Frequently Asked Questions

Questions related to making an investment

1. How do I invest? Can I buy Trust units directly from Sprott Asset Management?

Units of the Platinum and Palladium Trust trade in US$ on the TSX and NYSE Arca exchanges and are purchased through a brokerage. Sprott doesn't sell the units directly. They can be purchased like any regular equity through full service and discount brokers, including in the U.S. through Sprott Global Resource Investments (sprottglobal.com) at 800.477.7853, and in Canada through Sprott Private Wealth (sprottwealth.com) at 866.299.9906. Both firms are affiliates of the Trust.

Ticker Symbol: PPT.U (TSX)/SPPP (NYSE Arca)

CUSIP number: 85207Q104

ISIN: CA85207Q1047

2. Is there a CDN$ version of the Platinum and Palladium Trust, or is it denominated in US$ on both the TSX and NYSE ARCA?

Units of the Platinum and Palladium Trust are denominated in US$ on both the TSX (PPT.U) and NYSE Arca (SPPP).

3. What are the fees and expenses for this product?

What is the Management Expense Ratio (MER)?

Unitholders may be subject to brokerage commissions or other fees associated with trading (buying and selling) the units. There are no other fees payable directly by the unitholder except those related to the redemption of units for physical bullion.

For many investors, the transaction costs related to owning the Trust are expected to be lower than the costs to purchase, store and insure physical bullion directly.

The Sprott Physical Platinum and Palladium Trust pays the Manager a monthly management fee equal to 1/12 of 0.50% of the value of net assets of the Trust, plus any applicable Canadian taxes. The Trust pays the applicable operating and administrative expenses including for storage of the bullion.

The Management Expense Ratio (MER) is reported in the Platinum and Palladium Trust's quarterly financial statements and management report of fund performance, which can be found in the Financial Reports section of the website.

4. Do units of the Platinum and Palladium Trust track exactly the spot price of the underlying metals? How are the units priced (explain premium/discount calculation)?

The units of the Platinum and Palladium Trust will generally trade at a premium or discount to the net asset value per unit (NAVPU), depending on relative supply and demand for the units in the secondary market (the stock exchanges).

The Platinum and Palladium Trust is a closed-end mutual fund trust and not an open-ended exchange traded fund (ETF). Unlike the Platinum and Palladium Trust, ETFs issue or redeem units daily, reflecting purchases or redemptions of units by investors. Such purchases and redemptions are effected by a financial intermediary, engaged by the ETF administrator to create a market for the ETF units. As such, the trading price of ETFs on the stock exchange generally do not deviate significantly from net asset value.

By contrast, the Platinum and Palladium Trust does not employ any financial intermediary, and does not intend to issue new units, or redeem existing units, on a day-to-day basis. As such, the units of the Platinum and Palladium Trust will generally trade at a premium or discount to the net asset value per unit (NAVPU), depending on relative supply and demand for the units in the secondary market. The NAVPU and the premium-discount calculation (the % difference between the price of the Platinum and Palladium Trust units on the stock exchange and the NAVPU) are recorded each trading day on the Net Asset Value section of the website. Historical data charts showing the premium/discount frequency distribution are found on the same webpage.

The Trust believes that it maintains a strong position by offering investors close to full exposure to the price of physical platinum and palladium bullion with the ability to redeem units for physical platinum and palladium bullion, the liquidity of an ETF, and a potential tax advantage for U.S. investors, relative to holding platinum and palladium directly, as compared to a platinum and palladium ETF (see 'Material Tax Considerations-Material U.S. Federal Income Tax Considerations-U.S. Federal Income Tax Considerations of U.S. Holders' in the Prospectus).

5. Is the Platinum and Palladium Trust backed by physical bullion?

With the exception of cash held by the Trust to pay expenses and potential redemptions, the Trust exclusively invests in physical bullion. At any given time, the Manager intends to hold 97% of the total net assets of the Trust in physical bullion, in Good Delivery plate and/or ingot form for the platinum and palladium bullion. The Trusts do not invest in platinum or palladium certificates, futures or other financial instruments that represent platinum or palladium or that may be exchanged for platinum or palladium.

 

Physical Bullion-related Questions

6. How much platinum and palladium does the Trust hold?

The total ounces of platinum and palladium held within the Platinum and Palladium Trust and the number of units outstanding can be found on the Net Asset Value section of the website.

7. Who stores the platinum and palladium bullion?

The Trust's physical platinum bullion is unencumbered and stored fully allocated in a secure third party storage location in Canada. The physical palladium bullion is fully allocated and segregated in a secure third party storage location in London and Zurich. The physical bullion is subject to a physical count periodically on a spot inspection basis and subject to audit procedures by the Trusts' external auditors on at least an annual basis. Please see 'Custody of the Trust's Assets' in the Prospectus.

8. What is the process to take physical delivery of platinum and palladium bullion?

Unitholders will have the ability, on a monthly basis to redeem their units for physical bullion, provided the redemption request is for a minimum of 25,000 units, for a redemption price equal to 100% of the NAV of the redeemed units, less redemption and delivery expenses, including:

  • the handling of the notice of redemption
  • the delivery of the physical bullion for units that are being redeemed (estimated delivery fee per ounce of physical platinum and palladium bullion was $0.50 and $5.00, respectively, at the time of the Prospectus, though these fees are subject to change in accordance with the Storage Agreements)
  • and the applicable storage in-and-out fees. The in-and-out fee per plate or ingot of physical platinum bullion was $4.00 and the in-and-out fee per kilogram of physical palladium bullion was $0.71 (with a minimum of $40.00), at the time of the Prospectus.

For full details including the procedure to redeem units for physical bullion, please see 'Redemption of Units' in the Prospectus.

Tax-related Questions
Please refer to the Prospectus for more information on material tax considerations. The tax information in the Prospectus is a summary of a general nature only and is not intended to constitute legal or tax advice to any prospective purchaser of units. Prospective purchasers of units should consult with their own tax advisors about tax consequences of an investment in units based on their particular circumstances.

9. Are the Platinum and Palladium Trust units eligible for registered plans in Canada (e.g. RRSPs, TFSAs, etc.)?

Provided that either (i) the Trust qualifies as a ''mutual fund trust'' within the meaning of the Tax Act or (ii) the units are listed on a ''designated stock exchange'' for purposes of the Tax Act, the units, if issued on the date hereof, will be qualified investments under the Tax Act and the regulations thereunder for registered retirement savings plans, which we will refer to as RRSPs, registered retirement income funds, which we will refer to as RRIFs, deferred profit sharing plans, registered disability savings plans, registered education savings plans and tax-free savings accounts, which we will refer to as TFSAs, and collectively, plan trusts. Please see 'Material Tax Considerations - Taxation of Registered Plans' in the Prospectus.

10. Can I buy these units in my IRA/Roth IRA?

The Platinum and Palladium Trust believes a purchase of its units will qualify as an eligible investment for individual retirement accounts although there can be no assurance in that regard.

Section 406 of The U.S. Employee Retirement Income Security Act (ERISA) of 1974 as amended and Section 4975 of the U.S. Internal Revenue Code (Code) of 1986 as amended, prohibit certain transactions, unless a statutory or administrative exemption is applicable, involving:

  • the assets of an ERISA Plan
  • as well as those plans and accounts that are not subject to ERISA but which are subject to Section 4975 of the Code, such as:
    • individual retirement accounts (IRAs); and
    • entities that are deemed to hold the assets of such plans and accounts ("Plans") and certain persons (to whom we will refer as parties in interest or disqualified persons) having certain relationships to such Plans. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code.

The Trust anticipates that it qualifies for the exemption under the Plan Asset Regulations for ''publicly offered securities,'' although there can be no assurance in that regard.

In order to be considered a ''publicly offered security,'' the units must be:

  1. freely transferable;
  2. part of a class of securities that is owned by 100 or more investors independent of the Trust and of one another; and
  3. either

I. part of a class of securities registered under Section 12(b) or 12(g) of the Exchange Act; or

II. sold to the Plan as part of an offering of securities to the public pursuant to an effective registration statement under the Unites States Securities Act of 1933, as amended and the class of securities of which the securities are a part is registered under the Exchange Act within 120 days (or such later time as may be allowed by the Securities and Exchange Commission) after the end of the Gold Trust's fiscal year during which the offering of such securities to the public occurred.

For further details, please see 'U.S. ERISA considerations' in the Prospectus.

11. What are the tax implications of investing in the Platinum and Palladium Trust?

For U.S. taxable holders of Platinum and Palladium Trust units, any gains realized on the sale of units by an investor that is an individual, trust or estate, including such investors that own units through partnerships and other pass-through entities for U.S. federal income tax purposes, may be taxable as long-term capital gains (at a maximum rate of 20% compared to a long-term capital gains tax rate of 28% applied against most precious metals ETFs and physical coins), provided that such U.S. investor has held the units for more than one year at the time of the sale and such U.S. investor has made a timely and valid Qualified Electing Fund election with respect to the units on the IRS Form 8621. Within 45 days from the end of each taxable year of the Trust, the Trust will provide a Passive Foreign Investment Company (PFIC) Annual Information Statement on its website providing all information necessary to enable unitholders or beneficial owners of units, as applicable, to elect to treat the Trust as a QEF. Please visit the Tax Information FAQ.

For detail on U.S. and Canadian federal income tax considerations, please see "Material Tax Considerations' in the Prospectus.

For U.S. non-corporate investors who hold units for one year and timely file a QEF form, gains realized on the sale of the Trusts' units are currently taxed at a long-term capital gains rate with a maximum of 20%, versus a maximum of 28% applied against most precious metals ETFs and physical coins.

12. How do I get physical certificates evidencing ownership of my units?

In the United States, there are two methods:

One, you can direct your broker to request a physical certificate from the Depository Trust Company (DTC). This may be a more expensive option as DTC generally charges ~$500 per certificate.

Two, you can direct your broker to initiate a DWAC certificate request (only a broker can initiate this) with the Trust's co-Transfer Agent, R&T Co (www.rtco.com). See their DWAC transfer form here: http://www.rtco.com/forms/DWAC%20Certificate%20Request%20Form.pdf

Check with your brokerage if they offer this service and at what cost.

In Canada, you can direct your broker to withdraw units from CDS Clearing and Depository Services Inc. When the broker puts in the withdrawal, the transfer agent in Canada, Equity Financial Trust, will issue physical certificates to the broker.

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How To Buy

The units of the Trusts can be purchased like any regular exchange-traded security through full service and discount brokers, including Sprott Global Resource Investments in the U.S. and Sprott Private Wealth in Canada. Both firms are affiliates of the Trusts.

CUSIP: 85207Q104
ISIN: CA85207Q1047

You are now leaving Sprottphysicalbullion.com and entering a linked website. Sprott has partnered with ALPS in offering the Sprott Gold Miners ETF. For fact sheets, marketing materials, prospectuses, performance, expense information and other details about the ETF, you will be directed to the ALPS/Sprott website at www.SprottETFs.com

An investor should consider investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information. For more information about the ETF or to obtain a prospectus, call 1.855.215.1425. Read the prospectus carefully before investing. The ETF is distributed by ALPS Distributors, Inc. ALPS Advisors, Inc. is the investment adviser to the ETF and Sprott Asset Management LP is the investment sub-adviser. Sprott is not affiliated with ALPS.

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