|                                  
|----------------------------------
|UNITED STATES                     
|                                  
|SECURITIES AND EXCHANGE COMMISSION
|Washington,
 D.C. 20549           
|                                  
|Form 10-K                         
|                                  
|(Mark One)                        

xANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

or

oTRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-34412

ETFS SILVER TRUST

(Exact name of registrant as specified in its charter)

|                                         |                    
|---------------------------------------- | -------------------
|New York                                 | 26-4586763         
|(State or other jurisdiction of          | (I.R.S. Employer   
|incorporation or organization)           | Identification No.)
|                                         |                    
|c/o ETF
 Securities USA LLC              |                    
|48 Wall Street, 11th Floor               |                    
|New York, NY                             | 10005              
|(Address of principal executive offices) | (Zip Code)         

Registrants telephone number, including area
code:
(212) 918-4954

Securities registered pursuant to Section
12(b) of the Act:

|                            |  |                                          
|--------------------------- |  | -----------------------------------------
|Title of each class         |  | Name of each exchange on which registered
|                            |  |                                          
|ETFS Physical Silver Shares |  | NYSE Arca                                

Securities registered pursuant to Section
12(g) of the Act: None

Indicate by
check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes o No x


Indicate by
check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.


Yes o No x


Indicate by
check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.


Yes x No o


Indicate by
check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months.


Yes x No o


Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x

Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act

|                          |  |                            
|------------------------- |  | ---------------------------
|Large accelerated filer o |  | Accelerated filer x        
|                          |  |                            
|Non-accelerated filer o   |  | Smaller reporting company o

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Act).


Yes o No x


Aggregate
market value of the registrants Shares outstanding based upon the closing
price of a share on June 30, 2010 as reported by the NYSE Arca, Inc. on that
date: $161,559,000.

Number of the
registrants Shares outstanding as of March 8, 2011: 18,200,000

DOCUMENTS INCORPORATED BY REFERENCE:
None.

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FORWARD
LOOKING STATEMENTS

This Annual Report on Form 10-K contains various forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and within the Private Securities Litigation Reform Act of 1995, as
amended. Forward-looking statements usually include the verbs, anticipates,
believes, estimates, expects, intends, plans, projects, understands
and other verbs suggesting uncertainty. We remind readers that forward-looking
statements are merely predictions and therefore inherently subject to
uncertainties and other factors and involve known and unknown risks that could
cause the actual results, performance, levels of activity, or our achievements,
or industry results, to be materially different from any future results,
performance, levels of activity, or our achievements expressed or implied by
such forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Trust undertakes no obligation to publicly release any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

Additional significant uncertainties and other factors affecting
forward-looking statements are presented in the Risk Factors section herein.



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TABLE OF CONTENTS

|                                                                                                                       |  |   
|---------------------------------------------------------------------------------------------------------------------- |  | --
|PART I                                                                                                                 |  | 1 
|Item 1.
 Business                                                                                                      |  | 1 
|Trust Objective                                                                                                        |  | 1 
|Secondary
 Market Trading                                                                                              |  | 2 
|Valuation of
 Silver and Computation of Net Asset Value                                                                |  | 2 
|Trust Expenses                                                                                                         |  | 3 
|Deposit of
 Silver; Issuance of Shares                                                                                 |  | 3 
|Withdrawal of
 Silver; Redemption of Shares                                                                            |  | 4 
|Creation and
 Redemption Transaction Fee                                                                               |  | 4 
|The Sponsor                                                                                                            |  | 4 
|The Trustee                                                                                                            |  | 5 
|The Custodian                                                                                                          |  | 6 
|Description of
 the Shares                                                                                             |  | 6 
|Custody
    of the Trusts Silver                                                                                      |  | 7 
|United States
 Federal Income Tax Consequences                                                                         |  | 7 
|ERISA and
 Related Considerations                                                                                      |  | 10
|Item 1A. Risk
 Factors                                                                                                 |  | 11
|Item 1B.
 Unresolved Staff Comments                                                                                    |  | 16
|Item 2.
 Properties                                                                                                    |  | 16
|Item 3. Legal
 Proceedings                                                                                             |  | 16
|Item 4.
 (Removed and Reserved)                                                                                        |  | 16
|                                                                                                                       |  |   
|PART II                                                                                                                |  | 17
|Item 5. Market
 for Registrants Common Equity, Related Stockholder Matters and Issuer
 Purchases of Equity Securities |  | 17
|Item 6.
 Selected Financial Data                                                                                       |  | 19
|Item 7.
 Managements Discussion and Analysis of Financial Condition and Results of
 Operations                        |  | 19
|Item 7A.
 Quantitative and Qualitative Disclosures about Market Risk                                                   |  | 22
|Item 8.
 Financial Statements and Supplementary Data                                                                   |  | 22
|Item 9. Changes
 in and Disagreements with Accountants on Accounting and Financial Disclosure                          |  | 23
|Item 9A.
 Controls and Procedures                                                                                      |  | 23
|Item 9B. Other
 Information                                                                                            |  | 25
|                                                                                                                       |  |   
|PART III                                                                                                               |  | 26
|Item 10.
 Directors, Executive Officers and Corporate Governance                                                       |  | 26
|Item 11.
 Executive Compensation                                                                                       |  | 26
|Item 12.
 Security Ownership of Certain Beneficial Owners and Management and Related
 Stockholder Matters              |  | 26
|Item 13.
 Certain Relationships and Related Transactions, and Director Independence                                    |  | 26
|Item 14.
 Principal Accounting Fees and Services                                                                       |  | 26
|                                                                                                                       |  |   
|PART III                                                                                                               |  | 27
|Item 15.
 Exhibits, Financial Statement Schedules                                                                      |  | 27



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PART I

Item 1. Business

The purpose of the ETFS Silver Trust (the Trust), is to own silver
transferred to the Trust in exchange for shares issued by the Trust (Shares).
Each Share represents a fractional undivided beneficial interest in and
ownership of the Trust. The assets of the Trust are anticipated to consist
solely of silver bullion.The Trust was formed on July 20,
2009 when an initial deposit of silver was made in exchange for the issuance
of 2 Baskets (a Basket consists of
100,000 Shares).

The sponsor of the Trust is ETF Securities USA LLC (the Sponsor). The
trustee of the Trust is The Bank of New York Mellon (the Trustee) and the
custodian is HSBC Bank USA, National Association (the Custodian).

The Trusts Shares at redeemable value grew from $156,066,265 at
December 31, 2009 to $509,311,012 at December 31, 2010, the Trusts fiscal year
end. Outstanding Shares in the Trust grew from 9,200,000 Shares at December 31,
2009 to 16,700,000 Shares outstanding at December 31, 2010.

The Trust is not managed like a corporation or an active investment
vehicle. The Trust has no directors, officers or employees. It does not engage
in any activities designed to obtain a profit from or to improve the losses
caused by changes in the price of silver. The silver held by the Trust will
only be delivered to pay the remuneration due to the Sponsor (the Sponsors
Fee), distributed to Authorized Participants (defined below) in connection
with the redemption of Baskets or sold (1) on an as-needed basis to pay Trust
expenses not assumed by the Sponsor, (2) in the event the Trust terminates and
liquidates its assets, or (3) as otherwise required by law or regulation. The
Trust has no fixed termination date.

The Trust is not registered as an investment company under the
Investment Company Act of 1940 and is not required to register under such act.
The Trust does and will not hold or trade in commodities futures contracts
regulated by the Commodity Exchange Act (the CEA), as administered by the
Commodity Futures Trading Commission (the CFTC). The Trust is not a commodity
pool for purposes of the CEA and neither the Sponsor nor the Trustee is subject
to regulation as a commodity pool operator or a commodity trading advisor in
connection with the Shares.

Trust Objective

The investment objective of the Trust is for the Shares to reflect the
performance of the price of silver bullion, less the expenses of the Trusts
operations. The Shares are intended to constitute a simple and cost-effective
means of making an investment similar to an investment in silver. An investment
in physical silver requires expensive and sometimes complicated arrangements in
connection with the assay, transportation, warehousing and insurance of the
metal. Traditionally, such expense and complications have resulted in
investments in physical silver being efficient only in amounts beyond the reach
of many investors.

The Shares are intended to provide institutional and retail investors
with a simple and cost-efficient means, with minimal credit risk, of gaining
investment benefits similar to those of holding silver bullion. The Shares
offer an investment that;

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Is Easily
 Accessible. The Shares trade on the NYSE Arca and
 provide institutional and retail investors with indirect access to the silver
 market. The Shares are bought and sold on the NYSE Arca like any other
 exchange-listed securities. The close of the NYSE Arca trading session is
 4:00 PM New York time.                                                                                                                                                                                                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Is Relatively Cost
 Effective. The Sponsor expects that, for many
 investors, costs associated with buying and selling the Shares in the secondary
 market and the payment of the Trusts ongoing expenses will be lower than the
 costs associated with buying and selling silver bullion and storing and
 insuring silver bullion in a traditional allocated silver bullion account.                                                                                                                                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Has Minimal Credit
 Risk. The Shares represent an interest in physical
 bullion owned by the Trust (other than an amount held in unallocated form
 which is not sufficient to make up a whole bar or which is held temporarily
 to effect a creation or redemption of Shares). Physical bullion of the Trust
 in the Custodians possession is not subject to borrowing arrangements with
 third parties. Other than the silver temporarily being held in an unallocated
 silver account with the Custodian, the physical bullion of the Trust is not subject
 to counterparty or credit risks. See Risk FactorsSilver held in the Trusts
 unallocated silver account and any Authorized

1

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| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Participants unallocated silver account is not segregated from the
 Custodians assets.... These contrasts with most other financial products
 that gain exposure to bullion through the use of derivatives that are subject
 to counterparty and credit risks.

Investing in the Shares does not insulate the investor from certain
risks, including price volatility. See Risk Factors.

Secondary Market
Trading

While the Trusts investment objective is for the Shares to reflect the
performance of silver bullion, less the expenses of the Trust, the Shares may
trade in the secondary market on the NYSE Arca at prices that are lower or
higher relative to their net asset value, which is the value of the Trusts
assets less its liabilities (NAV), per Share. The amount of the discount or
premium in the trading price relative to the NAV per Share may be influenced by
non-concurrent trading hours between the NYSE Arca and the Commodity Exchange,
Inc., a subsidiary of New York Mercantile Exchange, Inc. (COMEX),
and the London bullion markets. While the Shares will trade on the NYSE Arca
until 4:00 PM New York time, liquidity in the global silver market is reduced
after the close of the COMEX at 1:30 PM New York time. As a result, during this
time, trading spreads, and the resulting premium or discount, on the Shares may
widen.

Valuation of
Silver and Computation of Net Asset Value

On each business day, as promptly as practicable after 4:00 p.m., New
York time, on such day (the Evaluation Time) the Trustee will evaluate the
silver held by the Trust and determines the NAV of the Trust. For the purposes
of making these calculations, a business day means any day other than a day
when NYSE Arca is closed for regular trading.

At the evaluation time, the Trustee values the
    Trusts silver on the
basis of that days London PM Fix (the daily fix of the price
of an ounce of silver which starts at 12:00 PM London, England time and is performed
in London by the three London Bullion Market Association LBMA members of the London silver fix), if no London
PM Fix is made on such day or has not been announced by the Evaluation Time,
the next most recent London silver price fix determined prior to the Evaluation
Time will be used, unless the Sponsor determines that such price is inappropriate
as a basis for evaluation. In the event the Sponsor determines that the London
PM Fix or such other publicly available price as the Sponsor may deem fairly
represents the commercial value of the Trusts silver is not an appropriate
basis for evaluation of the Trusts silver, it shall identify an alternative
basis for such evaluation to be employed by the Trustee. Neither the Trustee
nor the Sponsor shall be liable to any person for the determination that the
London PM Fix or such other publicly available price is not appropriate as a
basis for evaluation of the Trusts silver or for any determination as to
the alternative basis for such evaluation provided that such determination is
made in good faith.

Once the value of the silver has been determined,
    the Trustee will subtract all estimated accrued but unpaid fees (other than
    the fees accruing for such day on which the valuation takes place that are
    computed by reference to the value of the Trust or its assets), and other
    liabilities of the Trust from the total value of the silver and all other
    assets of the Trust (other than any amounts credited to the Trusts
    reserve account, if established). The resulting figure is the adjusted net
    asset value (the ANAV)
    of the Trust. The ANAV of the Trust is used to compute the Sponsors
    Fee.

All fees accruing for the day on which the valuation
    takes place that are computed by reference to the value of the Trust or its
    assets shall be calculated using the ANAV calculated for such day. The Trustee
    shall subtract from the ANAV the amount of accrued fees so computed for such
    day and the resulting figure is the NAV of the Trust. The Trustee  also
    determines the NAV per Share by dividing the NAV of the Trust by the number
    of the Shares outstanding as of the close of trading on the NYSE Arca (which
    includes the net number of any Shares created or redeemed on such evaluation
    day).

The Trustees estimation of accrued but unpaid
    fees, expenses and liabilities is conclusive upon all persons interested
    in the Trust and no revision or correction in any computation made under
    the Trust Agreement will be required by reason of any difference in amounts
    estimated from those actually paid.

2

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Trust Expenses

The Trusts only ordinary recurring expense is the Sponsors Fee. In
exchange for the Sponsors Fee, the Sponsor has agreed to assume the following
administrative and marketing expenses incurred by the Trust: the Trustees
monthly fee and out-of-pocket expenses, the Custodians fee and reimbursement
of the Custodians expenses under the Custody Agreements (defined below),
Exchange listing fees, SEC registration fees, printing and mailing costs, audit
fees and up to $100,000 per annum in legal expenses. The Sponsor also paid the
costs of the Trusts organization and the initial sale of the Shares, including
the applicable SEC registration fees.

The Sponsors Fee accrues daily at an annualized rate equal to 0.45% of
the ANAV of the Trust and is payable monthly in arrears. The Sponsor, from time
to time, may temporarily waive all or a portion of the Sponsors Fee at its
discretion for a stated period of time. Presently, the Sponsor has waived a
portion of its fee and reduced the Sponsors Fee to 0.30%. This waiver was in
existence for the entirety of 2010. The Sponsor decided to waive a portion of the Sponsors Fee to
reduce the Sponsors Fee to 0.30% until July 24, 2011. At this point, the Sponsor may renew its fee waiver, waive
a larger or smaller portion of its fee or not renew its fee waiver. If, at any
point in the future, the Sponsor does not continue its partial fee waiver, the
full Sponsors Fee will accrue and be paid to the Sponsor for subsequent
periods. The Sponsor is under no obligation to continue to waive all or part of
the Sponsors Fee on an ongoing basis.

The Sponsors Fee is paid by delivery of silver to an account
maintained by the Custodian for the Sponsor on an unallocated basis, The
Trustee will, when directed by the Sponsor, and, in the absence of such
direction, may, in its discretion, sell silver in such quantity and at such
times as may be necessary to permit payment in cash of Trust expenses not
assumed by the Sponsor. The Trustee is authorized to sell silver at such times
and in the smallest amounts required to permit such payments as they become
due, it being the intention to avoid or minimize the Trusts holdings of assets
other than silver. Accordingly, the amount of silver to be sold will vary from
time to time depending on the level of the Trusts expenses and the market
price of silver. The Custodian has agreed to purchase from the Trust, at the
request of the Trustee, silver needed to cover Trust expenses not assumed by
the Sponsor at a price at least 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
Sponsors Fee for the year ended December 31, 2010 was $595,965. The Sponsors
Fee was $206,026 for the period July 20, 2009 through December 31, 2009.

Deposit of
Silver; Issuance of Shares

The Trust creates and redeems Shares from time to time, but only in one
or more Baskets of 100,000 Shares. Only registered broker-dealers who have
entered into written agreements with the Sponsor and the Trustee (each, an
Authorized Participant) can deposit silver and receive Baskets of Shares in exchange.
The creation and redemption of Baskets is only made in exchange for the
delivery to the Trust or the distribution by the Trust of the amount of silver
represented by the Baskets being created or redeemed, the amount of which is
based on the combined NAV of the number of Shares included in the Baskets being
created or redeemed determined on the day the order to create or redeem Baskets
is properly received.

All silver bullion deposited with the Custodian must be of at least a
minimum fineness (or purity) of 999.0 parts per 1,000 (99.9%) and otherwise
conform to the rules, regulations practices and customs of the LBMA, including
the specifications for a London Good Delivery Bar.

Creation and redemption orders are accepted on business days the NYSE
Arca is open for regular trading. Settlements of such orders requiring receipt
or delivery, or confirmation of receipt or delivery, of silver in the United
Kingdom when (1) banks in the United Kingdom, and (2) the London silver markets
are regularly open for business. If such banks or the London silver markets are
not open for regular business for a full day, such a day will only be a
business day for settlement purposes if the settlement procedures can be
completed by the end of such day.

On any business day, an Authorized Participant may place an order with
the Trustee to purchase one or more Baskets. Purchase orders must be placed no
later than 3:59:59 p.m. on each business day the NYSE Arca is open for regular
trading. A purchase order so received is effective on the date it is received
in satisfactory form by the Trustee. By placing a purchase order, an Authorized
Participant agrees to deposit silver with the Trust, as described below. Prior
to the delivery of Baskets for a purchase order, the Authorized Participant
must also have wired to the Trustee the non-refundable transaction fee due for
the purchase order (as explained under Creation and Redemption Transaction Fee
below).

3

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An Authorized Participant who places a purchase order is responsible for
crediting its Authorized Participant Unallocated Account with the required
silver deposit amount by the third business day in London following the
purchase order date. Upon receipt of the silver deposit amount, the Custodian,
after receiving appropriate instructions from the Authorized Participant and
the Trustee, will transfer on the third business day following the purchase
order date the silver deposit amount from the Authorized Participant
Unallocated Account to the unallocated silver account of the Trust established
with the Custodian by the Unallocated Account Agreement between the Trustee and
the Custodian (the Trust Unallocated Account) and the Trustee will direct DTC
to credit the number of Baskets ordered to the Authorized Participants DTC account.
Acting on standing instructions given by the Trustee, the Custodian will
transfer the silver deposit amount from the Trust Unallocated Account to the
allocated silver account of the Trust established with the Custodian by the
Allocated Account Agreement between the Trustee and the Custodian (the Trust
Allocated Account) by transferring silver bars from its inventory to the Trust
Allocated Account. The Trusts Unallocated Account Agreement and Allocated
Account Agreement are referred to collectively as the Custody Agreements.

Withdrawal of
Silver; Redemption of Shares

The procedures by which an Authorized Participant can redeem one or
more Baskets mirror the procedures for the creation of Baskets. On any business
day, an Authorized Participant may place an order with the Trustee to redeem
one or more Baskets. Redemption orders must be placed no later than 3:59:59
p.m. on each business day the NYSE Arca is open for regular trading. A
redemption order so received is effective on the date it is received in
satisfactory form by the Trustee. The redemption procedures allow Authorized
Participants to redeem Baskets and do not entitle an individual owner of
beneficial interests in the Shares (a Shareholder) to redeem any Shares in an
amount less than a Basket, or to redeem Baskets other than through an
Authorized Participant.

By placing a redemption order, an Authorized Participant agrees to
deliver the Baskets to be redeemed through DTCs book-entry system to the Trust
not later than the third business day following the effective date of the
redemption order. Prior to the delivery of the redemption distribution for a
redemption order, the Authorized Participant must also have wired to the
Trustee the non-refundable transaction fee due for the redemption order (as
explained under Creation and Redemption Transaction Fee below).

The redemption distribution from the Trust will consist of a credit to
the redeeming Authorized Participants Authorized Participant Unallocated
Account representing the amount of the silver held by the Trust evidenced by
the Shares being redeemed. Fractions of a fine ounce of silver included in the
redemption distribution smaller than 0.001 of a fine ounce are disregarded.
Redemption distributions are subject to the deduction of any applicable tax or
other governmental charges which may be due.

Creation and
Redemption Transaction Fee

To compensate the Trustee for services in processing the creation and
redemption of Baskets, an Authorized Participant is required to pay a
transaction fee to the Trustee of $500 per order to create or redeem Baskets.
An order may include multiple Baskets. The transaction fee may be reduced,
increased or otherwise changed by the Trustee with the consent of the Sponsor.
The Trustee shall notify DTC of any agreement to change the transaction fee and
will not implement any increase in the fee for the redemption of Baskets until
30 days after the date of the notice.

The Sponsor

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Sponsor is a Delaware limited liability company. The Sponsors
 office is located at Ordinance House, 31 Pier Road, St. Helier, Jersey
 JE48PW, Channel Islands. Under the Delaware Limited Liability Company Act and
 the governing documents of the Sponsor, the sole member of the Sponsor, ETF
 Securities Limited, is not responsible for the debts, obligations and
 liabilities of the Sponsor solely by reason of being the sole member of the
 Sponsor.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The Sponsors Role                                                                                                                                                                                                                                                                                                                                                                                                                                                  

The Sponsor arranged for the creation of the Trust, the registration of
the Shares for their public offering in the United States and the listing of
the Shares on the NYSE Arca. The Sponsor has agreed to assume the following
administrative and marketing expenses incurred by the Trust: the Trustees
monthly fee and out-of-pocket expenses, the Custodians fee and the
reimbursement of the Custodians expenses under the Custody Agreements,
Exchange listing fees, SEC registration fees, printing and mailing costs, audit
fees and up to $100,000 per annum in legal

4

---



expenses. The Sponsor also paid the costs of the Trusts organization
and the initial sale of the Shares, including the applicable SEC registration
fees.

The Sponsor does not exercise day-to-day oversight over the Trustee or
the Custodian. The Sponsor may remove the Trustee and appoint a successor
Trustee (i) 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), (ii) if, having received written notice of a
material breach of its obligations under the Trust Agreement, the Trustee has
not cured the breach within 30 days, or (iii) if the Trustee refuses to consent
to the implementation of an amendment to the Trusts initial Internal Control
Over Financial Reporting. The Sponsor also has the right to replace the Trustee
during the 90 days following any merger, consolidation or conversion in which
the Trustee is not the surviving entity or, in its discretion, on the fifth
anniversary of the creation of the Trust or on any subsequent third anniversary
thereafter. The Sponsor also has the right to approve any new or additional
custodian that the Trustee may wish to appoint.

The Sponsor or one of its affiliates or agents (1) develops a marketing
plan for the Trust on an ongoing basis, (2) prepares marketing materials
regarding the Shares, including the content of the Trusts website and (3)
executes the marketing plan for the Trust.

The Trustee

The Bank of New York Mellon, a banking corporation organized under the
laws of the State of New York with trust powers (BNYM), serves as the
Trustee. BNYM has a trust office at 2 Hanson Place, Brooklyn, New York 11217.
BNYM is subject to supervision by the New York State 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 BNYM. A copy of the Trust Agreement is available
for inspection at BNYMs trust office identified above. Under the Trust
Agreement, the Trustee is required to maintain capital, surplus and undivided
profits of $150 million.

The Trustees Role

The Trustee is generally responsible for the day-to-day
    administration of the Trust, including keeping the Trusts operational
    records. The Trustees
principal responsibilities include (1) transferring the Trusts silver as
needed to pay the Sponsors Fee in silver (silver transfers are expected
to occur approximately monthly in the ordinary course), (2) valuing the Trusts
silver and calculating the NAV of the Trust and the NAV per Share, (3)
receiving and processing orders from Authorized Participants to create and redeem
Baskets and coordinating the processing of such orders with the Custodian and
DTC, (4) selling the Trusts silver as needed to pay any extraordinary Trust
expenses that are not assumed by the Sponsor, (5) when appropriate, making
distributions of cash or other property to Shareholders, and (6) receiving and
reviewing reports from or on the Custodians custody of and transactions
in the Trusts silver. The Trustee shall, with respect to directing the
Custodian, act in accordance with the instructions of the Sponsor. If the Custodian
resigns, the Trustee shall appoint an additional or replacement Custodian selected
by the Sponsor. Under the Custody Agreements, the Trustee, the Sponsor and the
Sponsors auditors and inspectors may, only up to twice a year, visit the
premises of the Custodian  for the purpose of
examining the Trusts silver and certain related records maintained by the
Custodian. In addition
the Trustee has no right to visit the premises of any subcustodian for the
purposes of examining the Trusts silver or any records maintained by the
subcustodian, and no subcustodian is obligated to cooperate in any review the
Trustee may wish to conduct of the facilities, procedures, records or
creditworthiness of such subcustodian. The Trustee intends to regularly
communicate with the Sponsor to monitor the overall performance of the Trust.
The Trustee does not monitor the performance of the Custodian or any other subcustodian
other than to review the reports provided by the Custodian pursuant to the Custody
Agreements. The Trustee, along with the Sponsor, will liaise with the Trusts legal, accounting and
other professional service providers as needed. The Trustee will assist and
support the Sponsor with the preparation of all periodic reports required to
be filed with the SEC on behalf of the Trust.

The Trustees monthly fees and out-of-pocket expenses are paid by the
Sponsor.

Affiliates of the Trustee may from time to time act as Authorized
Participants or purchase or sell silver or Shares for their own account, as
agent for their customers and for accounts over which they exercise investment
discretion.

5

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The Custodian

HSBC Bank, N.A. (HSBC) serves as the Custodian of the Trusts silver.
HSBC is a national banking association organized under the laws of the United
States of America. HSBC is subject to supervision by the Federal Reserve Bank
of New York and the Federal Deposit Insurance Corporation. HSBCs custodian office is located at 8 Canada
Square, London, E14 5HQ, United Kingdom. In addition to supervision and
examination by the US federal banking authorities, HSBCs London custodian
operations are subject to supervision by the Financial Services Authority, an
independent non-governmental which exercises statutory regulatory power under
the United Kingdom Financial Services and Markets Act 2000 and which regulates
the major participating members of the LBMA in the United Kingdom.

The Custodians Role

The Custodian is responsible for safekeeping for
    the Trust silver deposited with it by Authorized Participants in connection
    with the creation of Baskets. The Custodian is also responsible for selecting
    subcustodians, if any. The Custodian facilitates the transfer of silver in
    and out of the Trust through the unallocated silver accounts it will maintain
    for each Authorized Participant and the unallocated and allocated silver
    accounts it will maintain for the Trust. The Custodian holds at
    its London, England vault premises the Trusts
allocated silver. The Custodian is responsible for
allocating specific plates of silver bullion to the Trust Allocated Account.
The Custodian provides the Trustee with regular reports detailing the silver
transfers in and out of the Trusts unallocated and allocated silver accounts
and identifying the silver plates held in the Trusts allocated silver account.

The Custodians fees and expenses under the Custody Agreements are paid
by the Sponsor.

The Custodian and its affiliates may from time to time act as
Authorized Participants or purchase or sell silver or Shares for their own
account, as agent for their customers and for accounts over which they exercise
investment discretion.

Description of
the Shares

General

The Trustee is authorized under the Trust Agreement to create and issue
an unlimited number of Shares. The Trustee creates Shares only in Baskets (a
Basket equals a block of 100,000 Shares) and only upon the order of an
Authorized Participant. The Shares represent units of fractional undivided
beneficial interest in and ownership of the Trust and have no par value. Any
creation and issuance of Shares above the amount registered on the Trusts
then-current and effective registration statement with the SEC will require the
registration of such additional Shares.

Description of Limited Rights

The Shares do not represent a traditional investment and you should not
view them as similar to shares of a corporation operating a business
enterprise with management and a board of directors. Shareholders do not have
the statutory rights normally associated with the ownership of shares of a
corporation, including, for example, the right to bring oppression or
derivative actions. All Shares are of the same class with equal rights and
privileges. Each Share is transferable, is fully paid and non-assessable and
entitles the holder to vote on the limited matters upon which Shareholders may
vote under the Trust Agreement. The Shares do not entitle their holders to any
conversion or pre-emptive rights, or, except as provided below, any redemption
rights or rights to distributions.

Distributions

If the Trust is terminated and liquidated, the Trustee will distribute
to the Shareholders any amounts remaining after the satisfaction of all
outstanding liabilities of the Trust and the establishment of such reserves for
applicable taxes, other governmental charges and contingent or future
liabilities as the Trustee shall determine. Shareholders of record on the
record date fixed by the Trustee for a distribution will be entitled to receive
their pro rata portion of any distribution.

Voting and Approvals

Under the Trust Agreement, Shareholders have no voting rights, except
in limited circumstances. The Trustee may terminate the Trust upon the
agreement of Shareholders owning at least 75% of the outstanding Shares. In
addition, certain amendments to the Trust Agreement require advance notice to
the Shareholders before the effectiveness of such amendments, but no
Shareholder vote or approval is required for any amendment to the Trust
Agreement.

6

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Redemption of the Shares

The Shares may only be redeemed by or through an Authorized Participant
and only in Baskets.

Book-Entry Form

Individual certificates will not be issued for the Shares. Instead, one
or more global certificates is deposited by the Trustee with DTC and registered
in the name of Cede & Co., as nominee for DTC. The global certificates
evidence all of the Shares outstanding at any time. Under the Trust Agreement,
Shareholders are limited to (1) participants in DTC such as banks, brokers,
dealers and trust companies (DTC Participants), (2) those who maintain, either
directly or indirectly, a custodial relationship with a DTC Participant
(Indirect Participants), and (3) those banks, brokers, dealers, trust companies
and others who hold interests in the Shares through DTC Participants or
Indirect Participants. The Shares are only transferable through the book-entry
system of DTC. Shareholders who are not DTC Participants may transfer their
Shares through DTC by instructing the DTC Participant holding their Shares (or
by instructing the Indirect Participant or other entity through which their
Shares are held) to transfer the Shares. Transfers will be made in accordance
with standard securities industry practice.

Custody of the
Trusts Silver

Custody of the silver bullion deposited with and held by the Trust is
provided by the Custodian at its London, England vaults or by subcustodians
selected by the Custodian on a temporary basis. The Custodian is a market
maker, clearer and approved weigher under the rules of the LBMA.

The Custodian is the custodian of the
silver bullion credited to Trust Allocated Account in accordance with the Custody Agreements. The Custodian segregates the silver
bullion credited to the Trust Allocated Account from any other precious metal it holds or holds for others by entering appropriate
entries in its books and records.

The Custodian, as instructed by the Trustee on behalf of the Trust, is
authorized to accept, on behalf of the Trust, deposits of silver in unallocated
form. Acting on standing instructions specified in the Custody Agreements, the
Custodian allocates silver deposited in unallocated form with the Trust by
selecting bars of silver bullion for deposit to the Trust Allocated Account. All silver bullion allocated to the Trust must conform to the rules,
regulations, practices and customs of the LBMA.

The process of withdrawing silver from the Trust for a redemption of a
Basket is the same general procedure as for depositing silver with the Trust
for a creation of a Basket, only in reverse. Each transfer of silver between
the Trust Allocated Account and the Trust Unallocated Account connected with a
creation or redemption of a Basket may result in a small amount of silver being
held in the Trust Unallocated Account after the completion of the transfer. In
making deposits and withdrawals between the Trust Allocated Account and the
Trust Unallocated Account, the Custodian will use commercially reasonable efforts
to minimize the amount of silver held in the Trust Unallocated Account as of
the close of each business day. See Creation and Redemption of Shares.

United States
Federal Income Tax Consequences

The following  discussion of the material US federal
    income tax consequences that applies to the purchase, ownership and disposition
    of Shares by a US Shareholder (as defined below), and certain US federal
    income tax consequences that generally may apply to an investment in Shares
    by a Non-US Shareholder (as defined below). Based
    on the United States Internal Revenue Code of 1986, as amended (the Code),
    United States Treasury Regulations (Treasury Regulations) promulgated
    under the Code and judicial and administrative interpretations of the Code,
    all as in effect on this date and all of which are subject to change either
    prospectively or retroactively. The tax treatment of Shareholders may vary
    depending upon their own particular circumstances. Certain Shareholders (including
    broker-dealers, traders, banks and other financial institutions, insurance
    companies, real estate investment trusts, tax-exempt entities, Shareholders
    whose functional currency is not the US dollar or other investors with special
    circumstances) may be subject to special rules not discussed below. In addition,
    the following discussion applies only to investors who hold Shares as capital
    assets within the meaning of Code
section 1221 and not as part of a straddle, hedging transaction or a conversion
or constructive sale transaction. Moreover, the discussion below does not
address the effect of any state, local or foreign tax law or any transfer tax
on an owner of Shares. Purchasers of Shares are urged to consult their own tax
advisors with respect to all federal, state, local and foreign tax law or any
transfer tax considerations potentially applicable to their investment in
Shares.

For purposes of this discussion, a US Shareholder is a Shareholder
that is:

| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An individual who is
 treated as a citizen or resident of the United States for US federal income
 tax purposes;                                                                            
| |  | A corporation (or other
 entity treated as a corporation for US federal tax purposes) created or
 organized in or under the laws of the United States or any political
 subdivision thereof;

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| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An estate, the income of
 which is includible in gross income for US federal income tax purposes
 regardless of its source; or                                                                                               
| |  | A trust, if a court within
 the United States is able to exercise primary supervision over the
 administration of the trust and one or more US persons have the authority to
 control all substantial decisions of the trust.

A Shareholder that is not a US Shareholder as defined above (other than
a partnership, or an entity treated as a partnership for US federal tax
purposes) is generally considered a Non-US Shareholder for purposes of this
discussion. For US federal income tax purposes, the treatment of any beneficial
owner of an interest in a partnership, including any entity treated as a
partnership for US federal income tax purposes, will generally depend upon the
status of the partner and upon the activities of the partnership. Partnerships
and partners in partnerships should consult their tax advisors about the US
federal income tax consequences of purchasing, owning and disposing of Shares.

Taxation of the Trust

The Trust is classified as a grantor trust for
    US federal income tax purposes. As a result, the Trust itself is not subject
    to US federal income tax. Instead, the Trusts income and expenses will flow
    through to the
Shareholders, and the Trustee reports the Trusts income, gains, losses
and deductions to the Internal Revenue Service (IRS) on
that basis.

Taxation of US Shareholders

Shareholders generally are treated, for US federal income tax purposes,
as if they directly owned a pro rata share of the underlying assets held in the
Trust. Shareholders are also 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 Shares for cash, its initial tax basis
in its pro rata share of the assets held in the Trust at the time it acquires
its Shares is equal to its cost of acquiring the Shares. In the case of a
Shareholder that acquires its Shares as part of a creation, the delivery of
silver to the Trust in exchange for the underlying silver represented by the
Shares is not 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 are the same as its tax basis and holding period for the
silver delivered in exchange therefore (except to the extent of any cash
contributed for such Shares). For purposes of this discussion, it is assumed that
all of a Shareholders Shares are acquired on the same date and at the same
price per Share. Shareholders that hold multiple lots of Shares, or that are
contemplating acquiring multiple lots of Shares, should consult their tax
advisors as to the determination of the tax basis and holding period for the
underlying silver related to such Shares.

When the Trust sells silver, for example to pay expenses, a Shareholder
generally will recognize gain or loss in an amount equal to the difference
between (1) the Shareholders pro rata share of the amount realized by the
Trust upon the sale and (2) the Shareholders tax basis for its pro rata share
of the silver that was sold, which gain or loss will generally be long-term or
short-term capital gain or loss, depending upon whether the Shareholder has a
holding period in its Shares of longer than one year. A Shareholders tax basis
for its share of any silver sold by the Trust generally will be determined by
multiplying the Shareholders total basis for its 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 Shares, 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 Shares
sold. Accordingly, the Shareholder generally will recognize gain or loss on the
sale in an amount equal to the difference between (1) the amount realized
pursuant to the sale of the Shares, and (2) the Shareholders tax basis for the
portion of its pro rata share of the silver held in the Trust at the time of
sale that is attributable to the Shares sold, as determined in the manner
described in the preceding paragraph.

Redemption of some or all of a Shareholders Shares in exchange for the
underlying silver represented by the Shares redeemed generally will not be a
taxable event to the Shareholder. The Shareholders tax basis for the silver
received in the redemption generally will be the same as the Shareholders tax
basis for the portion of its pro rata share of the silver held in the Trust
immediately prior to the redemption that is attributable to the Shares
redeemed. The Shareholders holding period with respect to the silver received
should include the period during which the

8



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Shareholder held the Shares 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
Shares, 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 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,
which is treated as the basis of the silver received by the Shareholder in the
redemption.

In addition, recent legislation effective
after December 31, 2012, if applicable to a Shareholder, would impose a new 3.8% Medicare contribution tax on net investment income.
Shareholders should consult their tax advisor regarding this tax.

An Authorized Participant and other investors may be able to re-invest,
on a tax-deferred basis, in-kind redemption proceeds received from
exchange-traded products that are substantially similar to the Trust in the
Trusts Shares. Authorized Participants and other investors should consult
their tax advisors as to whether and under what circumstances the reinvestment
in the Shares of proceeds from substantially similar exchange-traded products
can be accomplished on a tax-deferred basis.

Maximum 28% Long-Term Capital Gains Tax Rate for US Shareholders Who
Are Individuals

Under current law, gains recognized by individuals from the sale of
collectibles, including silver bullion, held for more than one year are taxed
at a maximum federal income tax rate of 28%, rather than the 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
US Shareholder attributable to a sale of Shares held for more than one year, or
attributable to the Trusts sale of any silver bullion which the Shareholder is
treated (through its ownership of Shares) as having held for more than one
year, generally will be taxed at a maximum rate of 28%. The tax rates for
capital gains recognized upon the sale of assets held by an individual US
Shareholder for one year or less or by a taxpayer other than an individual US
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 Shares is 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 Shares reduces the amount realized by the Shareholder
with respect to the sale.

Shareholders are required to recognize 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, to the extent that
such expenses may be deducted, 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 further limitations under applicable provisions of the Code,
and may not be deductible at all for alternative minimum tax purposes.

Investment by Regulated Investment Companies

Mutual funds and other investment vehicles which are regulated
investment companies within the meaning of Code section 851 should consult
with their tax advisors concerning (1) the likelihood that an investment in
Shares, although they are a security within the meaning of the Investment
Company Act of 1940, may be considered an investment in the underlying silver
for purposes of Code section 851(b), and (2) the extent to which an investment
in Shares might nevertheless be consistent with preservation of their
qualification under Code section 851.

United States Information Reporting and Backup Withholding for US and
Non-US Shareholders

The Trustee or the appropriate broker files certain
    information returns with the IRS, and provides certain tax-related information
    to Shareholders, in accordance with applicable Treasury Regulations. Each
    Shareholder will be provided with information regarding its allocable portion
    of the Trusts annual
income (if any) and expenses.

A US Shareholder may be subject to US backup withholding tax in certain
circumstances unless it provides its taxpayer identification number and
complies with certain certification procedures. Non-US Shareholders may have

9

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to comply with certification procedures to establish that they are not
a US person in order to avoid the information reporting and backup withholding
tax requirements.

The amount of any backup withholding is allowed as a credit against a
Shareholders US federal income tax liability and may entitle such a
Shareholder to a refund, provided that the required information is furnished to
the IRS.

Income Taxation of Non-US Shareholders

The Trust does not expect to generate taxable income
    except for gain (if any) upon the sale of silver. A Non-US Shareholder generally
    is not subject to US federal income tax with respect to gain recognized upon
    the sale or other disposition of Shares, or upon the sale of silver by the
    Trust, unless (1) the Non-US Shareholder is an individual and is present
    in the United States for 183 days or more during the taxable year of the
    sale or other disposition, and the gain is treated as being from United States
    sources; or (2) the gain is effectively connected with the conduct by the
Non-US Shareholder of a trade or business in the United States.

Taxation in Jurisdictions other than the United States

Prospective purchasers of Shares that are based in or acting out of a
jurisdiction other than the United States are advised to consult their own tax
advisers as to the tax consequences, under the laws of such jurisdiction (or
any other jurisdiction not being the United States to which they are subject),
of their purchase, holding, sale and redemption of or any other dealing in
Shares and, in particular, as to whether any value added tax, other consumption
tax or transfer tax is payable in relation to such purchase, holding, sale,
redemption or other dealing.

ERISA and Related
Considerations

The Employee Retirement Income Security Act
of 1974, as amended (“ERISA”), and/or Code Section 4975 impose certain requirements on certain employee benefit plans
and other plans and arrangements, including individual retirement accounts and annuities, Keogh plans, and certain commingled investment
vehicles or insurance company general or separate accounts in which such plans or arrangements are invested (collectively, “Plans”),
and on persons who are fiduciaries with respect to the investment of “plan assets” of a Plan. Government plans and
some church plans are not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the
Code, but may be subject to substantially similar rules under other federal law, or under state or local law ("Other Law").

In contemplating an investment of a portion
of Plan assets in Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account
the facts and circumstances of the Plan and the “Risk Factors” discussed above and whether such investment is consistent
with its fiduciary responsibilities under ERISA or Other Law, including, but not limited to: (1) whether the investment is permitted
under the plan's governing documents, (2) whether the fiduciary has the authority to make the investment, (3) whether the investment
is consistent with the plan's funding objectives, (4) the tax effects of the investment on the Plan, and (5) whether the investment
is prudent considering the factors discussed in this report. In addition, ERISA and Code Section 4975 prohibit a broad
range of transactions involving assets of a plan and persons who are "parties in interest" under ERISA or "disqualified
persons" under Section 4975 of the Code. A violation of these rules may result in the imposition of significant
excise taxes and other liabilities. Plans subject to Other Law may be subject to similar restrictions.

It is anticipated that the Shares will constitute
“publicly-held offered securities” as defined in the Department of
Labor “Plan Asset Regulations,” §2510.3-101(b)(2).
Accordingly, pursuant to the Plan Asset Regulations, Shares purchased by a Plan,
and not an interest in the underlying assets held in the Trust, should be treated
as “plan assets” of the Plan, for purposes of applying the “fiduciary
responsibility”
and “prohibited transaction” rules of ERISA and the Code. Fiduciaries
of plans subject to Other Law should consult legal counsel to determine whether
there would be a similar result under the Other Law.

Investment by Certain Retirement Plans

Code section 408(m) provides that the acquisition of a collectible by
an individual retirement account (IRA) or a participant-directed account
maintained under any plan that is tax-qualified under Code section 401(a) 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. The IRS has issued
private letter rulings to the effect that a purchase of Shares in a trust
holding precious metals by an IRA, or by a participant-directed account under a
Code section 401(a) plan, will not be treated as resulting in a taxable
distribution to the IRA owner or plan participant under Code section 408(m).
However, if any of the Shares so purchased are distributed from the IRA or plan
account to the IRA owner or plan participant, or if any silver received by such
IRA or plan account upon the redemption of any of the Shares purchased by it,
the Shares or silver so distributed will be

10

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subject to federal income tax in the year of distribution, to the
extent provided under the applicable provisions of Code sections 408(d), 408(m)
or 402.

Item 1A. Risk
Factors

You should consider carefully the risks described below before making
an investment decision. You should also refer to the other information included
in this report, including the Trusts financial statements and the related
notes.

The value of the Shares relates directly to the value of the silver
held by the Trust and fluctuations in the price of silver could materially
adversely affect an investment in the Shares.

The Shares are designed to mirror as closely as possible the
performance of the price of silver bullion, and the value of the Shares relates
directly to the value of the silver held by the Trust, less the Trusts
liabilities (including estimated accrued but unpaid expenses). The price of
silver has fluctuated widely over the past several years. Several factors may
affect the price of silver, including:

| |                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                            
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Ø                                                                                                                                                                                                                                                                                                       | A change in economic conditions, such as a recession, can adversely
 affect the price of silver. Silver is used in a wide range of industrial
 applications, and an economic downturn could have a negative impact on its
 demand and, consequently, its price and the price of the Shares;
| |                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                            
| | Ø                                                                                                                                                                                                                                                                                                       | Investors expectations with respect to the rate of inflation;                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                            
| | Ø                                                                                                                                                                                                                                                                                                       | Currency exchange rates;                                                                                                                                                                                                                                                                   
| |                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                            
| | Ø                                                                                                                                                                                                                                                                                                       | Interest rates;                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                            
| | Ø                                                                                                                                                                                                                                                                                                       | Investment and trading activities of hedge funds and commodity funds;
 and                                                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                            
| | Ø                                                                                                                                                                                                                                                                                                       | Global or regional political, economic or financial events and
 situations.                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                            
| | In addition, investors should be aware that there is no assurance
 that silver will maintain its long-term value in terms of purchasing power in
 the future. In the event that the price of silver declines, the Sponsor
 expects the value of an investment in the Shares to decline proportionately.

The Shares may trade at a price which is at, above or below the NAV per
Share and any discount or premium in the trading price relative to the NAV per
Share may widen as a result of non-concurrent trading hours between the NYSE
Arca and London and COMEX.

The Shares may trade at, above or below the NAV per Share. The NAV per
Share fluctuates with changes in the market value of the Trusts assets. The
trading price of the Shares fluctuates in accordance with changes in the NAV
per Share as well as market supply and demand. The amount of the discount or
premium in the trading price relative to the NAV per Share may be influenced by
non-concurrent trading hours between the NYSE Arca and the major silver
markets. While the Shares trade on the NYSE Arca until 4:00 PM New York time,
liquidity in the market for silver is reduced after the close of the major
world silver markets, including London and the COMEX. As a result, during this
time, trading spreads, and the resulting premium or discount on the Shares, may
widen.

Purchasing activity in the silver market associated with the purchase
of Baskets from the Trust may cause a temporary increase in the price of
silver. This increase may adversely affect an investment in the Shares.

Purchasing activity associated with acquiring the silver required for
deposit into the Trust in connection with the creation of Baskets may
temporarily increase the market price of silver, which will result in higher
prices for the Shares. Temporary increases in the market price of silver may
also occur as a result of the purchasing activity of other market participants.
Other market participants may attempt to benefit from an increase in the market
price of silver that may result from increased purchasing activity of silver
connected with the issuance of Baskets. Consequently, the market price of
silver may decline immediately after Baskets are created. If the price of
silver declines, the trading price of the Shares may also decline.

The Shares and their value could decrease if unanticipated operational
or trading problems arise.

11

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There may be unanticipated problems or issues with respect to the
mechanics of the Trusts operations and the trading of the Shares that could
have a material adverse effect on an investment in the Shares. In addition,
although the Trust is not actively managed by traditional methods, to the
extent that unanticipated operational or trading problems or issues arise, the
Sponsors past experience and qualifications may not be suitable for solving
these problems or issues.

If the process of creation and redemption of Baskets encounters any
unanticipated difficulties, the possibility for arbitrage transactions intended
to keep the price of the Shares closely linked to the price of silver may not
exist and, as a result, the price of the Shares may fall.

If the processes of creation and redemption of Shares (which depend on
timely transfers of silver to and by the Custodian) encounter any unanticipated
difficulties, potential market participants who would otherwise be willing to
purchase or redeem Baskets to take advantage of any arbitrage opportunity
arising from discrepancies between the price of the Shares and the price of the
underlying silver may not take the risk that, as a result of those
difficulties, they may not be able to realize the profit they expect. If this
is the case, the liquidity of Shares may decline and the price of the Shares
may fluctuate independently of the price of silver and may fall.

The liquidity of the Shares may be affected by the withdrawal from
participation of one or more Authorized Participants.

In the event that one or more Authorized Participants having
substantial interests in Shares or otherwise responsible for a significant
portion of the Shares daily trading volume on the Exchange withdraw from
participation, the liquidity of the Shares will likely decrease which could
adversely affect the market price of the Shares and result in your incurring a
loss on your investment.

Shareholders do not have the protections associated with ownership of
Shares in an investment company registered under the Investment Company Act of
1940 or the protections afforded by the Commodity Exchange Act (CEA).

The Trust is not registered as an investment company under the
Investment Company Act of 1940 and is not required to register under such act.
Consequently, Shareholders do not have the regulatory protections provided to
investors in investment companies. The Trust does and will not hold or trade in
commodity futures contracts regulated by the CEA, as administered by the CFTC.
Furthermore, the Trust is not a commodity pool for purposes of the CEA, and
neither the Sponsor nor the Trustee is subject to regulation by the CFTC as a
commodity pool operator or a commodity trading advisor in connection with the
Shares. Consequently, Shareholders do not have the regulatory protections
provided to investors in CEA-regulated instruments or commodity pools.

The Trust may be required to terminate and liquidate at a time that is
disadvantageous to Shareholders.

If the Trust is required to terminate and liquidate, such termination
and liquidation could occur at a time which is disadvantageous to Shareholders,
such as when silver prices are lower than the silver prices at the time when
Shareholders purchased their Shares. In such a case, when the Trusts silver is
sold as part of the Trusts liquidation, the resulting proceeds distributed to
Shareholders will be less than if silver prices were higher at the time of
sale.

The lack of an active trading market for the Shares may result in
losses on investment at the time of disposition of the Shares.

12

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Although Shares are listed for trading on the NYSE Arca, it cannot be
assumed that an active trading market for the Shares will develop or be
maintained. If an investor needs to sell Shares at a time when no active market
for Shares exists, such lack of an active market will most likely adversely
affect the price the investor receives for the Shares (assuming the investor is
able to sell them).

Shareholders do not have the rights enjoyed by investors in certain
other vehicles.

As interests in an investment trust, the Shares have none of the statutory
rights normally associated with the ownership of Shares of a corporation
(including, for example, the right to bring oppression or derivative
actions). In addition, the Shares have limited voting and distribution rights
(for example, Shareholders do not have the right to elect directors and do not
receive dividends).

An investment in the Shares may be adversely affected by competition
from other methods of investing in silver.

The Trust competes with other financial vehicles, including traditional
debt and equity securities issued by companies in the silver industry and other
securities backed by or linked to silver, direct investments in silver and
investment vehicles similar to the Trust. Market and financial conditions, and
other conditions beyond the Sponsors control, may make it more attractive to
invest in other financial vehicles or to invest in silver directly, which could
limit the market for the Shares and reduce the liquidity of the Shares.

The price of silver may be affected by the sale of ETVs tracking silver
markets.

To the extent existing exchange traded vehicles (ETVs) tracking
silver markets represent a significant proportion of demand for physical silver
bullion, large redemptions of the securities of these ETVs could negatively
affect physical silver bullion prices and the price and NAV of the Shares.

Crises may motivate large-scale sales of silver which could decrease
the price of silver and adversely affect an investment in the Shares.

The possibility of large-scale distress sales of silver in times of
crisis may have a short-term negative impact on the price of silver and
adversely affect an investment in the Shares. For example, the 2008 financial
credit crisis resulted in significantly depressed prices of silver largely due
to a slowdown in demand in silver for industrial use and forced sales and
deleveraging from institutional investors. Crises in the future may impair
silvers price performance which would, in turn, adversely affect an investment
in the Shares.

Several factors may have the effect of causing a decline in the prices
of silver and a corresponding decline in the price of Shares. Among them:

A significant increase in silver hedging activity by silver producers.
Should there be an increase in the level of hedge activity of silver producing
companies, it could cause a decline in world silver prices, adversely affecting
the price of the Shares.

A significant change in the attitude of speculators and investors
towards silver. Should the speculative community take a negative view towards
silver, it could cause a decline in world silver prices, negatively impacting
the price of the Shares.

A widening of interest rate differentials between the cost of money and
the cost of silver could negatively affect the price of silver which, in turn,
could negatively affect the price of the Shares.

A combination of rising money interest rates and a continuation of the
current low cost of borrowing silver could improve the economics of selling
silver forward. This could result in an increase in hedging by silver mining
companies and short selling by speculative interests, which would negatively
affect the price of silver. Under such circumstances, the price of the Shares
would be similarly affected.

The Trusts silver may be subject to loss, damage, theft or restriction
on access.

There is a risk that part or all of the Trusts silver could be lost,
damaged or stolen. Access to the Trusts silver could also be restricted by
natural events (such as an earthquake) or human actions (such as a terrorist
attack). Any of these events may adversely affect the operations of the Trust
and, consequently, an investment in the Shares.

The Trusts lack of insurance protection and the Shareholders limited
rights of legal recourse against the Trust, the Trustee, the Sponsor, the
Custodian and any subcustodian exposes the Trust and its Shareholders to the
risk of loss of the Trusts silver for which no person is liable.

13

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The Trust does not insure its silver. The Custodian maintains insurance
with regard to its business on such terms and conditions as it considers
appropriate in connection with its custodial obligations and is responsible for
all costs, fees and expenses arising from the insurance policy or policies. The
Trust is not a beneficiary of any such insurance and does not have the ability
to dictate the existence, nature or amount of coverage. Therefore, Shareholders
cannot be assured that the Custodian maintains adequate insurance or any
insurance with respect to the silver held by the Custodian on behalf of the
Trust. In addition, the Custodian and the Trustee do not require any direct or
indirect subcustodians to be insured or bonded with respect to their custodial
activities or in respect of the silver held by them on behalf of the Trust.
Further, Shareholders recourse against the Trust, the Trustee and the Sponsor,
under New York law, the Custodian, under English law, and any subcustodians
under the law governing their custody operations is limited. Consequently, a
loss may be suffered with respect to the Trusts silver which is not covered by
insurance and for which no person is liable in damages.

The Custodians limited liability under the Custody Agreements and
English law may impair the ability of the Trust to recover losses concerning
its silver and any recovery may be limited, even in the event of fraud, to the
market value of the silver at the time the fraud is discovered.

The liability of the Custodian is limited under the Custody Agreements.
Under the Custody Agreements between the Trustee and the Custodian which
establish the Trust Unallocated Account and the Trust Allocated Account, the
Custodian is only liable for losses that are the direct result of its own
negligence, fraud or willful default in the performance of its duties. Any such
liability is further limited, in the case of the Allocated Account Agreement,
to the market value of the silver held in the Trust Allocated Account at the
time such negligence, fraud or willful default is discovered by the Custodian
and, in the case of the Unallocated Account Agreement, to the amount of silver
credited to the Trust Unallocated Account at the time such negligence, fraud or
willful default is discovered by the Custodian. Under each Authorized
Participant Unallocated Bullion Account Agreement (between the Custodian and an
Authorized Participant), the Custodian is not contractually or otherwise liable
for any losses suffered by any Authorized Participant or Shareholder that are
not the direct result of its own gross negligence, fraud or willful default in
the performance of its duties under such agreement, and in no event will its
liability exceed the market value of the balance in the Authorized Participant
Unallocated Account at the time such gross negligence, fraud or willful default
is discovered by the Custodian. In addition, the Custodian will not be liable
for any delay in performance or any non-performance of any of its obligations
under the Allocated Account Agreement, the Unallocated Account Agreement or the
Authorized Participant Unallocated Bullion Account Agreement by reason of any
cause beyond its reasonable control, including acts of God, war or terrorism.
As a result, the recourse of the Trustee or the investor, under English law, is
limited. Furthermore, under English common law, the Custodian or any
subcustodian will not be liable for any delay in the performance or any
non-performance of its custodial obligations by reason of any cause beyond its
reasonable control.

The obligations of the Custodian and English subcustodians are governed
by English law, which may frustrate the Trust in attempting to receive legal
redress against the Custodian or any subcustodian concerning its silver.

The obligations of the Custodian under the Custody Agreements and the
Authorized Participant Unallocated Bullion Account Agreement are governed by
English law. The Custodian may enter into arrangements with English
subcustodians, which arrangements may also be governed by English law. The
Trust is a New York common law trust. Any United States, New York or other
court situated in the United States may have difficulty interpreting English
law (which, insofar as it relates to custody arrangements, is largely derived
from court rulings rather than statute), LBMA rules or the customs and practices
in the London custody market. It may be difficult or impossible for the Trust
to sue a subcustodian in a United States, New York or other court situated in
the United States. In addition, it may be difficult, time consuming and/or
expensive for the Trust to enforce in a foreign court a judgment rendered by a
United States, New York or other court situated in the United States.

The Trust may not have adequate sources of recovery if its silver is
lost, damaged, stolen or destroyed.

If the Trusts silver is lost, damaged, stolen or destroyed under
circumstances rendering a party liable to the Trust, the responsible party may
not have the financial resources sufficient to satisfy the Trusts claim. For
example, as to a particular event of loss, the only source of recovery for the
Trust might be limited to the Custodian or one or more subcustodians or, to the
extent identifiable, other responsible third parties (e.g., a thief or
terrorist), any of which may not have the financial resources (including
liability insurance coverage) to satisfy a valid claim of the Trust.

Shareholders and Authorized Participants lack the right under the
Custody Agreements to assert claims directly against the Custodian and any
subcustodian.

14

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Neither the Shareholders nor any Authorized Participant have a right
under the Custody Agreements to assert a claim of the Trustee against the
Custodian or any subcustodian. Claims under the Custody Agreements may only be
asserted by the Trustee on behalf of the Trust.

Because neither the Trustee nor the Custodian oversees or monitors the
activities of subcustodians who may hold the Trusts silver, failure by the
subcustodians to exercise due care in the safekeeping of the Trusts silver
could result in a loss to the Trust.

Under the Allocated Account Agreement, the Custodian may appoint from
time to time one or more subcustodians to hold the Trusts silver on a
temporary basis pending delivery to the Custodian. The subcustodians which the
Custodian currently uses are LBMA market-making members that provide bullion
vaulting and clearing services to third parties. The Custodian is required
under the Allocated Account Agreement to use reasonable care in appointing its
subcustodians, making the Custodian liable only for negligence or bad faith in
the selection of such subcustodians, and has an obligation to use commercially
reasonable efforts to obtain delivery of the Trusts silver from any
subcustodians appointed by the Custodian. Otherwise, the Custodian is not
liable for the acts or omissions of its subcustodians. These subcustodians may
in turn appoint further subcustodians, but the Custodian is not responsible for
the appointment of these further subcustodians. The Custodian does not
undertake to monitor the performance by subcustodians of their custody
functions or their selection of further subcustodians. The Trustee does not
monitor the performance of the Custodian other than to review the reports
provided by the Custodian pursuant to the Custody Agreements and does not
undertake to monitor the performance of any subcustodian. Furthermore, the
Trustee may have no right to visit the premises of any subcustodian for the
purposes of examining the Trusts silver or any records maintained by the
subcustodian, and no subcustodian will be obligated to cooperate in any review
the Trustee may wish to conduct of the facilities, procedures, records or
creditworthiness of such subcustodian. In addition, the ability of the Trustee
to monitor the performance of the Custodian may be limited because under the Allocated
Account Agreement and the Unallocated Account Agreement the Trustee has only
limited rights to visit the premises of the Custodian for the purpose of
examining the Trusts silver and certain related records maintained by the
Custodian.

The obligations of any subcustodian of the Trusts silver are not
determined by contractual arrangements but by LBMA rules and London bullion
market customs and practices, which may prevent the Trusts recovery of damages
for losses on its silver custodied with subcustodians.

There are expected to be no written contractual arrangements between
subcustodians that hold the Trusts silver and the Trustee or the Custodian
because traditionally such arrangements are based on the LBMAs rules and on
the customs and practices of the London bullion market. In the event of a legal
dispute with respect to or arising from such arrangements, it may be difficult
to define such customs and practices. The LBMAs rules may be subject to change
outside the control of the Trust. Under English law, neither the Trustee nor
the Custodian would have a supportable breach of contract claim against a
subcustodian for losses relating to the safekeeping of silver. If the Trusts
silver is lost or damaged while in the custody of a subcustodian, the Trust may
not be able to recover damages from the Custodian or the subcustodian. Whether
a subcustodian will be liable for the failure of subcustodians appointed by it
to exercise due care in the safekeeping of the Trusts silver will depend on
the facts and circumstances of the particular situation. Shareholders cannot be
assured that the Trustee will be able to recover damages from subcustodians
whether appointed by the Custodian or by another subcustodian for any losses
relating to the safekeeping of silver by such subcustodian.

Silver bullion allocated to the Trust in connection with the creation
of a Basket may not meet the London Good Delivery Standards and, if a Basket is
issued against such silver, the Trust may suffer a loss.

Neither the Trustee nor the Custodian independently confirms the
fineness of the silver allocated to the Trust in connection with the creation
of a Basket. The silver bullion allocated to the Trust by the Custodian may be
different from the reported fineness or weight required by the LBMAs standards
for silver bars delivered in settlement of a silver trade (London Good Delivery
Standards), the standards required by the Trust. If the Trustee nevertheless
issues a Basket against such silver, and if the Custodian fails to satisfy its
obligation to credit the Trust the amount of any deficiency, the Trust may
suffer a loss.

Silver held in the Trusts unallocated silver account and any
Authorized Participants unallocated silver account is not segregated from the
Custodians assets. If the Custodian becomes insolvent, its assets may not be
adequate to satisfy a claim by the Trust or any Authorized Participant. In
addition, in the event of the Custodians insolvency, there may be a delay and
costs incurred in identifying the bullion held in the Trusts allocated silver
account.

15

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Silver which is part of a deposit for a purchase
    order or part of a redemption distribution is held for a time in the Trusts
    Unallocated Account and, previously or subsequently in, the Authorized Participant
    Unallocated Account of the purchasing or redeeming Authorized Participant.
    During those times, the Trust and the Authorized Participant, as the case
    may be, have no proprietary rights to any specific plates of silver held
    by the Custodian are each an unsecured creditor of the Custodian with respect
    to the amount of silver held in such unallocated accounts. In addition, if
    the Custodian fails to allocate the Trusts silver in a timely manner,
    in the proper amounts or otherwise in accordance with the terms of the Unallocated
    Account Agreement, or if a subcustodian fails to so segregate silver held
    by it on behalf of the Trust, unallocated silver will not be segregated from
    the Custodians assets,
and the Trust will be an unsecured creditor of the Custodian with respect to
the amount so held in the event of the insolvency of the Custodian. In the
event the Custodian becomes insolvent, the Custodians assets might not
be adequate to satisfy a claim by the Trust or the Authorized Participant for
the amount of silver held in their respective unallocated silver accounts.

In the case of the insolvency of the Custodian, a liquidator may seek
to freeze access to the silver held in all of the accounts held by the
Custodian, including the Trusts Allocated Account. Although the Trust would be
able to claim ownership of properly allocated silver, the Trust could incur
expenses in connection with asserting such claims, and the assertion of such a
claim by the liquidator could delay creations and redemptions of Baskets.

In issuing Baskets, the Trustee relies on certain information received
from the Custodian which is subject to confirmation after the Trustee has
relied on the information. If such information turns out to be incorrect,
Baskets may be issued in exchange for an amount of silver which is more or less
than the amount of silver which is required to be deposited with the Trust.

The Custodians definitive records are prepared after the close of its
business day. However, when issuing Baskets, the Trustee relies on information
reporting the amount of silver credited to the Trusts accounts which it
receives from the Custodian during the business day and which is subject to
correction during the preparation of the Custodians definitive records after
the close of business. If the information relied upon by the Trustee is
incorrect, the amount of silver actually received by the Trust may be more or
less than the amount required to be deposited for the issuance of Baskets.

The sale of the Trusts silver to pay expenses not assumed by the
Sponsor at a time of low silver prices could adversely affect the value of the
Shares.

The Trustee sells silver held by the Trust to pay Trust expenses not
assumed by the Sponsor on an as-needed basis irrespective of then-current
silver prices. The Trust is not actively managed and no attempt will be made to
buy or sell silver to protect against or to take advantage of fluctuations in
the price of silver. Consequently, the Trusts silver may be sold at a time
when the silver price is low, resulting in a negative effect on the value of
the Shares.

The value of the Shares will be adversely affected if the Trust is
required to indemnify the Sponsor or the Trustee under the Trust Agreement.

Under the Trust Agreement, each of the Sponsor and the Trustee has a
right to be indemnified from the Trust for any liability or expense it incurs
without gross negligence, bad faith or willful misconduct on its part. That
means the Sponsor or the Trustee may require the assets of the Trust to be sold
in order to cover losses or liability suffered by it. Any sale of that kind
would reduce the NAV of the Trust and the value of the Shares.

Item 1B.
Unresolved Staff Comments

None.

Item 2.
Properties

Not
applicable.

Item 3. Legal
Proceedings

None.

Item 4. (Removed
and Reserved)

16

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PART II

Item 5. Market
for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.

The Trust was formed on July 20, 2009 (the Date
    of Inception)
following an initial deposit of silver. The Trusts Shares have been listed
on the NYSE Arca under the symbol SIVR since its initial public offering on July
24, 2009. The following tables set out the range of high and low closing prices
for the Shares as reported for NYSE Arca transactions for each of the quarters
during the fiscal year ended December 31, 2010 and the fiscal period commencing
July 20, 2009 and ending December 31, 2009:

|                                                   |  |   |       |  |   |       | 
|-------------------------------------------------- |  | - | ----- |  | - | ----- | 
|Fiscal Year Ended December 31, 2010: Quarter Ended |  |   | High  |  |   | Low   | 
|                                                   |  |   |       |  |   |       | 
|March 31,
 2010                                    |  | $ | 18.79 |  | $ | 15.02 | 
|June 30,
 2010                                     |  | $ | 19.50 |  | $ | 17.37 | 
|September
 30, 2010                                |  | $ | 21.80 |  | $ | 17.46 | 
|December 31,
 2010                                 |  | $ | 30.73 |  | $ | 21.93 | 
|                                                   |  |   |       |  |   |       | 
|Period Ended December 31, 2009: Quarter Ended      |  |   | High  |  |   | Low   | 
|                                                   |  |   |       |  |   |       | 
|September
 30, 2009 (from the Date of Inception)   |  | $ | 17.44 |  | $ | 13.34 | 
|                                                   |  |   |       |  |   |       | 
|December 31,
 2009                                 |  | $ | 19.22 |  | $ | 16.11 | 

The number of
shares of record of the Trust as of March 8,
2011 was approximately 18,200,000.

Monthly Share Price

The following table sets forth,
for each of the most recent six months, the high and low closing prices of the
Shares, as reported for NYSE Arca transactions.

|                |  |      |       |     |   |       | 
|--------------- |  | ---- | ----- | --- | - | ----- | 
|Month           |  | High |       | Low |  
|                |  |      |       |     |   |       | 
|September
 2010 |  | $    | 21.80 |     | $ | 19.33 | 
|October 2010    |  | $    | 24.63 |     | $ | 21.93 | 
|November
 2010  |  | $    | 27.97 |     | $ | 24.54 | 
|December
 2010  |  | $    | 30.73 |     | $ | 28.22 | 
|January 2011    |  | $    | 30.57 |     | $ | 26.73 | 
|February
 2011  |  | $    | 33.76 |     | $ | 28.25 | 

17

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Issuer Purchase of Equity Securities

The Trust issues and redeems Shares only with Authorized
    Participants in exchange for silver, only in aggregations of 100,000 or integral
    multiples thereof. A list of current Authorized Participants is available
    from the Sponsor or the Trustee. Although the Trust does not purchase Shares
directly from its shareholders in connection with the redemption of Baskets,
the Trust redeemed as follows during the year ended December 31, 2010:

|                      |  |                                   |           |                                        |  |        | 
|--------------------- |  | --------------------------------- | --------- | -------------------------------------- |  | ------ | 
|Period                |  | Total number of 
 Shares redeemed |           | Average ounces 
 of silver per 
 Share | 
|                      |  |                                   |           |                                        | 
|                      |  |                                   |           |                                        |  |        | 
|01/01/10 to
 01/31/10 |  |                                   | 1,500,000 |                                        |  | 0.9986 | 
|02/01/10 to
 02/28/10 |  |                                   | 2,000,000 |                                        |  | 0.9982 | 
|03/01/10 to
 03/31/10 |  |                                   |          |                                        |  |       | 
|04/01/10 to
 04/30/10 |  |                                   |          |                                        |  |       | 
|05/01/10 to
 05/31/10 |  |                                   |          |                                        |  |       | 
|06/01/10 to
 06/30/10 |  |                                   | 100,000   |                                        |  | 0.9973 | 
|07/01/10 to
 07/31/10 |  |                                   |          |                                        |  |       | 
|08/01/10 to
 08/31/10 |  |                                   |          |                                        |  |       | 
|09/01/10 to
 09/30/10 |  |                                   |          |                                        |  |       | 
|10/01/10 to
 10/31/10 |  |                                   |          |                                        |  |       | 
|11/01/10 to
 11/30/10 |  |                                   |          |                                        |  |       | 
|12/01/10 to
 12/31/10 |  |                                   | 100,000   |                                        |  | 0.9959 | 
|                      |  |                                   |           |                                        |  |        | 
|Total                 |  |                                   | 3,700,000 |                                        |  | 0.9983 | 

The Trust redeemed as follows
during the period ended December 31, 2009

|                      |  |                                   |           |                                       |  |        | 
|--------------------- |  | --------------------------------- | --------- | ------------------------------------- |  | ------ | 
|Period                |  | Total number of 
 Shares redeemed |           | Average ounces 
 of silver per
 Share | 
|                      |  |                                   |           |                                       | 
|                      |  |                                   |           |                                       |  |        | 
|07/24/09 to
 07/30/09 |  |                                   |          |                                       |  |       | 
|08/01/09 to
 08/30/09 |  |                                   |          |                                       |  |       | 
|09/01/09 to
 09/30/09 |  |                                   |          |                                       |  |       | 
|10/01/09 to
 10/31/09 |  |                                   |          |                                       |  |       | 
|11/01/09 to
 11/30/09 |  |                                   |          |                                       |  |       | 
|12/01/09 to
 12/31/09 |  |                                   | 1,500,000 |                                       |  | 0.9993 | 
|                      |  |                                   |           |                                       |  |        | 
|Total                 |  |                                   | 1,500,000 |                                       |  | 0.9993 | 

18

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Item 6. Selected
Financial Data.

The following selected financial data for the Reporting Period should
be read in conjunction with the Trusts financial statements and related notes
and Managements Discussion and Analysis of Financial Condition and Results of
Operations.

|                                           |  |                     |             |                      |   |             | 
|------------------------------------------ |  | ------------------- | ----------- | -------------------- | - | ----------- | 
|                                           |  | December 31, 
 2010 |             | December 31, 
 2009* |  
|                                           |  |                     |             |                      |   |             | 
|                                           |  |                     |             |                      |   |             | 
|Total assets                               |  | $                   | 335,456,828 |                      | $ | 139,223,967 | 
|Total gain
 on silver                      |  | $                   | 8,738,410   |                      | $ | 3,870,417   | 
|Net gain from operations                   |  | $                   | 8,142,445   |                      | $ | 3,664,391   | 
|Weighted average
 number of Shares         |  |                     | 9,847,671   |                      | $ | 7,648,171   | 
|Net gain per Share                         |  | $                   | 0.83        |                      | $ | 0.48        | 
|Net cash
 provided by operating activities |  | $                   |            |                      | $ |            | 

|  |                                            
|- | -------------------------------------------
|  |                                            
|* | For the
 period from the Date of Inception.

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

This information should be read in conjunction with the financial
statements and notes to the financial statements included with this report. The
discussion and analysis that follows may contain statements that relate to
future events or future performance. In some cases, such forward-looking
statements can be identified by terminology such as may, should, expect,
plan, anticipate, believe, estimate, predict, potential or the
negative of these terms or other comparable terminology. Neither the Sponsor,
nor any other person assumes responsibility for the accuracy or completeness of
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.

Introduction.

The ETFS Silver Trust (the Trust) is a trust formed under the laws of
the State of New York. The Trust does not have any officers, directors, or
employees, and is administered by The Bank of New York Mellon (the Trustee)
acting as trustee pursuant to the Depositary Trust Agreement (the Trust
Agreement) between the Trustee and ETF Securities USA LLC, the sponsor of the
Trust (the Sponsor). The Trust issues Shares representing fractional
undivided beneficial interests in its net assets. The assets of the Trust
consist of silver bullion held by a custodian as an agent of the Trust and
responsible only to the Trustee.

The Trust is a passive investment vehicle and the
    objective of the Trust is merely for the value of each share to approximately
    reflect, at any given time, the price of the silver bullion owned by the
    Trust, less the Trusts
liabilities (anticipated to be principally for accrued operating expenses),
divided by the number of outstanding Shares. The Trust does not engage in any
activities designed to obtain a profit from, or ameliorate losses caused by,
changes in the price of silver.

The Trust
issues and redeems Shares only in exchange for silver, only in aggregations of
100,000 or integral multiples thereof (each, a Basket), and only in
transactions with registered broker-dealers that have previously entered into
an agreement with the Trust governing the terms and conditions of such issuance
(such dealers, the Authorized Participants). A list of current Authorized
Participants is available from the Sponsor or the Trustee.

Shares of the
Trust trade on the NYSE Arca under the symbol SIVR.

Investing in the Shares does not insulate the investor from certain
risks, including price volatility. The following table illustrates the movement
in the price of the Shares and net asset value (NAV) of the Shares against
the corresponding silver price (per 1 oz. of silver) since inception:

19

---



Share price & NAV v. silver price from
inception to December 31, 2010

(LINE GRAPH)



The divergence of the price of the Shares and NAV of the Shares from
the silver price over time reflects the cumulative effect of the Trust expenses
that arise if an investment had been held since inception.

Critical Accounting Policy

The financial statements and accompanying notes are prepared in
accordance with accounting principles generally accepted in the United States
of America. The preparation of these financial statements relies on estimates
and assumptions that impact the Trusts financial position and results of
operations. These estimates and assumptions affect the Trusts application of
accounting policies. Below we describe the valuation of silver bullion, a
critical accounting policy that we believe is important to understanding our
results of operations and financial position. In addition, please refer to Note
2 to the Financial Statements for further discussion of our accounting
policies.

Valuation of Silver

Silver is valued for financial statement purposes, at the lower of cost
or market. The cost of silver is determined according to the average cost
method and the market value is based on the London fix used to determine the
Net Asset Value of the Trust. Realized gains and losses on sales of silver, or
silver distributed for the redemption of Shares, are calculated on a trade date
basis using average cost.

The table below summarizes the impact of unrealized gains on the
Trusts silver holdings at December 31, 2010 and 2009:

|                                        |  |                    |             |                    |   |             | 
|--------------------------------------- |  | ------------------ | ----------- | ------------------ | - | ----------- | 
|                                        |  | December 31,
 2010 |             | December 31,
 2009 |  
|                                        |  |                    |             |                    |   |             | 
|                                        |  |                    |             |                    |   |             | 
|Investment in silver - average cost     |  | $                  | 329,357,195 |                    | $ | 139,223,967 | 
|Unrealized gain on investment in silver |  | $                  | 173,978,516 |                    |   | 16,842,298  | 
|                                        |  |                    |             |                    |   |             | 
|Investment in silver - market value     |  | $                  | 503,335,711 |                    | $ | 156,066,265 | 
|                                        |  |                    |             |                    |   |             | 

Inspection of Silver

Under the Custody Agreements, the Sponsor has exercised its right to visit the
Custodian in order to examine the silver and the records maintained by the Custodian. The inspection held on December 31, 2010 confirmed that the Custodians
records of silver held in the vault were accurate.

20

---



Liquidity

The Trust is
not aware of any trends, demands, conditions or events that are reasonably
likely to result in material changes to its liquidity needs. In exchange for a
fee, the Sponsor has agreed to assume most of the expenses incurred by the
Trust. As a result, the only ordinary expense of the Trust during the period
covered by this report was the Sponsors fee. The Trusts only source of
liquidity is its transfers and sales of silver.

The Trustee will, at the direction of
the Sponsor or in its own discretion, sell the Trust’s silver as necessary to pay the Trust’s expenses not otherwise
assumed by the Sponsor. The Trustee will not sell silver to pay the Sponsor’s Fee but will pay the Sponsor’s Fee through
in-kind transfers of silver to the Sponsor. At December 31, 2010, the Trust did not have any cash balances.

Review
of Financial Results

Financial Highlights

|                                               |  |                    |           |                     |   |           | 
|---------------------------------------------- |  | ------------------ | --------- | ------------------- | - | --------- | 
|                                               |  | December 31,
 2010 |           | December 31,
 2009* |  
|                                               |  |                    |           |                     |  
|Total gain on
     silver                      |  | $                  | 8,738,410 |                     | $ | 3,870,417 | 
|Net gain from
     operations                  |  | $                  | 8,142,445 |                     | $ | 3,664,391 | 
|Net cash provided
     operating by activities |  | $                  |          |                     | $ |          | 
|                                               |  |                    |           |                     |   |           | 

|                                     | 
|------------------------------------ | 
|*Period from
 the Date of Inception.

The year ended December 31, 2010

The net asset value (NAV) 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 NAV per Share is obtained by dividing the NAV of
the Trust on a given day by the number of Shares outstanding on that day.

The Trusts NAV grew from $156,066,265 at December 31, 2009 to $509,311,012
at December 31, 2010, a 226.34% increase for the year. NAV per
Share increased 79.73% from $16.97 at December 31, 2009 to $30.50 at
December 31, 2010. The increase in the Trusts NAV per Share resulted
primarily from an increase in the price per ounce of silver, which rose 80.28% from
$16.99
at December 31, 2009 to $30.63 at December 31, 2010 and an
increase in outstanding Shares, which rose from 9,200,000 Shares
at December 31, 2009 to 16,700,000 Shares at December 31, 2010,
a consequence of 11,200,000 Shares (112 Baskets) being created and 3,700,000
Shares (37 Baskets) being redeemed during the year.

The Trusts NAV per Share rose slightly less than the price per ounce
of silver on a percentage basis due to Sponsors Fees, which were $595,965
for the year, or 0.30% of the Trusts of the Trusts assets on an annualized
basis.

The NAV per Share of $30.57 at
December 30, 2010 was the highest during the year, compared with a low of
$15.12 at February 8, 2010.

Net gain from operations for the year ended December 31,
    2010 was $8,142,445 resulting from a net gain of $81,343 on
the transfer of silver to pay expenses and a net gain of $8,657,067 on
silver distributed for the redemption of Shares, offset by Sponsors Fees
of $595,965. Other than the Sponsors Fees, the Trust had no expenses during
the year ended December 31, 2010.

The fiscal period from  July 20, 2009 to December 31,
2009

On July 20, 2009, the Trust was formed as a legal entity with an
initial deposit of silver. On July 24, 2009, the Trusts Shares commenced
trading on the NYSE Arca under the symbol SIVR, and the Trust commenced
operations. The assets of the Trust were $1,378,000 as of close of business on
July 24, 2009.

The Trusts NAV grew from $1,378,000 at July 24, 2009 to $156,066,265
at December 31, 2009, an 11,225.56% increase for the period. The increase
in the Trusts NAV resulted primarily from an increase in the price per ounce
of Silver, which rose 23.29% from $13.78 at July 24, 2009 to $16.99 at December 31,
2009 and an increase in outstanding Shares, which rose from 100,000 Shares at
July 24, 2009 to 9,200,000 Shares at December 31,
2009, a consequence of 10,700,000 Shares (107 Baskets) being
created and 1,500,000 Shares (15 Baskets) being redeemed during the period.

21

---



The 23.15% increase in the Trusts NAV per share from $13.78 at July
24, 2009 to $16.97 at December 31, 2009 directly relates to the price per
ounce of silver, which rose 23.29%.

The Trusts NAV per Share rose slightly less than the price per ounce
of silver on a percentage basis due to Sponsors fees, which were $206,026 for
the period, or 0.30% of the Trusts assets on an annualized basis. The NAV per
Share of $19.15 on December 2, 2009 was the highest during the period, compared
with a low of $13.40 on July 30, 2009.

Net gain for the period ended December 31, 2009 was $3,664,391
resulting from a net gain of $27,499 on
the sale of silver to pay expenses and a net gain of $3,842,918 on
silver distributed for the redemption of Shares, offset by Sponsors fees of $ 206,026.
Other than the Sponsors Fees, the Trust had no expenses during the period
ended December 31, 2009.

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

The
Trust Indenture does not authorize the Trustee to borrow for payment of
the Trusts ordinary expenses. The Trust does not engage in transactions in
foreign currencies which could expose the Trust or holders of Shares to any
foreign currency related market risk. The Trust invests in no derivative
financial instruments and has no foreign operations or long-term debt
instruments.

Item 8. Financial
Statements and Supplementary Data.

Quarterly Income Statements

|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|-------------------------------------------------------- |  | ------------------ | --------- | -------------------------------- | - | ------------ | - | ----------- | --------- | - | - | ---------- | - | - | --------- | -
|Year Ended December 31, 2010                             |  |                    |           | For the Year
 Ended
 December 31 |  
|                                                         |  | Three months ended |           |                                 
|                                                         |  | March 31           |           | June 30                          |   | September 30 |   | December 31 |           |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|Revenues                                                 |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|Value of silver transferred to pay expenses              |  | $                  | 31,096    |                                  | $ | 100,346      |   | $           | 124,846   |   | $ | 214,745    |   | $ | 471,033   |  
|Cost of silver transferred to pay expenses               |  |                    | (29,693   | )                                |   | (87,768      | ) |             | (109,839  | ) |   | (162,390   | ) |   | (389,690  | )
|Gain on silver transferred to pay expenses               |  |                    | 1,403     |                                  |   | 12,578       |   |             | 15,007    |   |   | 52,355     |   |   | 81,343    |  
|Gain on silver distributed for the redemption of Shares  |  |                    | 7,331,209 |                                  |   | 290,114      |   |             |          |   |   | 1,035,744  |   |   | 8,657,067 |  
|Unrealized gain/(loss)
     on investment in silver      |  |                    |          |                                  |   |             |   |             |          |   |   |           |   |   |          |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|Total gain on
     transfers and distributions of silver |  | $                  | 7,332,612 |                                  | $ | 302,692      |   | $           | 15,007    |   | $ | 1,088,099  |   | $ | 8,738,410 |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|Expenses                                                 |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|Sponsors
     Fee                                       |  | $                  | 61,832    |                                  | $ | 109,432      |   | $           | 136,759   |   | $ | 287,942    |   | $ | 595,965   |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|Total expenses                                           |  | $                  | 61,832    |                                  | $ | 109,432      |   | $           | 136,759   |   | $ | 287,942    |   | $ | 595,965   |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|Net gain/(loss)
     from operations                     |  | $                  | 7,270,780 |                                  | $ | 193,260      |   | $           | (121,752  | ) | $ | 800,157    |   | $ | 8,142,445 |  
|                                                         |  |                    |           |                                  |   |              |   |             |           |   |   |            |   |   |           |  
|Net gain/(loss)
     per Share                           |  | $                  | 0.93      |                                  | $ | 0.02         |   | $           | (0.01     | ) | $ | 0.06       |   | $ | 0.83      |  
|Weighted average
     number of Shares                   |  |                    | 7,833,333 |                                  |   | 7,975,824    |   |             | 9,534,783 |   |   | 13,982,609 |   |   | 9,847,671 |  

|                                                        |  |                                       |           |                                   |   |                                                 |   |   |           |  
|------------------------------------------------------- |  | ------------------------------------- | --------- | --------------------------------- | - | ----------------------------------------------- | - | - | --------- | -
|Period Ended December 31, 2009                          |  | For the periodendedSeptember 30,2009* |           | Three monthsendedDecember 31,2010 |   | For the periodJuly 20 2009through Dec.31, 2010* |  
|                                                        |  |                                       |           |                                  
|                                                        |  |                                       |           |                                  
|                                                        |  |                                       |           |                                  
|                                                        |  |                                       |           |                                   |   |                                                 |   |   |           |  
|Revenues                                                |  |                                       |           |                                   |   |                                                 |   |   |           |  
|Value of silver transferred to pay expenses             |  | $                                     | 36,294    |                                   | $ | 169,732                                         |   | $ | 206,026   |  
|Cost of silver transferred to pay expenses              |  |                                       | (34,526   | )                                 |   | (144,001                                        | ) |   | (178,527  | )
|Gain on silver transferred to pay expenses              |  |                                       | 1,768     |                                   |   | 25,731                                          |   |   | 27,499    |  
|Gain on silver distributed for the redemption of Shares |  |                                       |          |                                   |   | 3,842,918                                       |   |   | 3,842,918 |  
|Unrealized gain/(loss)
     on investment in silver     |  |                                       |          |                                   |   |                                                |   |   |          |  
|                                                        |  |                                       |           |                                   |   |                                                 |   |   |           |  
|                                                        |  |                                       |           |                                   |   |                                                 |   |   |           |  
|Total gain
    on transfers and distributions of silver |  | $                                     | 1,768     |                                   | $ | 3,868,649                                       |   | $ | 3,870,417 |  
|                                                        |  |                                       |           |                                   |   |                                                 |   |   |           |  
|Expenses                                                |  |                                       |           |                                   |   |                                                 |   |   |           |  
|Sponsors
     Fee                                      |  | $                                     | 70,988    |                                   | $ | 102,716                                         |   | $ | 206,026   |  
|                                                        |  |                                       |           |                                   |   |                                                 |   |   |           |  
|Total expenses                                          |  | $                                     | 70,988    |                                   | $ | 102,716                                         |   | $ | 206,026   |  
|                                                        |  |                                       |           |                                   |   |                                                 |   |   |           |  
|Net (loss)/gain
     from operations                    |  | $                                     | (69,220   | )                                 | $ | 3,765,933                                       |   | $ | 3,664,391 |  
|                                                        |  |                                       |           |                                   |   |                                                 |   |   |           |  
|Net (loss)/gain
     per Share                          |  | $                                     | (0.01     | )                                 | $ | 0.42                                            |   | $ | 0.48      |  
|Weighted average
     number of Shares                  |  |                                       | 6,007,246 |                                   |   | 9,005,435                                       |   |   | 7,648,171 |  

|                                    | 
|----------------------------------- | 
|                                   
|*Period from the Date of Inception.

22

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The financial statements required by Regulation S-X, together with the
report of the Trusts independent registered public accounting firm appear on
pages F-1 to F-11of this filing.

Item 9. Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure.

There have been no changes in accountants and no disagreements with
accountants  during the year ended December 31, 2010.

Item 9A. Controls
and Procedures.

The Trust maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in its Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and forms,
and that such information is accumulated and communicated to the Chief
Executive Officer and Chief Financial Officer of the Sponsor, and to the audit
committee, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Chief Executive
Officer and the Chief Financial Officer of the Sponsor, the Sponsor conducted
an evaluation of the Trusts disclosure controls and procedures, as defined
under Exchange Act Rule 13a-15(e). Based on this evaluation, the Chief
Executive Officer and the Chief Financial Officer of the Sponsor concluded
that, as of December 31, 2010, the Trusts disclosure controls and procedures
were effective.

There have been changes in the Trusts or
    Sponsors internal control
over financial reporting that occurred during the Trusts recently completed
fiscal quarter ended December 31, 2010 that have materially affected, or are
reasonably likely to materially affect, the Trusts or Sponsors internal
control over financial reporting. These changes have occurred as a result of
the Sponsors review of the control processes. The changes include strengthening
the review procedures over the financial statements and the creation of an audit
committee to act in respect of the Trust on behalf of the Sponsors audit
committee.

Managements Report on Internal Control over
Financial Reporting

The Sponsors management is responsible for establishing and
maintaining adequate internal control over financial reporting, as defined
under Exchange Act Rules 13a-15(f) and 15d-15(f). The Trusts internal control
over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States. Internal control over
financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the Trusts
assets,

23

---



(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that the Trusts receipts and
expenditures are being made only in accordance with appropriate authorizations;
and

(3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Trusts assets that could have a
material effect on the financial statements.

Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become ineffective
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

The Chief
Executive Officer and Chief Financial Officer of the Sponsor assessed the
effectiveness of the Trusts internal control over financial reporting as of
December 31, 2010. In making this assessment, they used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal ControlIntegrated Framework. Their assessment included an
evaluation of the design of the Trusts internal control over financial
reporting and testing of the operational effectiveness of its internal control
over financial reporting. Based on their assessment and those criteria, the
Chief Executive Officer and Chief Financial Officer of the Sponsor concluded
that the Trust maintained effective internal control over financial reporting
as of December 31, 2010.

Deloitte & Touche LLP, the independent registered public accounting firm that audited and
reported on the financial statements included in this Form 10-K, as stated in
their report which is included herein, issued an attestation report on the
effectiveness of the Trusts internal control over financial reporting as of
December 31, 2010.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Sponsor, Trustee and the Shareholders
    of the ETFS Silver Trust

We have audited the internal control over financial reporting of ETFS Silver Trust (the Trust) as of December 31, 2010, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Trusts management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Trusts internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons performing similar functions, and effected by the companys board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the
    standards of the Public Company Accounting Oversight Board (United States),
    the financial statements of the Trust as of and for the year ended December
    31, 2010, and our report dated March 14, 2011 expressed an unqualified opinion
    on those financial statements.

/s/ Deloitte  & Touche LLP

New York, New
York
March 14, 2011

24

---



Item 9B. Other
Information.

Not
applicable.

25

---



PART III

Item 10.
Directors, Executive Officers and Corporate Governance.

Not
applicable.

Item 11.
Executive Compensation.

The Trust has
no directors or executive officers. The only ordinary expense paid by the Trust
    is the Sponsors Fee.

Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.

The Sponsor has no knowledge of any person being the beneficial owner of more than 5% of the Shares of the Trust.

Security Ownership of Management

The Trustee
does not beneficially own any of the Trust Shares.

Change in Control

Neither the Sponsor nor the Trustee knows of any arrangements which may
subsequently result in a change in control of the Trust.

Item 13. Certain
Relationships and Related Transactions, and Director Independence.

The Trust has
no directors or executive officers.

Item 14.
Principal Accounting Fees and Services.

Fees for services performed by Deloitte & Touche LLP for the period
ended December 31, 2009 and the year ended December 31, 2010 were as follows:

|                    |  |                   |         |                   |   |        | 
|------------------- |  | ----------------- | ------- | ----------------- | - | ------ | 
|                    |  | December 31, 2010 |         | December 31, 2009 |  
|                    |  |                   |         |                   |  
|                    |  |                   |         |                   |   |        | 
|Audit fees          |  | $                 | 90,000  |                   | $ | 51,000 | 
|Audit-related
 fees |  |                   | 45,000  |                   |   | 17,500 | 
|                    |  |                   |         |                   |   |        | 
|                    |  | $                 | 135,000 |                   | $ | 68,500 | 

Pre-Approved Policies and Procedures

As referenced
in Item 10 above, the Trust has no board of directors, and as a
result, has no pre-approval policies or procedures with respect to fees paid to
Deloitte & Touche LLP. Such determinations are made by the Sponsor.

None of the hours expended by Deloitte & Touche LLP to audit the
Trusts financial statements for the fiscal period ended December 31, 2010 were
attributable to work performed by persons other than the principal accountants
full-time, permanent employees.

26

---



PART III

Item 15.
Exhibits, Financial Statement Schedules

1. Financial Statements

See Index to
Financial Statements on Page F-1 for a list of the financial statements being
filed herein.

2. Financial Statement Schedules

Schedules have
been omitted since they are either not required, not applicable, or the
information has otherwise been included.

3. Exhibits

|            |                                                                                                                                                  
|----------- | -------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description                                                                                                                                      
|            |                                                                                                                                                  
|4.1         | Depositary
 Trust Agreement, incorporated by reference to Exhibit 4.1 filed with
 Registration Statement No. 333-156307 on July 21, 2009         
|            |                                                                                                                                                  
|4.2         | Form of
 Authorized Participant Agreement                                                                                                        
|            |                                                                                                                                                  
|4.3         | Global
 Certificate, incorporated by reference to Exhibit 4.3 filed with Registration
 Statement No. 333-156307 on July 21, 2009                 
|            |                                                                                                                                                  
|10.1        | Allocated
 Account Agreement, incorporated by reference to Exhibit 10.1 filed with
 Registration Statement No. 333-156307 on July 21, 2009       
|            |                                                                                                                                                  
|10.2        | Unallocated
 Account Agreement, incorporated by reference to Exhibit 10.2 filed with
 Registration Statement No. 333-156307 on July 21, 2009     
|            |                                                                                                                                                  
|10.3        | Depository
 Agreement, incorporated by reference to Exhibit 10.3 filed with Registration
 Statement No. 333-156307 on July 21, 2009              
|            |                                                                                                                                                  
|10.4        | Marketing
 Agent Agreement, incorporated by reference to Exhibit 10.4 filed with
 Registration Statement No 333-156307 on July 21, 2009          
|            |                                                                                                                                                  
|31.1        | Chief
 Executive Officers Certificate, pursuant to Section 302 of the
 Sarbanes-Oxley Act of 2002                                               
|            |                                                                                                                                                  
|31.2        | Chief
 Financial Officers Certificate, pursuant to Section 302 of the
 Sarbanes-Oxley Act of 2002                                               
|            |                                                                                                                                                  
|32.1        | Chief
 Executive Officers Certificate, pursuant to 18 U.S.C. Section 1350, as
 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|            |                                                                                                                                                  
|32.2        | Chief
 Financial Officers Certificate, pursuant to 18 U.S.C. Section 1350, as
 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

27

---



ETFS SILVER TRUST

FINANCIAL STATEMENTS AS OF DECEMBER 31, 2010

INDEX

|                                                                                                                                                 |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                                                 |  | Page
|                                                                                                                                                
|                                                                                                                                                 |  |     
|                                                                                                                                                 |  |     
|Report of
 Independent Registered Public Accounting Firm                                                                                         |  | F-2 
|                                                                                                                                                 |  |     
|Statements of
 Financial Condition at December 31, 2010 and December 31, 2009                                                                    |  | F-3 
|                                                                                                                                                 |  |     
|Statements of
 Operations for the year ended December 31, 2010 and for the period July 20,
 2009 through December 31, 2009                       |  | F-4 
|                                                                                                                                                 |  |     
|Statements of
 Cash Flows for the year ended December 31, 2010 and for the period July 20,
 2009 through December 31, 2009                       |  | F-5 
|                                                                                                                                                 |  |     
|Statements of
 Changes in Shareholders Deficit for the year ended December 31, 2010 and for
 the period July 20, 2009 through December 31, 2009 |  | F-6 
|                                                                                                                                                 |  |     
|Notes to the
 Financial Statements                                                                                                               |  | F-7 

F-1

---



REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Sponsor, Trustee and
the Shareholders of the ETFS Silver Trust:

We
have audited the accompanying statements of financial condition of ETFS Silver
Trust (the Trust) as of December 31, 2010 and 2009, and the related
statements of operations, changes in shareholders deficit, and cash flows
for the year ended December 31, 2010 and the period July 20, 2009 (date of inception)
to December 31, 2009. These financial statements are the responsibility of the
Trusts management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In
our opinion, such financial statements present fairly, in all material respects,
the financial position of the Trust at December 31, 2010 and 2009, and the
results of its operations and its cash flows for the year ended December 31,
2010 and the period July 20, 2009 (date of inception) to December 31, 2009, in
conformity with accounting principles generally accepted in the United States
of America.

We
have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the Trusts internal control
over financial reporting as of December 31, 2010, based on the criteria established
in Internal
Control  Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated March 14, 2011
expressed an unqualified opinion on the Trusts internal control over financial
reporting.

DELOITTE &
TOUCHE LLP

New York, New
York
March 14, 2011

F-2

---



ETFS
SILVER TRUST

Statements of Financial Condition

At December 31, 2010 and December 31, 2009

|                                                              |  |                    |              |                    |   |             |  
|------------------------------------------------------------- |  | ------------------ | ------------ | ------------------ | - | ----------- | -
|                                                              |  | December 31,
 2010 |              | December 31,
 2009 |  
|                                                              |  |                    |              |                    |  
|ASSETS                                                        |  |                    |              |                    |   |             |  
|Investment in silver (1)                                      |  | $                  | 329,357,195  |                    | $ | 139,223,967 |  
|Silver receivable                                             |  |                    | 6,099,633    |                    | $ |            |  
|                                                              |  |                    |              |                    |   |             |  
|Total assets                                                  |  | $                  | 335,456,828  |                    | $ | 139,223,967 |  
|                                                              |  |                    |              |                    |   |             |  
|                                                              |  |                    |              |                    |   |             |  
|LIABILITIES                                                   |  |                    |              |                    |   |             |  
|Accounts payable to
 Sponsor, net of waiver                   |  | $                  | 124,332      |                    | $ |            |  
|                                                              |  |                    |              |                    |   |             |  
|                                                              |  |                    |              |                    |   |             |  
|Total liabilities                                             |  | $                  | 124,332      |                    | $ |            |  
|                                                              |  |                    |              |                    |   |             |  
|                                                              |  |                    |              |                    |   |             |  
|Redeemable Shares:                                            |  |                    |              |                    |   |             |  
|Shares at redemption value
 to investors (2)                  |  |                    | 509,311,012  |                    |   | 156,066,265 |  
|                                                              |  |                    |              |                    |   |             |  
|Shareholders deficit                                         |  |                    | (173,978,516 | )                  |   | (16,842,298 | )
|                                                              |  |                    |              |                    |   |             |  
|Total liabilities,
 redeemable Shares & shareholders deficit |  | $                  | 335,456,828  |                    | $ | 139,223,967 |  
|                                                              |  |                    |              |                    |   |             |  

|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The market value of
 investment in silver as at December 31, 2010 is $503,335,711 and as at
 December 31, 2009, is $156,066,265.                                                           
|    |                                                                                                                                                                                            
|(2) | Authorized share capital
 is unlimited and no par value per Share. Shares issued and outstanding as at
     December 31, 2010 were 16,700,000 and as at December 31, 2009, were, 9,200,000.

See Notes to the Financial Statements.

F-3

---



ETFS SILVER TRUST

|                                                                                                    
|----------------------------------------------------------------------------------------------------
|Statements
 of Operations                                                                           
|                                                                                                    
|For the
 year ended December 31, 2010 and the period July 20, 2009* through December 31,
       2009
|                                                                                                    
|                                                                                                    

|                                                         |  |                                |           |                                                          |   |           |  
|-------------------------------------------------------- |  | ------------------------------ | --------- | -------------------------------------------------------- | - | --------- | -
|                                                         |  | Year
 Ended
 December 31, 2010 |           | For the periodJuly 20, 2009*
 through
 December 31, 2009 |  
|                                                         |  |                                |           |                                                          |  
|REVENUES                                                 |  |                                |           |                                                          |   |           |  
|                                                         |  |                                |           |                                                          |   |           |  
|Value of silver transferred
 to pay expenses             |  | $                              | 471,033   |                                                          | $ | 206,026   |  
|Cost of silver transferred
 to pay expenses              |  |                                | (389,690  | )                                                        |   | (178,527  | )
|                                                         |  |                                |           |                                                          |   |           |  
|Gain on silver transferred
 to pay expenses              |  |                                | 81,343    |                                                          |   | 27,499    |  
|                                                         |  |                                |           |                                                          |   |           |  
|Gain on silver distributed
 for the redemption of Shares |  |                                | 8,657,067 |                                                          |   | 3,842,918 |  
|                                                         |  |                                |           |                                                          |   |           |  
|                                                         |  |                                |           |                                                          |   |           |  
|                                                         |  |                                |           |                                                          |   |           |  
|Total gain on silver                                     |  | $                              | 8,738,410 |                                                          | $ | 3,870,417 |  
|                                                         |  |                                |           |                                                          |   |           |  
|                                                         |  |                                |           |                                                          |   |           |  
|EXPENSES                                                 |  |                                |           |                                                          |   |           |  
|                                                         |  |                                |           |                                                          |   |           |  
|Sponsors Fee, net of waiver
 (Note 2.7)                 |  |                                | 595,965   |                                                          |   | 206,026   |  
|                                                         |  |                                |           |                                                          |   |           |  
|                                                         |  |                                |           |                                                          |   |           |  
|Total expenses                                           |  |                                | 595,965   |                                                          |   | 206,026   |  
|                                                         |  |                                |           |                                                          |   |           |  
|                                                         |  |                                |           |                                                          |   |           |  
|Net gain from operations                                 |  | $                              | 8,142,445 |                                                          | $ | 3,664,391 |  
|                                                         |  |                                |           |                                                          |   |           |  
|                                                         |  |                                |           |                                                          |   |           |  
|Net gain
 per Share                                      |  | $                              | 0.83      |                                                          | $ | 0.48      |  
|                                                         |  |                                |           |                                                          |   |           |  
|Weighted
 average number of Shares                       |  |                                | 9,847,671 |                                                          |   | 7,648,171 |  

|                    
|--------------------
|                    
|* Date of
 Inception

See Notes to the Financial Statements.

F-4

---



ETFS SILVER TRUST

|                                                                                                    
|----------------------------------------------------------------------------------------------------
|Statements
 of Cash Flows                                                                           
|For the
 year ended December 31, 2010 and the period July 20, 2009* through December
       31, 2009
|                                                                                                    
|                                                                                                    

|                                                                                 |  |                                |             |                                                            |   |             | 
|-------------------------------------------------------------------------------- |  | ------------------------------ | ----------- | ---------------------------------------------------------- | - | ----------- | 
|                                                                                 |  | Year
 Ended
 December 31, 2010 |             | For the period
 July 20, 2009*
 through
 December 31, 2009 |  
|                                                                                 |  |                                |             |                                                            |  
|INCREASE /
 (DECREASE) IN CASH FROM OPERATIONS:                                  |  |                                |             |                                                            |   |             | 
|                                                                                 |  |                                |             |                                                            |   |             | 
|Cash proceeds received from
 transfer of silver                                  |  | $                              |            |                                                            | $ |            | 
|                                                                                 |  |                                |             |                                                            |   |             | 
|Cash expenses paid                                                               |  |                                |            |                                                            |   |            | 
|                                                                                 |  |                                |             |                                                            |   |             | 
|Increase in cash resulting
 from operations                                      |  |                                |            |                                                            |   |            | 
|                                                                                 |  |                                |             |                                                            |   |             | 
|Cash and cash equivalents
 at beginning of period                                |  |                                |            |                                                            |   |            | 
|                                                                                 |  |                                |             |                                                            |   |             | 
|Cash and cash equivalents
 at end of period                                      |  | $                              |            |                                                            | $ |            | 
|                                                                                 |  |                                |             |                                                            |   |             | 
|                                                                                 |  |                                |             |                                                            |   |             | 
|SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
 ACTIVITIES:                       |  |                                |             |                                                            |   |             | 
|                                                                                 |  |                                |             |                                                            |   |             | 
|Value of
      silver received for creation of Shares - net of silver receivable |  | $                              | 247,261,376 |                                                            | $ | 161,927,868 | 
|Value of
      silver distributed for redemption of Shares - at average cost     |  | $                              | 56,738,458  |                                                            | $ | 22,525,374  | 

|                                                                                               |  |                                |              |                                                            |   |              |  
|---------------------------------------------------------------------------------------------- |  | ------------------------------ | ------------ | ---------------------------------------------------------- | - | ------------ | -
|                                                                                               |  | Year
 Ended
 December 31, 2010 |              | For the period
 July 20, 2009*
 through
 December 31, 2009 |  
|                                                                                               |  |                                |              |                                                            |  
|RECONCILIATION OF NET GAIN/(LOSS) TO NET CASH
 PROVIDED BY OPERATING ACTIVITIES:               |  |                                |              |                                                            |   |              |  
|                                                                                              
|Net gain from
     operations                                                                  |  | $                              | 8,142,445    |                                                            | $ | 3,664,391    |  
|Adjustments
     to reconcile net gain to net cash provided by/(used in) operating activities: |  |                                |              |                                                            |   |              |  
|Increase in silver assets                                                                      |  |                                | (190,133,228 | )                                                          |   | (139,223,967 | )
|Adjustment of
     silver receivable to market value                                           |  |                                | 37,836       |                                                            |   |             |  
|Increase in receivable                                                                         |  |                                | (6,099,633   | )                                                          |   |             |  
|Increase in accounts payable to Sponsor                                                        |  |                                | 124,332      |                                                            |   |             |  
|Increase/(decrease) in redeemable Shares:                                                      |  |                                |              |                                                            |   |              |  
|Creations                                                                                      |  |                                | 253,323,773  |                                                            |   | 161,914,997  |  
|Redemptions                                                                                    |  |                                | (65,395,525  | )                                                          |   | (26,355,421  | )
|                                                                                               |  |                                |              |                                                            |   |              |  
|Net cash provided by operating activities                                                      |  | $                              |             |                                                            | $ |             |  
|                                                                                               |  |                                |              |                                                            |   |              |  
|                                                                                               |  |                                |              |                                                            |   |              |  
|Supplemental disclosure of non-cash item:                                                      |  |                                |              |                                                            |   |              |  
|Value of silver
     transferred to pay expenses                                               |  | $                              | 471,033      |                                                            | $ | 206,026      |  

|                    
|--------------------
|                    
|* Date of
 Inception

See Notes to the Financial Statements

F-5

---



ETFS SILVER TRUST

Statement of Changes in
Shareholders Deficit

|                                                                                                    
|----------------------------------------------------------------------------------------------------
|For the
 year ended December 31, 2010 and the period July 20, 2009* through December 31,
       2009

|                                                     |  |                                |              |                                                            |   |             |  
|---------------------------------------------------- |  | ------------------------------ | ------------ | ---------------------------------------------------------- | - | ----------- | -
|                                                     |  | Year
 Ended
 December 31, 2010 |              | For the period
 July 20, 2009*
 through
 December 31, 2009 |  
|                                                     |  |                                |              |                                                            |  
|                                                     |  |                                |              |                                                            |   |             |  
|Shareholders deficit -
 opening balance             |  | $                              | (16,842,298  | )                                                          | $ |            |  
|Net gain for the year                                |  |                                | 8,142,445    |                                                            |   | 3,664,391   |  
|Adjustment of redeemable
 Shares to redemption value |  |                                | (165,316,499 | )                                                          |   | (20,506,689 | )
|Adjustment of silver
 receivable to market value     |  |                                | 37,836       |                                                            |   |            |  
|                                                     |  |                                |              |                                                            |   |             |  
|Shareholders deficit - closing balance              |  | $                              | (173,978,516 | )                                                          | $ | (16,842,298 | )

|                    
|--------------------
|                    
|* Date of
 Inception

F-6

---



ETFS SILVER TRUST

Notes to the Financial Statements

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.   | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The ETFS Silver Trust (the Trust) is an investment trust formed on
 July 20, 2009, under New York law pursuant to a depositary trust agreement
 (the Trust Agreement) executed by ETF Securities USA LLC (the Sponsor)
 and the Bank of New York Mellon (the Trustee) at the time of the Trusts
 organization. The Trust holds silver bullion and issues ETFS Physical Silver
 Shares (the Shares) (in minimum blocks of 100,000 Shares, also referred to
 as Baskets) in exchange for deposits of silver and distributes silver in
 connection with redemption of Baskets. Shares represent units of fractional
 undivided beneficial interest in and ownership of the Trust which are issued
 by the Trust. The Sponsor is a Delaware limited liability company that is a
 wholly-owned subsidiary of ETF Securities Limited, a Jersey, Channel Islands
 based company. The Trust is governed by the Trust Agreement.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The investment objective of the Trust is for the Shares to reflect
 the performance of the price of silver, less the Trusts expenses and
 liabilities. The Trust is designed to provide an individual owner of
 beneficial interests in the Shares (a Shareholder) an opportunity to
 participate in the silver market through an investment in securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.   | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The preparation of financial statements in accordance with accounting
 principles generally accepted in the United States of America requires those
 responsible for preparing financial statements to make estimates and
 assumptions that affect the reported amounts and disclosures. Actual results
 could differ from those estimates. The following is a summary of significant
 accounting policies followed by the Trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.1. | Valuation
 of Silver                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | Silver is held by HSBC Bank USA, National Association (the
 Custodian), on behalf of the Trust and is valued, for financial statement
 purposes, at the lower of cost or market. The cost of silver is determined
 according to the average cost method and the market value is based on the
 London Fix used to determine the net asset value (NAV) of the Trust.
 Realized gains and losses on transfers of silver, or silver distributed for
 the redemption of Shares, are calculated on a trade date basis using average
 cost. The price for an ounce of silver is set by three market making members
 of the London Bullion Market Association at approximately 12:00 noon London
 time on each working day.                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | Once the value of silver has been determined, the NAV is computed by
 the Trustee by deducting all accrued fees and other liabilities of the Trust,
 including the remuneration due to the Sponsor (the Sponsors Fee), from the
 fair value of the silver and all other assets held by the Trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The table below summarizes the unrealized gains or losses on the
 Trusts silver holdings as of December 31, 2010 and December 31, 2009:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                                         |  |                    |             |                    |   |             | 
|---------------------------------------- |  | ------------------ | ----------- | ------------------ | - | ----------- | 
|                                         |  | December 31,
 2010 |             | December 31,
 2009 |  
|                                         |  |                    |             |                    |  
|                                         |  |                    |             |                    |  
|Investment in
 silver - average cost     |  | $                  | 329,357,195 |                    | $ | 139,223,967 | 
|Unrealized gain on
 investment in silver |  |                    | 173,978,516 |                    |   | 16,842,298  | 
|                                         |  |                    |             |                    |   |             | 
|Investment in
 silver - market value     |  | $                  | 503,335,711 |                    | $ | 156,066,265 | 

F-7

---



ETFS SILVER TRUST

Notes to the Financial Statements

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.   | Significant Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.1. | Valuation of
 Silver (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | The Trust recognizes the diminution in value of the investment in
 silver which arises from market declines on an interim basis. Increases in
 the value of the investment in silver through market price recoveries in
 later interim periods of the same fiscal year are recognized in the later
 interim period. Increases in value recognized on an interim basis may not
 exceed the previously recognized diminution in value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | 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, to cover expenses and
 liabilities and any losses that may have occurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.2. | Silver Receivable and Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | Silver receivable or payable represents the quantity of silver
 covered by contractually binding orders for the creation or redemption of
 Shares respectively, where the silver has not yet been transferred to or from
 the Trusts account. Generally, ownership of the silver is transferred within
 three days of trade date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | Silver receivable was $6,099,633 as of December 31, 2010 and nil as
 of December 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2.3. | Creations
 and Redemptions of Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | The Trust expects to create and redeem Shares from time to time, but
 only in one or more Baskets (a Basket equals a block of 100,000 Shares). The
 Trust issues Shares in Baskets to Authorized Participants on an ongoing
 basis. Individual investors cannot purchase or redeem Shares in direct
 transactions with the Trust. An Authorized Participant is a person who (1) is
 a registered broker-dealer or other securities market participant such as a
 bank or other financial institution which is not required to register as a
 broker-dealer to engage in securities transactions, (2) is a participant in
 The Depository Trust Company, (3) has entered into an Authorized Participant
 Agreement with the Trustee and the Sponsor and (4) has established an Authorized
 Participant Unallocated Account with the Custodian or another silver bullion
 clearing bank to effect transactions in silver bullion. An Authorized
 Participant Agreement is an agreement entered into by each Authorized
 Participant, the Sponsor and the Trustee which provides the procedures for
 the creation and redemption of Baskets and for the delivery of the silver
 required for such creations and redemptions. An Authorized Participant
 Unallocated Account is an unallocated silver account established with the
 Custodian by an Authorized Participant
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | The creation and redemption of Baskets is only made in exchange for
 the delivery to the Trust or the distribution by the Trust of the amount of
 silver represented by the Baskets being created or redeemed, the amount of
 which is based on the combined NAV of the number of Shares included in the
 Baskets being created or redeemed determined on the day the order to create
 or redeem Baskets is properly received.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | Authorized Participants may, on any business day, place an order with
 the Trustee to create or redeem one or more Baskets. The typical settlement
 period for Shares is three business days. In the event of a trade date at
 period end, where a settlement is pending, a respective account receivable
 and/or payable will be recorded. When silver is exchanged in settlement of
 redemption, it is considered a sale of silver for financial statement
 purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | The Shares of the Trust are classified as Redeemable Capital
Shares for financial statement purposes, since they are subject
to redemption at the option of Authorized Participants. Outstanding Shares
are reflected at redemption value, which represents the maximum obligation (based
on NAV per Share) with the difference from historical cost recorded as an
offsetting amount to retained earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-8

---



ETFS SILVER TRUST

Notes to the Financial Statements

|     |                                                                                                                                                                                          
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.   | Significant Accounting Policies (continued)                                                                                                                                              
|     |                                                                                                                                                                                          
|2.3. | Creations and
 Redemptions of Shares (continued)                                                                                                                                         
|     |                                                                                                                                                                                          
|     | Changes in the Shares for the year from January 1, 2010 through
 December 31, 2010 and the period from July 20, 2009 (the Date of Inception)
 through December 31, 2009 are as follows:

|                             |  |                                |            |                                                             |  |            |  
|---------------------------- |  | ------------------------------ | ---------- | ----------------------------------------------------------- |  | ---------- | -
|                             |  | Year
 Ended
 December 31, 2010 |            | For the period
 July 20, 2009*
 through
 December 21,
 2009 | 
|                             |  |                                |            |                                                             | 
|                             |  |                                |            |                                                             |  |            |  
|Number of Redeemable Shares: |  |                                |            |                                                             |  |            |  
|Opening balance              |  |                                | 9,200,000  |                                                             |  |           |  
|Creations                    |  |                                | 11,200,000 |                                                             |  | 10,700,000 |  
|Redemptions                  |  |                                | (3,700,000 | )                                                           |  | (1,500,000 | )
|                             |  |                                |            |                                                             |  |            |  
|Closing balance              |  |                                | 16,700,000 |                                                             |  | 9,200,000  |  

|                                              |  |                                |             |                                                             |   |             |  
|--------------------------------------------- |  | ------------------------------ | ----------- | ----------------------------------------------------------- | - | ----------- | -
|                                              |  | Year
 Ended
 December 31, 2010 |             | For the period
 July 20, 2009*
 through
 December 21,
 2009 |  
|                                              |  |                                |             |                                                             |  
|                                              |  |                                |             |                                                             |   |             |  
|Redeemable Shares:                            |  |                                |             |                                                             |   |             |  
|Opening Balance                               |  | $                              | 156,066,265 |                                                             |   |            |  
|Creations                                     |  |                                | 253,323,773 |                                                             |   | 161,914,997 |  
|Redemptions                                   |  |                                | (65,395,525 | )                                                           |   | (26,355,421 | )
|Adjustment to redemption value                |  |                                | 165,316,499 |                                                             |   | 20,506,689  |  
|                                              |  |                                |             |                                                             |   |             |  
|Closing balance                               |  | $                              | 509,311,012 |                                                             | $ | 156,066,265 |  
|                                              |  |                                |             |                                                             |   |             |  
|Redemption value
     per Share at period end |  | $                              | 30.50       |                                                             | $ | 16.96       |  

|                   
|-------------------
|                   
|* Date of Inception

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.4. | Revenue
 Recognition Policy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | The primary expense of the Trust is the Sponsors Fee, which is paid
 by the Trust through in-kind transfers of silver to the Sponsor. With respect
 to expenses not otherwise assumed by the Sponsor, the Trustee will, at the
 direction of the Sponsor or in its own discretion, sell the Trusts silver as
 necessary to pay these expenses. When selling silver to pay expenses, the
 Trustee will endeavor to sell the smallest amounts of silver needed to pay
 these expenses in order to minimize the Trusts holdings of assets other than
 silver.                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | Unless otherwise directed by the Sponsor, when selling silver the
 Trustee will endeavor to sell at the price established by the London Fix. The
 Trustee will place orders with dealers (which may include the Custodian)
 through which the Trustee expects to receive the most favorable price and
 execution of orders. The Custodian may be the purchaser of such silver only
 if the sale transaction is made at the next London PM Fix used by the
 Trustees to value the Trusts silver. Following the sale order, a gain or
 loss is recognized based on the difference between the selling price and the
 average cost of the silver sold. Neither the Trustee nor the Sponsor is
 liable for depreciation or loss incurred by reason of any sale.

F-9

---



ETFS SILVER TRUST

Notes to the Financial Statements

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.   | Significant Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.5. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The Trust is classified as a grantor trust for U.S. federal income
 tax purposes. As a result, the Trust itself will not be subject to U.S.
 federal income tax. Instead, the Trusts income and expenses will flow
 through to the Shareholders, and the Trustee will report the Trusts
 proceeds, income, deductions, gains, and losses to the Internal Revenue
 Service on that basis.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The Trust has adopted Financial Accounting Standards Board (FASB)
 Accounting Standards Codification (ASC) 740-10, Income Taxes (formerly FASB
 Interpretation Number 48, Accounting for Uncertainty in Income Taxes). FASB
 ASC 740-10 prescribes a recognition threshold and a measurement attribute for
 the financial statement recognition and measurement of a tax position taken
 or expected to be taken in a tax return. FASB ASC 740-10 also provides
 guidance on the related derecognition, classification, interest and
 penalties, accounting for interim periods, disclosure and transition of
 uncertain tax positions. The Sponsor has evaluated the effects of FASB ASC
 740-10 and has determined that it does not have a significant effect on the
 financial position or results of operations of the Trust.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2.6  | Investment in Silver                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     | The following represents the changes in ounces of silver and the
 respective values for the period from the Date of Inception through December
 31, 2009 and the year ended December 31, 2010:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                                                         |  |                                 |              |                                                               |   |              |  
|------------------------------------------------------------------------ |  | ------------------------------- | ------------ | ------------------------------------------------------------- | - | ------------ | -
|                                                                         |  | Year 
 Ended
 December 31, 2010 |              | For the
 period
 July 20, 2009*
 through
 December 31, 
 2009 |  
|                                                                         |  |                                 |              |                                                               |  
|Ounces of
    silver:                                                    |  |                                 |              |                                                               |   |              |  
|Opening balance                                                          |  |                                 | 9,185,771.9  |                                                               |   |             |  
|Creations (excluding silver receivable at December 31, 2010 - 199,139.2) |  |                                 | 10,964,004.5 |                                                               |   | 10,696,328.6 |  
|Redemptions                                                              |  |                                 | (3,693,621.5 | )                                                             |   | (1,498,198.4 | )
|Transfers of silver                                                      |  |                                 | (23,386.1    | )                                                             |   | (12,358.3    | )
|                                                                         |  |                                 |              |                                                               |   |              |  
|Closing balance                                                          |  |                                 | 16,432,768.8 |                                                               |   | 9,185,771.9  |  
|                                                                         |  |                                 |              |                                                               |   |              |  
|Investment
    in silver (lower of cost or market):                      |  |                                 |              |                                                               |   |              |  
|Opening balance                                                          |  | $                               | 139,223,967  |                                                               |   |             |  
|Creations (excluding silver receivable at December 31, 2010 $6,061,797)  |  |                                 | 247,261,376  |                                                               |   | 161,927,868  |  
|Redemptions                                                              |  |                                 | (56,738,458  | )                                                             |   | (22,525,374  | )
|Transfers of silver                                                      |  |                                 | (389,690     | )                                                             |   | (178,527     | )
|                                                                         |  |                                 |              |                                                               |   |              |  
|                                                                         |  |                                 |              |                                                               |   |              |  
|Closing balance                                                          |  | $                               | 329,357,195  |                                                               | $ | 139,223,967  |  

|                   
|-------------------
|                   
|* Date of Inception

F-10

---



ETFS SILVER TRUST

Notes to the Financial Statements

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.   | Significant Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.7. | Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | The Trust will transfer silver to the Sponsor to pay the Sponsors  Fee that will accrue
 daily at an annualized rate equal to 0.45% of the  adjusted daily NAV of the Trust, paid monthly in arrears. The Sponsor
 waived  a portion of its fee and reduced the Sponsors Fee to 0.30% for the first  year of the Trusts operations
 beginning on the Trusts inception date and  ending December 31, 2009. The Sponsor elected to continue to waive a
 portion  of its fee for the year ending December 31, 2010, so that the fee was 0.30%  of the adjusted daily NAV of the Trust
 during the year ending December 31,  2010. The Sponsor decided to waive a portion of the Sponsors fee to reduce the
 Sponsor’s fee to 0.30% until July  24, 2011. At this point, the Sponsor may renew its fee waiver, waive a larger or
 smaller portion  of its fee or not renew its fee waiver.                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | The Sponsor has agreed to assume administrative and marketing
 expenses incurred by the Trust, including the Trustees monthly fee and
 out-of-pocket expenses, the Custodians fee and the reimbursement of the
 Custodians expenses, exchange listing fees, United States Securities and
 Exchange Commission (the SEC) registration fees, printing and mailing
 costs, audit fees and certain legal expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2.8  | Subsequent
 Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | In accordance with the provisions set forth in FASB ASC 855-10,
 Subsequent Events, the Trusts management has evaluated the possibility of
 subsequent events existing in the Trusts financial statements through the
 issuance date. Management has determined that there are no material events
 that would require adjustment to or disclosure in the Trusts financial
 statements through this date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3.   | 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. The Trustee and the Custodian and their affiliates may
 from time to time act as Authorized Participants or purchase or sell silver
 or Shares for their own account, as agent for their customers and for
 accounts over which they exercise investment discretion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | For the year ended December 31, 2010, the Sponsors Fee, net of waiver (see note 2.7), was
                  $595,965. For                   the period ended December 31, 2009, the Sponsors Fee, net of waiver was
                  $206,026. As a result of the waiver, fees waived for the year ending
December 31, 2010 were $297,983 (2009: $103,013).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | At December 31, 2010, $124,332
         was payable to the Sponsor. At December 31, 2009, there were no fees
         payable to the Sponsor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.   | Concentration of Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | The Trusts sole business activity is the investment in silver, and
 substantially all the Trusts assets are holdings of silver which creates a
 concentration risk associated with fluctuations in the price of silver.
 Several factors could affect the price of silver, including: (i) global
 silver supply and demand, which is influenced by factors such as forward
 selling by silver producers, purchases made by silver producers to unwind
 silver hedge positions, central bank purchases and sales, and production and
 cost levels in major silver-producing countries; (ii) investors expectations
 with respect to the rate of inflation; (iii) currency exchange rates; (iv)
 interest rates; (v) investment and trading activities of hedge funds and
 commodity funds; and (vi) global or regional political, economic or financial
 events and situations. In addition, there is no assurance that silver will
 maintain its long-term value in terms of purchasing power in the future. In
 the event that the price of silver declines, the Sponsor expects the value of
 an investment in the Shares to decline proportionately. Each of these events
 could have a material effect on the Trusts financial position and results of
 operations.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5.   | Indemnification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | Under the Trusts organizational documents, each of the Trustee (and
 its directors, employees and agents) and the Sponsor (and its members,
 managers, directors, officers, employees, and affiliates) is indemnified by
 the Trust against any liability, cost or expense it incurs without gross
 negligence, bad faith or willful misconduct on its part and without reckless
 disregard on its part of its obligations and duties under the Trusts
 organizational documents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-11

---



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned in the capacities* indicated thereunto duly authorized.

|                      |                                                                 | 
|--------------------- | --------------------------------------------------------------- | 
|                      | ETF
 SECURITIES USA LLC                                         | 
|                      | Sponsor of
 the ETFS Silver Trust                               | 
|                      | (Registrant)                                                    | 
|                      |                                                                 | 
|                      | /s/ Graham
 Tuckwell                                            | 
|                      |                                                                 | 
|                      | Graham
 Tuckwell                                                | 
|                      | President
 and Chief Executive Officer                          | 
|                      | (Principal
 Executive Officer)                                  | 
|                      |                                                                 | 
|Date: March 15,
 2011 |                                                                 | 
|                      |                                                                 | 
|                      | /s/ Thomas
 Quigley                                             | 
|                      |                                                                 | 
|                      | Thomas
 Quigley                                                 | 
|                      | Chief
 Financial Officer and Treasurer                          | 
|                      | (Principal
 Financial Officer and Principal Accounting Officer)
|                      |                                                                
|Date: March 15,
 2011 |                                                                

* The Registrant is a trust and
the persons are signing in their capacities as officers of ETF Securities USA
LLC, the Sponsor of the Registrant.

---