The purpose of the iShares® Silver Trust (the “Trust”) is to
own silver transferred to the Trust in exchange for shares issued by the Trust
(“Shares”). Each Share represents a fractional undivided beneficial
interest in the net assets of the Trust. The assets of the Trust consist primarily
of silver held by the Trust’s custodian on behalf of the Trust. However,
there may be situations where the Trust will unexpectedly hold cash. For example,
a claim may arise against a third party, which is settled in cash. In situations
where the Trust unexpectedly receives cash or other assets, no new Shares will
be issued until after the record date for the distribution of such cash or other
property has passed.
The Trust was formed on April 21, 2006 when an initial deposit of silver was
made in exchange for the issuance of three Baskets (a “Basket” consists
of 50,000 Shares). The Trust is a grantor trust formed under the laws of the
State of New York.
The sponsor of the Trust is iShares Delaware Trust Sponsor LLC (the “Sponsor”),
a Delaware limited liability company and an indirect subsidiary of BlackRock,
Inc. The trustee of the Trust is The Bank of New York Mellon (the “Trustee”)
and the custodian of the Trust is JPMorgan Chase Bank N.A., London branch (the
“Custodian”). The agreement between the Trust and the Custodian
is governed by English law. The Trust does not have any officers, directors
or employees.
The Trust’s net asset value fell from $5,260,801,879 at December 31, 2014
to $4,391,943,604 at December 31, 2015, the Trust’s fiscal year end. Outstanding
Shares of the Trust fell from 344,000,000 Shares outstanding at December 31,
2014 to 333,550,000 Shares outstanding at December 31, 2015.
The activities of the Trust are limited to (1) issuing Baskets in exchange for
the silver deposited with the Custodian as consideration, (2) selling silver
as necessary to cover the Sponsor’s fee, 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.
The Trust seeks to reflect generally the performance of the price of silver.
The Trust seeks to reflect such performance before payment of the Trust’s
expenses and liabilities. 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. Traditionally, such expense and complications have resulted in
investments in physical silver being efficient only in amounts beyond the reach
of many investors. The Shares have been designed to remove the obstacles represented
by the expense and complications involved in an investment in physical silver,
while at the same time having an intrinsic value that reflects, at any given
time, the price of the silver owned by the Trust at such time, less the Trust’s
expenses and liabilities. Although the Shares are not the exact equivalent of
an investment in silver, they provide investors with an alternative that allow
a level of participation in the silver market through the securities market.
An investment in Shares is:
Backed by silver held by the Custodian on behalf of the Trust.
The Shares are backed by the assets of the Trust. The Trustee’s arrangements
with the Custodian contemplate that at the end of each business day there can
be in the Trust account maintained by the Custodian no more than 1,100 ounces
of silver in an unallocated form. The bulk of the Trust’s silver holdings
is represented by physical silver, identified on the Custodian’s books
in allocated and unallocated accounts on behalf of the Trust and held by the
Custodian in England, New York and other locations that may be authorized in
the future.
As accessible and easy to handle as any other investment in shares.
Retail investors may purchase and sell Shares through traditional brokerage
accounts. Because the intrinsic value of each Share is a function of the price
of silver held by the Trust, the cash outlay necessary for an investment in
Shares should be less than the amount required for currently existing means
of investing in physical silver. Shares are eligible for margin accounts.
Listed.
The Shares are listed and trade on NYSE Arca, Inc. (“NYSE Arca”)
under the symbol “SLV.”
Relatively cost efficient.
Because the expenses involved in an investment in physical silver are dispersed
among all holders of Shares, an investment in Shares may represent a cost-efficient
alternative to investments in silver for investors not otherwise in a position
to participate directly in the market for physical silver.
While the Trust seeks to reflect generally the performance of the price of
silver less the Trust’s expenses and liabilities, Shares may trade at,
above or below their net asset value per Share, or “NAV.” The NAV
of Shares will fluctuate with changes in the market value of the Trust’s
assets. The trading prices of Shares will fluctuate in accordance with changes
in their NAV, as well as market supply and demand. The amount of the discount
or premium in the trading price relative to the NAV may be influenced by non-concurrent
trading hours between the major silver markets and NYSE Arca. While the Shares
trade on NYSE Arca until 4:00 p.m. (New York time), liquidity in the market
for silver may be reduced after the close of the major world silver markets,
including London, Zurich and the Commodity Exchange, Inc. (“COMEX”)
in Chicago. As a result, during this time, trading spreads, and the resulting
premium or discount, on Shares may widen. However, given that Baskets of Shares
can be created and redeemed in exchange for the underlying amount of silver,
the Sponsor believes that the arbitrage opportunities may provide a mechanism
to mitigate the effect of such premium or discount.
