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
CUSIP number: 85207K107
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.
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
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
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
Physical Bullion-related Questions
6. Is the Silver Trust backed by physical silver
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
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
- 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
For full details including the procedure to redeem units for
physical silver bullion, please see page 55 of the prospectus.
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
- 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
- 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 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:
- freely transferable;
- part of a class of securities that is owned by 100 or more
investors independent of the Silver Trust and of one another;
- 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
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, 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.