with the Sponsor, the Sponsor and the Trustee fail to resolve
their differences regarding such proposed amendment. Under such circumstances, the Sponsor, acting on behalf of the Shareholders, may
remove the Trustee by written notice delivered to the Trustee and such removal shall take effect upon the appointment of a successor
Trustee and its acceptance of such appointment.
A
“Qualified Bank” means a bank, trust company, corporation or national banking association organized and doing business under
the laws of the United States or any State of the United States that is authorized under those laws to exercise corporate trust powers
and that (1) is a DTC Participant or a participant in such other depository as is then acting with respect to the Shares; (2) unless
counsel to the Sponsor, the appointment of which is acceptable to the Trustee, determines that the following requirement is not necessary
for the exception under section 408(m) of the Code, to apply, is a banking institution as defined in section 408(n) of the Code and (3)
had, as of the date of its most recent annual financial statements, an aggregate capital, surplus and undivided profits of at least $150
million.
The
Sponsor may also remove the Trustee at any time if the Trustee merges into, consolidates with or is converted into another corporation
or entity in a transaction in which the Trustee is not the surviving entity. The surviving entity from such a transaction shall be the
successor of the Trustee without the execution or filing of any document or any further act; however, during the 90-day period following
the effectiveness of such transaction, the Sponsor may, by written notice to the Trustee, remove the Trustee and designate a successor
Trustee.
If
the Trustee resigns or is removed, the Sponsor, acting on behalf of the Shareholders, shall use its reasonable efforts to appoint a successor
Trustee, which shall be a Qualified Bank. Every successor Trustee shall execute and deliver to its predecessor and to the Sponsor, acting
on behalf of the Shareholders, an instrument in writing accepting its appointment, and thereupon such successor Trustee, without any
further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor; but such predecessor,
nevertheless, upon payment of all sums due it and on the written request of the Sponsor, acting on behalf of the Shareholders, shall
execute and deliver an instrument transferring to such successor all rights and powers of such predecessor, shall duly assign, transfer
and deliver all right, title and interest in the Trust’s assets to such successor, and shall deliver to such successor a list of
the Shareholders of all outstanding Shares. The Sponsor or any such successor Trustee shall promptly mail notice of the appointment of
such successor Trustee to the Shareholders.
If
the Trustee resigns and no successor trustee is appointed within 60 days after the date the Trustee issues its notice of resignation,
the Trustee will terminate and liquidate the Trust and distribute its remaining assets.
The
Custodian and Custody of the Trust’s Silver
This
section summarizes some of the important provisions of the Trust Agreement which apply to the Custodian and the custody of the Trust’s
silver. For a general description of the Custodian’s role, see “The Custodian—The Custodian’s Role.” For
more information on the custody of the Trust’s silver, see “Custody of the Trust’s Silver” and “Description
of the Custody Agreements.”
The
Trustee, on behalf of the Trust, entered into the Custody Agreements with the Custodian under which the Custodian maintains the Trust
Allocated Account and the Trust Unallocated Account.
If
upon the resignation of any custodian there would be no custodian acting pursuant to the Custody Agreements, the Trustee shall, promptly
after receiving notice of such resignation, appoint a substitute custodian or custodians selected by the Sponsor pursuant to custody
agreements approved by the Sponsor; provided, however, that the rights and duties of the Trustee under the Trust Agreement and such custody
agreements shall not be materially altered without its consent. When directed by the Sponsor or if the Trustee in its discretion determines
that it is in the best interest of the Shareholders to do so and with the written approval of the Sponsor (which approval shall not be
unreasonably withheld or delayed), the Trustee shall appoint a substitute or additional custodian or custodians, which shall thereafter
be one of the custodians under the Trust Agreement. The Trustee shall not enter into or amend any custody agreement with a custodian
without the written approval of the Sponsor (which approval shall not be unreasonably withheld or delayed). When instructed by the Sponsor,
the Trustee shall demand that a custodian of the Trust deliver such of the Trust’s silver held by it as is requested of it to any
other custodian or such substitute or additional custodian or custodians directed by the Sponsor. Each such substitute or additional
custodian shall, forthwith upon its appointment, enter into a custody agreement in form and substance approved by the Sponsor.
The
Sponsor will appoint accountants or other inspectors to audit or examine the accounts and operations of the Custodian and any successor
custodian or additional custodian at such times as directed by the Sponsor as permitted by the Custody Agreements and for enforcing the
obligations of each such custodian as is necessary to protect the Trust and the rights and interests of the Shareholders. The Trustee
has no obligation to monitor the activities of any Custodian other than to receive and review such reports of the silver held for the
Trust by such Custodian and of transactions in silver held for the account of the Trust made by such Custodian pursuant to the Custody
Agreements. See “The Trustee—The Trustee’s Role” for a description of limitations on the ability of the Trustee
to monitor the performance of the Custodian. In the event that the Sponsor determines that the maintenance of silver with a particular
custodian is not in the best interests of the Shareholders, the Sponsor will direct the Trustee to initiate action to remove the silver
from the custody of such custodian or take such other action as the Trustee determines appropriate to safeguard the interests of the
Shareholders. The Trustee shall have no liability for any such action taken at the direction of the Sponsor or, in the absence of such
direction, any action taken by it in good faith. The Trustee’s only contractual rights are to direct the Custodian pursuant to
the Custody Agreements.
Valuation
of Silver, Definition of Net Asset Value and Adjusted Net Asset Value
On
each day that the NYSE Arca is open for regular trading, as promptly as practicable after 4:00 p.m., New York time, on such day (Evaluation
Time), the Trustee evaluates the silver 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 silver on the basis of that day’s LBMA Silver Price or, if no LBMA Silver
Price is made on such day or has not been announced by the Evaluation Time, the next most recent LBMA Silver Price 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 event
the Sponsor determines that the applicable LBMA Silver Price or such other publicly available price as the Sponsor may deem fairly represents
the commercial value of the Trust’s silver is not an appropriate basis for evaluation of the Trust’s silver, it shall identify
an alternative basis for such evaluation to be employed by the Trustee. Neither the Trustee nor the Sponsor shall be liable to any person
for the determination that the LBMA Silver Price or such other publicly available price is not appropriate as a basis for evaluation
of the Trust’s silver or for any determination as to the alternative basis for such evaluation provided that such determination
is made in good faith. See “Operation of the Silver Bullion Market—The Silver Bullion Market” for a description of
the LBMA Silver Price.
Once
the value of the silver has been determined, the Trustee subtracts all estimated accrued fees (other than the fees accruing for such
day on which the valuation takes place computed by reference to the value of the Trust or its assets), expenses and other liabilities
of the Trust from the total value of the silver and any other assets of the Trust. The resulting figure is the ANAV of the Trust. The
ANAV of the Trust is used to compute the Sponsor’s Fee.
All
fees accruing for the day on which the valuation takes place computed by reference to the value of the Trust or its assets are calculated
using the ANAV calculated for such day on which the valuation takes place. The Trustee shall subtract from the ANAV the amount of accrued
fees so computed for such day and the resulting figure is the NAV of the Trust. The Trustee also determines the NAV per Share by dividing
the NAV of the Trust by the number of the Shares outstanding as of the close of trading on the NYSE Arca (which includes the net number
of any Shares created or redeemed on such evaluation day).
Any
estimate of the accrued but unpaid fees, expenses and liabilities of the Trust for purposes of computing the NAV of the Trust and ANAV
made by the Trustee in good faith shall be conclusive upon all persons interested in the Trust and no revision or correction in any computation
made under the Trust Agreement will be required by reason of any difference in amounts estimated from those actually paid.
The
Sponsor and the Shareholders may rely on any evaluation furnished by the Trustee, and the Sponsor has no responsibility for the evaluation’s
accuracy. The determinations the Trustee makes will be made in good faith upon the basis of, and the Trustee will not be liable for any
errors contained in, information reasonably available to it. The Trustee will not be liable to the Sponsor, DTC, Authorized Participants,
the Shareholders or any other person for errors in judgment. However, the preceding liability exclusion will not protect the Trustee
against any liability resulting from bad faith or gross negligence in the performance of its duties.
Other
Expenses
If
at any time, other expenses are incurred outside the daily business of the Trust and the Sponsor’s Fee, the Trustee will at the
direction of the Sponsor or in its own discretion sell the Trust’s silver as necessary to pay such expenses. The Trust shall not
bear any expenses incurred in connection with the issuance and distribution of the securities being registered. These expenses shall
be paid by the Sponsor.
Sales
of Silver
The
Trustee will at the direction of the Sponsor or, in the absence of such direction, may, in its discretion, sell the Trust’s silver
as necessary to pay the Trust’s expenses not otherwise assumed by the Sponsor. The Trustee will not sell silver to pay the Sponsor’s
Fee. The Sponsor’s Fee is paid through delivery of silver from the Trust Unallocated Account that had been de-allocated from the
Trust Allocated Account for this purpose. When selling silver to pay other expenses, the Trustee is authorized to sell the smallest amounts
of silver needed to pay expenses in order to minimize the Trust’s holdings of assets other than silver. The Trustee places orders
with dealers (which may include the Custodian) as directed by the Sponsor or, in the absence of such direction, with dealers through
which the Trustee may reasonably expect to obtain a favorable price and good execution of orders. The Custodian may be the purchaser
of such only if the sale transaction is made at the next LBMA Silver Price or such other publicly available price that the Sponsor deems
fair, in each case as set following the sale order. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by
reason of any sale. See “United States Federal Income Tax Consequences—Taxation of US Shareholders” for information
on the tax treatment of silver sales.
The
Trustee will also sell the Trust’s silver if the Sponsor notifies the Trustee that sale is required by applicable law or regulation
or in connection with the termination and liquidation of the Trust. The Trustee will not be liable or responsible in any way for depreciation
or loss incurred by reason of any sale of silver directed by the Sponsor.
Any
property received by the Trust other than silver, cash or an amount receivable in cash (such as, for example, an insurance claim) will
be promptly sold or otherwise disposed of by the Trustee at the direction of the Sponsor.
The
Securities Depository; Book Entry-Only System; Global Security
DTC
acts as securities depository for the Shares. DTC is a limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code,
and a “clearing agency” registered pursuant to the provisions of section 17A of the Exchange Act. DTC was created to hold
securities of DTC Participants and to facilitate the clearance and settlement of transactions in such securities among the DTC Participants
through electronic book-entry changes. This eliminates the need for physical movement of securities certificates. DTC Participants include
securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly. DTC is expected to agree
with and represent to the DTC Participants that it will administer its book-entry system in accordance with its rules and by-laws and
the requirements of law.
Individual
certificates will not be issued for the Shares. Instead, one or more global certificates are signed by the Trustee on behalf of the Trust,
registered in the name of Cede & Co., as nominee for DTC, and deposited with the Trustee on behalf of DTC. The global certificates
evidence all of the Shares outstanding at any time. The representations, undertakings and agreements made on the part of the Trust in
the global certificates are made and intended for the purpose of binding only the Trust and not the Trustee or the Sponsor individually.
Upon
the settlement date of any creation, transfer or redemption of Shares, DTC credits or debits, on its book-entry registration and transfer
system, the amount of the Shares so created, transferred or redeemed to the accounts of the appropriate DTC Participants. The Trustee
and the Authorized Participants designate the accounts to be credited and charged in the case of creation or redemption of Shares.
Beneficial
ownership of the Shares is limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants
and Indirect Participants. Owners of beneficial interests in the Shares are shown on, and the transfer of ownership is effected only
through, records maintained by DTC (with respect to DTC Participants), the records of DTC Participants (with respect to Indirect Participants),
and the records of Indirect Participants (with respect to Shareholders that are not DTC Participants or Indirect Participants). Shareholders
are expected to receive from or through the DTC Participant maintaining the account through which the Shareholder has purchased their
Shares a written confirmation relating to such purchase.
Shareholders
that are not DTC Participants may transfer the Shares through DTC by instructing the DTC Participant or Indirect Participant through
which the Shareholders hold their Shares to transfer the Shares. Shareholders that are DTC Participants may transfer the Shares by instructing
DTC in accordance with the rules of DTC. Transfers are made in accordance with standard securities industry practice.
DTC
may decide to discontinue providing its service with respect to Baskets and/or the Shares by giving notice to the Trustee and the Sponsor.
Under such circumstances, the Sponsor will find a replacement for DTC to perform its functions at a comparable cost or, if a replacement
is unavailable, the Trustee will terminate the Trust.
The
rights of the Shareholders generally must be exercised by DTC Participants acting on their behalf in accordance with the rules and procedures
of DTC. Because the Shares can only be held in book entry form through DTC and DTC Participants, investors must rely on DTC, DTC Participants
and any other financial intermediary through which they hold the Shares to receive the benefits and exercise the rights described in
this section. Investors should consult with their broker or financial institution to find out about procedures and requirements for securities
held in book entry form through DTC.
Share
Splits
If
the Sponsor believes that the per Share price in the secondary market for Shares has fallen outside a desirable trading price range,
the Sponsor may direct the Trustee to declare a split or reverse split in the number of Shares outstanding and to make a corresponding
change in the number of Shares constituting a Basket.
Books
and Records
The
Trustee will keep proper books of record and account of the Trust at its office located in New York or such office as it may subsequently
designate. These books of record are open to inspection by any person who establishes to the Trustee’s satisfaction that such person
is a Shareholder at all reasonable times during the usual business hours of the Trustee.
The
Trustee will keep a copy of the Trust Agreement on file in its office which is available for inspection at all reasonable times during
its usual business hours by any Shareholder.
Statements,
Filings and Reports
After
the end of each fiscal year, the Sponsor causes to be prepared an annual report for the Trust containing audited financial statements.
The annual report is in such form and contains such information as is required by applicable laws, rules and regulations and may contain
such additional information which the Sponsor determines shall be included. The annual report shall be filed with the SEC and the NYSE
Arca and shall be distributed to such persons and in such manner, as shall be required by applicable laws, rules and regulations.
The
Sponsor is responsible for the registration and qualification of the Shares under the federal securities laws and any other securities
and blue sky laws of the US or any other jurisdiction as the Sponsor may select. The Sponsor will also prepare, or cause to be prepared,
and file any periodic reports or updates required under the Exchange Act. The Trustee will assist and support the Sponsor in the preparation
of such reports.
The
accounts of the Trust are audited, as required by law and as may be directed by the Sponsor, by independent registered public accountants
designated from time to time by the Sponsor. The accountant’s report will be furnished by the Trustee to Shareholders upon request.
The
Trustee will make such elections, file such tax returns, and prepare, disseminate and file such tax reports, as it is advised by its
counsel or accountants or as required from time to time by any applicable statute, rule or regulation.
Fiscal
Year
The
fiscal year of the Trust is the 12-month period ending December 31 of each year. The Sponsor may select an alternate fiscal year.
Termination
of the Trust
The
Trustee will set a date on which the Trust shall terminate and mail notice of the termination to the Shareholders at least 30 days prior
to the date set for termination if any of the following occurs:
| ● |
The
Trustee is notified that the Shares are delisted from the NYSE Arca and are not approved for listing on another national securities
exchange within five business days of their delisting; |
| |
|
| ● |
Shareholders
acting in respect of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust; |
| |
|
| ● |
60
days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign and a successor trustee has not
been appointed and accepted its appointment; |
| |
|
| ● |
The
SEC determines that the Trust is an investment company under the Investment Company Act of 1940 and the Trustee has actual knowledge
of such SEC determination; |
| |
|
| ● |
The
aggregate market capitalization of the Trust, based on the closing price for the Shares, was less than $350 million (as adjusted
for inflation) at any time after the first anniversary after the Trust’s formation and the Trustee receives, within six months
after the last of those trading days, notice from the Sponsor of its decision to terminate the Trust; |
| |
|
| ● |
The
CFTC determines that the Trust is a commodity pool under the CEA and the Trustee has actual knowledge of that determination; |
| |
|
| ● |
The
Trust fails to qualify for treatment, or ceases to be treated, for US federal income tax purposes, as a grantor trust, and the Trustee
receives notice from the Sponsor that the Sponsor determines that, because of that tax treatment or change in tax treatment, termination
of the Trust is advisable; |
| ● |
60
days have elapsed since DTC ceases to act as depository with respect to the Shares and the Sponsor has not identified another depository
which is willing to act in such capacity; or |
| |
|
| ● |
The
Trustee elects to terminate the Trust after the Sponsor is deemed conclusively to have resigned effective immediately as a result
of the Sponsor being adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property being appointed, or a trustee
or liquidator or any public officer taking charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation. |
On
and after the date of termination of the Trust, the Shareholders will, upon (1) surrender of Shares then held, (2) payment of the fee
of the Trustee for the surrender of Shares, and (3) payment of any applicable taxes or other governmental charges, be entitled to delivery
of the amount of Trust assets represented by those Shares. The Trustee shall not accept any deposits of silver after the date of termination.
If any Shares remain outstanding after the date of termination, the Trustee thereafter shall discontinue the registration of transfers
of Shares, shall not make any distributions to Shareholders, and shall not give any further notices or perform any further acts under
the Trust Agreement, except that the Trustee will continue to collect distributions pertaining to Trust assets and hold the same uninvested
and without liability for interest, pay the Trust’s expenses and sell silver as necessary to meet those expenses and will continue
to deliver Trust assets, together with any distributions received with respect thereto and the net proceeds of the sale of any other
property, in exchange for Shares surrendered to the Trustee (after deducting or upon payment of, in each case, the fee of the Trustee
for the surrender of Shares, any expenses for the account of the Shareholders in accordance with the terms and conditions of the Trust
Agreement, and any applicable taxes or other governmental charges).
At
any time after the expiration of 90 days following the date of termination of the Trust, the Trustee may sell the Trust assets then held
under the Trust Agreement and may thereafter hold the net proceeds of any such sale, together with any other cash then held by the Trustee
under the Trust Agreement, without liability for interest, for the pro rata benefit of the Shareholders that have not theretofore surrendered
their Shares. After making such sale, the Trustee shall be discharged from all obligations under the Trust Agreement, except to account
for such net proceeds and other cash (after deducting, in each case, any fees, expenses, taxes or other governmental charges payable
by the Trust, the fee of the Trustee for the surrender of Shares and any expenses for the account of the Shareholders in accordance with
the terms and conditions of the Trust Agreement, and any applicable taxes or other governmental charges). Upon the termination of the
Trust, the Sponsor shall be discharged from all obligations under the Trust Agreement except for its certain obligations to the Trustee
that survive termination of the Trust Agreement.
Amendments
The
Trustee and the Sponsor may amend any provisions of the Trust Agreement without the consent of any Shareholder. Any amendment that imposes
or increases any fees or charges (other than taxes and other governmental charges, registration fees or other such expenses), or that
otherwise prejudices any substantial existing right of the Shareholders will not become effective as to outstanding Shares until 30 days
after notice of such amendment is given to the Shareholders. Amendments to allow redemption for quantities of silver smaller or larger
than a Basket or to allow for the sale of silver to pay cash proceeds upon redemption shall not require notice pursuant to the preceding
sentence. Every Shareholder, at the time any amendment so becomes effective, shall be deemed, by continuing to hold any Shares or an
interest therein, to consent and agree to such amendment and to be bound by the Trust Agreement as amended thereby. In no event shall
any amendment impair the right of the Shareholder to surrender Baskets and receive therefor the amount of Trust assets represented thereby,
except in order to comply with mandatory provisions of applicable law.
On
September 20, 2018, the Sponsor entered into an amendment to the Trust Agreement with the Trustee (the “2018 DTA Amendment”),
effective as of October 1, 2018. The 2018 DTA Amendment reflects the changed name of the Trust from ETFS Silver Trust to Aberdeen Standard
Silver ETF Trust, the changed name of the Shares from ETFS Physical Silver Shares to Aberdeen Standard Physical Silver Shares ETF, and
the changed name of the Sponsor from ETF Securities USA LLC to Aberdeen Standard Investments ETFs Sponsor LLC. On
March 8, 2022, the Sponsor entered into an amendment to the Trust Agreement with the Trustee (the “2022 DTA Amendment”,
and together with the 2018 DTA Amendment, the “DTA Amendments”) as approved and directed by the Sponsor on behalf of the
Trust. The 2022 DTA Amendment reflects (1) the changes in the name of the Trust, effective March
31, 2022, from Aberdeen Standard Silver ETF Trust to abrdn Silver ETF Trust and the change in the name of Shares, effective March 31,
2022, from Aberdeen Standard Physical Silver Shares ETF to abrdn Physical Silver Shares ETF; and (2) the change in the name of the Sponsor
from “Aberdeen Standard Investments ETFs Sponsor LLC” to “abrdn ETFs Sponsor LLC,” which occurred on March 1,
2022. No other material changes to the Trust Agreement were made in connection with the DTA Amendment.
Governing
Law; Consent to New York Jurisdiction
The
Trust Agreement, and the rights of the Sponsor, the Trustee, DTC (as registered owner of the Trust’s global certificates for Shares)
and the Shareholders under the Trust Agreement, are governed by the laws of the State of New York. The Sponsor, the Trustee and each
Authorized Participant by its delivery of an Authorized Participant Agreement and each Shareholder by accepting a Share, consents to
the jurisdiction of the courts of the State of New York and any federal courts located in the borough of Manhattan in New York City.
Such consent in not required for any person to assert a claim of New York jurisdiction over the Sponsor or the Trustee.
UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES
The
following discussion of the material US federal income tax consequences that generally applies to the purchase, ownership and disposition
of Shares by a US Shareholder, 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 represents, insofar as it describes conclusions as to US federal income tax law and subject to the
limitations and qualifications described below, the opinion of Dechert LLP, counsel to the Sponsor and special US tax counsel to the
Trust. An opinion of counsel, however, is not binding on the United States Internal Revenue Service (IRS) or on the courts, and does
not preclude the IRS from taking a contrary position. 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 prospectus 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 US 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.
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 (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 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 in 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 silver 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 silver delivered in exchange therefor
(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.
When
the Trust sells or transfers silver, 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 silver 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 silver 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 silver sold, and the denominator of which is the total amount of the silver held in the Trust immediately prior to the sale. After
any such sale, a Shareholder’s tax basis for its pro rata share of the silver 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 silver 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 silver
held in the Trust at the time of the sale. Accordingly, the Shareholder generally will recognize 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 silver represented by the Shares redeemed generally
will not be a taxable event to the Shareholder. The Shareholder’s tax basis for the silver 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 silver received should include the period during which the Shareholder held the Shares redeemed. A subsequent sale of the silver
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
current law, gains recognized by individuals, estates or trusts from the sale of “collectibles,” including silver bullion,
held for more than one year are taxed at a maximum federal income tax rate of 28%, rather than the 20% rate applicable to most other
long-term capital gains. For these purposes, gains recognized by an individual upon the sale of Shares held for more than one year, or
attributable to the Trust’s sale of any silver bullion which the Shareholder is treated (through its ownership of Shares) as having
held for more than one year, generally will be taxed at a maximum rate of 28%. The tax rates for capital gains recognized upon the sale
of assets held by an individual US Shareholder for one year or less or by a corporate taxpayer are generally the same as those at which
ordinary income is taxed.
In
addition, high-income individuals and certain trusts and estates are subject to a 3.8% Medicare contribution tax that is imposed on net
investment income and gain. Shareholders should consult their tax advisor regarding this tax.
Brokerage
Fees and Trust Expenses
Any
brokerage or other transaction fees incurred by a Shareholder in purchasing Shares is treated as part of the Shareholder’s tax
basis in the Shares. Similarly, any brokerage fee incurred by a Shareholder in selling Shares reduces the amount realized by the Shareholder
with respect to the sale.
Shareholders
will be required to recognize a gain or loss upon a sale of silver by the Trust (as discussed above), even though some or all of the
proceeds of such sale are used by the Trustee to pay Trust expenses. Shareholders may deduct their respective pro rata share of each
expense incurred by the Trust to the same extent as if they directly incurred the expense. Shareholders who are individuals, estates
or trusts, however, may be required to treat some or all of the expenses of the Trust, to the extent that such expenses may be deducted,
as miscellaneous itemized deductions. Miscellaneous itemized deductions, including expenses for the production of income, will not be
deductible for either regular federal income tax or alternative minimum tax purposes for taxable years before January 1, 2026, and thereafter
generally are (i) deductible only to the extent that the aggregate of a Shareholder’s miscellaneous itemized deductions exceeds
2% of such Shareholder’s adjusted gross income for federal income tax purposes, (ii) not deductible for purposes of the alternative
minimum tax and (iii) are subject to the overall limitation on itemized deductions under the Code.
Investment
by Regulated Investment Companies
Mutual
funds and other investment vehicles which are “regulated investment companies” within the meaning of Code section 851 should
consult with their tax advisors concerning (1) the likelihood that an investment in Shares, although they are a “security”
within the meaning of the Investment Company Act of 1940, may be considered an investment in the underlying silver for purposes of Code
section 851(b), and (2) the extent to which an investment in Shares might nevertheless be consistent with preservation of their qualification
under Code section 851. In administrative guidance, the IRS stated that it will no longer issue rulings under Code section 851(b) relating
to the determination of whether or not an instrument or position is a “security”, but, instead, intends to defer to guidance
from the SEC for such determination.
United
States Information Reporting and Backup Withholding Tax for US and Non-US Shareholders
The
Trustee or the appropriate broker will file certain information returns with the IRS, and provides certain tax-related information to
Shareholders, in accordance with applicable Treasury Regulations. Each Shareholder will be provided with information regarding its allocable
portion of the Trust’s annual income (if any) and expenses.
A
US Shareholder may be subject to US backup withholding tax in certain circumstances unless it provides its taxpayer identification number
and complies with certain certification procedures. Non-US Shareholders may have to comply with certification procedures to establish
that they are not a US person in order to avoid the backup withholding tax.
The
amount of any backup withholding tax will be allowed as a credit against a Shareholder’s US federal income tax liability and may
entitle such a Shareholder to a refund, provided that the required information is furnished to the IRS.
Income
Taxation of Non-US Shareholders
The
Trust does not expect to generate taxable income except for gains (if any) upon the sale of silver. A Non-US Shareholder generally is
not subject to US federal income tax with respect to gains recognized upon the sale or other disposition of Shares, or upon the sale
of silver by the Trust, unless (1) the Non-US Shareholder is an individual and is present in the United States for 183 days or more during
the taxable year of the sale or other disposition, and the gain is treated as being from United States sources; or (2) the gain is effectively
connected with the conduct by the Non-US Shareholder of a trade or business in the United States.
Taxation
in Jurisdictions other than the United States
Prospective
purchasers of Shares that are based in or acting out of a jurisdiction other than the United States are advised to consult their own
tax advisers as to the tax consequences, under the laws of such jurisdiction (or any other jurisdiction not being the United States to
which they are subject), of their purchase, holding, sale and redemption of or any other dealing in Shares and, in particular, as to
whether any value added tax, other consumption tax or transfer tax is payable in relation to such purchase, holding, sale, redemption
or other dealing.
ERISA
AND RELATED CONSIDERATIONS
The
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or Code section 4975 impose certain requirements
on certain employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities, Keogh
plans, and certain commingled investment vehicles or insurance company general or separate accounts in which such plans or arrangements
are invested (collectively, “Plans”), and on persons who are fiduciaries with respect to the investment of “plan assets”
of a Plan. Government plans and some church plans are not subject to the fiduciary responsibility provisions of ERISA or the provisions
of section 4975 of the Code, but may be subject to substantially similar rules under other federal law, or under state or local law (“Other
Law”).
In
contemplating an investment of a portion of Plan assets in Shares, the Plan fiduciary responsible for making such investment should carefully
consider, taking into account the facts and circumstances of the Plan and the “Risk Factors” discussed above and whether
such investment is consistent with its fiduciary responsibilities under ERISA or Other Law, including, but not limited to: (1) whether
the investment is permitted under the plan’s governing documents, (2) whether the fiduciary has the authority to make the investment,
(3) whether the investment is consistent with the plan’s funding objectives, (4) the tax effects of the investment on the Plan,
and (5) whether the investment is prudent considering the factors discussed in this prospectus. In addition, ERISA and Code section 4975
prohibit a broad range of transactions involving assets of a plan and persons who are “parties in interest” under ERISA or
“disqualified persons” under section 4975 of the Code. A violation of these rules may result in the imposition of significant
excise taxes and other liabilities. Plans subject to Other Law may be subject to similar restrictions.
It
is anticipated that the Shares will constitute “publicly offered securities” as defined in the Department of Labor “Plan
Asset Regulations,” §2510.3-101 (b)(2) as modified by section 3(42) of ERISA. Accordingly, pursuant to the Plan Asset Regulations,
only Shares purchased by a Plan, and not an interest in the underlying assets held in the Trust, should be treated as assets of the Plan,
for purposes of applying the “fiduciary responsibility” rules of ERISA and the “prohibited transaction” rules
of ERISA and the Code. Fiduciaries of plans subject to Other Law should consult legal counsel to determine whether there would be a similar
result under the Other Law.
Investment
by Certain Retirement Plans
Code
section 408(m) provides that the acquisition of a “collectible” by an individual retirement account (“IRA”) or
a participant-directed account maintained under any plan that is tax-qualified under Code section 401(a) (“Tax Qualified Account”)
is treated as a taxable distribution from the account to the owner of the IRA, or to the participant for whom the Tax Qualified Account
is maintained, of an amount equal to the cost to the account of acquiring the collectible. The term “collectible” is defined
to include, with certain exceptions, “any metal or gem.” The IRS has issued several private letter rulings to the effect
that a purchase by an IRA, or by a participant-directed account under a Code section 401(a) plan, of publicly-traded shares in a trust
holding precious metals will not be treated as resulting in a taxable distribution to the IRA owner or Tax Qualified Account participant
under Code section 408(m). However, the private letter rulings provide that if any of the Shares so purchased are distributed from the
IRA or Tax Qualified Account to the IRA owner or plan participant, or if any precious metal is received by such IRA or plan account upon
the redemption of any of the Shares purchased by it, the Shares or precious metal so distributed will be subject to federal income tax
in the year of distribution, to the extent provided under the applicable provisions of Code sections 408(d), 408(m) or 402. Accordingly,
potential IRA or Tax Qualified Account investors are urged to consult with their own professional advisors concerning the treatment of
an investment in Shares under Code section 408(m).
PLAN
OF DISTRIBUTION
The
Trust issues Shares in Baskets to Authorized Participants in exchange for deposits of silver on a continuous basis. The Trust does not
issue fractions of a Basket. Because new Shares can be created and issued on an ongoing basis, at any point during the life of the Trust,
a “distribution,” as such term is used in the Securities Act, will be occurring. Broker-dealers and other persons are cautioned
that some of their activities will result in their being deemed participants in a distribution in a manner which would render them statutory
underwriters and subject them to the prospectus-delivery and liability provisions of the Securities Act. For example, a broker-dealer
firm or its client will be deemed a statutory underwriter if it purchases a Basket from the Trust, breaks the Basket down into the constituent
Shares and sells the Shares directly to its customers; or if it chooses to couple the creation of a supply of new Shares with an active
selling effort involving solicitation of secondary market demand for the Shares. A determination of whether a particular market participant
is an underwriter must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client
in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could
lead to designation as an underwriter.
Investors
that purchase Shares through a commission/fee-based brokerage account may pay commissions/fees charged by the brokerage account. We recommend
that investors review the terms of their brokerage accounts for details on applicable charges.
Dealers
that are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary trading transactions),
and thus dealing with Shares that are part of an “unsold allotment” within the meaning of section 4(a)(3)(C) of the Securities
Act, would be unable to take advantage of the prospectus-delivery exemption provided by section 4(a)(3) of the Securities Act.
The
Sponsor intends to qualify the Shares in states selected by the Sponsor and that sales be made through broker-dealers who are members
of FINRA. Investors intending to create or redeem Baskets through Authorized Participants in transactions not involving a broker-dealer
registered in such investor’s state of domicile or residence should consult their legal advisor regarding applicable broker-dealer
or securities regulatory requirements under the state securities laws prior to such creation or redemption.
The
offering of Baskets is being made in compliance with applicable rules of FINRA. The Authorized Participants will not receive from the
Trust or the Sponsor any compensation in connection with an offering of the Shares. Accordingly, there is, and will be, no payment of
underwriting compensation in connection with any such offering of Shares in excess of 10% of the gross proceeds of the offering.
Pursuant
to a Marketing Agent Agreement (the “Agent Agreement”) between ALPS Distributors, Inc. (the “Marketing Agent”)
and the Sponsor, the Marketing Agent provides marketing services under contract to the Sponsor and is paid by the Sponsor a certain amount
per annum, plus any fees or disbursements incurred by the Marketing Agent in connection with marketing of the Trust and its Shares. The
Trust is not responsible for the payment of any amounts to the Marketing Agent. The Sponsor and its parent, abrdn Inc., are solely responsible
for the payment of the amounts due to the Marketing Agent under the Agent Agreement.
On
September 20, 2018, the Agent Agreement was novated from ETF Securities (US) LLC (formerly known as ETFS Marketing LLC) to the Sponsor.
See
“Creation and Redemption of Shares” for additional information about the Trust’s procedures for issuance of Shares
in Baskets.
Under
the Agent Agreement, the Marketing Agent provides the following services to the Sponsor:
| |
● |
Review
marketing related legal documents and contracts; |
| |
|
|
| |
● |
Consult
with the Sponsor on the development of FINRA-compliant marketing campaigns; |
| |
|
|
| |
● |
Consult
with the Trust’s legal counsel on free-writing prospectus materials and disclosures in all marketing materials; |
| |
|
|
| |
● |
Review
and file with FINRA marketing materials that are not free-writing prospectus materials; |
| |
|
|
| |
● |
Register
and oversee supervisory activities of FINRA-licensed personnel; and |
| |
|
|
| |
● |
Maintain
books and records related to the services provided. |
| |
|
|
| |
The
Shares trade on the NYSE Arca under the symbol “SIVR.” |
LEGAL
MATTERS
The
validity of the Shares has been passed upon for the Sponsor by Dechert LLP, Washington, DC, who, as special US tax counsel to the Trust,
also rendered an opinion regarding the material US federal income tax consequences relating to the Shares.
EXPERTS
The
financial statements of the Trust as of December 31, 2022, and management’s assessment of the effectiveness of internal control
over financial reporting as of December 31, 2022 have been incorporated by reference herein and in the registration statement in reliance
upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon authority of
said firm as experts in accounting and auditing.
VALUATION
OF SILVER
At
the time of the Trust’s inception, the Sponsor determined that the Trust was not an investment company within the scope of Financial
Accounting Standards Board (FASB) Codification of Accounting Standards, Topic 946, Financial Services—Investment Companies (Topic
946). Consequently, the Trust did not prepare the disclosures applicable to investment companies under Topic 946, including the presentation
of its silver assets at “fair value” as defined in Topic 946. Instead, the Trust valued its silver assets at the lower of
cost or fair value in accordance with ASC 330, Inventory and ASC 270, Interim Reporting.
Following
the release of FASB Accounting Standards Update ASU 2013-08, Financial Services—Investments Companies (Topic 946): Amendments to
the Scope, Measurement and Disclosure Requirements, the Sponsor re-evaluated whether the Trust met the revised definition of an investment
company and has concluded that for reporting purposes, the Trust is classified as an investment company. 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.
As
a result of the change in the evaluation of investment company status, the Trust has, from January 1, 2014, presented its silver assets
at “fair value” as defined in FASB ASC Topic 820, Fair Value Measurements and Disclosures.
INCORPORATION
BY REFERENCE OF CERTAIN DOCUMENTS
This
prospectus is a part of a registration statement on Form S-3 filed by the Sponsor with the SEC under the Securities Act of 1933. As permitted
by the rules and regulations of the SEC, this prospectus does not contain all of the information contained in the registration statement
and the exhibits and schedules thereto. For further information about the Trust and about the securities offered hereby, you should consult
the registration statement and the exhibits and schedules thereto. You should be aware that statements contained in this prospectus concerning
the provisions of any documents filed as an exhibit to the registration statement or otherwise filed with the SEC are not necessarily
complete, and in each instance reference is made to the copy of such document as so filed.
The
SEC allows the “incorporation by reference” of information into this prospectus, which means that information may be disclosed
to you by referring you to other documents filed or which will be filed with the SEC. The following documents filed or to be filed by
the Trust are so incorporated by reference:
| 1. |
|
|
|
Annual
Report on Form 10-K for the fiscal year ended
December 31, 2022 filed with the SEC on March 1, 2023 (“Form 10-K”); |
| 2. |
|
|
|
Quarterly
Report on Form 10-Q for the quarterly period
ended March 31, 2023 filed with the SEC on May 9, 2023; |
| 3. |
|
|
|
Quarterly
Report on Form 10-Q for the quarterly period
ended June 30, 2023 filed with the SEC on August 9, 2023; |
| 4. |
|
|
|
Quarterly
Report on Form 10-Q for the quarterly period
ended September 30, 2023 filed with the SEC on November 8, 2023; |
| 5. |
|
|
|
The
description of the Shares contained in the registration statement on Form 8-A filed with
the SEC on July 17, 2009. |
In
addition, unless otherwise provided therein, any reports filed by the Trust with the SEC pursuant to section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the initial filing date of the registration statement of which this prospectus forms a part
and before the termination or completion of this offering shall be deemed to be incorporated by reference in this prospectus and to be
a part of it from the filing dates of such documents and shall automatically update or replace, as applicable, any information included
in, or incorporated by reference into this prospectus.
Certain
statements in and portions of this prospectus update, modify, or replace information in the above listed documents incorporated by reference.
Likewise, statements in or portions of a future document incorporated by reference in this prospectus may update, modify or replace statements
in and portions of this prospectus or the above listed documents.
The
Trust posts on its website (www.abrdn.com/usa/etf) its Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after the Sponsor, on behalf of the Trust, electronically
files such material with, or furnishes it to, the SEC. The Trust’s website and the information contained on that site, or connected
to that site, are not incorporated into and are not a part of this prospectus. The Trust will provide to each person, including any beneficial
owner, to whom a prospectus is delivered, a copy of any and all reports or documents that have been incorporated by reference in the
prospectus but which are not delivered with the prospectus; copies of any of these documents may be obtained free of charge through the
Trust’s website or by contacting the Trust, c/o abrdn ETFs Sponsor LLC, 1900 Market Street, Suite 200, Philadelphia, PA 19103,
or by calling 844-383-7289.
You
should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized any person
to provide you with different information or to make any representation not contained in this prospectus.
WHERE
YOU CAN FIND MORE INFORMATION
The
Sponsor has filed on behalf of the Trust a registration statement on Form S-3 with the SEC under the Securities Act. This prospectus
does not contain all of the information set forth in the registration statement (including the exhibits to the registration statement),
parts of which have been omitted in accordance with the rules and regulations of the SEC. For further information about the Trust or
the Shares, please refer to the registration statement.
Information
about the Trust and the Shares can also be obtained from the Trust’s website. The internet address of the Trust’s website
is www.abrdn.com/usa/etf . This internet address is only provided here as a convenience
to you to allow you to access the Trust’s website, and the information contained on or connected to the Trust’s website is
not part of this prospectus or the registration statement of which this prospectus is part.
The
Trust is subject to the informational requirements of the Exchange Act and the Sponsor, on behalf of the Trust, will file quarterly and
annual reports and other information with the SEC.
The
SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC.
PROSPECTUS
abrdn
Silver ETF Trust
Shares
of abrdn Physical Silver Shares ETF
February 12, 2024
Abrdn Silver ETF (AMEX:SIVR)
Historical Stock Chart
From Mar 2024 to Apr 2024
Abrdn Silver ETF (AMEX:SIVR)
Historical Stock Chart
From Apr 2023 to Apr 2024
