Public Offering Registration - ISHARES SILVER TRUST - 6-17-2005 by SLV-Agreements

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As filed with the Securities and Exchange Commission on June 17, 2005 Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

iSHARES SILVER TRUST
®

SPONSORED BY BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)

New York
(State or other jurisdiction of incorporation or organization)

6189
(Primary Standard Industrial Classification Code Number)

N/A
(I.R.S. Employer Identification No.)

c/o Barclays Global Investors International Inc. 45 Fremont Street San Francisco, CA 94105 Attn: BGI’s Product Management Team, Intermediary Investors and Exchange-Traded Products Department (415) 597-2000
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Barclays Global Investors International Inc. 45 Fremont Street San Francisco, CA 94105 Attn: BGI’s Product Management Team, Intermediary Investors and Exchange-Traded Products Department (415) 597-2000
(Name, address, including zip code, and telephone number, including area code, of agent for service)

David Yeres, Esq. Clifford Chance US LLP 31 West 52nd Street New York, NY 10019

Copies to: Ira Shapiro, Esq. Barclays Global Investors, N.A. 45 Fremont Street San Francisco, CA 94105

Sara Hanks Clifford Chance US LLP 2001 K Street, NW Washington, DC 20006

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  CALCULATION OF REGISTRATION FEE
Title of each Class of Securities to be Registered Amount to be Proposed Maximum Proposed Maximum Amount of Registration

Registered

Offering Price Per iShare (1)

Aggregate Offering Price (1)

Fee

iShares 13,000,000 $ 72 $ 936,000,000 $ 110,167.20 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(d) under the Securities Act of 1933. The initial amount of silver to be deposited in exchange for a Basket of iShares (a Basket consists of 50,000 iShares) is 500,000 ounces of silver, equivalent to 10 ounces per iShare. The price of silver used to calculate the proposed maximum offering price per share is based upon the London Fix on June 13, 2005 ($7.20 per ounce of silver). (London Fix is the price for an ounce of silver set by three market making members of the London Bullion Market Association at approximately 12:00 noon, London time on each working day). The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and the Sponsor and the Initial Purchaser are not soliciting an offer to purchase these securities, in any jurisdiction where the offer or sale is not permitted. PRELIMINARY, Subject to Completion [ • ], 2005

13,000,000 iShares

®

iShares Silver Trust
The iShares Silver Trust issues shares representing fractional undivided beneficial interests in its net assets. The assets of the trust consist primarily of silver held by the custodian on behalf of the trust. The objective of the trust is for the shares of the trust, called ―iShares ‖, to reflect the price of silver owned by the trust less the trust‘s expenses and liabilities. The iShares are listed and trade on the American Stock Exchange (the ―AMEX‖) under the symbol ―SLV‖. Market prices for the iShares may be different from the net asset value per iShare. Barclays Global Investors International Inc. is the sponsor of the trust, The Bank of New York is the trustee of the trust, and JPMorgan Chase Bank N.A., London branch, is the custodian of the trust. The trust is not an investment company registered under the Investment Company Act of 1940. The trust is not a commodity pool for purposes of the Commodity Exchange Act, and its sponsor is not subject to regulation by the Commodity Futures Trading Commission as a commodity pool operator, or a commodity trading advisor.
®

The trust intends to issue iShares on a continuous basis. The trust issues and redeems iShares only in blocks of 50,000 or integral multiples thereof. A block of 50,000 iShares is called a ―Basket‖. These transactions take place in exchange for silver. Only registered broker-dealers that become authorized participants by entering into a contract with the sponsor and the trustee may purchase or redeem Baskets. iShares will be offered to the public from time to time at prices that will reflect, among other things, the price of silver and the trading price of the iShares on the AMEX at the time of the offer. On [ • ], 2005, the London Fix was $[ • ] (London Fix is the price per ounce of silver set by three market making members of the London Bullion Market Association at approximately 12:00 noon, London time, on each working day). Except when aggregated in Baskets, iShares are not redeemable securities.

Investing in the iShares involves significant risks. See ―Risk Factors‖ starting on page 7.
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 iShares are not interests in nor obligations of the sponsor, the trustee or the Initial Purchaser identified below. The iShares are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. ―iShares‖ is a service mark of Barclays Global Investors, N.A.

On [ • ], 2005, Barclays Capital Inc., also called the Initial Purchaser, deposited with the custodian, for the benefit of the trust, 1,500,000 ounces of silver as consideration for three Baskets, which we will refer to as the ―initial Baskets‖, comprising 150,000 iShares with a per-iShare purchase price of 10 ounces of silver. Delivery of the initial Baskets to the Initial Purchaser is expected to take place on or about [ • ], 2005. The Initial Purchaser intends to offer to the public these 150,000 iShares at a per-iShare offering price that will vary depending, among other factors, on the price of silver and the trading price of the iShares on the AMEX at the time of the offer. iShares offered by the Initial Purchaser at different times may have different offering prices. The Initial Purchaser will not receive from the trust, the sponsor or any of their affiliates any fee or other compensation in connection with the sale of the iShares. The Initial Purchaser may receive commissions or fees from investors who purchase iShares through their commission- or fee-based brokerage accounts in amounts between $0.00 and $0.08, per iShare.

Barclays Capital

The date of this prospectus is [

], 2005.

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TABLE OF CONTENTS
Page

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS GLOSSARY PROSPECTUS SUMMARY Trust Structure, the Sponsor, the Trustee and the Custodian Trust Objective Principal Offices THE OFFERING SUMMARY FINANCIAL CONDITION RISK FACTORS USE OF PROCEEDS THE SILVER INDUSTRY Introduction Market Participants World Silver Supply and Demand (1995-2004) Historical Chart of the Price of Silver OPERATION OF THE SILVER MARKET Over-the-Counter Market London Good Delivery Bar London Market Regulation Futures Exchanges Not a Regulated Commodity Pool BUSINESS OF THE TRUST Trust Objective Secondary Market Trading Valuation of Silver; Computation of Net Asset Value Trust Expenses Impact of Trust Expenses on the Trust‘s Net Asset Value DESCRIPTION OF THE iSHARES AND THE TRUST AGREEMENT Deposit of Silver; Issuance of Baskets of iShares Redemption of Baskets of iShares; Withdrawal of Silver Certificates Evidencing the iShares Cash and Other Distributions Voting Rights Fees and Expenses of the Trustee Trust Expenses and Silver Sales Payment of Taxes Evaluation of Silver and the Trust Assets Amendment and Termination Limitations on Obligations and Liability Requirements for Trustee Actions i

iii iii 1 1 2 3 4 6 7 12 13 13 13 14 15 17 17 17 18 18 19 20 20 20 21 21 22 23 23 24 25 25 25 25 26 26 26 26 27 27

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TABLE OF CONTENTS (continued)
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THE SECURITIES DEPOSITORY; BOOK-ENTRY-ONLY SYSTEM; GLOBAL SECURITY THE SPONSOR The Sponsor‘s Role The Sponsor‘s Fee THE TRUSTEE The Trustee‘s Role THE CUSTODIAN The Custodian‘s Role Custody of the Trust‘s Silver UNITED STATES FEDERAL INCOME TAX CONSEQUENCES Taxation of the Trust Taxation of U.S. Shareholders Maximum 28% Long-Term Capital Gains Tax Rate for U.S. Shareholders Who Are Individuals Brokerage Fees and Trust Expenses Investment by Regulated Investment Companies Investment by Certain Retirement Plans Taxation of Non-U.S. Shareholders United States Information Reporting and Backup Withholding Taxation in Jurisdictions Other Than the United States ERISA AND RELATED CONSIDERATIONS PLAN OF DISTRIBUTION LEGAL MATTERS EXPERTS WHERE YOU CAN FIND MORE INFORMATION REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM STATEMENT OF FINANCIAL CONDITION NOTES TO THE FINANCIAL STATEMENT ii

28 29 29 29 30 30 30 30 31 33 33 34 35 35 35 35 36 36 36 36 38 41 41 41 F-1 F-2 F-3

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STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This prospectus includes statements which relate to future events or future performance. In some cases, you can identify such forward-looking statements by terminology such as ―may,‖ ―should,‖ ―expect,‖ ―plan,‖ ―anticipate,‖ ―believe,‖ ―estimate,‖ ―predict,‖ ―potential‖ or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this prospectus that address activities, events or developments that may occur in the future, including such matters as changes in commodity prices and market conditions (for silver and the iShares), 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 made by the sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are 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 iShares. Moreover, neither the sponsor, nor any other person assumes responsibility for the accuracy or completeness of the forward-looking statements. 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 a change in the sponsor‘s expectations or predictions. GLOSSARY In this prospectus, each of the following terms has the meaning set forth below: ―AMEX‖ — The American Stock Exchange LLC. ―Authorized Participant‖ — A person who, at the time of submitting to the trustee an order to create or redeem one or more Baskets (1) is a registered broker-dealer, (2) is a DTC Participant or an Indirect Participant, and (3) has in effect a valid Authorized Participant Agreement. ―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. ―Basket‖ — A block of 50,000 iShares or such number of iShares as the trustee, in consultation with the sponsor, may from time to time determine. ―Basket Silver Amount‖ — The amount of silver (measured in ounces), determined on each Business Day by the trustee, which Authorized Participants must transfer to the trust in exchange for a Basket, or will receive in exchange for each Basket surrendered for redemption. ―Business Day‖ — Any day other than (i) a Saturday or a Sunday, or (ii) a day on which the AMEX is closed for regular trading. ―CFTC‖ — Commodity Futures Trading Commission, an independent agency with the mandate to regulate commodity futures and option markets in the United States. ―Code‖ — The United States Internal Revenue Code of 1986, as amended. iii

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―COMEX‖ — The exchange market on silver futures contracts operated by Commodity Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc. ―Commodity Exchange Act‖ — The United States Commodity Exchange Act of 1936, as amended. ―Custodian‖ — JPMorgan Chase Bank N.A., a national banking association, acting through its London branch. ―Custodian Agreement‖ — The agreement between the trustee and the custodian governing the custody of the trust‘s silver. ―DTC‖ — The Depository Trust Company, a limited purpose trust company organized under the New York Banking Law, a ―banking organization‖ within the meaning of the New York Banking Law, a member of the United States 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 Securities Exchange Act of 1934. ―DTC Participant‖ — An entity which, pursuant to DTC‘s governing documents, is entitled to deposit securities with DTC in its capacity as a ―participant‖. ―ERISA‖ — The Employee Retirement Income Security Act of 1974, as amended. ―Exchange Act‖ — The United States Securities Exchange Act of 1934, as amended. ―FSA‖ — The Financial Services Authority, an independent non-governmental body which exercises statutory regulatory power under the FSM Act. ―FSM Act‖ — The United Kingdom Financial Services and Markets Act 2000. ―Initial Purchaser‖ — Barclays Capital Inc. ―Indirect Participant‖ — An entity which has access to the DTC clearing system by clearing securities through, or maintaining a custodial relationship with, a DTC Participant. ―IRA‖ — Individual retirement account. ―IRS‖ — Internal Revenue Service. ―iShares‖ — Units of fractional undivided beneficial interest in the net assets of the trust which are issued by the trust. ―LBMA‖ — The London Bullion Market Association, a trade association that acts as the coordinator for activities conducted on behalf of its members and other participants in the London bullion market. ―London Fix‖ means the price for an ounce of silver set by three market making members of the LBMA at approximately 12:00 noon, London time, on each working day. ―London Good Delivery Bar‖ — A bar of silver meeting the London Good Delivery Standards. ―London 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. iv

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―NASD‖ — National Association of Securities Dealers. ―NAV‖ — Net asset value per iShare. See ―Business of the Trust — Valuation of Silver; Computation of Net Asset Value‖ for a description of how the net asset value of the trust and the NAV are calculated. ―Non-U.S. Shareholder‖ — A shareholder that is not a U.S. Shareholder. ―OTC‖ — The global Over-the-Counter market for the trading of silver which consists of transactions in spot, forwards, and options and other derivatives. ―Ounce‖ — A troy ounce, equal to 1.0971428 ounces avoirdupois, with a minimum fineness of 0.999. ―Avoirdupois‖ is the system of weights used in the U.S. and Great Britain for goods other than precious metals, gems and drugs. In that system, a pound has 16 ounces and an ounce has 16 drams. ―Plans‖ — Employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities, Keogh plans, and certain collective investment funds or insurance company general or separate accounts in which such plans or arrangements are invested, that are subject to ERISA and/or Section 4975 of the Code. ―SEC‖ — The Securities and Exchange Commission. ―Securities Act‖ — The United States Securities Act of 1933, as amended. ―Shareholders‖ — Owners of beneficial interests in the iShares. ―Sponsor‖ — Barclays Global Investors International Inc., an indirect subsidiary of Barclays Bank PLC. ―TOCOM‖ — The Tokyo Commodity Exchange. ―Tonne‖ — One metric tonne which is equivalent to 1,000 kilograms or 32,150.7465 troy ounces. ―Trust‖ — The iShares Silver Trust, a New York trust formed pursuant to the Trust Agreement. ―Trust Agreement‖ — The Depositary Trust Agreement dated [ ], 2005 among the sponsor, The Bank of New York, the registered and beneficial owners from time to time of iShares and all persons that deposit silver for creation of iShares under which the trust is formed. ―Trustee‖ — The Bank of New York, a banking corporation organized under the laws of the State of New York with trust powers. ―Unallocated‖ — Silver is said to be held in unallocated form at a custodian when the person in whose name silver is so held is entitled to receive delivery of silver in the amount standing to the credit of that person‘s account, but that person has no ownership interest in any particular silver that the custodian maintaining the account owns or holds. In contrast, silver is held in ―allocated‖ form when specific bars of silver held by the custodian are identified as the property of the person holding the ―allocated‖ account. ―U.S. Shareholder‖ — A Shareholder that is (1) an individual who is treated as a citizen or resident of the United States for United States federal income tax purposes; (2) a corporation or partnership 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 United States 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 United States persons have the authority to control all substantial decisions of the trust, or a trust that has made a valid election under applicable Treasury Regulations to be treated as a domestic trust. v

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PROSPECTUS SUMMARY Although the sponsor believes that this summary is materially complete, you should read the entire prospectus, including “Risk Factors” beginning on page 7, before making an investment decision about the iShares. Trust Structure, the Sponsor, the Trustee and the Custodian The trust was formed on [ • ], 2005 when the sponsor and The Bank of New York signed the Depositary Trust Agreement (―Trust Agreement‖) and an initial deposit of silver was made in exchange for the issuance of three Baskets. The purpose of the trust is to own silver transferred to the trust in exchange for shares issued by the trust (―iShares‖). Each iShare 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 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 iShares will be issued until after the record date for the distribution of such cash or other property has passed. The trust issues iShares only in Baskets of 50,000 or integral multiples thereof. Baskets of iShares may be redeemed by the trust in exchange for the amount of silver corresponding to their redemption value. Individual iShares will not be redeemed by the trust, but are listed and trade on the AMEX under the symbol ―SLV‖. The objective of the trust is for the value of the iShares to reflect, at any given time, the price of silver owned by the trust at that time, less the trust‘s expenses and liabilities. The material terms of the trust are discussed in greater detail under the section ―Description of the iShares and the Trust Agreement‖. The trust is not a registered investment company under the Investment Company Act of 1940 and is not required to register under such act. The trust‘s sponsor is Barclays Global Investors International Inc., a Delaware corporation and a subsidiary of Barclays Bank PLC. The iShares are not obligations of, and are not guaranteed by, Barclays Global Investors International Inc. or any of its subsidiaries or affiliates, including the Initial Purchaser. The sponsor has arranged for the creation of the trust, the registration of the iShares for their public offering in the United States and the listing of the iShares on the AMEX. The sponsor has agreed to assume the following administrative and marketing expenses incurred by the trust: the trustee‘s fee, the custodian‘s fee, AMEX listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The sponsor will also pay the costs of the trust‘s organization and the initial sale of the iShares, including the applicable SEC registration fees. The sponsor will not exercise day-to-day oversight over the trustee or the custodian. The sponsor may remove the trustee and appoint a successor trustee 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) or if, having received written notice of a material breach of its obligations under the Trust Agreement, the trustee has not cured the breach within thirty days. The sponsor also has the right to replace the trustee during the ninety 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. The trustee is The Bank of New York and the custodian is JPMorgan Chase Bank N.A., London branch. The trustee is responsible for the day-to-day administration of the trust. The responsibilities of the trustee include (1) processing orders for the creation and redemption of Baskets; (2) coordinating with the custodian the 1

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receipt and delivery of silver transferred to, or by, the trust in connection with each issuance and redemption of Baskets; (3) calculating the net asset value and the adjusted net asset value of the trust on each business day; and (4) selling the trust‘s silver as needed to cover the trust‘s expenses. For a more detailed description of the role and responsibilities of the trustee see ―Description of the iShares and the Trust Agreement‖ and ―The Trustee.‖ The custodian is responsible for safekeeping the silver owned by the trust. The custodian is appointed by the trustee and is responsible to the trustee only. The general role and responsibilities of the custodian are further described in ―The Custodian.‖ The custodian has no obligation to accept any additional delivery on behalf of the trust if, after giving effect to such delivery, the total value of the trust‘s silver held by the custodian exceeds $1 billion. If this limit is exceeded, it is anticipated that the trustee, with the consent of the sponsor, will retain an additional custodian. If an additional custodian becomes necessary, the trustee will seek to hire the additional custodian under terms and conditions substantially similar to those in the agreement with JPMorgan Chase Bank N.A., London branch. However, because the agreement with the additional custodian will only be negotiated when the need for the additional custodian arises, it may not be possible for the trustee to locate at that time an additional custodian that agrees to exactly the same terms of the agreement with JPMorgan Chase Bank N.A., London branch. As a result, the new agreement may differ from the current one with JPMorgan Chase Bank N.A., London branch, with respect to issues like duration, fees, maximum amount of silver that the additional custodian will hold on behalf of the trust, scope of the additional custodian‘s liability and the additional custodian‘s standard of care. Trust Objective The objective of the trust is for the value of the iShares to reflect, at any given time, the price of silver owned by the trust at that time, less the trust‘s expenses and liabilities. 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 receives silver deposited with it in exchange for the creation of Baskets of iShares, sells silver as necessary to cover the trust expenses and other liabilities and delivers silver in exchange for Baskets of iShares surrendered to it for redemption. The iShares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in silver. Although the iShares 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. An investment in iShares is: Backed by silver held by the custodian on behalf of the trust. The iShares are backed by silver, identified on the custodian‘s books in allocated and unallocated accounts on behalf of the trust and held by the custodian in England 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 iShares through traditional brokerage accounts at prices expected to be less than the amount required for currently existing means of investing in physical silver. iShares are eligible for margin accounts. Listed. Although there can be no assurance that an actively traded market in the iShares will develop, the iShares are listed and trade on the AMEX under the symbol ―SLV‖. 2

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Relatively cost efficient. Because the expenses involved in an investment in physical silver will be dispersed among all holders of iShares, an investment in iShares 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. See ―Business of the Trust—Trust Objective‖. Principal Offices The sponsor‘s office is located at 45 Fremont Street, San Francisco, CA 94105. The trustee has a trust office at 101 Barclay Street, Floor 6E, New York, New York 10286. The custodian‘s registered office is 125 London Wall, London, EC2Y 5AJ, England. 3

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THE OFFERING Offering Use of proceeds The iShares represent units of fractional undivided beneficial interest in the net assets of the trust. Proceeds received by the trust from the issuance and sale of Baskets consist of silver deposits. Such deposits are held by the custodian on behalf of the trust until (i) distributed to Authorized Participants in connection with a redemption of Baskets or (ii) sold to pay the fee due to the sponsor and trust expenses or liabilities not assumed by the sponsor. SLV [•] The trust issues and redeems Baskets of iShares on a continuous basis (a Basket equals 50,000 iShares). Baskets of iShares are only issued or redeemed in exchange for an amount of silver determined by the trustee on each day that the AMEX is open for regular trading. No iShares are issued unless the custodian has allocated to the trust‘s account (except for an unallocated amount of silver not in excess of 1100 ounces), the corresponding amount of silver. Initially, a Basket requires delivery of 500,000 ounces of silver. The amount of silver necessary for the creation of a Basket, or to be received upon redemption of a Basket, will decrease over the life of the trust, due to the payment or accrual of fees and other expenses or liabilities payable by the trust. Baskets may be created or redeemed only by Authorized Participants, who pay the trustee a transaction fee for each order to create or redeem Baskets. See ―Description of the iShares and the Trust Agreement‖ for more details. The net asset value of the trust is obtained by subtracting the trust‘s expenses and liabilities on any day from the value of the silver owned by the trust on that day; the net asset value per iShare, or NAV, is obtained by dividing the net asset value of the trust on a given day by the number of iShares outstanding on that date. On each day on which the AMEX is open for regular trading, the trustee determines the NAV as promptly as practicable after 4:00 p.m. (New York time). The trustee values the trust‘s silver on the basis of that day‘s announced London Fix. If there is no London Fix on that day, the trustee is authorized to use the most recently announced London Fix unless the trustee, in consultation with the sponsor, determines that such price is inappropriate as a basis for evaluation. See ―Business of the Trust—Valuation of Silver; Computation of Net Asset Value.‖ The trust‘s only ordinary recurring expense is expected to be the remuneration due to the sponsor (the ―sponsor‘s fee‖). In exchange for the sponsor‘s fee, the sponsor has agreed to assume the following administrative and marketing expenses of the trust: the trustee‘s fee, the custodian‘s fee, AMEX listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The sponsor also paid the costs of the trust‘s organization and the initial sale of the iShares, including the applicable SEC registration fees. 4

American Stock Exchange symbol CUSIP Creation and redemption

Net Asset Value

Trust expenses

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The sponsor‘s fee is accrued and paid daily at an annualized rate equal to 0.50% of the adjusted net asset value of the trust. The trustee will from time to time sell silver in such quantity as may be necessary to permit payment of the sponsor‘s fee and of trust expenses and liabilities 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 liabilities and the market price of silver. See ―Business of the Trust—Trust Expenses‖ and ―Description of the iShares and the Trust Agreement—Trust Expenses and Silver Sales.‖ Tax Considerations Owners of iShares will be treated, for U.S. federal income tax purposes, as if they owned a corresponding share of the assets of the trust. They will also be viewed as if they directly received a corresponding share of any income of the trust, or as if they had incurred a corresponding share of the expenses of the trust. Consequently, each sale of silver by the trust will be a taxable event to Shareholders. See ―United States Federal Tax Consequences—Taxation of U.S. Shareholders‖ and ―ERISA and Related Considerations.‖ Owners of iShares do not have any voting rights. See ―Description of the iShares and the Trust Agreement—Voting Rights.‖ The trustee may suspend the delivery or registration of transfers of iShares, or may refuse a particular deposit or transfer at any time, if the trustee or the sponsor think it advisable for any reason. Redemptions may be suspended only (i) during any period in which regular trading on the AMEX is suspended or restricted, or the exchange is closed, or (ii) during an emergency as a result of which delivery, disposal or evaluation of silver is not reasonably practicable. See ―Description of the iShares and the Trust Agreement—Requirements for Trustee Actions.‖ The sponsor and the trustee: • • • are only obligated to take the actions specifically set forth in the Trust Agreement without negligence or bad faith; are not liable for the exercise of discretion permitted under the Trust Agreement; and have no obligation to prosecute any lawsuit or other proceeding on behalf of the Shareholders or any other person.

Voting Rights Suspension of Issuance, Transfers and Redemptions

Limitation on Liability

See ―Description of the iShares and the Trust Agreement—Limitations on Obligations and Liability.‖ Termination events The trustee will terminate the Trust Agreement if: • the trustee is notified that the iShares are delisted from the AMEX and are not approved for listing on another national securities exchange within five business days of their delisting; holders of at least 75% of the outstanding iShares notify the trustee that they elect to terminate the trust; 5

•

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•

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, as amended, and the trustee has actual knowledge of that determination; the aggregate market capitalization of the trust, based on the closing price for the iShares, was less than $350 million for five consecutive trading days and the trustee receives, within six months from the last of those trading days, notice that the sponsor has decided to terminate the trust; the CFTC determines that the trust is a commodity pool under the Commodity Exchange Act and the trustee has actual knowledge of that determination; or the trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for United States federal income tax purposes and the trustee receives notice that the sponsor has determined that the termination of the trust is advisable.

•

•

• •

If not terminated earlier by the trustee, the trust will terminate in 2045, on the fortieth anniversary of its creation. See ―Description of the iShares and the Trust Agreement—Amendment and Termination.‖ After termination of the trust, the trustee will deliver trust property upon surrender and cancellation of iShares and, ninety days after termination, may sell any remaining trust property in a private or public sale, and hold the proceeds, uninvested and in a non-interest bearing account, for the benefit of the holders who have not surrounded their iShares for cancellation. See ―Description of the iShares and the Trust Agreement—Amendment and Termination.‖ Authorized Participants Baskets may be created or redeemed only by Authorized Participants. Each Authorized Participant must be a registered broker-dealer, a participant in DTC, have entered into an agreement with the trustee (the Authorized Participant Agreement) and be in a position to transfer silver to, and take delivery of silver from, the custodian through one or more silver accounts. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of silver in connection with such creations or redemptions. A list of the current Authorized Participants can be obtained from the trustee or the sponsor. The iShares are issued in book-entry form only. Transactions in iShares clear through the facilities of DTC. Investors may hold their iShares through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC. SUMMARY FINANCIAL CONDITION As of the close of business on [ ], 2005, the date of formation of the trust, the net asset value of the trust was $[ • ] and the NAV was $[ • ]. See ―Statement of Financial Condition‖ elsewhere in this prospectus. 6

Clearance and settlement

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RISK FACTORS Before making an investment decision, you should consider carefully the risks described below, as well as the other information included in this prospectus. Because the iShares are created to reflect the price of the silver held by the trust, the market price of the iShares will be as unpredictable as the price of silver has historically been. This creates the potential for losses, regardless of whether you hold iShares for a short-, mid- or long-term. iShares are created to reflect, at any given time, the market price of silver owned by the trust at that time less the trust‘s expenses and liabilities. Because the value of iShares depends on the price of silver, it is subject to fluctuations similar to those affecting silver prices. The price of silver has fluctuated widely over the past several years. If silver markets continue to be characterized by the wide fluctuations that they have shown in the past several years, the price of the iShares will change widely and in an unpredictable manner. This exposes your investment in iShares to potential losses if you need to sell your iShares at a time when the price of silver is lower than it was when you made your investment in iShares. Even if you are able to hold iShares for the mid- or long-term you may never realize a profit, because silver markets have historically experienced extended periods of flat or declining prices. Following an investment in iShares, several factors may have the effect of causing a decline in the prices of silver and a corresponding decline in the price of iShares. Among them: • 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 iShares. A significant change in the attitude of speculators and investors towards silver. Should the speculative community take a negative view towards silver, a decline in world silver prices could occur, negatively impacting the price of the iShares. A significant increase in silver price hedging activity by silver producers. Traditionally, silver producers have not hedged to the same extent as other producers of precious metals (gold, for example) do. 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 iShares.

• •

Conversely, several factors may trigger a temporary increase in the price of silver prior to your investment in the iShares. If that is the case, you will be buying iShares at prices affected by the temporarily high prices of silver, and you may incur losses when the causes for the temporary increase disappear. Paradoxically, one of the causes for a temporary increase of this type would be a very enthusiastic reception of the iShares by the market. If a rush to acquire iShares results in large purchases of silver to be deposited in the trust, the price of silver may see an increase that will subside after the initial rush comes to an end. The amount of silver represented by the iShares will decrease over the life of the trust due to the sales necessary to pay the sponsor’s fee and trust expenses. Without increases in the price of silver sufficient to compensate for that decrease, the price of the iShares will also decline and you will lose money on your investment in iShares. Although the sponsor has agreed to assume all organizational and certain ordinary administrative and marketing expenses incurred by the trust, not all trust expenses have been assumed by the sponsor. For example, any taxes and other governmental charges that may be imposed on the trust‘s property will be not be paid by the sponsor. As part of its agreement to assume some of the trust‘s ordinary administrative expenses, the sponsor has agreed to pay legal fees and expenses of the trust not in excess of $100,000 per annum. Any legal fees and expenses in excess of that amount will be the responsibility of the trust. 7

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Because the trust does not have any income, it needs to sell silver to cover the sponsor‘s fee and expenses not assumed by the sponsor. The trust may also be subject to other liabilities (for example, as a result of litigation) which have also not been assumed by the sponsor. The only source of funds to cover those liabilities will be sales of silver held by the trust. Even if there are no expenses other than those assumed by the sponsor, and there are no other liabilities of the trust, the trustee will still need to sell silver to pay the sponsor‘s daily fee. The result of these sales is a decrease in the amount of silver represented by each iShare. New deposits of silver, received in exchange for new iShares issued by the trust, do not reverse this trend. A decrease in the amount of silver represented by each iShare results in a decrease in its price even if the price of silver has not changed. To retain the iShare‘s original price, the price of silver has to increase. Without that increase, the lower amount of silver represented by the iShare will have a correspondingly lower price. If these increases do not occur, or are not sufficient to counter the lower amount of silver represented by each iShare, you will sustain losses on your investment in iShares. An increase in the trust expenses not assumed by the sponsor, or the existence of unexpected liabilities affecting the trust, will force the trustee to sell larger amounts of silver, and will result in a more rapid decrease of the amount of silver represented by each iShare and a corresponding decrease in its value. The trust is a passive investment vehicle. This means that the value of your iShares may be adversely affected by trust losses that, if the trust had been actively managed, it might have been possible to avoid. The trustee does not actively manage the silver held by the trust. This means that the trustee does not sell silver at times when its price is high, or acquire silver at low prices in the expectation of future price increases. It also means that the trustee does not make use of any of the hedging techniques available to professional silver investors to attempt to reduce the risks of losses resulting from price decreases. Any losses sustained by the trust will adversely affect the value of your iShares. The price received upon the sale of iShares may be less that the value of the silver represented by them. The result obtained by subtracting the trust‘s expenses and liabilities on any day from the price of the silver owned by the trust on that day is the net asset value of the trust which, when divided by the number of iShares outstanding on that date, results in the net asset value per iShare, or NAV. iShares may trade at, above or below their NAV. The NAV of iShares will fluctuate with changes in the market value of the trust‘s assets. The trading prices of iShares will fluctuate in accordance with changes in their NAVs as well as market supply and demand. The amount of the discount or premium in the trading price relative to the NAV per iShare may be influenced by non-concurrent trading hours between the major silver markets and the AMEX. While the iShares will trade on the AMEX until 4:15 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, Zurich and the COMEX. As a result, during this time, trading spreads, and the resulting premium or discount on iShares, may widen. The liquidation of the trust may occur at a time when the disposition of the trust’s silver will result in losses to investors in iShares. The trust will have limited duration. If certain events occur, at any time, the trustee will have to terminate the trust. Otherwise, the trust will terminate automatically after forty years. See ―Description of the iShares and the Trust Agreement—Amendment and Termination‖ for more information about the termination of the trust, including when events outside the control of the sponsor, the trustee or the Shareholders may prompt the trust‘s termination. 8

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Upon termination of the trust, the trustee will sell silver in the amount necessary to cover all expenses of liquidation, and to pay any outstanding liabilities of the trust. The remaining silver will be distributed among investors surrendering iShares. Any silver remaining in the possession of the trustee after 90 days may be sold by the trustee and the proceeds of the sale will be held by the trustee until claimed by any remaining holders of iShares. Sales of silver in connection with the liquidation of the trust at a time of low prices will likely result in losses, or adversely affect your gains, on your investment in iShares. There may be situations where an Authorized Participant is unable to redeem a Basket of shares. To the extent the value of silver decreases, these delays may result in a decrease in the value of the silver the Authorized Participant will receive when the redemption occurs, as well as a reduction in liquidity for all shareholders in the secondary market. Although iShares surrendered by Authorized Participants in Basket-size aggregations are redeemable in exchange for the underlying amount of silver, redemptions may be suspended during any period while regular trading on the AMEX is suspended or restricted, or in which an emergency exists that makes it reasonably impracticable to deliver, dispose of, or evaluate silver. If any of these events occurs at a time when an Authorized Participant intends to redeem iShares, and the price of silver decreases before such Authorized Participant is able again to surrender for redemption Baskets of iShares, such Authorized Participant will sustain a loss with respect to the amount that it would have been able to obtain in exchange for the silver received from the trust upon the redemption of its iShares, had the redemption taken place when such Authorized Participant originally intended it to occur. As a consequence, Authorized Participants may reduce their trading in iShares during periods of suspension, decreasing the number of potential buyers of iShares in the secondary market and, therefore, the price a shareholder may receive upon sale. The liquidity of the iShares may also be affected by the withdrawal from participation of Authorized Participants. In the event that one of more Authorized Participants which have substantial interests in iShares withdraw from participation, the liquidity of the iShares will likely decrease which could adversely affect the market price of the iShares and result in your incurring a loss on your investment. Authorized Participants with large holdings may choose to terminate the trust. Holders of 75% of the iShares have the power to terminate the trust. This power may be exercised by a relatively small number of holders. If it is so exercised, investors who wished to continue to invest in silver through the vehicle of the trust will have to find another vehicle, and may not be able to find another vehicle that offers the same features as the trust. The lack of an active trading market for the iShares may result in losses on your investment at the time of disposition of your iShares. Although iShares are listed for trading on the AMEX, you should not assume that an active trading market for the iShares will develop or be maintained. If you need to sell your iShares at a time when no active market for them exists, such lack of an active market will most likely adversely affect the price you receive for your iShares (assuming you are able to sell them). If the process of creation and redemption of Baskets of iShares encounters any unanticipated difficulties or is materially restricted due to any illiquidity in the market for physical silver, the possibility for arbitrage transactions by Authorized Participants, intended to keep the price of the iShares closely linked to the price of silver, may not exist and, as a result, the price of the iShares may fall or otherwise diverge from NAV. If the processes of creation and redemption of iShares (which depend on timely transfers of silver to and by the custodian) encounter any unanticipated difficulties, potential market participants, such as the Authorized 9

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Participants and their customers, who would otherwise be willing to purchase or redeem Baskets of iShares to take advantage of any arbitrage opportunity arising from discrepancies between the price of the iShares 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 the iShares may decline and the price of the iShares may fluctuate independently of the price of silver and may fall. Furthermore, in the event that the London market for physical silver should become relatively illiquid and thereby materially restrict opportunities for arbitraging by delivering silver in return for Baskets of iShares, the iShares price may diverge from the value of physical silver and may fall. As an owner of iShares, you will not have the rights normally associated with ownership of other types of shares. iShares are not entitled to the same rights as shares issued by a corporation. By acquiring iShares, you are not acquiring the right to elect directors, to receive dividends, to vote on certain matters regarding the issuer of your iShares or to take other actions normally associated with the ownership of shares. You will only have the limited rights described under ―Description of the iShares and the Trust Agreement‖. As an owner of iShares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act of 1940, or the protections afforded by the Commodity Exchange Act of 1936. The trust is not registered as an investment company for purposes of United States federal securities laws, and is not subject to regulation by the SEC as an investment company. Consequently, the owners of iShares do not have the regulatory protections provided to investors in investment companies. For example, the provisions of the Investment Company Act that limit transactions with affiliates, prohibit the suspension of redemptions (except under certain limited circumstances) or limit sales loads do not apply to the trust. The trust does not hold or trade in commodity futures contracts regulated by the Commodity Exchange Act (CEA), as administered by the Commodity Futures Trading Commission (CFTC). Furthermore, the trust is not a commodity pool for purposes of the CEA, and its sponsor is not subject to regulation by the CFTC as a commodity pool operator, or a commodity trading advisor. Consequently, the owner of iShares does not have the regulatory protections provided to investors in CEA-regulated instruments or commodity pools. Consequently, the trustee is not subject to registration as a commodity pool operator and the owners of iShares do not receive the disclosure document and certified annual report required to be delivered by a commodity pool operator. Neither the sponsor nor the trustee has experience with a trust the only assets of which are expected to be silver. Their experience may be inadequate or unsuitable to manage the trust. None of the sponsor, the trustee, or their respective management, have experience handling an investment vehicle designed to reflect, at any given time, the value of the silver that is its only asset. If this lack of experience adversely affects the operations of the trust, the value of the iShares may also be adversely affected. The value of the iShares will be adversely affected if silver owned by the trust is lost or damaged in circumstances in which the trust is not in a position to recover the corresponding loss. The custodian is responsible to the trust for loss or damage to the trust‘s silver only under limited circumstances. The agreement with the custodian contemplates that the custodian will be responsible to the trust only if it acts with negligence, fraud or in willful default of its obligations under the custodian agreement. In addition, the custodian has agreed to indemnify the trust for any loss or liability directly resulting from a breach of the custodian‘s representations and warranties in the custodian agreement, a failure of the custodian to act in accordance with the trustee‘s instructions or any physical loss, destruction or damage to the silver held for the trust‘s account, except for losses due to nuclear accidents, terrorism, riots, acts of God, insurrections, strikes and similar causes beyond the control of the custodian for which the custodian will not be responsible to the trust. 10

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The custodian has no obligation to replace any silver lost under circumstances for which the custodian is liable to the trust. The custodian‘s liability to the trust, if any, will be limited to the value of any silver lost, or the amount of any balance held on an unallocated basis, at the time of the custodian‘s negligence, fraud or willful default, or at the time of the act or omission giving rise to the claim for indemnification. Any loss of silver owned by the trust will result in a corresponding loss in the NAV and it is reasonable to expect that such loss will also result in a decrease in the value at which the iShares are traded on the AMEX. Silver transferred to the trust in connection with the creation of Baskets of iShares may not be of the quality required under the Trust Agreement. The trust will sustain a loss if the trustee issues iShares in exchange for silver of inferior quality and that loss will adversely affect the value of all existing iShares. The procedures agreed to with the custodian contemplate that the custodian must undertake certain tasks in connection with the inspection of silver delivered by Authorized Participants in exchange for Baskets of iShares. The custodian‘s inspection includes review of the corresponding bar list to ensure that it accurately describes the weight, fineness, refiner marks and bar numbers appearing on the silver bars, but does not include any chemical or other tests designed to verify that the silver received does, in fact, meet the purity requirements referred to in the Trust Agreement. Accordingly, such inspection procedures may not prevent the deposit of silver that fails to meet these purity standards. Each person that deposits silver in the trust is liable to the trust if that silver does not meet the requirements of the Trust Agreement. The custodian will not be responsible or liable to the trust or to any investor in the event any silver otherwise properly inspected by it does not meet the purity requirements contained in the Trust Agreement. To the extent that Baskets of iShares are issued in exchange for silver of inferior quality and the trust is not able to recover damages from the person that deposited that silver, the total value of the assets of the trust will be adversely affected and, with it, the NAV. In these circumstances, it is reasonable to expect that the value at which the iShares trade on the AMEX will also be adversely affected. The value of the iShares will be adversely affected if the trust is required to indemnify the sponsor or the custodian as contemplated in the Trust Agreement and the custodian agreement. Under the Trust Agreement, the sponsor has a right to be indemnified from the trust for any liability or expense it incurs without negligence, bad faith or willful misconduct on its part. Similarly, under the custodian agreement the custodian has a right to be indemnified from the trust for any liability or expense it incurs without negligence, bad faith or willful misconduct on its part. This means that it may be necessary to sell assets of the trust in order to cover losses or liability suffered by the sponsor or the custodian. Any sale of that kind would reduce the net asset value of the trust and the value of the iShares. 11

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USE OF PROCEEDS Proceeds received by the trust from the issuance and sale of Baskets consist of silver deposits. Such deposits are held by the custodian on behalf of the trust until (i) distributed to Authorized Participants in connection with redemptions of Baskets or (ii) sold to pay fees due to the sponsor and trust expenses and liabilities not assumed by the sponsor. See ―Business of the Trust—Trust Expenses‖. 12

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THE SILVER INDUSTRY Introduction This section provides a brief introduction to the silver industry by looking at some of the key participants, detailing the primary sources of demand and supply and outlining the limited role of the ―official‖ sector ( i.e., central banks) in the market. Market Participants The participants in the world silver industry 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 lead, zinc, copper or gold mine production); scrap merchants and recyclers. 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 Unlike gold, 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 GFMS Limited in World Silver Survey 2005 , at the end of 2004, government held silver bullion stocks total 164 Moz. Silver holdings held by the central banks and governments equal only a 10-week supply whereas for gold it is estimated that governments hold approximately the equivalent of 10 to 12 years of supply. Recently, countries like Russia, China and India have reduced their holdings of silver. 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 the past several years as a result of the spread of digital photography). 13

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World Silver Supply and Demand (1995 – 2004) The following table sets forth a summary of the world silver supply and demand from 1995 to 2004: World Silver Supply and Demand (million ounces)
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Supply Mine Production Net Government Sales Old Silver Scrap Producer Hedging Implied Net Disinvestment Total Supply Demand Fabrication Industrial Applications Photography Jewelry & Silverware Coins & Medals Total Fabrication Net Government Purchases Producer Hedging Implied Net Investment Total Demand Silver Price (London US$/oz)

483.0 25.3 162.9 7.5 89.9 768.6

491.0 18.9 158.3 — 142.8 811.1

520.7 — 169.3 68.1 85.5 843.6

544.0 40.6 193.9 6.5 44.0 829.1

548.5 93.1 181.2 — 61.1 883.9

587.3 75.2 180.4 — 88.5 931.4

611.8 71.7 182.4 18.9 — 884.8

607.4 54.9 187.1 0.0 14.1 863.5

611.2 88.2 183.6 0.0 0.0 883.1

634.4 61.7 181.1 2.0 0.0 879.2

295.7 209.9 236.9 26.1 768.6 — — — 768.6 5.197

297.7 210.1 263.7 25.2 796.8 — 14.3 — 811.1 5.199

320.8 217.4 274.3 30.4 842.9 0.7 — — 843.6 4.897

316.4 225.4 259.4 27.8 829.1 — — — 829.1 5.544

339.2 227.9 271.7 29.2 867.9 — 16.0 — 883.9 5.220

375.4 218.3 278.2 32.1 904.0 — 27.4 — 931.4 4.951

336.3 213.1 287.1 30.5 867.0 — — 17.8 884.8 4.370

340.1 204.3 262.7 31.6 838.7 — 24.8 0.0 863.5 4.599

350.5 192.9 274.2 35.8 853.4 — 21.0 8.7 883.1 4.879

367.1 181.0 247.5 41.1 836.7 — 0.0 42.5 879.2 6.658

Source: World Silver Survey 2005 , the Silver Institute and GFMS Limited The following are some of the main historic characteristics of the silver market illustrated by the table: • Silver supply over the last ten years, including mine production, net government sales, old silver scrap, producer hedging and implied net disinvestment averaged 857.8 million ounces (Moz) per year. Mine production averages 69 percent of total silver supply between 1995-2004. During the period shown, old silver scrap was the second largest contributor to supply, averaging approximately 178 Moz per year, which averages 19 percent over the 10 year period 1995-2004. During this period, a structural deficit was recorded. This gap between fabrication demand and conventional supply (mine production and recycled scrap) stood at 21.2 Moz in 2004. Silver prices have not been hedged by producers in significant quantities. Net government sales increased dramatically from 1998 onward, primarily due to sales by the People‘s Bank of China. Net government sales fell by 30 percent, to 61.7 Moz in 2004, and of total supply, accounted for 7 percent last year. The biggest source of demand for silver is in industrial applications. Silver is among the best electrical and thermal conductor of all metals and is therefore used in many electrical applications, particularly in conductors, switches, contacts, and fuses. Silver is also used in the manufacture of batteries, featuring silver alloys as the cathode. Silver, a well-known bactericide, is used in a number of applications, including water purification systems, air-handling systems, and in a wide-range of textile and plastic 14

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consumer products. It is also used to join metals through brazing and soldering. For the ten year time-period reflected above, silver‘s use in industrial applications averaged 333.9 Moz per year. • • Silver is widely used in the manufacture of jewelry and silverware. This application for silver consumed an average of 265 Moz per year over the last decade. Silver‘s role in photography has been a regular component of silver demand. The photographic process is based on the presence of light-sensitive silver halide crystals, prepared by mixing a solution of soluble silver, usually silver nitrate, with other components. Photographic film is used in radiography (its biggest use), the graphic arts, motion pictures, and in consumer photography. Silver use in photography has averaged 210 Moz per year over the last ten years. Silver is also used in the fabrication of coins and medals. Silver was once widely used in coinage, and many nations were on a silver standard until the 19 century. Today silver is in limited use for circulating coinage, and is used in bullion coins issued by national governments for use by investors wishing to own physical silver in small quantities and in commemorative coins. Silver‘s use in coinage has averaged over 30 Moz per year from 1995-2004.
th

•

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 iShares. 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 supply and demand, geo-political uncertainties, economic concerns such as inflation, and real or speculative investor interest. The following chart illustrates the changes in the London Fix silver prices from January 1985 through May 2005:

Source: LBMA This section of the prospectus identifies movements of the silver price over the last 20 years and the historical events surrounding these movements. For the purposes of this discussion, ―silver prices‖ refers to the London Fix. 15

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Silver prices over the 20-year period, 1985 to 2004, averaged $5.226 (in U.S. dollars) per ounce. The intraday high in this period was reached in 1987 at $10.925, and the low was marked in 1991 at $3.548. The highest annual average was recorded in 1987 at $7.016, and the lowest annual average was seen in 1992 at $3.946. In 2004, the silver price average $6.658, with a high spot price of $8.290 and a low spot price of $5.495. The price of silver averaged $7.011 in the first five months of 2005. After five successive years of strong prices, silver began a general trend downward in 1985 for the next 7 years. The decline in the price of silver was related to several factors, including profit taking by investors and speculators, reduced inflation expectations and some constriction in industrial usage. During the 1990s the fundamentals for silver prices improved, with mine production rising only 4% from 1990 to 1999, while total fabrication demand increased by 22% during the same period. Substantial flows of silver bullion from above-ground stocks in China in 1999 impacted the silver price that year and into the early 2000s. The silver price staged a dramatic rally in 2004, reflecting strong investor and speculator interest, and improved supply/demand fundamentals, including stronger industrial demand and lower government sales. Between 2002 and 2004 the price of silver increased due to a number of factors. Among such factors are the decline in the U.S. dollar against other currencies, the poor performance of U.S. and other major equities markets, a surge in investment demand in commodities as an asset class generally, strength in fabrication demand, and the low level of forward selling by mining companies. The 2004 average price represents the first average annual price over $6.00 since 1988 and the highest annual average since that year. As indicated above, present prices and trends are no indication of future prices. There is no assurance that the present upward trend will continue or that silver prices are not about to enter a period of decline. See ―Risk Factors—Because the iShares are created to reflect the price of the silver held by the trust, the market prices for the iShares will be as unpredictable as the price of silver has historically been.‖ 16

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OPERATION OF THE SILVER MARKET The global trade in silver consists of Over-the-Counter (OTC) transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options. Over-the-Counter Market The OTC silver market includes spot, forward, and option and other derivative transactions conducted on a principal-to-principal basis. While this is a global 24-hour per day market, its main centers are London (the biggest venue), New York and Zurich. According to the London Bullion Market Association, members of the London Bullion Market Association (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, act as OTC market makers and most OTC market trades are cleared through London. The LBMA plays an important role in setting OTC silver trading industry standards. Members of the London bullion market typically trade with each other and with their clients on a principal-to-principal basis. All risks, including those of credit, are between the two parties to a transaction. This is known as an OTC market, as opposed to an exchange-traded environment. Unlike a futures exchange, where trading is based around standard contract units, settlement dates and delivery specifications, the OTC market allows flexibility. It also provides confidentiality, as transactions are conducted solely between the two principals involved. London Good Delivery Bar According to the London Bullion Market Association, the LBMA‘s ―London Good Delivery Lists‖, identify approved refiners of silver. In the OTC market, silver that meets the specifications for weight, dimensions, fineness (or purity), identifying marks (including the assay stamp of an LBMA-acceptable refiner) and appearance set forth in ―The Good Delivery Rules for Gold and Silver Bars‖ published by the LBMA are ―London Good Delivery Bars.‖ A London Good Delivery must contain between 750 ounces and 1100 ounces of silver with a minimum fineness (or purity) of 999.0 parts per 1000. A London Good Delivery Bar must also bear the stamp of one of refiners who are on the LBMA-approved list. A London Good Delivery Bar that is acceptable for settlement of any OTC transaction will be acceptable for delivery to the trust in connection with the issuance of Baskets of iShares. Settlement and Delivery The basis for settlement of a sale of silver in the LBMA market is delivery of a standard London Good Delivery bar at the London vault nominated by the dealer who made the sale, by credit to an allocated account, or through a LBMA clearing member to the unallocated account of any third party, according to the LBMA. Allocated Accounts According to the LBMA, these accounts are opened when a customer requires metal to be physically segregated and needs a detailed list of weights and assays. The customer has full title to the metal in the account, with the dealer holding it on the client‘s behalf as a custodian. Customers‘ holdings are identified in a weight list of bars showing the unique bar number, gross weight, the assay or fineness of each bar and its fine weight. Credits or debits to the holding will be effected by physical movements of bars to or from the customer‘s physical holding. Unallocated Accounts An unallocated account does not have specific bars set aside and the customer only has a general entitlement to the metal. It is the most convenient, cheapest and most commonly used method of holding metal. Transactions 17

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may be settled by credits or debits to the account while the balance represents the indebtedness between the two parties. Credit balances on the account do not entitle the creditor to specific silver bars, but are backed by the general stock of the bullion dealer with whom the account is held. The client is an unsecured creditor. Should the client wish to receive actual metal, this is done by ‗allocating‘ specific bars or equivalent bullion product, the fine silver content of which is then debited from the allocated account, according to the LBMA. London Market Regulation Responsibility for the regulation of the major participants in the London bullion market lies with the Financial Services Authority (FSA) under the Financial Services and Markets Act 2000. Under this Act, all UK-based banks, together with other investment firms, are subject to a range of requirements including capital adequacy, liquidity and systems and controls. Conduct of business in the London bullion market falls under two jurisdictions dictated by the type of business. The FSA is responsible for ―investment business‖ as defined under the Act. For the bullion market, this covers derivatives. The requirements upon firms in their dealings with market professionals are set out in the FSA‘s Inter-Professional Chapter, the IPC. For spot, forwards and deposits in silver, which are not covered by the Act, guidelines for the conduct of business are set out in The London Code of Conduct for Non-Investment Products, the NIPs code. Market practitioners representing the foreign exchange, money and bullion markets in conjunction with the Bank of England have drawn up this code. It sets out the standards of conduct and professionalism expected between market practitioners with each other and with their clients, according to the London Bullion Market Association. Futures Exchanges The most significant silver futures exchanges are the COMEX, operated by Commodities Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc., and the Tokyo Commodity Exchange (TOCOM). Future exchanges seek to provide a neutral, regulated marketplace for the trading of derivatives contracts for commodities. Future 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 COMEX, the commodity contracts are traded through open outcry; a verbal auction in which all bids, offers and trades must be publicly announced to all members. Electronic trading is offered by the exchange after regular market hours. Except for brief breaks to switch between open outcry and electronic trading in the evening and the morning, silver futures trade almost 24 hours a day, five business 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 open-outcry process to insure that it is conducted in conformance with all exchange rules; the financial condition of all exchange member firms to insure that they continuously meet financial commitments; and the positions of commercial and non-commercial customers to insure 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 monitors their enforcement. 18

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Not a Regulated Commodity Pool The trust will not trade in silver futures contracts on COMEX or on any other futures exchange. The trust will take delivery of physical silver that complies with the LBMA silver delivery rules. Because the trust will not trade in silver futures contracts on any futures exchange, the trust will not be regulated by the CFTC under the Commodity Exchange Act as a ―commodity pool,‖ and will not be operated by a CFTC-regulated commodity pool operator. Investors in the trust will not receive the regulatory protections afforded to investors in regulated commodity pools, nor may COMEX or any futures exchange enforce its rules with respect to the trust‘s activities. In addition, investors in the trust will not benefit from the protections afforded to investors in silver futures contracts on regulated futures exchanges. 19

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BUSINESS OF THE TRUST The activities of the trust are limited to (1) issuing Baskets of iShares 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 of iShares 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 objective of the trust is for the value of the iShares to reflect, at any given time, the price of silver owned by the trust at that time less the trust‘s expenses and liabilities. The iShares 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 iShares 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 expenses and liabilities. Although the iShares 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. An investment in iShares is: Backed by silver held by the custodian on behalf of the trust. The iShares 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 no more than 1100 ounces of silver in an unallocated form. Accordingly, 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 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 iShares through traditional brokerage accounts. Because the intrinsic value of each iShare is a function of the price of the silver held by the trust, the cash outlay necessary for an investment in iShares should be less than the amount required for currently existing means of investing in physical silver. iShares are eligible for margin accounts. Listed. Although there can be no assurance that an actively traded market in the iShares will develop, the iShares are listed and trade on the AMEX under the symbol ―SLV‖. Relatively cost efficient. Because the expenses involved in an investment in physical silver will be dispersed among all holders of iShares, an investment in iShares 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. Secondary Market Trading While the objective of the trust is for the value of the iShares to reflect, at any given time, the price of silver owned by the trust at that time less the trust‘s expenses and liabilities, iShares may trade at, above or below their 20

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NAV. The NAV of iShares will fluctuate with changes in the market value of the trust‘s assets. The trading prices of iShares 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 the AMEX. While the iShares trade on the AMEX until 4:15 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 COMEX. As a result, during this time, trading spreads, and the resulting premium or discount, on iShares may widen. However, given that Baskets of iShares 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. Valuation of Silver; Computation of Net Asset Value On each business day, as soon as practicable after 4:00 p.m. (New York time), the trustee evaluates the silver held by the trust and determines the net asset value of the trust. For purposes of making these calculations, a business day means any day other than a day when the AMEX is closed for regular trading. The trustee values the trust‘s silver on the basis of that day‘s announced London Fix. If there is no announced London Fix on a business day, the trustee is authorized to use the most recently announced London Fix unless the trustee, in consultation with the sponsor, determines that such price is inappropriate as a basis for evaluation. The LBMA fixings are an open process at which market participants can transact business on the basis of a single quoted price. Three market making members of the LBMA conduct the silver fixing meeting under the chairmanship of The Bank of Nova Scotia-ScotiaMocatta by telephone at 12:00 noon (London time) each working day. The other two members of the silver fixing are Deutsche Bank AG and HSBC Bank USA, N.A. Orders executed at the fixing are conducted as principal-to-principal transactions between the client and the dealer through whom the order is placed. Clients place orders with the dealing rooms of the fixing members, who net all the orders before communicating their interest to their representative at the fixing. The metal price is then adjusted to reflect whether there are more buyers or sellers at a given price until such time as supply and demand is seen to be balanced. Orders can be changed throughout the proceedings as the price is moved higher and lower until such time as buyers‘ and sellers‘ orders are satisfied and the price is said to be ―fixed‖. Once the value of the silver has been determined, the trustee subtracts all accrued fees (other than the fees to be 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 all other assets of the trust. The resulting figure is the adjusted net asset value of the trust, which is used to compute all fees (including the trustee‘s and the sponsor‘s fees) which are calculated from the value of the trust‘s assets. To determine the net asset value of the trust, the trustee subtracts from the adjusted net asset value of the trust the amount of accrued fees computed from the value of the trust‘s assets. The trustee also determines the NAV by dividing the net asset value of the trust by the number of the iShares outstanding at the time the computation is made. Trust Expenses The trust‘s only ordinary recurring expense is expected to be the sponsor‘s fee. In exchange for the sponsor‘s fee the sponsor has agreed to assume the following administrative and marketing expenses incurred by the trust: the trustee‘s fee, the custodian‘s fee, AMEX listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The sponsor will also pay the costs of the trust‘s organization and the initial sale of the iShares, including the applicable SEC registration fees. 21

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The sponsor‘s fee is accrued and paid daily at an annualized rate equal to 0.50% of the adjusted net asset value of the trust. 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 of the sponsor‘s fee and of trust expenses or liabilities 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 has agreed to purchase from the trust, at the request of the trustee, silver needed to cover trust expenses at a price equal to 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 sale of silver by the trust will be a taxable event to Shareholders. See ―United States Federal Tax Consequences—Taxation of U.S. Shareholders.‖ Impact of Trust Expenses on the Trust’s Net Asset Value The trust sells silver to raise the funds needed for the payment of the sponsor‘s fee and all trust expenses or liabilities not assumed by the sponsor. See ―The Sponsor—The Sponsor‘s Fee‖. 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 of iShares, or to cover the sponsor‘s fee and trust expenses or liabilities not assumed by the trustee, will be held in physical form by the custodian (except for residual amounts not exceeding 1100 ounces which will be held in unallocated form by the custodian on behalf of the trust). As a result of the recurring sales of silver necessary to pay the sponsor‘s fee and the trust expenses or liabilities not assumed by the sponsor, the net asset value of the trust and, correspondingly, the fractional amount of silver represented by each iShare will decrease over the life of the trust. New deposits of silver, received in exchange for additional new Baskets issued by the trust, do not reverse this trend. The following table, prepared by the sponsor, illustrates the anticipated impact of the sales of silver discussed above on the fractional amount of silver represented by each outstanding iShare. It assumes that the only sales of silver will be those needed to pay the sponsor‘s fee and that the price of silver and the number of iShares 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 decrease in the fractional amount of silver represented by each iShare. Calculation of NAV:
Year 1 2 3

Hypothetical silver price per ounce Sponsor‘s fee Shares of trust, beginning Ounces of silver in trust, beginning Beginning adjusted net asset value of the trust Ounces of silver to be sold to cover the sponsor‘s fee* Ounces of silver in trust, ending Ending adjusted net asset value of the trust Ending NAV * Sales occur daily, to pay the sponsor‘s fee. 22

$

$

$ $

7.00 0.50 % 100,000 1,000,000.00 7,000,000 5,000.00 995,000.00 6,965,000 69.65

$

$

$ $

7.00 0.50 % 100,000 995,000.00 6,965,000 4,975.00 990,025.00 6,930,175 69.30

$

$

$ $

7.00 0.50 % 100,000 990,025.00 6,930,175 4,950.13 985,074.88 6,895,524 68.96

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DESCRIPTION OF THE iSHARES AND THE TRUST AGREEMENT The trust was formed on [ ], 2005 when the sponsor and The Bank of New York signed the Trust Agreement and an initial deposit of silver was made in exchange for the issuance of three Baskets. The purpose of the trust is to own silver transferred to the trust in exchange for iShares issued by the trust. The trust is governed by the Trust Agreement among the sponsor, the trustee, the registered holders and beneficial owners of iShares and all persons that deposit silver for the purpose of creating iShares. The Trust Agreement sets out the rights of depositors of silver and registered holders of iShares and the rights and obligations of the sponsor and the trustee. New York law governs the Trust Agreement, the trust and the iShares. The following is a summary of material provisions of the Trust Agreement. It is qualified by reference to the entire Trust Agreement, which is filed as an exhibit to the registration statement of which the prospectus is a part. Each iShare 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 custodian on behalf of the trust. However, the trust is expected to make daily sales of silver to pay the sponsor‘s fee and to cover expenses and liabilities not assumed by the sponsor. Such sales result in the trust holding cash for brief periods of time. In addition, there may be other situations where the trust may hold cash. For example, a claim may arise against the custodian, an Authorized Participant, or any other third party, which is settled in cash. In those situations where the trust unexpectedly receives cash or any other assets, the Trust Agreement provides that no deposits of silver will be accepted ( i.e. , there will be no issuance of new iShares) until after the record date for the distribution of such cash or other property has passed. The trust issues iShares only in Baskets of 50,000 or integral multiples thereof. Baskets of iShares may be redeemed by the trust in exchange for the amount of silver represented by the aggregate number of iShares redeemed. The trust is not a registered investment company under the Investment Company Act of 1940 and is not required to register under such act. Deposit of Silver; Issuance of Baskets of iShares The trust expects to create and redeem iShares on a continuous basis but only in Baskets of 50,000 iShares. Upon the deposit of the corresponding amount of silver with the custodian, and the payment of the trustee‘s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the trustee will deliver the appropriate number of Baskets to the DTC account of the depositing Authorized Participant. Only Authorized Participants can deposit silver and receive Baskets of iShares in exchange. As of the date of this prospectus, Barclays Capital Inc, [ ] and [ ] are the only Authorized Participants. The sponsor and the trustee will maintain a current list of Authorized Participants. Silver deposited with the custodian must meet the London Good Delivery Standards. Before making a deposit, the Authorized Participant must deliver to the trustee a written purchase order indicating the number of Baskets it intends to acquire and the location or locations where it expects to make the corresponding deposit of silver with the custodian. The trustee will acknowledge the purchase order unless it or the sponsor decides to refuse the deposit as described below under ―Requirements for Trustee Actions.‖ The date the trustee receives that order will determine the Basket Silver Amount the Authorized Participant needs to deposit. However, orders received by the trustee after 4:00 p.m. (New York time) on a business day will be treated as received on the next following business day. The trustee has entered into an agreement with the custodian which contains arrangements so that silver can be delivered to the custodian in England or at other locations that may be authorized in the future. If the trustee accepts the purchase order, it will transmit to the Authorized Participant, via facsimile or electronic mail message, no later than 5:00 p.m. (New York time) on the date such purchase order is received, or deemed received, a copy of the purchase order endorsed ―Accepted‖ by the trustee and indicating the Basket Silver Amount that the Authorized Participant must deliver to the custodian in exchange for each Basket. Prior to the trustee‘s acceptance as specified above, a purchase order will only represent the Authorized Participant‘s unilateral offer to deposit silver in exchange for Baskets of iShares and will have no binding effect upon the trust, the trustee, the custodian or any other party. 23

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The Basket Silver Amount necessary for the creation of a Basket changes from day to day. The initial Basket Silver Amount is 500,000 ounces of silver. On each day that the AMEX is open for regular trading, the trustee adjusts the quantity of silver constituting the Basket Silver Amount as appropriate to reflect sales of silver, any loss of silver that may occur, and accrued expenses. The computation is made by the trustee as promptly as practicable after 4:00 p.m. (New York time). The Basket Silver Amount so determined is communicated via facsimile or electronic mail message to all Authorized Participants, and available in the sponsor‘s website for the iShares. It is expected that the AMEX will also publicize the Basket Silver Amount determined by the trustee as indicated above. Because the sponsor has assumed what are expected to be most of the trust‘s expenses, and the sponsor‘s fee accrues daily at the same rate ( i.e. , / th of the net asset value of the trust multiplied by 0.50%), in the absence of any extraordinary expenses or liabilities the amount of silver by which the Basket Silver Amount decreases each day is predictable. The trustee intends to make available on each business day, through the same channels used to disseminate the actual Basket Silver Amount, an indicative Basket Silver Amount for the next business day. Authorized Participants may use that indicative Basket Silver Amount as guidance regarding the amount of silver that they may expect to have to deposit with the custodian in respect of purchase orders placed by them on such next business day and accepted by the trustee. The agreement entered with each Authorized Participant provides, however, that once a purchase order has been accepted by the trustee, the Authorized Participant will be required to deposit with the custodian the Basket Silver Amount determined by the trustee on the effective date of the purchase order.
1 365

No iShares are issued unless and until the custodian has informed the trustee that it has allocated to the trust‘s account (except that any amounts of less than 1100 ounces may be held in the trust account on an unallocated basis) the corresponding amount of silver. In accordance with the procedures that the custodian has agreed to follow in connection with the creation of iShares, silver received by the custodian no later than 11:30 a.m. (London time) is required to be allocated to the trust‘s account no later than 9:00 a.m. (New York time) on next day that the custodian is open for business at the place of delivery. All taxes incurred in connection with the delivery of silver to the custodian in exchange for Baskets of iShares (including any applicable value added tax) will be the sole responsibility of the Authorized Participant making such delivery. Redemption of Baskets of iShares; Withdrawal of Silver Authorized Participants, acting on authority of the registered holder of iShares, may surrender Baskets of iShares in exchange for the corresponding Basket Silver Amount announced by the trustee. Upon the surrender of such iShares and the payment of the trustee‘s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the trustee will deliver to the order of the redeeming Authorized Participant the amount of silver corresponding to the redeemed Baskets. iShares can only be surrendered for redemption in Baskets of 50,000 iShares each. Before surrendering Baskets of iShares for redemption, an Authorized Participant must deliver to the trustee a written request indicating the number of Baskets it intends to redeem and the location where it would like to take delivery of the silver represented by such Baskets. The date the trustee receives that order determines the Basket Silver Amount to be received in exchange. However, orders received by the trustee after 4:00 p.m. (New York time) on a business day are treated as received on the next following business day. The custodian may make the silver available for collection at its office or at the office of a sub-custodian if the silver is being held by a sub-custodian. Silver is delivered at the locations designated by the trustee, in consultation with the custodian. All taxes incurred in connection with the delivery of silver to an Authorized Participant in exchange for Baskets of iShares (including any applicable value added tax) will be the sole responsibility of the Authorized Participant taking such delivery. Unless otherwise agreed to by the custodian, silver is delivered to the redeeming Authorized Participants in the form of physical bars only (except that any amount of less than 1100 ounces may be transferred to an unallocated account of or as ordered by, the redeeming Authorized Participant). 24

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Redemptions may be suspended only (i) during any period in which regular trading on the AMEX is suspended or restricted or the exchange is closed (other than scheduled holiday or weekend closings), or (ii) during an emergency as a result of which delivery, disposal or evaluation of silver is not reasonably practicable. Certificates Evidencing the iShares The iShares are evidenced by certificates executed and delivered by the trustee on behalf of the trust. DTC has accepted the iShares for settlement through its book-entry settlement system. So long as the iShares are eligible for DTC settlement, there will be only one global certificate evidencing shares that will be registered in the name of a nominee of DTC. Investors will be able to own iShares only in the form of book-entry security entitlements with DTC or direct or indirect participants in DTC. No investor will be entitled to receive a separate certificate evidencing iShares. Because iShares can only be held in the form of book-entries through DTC and its participants, investors must rely on DTC, a DTC participant and any other financial intermediary through which they hold iShares 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 the procedures and requirements for securities held in DTC book-entry form. Cash and Other Distributions If the sponsor and trustee determine that there is more cash being held in the trust than is needed to pay the trust‘s expenses for the next month, the trustee will distribute the extra cash to DTC. If the trust receives any property other than silver or cash, the trustee will distribute that property to DTC by any means it thinks is lawful, equitable and feasible. If it cannot make the distribution in that way, the trustee will sell the property and distribute the net proceeds, in the same way as it does with cash. Registered holders of iShares are entitled to receive these distributions in proportion to the number of iShares owned. Before making a distribution, the trustee may deduct any applicable withholding taxes and any fees and expenses of the trust that have not been paid. The trustee distributes only whole United States dollars and cents and is not required to round fractional cents to the nearest whole cent. The trustee is not responsible if it decides that it is unlawful or impractical to make a distribution available to registered holders. Voting Rights iShares do not have any voting rights. However, registered holders of at least 25% of the iShares have the right to require the trustee to cure any material breach by it of the Trust Agreement, and registered holders of at least 75% of the iShares have the right to require the trustee to terminate the Trust Agreement as described below. Fees and Expenses of the Trustee • Each deposit of silver for the creation of Baskets of iShares and each surrender of Baskets of iShares for the purpose of withdrawing trust property (including if the Trust Agreement terminates) must be accompanied by a payment to the trustee of a fee of $2,000 (or such other fee as the trustee, with the prior written consent of the sponsor, may from time to time announce). The trustee will be entitled to reimburse itself from the assets of the trust for all expenses and disbursements incurred by it for extraordinary services it may provide to the trust or in connection with any discretionary action the trustee may take to protect the trust or the interests of the holders. 25

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Trust Expenses and Silver Sales In addition to the fee payable to the sponsor (See ―The Sponsor—The Sponsor‘s Fee‖), the following expenses are paid out of the assets of the trust: • • • • any expenses or liabilities of the trust that are not assumed by the sponsor; any taxes and other governmental charges that may fall on the trust or its property; expenses and costs of any action taken by the trustee or the sponsor to protect the trust and the rights and interests of holders of iShares; and any indemnification of the sponsor as described below.

The trustee sells the trust‘s silver from time to time as necessary to permit payment of the fees and expenses that the trust is required to pay. See ―Business of the Trust—Trust Expenses.‖ The trustee is not responsible for any depreciation or loss incurred by reason of sales of silver made in compliance with the Trust Agreement. Payment of Taxes The trustee may deduct the amount of any taxes owed from any distributions it makes. It may also sell trust assets, by public or private sale, to pay any taxes owed. Registered holders of iShares will remain liable if the proceeds of the sale are not enough to pay the taxes. Evaluation of Silver and the Trust Assets See ―Business of the Trust—Valuation of Silver; Computation of Net Asset Value‖. Amendment and Termination The sponsor and the trustee may agree to amend the Trust Agreement without the consent of the holders of iShares. If an amendment imposes or increases fees or charges, except for taxes and other governmental charges, or prejudices a substantial right of holders of iShares, it will not become effective for outstanding iShares until 30 days after the trustee notifies DTC of the amendment. At the time an amendment becomes effective, by continuing to hold iShares, investors are deemed to agree to the amendment and to be bound by the Trust Agreement as amended. The trustee will terminate the Trust Agreement if: • • • • • the trustee is notified that the iShares are delisted from the AMEX and are not approved for listing on another national securities exchange within five business days of their delisting; holders of at least 75% of the outstanding iShares 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, as amended, and the trustee has actual knowledge of that determination; the aggregate market capitalization of the trust, based on the closing price for the iShares, was less than $350 million on each of five consecutive trading days and the trustee receives, within six months from the last of those trading days, notice that the sponsor has decided to terminate the trust; the CFTC determines that the trust is a commodity pool under the Commodity Exchange Act and the trustee has actual knowledge of that determination; or 26

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the trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for United States federal income tax purposes and the trustee receives notice that the sponsor has determined that the termination of the trust is advisable.

If not terminated earlier by the trustee, the trust will terminate in 2045, on the fortieth anniversary of its creation. The trustee will notify DTC at least 30 days before the date for termination of the Trust Agreement. After termination, the trustee and its agents will do the following under the Trust Agreement but nothing else: (1) collect distributions pertaining to trust property, (2) pay the trust‘s expenses and sell silver as necessary to meet those expenses and (3) deliver trust property upon surrender and cancellation of iShares. Ninety days or more after termination, the trustee may sell any remaining trust property by public or private sale. After that, the trustee will hold the money it received on the sale, as well as any other cash it is holding under the Trust Agreement for the pro rata benefit of the registered holders that have not surrendered their iShares. It will not invest the money and has no liability for interest. The trustee‘s only obligations will be to account for the money and other cash, after deduction of applicable fees, trust expenses and taxes and governmental charges. Limitations on Obligations and Liability The Trust Agreement expressly limits the obligations of the sponsor and the trustee. It also limits the liability of the sponsor and the trustee. The sponsor and the trustee: • • • • • are only obligated to take the actions specifically set forth in the Trust Agreement without negligence or bad faith; are not liable if either of them is prevented or delayed by law or circumstances beyond their control from performing their obligations under the Trust Agreement; are not liable if they exercise discretion permitted under the Trust Agreement; have no obligation to prosecute a lawsuit or other proceeding related to the iShares or the Trust Agreement on behalf of the holders of iShares or on behalf of any other person; may rely upon any documents they believe in good faith to be genuine and to have been signed or presented by the proper party.

In addition, the sponsor will be indemnified by the trust for any liability or expense it incurs without negligence, bad faith or willful misconduct on its part. Requirements for Trustee Actions Before the trustee delivers or registers a transfer of iShares, makes a distribution on iShares, or permits withdrawal of trust property, the trustee may require: • • • payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any iShares or trust property; satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and compliance with regulations it may establish, from time to time, consistent with the Trust Agreement, including presentation of transfer documents.

The trustee may suspend the delivery or registration of transfers of iShares, or may refuse a particular deposit or transfer at any time when the transfer books of the trustee are closed or if the trustee or the sponsor thinks it necessary or advisable for any reason. Redemptions may be suspended only (i) during any period in which regular trading on the AMEX is suspended or restricted or the exchange is closed (other than scheduled holiday or weekend closings), or (ii) during an emergency as a result of which delivery, disposal or evaluation of silver is not reasonably practicable. 27

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THE SECURITIES DEPOSITORY; BOOK-ENTRY-ONLY SYSTEM; GLOBAL SECURITY DTC will act as securities depository for the iShares. 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 Securities Exchange Act of 1934, as amended. DTC was created to hold securities of its 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 agrees with and represents to its participants that it will administer its book-entry system in accordance with its rules and by-laws and requirements of law. Individual certificates will not be issued for the iShares. Instead, a global certificate will be 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 certificate will represent all of the iShares outstanding at any time. Upon the settlement date of any creation, transfer or redemption of iShares, DTC will credit or debit, on its book-entry registration and transfer system, the amount of the iShares so created, transferred or redeemed to the accounts of the appropriate DTC Participants. The trustee and the DTC Participants will designate the accounts to be credited and charged in the case of creation or redemption of iShares. Beneficial ownership of the iShares will be limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Owners of beneficial interests in the iShares will be shown on, and the transfer of ownership will be 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 beneficial owners that are not DTC Participants or Indirect Participants). Beneficial owners are expected to receive from or through the DTC Participant a written confirmation relating to their purchase of the iShares. Investors may transfer the iShares through DTC by instructing the DTC Participant or Indirect Participant through which the Shareholders hold their iShares to transfer the iShares. Transfers will be made in accordance with standard securities industry practice. DTC may decide to discontinue providing its service for the iShares by giving notice to the trustee and the sponsor. Under such circumstances, the trustee and the sponsor will either find a replacement for DTC to perform its functions at a comparable cost or, if a replacement is unavailable, deliver separate certificates for iShares to the DTC Participants having iShares credited to their accounts. 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. The Trust Agreement provides that, as long as the iShares are represented by a global certificate registered in the name of DTC or its nominee, as described above, the trustee will be entitled to treat DTC as the holder of the iShares. 28

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THE SPONSOR The sponsor is a Delaware corporation and a subsidiary of Barclays Bank PLC. The sponsor‘s principal office is located at 45 Fremont Street, San Francisco, CA 94105. The Sponsor’s Role The sponsor will arrange for the creation of the trust, the registration of the iShares for their public offering in the United States and the listing of the iShares on the AMEX. The sponsor has agreed to assume the following administrative and marketing expenses incurred by the trust: the trustee‘s fee, the custodian‘s fee, AMEX listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The sponsor will also pay the costs of the trust‘s organization and the initial sale of the iShares, including the applicable SEC registration fees. The sponsor will not exercise day-to-day oversight over the trustee or the custodian. The sponsor may remove the trustee and appoint a successor trustee 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) or if, having received written notice of a material breach of its obligations under the Trust Agreement, the trustee has not cured the breach within thirty days. The sponsor also has the right to replace the trustee during the ninety 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. The Sponsor’s Fee The sponsor‘s fee accrues and is paid daily at an annualized rate equal to 0.50% of the adjusted net asset value of the trust. 29

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THE TRUSTEE The Bank of New York, a banking corporation organized under the laws of the State of New York with trust powers, will serve as the trustee. The Bank of New York has a trust office at 101 Barclay Street, Floor 6E, New York, New York 10286. The Bank of New York is subject to supervision by the New York State Banking 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 The Bank of New York by calling the following number: (212) 815-6250. A copy of the Trust Agreement is available for inspection at The Bank of New York‘s trust office identified above. The Bank of New York had at least $150 million in capital and retained earnings as of December 31, 2004. The Trustee’s Role The trustee is responsible for the day-to-day administration of the trust. This includes (1) processing orders for the creation and redemption of Baskets; (2) coordinating with the custodian the receipt and delivery of silver transferred to, or by, the trust in connection with each issuance and redemption of Baskets; (3) calculating the net asset value and the adjusted net asset value of the trust on each business day; and (4) selling the trust‘s silver as needed to cover the trust‘s expenses. In addition, the trustee will prepare the financial statements of the trust. The trustee‘s fees are paid by the sponsor. The trustee and any of its affiliates may from time to time purchase or sell iShares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. THE CUSTODIAN JPMorgan Chase Bank N.A., a national banking association, acting through its London branch, will serve as the custodian of the trust‘s silver. The Custodian’s Role The custodian is responsible for safekeeping the silver deposited into the trust in connection with the creation of Baskets. The custodian is appointed by the trustee and is responsible to the trustee only. The custodian has no obligation to accept any additional delivery on behalf of the trust if, after giving effect to such delivery, the total value of the trust‘s silver held by the custodian exceeds $1 billion. If this limit is exceeded, the sponsor anticipates that the trustee, with the consent of the sponsor, would retain an additional custodian. While the sponsor will seek any agreement with an additional custodian to be at least as protective of the interests of the trust as the current agreement is, the actual terms and conditions of such agreement will only be negotiated at the time such additional custodian becomes necessary. The identity of such additional custodian, as well as market conditions prevailing at the time, may, among other factors, result in the need to hire an additional custodian under terms and conditions significantly different from those in the agreement with JPMorgan Chase Bank N.A., London branch. For example, the duration of the agreement with the additional custodian, its fees, the maximum amount of silver that the additional custodian will hold on behalf of the trust, the scope of the additional custodian‘s liability (including with respect to silver held by subcustodians) and the additional custodian‘s standard of care may not be exactly the same as in the agreement with JPMorgan Chase Bank N.A., London branch. The custodian is responsible for conducting certain limited inspections of the silver delivered by an Authorized Participant and exercising a level of care similar to that used for its own account. However, the custodian is not responsible for conducting any chemical or other tests designed to verify that such silver meets the purity requirements referred to in the Trust Agreement. 30

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The custodian‘s fees are paid by the sponsor. The custodian has agreed to purchase from the trust, at the request of the trustee, silver needed to cover trust expenses at a price equal to the price used by the trustee to determine the value of the silver held by the trust on the date of the sale. The custodian and any of its subsidiaries and affiliates may from time to time purchase or sell iShares for their own account, as agent for their customers and for accounts over which they exercise investment discretion. Custody of the Trust’s Silver The following is a description of the material provisions of the custodian agreement between the trustee and JPMorgan Chase Bank N.A., London branch, as the custodian under which the custodian will hold the silver that belongs to the trust. For additional information, see the form of custodian agreement that is filed as an exhibit to the registration statement of which this prospectus is a part. The custodian‘s registered office is 125 London Wall, London, EC2Y 5AJ, England. English law governs the custodian agreement. The custodian will receive and hold silver that is deposited for the account of the trust. The custodian will release silver from the trust‘s account when instructed in writing by the trustee, and not otherwise. The custodian may keep the trust‘s silver at locations in England or with the consent of the trustee and the sponsor, in other places. The custodian may, at its own expense and risk, use subcustodians to discharge its obligations to the trust under the custodian agreement. The custodian has agreed that it will only retain subcustodians if they agree to grant to the trustee and the independent accountants of the trust access to records and inspection rights similar to those granted by JPMorgan Chase Bank N.A., London branch, in its agreement with the trustee. The custodian will remain responsible to the trustee for any silver held by any subcustodian appointed by the custodian to the same extent as if such silver were held by the custodian itself. When instructed by the trustee, the custodian will make silver from the trust‘s account available for collection at its office or at the office of a subcustodian where the silver is being held or will deliver up to 1100 ounces of silver on an unallocated basis to any account maintained with it or, if the custodian considers it lawful and practical, to an account maintained with any other custodial institution. As a result, in connection with redemptions of shares, silver may be received on an unallocated basis in an account maintained anywhere (if the custodian considers it lawful and practical to do so), or silver may be collected at any of the physical locations where the custodian is holding the trust‘s silver in England, to the extent the silver is available in any particular location. The custodian has agreed to use reasonable care in the performance of its duties to the trust, and will only be responsible for any loss or damage suffered by the trust as a direct result of the custodian‘s negligence, fraud or willful default in the performance of its duties. The custodian‘s liability to the trust, if any, will be limited to the value of any silver lost, or the amount of any balance held on an unallocated basis, at the time of the custodian‘s negligence, fraud or willful default. None of the custodian, or its directors, employees, agents or affiliates will incur any liability to the trust if, by reason of any law or regulation, or of an act of God, terrorism or other circumstance beyond the custodian‘s control, the custodian is prevented or forbidden from, or delayed in, performing its obligations under the custodian agreement. The custodian has agreed to indemnify the trustee for any loss or liability directly resulting from a breach of the custodian‘s representations and warranties in the custodian agreement, a failure of the custodian to act in accordance with the trustee‘s instructions or any physical loss, destruction or damage to the silver held for the trust‘s account, except for losses due to nuclear accidents, terrorism, riots, acts of God, insurrections, strikes and similar causes beyond the control of the custodian for which the custodian will not be responsible to the trust. The custodian will be responsible for the trust‘s silver held at subcustodians to the same extent as if that silver were in the custodian‘s own vault. 31

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The trust has agreed to indemnify the custodian for any loss incurred in connection with the custodian agreement, other than losses due to the custodian‘s negligence, fraud or willful default. The custodian may hold silver for the account of the trust on an unallocated basis. However, the custodian must take reasonable action to minimize the amount of bullion in the trust‘s account that is on an unallocated basis, and the custodian must allocate silver bars to the account of the trust so that no more than 1100 ounces of silver are held for the trust‘s account on an unallocated basis at the end of each business day of the custodian. The custodian has agreed to maintain insurance in support of its custodial obligations under the custodian agreement, including covering any loss of silver. The custodian has the right to reduce, cancel or allow to expire without replacement this insurance coverage, provided that it gives prior written notice to the trustee. In the case of a cancellation or expiration without replacement, the required notice must be at least 30 days prior to the last day of coverage. The insurance is held for the benefit of the custodian, not for the benefit of the Trust or the trustee, and the trustee may not submit a claim under the insurance maintained by the custodian. Either the trustee or the custodian may terminate the custodian agreement on 60 days‘ prior notice. 32

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following discussion of the material United States federal income tax consequences that generally will apply to the purchase, ownership and disposition of iShares by a U.S. Shareholder (as defined below), and certain United States federal income consequences that may apply to an investment in iShares by a Non-U.S. Shareholder (as defined below), represents, insofar as it describes conclusions as to United States federal income tax law and subject to the limitations and qualifications described therein, the opinion of Clifford Chance US LLP, special United States federal income tax counsel to the sponsor. The discussion below is based on the Code, Treasury Regulations promulgated thereunder 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 banks, financial institutions, insurance companies, tax-exempt organizations, broker-dealers, traders, persons holding iShares as a position in a ―hedging,‖ ―straddle,‖ ―conversion,‖ or ―constructive sale‖ transaction for United States federal income tax purposes, persons whose ―functional currency‖ is not the United States 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 will hold iShares as ―capital assets‖ within the meaning of section 1221 of the Code. Moreover, the discussion below does not address the effect of any state, local or foreign tax law on an owner of iShares. Purchasers of iShares are urged to consult their own tax advisors with respect to all federal, state, local and foreign tax law considerations potentially applicable to their investment in iShares. For purposes of this discussion, a ―U.S. Shareholder‖ is a Shareholder that is: • • An individual who is treated as a citizen or resident of the United States for United States federal income tax purposes; A corporation or partnership (or entity treated as a corporation or partnership for United States federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof, including the District of Columbia; An estate, the income of which is includible in gross income for United States 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 United States persons have the authority to control all substantial decisions of the trust, or a trust that has made a valid election under applicable Treasury Regulations to be treated as a domestic trust.

• •

A Shareholder that is not a U.S. Shareholder as defined above is considered a ―Non-U.S. Shareholder‖ for purposes of this discussion. Taxation of the Trust The sponsor and the trustee will treat the trust as a ―grantor trust‖ for United States federal income tax purposes. In the opinion of Clifford Chance US LLP, although not free from doubt due to the lack of directly governing authority, the trust will be classified as a ―grantor trust‖ for United States federal income tax purposes. As a result, the trust itself will not be subject to United States federal income tax. Instead, the trust‘s income and expenses will ―flow through‖ to the Shareholders, and the trustee will report the trust‘s income, gains, losses and deductions to the IRS on that basis. The opinion of Clifford Chance US LLP represents only its best legal judgment and is not binding on the IRS or any court. Accordingly, there can be no assurance that the IRS will agree with the conclusions of counsel‘s opinion and it is possible that the IRS or another tax authority could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary position. Neither the sponsor nor the trustee will request a ruling from the IRS with respect to the classification of the trust for United States federal income tax purposes. If the IRS were to assert successfully that the trust is not classified 33

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as a ―grantor trust,‖ the trust would be classified as a partnership for United States federal income tax purposes, which may affect timing and other tax consequences to the Shareholders. The following discussion assumes that the trust will be classified as a ―grantor trust‖ for United States federal income tax purposes. Taxation of U.S. Shareholders Shareholders will be treated, for United States federal income tax purposes, as if they directly owned a pro rata share of the underlying assets held in the trust. Shareholders also will be treated as if they directly received their respective pro rata shares of the trust‘s income, if any, and as if they directly incurred their respective pro rata shares of the trust‘s expenses. In the case of a Shareholder that purchases iShares for cash, its initial tax basis in its pro rata share of the assets held in the trust at the time it acquires its iShares will be equal to its cost of acquiring the iShares. In the case of a Shareholder that acquires its iShares as part of a creation of a Basket, the delivery of silver to the trust in exchange for the underlying silver represented by the iShares will not be a taxable event to the Shareholder, and the Shareholder‘s tax basis and holding period for the Shareholder‘s pro rata share of the silver held in the trust will be the same as its tax basis and holding period for the silver delivered in exchange therefor. For purposes of this discussion, and unless stated otherwise, it is assumed that all of a Shareholder‘s iShares are acquired on the same date and at the same price per iShare. Shareholders that hold multiple lots of iShares, or that are contemplating acquiring multiple lots of iShares, should consult their own tax advisers as to the determination of the tax basis and holding period for the underlying silver related to such iShares. When the trust sells silver, for example to pay expenses, a Shareholder will recognize gain or loss in an amount equal to the difference between (a) the Shareholder‘s pro rata share of the amount realized by the trust upon the sale and (b) the Shareholder‘s tax basis for its pro rata share of the silver that was sold. 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 share of all of the silver held in the trust 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 share of the total amount of the silver held in the trust 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 iShares, the Shareholder will be treated as having sold the portion of its pro rata share of the silver held in the trust at the time of the sale that is attributable to the iShares sold. Accordingly, the Shareholder generally will recognize gain or loss on the sale in an amount equal to the difference between (a) the amount realized pursuant to the sale of the iShares, and (b) the Shareholder‘s tax basis for the portion of its pro rata share of the silver held in the trust at the time of sale that is attributable to the iShares sold, as determined in the manner described in the preceding paragraph. A redemption of some or all of a Shareholder‘s iShares in exchange for the underlying silver represented by the iShares 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 portion of its pro rata share of the silver held in the trust immediately prior to the redemption that is attributable to the iShares redeemed. The Shareholder‘s holding period with respect to the silver received should include the period during which the Shareholder held the iShares redeemed. A subsequent sale of the silver received by the Shareholder will be a taxable event. After any sale or redemption of less than all of a Shareholder‘s iShares, the Shareholder‘s tax basis for its pro rata share of the silver held in the trust immediately after such sale or redemption generally will be equal to its tax basis for its share of the total amount of the silver held in the trust immediately prior to the sale or 34

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redemption, less the portion of such basis which is taken into account in determining the amount of gain or loss recognized by the Shareholder upon such sale or, in the case of a redemption, is treated as the basis of the silver received by the Shareholder in the redemption. Maximum 28% Long-Term Capital Gains Tax Rate for U.S. Shareholders Who Are Individuals Under current law, gains recognized by individuals from the sale of ―collectibles,‖ including silver, held for more than one year are taxed at a maximum rate of 28%, rather than the current 15% rate applicable to most other long-term capital gains. For these purposes, gain recognized by an individual upon the sale of an interest in a trust that holds collectibles is treated as gain recognized on the sale of collectibles, to the extent that the gain is attributable to unrealized appreciation in value of the collectibles held by the trust. Therefore, any gain recognized by an individual U.S. Shareholder attributable to a sale of iShares held for more than one year, or attributable to the trust‘s sale of any silver which the Shareholder is treated (through its ownership of iShares) 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 U.S. Shareholder for one year or less or by a taxpayer other than an individual United States taxpayer are generally the same as those at which ordinary income is taxed. Brokerage Fees and Trust Expenses Any brokerage or other transaction fee incurred by a Shareholder in purchasing iShares will be treated as part of the Shareholder‘s tax basis in the underlying assets of the trust. Similarly, any brokerage fee incurred by a Shareholder in selling iShares will reduce the amount realized by the Shareholder with respect to the sale. Shareholders will be required to recognize the full amount of 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 shares 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 as miscellaneous itemized deductions. Individuals may deduct certain miscellaneous itemized deductions only to the extent they exceed 2% of adjusted gross income. In addition, such deductions may be subject to phase-outs and other limitations under applicable provisions of 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 (i) the likelihood that an investment in iShares, 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 (ii) the extent to which an investment in iShares might nevertheless be consistent with preservation of their qualification under Code section 851. Investment by Certain Retirement Plans The purchase of iShares as an investment for an IRA, or for a participant-directed account maintained under any plan that is tax-qualified under section 401(a) of the Code, may be treated as the acquisition of a ―collectible‖ that is treated as a taxable distribution from the account to the owner of the IRA, or to the participant for whom the plan account is maintained, of an amount equal to the cost to the account of acquiring the collectible. Such treatment would apply if an account‘s purchase of iShares would be treated, for these purposes, as the acquisition of an interest in the underlying silver held in the trust, and such bullion (i) is not treated as in the physical possession of the IRA trustee, or (ii) is of a fineness less than the minimum fineness of a ―contract market‖ (as defined in 7 United States Code § 7) required for a regulated futures contract. In this regard, it is noted that, a 35

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private letter ruling has been issued by the IRS, to a taxpayer other than the Sponsor, upon facts and circumstances arguably similar to those presented by the Offering of iShares hereunder, in which the IRS concluded that the acquisition of shares by a custodian or trustee of an individual retirement account or an individually-directed account would not constitute the acquisition of a collectible for purposes of Section 408(m) of the Code. Private letter rulings may only be relied upon by the taxpayer requesting it, and, as such, the ruling noted in the foregoing sentence may not be relied upon with respect to the offering of iShares hereunder. Persons considering the purchase of iShares by an IRA, or by a participant-directed account under a Code section 401(a) plan, should consult their own tax advisers as to whether such purchase will be treated as resulting in a taxable distribution to the IRA owner or plan participant. See also ―ERISA and Related Considerations.‖ Taxation of Non-U.S. Shareholders A Non-U.S. Shareholder generally will not be subject to United States federal income tax with respect to gain recognized upon the sale or other disposition of iShares, or upon the sale of silver by the trust, unless (1) the Non-U.S. 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-U.S. Shareholder of a trade or business in the United States and certain other conditions are met. United States Information Reporting and Backup Withholding The trustee will file certain information returns with the IRS in connection with the trust. A U.S. Shareholder may be subject to United States backup withholding tax in certain circumstances unless it provides its taxpayer identification number and complies with certain certification procedures. Non-U.S. Shareholders may have to comply with certification procedures to establish that they are not a United States person in order to avoid the information reporting and backup withholding tax requirements. The amount of any backup withholding will be allowed as a credit against a Shareholder‘s United States federal income tax liability and may entitle such a Shareholder to a refund, provided that the required information is furnished to the IRS. Taxation in Jurisdictions Other Than the United States Prospective purchasers of iShares 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 iShares 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 (ERISA) and/or section 4975 of the Code impose certain requirements on employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities, Keogh plans, and certain collective investment funds or insurance company general or separate accounts in which such plans or arrangements are invested, that are subject to ERISA and/or the Code (collectively, Plans), and on persons who are fiduciaries with respect to the investment of assets treated as ―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 state or other federal law. 36

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In contemplating an investment of a portion of Plan assets in iShares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and circumstances of the Plan, the ―Risk Factors‖ discussed above and whether such investment is consistent with its fiduciary responsibilities, including, but not limited to: (a) whether the fiduciary has the authority to make the investment under the appropriate governing plan instrument; (b) whether the investment would constitute a direct or indirect non-exempt prohibited transaction with a party in interest; (c) the Plan‘s funding objectives; and (d) whether under the general fiduciary standards of investment prudence and diversification such investment is appropriate for the Plan, taking into account the overall investment policy of the Plan, the composition of the Plan‘s investment portfolio and the Plan‘s need for sufficient liquidity to pay benefits when due. It is anticipated that the iShares will constitute ―publicly-held offered securities‖ as defined in Department of Labor Regulations § 2510.3-101(b)(2). Accordingly, iShares purchased by a Plan, and not the Plan‘s interest in the underlying silver held in the trust represented by the iShares, should be treated as assets of the Plan, for purposes of applying the ―fiduciary responsibility‖ and ―prohibited transaction‖ rules of ERISA and the Code. See also ―United States Federal Tax Consequences—Investment by Certain Retirement Plans.‖ 37

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PLAN OF DISTRIBUTION In addition to, and independent of the initial purchase by the Initial Purchaser (described below), the trust issues iShares in Baskets to Authorized Participants in exchange for deposits of silver on a continuous basis. Because new iShares 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. Authorized Participants, other 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, an Authorized Participant, other 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 iShares and sells the iShares to its customers; or if it chooses to couple the creation of a supply of new iShares with an active selling effort involving solicitation of secondary market demand for the iShares. 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 would lead to designation as an underwriter. Investors that purchase iShares 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 iShares that are part of an ―unsold allotment‖ within the meaning of Section 4(3)(C) of the Securities Act, would be unable to take advantage of the prospectus-delivery exemption provided by Section 4(3) of the Securities Act. The sponsor intends to qualify the iShares in states selected by the sponsor and that sales be made through broker-dealers who are members of the NASD. 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. Barclays Capital Inc. is the Initial Purchaser. On [ ], 2005, the Initial Purchaser agreed to purchase 150,000 iShares, which compose the initial Baskets. As consideration for the initial Baskets, the trust received from the Initial Purchaser 1,500,000 ounces of silver. The Initial Purchaser intends to make a public offering of the initial Baskets at a per iShare offering price that will vary, depending among other factors, on the price of silver and the trading price of the iShares on the AMEX at the time of the offer. iShares offered by the Initial Purchaser at different times may have different offering prices. The Initial Purchaser will not receive from the trust, the sponsor or any of their affiliates any fee or other compensation in connection with the sale of the iShares. With respect to sale of the iShares comprising the initial Baskets and in the event that the Initial Purchaser or any affiliate acts as Authorized Participant, it may receive commissions/fees from investors who purchase iShares. The trust will not bear any expenses in connection with the offering or sales of the initial Baskets of iShares. The sponsor has agreed to indemnify the Initial Purchaser against certain liabilities, including liabilities under the Securities Act of 1933, and to contribute to payments that the Initial Purchaser may be required to make in respect thereof. Because the NASD views the iShares as interests in a direct participation program, no NASD-member, or person associated with a member, will participate in a public offering of iShares except in compliance with Rule 2810 of the NASD Conduct Rules. Neither the Initial Purchaser nor the Authorized Participants receive from the trust or the sponsor any compensation in connection with an offering of the iShares. Accordingly, there is, and will be, no payment of underwriting compensation in connection with any such offering in excess of 10% of the gross proceeds of the offering for commissions and 0.5% for due diligence. 38

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The Initial Purchaser and the Sponsor, each of whom is a subsidiary of Barclays Bank PLC, have a working relationship involving the development of business opportunities within the Barclays Bank PLC group. Affiliates of the Initial Purchaser may act as dealers with respect to the iShares. The Initial Purchaser will not act as an Authorized Participant with respect to the initial Baskets, and its activities with respect to the initial Baskets will be distinct from those of an Authorized Participant. The Initial Purchaser has represented, warranted and agreed that: • the offering of the iShares will be made on a private placement basis in Canada (in the provinces of British Columbia, Ontario and Quebec) (1) through the Initial Purchaser or its affiliates who are permitted under applicable securities laws or available exemptions to offer and sell the iShares in Canada; (2) solely to purchasers who are entitled under applicable provincial securities laws to purchase the iShares without the benefit of a prospectus qualified under the securities laws; and (3) in the case of purchasers in provinces other than Ontario, without the services of a dealer registered pursuant to those securities laws; the offering and sale of iShares in Japan can only be effected through a licensed Commodity Investment Dealer (―shohin toushi hanbai gyosha‖) or a person exempt under the law Concerning Regulations of Commodities Investment Business (Commodities Law). The prospectus cannot be distributed in Japan other than to a licensed Commodity Investment Dealer or a person exempt under the Commodities Law; the offering and sale of iShares in Switzerland will be on the basis of a non-public offering. This prospectus does not constitute a prospectus according to articles 652a or 1156 of the Swiss Federal Code of Obligations and the iShares may not be offered or distributed on a professional basis in or from Switzerland and neither this prospectus nor any other offering material relating to the iShares may be publicly issued in connection with any such offer or distribution. The iShares have not been and will not be approved by any Swiss regulatory authority. In particular, neither the iShares nor the trust are or will be supervised by the Swiss Federal Banking Commission, and investors may not claim protection under the Swiss Investment Fund Act; the trust is a collective investment scheme as defined in the Financial Services and Markets Act 2000. The trust has not been authorized, or otherwise recognized or approved, by the Financial Services Authority and, as an unregulated scheme, it accordingly cannot be promoted in the United Kingdom to the general public. The Initial Purchaser has represented, warranted and agreed that it will promote the trust in the United Kingdom in accordance with applicable law and regulation only to (1) persons who are investment professionals (as defined in Article 14(5) of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (the ―CIS Order‖)); (2) persons who are within any of the categories of persons described in Article 22 of the CIS Order; or (3) persons to whom this prospectus may otherwise lawfully be communicated; this prospectus has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the ―SFA‖). Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the iShares may not be circulated or distributed, nor may the iShares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor or other person specified in Section 274 of the SFA, (ii) to a sophisticated investor, and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA; it will comply with the Securities Sales Prospectus Act (Wertpapier-Verkaufsprospektgesetz, the ―WV Act‖) of the Federal Republic of Germany and all other applicable legal and regulatory requirements. In particular, the Initial Purchaser represents that it has not engaged and agrees that it will not engage in a public offering (öffentliches Angebot) within the meaning of the WV Act with respect to any iShares otherwise than in accordance with the WV Act; 39

•

•

•

•

•

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•

the iShares may not be offered, sold or distributed in Spain save in compliance with the requirements of the Spanish Securities Market Law (Ley 24/1988, de 28 de julio, del Mercado de Valores), as amended and restated, and Royal Decree 291/1992 on Issues and Public Offerings of Securities (Real Decreto 291/1992, de 27 de marzo, sobre Emisiones y Ofertas Púiblicas de Venta de Valores), as amended and restated, and other applicable Spanish laws and regulations; the iShares may not be acquired by or offered, directly or indirectly to, individuals or entities in the Netherlands and this prospectus may not be circulated in the Netherlands as part of initial distribution or at any time thereafter, except to individuals or entities whose ordinary business or profession is (1) to trade or invest in securities or (2) involves the acquisition and disposal of investment objects of the same kind as the assets or a substantial part of the assets of the trust, in either case within the meaning of Article 1 of the regulation dated October 9, 1990 (as amended) issued pursuant to Article 14 of the Investment Institutions Supervision Act (Wet Toezicht Beleggingsinstellingen) of 27 June 1990; the offering of the iShares has not been registered pursuant to the Italian securities legislation and, accordingly, the Initial Purchaser has represented and agreed that it has not offered or sold, and will not offer or sell, any iShares in the Republic of Italy in a solicitation to the public, and that sales of the iShares in the Republic of Italy shall be effected in accordance with all Italian securities, tax and exchange control and other applicable laws and regulations. The Initial Purchaser has represented and agreed that it will not offer, sell or deliver any iShares or distribute copies of this prospectus or any other document relating to the iShares in the Republic of Italy except: (1) to ―Professional Investors‖, as defined in Article 31.2 of CONSOB Regulation No. 11522 of 1 July 1998 as amended (―Regulation No. 11522‖), pursuant to Article 30.2 and 100 of Legislative Decree No. 58 of 24 February 1998 as amended (―Decree No. 58‖), or in any other circumstances where an expressed exemption to comply with the solicitation restrictions provided by Decree No. 58 or CONSOB Regulation No. 11971 of 14 May 1999 as amended applies, provided, however, that any such offer, sale or delivery of the iShares or distribution of copies of this prospectus or any other document relating to the iShares in the Republic of Italy must be: (a) made by investment firms, banks or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with Legislative Decree No. 385 of 1 September 1993 as amended (―Decree No. 385‖), Decree No. 58, Regulation No. 11522 and any other applicable laws and regulations; and (b) in compliance with any other applicable notification requirement or limitation which may be imposed by CONSOB or the Bank of Italy; or (2) if Italian residents submit unsolicited offers to the Initial Purchaser to purchase the iShares; and (1) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any iShares other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) and (2) it has not issued and will not issue any advertisement, invitation or document relating to the iShares, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to iShares which are or are intended to be disposed of only to persons outside Hong Kong or only to ―professional investors‖ within the meaning of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any rules made thereunder.

•

•

•

In addition, this prospectus has not been submitted to the registration procedures of the French Autorité des Marchés Financiers and, accordingly, the iShares may not be offered or sold to the public in France. Offers and sales of the iShares in France may be made only to qualified investors (investisseurs qualifiés) in accordance with Article L.411-2 of the French Code monétaire et financier and decree no. 98-880 dated 1 October 1998 (the ―French Code‖). This prospectus or any other offering material relating to the iShares may not be distributed in France to any person other than a qualified investor, as defined in the French Code. The iShares will be listed on the AMEX under the symbol ―SLV‖. 40

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LEGAL MATTERS The validity of the iShares has been passed upon for the sponsor by Clifford Chance US LLP, New York, New York, who, as special United States tax counsel to the sponsor, will also render an opinion regarding the material federal income tax consequences relating to the iShares. License Agreement Without conceding that the operation of the trust or the marketing or trading in iShares would infringe upon any intellectual property owned by The Bank of New York, the sponsor has entered into a license agreement with The Bank of New York under which The Bank of New York grants to the sponsor a perpetual, world wide, non-exclusive, non-transferable license under The Bank of New York‘s patents and patent applications that cover securitized silver products solely for the purpose of establishing, operating and marketing any securitized silver financial product that is sold, sponsored or issued by the sponsor. EXPERTS The Statement of Financial Condition of the trust as of [ ], 2005 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent registered public accounting firm, given on the authority of said firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION The sponsor has filed on behalf of the trust a registration statement on Form S-1 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 iShares, please refer to the registration statement, which you may inspect, without charge, at the public reference facilities of the SEC at the below address or online at www.sec.gov, or obtain at prescribed rates from the public reference facilities of the SEC at the below address. The trust is subject to the informational requirements of the Exchange Act and the sponsor will, on behalf of the trust, file certain reports and other information with the SEC. The sponsor will file an updated prospectus annually for the trust pursuant to the Securities Act. The reports and other information can be inspected at the public reference facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549 and online at www.sec.gov. You may also obtain copies of such material from the public reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You may obtain more information concerning the operation of the public reference facilities of the SEC by calling the SEC at 1-800-SEC-0330 or visiting online at www.sec.gov. 41

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REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM [To be furnished by amendment] F-1

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Form of Statement of Financial Condition STATEMENT OF FINANCIAL CONDITION as of [ ], 2005 Assets Current Assets Silver bullion (fair value $[ Total Assets Liabilities and Shareholders’ Equity Current Liabilities Total Liabilities Commitments and contingent liabilities (Note 1F) Redeemable capital shares, no par value, —[ (at redemption value) Retained earnings Total Liabilities and Shareholders’ Equity F-2 ] authorized, issued and outstanding [ — $ [ ] ] — —

])

$

[ [

] ]

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NOTES TO THE FINANCIAL STATEMENT as of [ ], 2005 1. Organization and Significant Accounting Policies The iShares Silver Trust (the ―Trust‖) was organized on [ ], 2005 as a New York Trust. The trustee is The Bank of New York (the ―Trustee‖) and is responsible for the day to day administration of the Trust. The Trust‘s sponsor is Barclays Global Investors International Inc. (the ―Sponsor‖), a Delaware corporation and a subsidiary of Barclays Bank PLC. The objective of the Trust is for the value of the iShares to reflect, at any given time, the price of silver owned by the Trust at that time, less the Trust‘s expenses and liabilities. The Trust is designed to provide a vehicle for investors to own interests in silver bullion. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America, and the Trust‘s prospectus. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A. Silver Bullion For financial statement purposes, the silver bullion is valued at the lower of cost or market, using the average cost method. Gain or loss on sales of silver bullion is calculated on a trade date basis. Fair value of the silver bullion is based on the London Fix. The following table summarizes activity in silver bullion during the period covered by this financial statement:
Ounces Carrying Value Market Value Realized Gain/Loss

Beginning balance Silver contributed Silver distributed Silver sold Ending balance B. Redeemable Capital Shares

— [ — — [ ].00 ]

$ [

— ] — —

$ [

— ] — — $ — — — —

$

[

]

$

[

]

$

Shares of the Trust are classified as ―redeemable‖ for financial statement purposes, since they are subject to redemption as follows. Trust shares are issued and redeemed continuously in aggregations of 50,000 shares in exchange for silver bullion rather than cash. Individual investors cannot purchase or redeem shares in direct transactions with the Trust. The Trust only deals with registered broker-dealers eligible to settle securities transactions through the book-entry facilities of the Depository Trust Company and which have entered into a contractual arrangement with the Trust and the Sponsor governing, among other matters, the creation and redemption processes (such broker-dealers the ―Authorized Participants‖). Holders of shares of the Trust may redeem their shares at any time acting through an Authorized Participant and in the prescribed aggregations of 50,000 shares; provided, that redemptions of shares may be suspended during any period while regular trading on the AMEX is suspended or restricted, or in which an emergency exists as a result of which delivery, disposal or evaluation of silver is not reasonably practicable. The per-share amount of silver exchanged for a purchase or redemption is calculated daily by the Trustee, using the London Fix to calculate the silver amount in respect of any liabilities for which covering silver sales have not yet been made, and represents the per-share amount of silver held by the Trust, after giving effect to its liabilities, sales to cover expenses and liabilities and any losses that may have occurred. F-3

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When silver is exchanged in settlement of a redemption, it is considered a sale of silver for financial statement purposes. Due to the expected continuing sales and redemption of capital stock and the three day period for share settlement the Trust reflects capital shares sold as a receivable, rather than as contra equity. Shares redeemed are reflected as a liability on the trade date. Outstanding Trust shares are reflected at redemption value, which is the net asset value per share at the period ended date. Adjustments to redemption value are reflected in retained earnings. Net asset value is computed by deducting all accrued fees, expenses and other liabilities of the Trust, including the Trustee‘s and Sponsor‘s fees, from the fair value of the silver bullion held by the Trust. Activity in redeemable capital shares is as follows:
Shares Amount

Balance at the opening of business on [ Shares redeemed Shares issued Adjustment to redemption value Balance at close of business on [ C. Federal Income Taxes

], 2005 [

— — ] — [ ]

$ [

— — ] — ]

], 2005

$

[

The Trust is treated as a ―grantor trust‖ for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, and gains and losses are deemed ―passed through‖ to the holders of shares of the Trust. D. Expenses The Trust will pay to the Sponsor a Sponsor‘s fee that will accrue daily at an annualized rate equal to 0.50% of the adjusted daily net asset value of the Trust, paid in arrears. The Sponsor has agreed to assume the following administrative and marketing expenses incurred by the Trust: the Trustee‘s fee, the custodian‘s fee, AMEX listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses, and up to $100,000 per annum in legal fees and expenses. The Sponsor has also paid the costs of the Trust‘s organization and the initial sales of the iShares, including applicable SEC registration fees. E. Related Parties The Sponsor and the Trustee are considered to be related parties to the Trust. The Trustee‘s fee is paid by the Sponsor and is not a separate expense of the Trust. F. Indemnifications Under the Trust‘s organizational documents, the Sponsor is indemnified against any liability or expense it incurs without negligence, bad faith or willful misconduct on its part. The Trust‘s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. 2. Concentration Risk Substantially all of the Trust‘s assets are holdings of silver bullion, which creates a concentration risk associated with fluctuations in the price of silver. Accordingly, a decline in the price of silver will have an adverse effect on the value of the shares of the Trust. Factors that may have the effect of causing a decline in the price of silver include large sales by the official sector (governments, central banks and related institutions), an increase in the hedging activities of silver producers, and changes in the attitude towards silver of speculators and other market participants.] F-4

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iShares Silver Trust
13,000,000 iShares PROSPECTUS
[•], 2005 Until [•], 2005, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers‘ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions

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PART II—INFORMATION NOT REQUIRED IN PROSPECTUS TABLE OF CONTENTS Item 13. Other Expenses of Issuance and Distribution. 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. Item 14. Indemnification of Directors and Officers. Section 5.6(b) of the Trust Agreement provides that the trustee shall indemnify the sponsor, its directors, employees and agents against, and hold each of them harmless from, any loss, liability, cost, expense or judgment (including reasonable fees and expenses of counsel) (i) caused by the negligence or bad faith of the trustee or (ii) arising out of any information furnished in writing to the sponsor by the trustee expressly for use in the registration statement, or any amendment thereto, filed with the SEC relating to the iShares that is not materially altered by the sponsor. Section 5.6(d) of the Trust Agreement provides that the sponsor and its shareholders, directors, officers, employees, affiliates (as such term is defined under the Securities Act of 1933, as amended) and subsidiaries shall be indemnified from the trust and held harmless against any loss, liability or expense incurred without their (1) negligence, bad faith, willful misconduct or willful malfeasance arising out of or in connection with the performance of its obligations under the Trust Agreement or any actions taken in accordance with the provisions of the Trust Agreement or (2) reckless disregard of their obligations and duties under the Trust Agreement. Item 15. Recent Sales of Unregistered Securities. Not applicable. Item 16. Exhibits and Financial Statement Schedules. (a) Exhibits
Exhibit No. Description

1.1 4.1 4.2 5.1 8.1 10.1 23.1 23.2 24.1 *

Form of Distribution Agreement Form of Depositary Trust Agreement Form of Authorized Participant Agreement Form of Opinion of Clifford Chance US LLP as to legality Form of Opinion of Clifford Chance US LLP as to tax matters Form of Custodian Agreement Consent of PricewaterhouseCoopers* Consents of Clifford Chance US LLP are included in Exhibits 5.1 and 8.1 Powers of attorney are included on the signature page to this registration statement.

To be furnished by amendment. (b) Financial Statement Schedules Not applicable. II-1

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Item 17. Undertakings. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the ―Calculation of Registration Fee‖ table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. (4) That insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-2

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SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, California, on June 15, 2005. Barclays Global Investors International Inc. sponsor of the iShares Silver Trust By: /s/ B LAKE R. G ROSSMAN
Blake R. Grossman Chief Executive Officer – President

By:

/s/ F RANCIS S. R YAN
Francis S. Ryan Chief Financial Officer

POWER OF ATTORNEY Each person whose signature appears below hereby constitutes Blake R. Grossman and Francis S. Ryan, and each of them singly, his true and lawful attorneys-in-fact with full power to sign on behalf of such person, in the capacities indicated below, any and all amendments to this registration statement and any subsequent related registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and generally to do all such things in the name and on behalf of such person, in the capacities indicated below, to enable the Registrant to comply with the provisions of the Securities Act of 1933 and all requirements of the Securities and Exchange Commission thereunder, hereby ratifying and confirming the signature of such person as it may be signed by said attorneys-in-fact, or any of them, on any and all amendments to this registration statement or any such subsequent related registration statement. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities* and on the dates indicated.
Signature Capacity Date

/s/ B LAKE R. G ROSSMAN
Blake R. Grossman

Chief Executive Officer – Director – President

June 15, 2005

/s/ R ICHARD T. R ICCI
Richard T. Ricci

Director

June 15, 2005

* The Registrant will be a trust and the persons are signing in their capacities as officers or directors of Barclays Global Investors International Inc., the sponsor of the Registrant. II-3

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EXHIBIT INDEX
Exhibit Number Description

1.1 4.1 4.2 5.1 8.1 10.1 23.1 23.2 24.1 *

Form of Distribution Agreement Form of Depositary Trust Agreement Form of Authorized Participant Agreement Form of Opinion of Clifford Chance US LLP as to legality Form of Opinion of Clifford Chance US LLP as to tax matters Form of Custodian Agreement Consent of PricewaterhouseCoopers* Consents of Clifford Chance US LLP are included in Exhibits 5.1 and 8.1 Powers of attorney are included on the signature page to this registration statement.

To be furnished by amendment.

Exhibit 1.1 [ ] iShares

iSHARES SILVER TRUST DISTRIBUTION AGREEMENT [ ], 2005

DISTRIBUTION AGREEMENT [ Barclays Capital Inc. 200 Park Avenue New York, NY 10166 Ladies and Gentlemen: Barclays Global Investors International Inc., a Delaware corporation (the ―Sponsor‖), has sponsored the formation of a trust, known as ―iShares Silver Trust‖ (the ―Trust‖) pursuant to the laws of the State of New York. Subject to the terms hereof, the Trust has issued to Barclays Capital Inc. (―Barclays Capital‖) an aggregate of [ ] units of fractional undivided beneficial interest in and ownership of the Trust (each such unit, an ―iShare ‖) upon the deposit by Barclays Capital with JPMorgan Chase Bank N.A., a national banking association organized under the laws of the United States of America acting through its London branch as custodian of the Trust (in such capacity, the ―Custodian‖), of an aggregate amount of [ ] Ounces of silver bullion, (equal to [ ] baskets as described in the Prospectus, the ―Initial Deposit‖). The iShares are described in the Prospectus which is referred to below.
®

], 2005

The Sponsor has filed, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the ―Act‖), with the Securities and Exchange Commission (the ―Commission‖) a registration statement on Form S-1 (Registration No. 333-[ ]) including a prospectus, relating to the iShares. The Sponsor has furnished to you, for use by Barclays Capital, the form of what is expected to be the final prospectus (constituting a part of the registration statement, each such prospectus being herein called a ―Prospectus‖) relating to the iShares. Except where the context otherwise requires, the registration statement, as amended when it becomes effective, including all documents filed as a part thereof, and including any information contained in any prospectus subsequently filed with the Commission pursuant to Rule 424(b) under the Act and also including any registration statement filed pursuant to Rule 462(b) under the Act, is herein called the ―Registration Statement‖. As used herein, ―business day‖ shall mean a day on which the American Stock Exchange is open for trading. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Depositary Trust Agreement (as defined below). The Sponsor, on its own behalf and in its capacity as sponsor of the Trust, and Barclays Capital agree as follows: 1. Sale and Purchase . Upon the basis of the representations and warranties and subject to the terms and conditions herein set forth (including satisfaction of the conditions set forth in section 6 hereof), Barclays Capital is purchasing from the Trust [ ] iShares (such iShares, collectively, the ―Purchased Shares‖) in exchange for silver bullion which, in the amount of the Initial Deposit, has been delivered by Barclays Capital to the Custodian on the date hereof. The Sponsor and the Trust are advised by Barclays Capital that, upon satisfaction (or waiver by Barclays Capital) of the conditions set forth in section 6 hereof, Barclays Capital intends to make a public offering of its iShares as soon after the effective date of the Registration Statement, and on such terms, as in its judgment is advisable. 2. Deposit of Silver and Delivery of the Purchased Shares . Pursuant to the Depositary Trust Agreement of the iShares Silver Trust between the Sponsor and the Trustee (the ―Depositary Trust Agreement‖), dated the date hereof, Barclays Capital has on the date hereof made delivery of the Initial

Deposit to the Custodian, with irrevocable instructions to transfer such Initial Deposit to the account of the Trust, and the Trust has caused the Purchased Shares to be delivered to Barclays Capital through the facilities of The Depository Trust Company (―DTC‖) for the account of Barclays Capital. 3. Representations and Warranties of the Sponsor . The Sponsor, on its own behalf and in its capacity as sponsor of the Trust, represents and warrants to and agrees with Barclays Capital that: (a) at the time the conditions set forth in section 6 hereof have been waived or satisfied (such time, the ―time of closing‖) (i) the Registration Statement shall have become effective and no stop order of the Commission with respect thereto shall have been issued and no proceedings for such purpose shall have been instituted or, to the Sponsor‘s knowledge after due inquiry, will then be contemplated by the Commission; (ii) each Prospectus, at the time of filing thereof, shall have complied in all material respects with the requirements of the Act and the last Prospectus distributed in connection with the offering of the shares shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iii) the Registration Statement shall comply, and shall have complied at the time it became effective, in all material respects with the requirements of the Act and the Prospectus will comply, as of its date and at the time of closing, in all material respects with the requirements of the Act and any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement have been so described or filed; (iv) the conditions to the use of Form S-1 have been satisfied; (v) the Registration Statement shall not contain, and shall have not contained at the time it became effective, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Sponsor makes no warranty or representation with respect to any statement contained in the Registration Statement or the Prospectus in reliance upon and in conformity with information concerning Barclays Capital and furnished in writing by or on behalf of Barclays Capital to the Sponsor expressly for use in the Registration Statement or such Prospectus; and (vi) the Sponsor and the Trust shall have not distributed and will not distribute any offering material in connection with the offering or creation of the shares other than the Registration Statement or the then most recent Prospectus; (b) on the date of the Initial Deposit, the statement of financial position is as set forth in the section of the Registration Statement and the Prospectus entitled ―Statement of Financial Condition‖; (c) as of the date hereof, the Trust has been duly formed and is validly existing as an investment trust under the laws of the State of New York, as described in the Registration Statement and the Prospectus, and has all power and authority to issue and deliver the iShares as contemplated herein; (d) the Sponsor is a Delaware corporation, with full power and authority to conduct its business as described in the Registration Statement and the Prospectus; (e) the Sponsor is duly qualified, validly existing and in good standing under the laws of its jurisdiction of organization; and the Trust is not required to so qualify in any jurisdiction; (f) complete and correct copies of the Depositary Trust Agreement, and any and all amendments thereto, have been delivered to Barclays Capital, and no changes thereto have been made subsequent to the date hereof and prior to the time of closing; 2

(g) the iShares have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and non-assessable and free of statutory and contractual preemptive rights, rights of first refusal and similar rights; (h) the iShares conform in all material respects to the description thereof contained in the Registration Statement and the Prospectus and the holders of the iShares will not be subject to personal liability by reason of being such holders; (i) this Agreement has been duly authorized, executed and delivered by the Sponsor; (j) neither the Sponsor nor the Trust is in material breach or material violation of or in material default under (nor has any event occurred which with notice, lapse of time or both would result in any material breach or material violation of, constitute a material default under or give the holder of any indebtedness (or a person acting on such holder‘s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) its respective constitutive documents, or any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Sponsor or the Trust is a party or by which either of them or any of their properties may be bound or affected, and the execution, delivery and performance of this Agreement, the issuance and sale of the iShares and the consummation of the transactions contemplated hereby will not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which with notice, lapse of time or both would result in any breach or violation of or constitute a default under), respectively, the constitutive documents of the Sponsor or the Depositary Trust Agreement, or any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which the Sponsor or the Trust is a party or by which either of them or any of their respective properties may be bound or affected, or any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Sponsor or the Trust; (k) no approval, authorization, consent or order of or filing with any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency is required in connection with the issuance and sale of the iShares or the consummation by the Sponsor and the Trust of the transactions contemplated hereby other than registration of the iShares under the Act, which has been or will be effected, and any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the shares are being offered by Barclays Capital or under the rules and regulations of the National Association of Securities Dealers (the ―NASD‖); (l) except as set forth in the Registration Statement and the Prospectus, (i) no person has the right, contractual or otherwise, to cause the Trust to issue or sell to it any iShares or other equity interest of the Trust, and (ii) no person has the right to act as an underwriter or as a financial advisor to the Trust in connection with the offer and sale of the iShares, in the case of each of the foregoing clauses (i) and (ii), whether as a result of the filing or effectiveness of the Registration Statement or the sale of the iShares as contemplated thereby or otherwise; no person has the right, contractual or otherwise, to cause the Sponsor on behalf of the Trust to register under the Act any other equity interests of the Trust, or to include any such shares or interests in the Registration Statement or the offering contemplated thereby, whether as a result of the filing or effectiveness of the Registration Statement or the sale of the shares as contemplated thereby or otherwise; (m) each of the Sponsor and the Trust has all necessary licenses, authorizations, consents and approvals and has made all necessary filings required under any federal, state, local or foreign law, regulation or rule, and has obtained all necessary authorizations, consents and approvals from other persons, in order to conduct its respective business; neither the Sponsor nor the Trust is in violation 3

of, or in default under, or has received notice of any proceedings relating to revocation or modification of, any such license, authorization, consent or approval or any federal, state, local or foreign law, regulation or rule or any decree, order or judgment applicable to the Sponsor or the Trust; (n) all legal or governmental proceedings, affiliate transactions, off-balance sheet transactions, contracts, licenses, agreements, leases or documents of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement have been so described or filed as required; (o) except as set forth in the Registration Statement and the Prospectus, there are no material actions, suits, claims, investigations or proceedings pending or threatened or, to the Sponsor‘s knowledge after due inquiry, contemplated to which the Sponsor or the Trust, or (to the extent that is or could be material in the context of the offering and sale of the iShares) any of their respective directors or officers, is or would be a party or of which any of their respective properties are or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency; (p) PricewaterhouseCoopers, whose report on the audited statement of financial condition of the Trust is filed with the Commission as part of the Registration Statement and the Prospectus, are independent public accountants as required by the Act; (q) the audited statement of financial condition included in the Prospectus, together with the related notes and schedules, presents fairly the financial position of the Trust as of the date indicated and has been prepared in compliance with the requirements of the Act and in conformity with generally accepted accounting principles; there are no financial statements (historical or pro forma) that are required to be included in the Registration Statement and the Prospectus that are not included as required; and the Trust does not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not disclosed in the Registration Statement and the Prospectus; (r) subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any (i) material adverse change, or any development involving a prospective material adverse change affecting the Sponsor or the Trust, (ii) transaction which is material to the Sponsor or the Trust taken as a whole, (iii) obligation, direct or contingent (including any off-balance sheet obligations), incurred by the Sponsor or the Trust, which is material to the Trust, (iv) change in the iShares or outstanding indebtedness of the Trust, or (v) dividend or distribution of any kind declared, paid or made on the iShares; (s) the Trust is not and, after giving effect to the offering and sale of the iShares, will not be an ―investment company‖ or an entity ―controlled‖ by an ―investment company,‖ as such terms are defined in the investment Company Act of 1940, as amended (the ―Investment Company Act‖); (t) except as set forth in the Registration Statement and the Prospectus, (i) the Sponsor and the Trust own, or have obtained valid and enforceable licenses for, or other rights to use, the inventions, patent applications, patents, trademarks (both registered and unregistered), tradenames, copyrights, trade secrets and other proprietary information described in the Registration Statement and the Prospectus as being owned or licensed by them or which are necessary for the conduct of their respective businesses, (collectively, ―Intellectual Property‖); (ii) there are no third parties who have or, to the Sponsor‘s knowledge after due inquiry, will be able to establish rights to any Intellectual Property, except for the ownership rights of the owners of the Intellectual Property which is licensed to the Sponsor or the Trust; (iii) there is no infringement by third parties of any Intellectual Property; (iv) there is no pending or threatened action, suit, proceeding or claim by others challenging the Sponsor‘s or the Trust‘s rights in or 4

to any Intellectual Property, and the Sponsor and the Trust are unaware of any facts which could form a reasonable basis for any such claim; (v) there is no pending or threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property, and the Sponsor and the Trust are unaware of any facts which could form a reasonable basis for any such claim; and (vi) there is no pending or threatened action, suit, proceeding or claim by others that the Sponsor or the Trust infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and the Sponsor and the Trust are unaware of any facts which could form a reasonable basis for any such claim. (u) the Trust is not subject to any tax filing or any payment obligation of any tax or other assessment of a similar nature (whether imposed directly or through withholding) including any interest, additions to tax or penalties applicable thereto due or claimed to be due; (v) neither the Sponsor nor the Trust has sent or received any communication regarding termination of, or intent not to renew, any of the contracts or agreements referred to or described in, or filed as an exhibit to, the Registration Statement, and no such termination or non-renewal has been threatened by the Sponsor or the Trust or, to the Sponsor‘s or the Trust‘s knowledge, any other party to any such contract or agreement; (w) on behalf of the Trust, the Sponsor has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-14 and 15d-14 under the Exchange Act of 1934 (the ―Exchange Act‖), giving effect to the rules and regulations, and SEC staff interpretations (whether or not public), thereunder)); such disclosure controls and procedures are designed to ensure that material information relating to the Trust, is made known to the Sponsor, and such disclosure controls and procedures are effective to perform the functions for which they were established; on behalf of the Trust, the Sponsor has been advised of: (i) any significant deficiencies in the design or operation of internal controls which could adversely affect the Trust‘s ability to record, process, summarize, and report financial data; and (i) any fraud, whether or not material, that involves management or other employees who have a role in the Trust‘s internal controls; any material weaknesses in internal controls have been identified for the Trust‘s auditors; (x) any statistical and market-related data included in the Registration Statement and the Prospectus are based on or derived from sources that the Sponsor believes to be reliable and accurate, and the Sponsor has obtained the written consent to the use of such data from such sources to the extent required; (y) neither the Sponsor, nor the Trust, nor any of the Sponsor‘s directors, members, officers, affiliates or controlling persons has taken, directly or indirectly, any action designed, or which has constituted or might reasonably be expected to cause or result in, under the Exchange Act or otherwise, the stabilization or manipulation of the price of any security or asset of the Trust to facilitate the sale or resale of the iShares; and (z) to the Sponsor‘s knowledge after due inquiry, there are no affiliations or associations between any member of the NASD and any of the Sponsor‘s officers, directors or 5% or greater securityholders, except for Barclays Global Investor Services, a registered broker-dealer wholly owned by an affiliate of the Sponsor (and which will take no part in any distribution of the iShares) or as set forth in the Registration Statement and the Prospectus. In addition, any certificate signed by any officer of the Sponsor and delivered to Barclays Capital or counsel for Barclays Capital in connection with the offering of the iShares shall be deemed to be a representation and warranty by the Sponsor, as the case may be, as to matters covered thereby, to Barclays Capital. 5

4. Certain Covenants of the Sponsor . The Sponsor, on its own behalf and in its capacity as sponsor of the Trust, agrees: (a) to furnish such information as may be required and otherwise to cooperate in qualifying the iShares for offering and sale under the securities or blue sky laws of such states as Barclays Capital may reasonably designate and to maintain such qualifications in effect so long as Barclays Capital may request for the distribution of the iShares not to exceed a period of nine months; provided that the Trust shall not be required to qualify as a foreign corporation or to consent to the service of process under the laws of any such jurisdiction (except service of process with respect to the offering and sale of the iShares); and to promptly advise Barclays Capital of the receipt by the Sponsor of any notification with respect to the suspension of the qualification of the iShares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (b) to make available to Barclays Capital, as soon as practicable after the Registration Statement becomes effective, and thereafter from time to time to furnish to Barclays Capital, as many copies of the Prospectus (or of the Prospectus as amended or supplemented if the Sponsor or the Trust shall have made any amendments or supplements thereto after the effective date of the Registration Statement) as Barclays Capital may request for the purposes contemplated by the Act; in case Barclays Capital is required to deliver a prospectus after the nine-month period referred to in Section 10(a)(3) of the Act in connection with the sale of the iShares, the Sponsor will prepare, at its expense, promptly upon request such amendment or amendments to the Registration Statement and the Prospectus as may be necessary to permit compliance with the requirements of Section 10(a)(3) of the Act; (c) to endeavor to cause the Registration Statement to become effective on or before the time of closing and the Sponsor will advise Barclays Capital promptly; and, if requested by Barclays Capital, to confirm in writing when the Registration Statement and any post-effective amendment thereto has become effective; and (iii) upon receipt of request from Barclays Capital therefor, to file a post-effective amendment removing any reference to Barclays Capital thereunder; (d) to advise Barclays Capital promptly, confirming such advice in writing, of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information with respect thereto, or of notice of institution of proceedings for, or the entry of a stop order suspending the effectiveness of the Registration Statement and, if the Commission should enter a stop order suspending the effectiveness of the Registration Statement, to use its best efforts to obtain the lifting or removal of such order as soon as possible; to advise Barclays Capital promptly of any proposal to amend or supplement the Registration Statement or the Prospectus and to provide Barclays Capital and Barclays Capital‘s counsel copies of any such documents for review and comment a reasonable amount of time prior to any proposed filing and to file no such amendment or supplement to which Barclays Capital shall object in writing; (e) subject to section 4(d) hereof, to file promptly all reports and any information statement required to be filed by the Trust with the Commission in order to comply with the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Purchased Shares; (f) to advise Barclays Capital promptly of the happening of any event within the time during which a prospectus relating to the Purchased Shares is required to be delivered under the Act which could require the making of any change in the Prospectus then being used so that the Prospectus 6

would not include an untrue statement of material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, and, during such time, subject to section 4(d) hereof, to prepare and furnish, at the Sponsor‘s expense, to Barclays Capital promptly such amendments or supplements to such Prospectus as may be necessary to reflect any such change; (g) to make generally available to the shareholders of the Trust, and to deliver to Barclays Capital, an earnings statement of the Trust (which will satisfy the provisions of Section 11(a) of the Act) covering a period of twelve months beginning after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act) as soon as is reasonably practicable after the termination of such twelve-month period; (h) to furnish to Barclays Capital promptly for a period of one year from the date of this Agreement such information as Barclays Capital may reasonably request regarding the Trust; (i) to pay all costs, expenses, fees and taxes in connection with (i) the preparation and filing of the Registration Statement, the Prospectus, and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to Barclays Capital (including costs of mailing and shipment), (ii) the registration, issue, sale and delivery of the iShares including any stock or transfer taxes and stamp or similar duties payable upon the sale, issuance or delivery of the shares to Barclays Capital, (iii) the producing, word processing and/or printing of this Agreement, any Powers of Attorney and any closing documents (including compilations thereof) and the reproduction and/or printing and furnishing of copies of each thereof to Barclays Capital and (except closing documents) to dealers (including costs of mailing and shipment), (iv) the qualification of the iShares for offering and sale under state or foreign laws and the determination of their eligibility for investment under state law as aforesaid (including the legal fees and filing fees and other disbursements of counsel for Barclays Capital) and the printing and furnishing of copies of any blue sky surveys or legal investment surveys to Barclays Capital, (v) any listing of the iShares on any securities exchange or qualification of the iShares for quotation on the American Stock Exchange and any registration thereof under the Exchange Act, (vi) any filing for review of the public offering of the iShares by the NASD, including the legal fees and filing fees and other disbursements of counsel to Barclays Capital, (vi) the fees and disbursements of the Custodian (as defined in the Depositary Trust Agreement), transfer agent or registrar for the iShares, (vii) the costs and expenses of the Trust relating to presentations or meetings undertaken in connection with the marketing of the offering and sale of the iShares to prospective investors and Barclays Capital‘s sales forces, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel, lodging and other expenses incurred by the officers of the Sponsor or the Trust and any such consultants, and the cost of any aircraft chartered in connection with the road show, and (ix) the performance of the Sponsor‘s other obligations hereunder; (j) to use its best efforts to cause the iShares to be listed on the American Stock Exchange; (k) to maintain a Custodian (as defined in the Depositary Trust Agreement) and an orderly procedure for the transfer and register of the iShares; and (l) to waive until the time of closing any fees due under Section 5.8(a) of the Depositary Trust Agreement. 5. Reimbursement of Barclays Capital‘s Expenses . The Sponsor shall, at the earlier of the time of closing and the first business day immediately following the last day on which the conditions 7

referred to in section 6 hereof may be satisfied, reimburse Barclays Capital for all of its out-of-pocket expenses, including the fees and disbursements of counsel, incurred by Barclays Capital in connection with the preparation of this Agreement and the transactions contemplated hereby. 6. Conditions of Barclays Capital‘s Obligations . The obligations of Barclays Capital hereunder are subject to the accuracy of the representations and warranties contained herein on the date hereof (if applicable), at the time of closing, the performance by the Sponsor of its obligations hereunder and compliance with the following additional conditions precedent no later than on [ ], 2005: (a) The Sponsor shall furnish to Barclays Capital at the time of closing an opinion of counsel for the Sponsor, addressed to Barclays Capital, and dated the time of closing and in form and substance satisfactory to Clifford Chance US LLP, counsel for Barclays Capital, stating that: (i) the iShares issuable hereunder, when issued in accordance with the terms hereof will have been duly authorized and validly issued and fully paid and non-assessable; (ii) the iShares conform to the description thereof contained in the Registration Statement and the Prospectus; (iii) the Registration Statement and the Prospectus (except as to the financial statements and schedules and other financial and statistical information contained therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act; (iv) the Registration Statement has become effective under the Act and, to such counsel‘s knowledge, no stop order proceedings with respect thereto are pending or threatened under the Act and any required filing of the Prospectus and any supplement thereto pursuant to Rule 424 under the Act has been made in the manner and within the time period required by such Rule 424; (v) no approval, authorization, consent or order of or filing with any federal, or New York State governmental or regulatory commission, board, body, authority or agency is required in connection with the issuance and sale of the iShares and consummation by the Sponsor of the transactions contemplated hereby other than registration of the iShares under the Act (except such counsel need express no opinion as to any necessary qualification under the state securities or blue sky laws of any state or the laws of any jurisdictions outside the United States); (vi) the Trust is not and, after giving effect to the offering and sale of the iShares, will not be an ―investment company‖ or an entity ―controlled‖ by an ―investment company,‖ as such terms are defined in the Investment Company Act; and (vii) the information in the Registration Statement and the Prospectus under the headings ―Description of the iShares and the Trust Agreement‖, ―United States Federal Income Tax Consequences,‖ and ―Custody of the Trust‘s Silver‖ insofar as such statements constitute a summary of documents or matters of law are accurate in all material respects and present fairly the information required to be shown. In addition, such counsel shall state that such counsel has participated in conferences with officers and other representatives of the Sponsor, representatives of the independent public accountants of the Trust and representatives of Barclays Capital at which the contents of the Registration Statement and the Prospectus were discussed and, although such counsel is not passing upon and does not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Registration 8

Statement or the Prospectus (except as and to the extent stated in subparagraphs (ii) and (vii) above), on the basis of the foregoing nothing has come to the attention of such counsel that causes them to believe that the Registration Statement or any amendment thereto at the time such Registration Statement or amendment became effective contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus or any supplement thereto at the date of such Prospectus or such supplement, and at the time of closing, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no opinion with respect to the information contained under the heading ―The Silver Industry‖ or the financial statements and schedules and other financial and statistical information included in the Registration Statement or the Prospectus). (b) The Sponsor shall furnish to Barclays Capital at the time of closing an opinion of Emmet, Marvin & Martin LLP, counsel for the Trustee, addressed to Barclays Capital, and dated the time of closing and in form and substance satisfactory to Clifford Chance US LLP, counsel for Barclays Capital, stating that: (i) The Depositary Trust Agreement (i) has been duly authorized, executed and delivered by The Bank of New York (ii) constitutes a valid and binding agreement of the Trustee enforceable against the Trustee in accordance with its terms, except as enforcement of it may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general application relating to or affecting creditors‘ rights and general principles of equity; (ii) the Custodian Agreement dated as of [ ], 2005 (the ―Custodian Agreement‖) between the Trustee and the Custodian has been duly authorized, executed and delivered by the Trustee and constitutes a valid and binding agreement of the Trustee enforceable against the Trustee in accordance with its terms, except as enforcement of it may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws of general application relating to or affecting creditors‘ rights and (ii) general principles of equity; (iii) upon receipt by the Trustee of an initial deposit of silver in accordance with the Trust Agreement, the Trust (as defined in the Depositary Trust Agreement) will exist; (iv) upon delivery by the Trustee of the iShares against the deposit of silver in accordance with the provisions of the Depositary Trust Agreement, the iShares will be validly issued and will entitle the registered holder the iShares to the rights specified in the Trust Agreement; and (v) The Bank of New York is a corporation duly organized and existing under the laws of the State of New York, is validly existing as a banking organization under the Banking Law of the State of New York and is a subsisting trust company under the supervision of the New York State Banking Department, and The Bank of New York has full power and authority to enter into and perform its obligations under each of the Trust Agreement and the Custodian Agreement. (c) The Sponsor shall furnish to Barclays Capital at the time of closing an opinion of [ ], counsel to the Sponsor, addressed to Barclays Capital, and dated the time of closing and in form and substance satisfactory to Clifford Chance US LLP, counsel for Barclays Capital, stating that: (i) the Sponsor is a Delaware corporation with full corporate power and authority to conduct its business as described in the Registration Statement and the Prospectus and to execute and deliver this Agreement; 9

(ii) the Sponsor is duly qualified, validly existing and in good standing under the laws of its jurisdiction of organization; (iii) this Agreement has been duly authorized, executed and delivered by the Sponsor; (iv) the execution, delivery and performance of this Agreement by the Sponsor, the issuance and delivery of the iShares by the Trust and the consummation by the Sponsor of the transactions contemplated hereby do not and will not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which with notice, lapse of time or both would result in any breach or violation of or constitute a default under) the constitutive documents of the Sponsor or the Depositary Trust Agreement, or any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument known to such counsel after reasonable (based on a certificate of an officer of the Sponsor) investigation to which the Sponsor is a party or by which any of its properties may be bound or affected, or any federal, or New York State law, regulation or rule or any decree, judgment or order applicable to the Sponsor and known to such counsel; (v) to such counsel‘s knowledge, the Sponsor is not in material breach or material violation of or in material default under (nor has any event occurred which with notice, lapse of time, or both would result in any material breach or material violation of or material default under), its constitutive documents, or any federal or New York State law, regulation or rule applicable to the Sponsor; and (vi) to such counsel‘s knowledge, there are no actions, suits, claims, investigations or proceedings pending, or threatened to which the Sponsor is or would be a party or to which any of its properties is or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency which are required to be described in the Registration Statement or the Prospectus but are not so described. (d) No Prospectus or amendment or supplement to the Registration Statement or the Prospectus shall have been filed to which Barclays Capital objects in writing. (e) The Registration Statement shall have been declared effective. (f) Prior to the time of closing, (i) no stop order with respect to the effectiveness of the Registration Statement shall have been issued under the Act or proceedings initiated under Section 8(d) or 8(e) of the Act, (ii) the Registration Statement and all amendments thereto shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) the Prospectus and all amendments or supplements thereto shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading. (g) Between the time of execution of this Agreement and the time of closing, no material adverse change or any development involving a prospective material adverse change in the management or financial condition of the Sponsor shall occur or become known. (h) The Sponsor will, at the time of closing, deliver to Barclays Capital an officer‘s certificate of the Chief Executive Officer and its Chief Financial Officer in the form attached as Exhibit A hereto. 10

(i) The Sponsor and the Trustee shall each have furnished to Barclays Capital such other documents and certificates as to the accuracy and completeness of any statement in the Registration Statement and the Prospectus as of the time of closing, as Barclays Capital may reasonably request; provided, that in the case of the Trustee, such certificate shall be in the form attached as Exhibit B hereto. (j) The iShares shall have been approved for listing on the American Stock Exchange, subject only to notice of issuance at or prior to the time of closing. In the event that any of the foregoing conditions precedent have not been met or waived within the time indicated in the opening paragraph of section 6 hereof, Barclays Capital may in its sole discretion elect to surrender the Purchased Shares to the Trust for redemption in compliance with the provisions of the Depositary Trust Agreement, and upon receipt by Barclays Capital of the Initial Deposit and any expenses payable to Barclays Capital pursuant to section 5 of this Agreement, this Agreement shall be of no further force and effect and all obligations of the parties hereunder shall be discharged; provided, that obligations of the parties arising under section 4(k), 5 and 9 shall survive the termination of this Agreement. 7. Subsequent Offer and Resale of the iShares . The Initial Purchaser represents, warrants and agrees that subsequent offers and resales of the iShares will be made in compliance with applicable laws and regulations of each jurisdiction in which such offer or sale takes place and, in particular, that: (a) the offering of the iShares will be made on a private placement basis in Canada (in the provinces of British Columbia, Ontario and Quebec) (1) through the Initial Purchaser or its affiliates who are permitted under applicable securities laws or available exemptions to offer and sell the iShares in Canada; (2) solely to purchasers who are entitled under applicable provincial securities laws to purchase the iShares without the benefit of a prospectus qualified under the securities laws; and (3) in the case of purchasers in provinces other than Ontario, without the services of a dealer registered pursuant to those securities laws; (b) the offering and sale of iShares in Japan can only be effected through a licensed Commodity Investment Dealer (― shohin toushi hanbai gyosha ‖) or a person exempt under the law Concerning Regulations of Commodities Investment Business (Commodities Law). The Prospectus cannot be distributed in Japan other than to a licensed Commodity Investment Dealer or a person exempt under the Commodities Law; (c) the offering and sale of iShares in Switzerland will be on the basis of a non-public offering. The Prospectus does not constitute a prospectus according to articles 652a or 1156 of the Swiss Federal Code of Obligations and the iShares may not be offered or distributed on a professional basis in or from Switzerland and neither the Prospectus nor any other offering material relating to the iShares may be publicly issued in connection with any such offer or distribution. The iShares have not been and will not be approved by any Swiss regulatory authority. In particular, neither the iShares nor the trust are or will be supervised by the Swiss Federal Banking Commission, and investors may not claim protection under the Swiss Investment Fund Act; (d) the Trust is a collective investment scheme as defined in the Financial Services and Markets Act 2000. The Trust has not been authorized, or otherwise recognized or approved, by the Financial Services Authority and, as an unregulated scheme, it accordingly cannot be promoted in the United Kingdom to the general public. The Initial Purchaser will promote the Trust in the United Kingdom in accordance with applicable law and regulation only to (1) persons who are investment professionals (as defined in Article 14(5) of the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (the ―CIS Order‖)); (2) persons who are within any of the categories of persons described in Article 22 of the CIS Order; or (3) persons to whom the Prospectus may otherwise lawfully be communicated; 11

(e) the Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the ―SFA‖). Accordingly, the Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the iShares may not be circulated or distributed, nor may the iShares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor or other person specified in Section 274 of the SFA, (ii) to a sophisticated investor, and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA; (f) it will comply with the Securities Sales Prospectus Act ( Wertpapier-Verkaufsprospektgesetz , the ―WV Act‖) of the Federal Republic of Germany and all other applicable legal and regulatory requirements. In particular, the Initial Purchaser has not engaged and will not engage in a public offering ( öffentliches Angebot ) within the meaning of the WV Act with respect to any iShares otherwise than in accordance with the WV Act; (g) the iShares may not be offered, sold or distributed in Spain save in compliance with the requirements of the Spanish Securities Market Law ( Ley 24/1988, de 28 de julio, del Mercado de Valores ), as amended and restated, and Royal Decree 291/1992 on Issues and Public Offerings of Securities ( Real Decreto 291/1992, de 27 de marzo, sobre Emisiones y Ofertas Públicas de Venta de Valores ), as amended and restated, and other applicable Spanish laws and regulations; (h) the iShares may not be acquired by or offered, directly or indirectly to, individuals or entities in the Netherlands and the Prospectus may not be circulated in the Netherlands as part of initial distribution or at any time thereafter, except to individuals or entities whose ordinary business or profession is (1) to trade or invest in securities or (2) involves the acquisition and disposal of investment objects of the same kind as the assets or a substantial part of the assets of the trust, in either case within the meaning of Article 1 of the regulation dated October 9, 1990 (as amended) issued pursuant to Article 14 of the Investment Institutions Supervision Act ( Wet Toezicht Beleggingsinstellingen ) of 27 June 1990; (i) the offering of the iShares has not been registered pursuant to the Italian securities legislation and, accordingly, the Initial Purchaser has not offered or sold, and will not offer or sell, any iShares in the Republic of Italy in a solicitation to the public, and any sales of the iShares in the Republic of Italy shall be effected in accordance with all Italian securities, tax and exchange control and other applicable laws and regulations. The Initial Purchaser will not offer, sell or deliver any iShares or distribute copies of the Prospectus or any other document relating to the iShares in the Republic of Italy except: (1) to ―Professional Investors‖, as defined in Article 31.2 of CONSOB Regulation No. 11522 of 1 July 1998 as amended (―Regulation No. 11522‖), pursuant to Article 30.2 and 100 of Legislative Decree No. 58 of 24 February 1998 as amended (―Decree No. 58‖), or in any other circumstances where an expressed exemption to comply with the solicitation restrictions provided by Decree No. 58 or CONSOB Regulation No. 11971 of 14 May 1999 as amended applies, provided, however, that any such offer, sale or delivery of the iShares or distribution of copies of the Prospectus or any other document relating to the iShares in the Republic of Italy must be: (a) made by investment firms, banks or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with Legislative Decree No. 385 of 1 September 1993 as amended (―Decree No. 385‖), Decree No. 58, Regulation No. 11522 and any other applicable laws and regulations; and (b) in compliance with any other applicable notification requirement or limitation which may be imposed by CONSOB or the Bank of Italy; or (2) if Italian residents submit unsolicited offers to the Initial Purchaser to purchase the iShares; and 12

(j) (1) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any iShares other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) and (2) it has not issued and will not issue any advertisement, invitation or document relating to the iShares, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to iShares which are or are intended to be disposed of only to persons outside Hong Kong or only to ―professional investors‖ within the meaning of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and any rules made thereunder. In addition, the Prospectus has not been submitted to the registration procedures of the French Autorité des Marchés Financiers and, accordingly, the iShares may not be offered or sold to the public in France. Offers and sales of the iShares in France may be made only to qualified investors ( investisseurs qualifiés ) in accordance with Article L.411-2 of the French Code Monetaire et Financier and decree no. 98-880 dated 1 October 1998 (the ―French Code‖). The Prospectus or any other offering material relating to the iShares may not be distributed in France to any person other than a qualified investor, as defined in the French Code. 8. Termination . The obligations of Barclays Capital hereunder shall be subject to termination in the absolute discretion of Barclays Capital, if (x) since the time of execution of this Agreement or the earlier respective dates as of which information is given in the Registration Statement and the Prospectus, there has been any material adverse change or any development involving a prospective material adverse change affecting the Sponsor or the Trust which would, in Barclays Capital‘s judgment, make it impracticable or inadvisable to proceed with the public offering or the delivery of the iShares on the terms and in the manner contemplated in the Registration Statement and the Prospectus, or (y) since the time of execution of this Agreement, there shall have occurred (i) a suspension or material limitation in trading in securities generally on the American Stock Exchange, the American Stock Exchange or the NASDAQ, (ii) a suspension or material limitation in trading in the Trust‘s securities on the American Stock Exchange, (iii) a general moratorium on commercial banking activities declared by either federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States, (iv) an outbreak or escalation of hostilities or acts of terrorism involving the United States or a declaration by the United States of a national emergency or war, or (v) any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in Barclays Capital‘s judgment makes it impracticable or inadvisable to proceed with the public offering or the delivery of the iShares on the terms and in the manner contemplated in the Registration Statement and the Prospectus. If Barclays Capital elects to terminate this Agreement as provided in this section 8, the Sponsor shall be notified promptly in writing. If the sale to Barclays Capital of the iShares, as contemplated by this Agreement, is not carried out by Barclays Capital for any reason permitted under this agreement or if such sale is not carried out because the Sponsor shall be unable to comply with any of the terms of this Agreement, the Sponsor shall not be under any obligation or liability under this Agreement (except to the extent provided in sections 4(k), 5 and 9 hereof), and Barclays Capital shall be under no obligation or liability to the Sponsor or the Trust under this agreement (except to the extent provided in section 9 hereof) or to one another hereunder. 13

9. Indemnity and Contribution . (a) The Sponsor agrees to indemnify, defend and hold harmless Barclays Capital, its partners, directors and officers, and any person who controls it within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which Barclays Capital or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof) or in a Prospectus (the term Prospectus for the purpose of this section 9 being deemed to include the Prospectus and the Prospectus as amended or supplemented by the Sponsor), or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated in either such Registration Statement or such Prospectus or necessary to make the statements made therein not misleading, except insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in and in conformity with information concerning Barclays Capital furnished in writing by or on behalf of Barclays Capital to the Sponsor expressly for use in such Registration Statement or such Prospectus or arises out of or is based upon any omission or alleged omission to state a material fact in connection with such information required to be stated in such Registration Statement or such Prospectus or necessary to make such information not misleading, (ii) any untrue statement or alleged untrue statement made by the Sponsor in section 3 hereof or the failure by the Sponsor to perform when and as required any agreement or covenant contained herein, or (iii) any untrue statement or alleged untrue statement of any material fact contained in any audio or visual materials provided by the Sponsor or based upon written information furnished by or on behalf of the Sponsor or the Trust including, without limitation, slides, videos, films or tape recordings used in connection with the marketing of the iShares. The Sponsor shall not be liable under this section 9(a) for any loss, damage, expense, liability or claim which may be incurred by Barclays Capital to the extent that such loss, damage, expense, liability or claim is caused by the failure by Barclays Capital to deliver any subsequent Prospectus as required. If any action, suit or proceeding (each, a ―Proceeding‖) is brought against Barclays Capital or any such person in respect of which indemnity may be sought against the Sponsor pursuant to the foregoing paragraph, Barclays Capital or such person shall promptly notify the Sponsor in writing of the institution of such Proceeding and the Sponsor shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses; provided, however, that the omission to so notify the Sponsor shall not relieve the Sponsor from any liability which the Sponsor may have to Barclays Capital or any such person except to the extent that the Sponsor has been materially prejudiced by such failure and has not otherwise learned of such proceeding. Barclays Capital or such person shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of Barclays Capital or of such person unless the employment of such counsel shall have been authorized in writing by the Sponsor in connection with the defense of such Proceeding or the Sponsor shall not have, within a reasonable period of time in light of the circumstances, employed counsel to have charge of the defense of such proceeding or such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from, additional to or in conflict with those available to the Sponsor (in which case the Sponsor shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties), in any of which events such fees and expenses shall be borne by the Sponsor and paid as incurred (it being understood, however, that the Sponsor shall not be liable for the 14

expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). The Sponsor shall not be liable for any settlement of any Proceeding effected without its written consent but if settled with the written consent of the Sponsor, the Sponsor agrees to indemnify and hold harmless Barclays Capital and any such person from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then the indemnifying party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have fully reimbursed the indemnified party in accordance with such request prior to the date of such settlement and (iii) such indemnified party shall have given the indemnifying party at least 30 days‘ prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such indemnified party. (b) Barclays Capital agrees to indemnify, defend and hold harmless each of the Sponsor, its directors and officers, and any person who controls the Sponsor or the Trust within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which, jointly or severally, the Sponsor, the Trust or any such person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in and in conformity with information furnished in writing by or on behalf of Barclays Capital to the Sponsor or the Trust expressly for use in the Registration Statement (or in the Registration Statement as amended by any post-effective amendment thereof) or in the Prospectus or any amendment to the Prospectus, or arises out of or is based upon any omission or alleged omission to state a material fact in connection with such information required to be stated in such Registration Statement or such Prospectus or necessary to make such information not misleading. If any Proceeding is brought against the Sponsor or the Trust or any such person in respect of which indemnity may be sought against Barclays Capital pursuant to the foregoing paragraph, the Sponsor, the Trust or such person shall promptly notify Barclays Capital in writing of the institution of such Proceeding and Barclays Capital shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such indemnified party and payment of all fees and expenses; provided, however, that the omission to so notify Barclays Capital shall not relieve Barclays Capital from any liability which Barclays Capital may have to the Sponsor, the Trust or any such person or otherwise. The Sponsor, the Trust or such person shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of the Sponsor, the Trust or such person unless the employment of such counsel shall have been authorized in writing by Barclays Capital in connection with the defense of such Proceeding or Barclays Capital shall not have, within a reasonable period of time in light of the circumstances, employed counsel to defend such Proceeding or such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from or additional to or in conflict with those available to Barclays Capital (in which case Barclays Capital shall not have the right to direct the defense of such Proceeding on behalf of the indemnified party or parties, but Barclays Capital may employ counsel and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of Barclays Capital), in 15

any of which events such fees and expenses shall be borne by Barclays Capital and paid as incurred (it being understood, however, that Barclays Capital shall not be liable for the expenses of more than one separate counsel (in addition to any local counsel) in any one Proceeding or series of related Proceedings in the same jurisdiction representing the indemnified parties who are parties to such Proceeding). Barclays Capital shall not be liable for any settlement of any such Proceeding effected without the written consent of Barclays Capital but if settled with the written consent of Barclays Capital, Barclays Capital agrees to indemnify and hold harmless the Sponsor, the Trust and any such person from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement and (iii) such indemnified party shall have given the indemnifying party at least 30 days‘ prior notice of its intention to settle. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such Proceeding. (c) If the indemnification provided for in this section 9 is unavailable to an indemnified party under subsections (a) and (b) of this section 9 or insufficient to hold an indemnified party harmless in respect of any losses, damages, expenses, liabilities or claims referred to therein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by the Sponsor and the Trust on the one hand and Barclays Capital on the other hand from the offering of the iShares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Sponsor and the Trust on the one hand and of Barclays Capital on the other in connection with the statements or omissions which resulted in such losses, damages, expenses, liabilities or claims, as well as any other relevant equitable considerations. The relative benefits received by the Sponsor and the Trust on the one hand and Barclays Capital on the other shall be deemed to be in the same respective proportions as the total proceeds from the offering (net of underwriting discounts, commissions and fees (if any) but before deducting expenses) received by the Sponsor and the Trust and the total underwriting discounts and commissions received by Barclays Capital, bear to the aggregate public offering price of the iShares. The relative fault of the Sponsor and the Trust on the one hand and of Barclays Capital on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by the Sponsor and the Trust or by Barclays Capital and the parties‘ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, damages, expenses, liabilities and claims referred to in this subsection shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating, preparing to defend or defending any Proceeding. (d) The Sponsor and Barclays Capital agree that it would not be just and equitable if contribution pursuant to this section 9 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in subsection (c) above. Notwithstanding the provisions of this section 9, Barclays Capital shall not be required to contribute any amount in excess of the amount by which the total price at which the iShares created by Barclays Capital 16

and distributed to the public were offered to the public exceeds the amount of any damage which Barclays Capital has otherwise been required to pay by reason of such untrue statement or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The indemnity and contribution agreements contained in this section 9 and the covenants, warranties and representations of the Sponsor contained in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of Barclays Capital, its partners, directors or officers or any person (including each partner, officer or director of such person) who controls Barclays Capital within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of each of the Sponsor, its directors or officers or any person who controls the Sponsor or the Trust within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and shall survive any termination of this Agreement or the issuance and delivery of the iShares. The Sponsor and the Trust and Barclays Capital agree promptly to notify each other of the commencement of any Proceeding against it and, in the case of the Sponsor and the Trust, against any of the Sponsor‘s or the Trust‘s officers or directors in connection with the issuance and sale of the iShares, or in connection with the Registration Statement or the Prospectus. 10. Information Furnished by Barclays Capital . The statements set forth in the last paragraph on the cover page of the Prospectus and the statements set forth in the bullet points and the second sentence in the fourth paragraph and the penultimate paragraph under the caption ―Plan of Distribution‖ in the Prospectus constitute the only information furnished by or on behalf of Barclays Capital as such information is referred to in sections 3 and 9 hereof. 11. Notices . Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing or by telegram and, if to Barclays Capital, shall be sufficient in all respects if delivered or sent to Barclays Capital Inc., US Operations – Trading Operations, 200 Cedar Knolls Road, Whippany, NJ 07981, Attention: Richard Ladd, Director, Telephone: (973) 576-3123, Fax: (973) 576-7325, with a copy to: Barclays Capital Inc., UK/Europe Operations – Commodities, 10 The South Colonnade, Canary Wharf, London E14 4PU, United Kingdom, Attention: Stephen Bell, Associate Director, Telephone: + 44 20 7773 6393, Fax: + 44 20 7773 6121; and, if to the Sponsor or the Trust, shall be sufficient in all respects if delivered or sent to the Sponsor at the offices of the Sponsor at Barclays Global Investors International Inc., 45 Fremont Street, San Francisco, CA 94105, Attention: BGI‘s Product Management Team, Intermediary Investors and Exchange Traded Products Department Telephone: (415) 402-4671, Facsimile: (415) 618-5097, with a copy to: Barclays Global Investors International Inc. 45 Fremont Street, San Francisco, CA 94105, Attn: BGI‘s Legal Department, Telephone: (415) 597-2860, Facsimile: (415) 597-2753. 12. Governing Law; Construction . This Agreement and any claim, counterclaim or dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement (―Claim‖), directly or indirectly, shall be governed by, and construed in accordance with, the laws of the State of New York. The section headings in this Agreement have been inserted as a matter of convenience of reference and are not a part of this Agreement. 13. Submission to Jurisdiction . The Sponsor irrevocably agrees that any claim may be instituted in the courts of the State of New York located in the city and County of New York or in the United States District Court for the southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Sponsor consents to the jurisdiction of such courts and personal service with respect thereto. Each of Barclays Capital and the Sponsor waives all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any 17

way arising out of or relating to this Agreement. The Sponsor agrees that a final judgment in any such action, proceeding or counterclaim brought in any such court shall be conclusive and binding upon the Sponsor and may be enforced in any other courts to the jurisdiction of which the Sponsor is or may be subject, by suit upon such judgment. 14. Parties at Interest . The Agreement herein set forth has been and is made solely for the benefit of Barclays Capital and the Sponsor and to the extent provided in section 9 hereof the controlling persons, partners, directors and officers referred to in section 9, and their respective successors, permitted assigns, heirs, personal representatives and executors and administrators. No other person, partnership, association or corporation (including a purchaser, as such purchaser, from Barclays Capital) shall acquire or have any right under or by virtue of this Agreement. 15. Counterparts . This Agreement may be signed by the parties in one or more counterparts which together shall constitute one and the same agreement among the parties. 16. Successors and Assigns . This Agreement may be assigned only with the written consent of the parties hereunder and shall be binding upon Barclays Capital and the Sponsor and the Trust and their successors and permitted assigns and any successor or assign of any substantial portion of the Sponsor‘s and the Trust‘s and any of Barclays Capital‘s respective businesses and/or assets. 18

If the foregoing correctly sets forth the understanding between the Sponsor and Barclays Capital, please so indicate in the space provided below for that purpose, whereupon this agreement and your acceptance shall constitute a binding agreement between the Sponsor and Barclays Capital. Very truly yours, BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC. By: Name: Title: By: Name: Title: Accepted and agreed to as of the date first above written, on behalf of itself BARCLAYS CAPITAL INC. By: Name: Title: Acknowledged and accepted THE BANK OF NEW YORK By: Name: Title: 19

EXHIBIT A Officer‘s Certificate 1. I have reviewed the Registration Statement and the Prospectus. 2. The representations and warranties of the Sponsor and the Trust as set forth in this Agreement are true and correct as of the date hereof and as of the time of closing. 3. Each of the Sponsor and the Trust has performed all of its obligations under this Agreement as are to be performed at or before the time of closing. 4. The conditions set forth in paragraphs (f) and (g) of section 6 of this Agreement have been met. Exhibit A-1

EXHIBIT B TRUSTEE’S CERTIFICATE PURSUANT TO SECTION 6(i) OF THE DISTRIBUTION AGREEMENT [ On the letterhead of the Trustee ] Barclays Capital Inc. 200 Park Avenue New York, NY 10166 [  ], 2005 Dear Sirs, We refer to the Distribution Agreement dated [ , 2005] (the ― Distribution Agreement ‖) between Barclays Capital Inc. and Barclays Global Investors International Inc and acknowledged by us. Each capitalized term used herein and not otherwise defined has the meaning ascribed to it in the Distribution Agreement. Pursuant to section 6(i) of the Distribution Agreement, I, [  ], being a duly authorized officer of the Trustee, hereby certify that: 1. 2. the information contained in the last sentence of the first paragraph under the heading ―The Trustee‖ in the Registration Statement is true, complete and accurate in all respects; and the Trustee is not in material breach or material violation of or in material default under (nor has any event occurred which with notice, lapse of time, or both, would result in any material breach or material violation of or material default under): (a) (b) (c) (d) the Trust Agreement; the Custodian Agreement; the Distribution Agreement; or to my knowledge, any federal or New York State law, regulation or rule applicable to the Trustee in its capacity as trustee of the Trust.

This letter is governed by and shall be construed in accordance with the laws of the State of New York. Yours faithfully, THE BANK OF NEW YORK By: Name: Title: Exhibit B-1

Exhibit 4.1 BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC. as Sponsor and THE BANK OF NEW YORK, as Trustee

Depositary Trust Agreement iShares Silver Trust

Dated as of [

], 2005

TABLE OF CONTENTS
Page

ARTICLE I Section 1.1. Section 1.2. ARTICLE II Section 2.1. Section 2.2. Section 2.3. Section 2.4. Section 2.5. Section 2.6. Section 2.7. Section 2.8. Section 2.9. Section 2.10. ARTICLE III Section 3.1. Section 3.2. ARTICLE IV Section 4.1. Section 4.2. Section 4.3. Section 4.4. Section 4.5. Section 4.6. Section 4.7. Section 4.8. Section 4.9. Section 4.10. Section 4.11.

DEFINITIONS AND RULES OF CONSTRUCTION Definitions Rules of Construction CREATION AND DECLARATION OF TRUSTS; FORM OF CERTIFICATES; DEPOSIT OF SILVER; DELIVERY, REGISTRATION OF TRANSFER AND SURRENDER OF SHARES Creation and Declaration of Trust; Business of the Trust Form of Certificates; Book-Entry System; Transferability of Shares Deposit of Silver Delivery of Shares Registration and Registration of Transfer of Shares; Combination and Split-up of Certificates Surrender of Shares and Withdrawal of Trust Property Limitations on Delivery, Registration of Transfer and Surrender of Shares Lost Certificates, Etc. Cancellation and Destruction of Surrendered Certificates Splits and Reverse Splits of Shares CERTAIN OBLIGATIONS OF REGISTERED OWNERS OF SHARES Liability of Registered Owner for Taxes and Other Governmental Charges Warranties on Deposit of Silver ADMINISTRATION OF THE TRUST Evaluation of Silver Responsibility of the Trustee for Evaluations Trust Evaluation Cash Distributions Other Distributions Fixing of Record Date Payment of Expenses; Silver Sales Statements and Reports Further Provisions for Silver Sales Counsel Grantor Trust -i-

3 3 6

6 6 7 8 9 9 9 10 11 11 11 11 11 11 12 12 12 12 13 13 13 14 14 14 15 15

TABLE OF CONTENTS (continued)
Page

ARTICLE V Section 5.1. Section 5.2. Section 5.3. Section 5.4. Section 5.5. Section 5.6. Section 5.7. Section 5.8. Section 5.9. Section 5.10. Section 5.11. Section 5.12. ARTICLE VI Section 6.1. Section 6.2. ARTICLE VII Section 7.1. Section 7.2. Section 7.3. Section 7.4. Section 7.5. Section 7.6. Section 7.7. EXHIBIT A

THE TRUSTEE AND THE SPONSOR Maintenance of Office and Transfer Books by the Trustee Prevention or Delay in Performance by the Sponsor or the Trustee Obligations of the Sponsor and the Trustee Resignation or Removal of the Trustee; Appointment of Successor Trustee The Custodian Indemnification Charges of Trustee Charges of Sponsor Retention of Trust Documents Federal Securities Law Filings Prospectus Delivery Discretionary Actions by Trustee; Consultation AMENDMENT AND TERMINATION Amendment Termination MISCELLANEOUS Counterparts Third-Party Beneficiaries Severability Registered Owners, Beneficial Owners and Depositors as Parties; Binding Effect Notices Agent for Service; Submission to Jurisdiction Governing Law

15 15 16 16 17 17 18 20 20 20 20 21 21 22 22 22 23 23 23 24 24 24 25 25 A-1 -ii-

DEPOSITARY TRUST AGREEMENT THIS DEPOSITARY TRUST AGREEMENT dated as of [ ], 2005, between BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC, a Delaware corporation, as sponsor, THE BANK OF NEW YORK, a New York banking corporation, as trustee, all Registered Owners and Beneficial Owners from time to time of iShares Silver Trust Shares issued hereunder and all Depositors. W I T N E S S E T H: WHEREAS the Sponsor desires to establish a trust, to be known as the ―iShares Silver Trust‖, pursuant to the laws of the State of New York; and WHEREAS the Sponsor desires to establish the terms on which Silver (as herein defined) may be deposited in the trust and provide for the creation of iShares Silver Trust Shares in Baskets (as herein defined) representing fractional undivided interests in the net assets of the trust and the execution and delivery of Certificates (as herein defined) evidencing the iShares Silver Trust Shares; and WHEREAS the Sponsor desires to provide for other terms and conditions upon which the trust shall be established and administered, as hereinafter provided; NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the Sponsor and the Trustee hereby agree as follows: ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1.1. Definitions . Except as otherwise specified in this Depositary Trust Agreement or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Depositary Trust Agreement. ―Agreement‖ means this Depositary Trust Agreement, as amended or supplemented in accordance with its terms. ―Authorized Participant‖ means a Person that, at the time of submitting a Purchase Order or a Redemption Order (i) is a registered broker-dealer, (ii) is a DTC Participant or an Indirect Participant and (iii) has in effect a valid Authorized Participant Agreement. ―Authorized Participant Agreement‖ means an agreement among the Trustee, the Sponsor and an Authorized Participant that authorizes the Authorized Participant to submit Purchase Orders and Redemption Orders under this Agreement. ―Basket‖ means 50,000 Shares, except that the Trustee, in consultation with the Sponsor, may from time to time increase or decrease the number of Shares comprising a Basket. ―Basket Silver Amount‖ is the amount of Silver that must be deposited for issuance of one Basket or that is deliverable upon Surrender of one Basket. The Basket Silver Amount will be determined as provided in Section 2.3(b). 3

―Benchmark Price‖ means, as of any day, (i) such day‘s London‘s Fix; or (ii) other publicly available price as the Sponsor, in consultation with the Trustee, may determine fairly represents the commercial value of Silver held by the Trust. ―Beneficial Owner‖ means any Person owning a beneficial interest in any Shares. ―Business Day‖ means any day other than (i) a Saturday or Sunday or (ii) a day on which the Exchange is not open for regular trading. ―Certificate‖ means a certificate that is executed and delivered by the Trustee under this Agreement evidencing Shares. ―CFTC‖ means the Commodity Futures Trading Commission or any successor governmental agency in the United States. ―Commission‖ means the Securities and Exchange Commission of the United States or any successor governmental agency in the United States. ―Corporate Trust Office‖ means the office of the Trustee at which its depositary receipt business is administered which, at the date of this Agreement, is located at 101 Barclay Street, New York, New York 10286. ―Custodian‖ means JPMorgan Chase Bank N.A., as agent of the Trust for the purposes of this Depositary Trust Agreement, and any substitute or additional Custodian appointed by the Trustee as provided in Section 5.5. ―Deliver‖ means (a) when used with respect to Silver, (i) physically delivering that Silver to, or making that Silver available for collection by, the Person entitled to the delivery at the specified location, (ii) obtaining evidence that ownership of that Silver has been transferred to, and the Silver is being duly held by a custodian for the account of, the Person entitled to that delivery or (iii) obtaining an acknowledgement from a custodian of a credit of Silver on an Unallocated Basis to the account of the Person entitled to that delivery and (b) when used with respect to Shares, either (i) one or more book-entry transfers of those Shares to an account or accounts at DTC designated by the Person entitled to such delivery for further credit as specified by that Person or (ii) in the circumstances specified in Section 2.2(e), execution and delivery at the Corporate Trust Office of the Trustee of one or more Certificates evidencing those Shares. ―Depositor‖ means any Authorized Participant that deposits Silver into the Trust, either for its own account or on behalf of another Person that is the owner or beneficial owner of that Silver. ―DTC‖ means The Depository Trust Company, its nominees and their respective successors. ―DTC Participant‖ means a Person that, pursuant to DTC‘s governing documents, is entitled to deposit securities with DTC in its capacity as a ―participant‖. ―Exchange‖ means the exchange on which the Shares are principally traded, as specified by the Sponsor. ―Indirect Participant‖ means a Person that, by clearing securities through, or maintaining a custodial relationship with, a DTC participant, has access to the DTC clearing system. 4

―LBMA‖ means the London Bullion Market Association. ―London Fix‖ means the price of an ounce of Silver as set by three market members of the LBMA at approximately 12:00 noon, London time, on each working day. ―Net Asset Value‖ means the net value of the Trust determined under Section 4.3. ―Net Asset Value per Share‖ means the value of a Share determined under Section 4.3. ―Order Cutoff Time‖ means, with respect to any Business Day, (i) 4:00 p.m. (New York time) on such Business Day or (ii) another time agreed to by the Sponsor and the Trustee and of which Registered Owners and all existing Authorized Participants have been notified by the Trustee. ―Order Date‖ means, with respect to a Purchase Order, the date specified in Section 2.3(a) and, with respect to a Redemption Order, the date specified in Section 2.6(a). ―Ounce‖ means a troy ounce, equal to 1.0971428 ounces avoirdupois, with a minimum fineness of 999.0 parts per thousand silver. ―Person‖ means any natural person or any limited liability company, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. ―Purchase Order‖ is defined in Section 2.3. ―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 (i) is a DTC Participant or a participant in such other securities depository as is then acting with respect to the Shares; (ii) 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 Internal Revenue Code of 1986, as amended (the ―Code‖), to apply, is a banking institution as defined in Section 408(n) of the Code and (iii) had, as of the date of its most recent annual financial statements, an aggregate capital, surplus and undivided profits of at least $150,000,000. ―Redemption Order‖ is defined in Section 2.6. ―Registered Owner‖ means the Person in whose name Shares are registered on the books of the Trustee maintained for that purpose. ―Registrar‖ means any bank or trust company that is appointed to register Shares and transfers of Shares as herein provided. ―Shares‖ means iShares Silver Trust Shares created under this Agreement, each representing a fractional undivided ownership interest in the net assets of the Trust, which interest shall equal a fraction, the numerator of which is 1 and the denominator of which is the total number of Shares outstanding. ―Silver‖ means (a) silver that meets the requirements of ―good delivery‖ under the rules of the LBMA and (b) credit to an account on an Unallocated Basis representing the right to receive silver that meets the requirements of part (a) of this definition. 5

―Sponsor‖ means Barclays Global Investors International Inc., a Delaware corporation, or its successor. ―Surrender‖ means, when used with respect to Shares, (a) one or more book-entry transfers of Shares to the DTC account of the Trustee or (b) surrender to the Trustee at its Corporate Trust Office of one or more Certificates evidencing Shares. ―Trust‖ means the iShares Silver Trust, the trust entity created by this Agreement. ―Trustee‖ means The Bank of New York, a New York banking corporation, in its capacity as trustee under this Agreement, or any successor as trustee under this Agreement. ―Trust Property‖ means the Silver that is deposited under this Agreement and any cash or other property that is received by the Trustee in respect of Trust Property and that is being held under this Agreement. ―Unallocated Basis‖ means that the Person in whose name Silver is so held is entitled to receive delivery of Silver standing to the credit of that Person‘s account, but that Person has no ownership interest in any particular Silver that the custodian maintaining that account owns or holds. Section 1.2. Rules of Construction . Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect in the United States; (iii) ―or‖ is not exclusive; (iv) the words ―herein‖, ―hereof‖, ―hereunder‖ and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; (v) ―including‖ means including without limitation; and (vi) words in the singular include the plural and words in the plural include the singular. ARTICLE II CREATION AND DECLARATION OF TRUSTS; FORM OF CERTIFICATES; DEPOSIT OF SILVER; DELIVERY, REGISTRATION OF TRANSFER AND SURRENDER OF SHARES Section 2.1. Creation and Declaration of Trust; Business of the Trust . (a) The Trustee acknowledges that it has received an initial deposit of Silver under and in accordance with this Agreement from Barclays Capital Inc. The Trustee declares that it will hold that initial deposit and all other Trust Property as trustee for the benefit of the Registered Owners for the purposes of, and subject to and limited by the terms and conditions set forth in, this Agreement. The trust created by this Agreement shall be known as the ―iShares Silver Trust‖. 6

(b) The Trust shall not engage in any business or activities other than those authorized by this Agreement or incidental and necessary to carry out the duties and responsibilities set forth in this Agreement. Other than issuance of the Shares, the Trust shall not issue or sell any certificates or other obligations or, except as provided in this Agreement, otherwise incur, assume or guarantee any indebtedness for money borrowed. Section 2.2. Form of Certificates; Book-Entry System; Transferability of Shares . (a) The Certificates evidencing Shares shall be substantially in the form set forth in Exhibit A annexed to this Agreement, with appropriate insertions, modifications and omissions, as hereinafter provided. No Shares shall be entitled to any benefits under this Agreement or be valid or obligatory for any purpose unless a Certificate evidencing those Shares has been executed by the Trustee by the manual or facsimile signature of a duly authorized signatory of the Trustee and, if a Registrar (other than the Trustee) for the Shares shall have been appointed, countersigned by the manual signature of a duly authorized officer of the Registrar. The Trustee shall maintain books on which the registered ownership of each Share and transfers, if any, of such registered ownership shall be recorded. Certificates evidencing Shares bearing the manual or facsimile signature of a duly authorized signatory of the Trustee and the manual signature of a duly authorized officer of the Registrar, if applicable, who was, at the time such Certificates were executed, a proper signatory of the Trustee or Registrar, if applicable, shall bind the Trustee, notwithstanding that such signatory has ceased to hold such office prior to the delivery of such Certificates. (b) The Certificates may be endorsed with or have incorporated in the text thereof such legends or recitals or modifications not inconsistent with the provisions of this Agreement as may be required by the Trustee or required to comply with any applicable law or regulations thereunder or with the rules and regulations of any securities exchange upon which Shares may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which the Shares evidenced by a particular Certificate are subject. (c) The Sponsor and the Trustee will apply to DTC for acceptance of the Shares in its book-entry settlement system. Shares deposited with DTC shall be evidenced by one or more global Certificates which shall be registered in the name of Cede & Co., as nominee for DTC, and shall bear the following legend: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (―DTC‖), TO THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. (d) So long as the Shares are eligible for book-entry settlement with DTC and such settlement is available, unless otherwise required by law, notwithstanding the provisions of Sections 2.2(a) and (b), all Shares shall be evidenced by one or more global Certificates the Registered Owner of which is DTC or a 7

nominee of DTC and (i) no Beneficial Owner of Shares will be entitled to receive a separate Certificate evidencing those Shares, (ii) the interest of a Beneficial Owner in Shares represented by a global Certificate will be shown only on, and transfer of that interest will be effected only through, records maintained by DTC or a DTC Participant or Indirect Participant through which the Beneficial Owner holds that interest and (iii) the rights of a Beneficial Owner with respect to Shares represented by a global Certificate will be exercised only to the extent allowed by, and in compliance with, the arrangements in effect between such Beneficial Owner and DTC or the DTC Participant or Indirect Participant through which that Beneficial Owner holds an interest in Shares. (e) If, at any time when Shares are evidenced by a global Certificate, DTC ceases to make its book-entry settlement system available for such Shares, the Trustee shall execute and deliver separate Certificates evidencing Shares to the DTC Participants entitled thereto, with such additions, deletions and modifications to this Agreement and to the form of Certificate evidencing Shares as the Sponsor and the Trustee may agree. (f) Title to a Certificate evidencing Shares (and to the Shares evidenced thereby), when properly endorsed or accompanied by proper instruments of transfer, shall be transferable by delivery with the same effect as in the case of a negotiable instrument under the laws of New York; provided, however, that the Trustee, notwithstanding any notice to the contrary, may treat the Registered Owner of Shares as the absolute owner thereof for the purpose of determining the person entitled to any distribution or to any notice provided for in this Agreement and for all other purposes. Section 2.3. Deposit of Silver . (a) After the initial deposit of Silver in the Trust, the issuance and Delivery of Shares will take place only in integral numbers of Baskets and in compliance with the provisions of this Agreement, as supplemented by any procedures attached to an applicable Authorized Participant Agreement, to the extent those procedures are consistent with this Agreement. Authorized Participants wishing to acquire from the Trustee one or more Baskets must place an order with the Trustee (a ―Purchase Order‖) no later than 4:00 p.m. (New York time) on any Business Day. Purchase Orders received by the Trustee prior to the Order Cutoff Time on a Business Day on which the Benchmark Price is announced will have that Business Day as the Order Date. Purchase Orders received by the Trustee on or after the Order Cutoff Time on a Business Day, or on a Business Day on which the Benchmark Price is not announced, will have as their Order Date the next Business Day on which the Benchmark Price is announced. As consideration for each Basket acquired, Authorized Participants must deposit with the Custodian, at the location designated by the Custodian, the Basket Silver Amount determined by the Trustee on the Order Date of the corresponding Purchase Order. Silver must be Delivered to the Custodian in the form of Silver bars only, except that an amount of Silver not exceeding 1100 Ounces may be Delivered to the Custodian on an Unallocated Basis. (b) The Trustee shall determine the Basket Silver Amount for each Business Day. The initial ―Basket Silver Amount‖ is 500,000 Ounces. After the initial deposit, the ―Basket Silver Amount‖ shall be an amount of Silver equal to the result obtained by subtracting the daily expense accrual from the previous day‘s total Ounces of Silver in the Trust and then dividing by the number of Baskets outstanding. Fractions of an Ounce of Silver included in the Basket Silver Amount smaller than .001 Ounce shall be disregarded. The Sponsor intends to publish, or may designate other persons to publish, for each Business Day, the Basket Silver Amount. (c) If the Trust Property includes money or any property other than Silver, no deposits of Silver will be accepted until after a record date for distribution of that money or property, or proceeds of that property, has passed. 8

(d) All deposited Silver shall be owned by the Trust and held for the Trust by the Custodian. The Trustee shall require the Custodian to agree that the Custodian will use reasonable efforts to minimize the amount of Silver held for the Trust on an Unallocated Basis at all times and the Custodian must allocate ownership of silver bars to the Trust such that no more than 1100 Ounces of Silver are held on an Unallocated Basis for the Trust at the end of each business day of the Custodian. Cash and any other assets of the Trust shall be held by the Trustee at such place and in such manner as the Trustee shall determine. Section 2.4. Delivery of Shares . Upon receipt by the Trustee of any deposit in accordance with Section 2.3, together with a Purchase Order and the other documents required as above specified, if any, and a confirmation from the Custodian that the Silver Deposit Amount has been Delivered to the Custodian for each Basket of Shares and the Custodian is holding that Silver for the account of the Trust, the Trustee, subject to the terms and conditions of this Agreement, shall Deliver to the Depositor the number of Baskets of Shares issuable in respect of such deposit as requested in the corresponding Purchase Order, but only upon payment to the Trustee of the fees and expenses of the Trustee as provided in Section 5.7 and of all taxes and governmental charges and fees payable in connection with such deposit, the transfer of the Silver and the issuance and Delivery of the Shares. Section 2.5. Registration and Registration of Transfer of Shares; Combination and Split-up of Certificates . (a) The Trustee shall keep or cause to be kept a register of Registered Owners of Shares and shall provide for the registration of Shares and the registration of transfers of Shares. (b) The Trustee, subject to the terms and conditions of this Agreement, shall register transfers of ownership of Shares on its transfer books from time to time, upon any Surrender of a Certificate evidencing such Shares, by the Registered Owner in person or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer, and duly stamped as may be required by the laws of the State of New York and of the United States of America. Thereupon the Trustee shall execute a new Certificate or Certificates evidencing such Shares, and deliver the same to or upon the order of the Person entitled thereto. (c) The Trustee, subject to the terms and conditions of this Agreement, shall, upon Surrender of a Certificate or Certificates evidencing Shares for the purposes of effecting a split-up or combination of that certificate or certificates, execute and deliver one or more new Certificates evidencing those Shares. (d) The Trustee may, with the written approval of the Sponsor (which approval shall not be unreasonably withheld), appoint one or more co-transfer agents for the purpose of effecting registration of transfers of Shares and combinations and split-ups of Certificates at designated transfer offices on behalf of the Trustee. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Registered Owners or Persons entitled to Shares and will be entitled to protection and indemnity to the same extent as the Trustee. Section 2.6. Surrender of Shares and Withdrawal of Trust Property . (a) Upon Surrender of any integral number of Baskets for the purpose of withdrawal of the amount of Trust Property represented thereby, and upon payment of the fee of the Trustee in connection with the Surrender of Shares as provided in Section 5.7 and payment of all taxes and charges payable in connection with such Surrender and withdrawal of Trust Property, and subject to the terms and conditions 9

of this Agreement, an Authorized Participant acting on authority of the Registered Owner of those Shares will be entitled to Delivery, in accordance with the provisions of this Agreement, as supplemented by any procedures attached to an applicable Authorized Participant Agreement, to the extent those procedures are consistent with this Agreement, of the amount of Trust Property at the time represented by such Baskets, including the Basket Silver Amounts corresponding to such Baskets on the applicable Order Date (determined as provided below). Authorized Participants wishing to redeem one or more Baskets must place an order with the Trustee (a ―Redemption Order‖) no later than 4:00 p.m. (New York time) on any Business Day. Redemption Orders received by the Trustee prior to the Order Cutoff Time on a Business Day on which the Benchmark Price is announced will have that Business Day as the Order Date. Redemption Orders received by the Trustee on or after the Order Cutoff Time on any Business Day, or on a Business Day on which the Benchmark Price is not announced, will have as their Order Date the next Business Day on which the Benchmark Price is announced. Unless otherwise agreed to by the Custodian, Silver will be Delivered by the Custodian, at the location designated by the Custodian (or by a sub-custodian designated by the Custodian), in the form of Silver bars only, except that an amount of Silver not exceeding 1100 Ounces may be Delivered by the Custodian on an Unallocated Basis. (b) The Trustee may require that a Certificate evidencing Shares Surrendered for the purpose of withdrawal is properly endorsed in blank or accompanied by proper instruments of transfer in blank. Upon a Surrender of an integral number of Baskets of Shares and satisfaction of all the conditions for withdrawal of Trust Property, the Trustee shall instruct the Custodian to Deliver, at the location designated by the Custodian (or by a sub-custodian designated by the Custodian), to or to the order of the Surrendering Authorized Participant the amount of Silver represented by the Surrendered Baskets of Shares and the Trustee shall pay or deliver to or to the order of the Surrendering Authorized Participant the amount of any other Trust Property represented by the Surrendered Baskets of Shares. Any Delivery of Silver other than at the location designated by the Custodian (or by a sub-custodian designated by the Custodian) will be at the expense and risk of the Authorized Participant. The Trustee is not required to effect any physical movement of Silver from one custody location to another to meet any request by a Surrendering Authorized Participant as to where Silver will be Delivered. Section 2.7. Limitations on Delivery, Registration of Transfer and Surrender of Shares . (a) As a condition precedent to the Delivery, registration of transfer, split-up, combination or Surrender of any Shares or withdrawal of any Trust Property, the Trustee or Registrar may require payment from the Depositor or the Authorized Participant Surrendering the Shares of a sum sufficient to reimburse it for any tax or other governmental charges and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to any securities being withdrawn) and payment of any applicable fees as herein provided, may require the production of proof satisfactory to it as to the identity and genuineness of any signature and may also require compliance with any regulations the Trustee may establish consistent with the provisions of this Agreement, including, without limitation, this Section 2.7. (b) The Delivery of Shares against deposits of Silver and the registration of transfer of Shares may be suspended generally, or refused with respect to particular requested Deliveries, during any period when the transfer books of the Trustee are closed or if any such action is deemed necessary or advisable by the Trustee or the Sponsor for any reason at any time or from time to time. Except as otherwise provided elsewhere in this Agreement, the Surrender of Shares for purposes of withdrawing Trust Property may be suspended only (i) during any period in which regular trading on the Exchange is suspended or restricted or the Exchange is closed (other than scheduled holiday or weekend closings), or (ii) during an emergency as a result of which Delivery, disposal or evaluation of Silver is not reasonably practicable. 10

Section 2.8. Lost Certificates, Etc . The Trustee shall execute and deliver a new Certificate of like tenor in exchange and substitution for a mutilated Certificate upon cancellation thereof, or in lieu of and in substitution for a destroyed, lost or stolen Certificate if the Registered Owner thereof has (a) filed with the Trustee (i) a request for such execution and delivery before the Trustee has notice that the Shares evidenced by the Certificate have been acquired by a protected purchaser and (ii) a sufficient indemnity bond, and (b) satisfied any other reasonable requirements imposed by the Trustee. Section 2.9. Cancellation and Destruction of Surrendered Certificates . All Certificates Surrendered to the Trustee shall be canceled by the Trustee. The Trustee is authorized to destroy certificates so canceled. Section 2.10. Splits and Reverse Splits of Shares . If requested in writing by the Sponsor, the Trustee shall effect a split or reverse split of the Shares as of a record date set by the Trustee in accordance with procedures determined by the Trustee. The Trustee is not required to distribute any fraction of a Share in connection with a split or reverse split of the Shares. The Trustee may sell the aggregated fractions of Shares that would otherwise be distributed in a split or reverse split of the Shares or the amount of Trust Property that would be represented by those Shares and distribute the net proceeds of those Shares or that Trust Property to the Record Owners entitled to them. The amount of Trust Property represented by each Share and the Basket Silver Amount shall be adjusted as appropriate as of the open of business on the Business Day following the record date for a split or reverse split of the Shares. ARTICLE III CERTAIN OBLIGATIONS OF REGISTERED OWNERS OF SHARES Section 3.1. Liability of Registered Owner for Taxes and Other Governmental Charges . If any tax or other governmental charge shall become payable by the Trustee with respect to any transfer or redemption of Shares, such tax or other governmental charge shall be payable by the Registered Owner of such Shares to the Trustee. The Trustee shall refuse to effect any registration of transfer of such Shares or any withdrawal of Trust Property represented by such Shares until such payment is made, and may withhold any distributions, or may sell for the account of the Registered Owner thereof Trust Property or Shares, and may apply such distributions or the proceeds of any such sale in payment of such tax or other governmental charge, and the Registered Owner of such Shares shall remain liable for any deficiency. The Trustee shall distribute any net proceeds of a sale made under the preceding sentence that remain, after payment of the tax or other governmental charge, to the Registered Owners entitled thereto as in the case of a distribution in cash. Section 3.2. Warranties on Deposit of Silver . Every Person depositing Silver under this Agreement shall be deemed thereby to represent and warrant that the Silver meets the requirements to be Silver and contains the required number of Ounces, that the person making such deposit is duly authorized to do so and that at the time of delivery, the Silver 11

is free and clear of any lien, pledge, encumbrance, right, charge or claim (other than the rights created by this Agreement). All representations and warranties deemed made under this Section 3.2 shall survive the deposit of Silver, Delivery or Surrender of Shares or termination of this Agreement. ARTICLE IV ADMINISTRATION OF THE TRUST Section 4.1. Evaluation of Silver . As promptly as practicable after 4:00 p.m. (New York time), on each Business Day, the Trustee shall determine the value of the Silver held or receivable by the Trust on the basis of the Benchmark Price for that day. If no Benchmark Price is announced on a Business Day, the Trustee shall determine the value of the Silver held or receivable by the Trust for that day on the basis of the most recently announced Benchmark Price. However, if the Trustee and the Sponsor determine that the price specified in the two preceding sentences is inappropriate as a basis for evaluation, they shall identify an alternative basis for evaluation to be employed by the Trustee. Silver deliverable under a Purchase Order shall be included in the evaluation beginning on the Order Date. Silver deliverable under a Redemption Order shall not be included in the evaluation on and after the Order Date. Neither the Trustee nor the Sponsor shall be liable to any Person for the determination that the most recently announced Benchmark Price is not appropriate as a basis for evaluation of the Silver held or receivable by the Trust or for any determination as to the alternative basis for evaluation, provided that such determination is made in good faith. If the Sponsor determines that Benchmark Price will have the meaning set forth in part (ii) of the definition of that term, the Trustee shall give notice to the Registered Owners, and the Trustee shall not apply the new definition of Benchmark Price until 60 days after the date of that notice. Section 4.2. Responsibility of the Trustee for Evaluations . The Sponsor, Depositors, Registered Owners and Beneficial Owners may rely on any evaluation or determination of any amount made by the Trustee, and the Sponsor shall have no responsibility for the accuracy thereof. The determinations made by the Trustee under this Agreement shall be made in good faith upon the basis of, and the Trustee shall not be liable for any errors contained in, information reasonably available to it. The Trustee shall be under no liability to the Sponsor, or to Depositors, Registered Owners or Beneficial Owners, for errors in judgment; provided, however, that this provision shall not protect the Trustee against any liability to which it would otherwise be subject by reason of negligence or bad faith in the performance of its duties. Section 4.3. Trust Evaluation . As promptly as practicable after completion of the evaluation required under Section 4.1 on each Business Day, the Trustee shall subtract all accrued fees (other than the fees 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 deposited Silver determined by the Trustee pursuant to Section 4.1 and all other assets of the Trust. The resulting figure is the ―Adjusted Net Asset Value‖ of the Trust. All fees computed by reference to the value of the Trust or its assets shall be calculated on the Adjusted Net Asset Value. The Trustee shall subtract from the Adjusted Net Asset Value the amount of accrued fees so computed and the resulting figure is the ―Net Asset Value‖ of the Trust. The Trustee shall also divide the Net Asset Value of the Trust by the number of Shares outstanding as of the close of business on the date of the evaluation then 12

being made, which figure is the ―Net Asset Value per Share.‖ All fees, expenses and other liabilities of the Trust that are or will be incurred or accrued through the close of business on a Business Day shall be included in the calculations required by this Section 4.3 for that Business Day. Shares deliverable under a Purchase Order shall be considered to be outstanding for purposes of this Section 4.3 beginning on the Order Date. Shares deliverable under a Redemption Order shall not be considered to be outstanding for purposes of this Section 4.3 on and after the Order Date. Adjusted Net Asset Value, Net Asset Value and Net Asset Value per Share shall be computed in accordance with generally accepted accounting principles in the United States. Section 4.4. Cash Distributions . Whenever the Trustee distributes any cash, the Trustee shall distribute the amount available for the distribution to the Registered Owners entitled thereto, in proportion to the number of Shares held by them respectively; provided, however, that in the event that the Trustee shall be required to withhold and does withhold from such cash an amount on account of taxes, the amount distributed to the Registered Owners shall be reduced accordingly. The Trustee shall distribute only such amount, however, as can be distributed without attributing to any Registered Owner a fraction of one cent. Any such fractional amounts shall be rounded to the nearest whole cent and so distributed to Registered Owners entitled thereto. Section 4.5. Other Distributions . Whenever the Trustee receives any property in respect of Trust Property other than cash proceeds of a sale of Trust Property (including any claim that accrues in favor of the Trust on account of any loss of deposited Silver or other Trust Property), the Trustee shall cause the securities or other property received by it to be distributed to the Registered Owners entitled thereto, in proportion to the number of Shares held by them respectively, after deduction or upon payment of the expenses of the Trustee, in any manner that the Trustee may deem lawful, equitable and feasible for accomplishing such distribution; provided, however, that if in the opinion of the Trustee such distribution cannot be made proportionately among the Registered Owners entitled thereto, or if for any other reason (including, but not limited to, any requirement that the Trustee withhold an amount on account of taxes or other governmental charges or that securities must be registered under the Securities Act of 1933 in order to be distributed to Registered Owners) the Trustee deems such distribution not to be lawful and feasible, the Trustee shall adopt such method as it deems lawful, equitable and feasible for the purpose of effecting such distribution, after deduction or upon payment of the expenses of the Trustee, including, but not limited to, the public or private sale of the securities or property thus received, or any part thereof, and the net proceeds of any such sale shall be distributed by the Trustee to the Registered Owners entitled thereto as in the case of a distribution received in cash. Section 4.6. Fixing of Record Date . Whenever any distribution will be made, or whenever the Trustee receives notice of any solicitation of proxies or consents from Registered Owners, or whenever for any reason there is split, reverse split or other change in the outstanding Shares, or whenever the Trustee shall find it necessary or convenient in respect of any matter, the Trustee, in consultation with the Sponsor, shall fix a record date for the determination of the Registered Owners who shall be (i) entitled to receive such distribution or the net proceeds of the sale thereof, (ii) entitled to give such proxies or consents in respect of any such solicitation or (iii) entitled to act in respect of any other matter for which the record date was set. 13

Section 4.7. Payment of Expenses; Silver Sales . (a) The following charges are or may be accrued and paid by the Trust: (i) the service fee payable to the Sponsor as set forth in Section 5.8; (ii) expenses of the Trust not assumed by the Sponsor pursuant to Section 5.3(g); (iii) taxes and other governmental charges; (iv) expenses and costs of any extraordinary services performed by the Trustee or the Sponsor on behalf of the Trust or action taken by the Trustee or the Sponsor to protect the Trust or the interests of Registered Owners; and (v) indemnification of the Sponsor as provided in Section 5.6(d). The Trustee shall, 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 of expenses under this Agreement. The Trustee is authorized to sell Silver at such times and in the smallest amounts required to permit payment of expenses as they come due, it being the intention to avoid or minimize the Trust‘s holdings of assets other than Silver. Neither the Trustee nor the Sponsor shall have any liability for loss or depreciation resulting from sales of Silver so made. The Trustee shall not be liable or responsible in any way for depreciation or loss incurred by reason of any sale made pursuant to the Sponsor‘s direction or otherwise in accordance with this Section. (b) If at any time and from time to time, the Trustee and Sponsor determine that the amount of cash included in the Trust Property exceeds the anticipated expenses of the Trust during the following month, the Trustee shall distribute the excess to the Registered Owners under Section 4.4. Section 4.8. Statements and Reports . (a) After the end of each fiscal year and within the time period required by applicable laws, rules and regulations, at the Sponsor‘s expense, the Trustee shall send to the Registered Owners at the end of such fiscal year, an annual report of the Trust containing financial statements that will be prepared by the Trustee and audited by independent accountants designated by the Sponsor and such other information as may be required by such laws, rules and regulations or otherwise, or which the Sponsor determines shall be included. The Trustee may distribute the annual report by any means acceptable to the Registered Owners. (b) The Trustee shall provide the Sponsor with such certifications, supporting documents and other evidence regarding the internal control over financial reporting established and maintained by the Trust, and used by the Trustee in connection with its preparation of the financial statements of the Trust, as may be reasonably necessary in order to enable the Sponsor to prepare and file or furnish to the Commission any certifications regarding such matters which may be required to be included with the Trust‘s periodic reports under the Securities Exchange Act of 1934, as amended. Section 4.9. Further Provisions for Silver Sales . In addition to selling Silver in accordance with Section 4.7, the Trustee shall sell Silver whenever any one or more of the following conditions exists: (a) the Sponsor has notified the Trustee that such sale is required by applicable law or regulation; or 14

(b) this Agreement has been terminated and the Trust Property is to be liquidated in accordance with Section 6.2. Unless otherwise directed by the Sponsor, when selling Silver the Trustee shall endeavor to place orders with dealers (which may include the Custodian) through which it may reasonably expect to obtain a favorable price and good execution of orders. The Trustee and the Sponsor shall not be liable or responsible in any way for depreciation or loss incurred by reason of any sale made pursuant to this Section 4.9. Section 4.10. Counsel . The Sponsor may from time to time employ counsel to act on behalf of the Trust and perform any legal services in connection with the Silver and the Trust, including any legal matters relating to the possible disposition or acquisition of any Silver. The fees and expenses of such counsel shall be paid by the Sponsor. Section 4.11. Grantor Trust . Nothing in this Agreement, any agreement with a Custodian, or otherwise, shall be construed to give the Trustee the power to vary the investment of the Beneficial Registered Owners within the meaning of Section 301.7701-4(c) under the Internal Revenue Code of 1986, as amended (the ―Code‖) or any similar or successor provision of the regulations under the Code, nor shall the Sponsor give the Trustee any direction that would vary the investment of the Beneficial Owners. However, the Trustee shall not be liable to any Person for any failure of the Trust to qualify as a grantor trust under the Code or any comparable provision of the laws of any State or other jurisdiction where that treatment is sought, except that this sentence shall not limit the Trustee‘s responsibility for the administration of the Trust in accordance with this Agreement. ARTICLE V THE TRUSTEE AND THE SPONSOR Section 5.1. Maintenance of Office and Transfer Books by the Trustee . (a) Until termination of this Agreement in accordance with its terms, the Trustee shall maintain facilities for the execution and Delivery, registration, registration of transfers and Surrender of Shares in accordance with the provisions of this Agreement. (b) The Trustee shall keep books for the registration of Shares and registration of transfers of Shares which at all reasonable times shall be open for inspection by the Registered Owners. (c) The Trustee may, and at the reasonable written request of the Sponsor shall, close the transfer books at any time or from time to time if such action is deemed necessary or advisable in the reasonable judgment of the Trustee or the Sponsor. (d) If any Shares are listed on one or more stock exchanges in the United States, the Trustee shall act as Registrar or, with the written approval of the Sponsor (which approval shall not be unreasonably withheld), appoint a registrar or one or more co-registrars for registry of such Shares in accordance with any requirements of such exchange or exchanges. 15

Section 5.2. Prevention or Delay in Performance by the Sponsor or the Trustee . Neither the Sponsor nor the Trustee nor any of their respective directors, employees, agents or affiliates shall incur any liability to any Registered Owner, Beneficial Owner or Depositor if, by reason of any provision of any present or future law or regulation of the United States or any other country, or of any governmental or regulatory authority or stock exchange, or by reason of any act of God or war or terrorism or other circumstances beyond its control, the Sponsor or the Trustee is prevented or forbidden from, or would be subject to any civil or criminal penalty on account of, or is delayed in, doing or performing any act or thing which by the terms of this Agreement it is provided shall be done or performed and accordingly the Sponsor or the Trustee does not do that thing or does that thing at a later time than would otherwise be required. The Sponsor and the Trustee will not incur any liability to any Registered Owner or Beneficial Owner or Depositor by reason of any non-performance or delay in the performance of any act or thing which by the terms of this Agreement it is provided may be done or performed, or by reason of any exercise of, or failure to exercise, any discretion provided for in this Agreement. Section 5.3. Obligations of the Sponsor and the Trustee . (a) Neither the Sponsor nor the Trustee assumes any obligation nor shall either of them be subject to any liability under this Agreement to any Registered Owner or Beneficial Owner or Depositor (including, without limitation, liability with respect to the worth of the Trust Property), except that each of them agrees to perform its obligations specifically set forth in this Agreement without negligence or bad faith. (b) Neither the Sponsor nor the Trustee shall be under any obligation to prosecute any action, suit or other proceeding in respect of any Trust Property or in respect of the Shares on behalf of a Registered Owner, Beneficial Owner, Depositor or other Person. (c) Neither the Sponsor nor the Trustee shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any Depositor, any Registered Owner or any other person believed by it in good faith to be competent to give such advice or information. (d) The Trustee shall not be liable for any acts or omissions made by a successor Trustee whether in connection with a previous act or omission of the Trustee or in connection with any matter arising wholly after the resignation of the Trustee, provided that in connection with the issue out of which such potential liability arises the Trustee performed its obligations without negligence or bad faith while it acted as Trustee. (e) The Trustee and the Sponsor shall have no obligation to comply with any direction or instruction from any Registered Owner or Beneficial Owner or Depositor regarding Shares except to the extent specifically provided in this Agreement. (f) The Trustee shall be a fiduciary under this Agreement; provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee shall be limited by, and shall be only those specifically set forth in, this Agreement. 16

(g) The Sponsor shall be responsible for all organizational expenses of the Trust, and for the following administrative and marketing expenses of the Trust: the Trustee‘s monthly fee, the Custodian‘s fee, listing fees of the Exchange, registration fees charged by the Commission, printing and mailing costs, audit fees and expenses and legal fees and expenses not in excess of $100,000 per year. Section 5.4. Resignation or Removal of the Trustee; Appointment of Successor Trustee . (a) The Trustee may at any time resign as Trustee hereunder 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 as hereinafter provided. (b) The Sponsor may remove the Trustee in its discretion by written notice delivered to the Trustee in the manner provided in Section 7.5 at least 90 days prior to the fifth anniversary of the date of this Agreement or, thereafter, by written notice delivered to the Trustee at least 90 days prior to the last day of any subsequent three-year period. If at any time the Trustee ceases to be a Qualified Bank or is in material breach of its obligations under this Agreement and the Trustee fails to cure such breach within 30 days after receipt by the Trustee of written notice from the Sponsor or Registered Owners acting on behalf of at least 25% of the outstanding Shares specifying such default and requiring the Trustee to cure such default, the Sponsor, acting on behalf of the Registered Owners, may remove the Trustee by written notice delivered to the Trustee in the manner provided in Section 7.5, and such removal shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment as hereinafter provided. (c) If the Trustee acting hereunder resigns or is removed, the Sponsor, acting on behalf of the Registered Owners, 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 Registered Owners, an instrument in writing accepting its appointment hereunder, 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 Registered Owners, shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and deliver all right, title and interest in the Trust Property to such successor, and shall deliver to such successor a list of the Registered Owners of all outstanding Shares. The Sponsor or any such successor Trustee shall promptly mail notice of the appointment of such successor Trustee to the Registered Owners. (d) Any corporation into which the Trustee may be merged, consolidated or converted in a transaction in which the Trustee is not the surviving corporation shall be the successor of the Trustee without the execution or filing of any document or any further act. During the 90-day period following the effectiveness of a merger, consolidation or conversion described in the preceding sentence, the Sponsor may, by written notice to the Trustee, remove the Trustee and designate a successor Trustee in compliance with the provisions of subsection (c) above. Section 5.5. The Custodian . The Custodian will be subject at all times and in all respects to the directions of the Trustee and will be responsible solely to it. Any Custodian may resign and be discharged from its duties by notice of such resignation delivered to the Trustee at least 60 days prior to the date on which such resignation is to become effective. If upon the effectiveness of such resignation there would be no Custodian acting hereunder, the Trustee shall, promptly after receiving such notice, with the written approval of the Sponsor (which approval shall not be unreasonably withheld or delayed), appoint a substitute custodian or 17

custodians, each of which shall thereafter be a Custodian hereunder. Whenever the Trustee in its discretion determines that it is in the best interest of the Registered Owners to do so, it may with the written approval of the Sponsor (which approval shall not be unreasonably withheld or delayed), appoint a substitute or additional custodian or custodians, which shall thereafter be one of the Custodians hereunder. After the date of this 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). Upon demand of the Trustee any Custodian shall deliver such of the Silver held by it as are requested of it to any other Custodian or such substitute or additional custodian or custodians. Each such substitute or additional custodian shall deliver to the Trustee, forthwith upon its appointment, an acceptance of such appointment satisfactory in form and substance to the Trustee. Upon the appointment of any successor Trustee hereunder, each Custodian then acting hereunder shall forthwith become, without any further act or writing, the agent hereunder of such successor Trustee and the appointment of such successor Trustee shall in no way impair the authority of each Custodian hereunder; but the successor Trustee so appointed shall, nevertheless, on the written request of any Custodian, execute and deliver to such Custodian all such instruments as may be proper to give to such Custodian full and complete power and authority as agent hereunder of such successor Trustee. Section 5.6. Indemnification . (a) The Sponsor shall indemnify the Trustee, its directors, employees and agents (the ―Trustee Indemnified Persons‖) against, and hold each of them harmless from, any loss, liability, cost, expense or judgment (including, but not limited to, the reasonable fees and expenses of counsel) (collectively ―Indemnified Amounts‖) that is incurred by any of them and that arises out of or is related to (i) any offer or sale by the Trust of Baskets of Shares under this Agreement, (ii) acts performed or omitted pursuant to the provisions of this Agreement, as the same may be amended, modified or supplemented from time to time, (A) by a Trustee Indemnified Person or (B) by the Sponsor or (iii) any filings with or submissions to the Commission in connection with or with respect to the Shares (which by way of illustration and not by way of limitation, include any registration statement and any amendments or supplements thereto filed with the Commission or any periodic reports or updates that may be filed under the Securities Exchange Act of 1934, as amended, or any failure to make any filings with or submissions to the Commission which are required to be made in connection with or with respect to the Shares), except that the Sponsor shall not have any obligations under this Section 5.6(a) to pay Indemnified Amounts incurred as a result of and attributable to (x) the negligence or bad faith of, or material breach of the terms of this Agreement by, the Trustee, (y) written information furnished in writing by the Trustee to the Sponsor expressly for use in the registration statement, or any amendment thereto or periodic or other report, filed with the Commission relating to the Shares that is not materially altered by the Sponsor or (z) any misrepresentations or omissions made by a Depositor (other than the Sponsor) in connection with such Depositor‘s offer and sale of Shares. (b) The Trustee shall indemnify the Sponsor, its directors, employees and agents against, and hold each of them harmless from, any Indemnified Amounts (i) caused by the negligence or bad faith of the Trustee or (ii) arising out of any information furnished in writing to the Sponsor by the Trustee expressly for use in the registration statement, or any amendment thereto or periodic or other report, filed with the Commission relating to the Shares that is not materially altered by the Sponsor. (c) If the indemnification provided for in Section 5.6(a) or (b) is unavailable or insufficient to hold harmless the indemnified party under subsection (a) or (b) above, then the indemnifying party shall contribute to the Indemnified Amounts referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Sponsor on the one hand and the Trustee on the other hand from the offering of the Shares which are the subject of the action or (ii) if the allocation 18

provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Sponsor on the one hand and the Trustee on the other hand in connection with the action, statement or omission which resulted in such Indemnified Amount as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact from which the action arises relates to information supplied by the Sponsor or the Trustee and the parties‘ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission or the act or omission from which the action arises. The amount of Indemnified Amounts referred to in the first sentence of this subsection (c) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (c). (d) The Sponsor and its shareholders, directors, officers, employees, affiliates (as such term is defined under the Securities Act of 1933, as amended) and subsidiaries (each a ―Sponsor Indemnified Party‖) shall be indemnified from the Trust and held harmless against any loss, liability or expense incurred without (1) negligence, bad faith, willful misconduct or willful malfeasance on the part of such Sponsor Indemnified Party arising out of or in connection with the performance of its obligations under this Agreement or any actions taken in accordance with the provisions of this Agreement or (2) reckless disregard on the part of such Sponsor Indemnified Party of its obligations and duties under this Agreement. Such indemnity shall include payment from the Trust of the costs and expenses incurred by such Sponsor Indemnified Party in defending itself against any claim or liability in its capacity as Sponsor. Any amounts payable to a Sponsor Indemnified Party under this Section 5.6(d) 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 this Agreement and the rights and duties of the parties hereto and the interests of the Registered Owners 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. (e) If an action, proceeding (including, but not limited to, any governmental investigation), claim or dispute (collectively, a ―Proceeding‖) in respect of which indemnity may be sought by either party is brought or asserted against the other party, the party seeking indemnification (the ―Indemnitee‖) shall promptly (and in no event more than seven (7) days after receipt of notice of such Proceeding) notify the party obligated to provide such indemnification (the ―Indemnitor‖) of such Proceeding. The failure of the Indemnitee to so notify the Indemnitor shall not impair the Indemnitee‘s ability to seek indemnification from the Indemnitor (but only for costs, expenses and liabilities incurred after such notice) unless such failure adversely affects the Indemnitor‘s ability to adequately oppose or defend such Proceeding. Upon receipt of such notice from the Indemnitee, the Indemnitor shall be entitled to participate in such Proceeding and, to the extent that it shall so desire and provided no conflict of interest exists as specified in clause (i) below and there are no other defenses available to Indemnitee as specified in clause (iii) below, to assume the defense thereof with counsel reasonably satisfactory to the Indemnitee (in which case all attorney‘s fees and expenses shall be borne by the Indemnitor and the Indemnitor shall in good faith defend the Indemnitee). The Indemnitee shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but, in such case, no fees and expenses of such counsel shall be borne by the Indemnitor unless such fees and expenses are otherwise required to be indemnified under Section 5.06(a), (b) or (d), as applicable, and (i) there is such a conflict of interest between the Indemnitor and the Indemnitee as would preclude, in compliance with the ethical rules in effect in the jurisdiction in which the Proceeding was brought, one lawyer from representing both parties simultaneously, (ii) the Indemnitor fails, within the earlier of (x) twenty (20) days following receipt of notice of the Proceeding from the Indemnitee or (y) seven (7) days prior to the date the first response or appearance is required to be made in such Proceeding, to assume the defense of such Proceeding with 19

counsel reasonably satisfactory to the Indemnitee or (iii) there are legal defenses available to Indemnitee that are different from or are in addition to those available to the Indemnitor. No compromise or settlement of such Proceeding may be effected by either party without the other party‘s consent unless (m) there is no finding or admission of any violation of law and no effect on any other claims that may be made against such other party and (n) the sole relief provided is monetary damages that are paid in full by the party seeking the settlement. Neither party shall have any liability with respect to any compromise or settlement effected without its consent, which shall not be unreasonably withheld. The Indemnitor shall have no obligation to indemnify and hold harmless the Indemnitee from any loss, expense or liability incurred by the Indemnitee as a result of a default judgment entered against the Indemnitee unless such judgment was entered after the Indemnitor agreed, in writing, to assume the defense of such Proceeding. Section 5.7. Charges of Trustee . (a) Each Depositor, and each person surrendering Shares for the purpose of withdrawing Trust Property, shall pay to the Trustee a fee of $2,000 per transaction for the Delivery of Shares pursuant to Section 2.4 and the Surrender of Baskets of Shares pursuant to Section 2.6 or 6.2 (or such other fee as the Trustee, with the prior written consent of the Sponsor, may from time to time announce). (b) The Trustee is entitled to receive from the Sponsor fees for its services and reimbursement for its out-of-pocket expenses in accordance with written agreements between the Sponsor and the Trustee. (c) The Trustee is entitled to charge the Trust for all expenses and disbursements incurred by it under Section 5.12(a) or that are of the type described in Sections 4.7(a)(2) or (3) of this Agreement (including the fees and disbursements of its legal counsel), except that the Trustee is not entitled to charge the Trust for (i) expenses and disbursements incurred by it prior to the commencement of trading of Shares on the Exchange and (ii) fees of agents for performing services the Trustee is required to perform under this Agreement. Section 5.8. Charges of Sponsor . (a) The Sponsor is entitled to receive from the Trust, as an expense of the Trust, a fee for services that will accrue and be paid daily at an annualized rate of 0.50% of Adjusted Net Asset Value. (b) The Sponsor is entitled to receive reimbursement from the Trust for all expenses and disbursements incurred by it under the last sentence of Section 5.6(d) or that are of the type described in Sections 4.7(a)(2), (3) or (4) of this Agreement, except that the Sponsor is not entitled to charge the Trust for (i) expenses and disbursements incurred by it prior to the commencement of trading of Shares on the Exchange and (ii) fees of agents for performing services the Sponsor is required to perform under this Agreement. Section 5.9. Retention of Trust Documents . The Trustee is authorized to destroy those documents, records, bills and other data compiled during the term of this Agreement at the times permitted by the laws or regulations governing the Trustee, unless the Sponsor reasonably requests the Trustee in writing to retain those items for a longer period. Section 5.10. Federal Securities Law Filings . (a) The Sponsor shall (i) prepare and file a registration statement with the Commission and take such action as is necessary from time to time to qualify the Shares for offering and sale under the federal securities laws of the United States, including the preparation and filing of amendments and supplements 20

to such registration statement, (ii) promptly notify the Trustee of any amendment or supplement to the registration statement or prospectus, of any order preventing or suspending the use of any prospectus, of any request for the amending or supplementing of the registration statement or prospectus or if any event or circumstance occurs which is known to the Sponsor as a result of which the registration statement or prospectus, as then amended or supplemented, would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iii) provide the Trustee from time to time with copies, including copies in electronic form, of the prospectus, as amended and supplemented, in such quantities as the Trustee may reasonably request and (iv) prepare and file any periodic reports or updates that may be required under the Securities Exchange Act of 1934, as amended. The Trustee shall furnish to the Sponsor any information from the records of the Trust that the Sponsor reasonably requests in writing that is needed to prepare any filing or submission that the Sponsor or the Trust is required to make under the federal securities laws of the United States. (b) The Sponsor shall have all necessary and exclusive power and authority to (i) from time to time adopt, implement or amend such disclosure controls and procedures as are necessary or desirable, in the Sponsor‘s reasonable judgment, to ensure compliance with the disclosure and ongoing reporting obligations under any applicable securities laws; (ii) appoint and remove the auditors of the Trust; and (iii) seek from the relevant securities or other regulatory authorities such relief, clarification or other action as the Sponsor shall deem necessary or desirable regarding the disclosure or financial reporting obligations of the Trust. Section 5.11. Prospectus Delivery . The Trustee shall, if required by the federal securities laws of the United States, in any manner permitted by such laws, deliver at the time of issuance of Shares, a copy of the relevant prospectus, as most recently furnished to the Trustee by the Sponsor, to each Depositor. Section 5.12. Discretionary Actions by Trustee; Consultation . (a) The Trustee may, in its discretion, undertake any action that it considers necessary or desirable to protect the Trust or the interests of the Registered Owners. The expenses incurred by the Trustee in connection with taking any action under the preceding sentence (including the fees and disbursements of legal counsel) shall be expenses of the Trust, and the Trustee shall be entitled to be reimbursed for those expenses by the Trust. (b) The Trustee shall notify and consult with the Sponsor before undertaking any action under subsection (a) above or if the Trustee becomes aware of any development or event that affects the administration of the Trust but is not contemplated or provided for in this Agreement. (c) The Sponsor shall notify and consult with the Trustee before undertaking any action under the last sentence of Section 5.6(d) or if the Sponsor becomes aware of any development or event that affects the administration of the Trust but is not contemplated or provided for in this Agreement. 21

ARTICLE VI AMENDMENT AND TERMINATION Section 6.1. Amendment . The Trustee and the Sponsor may amend any provisions of this Agreement without the consent of any Registered Owner. 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 Registered Owners will not become effective as to outstanding Shares until 30 days after notice of such amendment is given to the Registered Owners. Every Registered Owner and Beneficial Owner, 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 this Agreement as amended thereby. In no event shall any amendment impair the right of the Registered Owner of Shares to Surrender Baskets of Shares and receive therefor the amount of Trust Property represented thereby, except in order to comply with mandatory provisions of applicable law. Section 6.2. Termination . (a) The Trustee shall set a date on which this Agreement will terminate and mail notice of that termination to the Registered Owners at least 30 days prior to the date set for termination if any of the following occurs: (i) The Trustee is notified that the Shares are delisted from a national securities exchange and are not approved for listing on another national securities exchange within five business days of their delisting; (ii) Registered Owners acting in respect of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust; (iii) 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 as provided in Section 5.4; (iv) the Commission determines that the Trust is an investment company under the Investment Company Act of 1940, as amended, and the Trustee has actual knowledge of such Commission determination; (v) the aggregate market capitalization of the Trust, based on the closing price for the Shares, was less than $350 million for five consecutive trading days 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; (vi) the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act of 1936, as amended, and the Trustee has actual knowledge of that determination; or (vii) the Trust fails to qualify for treatment, or ceases to be treated, for United States 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. 22

(b) If no event specified in subsection (a) above occurs first, the Trust shall terminate in 2045, on the fortieth anniversary of its creation and the Trustee shall mail a notice of that impending termination to the Registered Owners at least 30 days before that anniversary. (c) On and after the date of termination of this Agreement, the Registered Owner of Shares will, upon (i) Surrender of those Shares, (ii) payment of the fee of the Trustee for the Surrender of Shares provided in Section 5.7, and (iii) payment of any applicable taxes or other governmental charges, be entitled to Delivery, to him or upon his order, of the amount of Trust Property represented by those Shares. The Trustee shall not accept any deposits of Silver after the date of termination of this Agreement. If any Shares remain outstanding after the date of termination of this Agreement, the Trustee thereafter shall discontinue the registration of transfers of Shares, shall not make any distributions to Registered Owners, and shall not give any further notices or perform any further acts under this Agreement, except that the Trustee shall continue to collect distributions pertaining to Trust Property 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 shall continue to deliver Trust Property, 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 set forth in 5.7 for the Surrender of Shares, any expenses for the account of the Registered Owner of such Shares in accordance with the terms and conditions of this Agreement, and any applicable taxes or other governmental charges). At any time after the expiration of 90 days following the date of termination of this Agreement, the Trustee may sell the Trust Property then held under this Agreement and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it under this Agreement, unsegregated and without liability for interest, for the pro rata benefit of the Registered Owners of Shares that have not theretofore been Surrendered, such Registered Owners thereupon becoming general creditors of the Trustee with respect to such net proceeds. After making such sale, the Trustee shall be discharged from all obligations under this 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 Registered Owner of such Shares in accordance with the terms and conditions of this Agreement, and any applicable taxes or other governmental charges). Upon the termination of this Agreement, the Sponsor shall be discharged from all obligations under this Agreement except for its obligations to the Trustee under Section 5.6. Sections 5.6, 5.7 and 5.8 shall survive termination of this Agreement. ARTICLE VII MISCELLANEOUS Section 7.1. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts shall constitute one and the same instrument. Copies of this Agreement shall be filed with the Trustee and shall be open to inspection by any Registered Owner during the Trustee‘s business hours. Section 7.2. Third-Party Beneficiaries . This Agreement is for the exclusive benefit of the parties hereto, and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other person. 23

Section 7.3. Severability . In case any one or more of the provisions contained in this Agreement should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall in no way be affected, prejudiced or disturbed thereby. Section 7.4. Registered Owners, Beneficial Owners and Depositors as Parties; Binding Effect . The Registered Owners, Beneficial Owners and Depositors from time to time shall be parties to this Agreement and shall be bound by all of the terms and conditions hereof by their acceptance of Shares or any interest therein or by their depositing Silver, as the case may be. Section 7.5. Notices . (a) All notices given under this Agreement must be in writing. (b) Any and all notices to be given to the Trustee or the Sponsor shall be deemed to have been duly given (i) when it is actually delivered by a messenger or recognized courier service, (ii) five days after it is mailed by registered or certified mail, postage paid or (iii) when receipt of a facsimile transmission is acknowledged via a return receipt or receipt confirmation as requested by the original transmission, in each case to or at the address set forth below: To the Trustee: THE BANK OF NEW YORK 101 Barclay Street, 22-W New York, New York 10286 Attention: ADR Administration Facsimile: (212) 571-3050 or any other place to which the Trustee may have transferred its Corporate Trust Office with notice to the Sponsor. To the Sponsor: BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC. 45 Fremont Street San Francisco, California 94105 Attention: BGI‘s Product Management Team, Intermediary Investors and Exchange Traded Products Department Telephone: (415) 402-4671 Facsimile: (415) 618-5097 with a copy to: BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC. 45 Fremont Street San Francisco, CA 94105 Attention: BGI‘s Legal Department Telephone: (415) 597-2860 Facsimile: (415) 597-2753 or any other place to which the Sponsor may have transferred its principal office with notice to the Trustee. 24

(c) Any and all notices to be given to a Registered Owner shall be deemed to have been duly given (i) when actually delivered by messenger or a recognized courier service, (ii) when mailed, postage prepaid or (iii) when sent by facsimile transmission confirmed by letter, in each case at or to the address of such Registered Owner as it appears on the transfer books of the Trustee, or, if such Registered Owner shall have filed with the Trustee a written request that any notice or communication intended for such Registered Owner be delivered to some other address, at the address designated in such request. Section 7.6. Agent for Service; Submission to Jurisdiction . The Sponsor hereby (i) irrevocably designates and appoints Barclays Bank PLC, New York Branch, General Counsel‘s office, located at 200 Park Avenue, 4th Floor, New York, New York 10166, in the State of New York, as the Sponsor‘s authorized agent upon which process may be served in any suit or proceeding arising out of or relating to the Shares, the Trust Property or this Agreement, (ii) consents and submits to the jurisdiction of any state or federal court in The City of New York, State of New York, in which any such suit or proceeding may be instituted, and (iii) agrees that service of process upon said authorized agent shall be deemed in every respect effective service of process upon the Sponsor in any such suit or proceeding. The Sponsor agrees to deliver, upon the execution and delivery of this Agreement, a written acceptance by such agent of its appointment as such agent. The Sponsor further agrees to take any and all action, including the filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment in full force and effect for so long as any Shares remain outstanding or this Agreement remains in force. In the event the Sponsor fails to continue such designation and appointment in full force and effect, the Sponsor hereby waives personal service of process upon it and consents that any such service of process may be made by certified or registered mail, return receipt requested, directed to the Sponsor at its address last specified for notices hereunder, and service so made shall be deemed completed five (5) days after the same shall have been so mailed. Section 7.7. Governing Law . This Agreement shall be interpreted under, and all rights and duties under this Agreement shall be governed by, the internal substantive laws (but not the choice of law rules) of the State of New York. 25

IN WITNESS WHEREOF, BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC. and THE BANK OF NEW YORK have duly executed this Depositary Trust Agreement as of the day and year first set forth above. BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC. By: Name: Title: By: Name: Title: THE BANK OF NEW YORK, as Trustee By: Name: Title: 26

EXHIBIT A [Form of Certificate] THE SHARES EVIDENCED HEREBY REPRESENT RIGHTS WITH RESPECT TO UNDERLYING TRUST PROPERTY (AS DEFINED IN THE DEPOSITARY TRUST AGREEMENT REFERRED TO HEREIN) HELD BY THE TRUST AND DO NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND ARE NOT GUARANTEED BY THE SPONSOR OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE SHARES NOR THE UNDERLYING TRUST PROPERTY ARE INSURED UNDER ANY AGREEMENT THAT DIRECTLY BENEFITS THE TRUST OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (―DTC‖), TO THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. A-1

iSHARES SILVER TRUST SHARES ISSUED BY iSHARES SILVER TRUST REPRESENTING FRACTIONAL INTERESTS IN DEPOSITED SILVER AND ANY OTHER TRUST PROPERTY THE BANK OF NEW YORK, as Trustee No. CUSIP: THE BANK OF NEW YORK, as Trustee (hereinafter called the Trustee), hereby certifies that CEDE & CO., as nominee of the Depository Trust Company, or registered assigns, is the owner of * Shares issued by iShares Silver Trust, each representing a fractional undivided interest in the net assets of the Trust, as provided in the Agreement referred to below. At the time of delivery of the Agreement, each 50,000 Shares represented an interest in 500,000 Ounces of Silver that are deposited under the Agreement and held by the Custodian referred to in the Agreement. The amount of Silver in which each 50,000 Shares represents an interest will decline over time as provided in the Agreement. The Trustee‘s Corporate Trust Office is located at a different address than its principal executive office. Its Corporate Trust Office is located at 101 Barclay Street, New York, New York 10286, and its principal executive office is located at One Wall Street, New York, New York 10286. This Certificate is issued upon the terms and conditions set forth in the Depositary Trust Agreement dated as of [ ], 2005 (the ―Agreement‖) among Barclays Global Investors International Inc. (herein called the Sponsor), the Trustee, all Registered Owners and Beneficial Owners from time to time of Shares issued thereunder and all Depositors. By becoming a Registered Owner or Beneficial Owner, or by depositing Silver, a Person becomes a party to the Agreement and is bound by all the terms and conditions of the Agreement. The Agreement sets forth the rights of Depositors and Registered Owners and the rights and duties of the Trustee and the Sponsor. Copies of the Agreement are on file at the Trustee‘s Corporate Trust Office in New York City. * Shares

* That number of Shares held at The Depository Trust Company at any given point in time. A-2

The Agreement is hereby incorporated by reference into and made a part of this Certificate as if set forth in full in this place. Capitalized terms not defined herein shall have the meanings set forth in the Agreement. This Certificate shall not be entitled to any benefits under the Agreement or be valid or obligatory for any purpose unless it is executed by the Trustee by the manual or facsimile signature of a duly authorized signatory of the Trustee and, if a Registrar (other than the Trustee) for the Shares shall have been appointed, countersigned by the manual signature of a duly authorized officer of the Registrar. Dated: THE BANK OF NEW YORK, as Trustee By: THE TRUSTEE’S CORPORATE TRUST OFFICE ADDRESS IS 101 BARCLAY STREET, NEW YORK, NEW YORK 10286 A-3

Exhibit 4.2 AUTHORIZED PARTICIPANT AGREEMENT AUTHORIZED PARTICIPANT AGREEMENT (this ―Agreement‖ ) dated as of [ ], 2005 among (i) [ ],a [ ] [organized] under the laws of [ ] (the ―Authorized Participant‖ ), (ii) The Bank of New York, a New York Banking corporation acting in its capacity as trustee (in such capacity, the ―Trustee‖ ) of the iShares Silver Trust (the ―Trust‖ ), a trust created under New York law pursuant to the provisions of the Depositary Trust Agreement (the ―Trust Agreement‖ ) dated [ ], 2005 between the Trustee and Barclays Global Investors International Inc., in its capacity as sponsor of the Trust (in such capacity, the ―Sponsor‖ ), and (iii) the Sponsor. RECITALS A. Pursuant to the provisions of the Trust Agreement, the Trust may from time to time issue or redeem equity securities representing an interest in the assets of the Trust ( ―iShares‖ ), in each case only in aggregate amounts of 50,000 iShares (such aggregate amount, a ―Basket‖ ), and integral multiples thereof, and only in transactions with a party who, at the time of the transaction, shall have signed and in effect an Authorized Participant Agreement with the Trust. B. [ ]. has requested to become an ―Authorized Participant‖ with respect to the Trust (as such term is defined in the Trust Agreement), and the Sponsor and the Trustee have agreed to such request. NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties, hereto, intending to be legally bound, agree as follows: Section 1. Procedures. The Authorized Participant will purchase or redeem Baskets of iShares of the Trust in compliance with the Trust Agreement as supplemented by the Creation and Redemption Procedures attached to this Agreement as Schedule 1 (such procedures, as the same may be amended or modified from time to time in compliance with the provisions hereof and thereof, the ―Procedures‖ ), using the form attached thereto as Annex I (a ―Purchase Order‖, in the case of an order to purchase one or more Baskets of iShares and a ―Redemption Order‖ , in case of an order to redeem one or more Baskets of iShares). All Purchase Orders and Redemption Orders (collectively, ―Orders‖ ) shall be placed and executed in accordance with the Trust Agreement as supplemented by the Procedures. Section 2. Incorporation of Standard Terms. The Standard Terms attached hereto as Schedule 2 are hereby incorporated by reference into, and made a part of, this Agreement. Section 3. Conflicts Rules. In case of any inconsistency between the provisions of this Agreement and the Trust Agreement, the provisions of the Trust Agreement shall control. In case of inconsistency between the provisions incorporated by reference into this Agreement pursuant to Section 2 above and any other provision of this Agreement, the latter will control. Section 4. Authorized Representatives. Pursuant to Section 2.01 of the Standard Terms, attached hereto as Schedule 3 is a certificate listing the Authorized Representatives of the Authorized Participant. Section 5. Additional Covenants. The Authorized Participant covenants and agrees: (a) To use its best efforts to ensure that any Delivery of Silver to the Custodian, or any withdrawal of Silver from the Trust, in connection with a Purchase Order or Redemption Order placed by the Authorized Participant will take place only through one or more members of the London Bullion Market Association; and

(b) Promptly upon written demand therefor (accompanied of such reasonable evidence as the Authorized Participant may request), to reimburse the Trust or the Custodian the amount of any taxes (including value added taxes) that may be imposed on the Trust or the Custodian in connection with any Delivery of Silver by or on behalf of the Authorized Participant to the Custodian (in the case of a Purchase Order placed by the Authorized Participant), or any Delivery of Silver to or for the account of the Authorized Participant (in the case of a Redemption Order placed by the Authorized Participant). Capitalized terms used in this Section and not otherwise defined herein have the meaning ascribed to them in the Procedures. Section 6. Notices. Except as otherwise specifically provided in the Procedures, all notices required or permitted to be given pursuant hereto shall be given in writing and delivered by personal delivery or by postage prepaid registered or certified United States first class mail, return receipt requested, or by telex, telegram or facsimile or similar means of same day delivery (with a confirming copy by mail) addressed as follows: (i) If to the Trustee: The Bank of New York 101 Barclay Street — Floor 6E New York, NY 10286 Attn: Alfred Irving or Jarvis Joseph Telephone: (212) 815-6250 Facsimile: (212) 815-6218 (ii) If to the Sponsor: Barclays Global Investors International Inc. 45 Fremont Street San Francisco, CA 94105 Attn: BGI‘s Product Management Team, Intermediary Investors and Exchange Traded Products Department Telephone: (415) 597-2860 Facsimile: (415) 597-2753 with a copy to: Barclays Global Investors International Inc. 45 Fremont Street San Francisco, CA 94105 Attn: BGI‘s Legal Department Telephone: (415) 597-2860 Facsimile: (415) 597-2753 (iii) If to the Authorized Participant: [ ] 2

or to such other address as any of the parties hereto shall have communicated in writing to the remaining parties in compliance with the provisions hereof. Section 7. Effectiveness, Termination and Amendment. This Agreement shall become effective upon execution and delivery by each of the parties hereto. This Agreement may be terminated at any time by any party upon sixty days prior written notice to the other parties and may be terminated earlier by the Trustee or the Sponsor at any time on the event of a breach by the Authorized Participant of any provision of this Agreement (including the Standard Terms incorporated by Section 2 hereof) or the Procedures. This Agreement supersedes any prior agreement between or among the parties concerning the matters governed hereby. This Agreement may be amended by the Trustee and the Sponsor from time to time without the consent of the Authorized Participant or any Beneficial Owner by the following procedure: the Trustee or the Sponsor will mail a copy of the amendment to the Authorized Participant in compliance with the notice provisions of this Agreement; if the Authorized Participant does not object in writing to the amendment within ten (10) Business Days after receipt of the proposed amendment, the amendment will become part of this Agreement in accordance with its terms. Section 8. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York. The parties irrevocably submit to the non-exclusive jurisdiction of any New York State or United States Federal court sitting in New York City over any suit, action or proceeding arising out of, or relating to, this Agreement. Section 9. Assignment. No party to this Agreement shall assign any rights, or delegate the performance of any obligations, arising hereunder without the prior written consent of the other parties hereto; provided , that any into which a party hereto may be merged or converted, or with which it may be consolidated, or any entity resulting from any merger, consolidation or conversion to which a party hereunder shall be a party, shall be the successor of such party hereto. Any purported assignment or delegation in violation of these provisions shall be null and void. Notwithstanding the foregoing, any successor Trustee appointed in compliance with the Trust Agreement shall automatically become a party hereto and shall assume all the obligations, and be entitled to all the rights and remedies of the Trustee hereunder. Section 10. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 3

IN WITNESS WHEREOF, the parties hereto have executed this Authorized Participant Agreement as of the date set forth above. THE BANK OF NEW YORK, in its capacity as Trustee of the iShares Silver Trust, By: Name: Title: BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC., in its capacity as Sponsor By: Name: Title: [AUTHORIZED PARTICIPANT] By: Name: Title: 4

Schedule 1 Creation and Redemption Procedures iShares Silver Trust Creation and Redemption Procedures Dated as of , 2005

TABLE OF CONTENTS
Page

ARTICLE I Section 1.01. Section 1.02. Section 1.03. ARTICLE II Section 2.01. Section 2.02. ARTICLE III Section 3.01.

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Definitions. Interpretation. Conflicts. CREATION PROCEDURES Initial Creation of iShares. Subsequent Creation of iShares. REDEMPTION PROCEDURES Redemption of iShares. -i-

1 1 3 3 3 3 3 5 5

iSHARES SILVER TRUST CREATION AND REDEMPTION PROCEDURES adopted by the Sponsor and the Trustee (each as defined below) as of [ ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. Definitions . For purposes of these Procedures, unless the context otherwise requires, the following terms will have the following meanings: ― Authorized Participant ‖ shall have the meaning ascribed to the term in the introductory paragraph of the Authorized Participant Agreement. ― Authorized Participant Agreement ‖ shall mean the Authorized Participant Agreement to which these Procedures are attached as Schedule 1. ― Authorized Representative ‖ shall mean, with respect to an Authorized Participant, each individual who, pursuant to the provisions of the Authorized Participant Agreement between such Authorized Participant and the Trustee, has the power and authority to act on behalf of the Authorized Participant in connection with the placement of Purchase Orders or Redemption Orders and is in possession of the personal identification number (PIN) assigned by the Trustee for use in any communications regarding Purchase or Redemption Orders on behalf of such Authorized Participant. ― Basket ‖ shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement. ― Basket Silver Amount ‖ shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement. ― Benchmark Price ‖ shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement. ― Business Day ‖ shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement. ― Creation ‖ means the process that begins when an Authorized Participant first indicates to the Trustee its intention to purchase one or more Baskets pursuant to these Procedures and concludes with the issuance by the Trustee and Delivery to such Authorized Participant of the corresponding number of iShares. ― Creation and Redemption Line ‖ shall mean a telephone number designated as such by the Trustee and communicated to each Authorized Participant in compliance with the notice provisions of the respective Authorized Participant Agreement. ― Custodial Account ‖ shall mean the account established by the Trustee with the Custodian pursuant to the Custodian Agreement. ― Custodian Day ‖ shall mean a day on which the facilities at which a Delivery of Silver is to take place to or by the Custodian on behalf of the Trust are open for business. S1-1 ], 2005

― Custodian ‖ shall mean JPMorgan Chase Bank N.A., London Branch, in its capacity as custodian under the Custodian Agreement, and any successor thereto or additional custodian appointed in compliance with the provisions of the Trust Agreement and the Custodian Agreement. ― Custodian Agreement ‖ shall mean the Custodian Agreement dated as of Custodian. , 2005 by and between the Trustee and the

― Delivery ‖ shall mean a delivery of Silver or Shares, as applicable, in each case effected according to the definition of ―Deliver‖ in Section 1.1 of the Trust Agreement. ― DTC ‖ shall mean The Depository Trust Company, its nominees and their respective successors. ― iShares ‖ shall mean shares issued by the Trustee representing fractional, undivided interests in the net assets of the Trust. ― Initial Creation ‖ shall mean the initial creation of iShares pursuant to the provisions of Section 2.01. ―LBMA‖ shall mean the London Bullion Market Association. ― Order Cut-Off Time ‖ shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement. ― Order Date ‖ shall have, (i) with respect to a Purchase Order, the meaning ascribed to the term in Section 2.3 of the Trust Agreement; and (ii) with respect to a Redemption Order, the meaning ascribed to the term in Section 2.6 of the Trust Agreement. ― Ounce ‖ shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement. ― Purchase Order ‖ shall mean an order to purchase one or more Baskets in the form attached hereto as Annex I. ― Redemption Order ‖ shall mean an order to redeem one or more Baskets in the form attached hereto as Annex I. ― Silver ‖ shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement. ― Sponsor ‖ shall mean Barclays Global Investors International Inc., a Delaware corporation, in its capacity as sponsor under the Trust Agreement. ― Trustee ‖ shall mean The Bank of New York, a New York banking corporation, in its capacity as Trustee under the Trust Agreement, and any successor thereto in compliance with the provisions thereof. ― Trust ‖ shall mean the iShares Silver Trust, a trust governed by the provisions of the Trust Agreement. ― Trust Agreement ‖ shall mean the Depositary Trust Agreement dated as of and beneficial owners from time to time of iShares and all depositors. , 2005 among the Trustee, the Sponsor, all owners

― Unallocated Basis ‖ shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement. ―VAT‖ shall mean value added tax as provided for in the Value Added Tax Act 1994 (as amended or re-enacted from time to time) and legislation supplemental thereto and any other tax (whether imposed in the United Kingdom in substitution thereof or in addition thereto or elsewhere) of a similar fiscal nature. S1-2

Section 1.02. Interpretation . In these Procedures: Unless otherwise indicated, all references to Sections, clauses, paragraphs, schedules or exhibits, are to Sections, clauses, paragraphs, schedules or exhibits in or to these Procedures. The words ―hereof‖, ―herein‖, ―hereunder‖ and words of similar import shall refer to these Procedures as a whole, and not to any individual provision in which such words may appear. A reference to any statute, law, decree, rule, regulation or other applicable norm shall be construed as a reference to such statute, law, decree, rule, regulation or other applicable norm as re-enacted, re-designated or amended from time to time. A reference to any agreement, instrument or document shall be construed as a reference to such agreement, instrument or document as the same may have been amended from time to time in compliance with the provisions thereof. Section 1.03. Conflicts . In case of conflict between any provision of these Procedures and the terms of the Trust Agreement, the terms of the Trust Agreement shall control. ARTICLE II CREATION PROCEDURES Section 2.01. Initial Creation of iShares . The initial creation of iShares will take place in compliance with such procedures as the Trustee, the Sponsor and the initial Depositor may agree. Section 2.02. Subsequent Creation of iShares . After the Initial Creation, the issuance and Delivery of iShares shall take place only in integral numbers of Baskets in compliance with the following rules: a. Authorized Participants wishing to acquire from the Trustee one or more Baskets shall place a Purchase Order with the Trustee no later than 4:00 p.m. (New York time) on any Business Day; provided, however, that only Purchase Orders received by the Trustee prior to the Order Cut-Off Time on a Business Day on which a Benchmark Price is announced shall have such Business Day as the Order Date. Purchase Orders received by the Trustee on or after the Order Cut-Off Time on a Business Day, or on a Business Day on which no Benchmark Price is announced, shall be considered received at the opening of business on the next Business Day on which a Benchmark Price is announced and shall have as their Order Date such next Business Day. b. For purposes of paragraph ‖a‖ above, a Purchase Order shall be deemed ―received‖ by the Trustee only when each of the following has occurred: (i) An Authorized Representative shall have placed a telephone call to the Trustee‘s Creation and Redemption Line informing the Trustee that the Authorized Participant wishes to place a Purchase Order for a specified number of Baskets, and the location or locations where the Authorized Participant intends to make Delivery of the Basket Silver Amount corresponding to each Basket (such locations to be limited to those where, in compliance with the Custodian Agreement, the Custodian is authorized to hold Silver on behalf of the Trust). S1-3

(ii) Within one hour following such telephone call, the Trustee shall have received, via facsimile or electronic mail message, a duly completed, irrevocable Purchase Order executed by an Authorized Representative of such Authorized Participant. c. The Trustee shall provide a written summary to the Custodian of all Orders for such Order Date no later than 4:30 p.m. (New York time). The Trustee will ask the Custodian to confirm whether delivery can be made at the locations indicated by the Authorized Participant no later than 5:00 p.m. (New York time). d. Before accepting a Purchase Order, the Trustee shall make sure that there exists at least one location at which the Authorized Participant is willing to Deliver, and the Custodian is capable of accepting, the requisite amount of Silver in connection with such Purchase Order. Should the Trustee elect to accept the Purchase Order, it shall communicate its decision by sending to the Authorized Participant (with copies to the Custodian at the offices of the Custodian in London and at each location at which the Authorized Participant will be expected to Deliver Silver pursuant to ―c‖ above), via facsimile or electronic mail message, no later than 5:00 p.m. (New York time) on the Order Date for such Purchase Order a copy of the corresponding Purchase Order endorsed ―Accepted‖ by the Trustee and indicating the Basket Silver Amount that the Authorized Participant shall Deliver to the Custodian in respect of each Basket. Prior to the transmission of the Trustee‘s acceptance as specified above, a Purchase Order will only represent the Authorized Participant‘s unilateral offer to deposit Silver in exchange for Baskets of iShares and will have no binding effect upon the Trust, the Trustee, the Custodian or any other party. e. The Authorized Participant will be responsible for the cost of transportation of Silver to the location where it is to be Delivered. The Basket Silver Amount corresponding to each Basket must be delivered at the locations specified by the Custodian no later than 11:30 a.m. (London time) on the second Custodian Day following the Order Date. Delivery may be made for deposit either in the Trustee‘s Custodial Account or in an account of the Authorized Participant with the Custodian or any subcustodian. If delivery is made for deposit in the Authorized Participant‘s account with the Custodian, it will be accompanied by an irrevocable order to the Custodian authorizing the transfer of the Silver so delivered to the Trustee‘s Custodial Account against the delivery by the Trustee of the corresponding number of iShares as provided in paragraph ‖h‖ or ―i‖ below, as applicable. The Authorized Participant shall contact the Custodian to obtain information regarding the location of the facilities where Delivery shall take place. The Custodian shall take all necessary measures to ensure that the facilities at which Delivery is to take place in respect of a Purchase Order are prepared to take such Delivery no later than 11:30 a.m. (London time) on the second Custodian Day following the applicable Order Date. f. Silver shall be Delivered to the Custodian in the form of Silver bars only, and must be accompanied by the corresponding bar list; provided , that an amount of Silver not exceeding 1100 Ounces may be Delivered to the Custodian on an Unallocated Basis. Silver that has been Delivered to the Custodian no later than 11:30 a.m. (London time) on a Custodian Day shall be allocated by the Custodian to the Trustee‘s Custodial Account no later than 9:00 a.m. (New York time) on the first Custodian Day following the date of such Delivery. In all other cases Silver Delivered to the Custodian shall be allocated by the Custodian to the Trustee‘s Custodial Account no later than the third Custodian Date following the Order Date. g. The Custodian shall allocate Silver to the Trustee‘s Custodial Account by (i) making entries in the Custodian‘s books and records to identify such Silver as being held for the Trust, it being understood that such entries shall identify each bar of Silver so allocated by refiner, assay, serial number and gross and fine weight; (ii) physically segregating from Silver held by the Custodian for its own account or on behalf of other clients the Silver so allocated to the Trustee‘s Custodial Account; and (iii) sending to the Trustee, via signed facsimile and electronic mail message, a written confirmation of the allocation, including the identification of the bars allocated as described above. S1-4

h. On the third Custodian Day following the Order Date corresponding to a Purchase Order, or on such earlier date as the Trustee in its discretion may agree, the Trustee shall issue the aggregate number of iShares corresponding to the Baskets ordered by the Authorized Participant and Deliver them, by credit to the account at DTC which the Authorized Participant shall have identified for such purpose in its Purchase Order, provided that, by 9:00 a.m. (New York time) on the date such issuance and Delivery is to take place: (i) the Custodian shall have reported in writing to the Trustee that: (a) in the case Silver bars delivered by the Authorized Participant, it has reviewed the corresponding bar list and the Silver received from the Authorized Participant to assure that the Silver matches the description in the bar list in terms of weight, fineness, refiner‘s marks and bar numbers and that, based on that review and on such further examination as the Custodian customarily performs in respect of Silver purchased for its own account, the Silver deposited by the Authorized Participant in respect to such Purchase Order (A) complies with the ―Good Delivery‖ Rules of the LBMA and (B) is held by the Custodian on behalf of the Trust in allocated form (except for amounts not to exceed in the aggregate 1100 Ounces); or (b) in the case of Silver delivered on an unallocated basis, the corresponding amount of Silver been allocated to the Trustee‘s Custodian Account and the Silver so allocated is in compliance with the provisions of the paragraph above; (ii) the Trustee shall have received from the Authorized Participant a per order transaction fee in the amount of US$2,000.00; (iii) the Authorized Participant shall have agreed to pay, or reimburse the Custodian or the Trust the amount of, any applicable taxes (including VAT) which is or becomes due in connection with the Delivery of Silver to the Custodian; and (iv) any other conditions to the issuance under the Trust Agreement shall have been satisfied. i. In all other cases, the Trustee shall issue the aggregate number of iShares corresponding to the Baskets ordered by the Authorized Participant and Deliver them by credit to the account at DTC which the Authorized Participant shall have identified for such purpose in its Purchase Order on the Business Day following the date on which the conditions set forth in clauses (i) to (iv) of paragraph ‖h‖ above shall have been met. ARTICLE III REDEMPTION PROCEDURES Section 3.01. Redemption of iShares . Redemption of iShares shall take place only in integral numbers of Baskets in compliance with the following rules: a. Authorized Participants wishing to redeem one or more Baskets shall place a Redemption Order with the Trustee no later than 4:00 p.m. (New York time) on any Business Day; provided, however, that only Redemption Orders received by the Trustee prior to the Order Cut-Off Time on a Business Day S1-5

on which a Benchmark Price is announced shall have such Business Day as the Order Date. Redemption Orders received by the Trustee on or after the Order Cut-Off Time on any Business Day, or on a Business Day on which no Benchmark Price is announced, shall be considered received at the opening of business on the next Business Day on which a Benchmark Price is announced and shall have as their Order Date such next Business Day. b. For purposes of paragraph ‖a‖ above, a Redemption Order shall be deemed ―received‖ by the Trustee only when each of the following has occurred: (i) An Authorized Representative shall have placed a telephone call to the Trustee‘s Creation and Redemption Line informing the Trustee that the Authorized Participant wishes to place a Redemption Order for a specified number of Baskets. (ii) Within one hour following such telephone call, the Trustee shall have received, via facsimile or electronic mail message, a duly completed, irrevocable Redemption Order executed by an Authorized Representative of such Authorized Participant. c. Should the Trustee elect to accept such Redemption Order, it shall communicate its decision to the Authorized Participant by sending to the Authorized Participant (with copy to the Custodian), via facsimile or electronic mail message, no later than 5:00 p.m. (New York time) on the Order Date for such Redemption Order a copy of the corresponding Redemption Order endorsed ―Accepted‖ by the Trustee and indicating the Silver Basket Amount that the Custodian shall Deliver to the Authorized Participant in respect of each Basket being redeemed. d. Unless otherwise agreed to by the Custodian, Silver will be Delivered by the Custodian in the form of Silver bars only; provided , that an amount of Silver not exceeding 1100 Ounces may be Delivered by the Custodian on an Unallocated Basis. While a redeeming Authorized Participant will be entitled to express a preference as to the city or facility where it would like to have the Silver Basket Amount delivered, the Trustee, in consultation with the Custodian and taking into account the best interests of the Trust and the Owners, will have final authority to decide where such delivery will take place. The Custodian shall inform via electronic mail message or facsimile sent to an Authorized Person of the redeeming Authorized Participant no later than 11:00 a.m. (New York time) on the first Custodian Day following the Order Date of such Redemption Order the exact location(s) where Delivery will be made, and the amount of Silver to be Delivered to the Authorized Participant at each such location. e. Provided that by 9:00 a.m. (New York time) on the third Custodian Day following the Order Date of a Redemption Order, the Trustee shall have confirmed in writing to the Custodian that: (i) the Authorized Participant has Delivered to the Trustee‘s account at DTC the total number of iShares to be redeemed by such Authorized Participant pursuant to such Redemption Order; (ii) the Trustee has received a per order transaction fee of US$2,000.00; (iii) the Authorized Participant has agreed to pay, or reimburse the Custodian or the Trust the amount of, any applicable taxes (including VAT) which is or becomes due in connection with the Delivery of Silver to the Authorized Participant; and (iv) any other conditions to the redemption under the Trust Agreement have been satisfied, S1-6

the Custodian will, as applicable, on such day, at the locations and in the amounts specified in the communication sent in compliance with paragraph ‖d‖ above, either: (A) Deliver to such Authorized Participant the corresponding amount of Silver which complies with the ―Good Delivery‖ Rules of the LBMA or (B) credit the account indicated by the redeeming Authorized Participant in its Redemption Order. Having made such Delivery, the Custodian will send written confirmation thereof to the Trustee who will then cancel the iShares so redeemed. f. In all other cases, Delivery must be completed by the Custodian as soon as, in the reasonable judgment of the Custodian, it is practicable following receipt of written confirmation from the Trustee as described in clauses ‖i‖ to ―iv‖ of paragraph ‖e‖ above. g. The foregoing provisions notwithstanding, the Custodian shall not be liable for any failure or delay in making Delivery of Silver in respect of a Redemption Order arising from nuclear fission or fusion, radioactivity, war, terrorist event, invasion, insurrection, civil commotion, riot, strike, act of government, public authority or act of God, or a similar cause that is beyond the Custodian‘s control. In the event of any such delay, the time to complete Delivery in respect of a Redemption Order will be extended for a period equal to that during which the inability to perform continues. h. In the event that, by 9:00 a.m. (New York time) on the third Custodian Day following the Order Date of a Redemption Order, Trustee‘s account at DTC shall not have been credited with the total number of iShares corresponding to the total number of Baskets to be redeemed pursuant to such Redemption Order, the Trustee will cancel such Redemption Order and will send via fax or electronic mail message notice of such cancellation to the respective Authorized Participant and the Custodian. S1-7

IN WITNESS WHEREOF, the Sponsor and the Trustee have executed these Creation and Redemption Procedures as of the date set forth above. THE BANK OF NEW YORK , in its capacity as Trustee of the iShares Silver Trust,

By: Name: Title: Alfred L. Irving Vice-President

BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC., in its capacity as Sponsor By: Name: Title: S1-8 By: Name: Title:

ANNEX I TO CREATION AND REDEMPTION PROCEDURES THE BANK OF NEW YORK, TRUSTEE CREATION/REDEMPTION ORDER FORM iSHARES SILVER TRUST CONTACT INFORMATION FOR ORDER EXECUTION: Telephone order number: (718) 315-4811 / 315-4512 Fax order number: (718) 315-4881 Custodian Instructions Participant must complete all items in Part 1. The Trustee in its discretion may reject any order not submitted in complete form. I. TO BE COMPLETED BY PARTICIPANT: Time: Firm Name: Fax Number:

Date: Broker Name: DTC Participant Number: Telephone Number:

Type of order (Check Creation or Redemption please) (One Basket = 50,000 Shares) Creation: # Of Baskets: Order # Please indicate Silver clearing agent:   JP Morgan UBS  Deutsche Bank  If physical delivery, check here settlement HSBC   Bank of Nova Scotia and contact JP Morgan regarding Redemption: Number: Number written out:

This Purchase or Redemption Order is subject to the terms and conditions of the Depositary Trust Agreement of the iShares Silver Trust as currently in effect and the Authorized Participant Agreement between the Authorized Participant, the Trustee and the Sponsor named therein. All representations and warranties of the Authorized Participant set forth in such Depositary Trust Agreement (including, if this is a Purchase Order, the representations in Section 3.2 of the Depositary Trust Agreement).and in the Authorized Participant Agreement are incorporated herein by reference and are true and accurate as of the date hereof. The undersigned does hereby certify as of the date set forth below that he/she is an Authorized Representative under the Authorized Participant Agreement and that he/she is authorized to deliver this Purchase or Redemption Order to the Trustee on behalf of the Authorized Participant. The Authorized Participant acknowledges and agrees that that (1) once accepted by the Trustee, this Purchase or Redemption Order will become a legally binding contract for the delivery of the Basket Silver Amount per Basket, or the number of Baskets, indicated above, and that the final Basket Silver Amount will be announced at the conclusion of the trading day, and (2) any taxes (including Value Added Taxes) incurred in connection with this transaction will be the responsibility of, and will be reimbursed upon demand from the Custodian or the Trust by, the Authorized Participant.

Date

Authorized Person‘s Signature

II. TO BE COMPLETED BY TRUSTEE AND CUSTODIAN: This certifies that the above order has been: Accepted by the Trustee Accepted by Custodian Declined-Reason: Final # of Ounces Final Cash Due to BNY Final # of SLV Shares

Date Time Date Time S1-9

Authorized Signature of Custodian Authorized Signature of Trustee

Schedule 2 Standard Terms iShares Silver Trust Standard Terms for Authorized Participant Agreements Dated as of , 2005

TABLE OF CONTENTS
Page

ARTICLE I Section 1.01. Section 1.02. Section 1.03. Section 1.04. Section 1.05. Section 1.06. Section 1.07. Section 1.08. ARTICLE II Section 2.01. Section 2.02. Section 2.03. Section 2.04. ARTICLE III Section 3.01. Section 3.02. Section 3.03. Section 3.04. Section 3.05. ARTICLE IV Section 4.01. Section 4.02. Section 4.03. ARTICLE V Section 5.01. Section 5.02. ARTICLE VI Section 6.01.

ORDERS FOR PURCHASE AND REDEMPTION Authorization to Purchase and Redeem Baskets Procedures for Orders Consent to Recording Irrevocability Costs and Expenses Delivery of Property to the Trust Title to Deposit Property and iShares Surrendered for Redemption Certain Payments or Distributions AUTHORIZED REPRESENTATIVES Certification PIN Numbers Termination of Authority Verification STATUS OF THE AUTHORIZED PARTICIPANT Clearing Status Broker-Dealer Status Foreign Status Compliance with Certain Laws Authorized Participant Status ROLE OF AUTHORIZED PARTICIPANT Independent Contractor Rights and Obligations of DTC Participant Beneficial Owner Communications MARKETING MATERIALS AND REPRESENTATIONS Authorized Participant‘s Representation Prospectus INDEMNIFICATION; LIMITATION OF LIABILITY Indemnification -i-

1 1 1 1 1 1 1 1 2 2 2 2 3 3 3 3 3 4 4 4 4 4 4 4 5 5 5 5 5

TABLE OF CONTENTS (continued)
Page

ARTICLE VII Section 7.01. Section 7.02.

MISCELLANEOUS Commencement of Trading Definitions -ii-

6 6 6

STANDARD TERMS FOR AUTHORIZED PARTICIPANT AGREEMENTS (the ― Standard Terms ‖) agreed to as of [ ], 2005 by and between The Bank of New York, a New York banking corporation, and Barclays Global Investors International Inc., a Delaware corporation. ARTICLE I ORDERS FOR PURCHASE AND REDEMPTION Section 1.01. Authorization to Purchase and Redeem Baskets . Subject to the provisions of the Authorized Participant Agreement, during the term of the Authorized Participant Agreement the Authorized Participant will be authorized to purchase and redeem Baskets of iShares in compliance with the provisions of the Trust Agreement. Section 1.02. Procedures for Orders . Each party hereto agrees to comply with the provisions of the Trust Agreement and the Procedures to the extent applicable to it. Section 1.03. Consent to Recording . The phone lines used by the Trustee, the Custodian or their affiliated persons may be recorded, and the Authorized Participant hereby consents to the recording of all calls with any of those parties. Section 1.04. Irrevocability . The Authorized Participant agrees on behalf of itself and any Authorized Participant Client that delivery to the Trustee of an Order shall be irrevocable; provided that each of the Trust and the Sponsor reserves the right to reject any Order in compliance with the provisions of the Trust Agreement. Section 1.05. Costs and Expenses . The Authorized Participant shall be responsible for any and all expenses and costs incurred by the Trust in connection with any Orders. Section 1.06. Delivery of Property to the Trust . The Authorized Participant understands and agrees that in the event Deposit Property is not transferred to the Trust by the time specified in the Purchase Order and in compliance with the Procedures and the Trust Agreement, a Purchase Order may be cancelled by the Trustee 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. Section 1.07. Title to Deposit Property and iShares Surrendered for Redemption . The Authorized Participant represents and warrants to the Trustee that a. in connection with each Purchase Order, the Authorized Participant will have full power and authority to transfer to the Trust the corresponding Deposit Property, and that upon delivery of such Deposit Property to the Custodian and/or the relevant subcustodian in accordance with the Procedures, the Trust will acquire good and unencumbered title to such property, free and clear of all liens, charges, duties imposed on the transfer of assets and encumbrances and not subject to any adverse claims or transferability restrictions, whether arising by operation of law or otherwise; and b. in connection with a Redemption Order, the Authorized Participant will have full power and authority to surrender to the Trustee for redemption the corresponding iShares, and upon such surrender the Trust will acquire good and unencumbered title to such iShares, free and clear of all liens, charges, duties imposed on the transfer of assets and encumbrances and not subject to any adverse claims, transferability restrictions (whether arising by operation of law or otherwise), loan, pledge, repurchase or securities lending agreements or other arrangements which would preclude the delivery of such iShares on a ―regular way‖ basis. S2-1

Section 1.08. Certain Payments or Distributions . a. With respect to any Purchase Order, the Trust acknowledges and agrees to return to the Authorized Participant any payment, distribution or other amount paid to the Trust in respect of any Deposit Property transferred to the Trust that, based on the valuation of such Deposit Property at the time of transfer, should have been paid to the Authorized Participant. Likewise, the Authorized Participant acknowledges and agrees to return to the Trust any payment, distribution or other amount paid to the Authorized Participant or any Authorized Participant Client in respect of any Deposit Property transferred to the Trust that, based on the valuation of such Deposit Property at the time of transfer, should have been paid to the Trust. b. With respect to any Redemption Order, the Authorized Participant on behalf of itself and any Authorized Participant Client acknowledges and agrees to return to the Trust any payment, distribution or other amount paid to it or an Authorized Participant Client in respect of any property transferred to the Authorized Participant or any Authorized Participant Client that, based on the valuation of such property at the time of transfer, should have been paid to the Trust. The Trust is entitled to reduce the amount of any property due to the Authorized Participant or any Authorized Participant Client by an amount equal to any payment, distribution or other sum to be paid to the Authorized Participant or to the Authorized Participant Client in respect of any property transferred to the Authorized Participant or any Authorized Participant Client that, based on the valuation of such property at the time of transfer, should be paid to the Trust. Likewise, the Trust acknowledges and agrees to return to the Authorized Participant or any Authorized Participant Client any payment, distribution or other amount paid to it in respect of any iShares transferred to the Trust that, based on the valuation of such iShares at the time of transfer, should have been paid to the Authorized Participant or such Authorized Participant Client. ARTICLE II AUTHORIZED REPRESENTATIVES Section 2.01. Certification . Concurrently with the execution of the Authorized Participant Agreement, and as requested from time to time by the Trustee but no less frequently than annually, the Authorized Participant shall deliver to the Trust a certificate signed by the Authorized Participant‘s Secretary or other duly authorized official setting forth the names, e-mail addresses and telephone and facsimile numbers of all persons authorized to give instructions relating to any activity contemplated hereby or any other notice, request or instruction on behalf of the Authorized Participant (each an ― Authorized Representative ‖). Such certificate may be accepted and relied upon by the Trust as conclusive evidence of the facts set forth therein and shall be considered to be in full force and effect until (i) receipt by the Trust of a superseding certificate in a form approved by the Trust bearing a subsequent date, or (ii) termination of the Authorized Participant Agreement. Section 2.02. PIN Numbers . The Trustee shall issue to each Authorized Participant a unique personal identification number (― PIN Number ‖) by which such Authorized Participant shall be identified and instructions issued by the Authorized Participant shall be authenticated. The PIN Number shall be kept confidential and only provided to Authorized Representatives. The Authorized Participant may revoke the PIN Number at any time upon written notice to the Trustee, and the Authorized Participant shall be responsible for doing so in the event that it becomes aware that an unauthorized person has received access to its PIN Number or has or intends to use the PIN Number in an unauthorized manner. Upon receipt of such written request, the Trustee shall, as promptly as practicable, de-activate the PIN S2-2

Number. If an Authorized Participant‘s PIN Number is changed, the new PIN Number will become effective on a date mutually agreed upon by the Authorized Participant and the Trustee. The Authorized Participant agrees that, absent the Trustee‘s fraud, willful misconduct or failure to cancel the PIN Number promptly following a written request to do so from the Authorized Participant or the termination of the Authorized Participant Agreement, none of the Trust or the Trustee shall be liable for losses incurred by the Authorized Participant as a result of unauthorized use of the Authorized Participant‘s PIN Number prior to the time the Authorized Participant provides notice to the Trustee of the termination or revocation of authority pursuant to Section 2.03. Section 2.03. Termination of Authority . Upon the termination or revocation of authority of an Authorized Representative by the Authorized Participant, the Authorized Participant shall (i) give immediate written notice of such fact to the Trustee and such notice shall be effective upon receipt by the Trustee; and (ii) request a new PIN Number. The Trustee shall, as promptly as practicable, de-activate the PIN Number upon receipt of such written notice. Section 2.04. Verification . The Trustee may assume that all instructions issued to it using the Authorized Participant‘s PIN Number have been properly placed by Authorized Representatives, unless the Trustee has actual knowledge to the contrary or the Authorized Participant has revoked its PIN Number. The Trustee shall have no duty to verify that an Order is being placed by an Authorized Representative. The Authorized Participant agrees that the Trustee shall not be responsible for any losses incurred by the Authorized Participant as a result of an Authorized Representative identifying himself or herself as a different Authorized Representative or an unauthorized person identifying himself or herself as an Authorized Representative, unless the Trustee previously received from the Authorized Participant written notice to revoke its PIN Number. ARTICLE III STATUS OF THE AUTHORIZED PARTICIPANT Section 3.01. Clearing Status . The Authorized Participant represents, covenants and warrants that, as of the date of execution of the Authorized Participant Agreement, and at all times during the term of the Authorized Participant Agreement, the Authorized Participant is and will be entitled to use the clearing and settlement services of each of the national or international clearing and settlement organizations through which, in compliance with the Procedures, the transactions contemplated hereby will clear and settle. Any change in the foregoing status of the Authorized Participant shall terminate the Authorized Participant Agreement and the Authorized Participant shall give prompt written notice thereof to the Trustee. Section 3.02. Broker-Dealer Status . The Authorized Participant represents and warrants that, unless the following paragraph is applicable to it, it is (i) registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, (ii) qualified to act as a broker or dealer in the states or other jurisdictions where it transacts business to the extent so required by applicable law, and (iii) a member in good standing of the NASD. The Authorized Participant agrees that it will maintain such registrations, qualifications, and membership in good standing and in full force and effect throughout the term of the Authorized Participant Agreement. The Authorized Participant further agrees to comply with all Federal laws, the laws of the states or other jurisdictions concerned, and the rules and regulations promulgated thereunder, to the extent such laws and regulations are applicable to the Authorized Participant‘s transactions in iShares, and with the Constitution, By-Laws and Conduct Rules of the NASD applicable to its activities as an Authorized Participant, and that it will not offer or sell iShares in any state or jurisdiction where they may not lawfully be offered and/or sold. S2-3

Section 3.03. Foreign Status . If the Authorized Participant is offering and selling iShares in jurisdictions outside the several states, territories and possessions of the United States and is not otherwise required to be registered, qualified, or a member of the NASD as set forth in the preceding paragraph, the Authorized Participant nevertheless agrees to observe the applicable laws of the jurisdiction in which such offer and/or sale is made (e.g., it will not offer or sell iShares of the Trust in any state or jurisdiction where they may not lawfully be offered and/or sold), to comply with the full disclosure requirements of the 1933 Act and the regulations promulgated thereunder and to conduct its business in accordance with the spirit of the NASD Conduct Rules. Section 3.04. Compliance with Certain Laws . If the Authorized Participant is subject to the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (― U.S.A. PATRIOT Act ‖), the Authorized Purchaser is in compliance with the anti-money laundering and related provisions of the U.S.A. PATRIOT Act. Section 3.05. Authorized Participant Status . a. The Authorized Participant understands and acknowledges that the method by which Baskets of iShares will be created and traded may raise certain issues under applicable securities laws. For example, because new Baskets of iShares may be issued and sold by the Trust on an ongoing basis, at any point a ―distribution‖, as such term is used in the 1933 Act, may occur. The Authorized Participant understands and acknowledges that some activities on its part, depending on the circumstances, may result in its being deemed a participant in a distribution in a manner which could render it a statutory underwriter and subject it to the prospectus delivery and liability provisions of the 1933 Act. b. The Sponsor shall ensure that the Prospectus contains an accurate and current listing of Authorized Participants. ARTICLE IV ROLE OF AUTHORIZED PARTICIPANT Section 4.01. Independent Contractor . The Authorized Participant acknowledges and agrees that for all purposes of the Authorized Participant Agreement, the Authorized Participant will be deemed to be an independent contractor, and will have no authority to act as agent for the Trust or the Trustee in any matter or in any respect. The Authorized Participant agrees to make itself and its employees available, upon request, during normal business hours to consult with the Trustee, the Sponsor or their designees concerning the performance of the Authorized Participant‘s responsibilities under the Authorized Participant Agreement; provided, however, that the Authorized Participant shall be under no obligation to divulge or otherwise disclose any information that the Authorized Participant reasonably believes (i) it is under legal obligation not to disclose, or (ii) it is confidential or proprietary in nature. Section 4.02. Rights and Obligations of DTC Participant . In executing the Authorized Participant Agreement, the Authorized Participant agrees in connection with any purchase or redemption transactions in which it acts for an Authorized Participant Client or for any other DTC Participant or indirect participant, or any other Beneficial Owner, that it shall extend to any such party all of the rights, and shall be bound by all of the obligations, of a DTC Participant in addition to any obligations that it undertakes hereunder or in accordance with the Procedures. Section 4.03. Beneficial Owner Communications . The Authorized Participant agrees, subject to any limitations arising under federal or state securities laws relating to privacy or other obligations it may have to its customers, to assist the Trustee or the Sponsor in determining the ownership level of each S2-4

beneficial owner relating to positions in iShares that the Authorized Participant may hold as record holder. In addition, the Authorized Participant agrees, in accordance with applicable laws, rules and regulations, at the request of the Sponsor or the Trustee to forward to such beneficial owners written materials and communications received from the requesting party in sufficient quantities to allow mailing thereof to such beneficial owners, including notices, annual reports, disclosure or other informational materials and any amendments or supplements thereto that may be required to be sent by the Sponsor or the Trustee to such beneficial owners pursuant to the Trust Agreement or applicable law or regulation, or that the Sponsor or the Trustee reasonably wishes to distribute, at its own expense, to such beneficial owners. ARTICLE V MARKETING MATERIALS AND REPRESENTATIONS Section 5.01. Authorized Participant‘s Representation . The Authorized Participant represents, warrants and agrees that it will not make, or permit any of its representatives to make, any representations concerning iShares other than those contained in the Trust‘s then current Prospectus or in any promotional materials or sales literature furnished to the Authorized Participant by the Sponsor. The Authorized Participant agrees not to furnish or cause to be furnished to any person or display or publish any information or materials relating to iShares (including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar materials), except such information and materials as may be furnished to the Authorized Participant by the Sponsor and such other information and materials as may be approved in writing by the Sponsor. The Authorized Participant understands that the Trust will not be advertised as offering redeemable securities, and that any advertising materials will prominently disclose that the iShares are not redeemable units of beneficial interest in the Trust. Notwithstanding the foregoing, the Authorized Participant may, without the written approval of the Sponsor, prepare and circulate in the regular course of its business reports, research or similar materials that include information, opinions or recommendations relating to iShares (i) for public dissemination, provided that such reports, research or similar materials compare the relative merits and benefits of iShares with other products and do not discuss iShares more prominently than such other products and (ii) for internal use by the Authorized Participant. Copies of the then current Prospectus of the Trust will be supplied by the Sponsor to the Authorized Participant in reasonable quantities upon request. Section 5.02. Prospectus . The Sponsor will provide, or cause to be provided, to the Authorized Participant copies of the then current Prospectus and any printed supplemental information in reasonable quantities upon request. The Sponsor will notify the Authorized Participant when a revised, supplemented or amended Prospectus for the iShares is available, and make available to the Authorized Participant copies of such revised, supplemented or amended Prospectus at such time and in such quantities as may be reasonable to permit the Authorized Participant to comply with any obligation the Authorized Participant may have to deliver such Prospectus to its customers. The Sponsor shall be deemed to have complied with this Section 5.02 when the Authorized Participant has received such revised, supplemented or amended Prospectus by e-mail, in printable form, with such number of hard copies as may be agreed from time to time by the parties promptly thereafter. ARTICLE VI INDEMNIFICATION; LIMITATION OF LIABILITY Section 6.01. I ndemnification . The provisions of this Section 6.01 shall survive termination of the Agreement. S2-5

a. The Authorized Participant shall indemnify and hold harmless the Sponsor, the Trustee, the Trust, the Custodian (which the parties agree is a third-party beneficiary under this Subsection 6.01(a)) their respective subsidiaries, Affiliates, directors, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the 1933 Act (each an ― Indemnified Party ‖) from and against any loss, liability, cost and expense (including attorneys‘ fees) incurred by such Indemnified Party as a result of (i) any breach by the Authorized Participant of any representations or warranties of the Authorized Participant (including under Section 3.2 of the Depositary Trust Agreement); (ii) any failure on the part of the Authorized Participant to perform any of its obligations set forth in the Authorized Participant Agreement; (iii) any failure by the Authorized Participant to comply with applicable laws, including rules and regulations of self-regulatory organizations, that apply to it; or (iv) actions of such Indemnified Party in reliance upon any instructions issued in accordance with the Procedures reasonably believed by such Indemnified Party to be genuine and to have been given by the Authorized Participant. b. The Authorized Participant shall not be liable to any Indemnified Party for any damages arising out of (i) mistakes or errors in data provided in connection with purchase or redemption transactions except for data provided by the Authorized Participant, or (ii) mistakes or errors by, or arising out of interruptions or delays of communications with, the Trustee or any Indemnified Party. ARTICLE VII MISCELLANEOUS Section 7.01. Commencement of Trading . The Authorized Participant may not submit an Order prior to the effectiveness of the registration statement, or amendment to the registration statement, filed with the Securities and Exchange Commission and pursuant to which the Authorized Participant is identified as such in the Prospectus. Section 7.02. Definitions . The capitalized terms used herein are defined as follows. a. ―1933 Act‖ means the U.S. Securities Act of 1933, as amended. b. ―Affiliate‖ shall have the meaning given to it by Rule 501(b) under the 1933 Act. c. ―Authorized Participant Agreement‖ shall mean each Authorized Participant Agreement among the Authorized Participant, the Trustee and the Sponsor into which these Standard Terms shall have been incorporated by reference. d. ―Authorized Participant‖ shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement. e. ―Authorized Participant Client‖ means any party on whose behalf the Authorized Participant acts in connection with an Order (whether a customer or otherwise). f. ―Authorized Representative‖ shall have the meaning ascribed to it in Section 2.01 hereof. g. ―Basket‖ shall have the meaning ascribed to it in the Recitals to the Authorized Participant Agreement. h. ―Beneficial Owner‖ shall have the meaning given to it by Rule 16a-1(a)(2) of the Securities Exchange Act of 1934. S2-6

i. ―Business Day‖ shall mean each day the exchange on which the iShares trade is open for regular trading. j. ―Custodian‖ shall have the meaning ascribed to it in the Procedures. k. ―Deposit Property‖ means property which, in compliance with the provisions of the Trust Agreement, must be transferred by the Authorized Participant to the Trust in exchange for iShares. l. ―DTC‖ means The Depository Trust Company. m. ―Indemnified Party‖ shall have the meaning ascribed to it in Section 6.01.a hereof. n. ―iShares‖ means iShares issued by the Trust pursuant to the provisions of the Trust Agreement. o. ―NASD‖ means the National Association of Securities Dealers, Inc. p. ―Order‖ shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement. q. ―Procedures‖ shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement. r. ―Prospectus‖ means the Trust‘s current prospectus included in its effective registration statement, as supplemented or amended from time to time. s. ―Purchase Order‖ shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement. t. ―Redemption Order‖ shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement. u. ―Sponsor‖ shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement. v. ―Trust‖ shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement. w. ―Trust Agreement‖ shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement. x. ―Trustee‖ shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement. S2-7

IN WITNESS WHEREOF, the Sponsor and the Trustee have executed these Standard Terms as of the date set forth above. THE BANK OF NEW YORK, in its capacity as Trustee of the iShares Silver Trust, By: Name: Title: BARCLAYS GLOBAL INVESTORS INTERNATIONAL INC., in its capacity as Sponsor By: Name: Title: S2-8 By: Name: Title:

Schedule 3 Certificate of Authorized Representatives Each of the following employees of [ ] (each, an ― Authorized Representative ‖) is authorized, in accordance with the Authorized Participant Agreement dated [ ], 2005 among [ ], the Sponsor and the Trustee, to submit Purchase Orders and Redemption Orders on behalf and in the name of [ ] and to give instructions or any other notice or request on behalf of [ ] with respect to such Orders or any other activity contemplated by the Authorized Participant Agreement. Name: e-mail Address: Telephone: Fax: Name: e-mail Address: Telephone: Fax: Name: e-mail Address: Telephone: Fax: Name: e-mail Address: Telephone: Fax: Name: e-mail Address: Telephone: Fax: The undersigned, [ ], [ ]of [ ], does hereby certify that the persons listed above have been duly authorized to act as Authorized Representatives pursuant to the Authorized Participant Agreement. By: Name: Title: Date:

Exhibit 5.1 June [ ], 2005

Barclays Global Investors International, Inc. 45 Fremont Street San Francisco, CA 94105 Re: iShares® Silver Trust Ladies and Gentlemen: We have served as counsel to Barclays Global Investors International, Inc. (―Sponsor‖) in its capacity as sponsor of the iShares Silver Trust (―Trust‖) with respect to the formation of the Trust and the preparation and filing with the Securities and Exchange Commission of a Registration Statement on Form S-1 (Registration No. 333-[ ]) (the ―Registration Statement‖), in connection with the registration under the Securities Act of 1933, as amended (the ―Securities Act‖) of 13 million shares representing fractional undivided beneficial interests in the net assets of the Trust (the ―Shares‖).
®

In connection with the preparation of this opinion, we have examined executed originals or copies of the following documents: 1. The Depositary Trust Agreement dated as of [ ], 2005 between the Sponsor and The Bank of New York, a New York banking corporation, as trustee (in such capacity, the ―Trustee‖). 2. The Custodian Agreement dated as of [ ], 2005 between the Trustee and JPMorgan Chase Bank N.A, London branch, a company incorporated with limited liability as a National Banking Association, as custodian (in such capacity, the ―Custodian‖). 3. The Registration Statement. 4. The Distribution Agreement, dated [ ], 2005 between the Sponsor and Barclays Capital Inc. (the ―Initial Purchaser‖).

5. Copy of the global certificate representing the Shares to be issued under the Depositary Trust Agreement. 6. Such other pertinent records or documents as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In such examination, we have assumed the following: (i) the authenticity of original documents and the genuineness of all signatures; (ii) the conformity to the originals of all documents submitted to us as copies; and (iii) the accuracy and completeness of the information, representations and warranties contained in the records, documents, instruments and certificates we have reviewed. In rendering the opinions contained herein, we have relied with respect to certain factual matters solely upon the representations, certifications and other information contained in the documents

Barclays Global Investors International, Inc. June [ ], 2005

Page 2

listed above. We have not made or undertaken to make any independent investigation to establish or verify the accuracy or completeness of such factual representations, certifications and other information. We express no opinion as to matters of law in any jurisdiction other than the State of New York. Except as otherwise expressly set forth in this letter, our opinions are based solely upon the law and the facts as they exist on the date hereof and we undertake no, and disclaim any, obligation to advise you of any subsequent change in law or facts or circumstances which might affect any matter or opinion set forth herein. Based on the foregoing and subject to the qualifications set forth in this letter, we are of the opinion that the Shares, when issued in accordance with the terms of the Depositary Trust Agreement, including the receipt by the Custodian, on behalf of the Trustee, of the consideration required for the issuance of Shares, will be legally issued, fully paid and non-assessable. We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the use of our name where it appears in the Registration Statement. Very truly yours,

Exhibit 8.1 , 2005 Barclays Global Investors International Inc. 45 Fremont Street, San Francisco, CA 94105 Re: iShares Silver Trust Registration Statement on Form S-1

Ladies and Gentlemen: We have acted as legal counsel to Barclays Global Investors International Inc., a Delaware corporation (the ―Company‖), in connection with the preparation and filing under the Securities Act of 1933, as amended (the ―Securities Act‖), and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, of a registration statement on Form S-1, Registration No. 333, filed on June , 2005 (the ―Registration Statement‖). The Registration Statement relates to the proposed issuance by the iShares Silver Trust (the ―Trust‖), an investment trust formed on , 2005, under the laws of the State of New York pursuant to the terms of the Depositary Trust Agreement dated , 2005 (the ―Trust Agreement‖), entered into by and among the Company as sponsor, and The Bank of New York, a banking corporation organized under the laws of the State of New York, as trustee (the ―Trustee‖), of 13,000,000 shares, representing units of fractional undivided beneficial interest in and ownership of the Trust (the ―Shares‖). In connection therewith, you have requested our opinion with respect to certain U.S. federal income tax matters. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Trust Agreement. In rendering the opinions expressed herein, we have examined and relied on the Trust Agreement; the Registration Statement; originals or copies, certified or otherwise identified to our satisfaction, of all such agreements, certificates and other statements of corporate officers and other representatives of the Company; and such other documents, records and instruments as we have deemed necessary in order to enable us to render the opinion referred to in this letter. In our examination of the foregoing documents, we have assumed, with your consent, that all documents reviewed by us are original documents, or true and accurate copies of original documents, and have not been subsequently amended; the signatures of each original document are genuine; each party who executed the document had proper authority and capacity; all representations and statements set forth in such documents are true and correct; and all obligations imposed by any such documents on the parties thereto have been or will be performed or satisfied in accordance with their terms. Our opinions are based upon the Internal Revenue Code of 1986, as amended (the ―Code‖), Treasury Regulations promulgated thereunder, pertinent judicial decisions, current interpretive rulings and

, 2005 pronouncements of the Internal Revenue Service (the ―IRS‖), and such other authorities as we have considered relevant, in effect as of the date hereof, all of which are subject to legislative, judicial or administrative change or differing interpretation, possibly with retroactive effect. Our opinions are not binding on the IRS, and no assurance can be given that the conclusions expressed herein will not be challenged by the IRS or sustained by a court. Based upon and subject to the foregoing, (i) we are of the opinion, although not free from doubt due to the lack of directly governing authority, that the Trust will be classified as a ―grantor trust‖ for U.S. federal income tax purposes, and (ii) we confirm that the discussion in the Registration Statement under the caption ―United States Federal Income Tax Consequences,‖ to the extent it consists of statements of law and legal conclusions, and subject to the limitations and qualifications set forth therein, constitutes our opinion as to the material U.S. federal income tax consequences that will apply under currently applicable law to the purchase, ownership and disposition of the Shares. The opinions stated above represent our conclusions as to the application of the U.S. federal income tax laws existing as of the date of this letter. Further, the opinions set forth above represent our conclusions based upon the assumptions, documents, facts and representations referred to above. Any material amendments to such documents, changes in any significant facts or inaccuracy of such assumptions or representations could affect the accuracy of our opinions. Although we have made such inquiries and performed such investigations as we have deemed necessary to fulfill our professional responsibilities as counsel, we have not undertaken an independent investigation of all of the facts referred to in this letter and the certificates and other statements of corporate officers and other representatives of the Company. The opinions set forth in this letter are (i) limited to those matters expressly covered and no opinion is expressed in respect of any other matter, (ii) as of the date hereof, and (iii) rendered by us at the request of the Company. We assume no obligation to update our opinions for events or changes in the law occurring after the effective date of the Registration Statement. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement and to the references therein to us. In giving such consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Securities and Exchange Commission promulgated thereunder. Very truly yours, Page 2

Exhibit 10.1 JPMorgan Chase Bank N.A, London Branch and The Bank of New York

CUSTODIAN AGREEMENT

THIS AGREEMENT is made on [ BETWEEN (1) (2)

], 2005

JPMorgan Chase Bank N.A, London branch, a company incorporated with limited liability as a National Banking Association, whose principal London office is at 125 London Wall, London EC2Y 5AJ (― we ‖ or ― us ‖); and The Bank of New York, a banking corporation organised under the laws of the State of New York, whose principal place of business is at 101 Barclay Street, New York, New York 10286, United States of America, in its capacity as trustee of the iShares Silver Trust (― Trust ‖) (in such capacity ― you ‖).

INTRODUCTION We have agreed to open and maintain for you the Account (as defined below) and to provide other services to you in connection with the Account. This agreement sets out the terms under which we will provide those services to you and the arrangements which will apply in connection with those services. IT IS AGREED AS FOLLOWS 1. INTERPRETATION 1.1 Definitions: In this Agreement: ― Account ‖ means the account constituted by the Allocated Account and the Unallocated Account. ― Account Balance ‖ means, in relation to the Account, all your rights to and interest in the balance from time to time on that Account. ― Allocated Account ‖ means the sub-account maintained by us in your name recording the amount of Bullion received and held by us for you on an allocated basis. ― Availability Date ‖ means the Business Day on which you wish to transfer or deliver Silver to us for deposit into the Account. ― Bullion ‖ means any Silver held by us or any Sub-Custodian in the Allocated Account from time to time. ― Business Day ‖ means a Custodian Day (as defined in the Procedures). ―eBTS‖ or ― Website ‖ means the electronic Bullion Transfer System website developed by us. ―Fees‖ means the fees and charges referred to in clause 10.1 of this Agreement. ― LBMA ‖ means The London Bullion Market Association or its successors. ―Procedures‖ means the document entitled ―iShares Silver Trust Creation and Redemption Procedures‖ attached as Schedule 1 (as amended from time to time).

― Rules ‖ means the rules, regulations, practices and customs of the LBMA, the Bank of England and such other regulatory authority or other body as shall affect the activities contemplated by this Agreement. ― Sub-Custodian ‖ means a sub-custodian, agent or depository (including an entity within our corporate group) appointed by us to perform any of our duties under this Agreement including the custody and safekeeping of Bullion. ― Silver ‖ means silver that meets the requirements of ―good delivery‖ under the rules of the LBMA expressed in troy ounces and with a minimum fineness of 0.999. ― Unallocated Account ‖ means the sub-account maintained by us in your name recording the amount of Silver which either we or you, as the case may be, have a right to call upon the other party to deliver to it. ― VAT ‖ means value added tax as provided for in the Value Added Tax Act 1994 (as amended or re-enacted from time to time) and legislation supplemental thereto and any other tax (whether imposed in the United Kingdom in substitution thereof or in addition thereto or elsewhere) of a similar fiscal nature. ― Withdrawal Date ‖ means the Business Day on which you wish to withdraw Silver from the Account. 1.2 1.3 2. Headings: The headings in this Agreement do not affect its interpretation. Singular and plural: References to the singular include the plural and vice versa.

ACCOUNT 2.1 Opening Account: We shall open and maintain the Account. The Account shall comprise: (a) an Allocated Account in respect of Silver which you ask us to hold for you on an allocated basis; and 2

(b)

an Unallocated Account in respect of Silver which you ask us to hold for you on an unallocated basis,

which together shall be treated as a single account for all purposes of this Agreement unless the context requires otherwise. 2.2 Deposits and withdrawals : The balance of your Account shall reflect the combined balance on your Allocated Account and Unallocated Account. The balance of the Allocated Account shall reflect the amount of your Bullion held by us. The balance of the Unallocated Account shall reflect your or our entitlement to delivery of an amount of Silver from the other party, in each case equal to the amount of deposits less withdrawals of Silver made by you pursuant to the terms of this Agreement in relation to the Unallocated Account. Denomination of Account: The Account shall be denominated in troy ounces of Silver. Delivery, Receipt and Maintenance of Silver: We will receive, hold, release and deliver Silver from the Account only in accordance with this Agreement and the Procedures. In the event of a conflict between the terms of this Agreement and those of the Procedures, the Procedures shall prevail; provided, however, that any amendment to the Procedures after the date of this Agreement which modifies the scope of our duties or liabilities shall only be binding upon us to the extent that it has been adopted by you and the Sponsor with our prior written consent (which consent will not be unreasonably withheld or delayed). Reports: We will provide reports to you relating to deposits into and withdrawals from the Account and the Account Balance in such form and with such frequency (but not less than monthly) as may be agreed between you and us including the reports specified in sub-clauses (a) and (b) below. We will notify you by telex, SWIFT or fax on each day there is activity in an account of the balance in the account on such day and of any instruction to which we were unable to give effect. Such reports will also be available to you daily by means of eBTS, however the paper record will prevail. (a) For each Business Day, not later than 9:00 a.m., New York time on the following Business Day, we will transmit to you information showing the movement of Silver into and out of the Account, identifying separately each transaction and any substitution of Silver made under clause 2.7. We will supply to you at least monthly, within ten Business Days following the end of each calendar month a written statement which: (i) (ii) (iii) lists all property held in the Account including a weight list for the Silver in the Allocated Account containing information sufficient to uniquely identify each bar of Silver; identifies the entity having physical possession of each bar; and details all transactions involving the Account, including daily balances held in the Unallocated Account and all transfers to or from the Account or any account with a Sub-Custodian containing Silver held for your benefit and any substitutions or relocations of Silver held in the Account. 3

2.3 2.4

2.5

(b)

Such reports shall also include any other information that you may reasonably request. We will provide additional weight lists to you upon your request. 2.6 2.7 Reversal of entries: We at all times reserve the right to reverse any provisional or erroneous entries to the Account with effect back-valued to the date upon which the final or correct entry (or no entry) should have been made. Substitution of Silver : With your prior approval (in consultation with the Sponsor), we may substitute other Bullion for Bullion held in the Allocated Account, provided that there is no change in the total number of troy ounces of Silver held in the Allocated Account. Access to Records; Inspection Rights: We will permit your officers and properly designated representatives and independent public accountants for the Trust identified by you reasonable access to the records of the Account for the purpose of confirming the content of those records. Upon at least ten days‘ prior notice, during our regular banking hours, any such officer or properly designated representative, any independent public accountants for the Trust identified by you and any person designated by any regulatory authority having jurisdiction over you or the Trust will be entitled to examine on our premises the Silver held by us on our premises pursuant to this Agreement and our records regarding the Silver held hereunder at a Sub-Custodian, but only upon receipt from you of properly authorised instructions to that effect. Unless we have received at least ten days‘ prior notice and reasonable assurances (in the our sole discretion) that any costs and expenses incurred in connection therewith will be indemnified to us, we shall not be required to move to our premises any Silver held at a Sub-Custodian for purposes of making it available for inspection as provided herein. In addition, we understand that, in connection with the preparation of the financial statements of the Trust that will be filed from time to time with the United States Securities and Exchange Commission, officers of the Sponsor will be required by law or regulation to provide written assurances regarding the reliability of the internal controls used in the preparation of those financials. To the extent that our activities or controls in our capacity as custodian of the Trust assets are relevant to the information presented in the financial statements of the Trust, we will cooperate with the Sponsor and the Trustee to enable the Sponsor to provide the required written assurances referred to above, including (but not limited to) by providing the Sponsor‘s and the Trust‘s external auditors with any necessary information and reports regarding our internal control over financial reporting as far as such reporting relates to the scope of our duties.

2.8

3.

DEPOSITS 3.1 Procedure: You may at any time notify us of your intention to deposit Silver. A deposit must be made (in the manner and accompanied by such documentation as we may require) by: (a) (in the case of the Unallocated Account only) transfer from an account relating to Silver and having the same denomination as that to which the Account relates; or 4

(b)

the delivery of Silver to us at our London vault premises, through any recognised clearing member of the London Bullion Market Association (acting as delivery agent), or as we may otherwise direct, at your expense and risk. All deposits of Silver delivered to us must be in the form of bars which comply with the Rules (including the Rules relating to good delivery and fineness) or in such other form as may be agreed between you and us.

3.2

Notice requirements: Any notice relating to a deposit of Silver must: (a) (b) (c) (d) be received by us no later than the time specified in the Procedures unless otherwise agreed; in the case of a deposit pursuant to clause 3.1(a), specify the details of the account from which the Silver will be transferred; in the case of a deposit pursuant to clause 3.1(b), specify the name of the person or carrier that will deliver the Silver to us at our London vault premises, or as we may direct, and the manner in which the Silver will be packed; and specify the amount (in the appropriate denomination) of the Silver to be credited to the Account, the Availability Date and any other information which we may from time to time require.

3 . 3 Timing: A deposit of Silver will not be credited to the Account until: (a) (b) in the case of a deposit pursuant to clause 3.1(a), an account of ours with any bank, broker or other firm has been credited with an amount equal to the amount of such deposit; and in the case of a deposit pursuant to clause 3.1(b), we have received the Silver, taken such steps as we may consider appropriate in our sole discretion to verify its compliance with the Rules (without prejudice to clause 11.1) and weighed it in accordance with LBMA practice to confirm that it is the required weight.

3.4

Capacity; Right to refuse Precious Metal or amend procedure: We will use our best efforts to have available the necessary capacity to take delivery of Bullion on your behalf at the locations specified in clause 7.4 of this Agreement by parties making such deliveries; for this purpose we are authorised to, at our own risk and expense, move Silver held in the Account from one location to another location otherwise permitted under this Agreement; provided, that we will not be required to take any additional delivery of Silver if, after giving effect to such delivery, the aggregate value of Bullion in the Account would exceed U.S.$ 1 billion.

4

WITHDRAWALS 4.1 Release of Silver : No Silver held in the Account shall be released in any manner whatsoever except upon your written instructions and in accordance with the Procedures. We will deliver Silver by making Silver bars available for collection at our office or at the office of a Sub-Custodian at which the Silver is held. However, we will, upon your order, deliver amounts of up to 1100 troy ounces of silver from the Unallocated Account. 5

4.2

Procedure: You may at any time notify us of your intention to withdraw Silver standing to the credit of the Account. A withdrawal may be made (in the manner and accompanied by such documentation as we may require) by: (a) (b) (in the case of the Unallocated Account only) transfer to an account relating to Silver and having the same denomination as that to which the Account relates; or the collection of Silver from us at our London vault premises, or at the vault premises of such Sub-Custodian as we may direct, at your expense and risk. Without prejudice to clause 11.1, any Silver made available to you will be in the form of bars which comply with the Rules (including the Rules relating to good delivery and fineness) or in such other form as may be agreed between you and us. We are entitled to select which bars are to be made available to you.

4.3

Notice requirements: Any notice relating to a withdrawal of Silver must: (a) (b) (c) be received by us no later than the time set out in the Procedures; specify the details of the account to which the Silver is to be transferred or the name of the person or carrier that will collect the Silver from us (as applicable); and specify the amount of Silver to be withdrawn from the Allocated Account and the amount (in the appropriate denomination) of any Silver to be debited to the Unallocated Account, the Withdrawal Date and any other information which we may from time to time require.

4.4

Collection of Bullion: You must collect, or arrange for the collection of Bullion being withdrawn from us or the Sub-Custodian at your expense and risk. We will advise you of the location from which the Bullion may be collected no later than one Business Day prior to the Withdrawal Date.

5.

INSTRUCTIONS 5.1 Your representatives: Whenever in this Agreement it is provided that we are authorised to act or refrain from acting on instructions, approval or consent of, or notice from, you, we are so authorised to act or refrain from acting only on instructions, approval, consent or notice given in accordance with this clause 5. We are authorised to rely and act upon written instructions signed by an authorised person designated in Schedule 2 (―Authorised Persons‖), as amended from time to time by written notice to us. Except where otherwise provided in this Agreement, we are further authorised to rely upon instructions received orally or by any other means which are identified as having been given by an Authorised Person and which conform to any agreement which might be entered between you and us regarding the method of identification or the means of transmission of such instructions, including through eBTS. Any oral instructions shall be promptly confirmed in writing. Until we receive written notice to the contrary, we are entitled to assume that any of Authorised Person has full and unrestricted power to give us instructions on your behalf. We are also entitled to rely on any instructions which are from, or which purport to emanate from, any person who appears to have such authority; 6

provided, that, other than for any instructions transmitted through an authenticated electronic transmission system, if any such person is not an Authorized Person, we will promptly contact you to seek to verify his authority to act on your behalf. 5.2 eBTS: All transfers into and out of the Account(s) shall be made upon receipt of, and in accordance with, instructions given by you to us. Such instructions may be given either: a. through eBTS, accessible through the JPMorgan Chase Bank website (the ―Website‖) by you pursuant to the terms of the Website agreement; or b. if, for any reason the Website is not operational, and unless otherwise agreed, any such instruction or communication shall be effective if given by authenticated electronic transmission (including tested telex and SWIFT) or such other electronic messaging system as the parties may from time to time agree. Amendments: Once given, instructions continue in full force and effect until they are cancelled, amended or superseded. Any such instructions shall have effect only after actual receipt by us. Unclear or ambiguous instructions: If, in our opinion, any instructions are unclear or ambiguous, we will use reasonable endeavours (taking into account any relevant time constraints) to obtain clarification of those instructions but, failing that, we may in our absolute discretion and without any liability on our part, act upon what we believe in good faith such instructions to be or refuse to take any action or execute such instructions until any ambiguity or conflict has been resolved to our satisfaction. Refusal to execute: We reserve the right to refuse to execute instructions if in our opinion they are or may be contrary to the Rules or any applicable law.

5.3 5.4

5.5 6.

CONFIDENTIALITY 6.1 Disclosure to others: Subject to clause 6.2, each party shall respect the confidentiality of information acquired under this Agreement and neither will, without the consent of the other, disclose to any other person any information acquired under this Agreement provided that nothing in this Agreement will prevent or condition the filing with the United States Securities and Exchange Commission of a copy of this Agreement in connection with the registration of the public offering of its shares by the Trust. Permitted disclosures: Each party accepts that from time to time the other party may be required by law or the Rules, or requested by a government department or agency, fiscal body or regulatory authority, to disclose information acquired under this Agreement. In addition, the disclosure of such information may be required by a party‘s auditors, by its legal or other advisors or by a company which is in the same group of companies as a party (eg. a subsidiary or holding company of a party). Each party irrevocably authorises the other to make such disclosures without further reference to such party.

6.2

7.

CUSTODY SERVICES 7.1 7.2 Appointment: You hereby appoint us to act as custodian of the Bullion in accordance with this Agreement and any Rules which apply to us. Segregation of Bullion: We will segregate the Bullion from any precious metal which we own or hold for other customers or which Bank of New York owns in its own right and we will request Sub-Custodians to segregate the Bullion from any precious metals owned by any of the foregoing. 7

7.3 7.4 7.5

Ownership of Bullion: We will identify in our books that the Bullion belongs to you. Location of Bullion: The Bullion must be held by us at our vault premises in England or at the vaults of any Sub-Custodian in England, unless otherwise agreed between you and us (with the Sponsor‘s approval). Minimisation of Silver held in Unallocated Account: We will take reasonable steps to minimise the amount of Silver held in the Unallocated Account in accordance with the terms of this clause. We will take reasonable steps to allocate bars of Bullion to the Allocated Account in substitution for holdings of an equivalent denomination in the Unallocated Account on Business Days such that no more than 1100 troy ounces of Silver is held in the Unallocated Account at the close of each Business Day. Charges; Liens: The Bullion shall not be subject to any right, charge, security interest, lien or claim of any kind in favour of us, any Sub-Custodian or any creditor of any of them, except a lien for payment for the safe custody and administration of the Bullion. We shall not loan, hypothecate, pledge or otherwise encumber any Bullion in the Allocated Account absent your written instructions. Insurance : We undertake that we maintain insurance in support of our custodial obligations under this Agreement including covering any loss of Silver. Evidence of such insurance coverage is available upon request. In the event that we elect to reduce, cancel or not to renew such insurance, we will give you prior written notice as follows: in the case of a reduction, we will endeavour to provide such notice at least 30 days prior to the effective date of the reduction; and in the event of a cancellation or expiration of the insurance without renewal we will provide such notice at least 30 days prior to the last day of insurance coverage. You acknowledge that any such insurance is held for our benefit and not for the benefit of you or the Trust, and that notwithstanding clause 11.6 you may not submit any claim under the terms of such insurance. Notice of Changes: We will notify you promptly in writing if we become aware that (i) we receive notice of any claim against the Account other than a claim for payment of safe custody or administration permitted by this Agreement; (ii) we otherwise fail to comply with any of the provisions of this Agreement; or (iii) any of our representations and warranties in clause 9 shall cease to be true and correct. Other Information: We will provide to you (i) our most recent audited financial statements promptly after such statements are prepared; (ii) a copy of any reports obtained by us on the accounting system and internal accounting controls and procedures used by any Sub-Custodian at which any Silver is held; (iii) information regarding market policies and procedures, the local law applicable to our activities, and the overall regulatory and economic environment in which we operate; and (iv) the names and addresses of the governmental agencies or regulatory authorities which supervise or regulate us and any Sub-Custodian with which Silver has been deposited pursuant to this Agreement.

7.6

7.7

7.8

7.9

7.10 Purchases of Silver by us: When requested by you on any Business Day on which Silver held by the Trust is evaluated, we will purchase from you, for cash and for same day 8

settlement, the amount of Silver that you specify as necessary to pay the expenses of the Trust at a price per troy ounce equal to the price used by you for the evaluation of the Trust‘s Silver on such date. We will pay to you or to your order the proceeds of each purchase of Silver made under this clause when requested by you or otherwise on the first Business Day following the end of the month in which the transaction occurred. 8. SUB-CUSTODIANS AND AGENTS 8.1 Sub-Custodians: We may appoint Sub-Custodians to perform any of our duties under this Agreement including the custody and safekeeping of Bullion. We will use reasonable care in the appointment of any Sub-Custodian. Silver held by a Sub-Custodian shall be kept in our account at such Sub-Custodian, and we will separately identify on our books Silver that is so held on your behalf. Our account with each such Sub-Custodian will be subject only to our instructions. Any Sub-Custodian will be a member of the LBMA. Liability for Sub-Custodians: Our use of Sub-Custodians shall be without prejudice to our obligations and liabilities under this Agreement. Notice: We will provide you on request with the name and address of any Sub-Custodian of Bullion along with any other information which you may reasonably require concerning the appointment of a Sub-Custodian. Monitoring: We will monitor the conduct of each Sub-Custodian, and promptly advise you of any difficulties or problems (financial, operational or otherwise) existing with respect to such Sub-Custodian of which we are aware and will take appropriate and lawful action to protect and safekeep your Silver deposited with such Sub-Custodian, including to the extent feasible, the withdrawal of such Silver from such Sub-Custodian. Access and Inspection: We will not entrust Silver held in the Account to any Sub-Custodian unless that Sub-Custodian grants rights of access and inspection to records and Silver that are similar to those granted by us under this Agreement. Use of Agents: We may in our discretion use agents in connection with handling transactions under this Agreement, provided that any such use shall not relieve us of any of our responsibilities or liabilities hereunder.

8.2 8.3 8.4

8.5 8.6 9.

REPRESENTATIONS 9.1 Your representations : You represent and warrant to us that: (a) (b) (c) the Trust is and will remain duly constituted with all necessary authority, powers, consents, licences and authorisations and all necessary action has been taken to enable it to engage in the transactions provided for under this Agreement; you are and will remain duly appointed as trustee of the Trust and have and will have unencumbered legal title to the assets of the Trust at all times; you have all necessary authority, powers, consents, licences and authorisations and have taken all necessary action to enable you lawfully to enter into and perform your duties and obligations under this Agreement; 9

(d) (e)

the persons entering into this Agreement on your behalf have been duly authorised to do so; and this Agreement and the obligations created under it are binding upon you and enforceable against you in accordance with its terms (subject to applicable principles of equity) and do not and will not violate the terms of the Rules or any order, charge or agreement by which you are bound.

You undertake to notify us in the event that any of the statements set out in the sub-clauses ceases to be true. 9.2 Our representations: We represent and warrant to you that: (a) (b) (c) (d) We are a bank, duly organized under the laws of our country of organization as set forth above, and are regulated as such by that country‘s government or an agency thereof; this Agreement has been duly authorized, executed and delivered on our behalf and constitutes our legal, valid and binding obligation; we are, and will continue to be during the term of this Agreement, a member of the LBMA; the execution, delivery and performance of this Agreement by us do not and will not violate any applicable law or regulation and do not require the consent of any governmental or other regulatory body except for such consents and approvals as have been obtained; and Bullion substituted by us under clause 2.7 meets the definition of ―Silver‖ in this Agreement and has a fine weight at least equal to the fine weight of the Bullion for which it is substituted.

(e) 10.

FEES AND EXPENSES 10.1 Fees : Our fees will be paid in accordance with the fee agreement which has been executed by the parties hereto and Barclays Global Investors, International Inc. (the ―Sponsor‖ ), as that agreement may be amended from time to time by the parties to it in accordance with its terms. Details of charges (including charges with respect to the use of the eBTS Website, if any, transfer clearing charges and storage charges) will be advised to you by us in writing from time to time. 10.2 Credit balances: No interest or other amount will be paid by us on any credit balance on the Unallocated Account. 10.3 Debit balances: You are not entitled to overdraw the Unallocated Account except to the extent that there is equivalent Bullion in the Allocated Account. If for any reason the Unallocated Account is overdrawn beyond 1100 troy ounces, we may at our sole discretion and without any further consent from you transfer equivalent Bullion from the Allocated Account in satisfaction of such debit balance. 10

11.

SCOPE OF RESPONSIBILITY 11.1 Disclaimer of liability : You understand and agree that we will not know, will not have any duty to determine and, except as provided in clause 9.2(d), in making any report required under this Agreement, will not be considered to be making any representation or warranty as to whether in fact the Silver deposited with us contains the amount of pure silver indicated on the bars. Except for Silver deposited by us in substitution for other Silver held in the Account under clause 2.7, WE DISCLAIM ALL LIABILITY FOR THE GENUINENESS AND FINENESS OF SILVER DEPOSITED WITH US UNDER THIS AGREEMENT. 11.2 Exclusion of liability : We will use reasonable care in the performance of our duties under this Agreement and without prejudice to clause 11.1 will only be responsible for any loss or damage suffered by you as a direct result of any negligence, fraud or wilful default on our part in the performance of our duties, and in which case our liability will not exceed the aggregate of the market value of the Bullion and the balance of the Unallocated Account at the time of such negligence, fraud or wilful default. 11.3 Force majeure : Neither we, nor any of our directors, employees, agents or affiliates shall incur any liability to you if, by reason of any provision of any present or future law or regulation of the United Kingdom or any other country, or of any governmental or regulatory authority or stock exchange, or by reason of any act of God or war or terrorism or other circumstances beyond our control, we are prevented or forbidden from, or would be subject to any civil or criminal penalty on account of, or are delayed in, doing or performing any act or thing which by the terms of this Agreement it is provided shall be done or performed and accordingly we do not do that thing or do that thing at a later time than would otherwise be required. 11.4 Indemnity in favour of us : You shall indemnify and keep us indemnified (on an after tax basis) on demand against all costs and expenses, damages, liabilities and losses (including but not limited to reasonable legal fees and expenses) ( ― Losses ‖ ) which we may suffer or incur directly in connection with this Agreement except to the extent that such Losses are due directly to our negligence, wilful default or fraud. 11

11.5 Indemnity in favour of you: We shall be liable for and shall indemnify you for, and hold you harmless from, any Losses incurred by you (individually or in your capacity as trustee) directly relating to or arising from any breach of our representations and warranties contained in this Agreement, any failure by us to act or refrain from acting in accordance with instructions under clause 5 from you, or any physical loss, destruction or damage to the Bullion, except, in each case, for Losses arising from nuclear fission or fusion, radioactivity, war, terrorist event, invasion, insurrection, civil commotion, riot, strike, act of government or public authority, act of God or a similar cause that is beyond our control, provided that our liability under this clause shall be limited to the value of Silver under custody at the time of the act or omission giving rise to the claim under this clause. You will notify us promptly of any proceeding or claim for which you may seek indemnity, and we shall cooperate fully with you with respect to any such proceeding or claim. Any deposit of Silver held in the Account with a Sub-Custodian pursuant to Section 8 hereof shall not affect our responsibilities or liabilities or in any way limit or relieve us of our responsibilities or liabilities under this Section 11, and we shall remain fully liable with respect to such Silver as if we had retained physical possession of it. 11.6 Subrogation: You and the Trust will be subrogated to us with respect to any claim against a Sub-Custodian or any other person for any loss or damage suffered by you or the Trust if and to the extent that you and the Trust have not been made whole for such loss or damage, and we hereby assign all such rights to you. Your exercise of the rights granted in this clause shall not affect our liabilities under the preceding provisions of this clause 11. 11.7 Exculpation in respect of offer document We and our officers, directors, employees, agents and sub-custodians shall not be responsible or liable in any manner for any recitals, statements, representations or warranties made by any person other than us under or in connection with the establishment of, or sale of interests in, the Trust, including without limitation any offer document, prospectus, filings, marketing documentation or other documentation relating thereto. 12. TERMINATION 12.1 Method: Either party may terminate this Agreement by giving not less than 60 Business Days written notice to the other party, provided that we may terminate this Agreement immediately on written notice in the event that any of the statements set out in clause 9.1(a)-(e) become untrue , and you may terminate this Agreement immediately on written notice following an event specified in clause 7.8 provided that clause 11 shall survive termination of this Agreement. Any such notice given by you must specify: (a) (b) (c) the date on which the termination will take effect (the ―Termination Date‖); the person to whom any Bullion and any credit balance on the Unallocated Account is to be transferred; and all other necessary arrangements for the transfer or repayment, as the case may be, of any Account Balance. 12

12.2 Redelivery arrangements : If you do not make arrangements acceptable to us for the transfer or repayment of any Bullion or credit balance in the Unallocated Account we may continue to store the Bullion or maintain that Unallocated Account (as the case may be), in which case we will continue to charge the Fees payable under clause 10. If you have not made arrangements acceptable to us for the redelivery of the Bullion or transfer or repayment of any credit balance in the Unallocated Account (as the case may be) within 6 months of the date specified in the termination notice as the date on which the termination will take effect, we will be entitled to close the Account, sell the Bullion and close the Unallocated Account and account to you for the proceeds after deducting any amounts due to us under this Agreement. 12.3 Existing rights : Termination shall not affect rights and obligations then outstanding under this Agreement which shall continue to be governed by this Agreement until all obligations have been fully performed. 12.4 eBTS : Effective the Termination Date the use of the Website will automatically be terminated and no further access to the Website will be permitted. 13. VALUE ADDED TAX 13.1 VAT included: All sums payable to us under this Agreement shall be deemed to include any applicable VAT. 13.2 Supplies: Where pursuant to or in connection with this Agreement, we make a supply to you for VAT purposes and VAT is or becomes chargeable on such supply, you shall on demand pay to us (in addition to any other consideration for such supply) a sum equal to the amount of such VAT and we shall on receipt of such payment provide you with an invoice or receipt in such form and within such period as may be prescribed by applicable law. 13.3 Deemed supplies: Where, pursuant to or in connection with this Agreement, we are deemed or treated by applicable law or the practice from time to time of the relevant fiscal authority to make a supply for VAT purposes to any person by virtue of our or any Sub-Custodian for us relinquishing physical control of any Silver, and VAT is or becomes chargeable on such supply, you shall on demand pay to us a sum equal to the amount of such VAT and we shall on receipt of such payment provide an invoice or receipt in such form and within such period as may be prescribed by applicable law to the person to which we are deemed or treated to make such supply. 14. NOTICES AND RECORD-KEEPING 14.1 Form: A notice or other communication under or in connection with this Agreement may be given orally unless required in writing under this Agreement. References to writing includes an electronic transmission. 14.2 Method of transmission : Any notice or other communication required to be in writing may be delivered personally or sent by first class post, pre-paid recorded delivery (or air mail if overseas), authenticated electronic transmission (including telex, fax and SWIFT) or such other electronic transmission as the parties may from time to time agree, to the party due to receive the notice or communication, at its address, number or destination set out in this Agreement or another address, number or destination specified by that party by written notice to the other. 13

14.3 Deemed receipt on notice: A notice or other communication under or in connection with this Agreement will be deemed received only if actually received or delivered. 14.4 Recording of calls: We may record telephone conversations without use of a warning tone. Such recordings will be our sole property and accepted by you as evidence of the orders or instructions given; provided that in case of any dispute or disagreement regarding any conversation so recorded we will promptly share the recordings with you and your representatives; and provided further, that we will have no obligations to retain any such recordings prior to becoming aware of any such dispute or disagreement. 14.5 Records: We will maintain adequate records identifying the Silver as belonging to you. Such records shall include, with respect to the Account: (a) journals or other records of original entry containing an itemised daily record in detail of all receipts and deliveries of Silver (including adequate information to uniquely identify each bar of Silver received in or delivered from the Allocated Account; and ledgers (or other records) reflecting: (i) (ii) (iii) Silver in our physical possession, or held by any Sub-Custodian; and Silver held in the Unallocated Account and allocations made daily in respect thereof, as provided in Section 7.5; and such other books and records as you may reasonably request.

(b)

14.6 Annual Certificate: We will deliver annually to you and more frequently if requested by you, a certificate dated the date of delivery, certifying that we have, since the date of this Agreement or the date of the preceding such certificate, complied with the terms and conditions of this Agreement and that our representations and warranties in clause 9 of this Agreement continue to be true and correct. 15. GENERAL 15.1 No advice: Our duties and obligations under this Agreement do not include providing you with investment advice. In asking us to open and maintain the Account, you do so in reliance upon your own judgement and we shall not owe to you any duty to exercise any judgement on your behalf as to the merits or suitability of any deposits into, or withdrawals from, an Account. 15.2 Assignment : This agreement is for the benefit of and binding upon us both and our respective successors and assigns. You may not assign, transfer or encumber, or purport to assign, transfer or encumber, your right, title or interest in relation to any Account or any right or obligation under this Agreement or any part of any of the foregoing unless we otherwise agree in writing. 14

15.3 Amendments : Any amendment to this Agreement must be agreed in writing and be signed by us both. Any amendment affecting the rights of the Sponsor under this Agreement shall require written consent of the Sponsor. Unless otherwise agreed, an amendment will not affect any legal rights or obligations which may already have arisen. 15.4 Partial invalidity : If any of the clauses (or part of a clause) of this Agreement becomes invalid or unenforceable in any way under the Rules or any law, the validity of the remaining clauses (or part of a clause) will not in any way be affected or impaired. 15.5 Entire agreement : This document represents the entire agreement, and supersedes any previous agreements between you and us relating to the subject matter of this Agreement. 15.6 Joint and several liability : If there is more than one of you, your responsibilities under this Agreement apply to each of you individually as well as jointly. 15.7 Counterparts : This agreement may be executed in any number of counterparts each of which when executed and delivered is an original, but all the counterparts together constitute the same agreement. 15.8 Contracts (Rights of Third Parties) Act 1999: Other than the Sponsor, a person who is not a party to this Agreement shall have no rights under the Contracts (Rights of Third Parties Act) 1999. 15.9 Legal opinion: We will furnish to you an opinion of counsel acceptable to you addressed to you and dated the date hereof to the effect that: (a) (b) 16 our execution, delivery and performance of this Agreement have been duly authorized by us and do not and will not violate any applicable law or regulation and do not require the consent of any governmental or other regulatory body; and this Agreement has been duly executed and delivered by us and constitutes our legal, valid and binding obligation, enforceable in accordance with its terms subject to principles of equity.

PROCEDURES The provisions of the Procedures are hereby incorporated into and made a part of this Agreement, subject to clause 2.4. You and we agree to comply with the Procedures. You, with the prior written consent of the Sponsor, may modify the Procedures from time to time upon reasonable advance notice and, if the modifications relate to our duties, after consultation with us.

17

GOVERNING LAW AND JURISDICTION 16.1 Governing law: This agreement is governed by, and will be construed in accordance with, English law. 16.2 Jurisdiction The English courts have non-exclusive jurisdiction to settle any disputes or claims which may arise out of or in connection with this Agreement and, for these purposes you irrevocably submit to the jurisdiction of the English courts. 15

16.3 Waiver of immunity: To the extent that you may in any jurisdiction claim for yourself or your assets any immunity from suit, judgement, enforcement or otherwise howsoever, you agree not to claim and irrevocably waive any such immunity to which you would otherwise be entitled (whether on grounds of sovereignty or otherwise) to the full extent permitted by the laws of such jurisdiction. 16.4 Service of process : If you are situated outside England and Wales, process by which any proceedings in England are begun may be served on you by being delivered to the address specified below. This does not affect our right to serve process in another manner permitted by law. Address for service of process : EXECUTED by the parties Signed on behalf of JPMorgan Chase Bank N.A, London Branch by Signature Name Title Signed on behalf of Bank of New York by Signature Name Title 16

Schedule 1 Procedures {Attached} 17

Schedule 2 Authorised Persons of the Trustee Dated [ ], 2005

The names, titles and specimen signatures of the ―Authorised Persons‖ of the Trustee are as follows:
Name Title Signature

[Alfred L. Irving [Jarvis Joseph [Joseph Caiazzo

Vice President ] Assistant Vice President] Assistant Treasurer] 18


								
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