Sprott Physical Silver Trust FAQs

Questions related to making an investment

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

Units of the Silver Trust trade in US$ on the TSX and NYSE Arca exchanges and are purchased through a brokerage. Sprott doesn't sell the Units directly.
Ticker Symbol: PHS.U (TSX) / PSLV (NYSE Arca)
CUSIP number: 85207K107
ISIN: CA85207K1075

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

No. Units of the Silver Trust are denominated in US$ on both the TSX (PHS.U) and NYSE Arca (PSLV). Silver bullion is tradable internationally and its price is generally quoted in U.S. dollars.

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 silver bullion.

The Silver Trust is responsible for all other fees and expenses including the management fee. The Silver Trust pays the Manager a monthly management fee equal to 1⁄12 of 0.45% of the value of net assets of the Silver Trust (determined in accordance with the trust agreement), plus any applicable Canadian taxes. The management fee is calculated and accrued daily and payable monthly in arrears on the last day of each month.

The MER is reported in the Silver Trust's quarterly Report to Unit Holders which can be found on the Financial Reports section of the website.

4. What is the difference between the Sprott Physical Silver Trust and the Sprott Silver Bullion Fund?

The Silver Trust is a closed-end mutual fund trust. Units of the Silver Trust trade in US$ on the TSX and NYSE Arca exchanges. The Sprott Silver Bullion Fund is an open-ended mutual fund available to Canadian investors and purchased in Cdn$. For a comparison of all precious metals solutions available to Canadian investors, please view our brochure.

5. Do units of the Silver Trust track exactly the spot price of silver? How are the units priced (explain premium/discount calculation)?

The units of the Silver 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 Silver Trust is a closed-end mutual fund trust and not an open-ended exchange traded fund (ETF). Unlike the Silver Trust, silver 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 Silver 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 Silver 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 Silver Trust units on the stock exchange and the NAVPU) are recorded on the website 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.

Physical Bullion-related Questions

6. Is the Silver Trust backed by physical silver bullion?

Except with respect to cash held by the Silver Trust to pay expenses and anticipated redemptions, the Silver Trust expects to own only London Good Delivery physical silver bullion. The Manager intends to invest and hold approximately 97% of the total net assets of the Silver Trust in physical silver bullion in London Good Delivery bar form. The Silver Trust does not invest in silver certificates or other financial instruments that represent silver or that may be exchanged for silver.

7. How much silver does the Trust hold?

The total ounces of silver held within the Silver Trust and the number of units outstanding can be found on the Net Asset Value section of the website.

8. Who stores the silver bullion?

The Silver Trust's physical silver bullion is unencumbered and stored fully allocated in a secure third party storage location in Canada. The physical silver bullion is subject to periodic inspection and audits. Please see "Custody of the Trust's Assets" on page 51 of the Prospectus.

9. What is the process to take physical delivery of silver?

Unitholders will have the ability, on a monthly basis, to redeem their units for physical silver bullion for a redemption price equal to 100% of the net asset value (see current NAV of units here) of the redeemed units, less expenses, including:

  • the handling of the notice of redemption;
  • the delivery of the physical silver bullion for units that are being redeemed (estimated at $0.50 an oz at the time of the prospectus); and
  • the applicable silver storage in-and-out fees (~$5 per bar at the time of the prospectus).

Redemption requests for silver must be for amounts that are at least equivalent in value to 10 London Good Delivery bars plus the abovementioned applicable expenses. A ''London Good Delivery bar'' contains between 750 and 1,100 troy ounces of silver. 

The redemption can also be for an integral multiple of one bar in excess of 10, e.g. 11 or 12 etc. However, any fractional amount of redemption proceeds in excess of 10 London Good Delivery bars or an integral multiple of one bar in excess thereof will be paid in cash at a rate equal to 100% of the NAV of such excess amount. 

For full details including the procedure to redeem units for physical silver bullion, please see page 55 of 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.

10. Are the Units eligible for registered plans in Canada (e.g. RRSPs, TFSAs, etc.)?

Provided that the Silver Trust qualifies and continues at all times to qualify as a ''mutual fund trust'' within the meaning of the Income Tax Act, the units will be qualified investments under the Tax Act and the regulations thereunder for trusts governed by registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), registered education savings plans (RESPs), deferred profit sharing plans, registered disability savings plans (RDSPs) and tax-free savings accounts (TFSAs), in the opinion of Heenan Blaikie LLP, counsel for the Silver Trust and Davies Ward Phillips & Vineberg LLP, counsel to the underwriters of the Silver Trust's initial public offering. For further details, please see 'Eligibility Under The Tax Act For Investment By Canadian Exempt Plans' on page 114 of the Prospectus.

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

The Silver 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 Silver Trust anticipates that it will qualify 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 Silver Trust and of one another; and
  3. either
    • part of a class of securities registered under Section 12(b) or 12(g) of the Exchange Act; or
    • 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 Silver Trust's fiscal year during which the offering of such securities to the public occurred.

For further details, please see 'U.S. ERISA Considerations' on page 107 of the prospectus.

12. What are the tax implications of investing in the Silver Trust?

For U.S. taxable holders of Silver 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% under current law, compared to a long-term capital gains tax rate of 28% applicable to the disposition of physical silver bullion and other ''collectibles'' held for more than one year), 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 (QEF) 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: Please visit the Tax Information FAQ.

For details on U.S. and Canadian federal income tax considerations, please see page 95 of the Prospectus.

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

In the United States, shareholders can contact the Computershare call center at 800-446-2617 or go to computershare.com and access a transfer form by creating an account.

In Canada, shareholders can direct their 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: 85207K107
ISIN: CA85207K1075

You are now leaving Sprottphysicalbullion.com and entering a linked website. Sprott has partnered with ALPS in offering the Sprott Gold Miners ETF and the Sprott Junior Gold Miners ETF. For fact sheets, marketing materials, prospectuses, performance, expense information and other details about the ETFs, 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 prospectuses contains this and other important information. For more information about the ETFs or to obtain a prospectus, call 1.855.215.1425. Read the prospectus carefully before investing. The ETFs are distributed by ALPS Portfolio Solutions Distributors, Inc. ALPS Advisors, Inc. is the investment adviser to the ETF. Sprott is not affiliated with ALPS.

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