Exhibit 99.6



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Table of Contents

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|Management Report on Fund Performance |  | 2
|------------------------------------- |  | -
|Audited Financial Statements          |  | 6

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1

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|Sprott Physical Silver Trust |  | December 31, 2013
|---------------------------- |  | -----------------

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Management Report of Fund Performance*

Investment Objective and Strategies

Sprott
Physical Silver Trust (the "Trust") is a closed-end mutual fund trust organized under the laws of the Province of Ontario, Canada, created to invest and hold substantially all of its
assets in physical silver bullion. The Trust seeks to provide a secure, convenient and exchange-traded investment alternative for investors interested in holding physical silver bullion without the
inconvenience that is typical of a direct investment in physical silver bullion. The Trust intends to achieve its objective by investing primarily in long-term holdings of unencumbered, fully
allocated, physical silver bullion and does not speculate with regard to short-term changes in silver prices.

The
units of the Trust are listed on the New York Stock Exchange ("NYSE") Arca and the Toronto Stock Exchange ("TSX") under the symbols "PSLV" and "PHS.U", respectively.

Risks

The
risks of investing in the Trust are detailed in the Trust's annual information form dated March 27, 2013. There have been no material changes to the Trust since inception that have affected
the overall level of risk. The principal risks associated with investing in the Trust are the price of silver, the net asset value and/or the market price of the units, the purchase, transport,
insurance and storage of physical silver bullion, liabilities of the Trust, and redemption of units.

Results of Operations

For
the year ended December 31, 2013, total unrealized losses on physical silver bullion amounted to $536.1 million compared to unrealized gains of $54.7 million during the same
period in 2012.

During
the year ended December 31, 2013, the Trust did not issue any units. The Trust redeemed 1,917 units for cash at a total cost of $15,237 during the period.

The
value of the net assets of the Trust as of December 31, 2013 was $967.6 million or $7.60 per unit, compared to $1,510.9 million or $11.86 per unit per unit as at
December 31, 2012, the Trust's most recent fiscal year end. The Trust held 49,287,870 ounces of physical silver bullion as of December 31, 2013. As at December 31, 2013,
the spot price of silver was $19.47 an ounce compared to a price of $30.34 an ounce as at December 31, 2012. The Trust returned -36.0% compared to the return on spot silver of -35.9%.

The
Trust's net asset value per unit on December 31, 2013 was $7.60. The units closed at $7.57 on the NYSE Arca and $7.58 on the TSX on December 31, 2013 compared to closing prices of
$12.04 on the NYSE Arca and $12.07 on the TSX on December 31, 2012. The units are denominated in U.S. dollars on both exchanges. During the year ended December 31, 2013, the
Trust's units traded on the NYSE Arca at an average premium to net asset value of approximately 1.4%.

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The annual management report of fund performance is an analysis and explanation that is designed to complement and supplement an investment fund's financial
statements. This report contains financial highlights but does not contain the complete annual financial statements of the investment fund. A copy of the annual financial statements has been included
separately within the Report to Unitholders. You can also get a copy of the annual financial statements at your request, and at no cost, by calling 1-866-299-9906, by visiting our website at
www.sprottphysicalsilvertrust.com or SEDAR at www.sedar.com or by writing to us at: Sprott Asset Management LP, Royal Bank Plaza, South Tower, 200 Bay Street, Suite 2700,
P.O. Box 27, Toronto, Ontario M5J 2J1.


2

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OPERATING
EXPENSES

The Trust pays its own operating expenses, which include, but are not limited to, audit, legal, trustee fees, unitholder reporting expenses, general and administrative fees,
filing and listing fees payable to applicable securities regulatory authorities and stock exchanges, storage fees for the physical silver bullion, costs incurred in connection with the Trust's
continuous disclosure public filing requirements and investor relations and any expenses associated with the implementation and on-going operation of the Independent Review Committee of the Trust.
Operating expenses for the year ended December 31, 2013 amounted to $1,913,509 (not including applicable Canadian taxes) compared to $1,668,093 for the same period in 2012. The increase
in expenses during the year was primarily due to an increase in the cost of storing the physical silver bullion, as well as higher administrative expenses related to the allocation of expenses across
the funds administered by the Manager. Operating expenses for the period from January 1, 2013 to December 31, 2013 amounted to 0.16% of the average net assets during the period on an
annualized basis, compared to 0.14% for the same period in 2012.

Related Party Transactions

MANAGEMENT
FEES

The Trust pays the Manager, Sprott Asset Management LP, a monthly management fee equal to 1/12 of 0.45% of the value of the net assets of the 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. For the year ended December 31, 2013, the Trust incurred management fees of $5,345,220 (not including applicable Canadian taxes) compared to $5,271,462 for the same period
in 2012.

3

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|Sprott Physical Silver Trust |  | December 31, 2013
|---------------------------- |  | -----------------

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Financial Highlights

The
following tables show selected key financial information about the Trust and are intended to help you understand the Trust's financial performance for the years shown.

Net
assets per unit1

|                                          |  | December 31, 2013
$ |   | December 31, 2012
$ |   | December 31, 2011
$ |   | October 28, 2010 
December 31, 2010
$ |   | 
|----------------------------------------- |  | ------------------- | - | ------------------- | - | ------------------- | - | -------------------------------------- | - | 
|                                         
|Net assets per Unit, beginning of period  |  | 11.86               |   | 10.81               |   | 12.09               |   | 10.00                                  |   | 
|                                         
|Increase (decrease) from operations2:     |  |                     |   |                     |   |                     |   |                                        |   | 
|Total revenue                             |  |                    |   |                    |   |                    |   |                                       |   | 
|Total expenses                            |  | (0.06               | ) | (0.08               | ) | (0.09               | ) | (0.01                                  | ) | 
|Realized gains (losses) for the period    |  |                    |   |                    |   |                    |   |                                       |   | 
|Unrealized gains (losses) for the period  |  | (4.21               | ) | 0.57                |   | (1.19               | ) | 2.60                                   |   | 
|                                         
|Total increase (decrease) from operations |  | (4.27               | ) | 0.49                |   | (1.28               | ) | 2.59                                   |   | 
|                                         
|Net assets per Unit, end of period        |  | 7.60                |   | 11.86               |   | 10.81               |   | 12.09                                  |   | 
|                                         

Ratios and Supplemental Data

|                                 |  | December 31, 2013 |  | December 31, 2012 |  | December 31, 2011 |  | December 31, 2010 | 
|-------------------------------- |  | ----------------- |  | ----------------- |  | ----------------- |  | ----------------- | 
|                                
|Total net asset value (000's)1   |  | $967,551          |  | $1,510,942        |  | $621,428          |  | $695,232          | 
|Number of Units outstanding1     |  | 127,365,280       |  | 127,367,197       |  | 57,497,090        |  | 57,500,000        | 
|Management expense ratio2        |  | 0.65%             |  | 0.65%             |  | 0.66%             |  | 0.62%             | 
|Trading expense ratio3           |  | nil               |  | nil               |  | nil               |  | nil               | 
|Portfolio turnover rate4         |  | nil               |  | nil               |  | nil               |  | nil               | 
|Net asset value per Unit         |  | $7.60             |  | $11.86            |  | $10.81            |  | $12.09            | 
|Closing market price  NYSE Arca |  | $7.57             |  | $12.04            |  | $13.43            |  | $14.07            | 
|Closing market price  TSX       |  | $7.58             |  | $12.07            |  | $13.55            |  | $14.07            | 
|                                

4

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|Sprott Physical Silver Trust |  | December 31, 2013
|---------------------------- |  | -----------------

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Past Performance

The
indicated rates of return are the historical total returns including changes in unit values and assume reinvestment of all distributions in additional units of the Trust. These returns do not take
into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that may reduce returns. Please note that past performance is not indicative of future
performance. All rates of returns are calculated based on the Net Asset Value of the units of the Trust.

Year-by-Year Returns

The
bar chart below indicates the performance of the Trust units for each of the periods shown, and illustrates how the Trust's performance has changed from period to period. The chart shows, in
percentage terms, how much an investment made on the first day of each period would have grown or decreased by the last day of each period.

GRAPHIC

Summary of Investment Portfolio

As of December 31, 2013

|                          |  | Ounces     |  | Fair Value
per ounce
$ |  | Average
Cost
$ |  | Fair
Value
$ |  | % of
Net Asset
Value
% | 
|------------------------- |  | ---------- |  | ---------------------- |  | -------------- |  | ------------ |  | ---------------------- | 
|                         
|Physical silver bullion   |  | 49,287,870 |  | 19.47                  |  | 1,361,835,584  |  | 959,551,049  |  | 99.2                   | 
|Cash and Cash Equivalents |  |            |  |                        |  |                |  | 7,960,067    |  | 0.8                    | 
|Other Net Assets          |  |            |  |                        |  |                |  | 39,607       |  | 0.0                    | 
|                         
|Total Net Asset Value     |  |            |  |                        |  |                |  | 967,550,723  |  | 100.0                  | 
|                         

This
summary of investment portfolio may change due to the ongoing portfolio transactions of the Trust.

5

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Sprott Physical Silver Trust

Audited financial statements

December 31, 2013

6

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GRAPHIC

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL INFORMATION

Sprott
Asset Management LP, the "Manager" of the Sprott Physical Silver Trust (the "Trust") is responsible for the integrity, consistency, objectivity and reliability of the Financial
Statements of the Trust. International Financial Reporting Standards have been applied and management has exercised its judgment and made best estimates where appropriate.

The
Manager's internal controls and supporting procedures maintained provide reasonable assurance that financial records are complete and accurate. These supporting procedures include the oversight of
RBC Investor Services, the Trust's valuation agent.

Management
has assessed the effectiveness of the internal controls over financial reporting as at December 31, 2013 using the framework found in Internal
Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, management has
concluded that as at December 31, 2013 the Manager's internal controls over financial reporting were effective.

Ernst &
Young LLP, the independent auditors appointed by the Manager of the Trust, have audited the effectiveness of the Trust's internal control over financial reporting as at
December 31, 2013 in addition to auditing the Trust's Financial Statements as of the same date. Their reports, which expressed an unqualified opinion, can be found on pages 2 to 3
of the Financial Statements. Ernst & Young have full and free access to, and meet periodically with, the Manager of the Trust to discuss their audit and matters arising there from, such as,
comments they may have on the fairness of financial reporting and the adequacy of internal controls.

GRAPHIC

Steven
Rostowsky
Chief Financial Officer
March 31, 2014

7

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INDEPENDENT AUDITORS' REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

To
Sprott Asset Management LP (the "Manager"), the Trustee and the Unitholders of the Sprott Physical Silver Trust

We
have audited the accompanying financial statements of Sprott Physical Silver Trust, which comprise the statements of financial position as at December 31, 2013 and 2012, and the statements
of comprehensive income, changes in equity and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management's responsibility for the financial statements

Management
is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.

Auditors' responsibility

Our
responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.

An
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the
entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.

We
believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In
our opinion, the financial statements present fairly, in all material respects, the financial position of Sprott Physical Silver Trust as at December 31, 2013 and 2012, and its financial
performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Other matter

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Sprott Physical Silver Trust's internal control over financial reporting
as at December 31, 2013, based on the criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (1992 framework) and our report dated March 31, 2014 expressed an unqualified opinion on Sprott Physical Silver Trust's internal control over financial reporting.

|                               |  | GRAPHIC                                          
|------------------------------ |  | -------------------------------------------------
|March 31, 2014
Toronto, Canada |  | Chartered Accountants
Licensed Public Accountants

8

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
Sprott Asset Management LP (the "Manager"), the Trustee and the Unitholders of the Sprott Physical Silver Trust

We
have audited the Sprott Physical Silver Trust's (the "Trust") internal control over financial reporting as of December 31, 2013, based on criteria established in Internal
Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (the COSO criteria). The
Manager 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 Responsibility for Financial Information. 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 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 International Financial Reporting Standards, 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 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 inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Manager of the Sprott Physical Silver Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the
COSO criteria.

We
also have audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the statements of
financial position as of December 31, 2013 and 2012, and the statements of comprehensive income, changes in equity and cash flows for the years then ended of the Sprott Physical Silver Trust
and our report dated March 31, 2014 expressed an unqualified opinion thereon.

|                                 |  | GRAPHIC                                          
|-------------------------------- |  | -------------------------------------------------
|March 31, 2014,
Toronto, Canada. |  | Chartered Accountants
Licensed Public Accountants

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Sprott Physical Silver Trust

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Statements of comprehensive income

|                                                               |  | For the year ended
December 31, 2013 |   | For the year ended
December 31, 2012 | 
|-------------------------------------------------------------- |  | ------------------------------------ | - | ------------------------------------ | 
|                                                              
|                                                               |  | $                                    |   | $                                    | 
|                                                               |  |                                      |   |                                      | 
|Income                                                         |  |                                      |   |                                      | 
|Unrealized gains (losses) on silver bullion                    |  | (536,089,139                         | ) | 54,651,806                           | 
|Sales tax refund                                               |  | 278,028                              |   |                                     | 
|                                                              
|                                                               |  | (535,811,111                         | ) | 54,651,806                           | 
|                                                              
|Expenses                                                       |  |                                      |   |                                      | 
|Management fees(note 11)                                       |  | 5,345,220                            |   | 5,271,462                            | 
|Bullion storage fees                                           |  | 1,332,713                            |   | 966,215                              | 
|Sales tax                                                      |  | 415,892                              |   | 726,305                              | 
|Listing and regulatory filing fees                             |  | 164,500                              |   | 163,753                              | 
|Unitholder reporting costs                                     |  | 135,619                              |   | 117,898                              | 
|Administrative fees                                            |  | 102,770                              |   | 25,119                               | 
|Audit fees                                                     |  | 93,000                               |   | 147,620                              | 
|Independent Review Committee fees                              |  | 33,532                               |   | 24,123                               | 
|Legal fees                                                     |  | 31,971                               |   | 211,230                              | 
|Net foreign exchange losses                                    |  | 13,198                               |   | 2,589                                | 
|Trustee fees                                                   |  | 5,000                                |   | 4,495                                | 
|Custodial fees                                                 |  | 1,206                                |   |                                     | 
|Other expenses                                                 |  |                                     |   | 5,050                                | 
|                                                              
|                                                               |  | 7,674,621                            |   | 7,665,861                            | 
|                                                              
|Realized gains on investments                                  |  |                                      |   |                                      | 
|Net realized gains on investments                              |  |                                     |   |                                     | 
|                                                              
|Net income (loss) and comprehensive income (loss) for the year |  | (543,485,732                         | ) | 46,985,945                           | 
|                                                              
|Increase (decrease) in total equity per Unit(note 9)           |  | (4.27                                | ) | 0.49                                 | 
|                                                              

The accompanying notes are an integral part of these financial statements.

On behalf of the Manager, Sprott Asset Management LP,
by its General Partner, Sprott Asset Management GP Inc.:

|GRAPHIC     |  | GRAPHIC         
|----------- |  | ----------------
|John Wilson |  | Steven Rostowsky
|DIRECTOR    |  | DIRECTOR        

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Sprott Physical Silver Trust

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Statements of financial position

|                                            |  | As at December 31,
2013 |   | As at December 31,
2012 |   | 
|------------------------------------------- |  | ----------------------- | - | ----------------------- | - | 
|                                           
|                                            |  | $                       |   | $                       |   | 
|                                            |  |                         |   |                         |   | 
|Assets                                      |  |                         |   |                         |   | 
|Cash(note 6)                                |  | 7,960,067               |   | 15,349,483              |   | 
|Silver bullion                              |  | 959,551,049             |   | 1,495,640,188           |   | 
|Accounts receivable                         |  | 39,607                  |   |                        |   | 
|                                           
|Total assets                                |  | 967,550,723             |   | 1,510,989,671           |   | 
|                                           
|Liabilities                                 |  |                         |   |                         |   | 
|Accounts payable                            |  |                        |   | 47,705                  |   | 
|                                           
|Total liabilities                           |  |                        |   | 47,705                  |   | 
|                                           
|Equity                                      |  |                         |   |                         |   | 
|Unitholders' capital                        |  | 1,453,477,140           |   | 1,453,496,310           |   | 
|Unit premium and reserves                   |  | 56,470                  |   | 55,632                  |   | 
|Retained earnings (deficit)                 |  | (423,515,031            | ) | 119,967,606             |   | 
|Underwriting commissions and issue expenses |  | (62,467,856             | ) | (62,577,581             | ) | 
|                                           
|Total equity(note 8)                        |  | 967,550,723             |   | 1,510,941,967           |   | 
|                                           
|Total liabilities and equity                |  | 967,550,723             |   | 1,510,989,671           |   | 
|                                           
|Total equity per Unit                       |  | 7.60                    |   | 11.86                   |   | 
|                                           

The accompanying notes are an integral part of these financial statements.

11

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Sprott Physical Silver Trust

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Statements of changes in equity

|                                                     |  | Number
of Units
Outstanding |   | Unitholders'
Capital |   | Retained
Earnings |   | Underwriting
Commissions
and Issue
Expenses |   | Unit Premiums
and Reserves |  | Total Equity  |   | 
|---------------------------------------------------- |  | --------------------------- | - | -------------------- | - | ----------------- | - | ------------------------------------------- | - | -------------------------- |  | ------------- | - | 
|                                                    
|                                                     |  |                             |   | $                    |   | $                 |   | $                                           |   | $                          |  | $             |   | 
|                                                     |  |                             |   |                      |   |                   |   |                                             |   |                            |  |               |   | 
|Balance at January 1, 2012                           |  | 57,497,090                  |   | 574,970,900          |   | 73,233,658        |   | (26,778,799                                 | ) | 2,209                      |  | 621,427,968   |   | 
|Proceeds from issuance of Units                      |  | 69,951,752                  |   | 879,341,860          |   |                  |   |                                            |   |                           |  | 879,341,860   |   | 
|Cost of Redemption of Units                          |  | (81,645                     | ) | (816,450             | ) | (251,997          | ) |                                            |   | 53,423                     |  | (1,015,024    | ) | 
|Net income for the year                              |  |                            |   |                     |   | 46,985,945        |   |                                            |   |                           |  | 46,985,945    |   | 
|Underwriting commissions and issue expenses          |  |                            |   |                     |   |                  |   | (35,798,782                                 | ) |                           |  | (35,798,782   | ) | 
|                                                    
|Balance at December 31, 2012                         |  | 127,367,197                 |   | 1,453,496,310        |   | 119,967,606       |   | (62,577,581                                 | ) | 55,632                     |  | 1,510,941,967 |   | 
|                                                    
|Balance at January 1, 2013                           |  | 127,367,197                 |   | 1,453,496,310        |   | 119,967,606       |   | (62,577,581                                 | ) | 55,632                     |  | 1,510,941,967 |   | 
|Proceeds from issuance of Units(note 8)              |  |                            |   |                     |   |                  |   |                                            |   |                           |  |              |   | 
|Cost of Redemption of Units(note 8)                  |  | (1,917                      | ) | (19,170              | ) | 3,095             |   |                                            |   | 838                        |  | (15,237       | ) | 
|Net loss for the year                                |  |                            |   |                     |   | (543,485,732      | ) |                                            |   |                           |  | (543,485,732  | ) | 
|Underwriting commissions and issue expenses recovery |  |                            |   |                     |   |                  |   | 109,725                                     |   |                           |  | 109,725       |   | 
|                                                    
|Balance at December 31, 2013                         |  | 127,365,280                 |   | 1,453,477,140        |   | (423,515,031      | ) | (62,467,856                                 | ) | 56,470                     |  | 967,550,723   |   | 
|                                                    

The accompanying notes are an integral part of these financial statements.

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Sprott Physical Silver Trust

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Statements of cash flows

|                                                                                         |                                             | For the year ended
December 31, 2013 |             | For the year ended
December 31, 2012 |             |  
|---------------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------ | ----------- | ------------------------------------ | ----------- | -
|                                                                                        
|                                                                                         |                                             | $                                    |             | $                                    |             |  
|                                                                                         |                                             |                                      |             |                                      |             |  
|Cash flows from operating activities                                                     |                                             |                                      |             |                                      |             |  
|Net income (loss) for the year                                                           |                                             | (543,485,732                         | )           | 46,985,945                           |             |  
|Adjustments to reconcile net income for the period to net cash from operating activities |                                             |                                      |             |                                      |             |  
|                                                                                         | Unrealized (gains) losses on silver bullion |                                      | 536,089,139 |                                      | (54,651,806 | )
|Net changes in operating assets and liabilities                                          |                                             |                                      |             |                                      |             |  
|Decrease (Increase) in prepaid assets                                                    |                                             |                                     |             | 252,370                              |             |  
|Increase in accounts receivable                                                          |                                             | (39,607                              | )           |                                     |             |  
|Decrease in accounts payable                                                             |                                             | (47,705                              | )           | (209,921                             | )           |  
|                                                                                        
|Net cash used in operating activities                                                    |                                             | (7,483,905                           | )           | (7,623,413                           | )           |  
|                                                                                        
|Cash flows from investing activities                                                     |                                             |                                      |             |                                      |             |  
|Purchase of silver bullion                                                               |                                             |                                     |             | (820,112,296                         | )           |  
|                                                                                        
|Net cash used in investing activities                                                    |                                             |                                     |             | (820,112,296                         | )           |  
|                                                                                        
|Cash flows from financing activities                                                     |                                             |                                      |             |                                      |             |  
|Proceeds from issuance of Units(note 8)                                                  |                                             |                                     |             | 879,341,860                          |             |  
|Payments on redemption of Units(note 8)                                                  |                                             | (15,237                              | )           | (1,015,024                           | )           |  
|Underwriting commissions and issue (expenses) recovery                                   |                                             | 109,725                              |             | (35,798,782                          | )           |  
|                                                                                        
|Net cash provided by financing activities                                                |                                             | 94,488                               |             | 842,528,054                          |             |  
|                                                                                        
|Net increase (decrease) in cash during the year                                          |                                             | (7,389,416                           | )           | 14,792,345                           |             |  
|Cash at beginning of year                                                                |                                             | 15,349,483                           |             | 557,138                              |             |  
|                                                                                        
|Cash at end of year(note 6)                                                              |                                             | 7,960,067                            |             | 15,349,483                           |             |  
|                                                                                        

The accompanying notes are an integral part of these financial statements.

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Sprott Physical Silver Trust
Notes to the Annual Financial StatementsDecember 31, 2013

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1. Organization of the Trust

Sprott
Physical Silver Trust (the "Trust") is a closed-end mutual fund trust created under the laws of the Province of Ontario, Canada, pursuant to a trust agreement dated as of June 30,
2010, as amended and restated as of October 1, 2010 (the "Trust Agreement"). The Trust's initial public offering was priced on October 28, 2010 and closed on November 2,
2010. The Trust is authorized to issue an unlimited number of redeemable, transferable trust units (the "Units"). All issued Units have no par value, are fully paid for, and are listed and
traded on the New York Stock Exchange Arca (the "NYSE Arca") and the Toronto Stock Exchange (the "TSX") under the symbols "PSLV" and "PHS.U", respectively.

The
investment objective of the Trust is to seek to provide a secure, convenient and exchange-traded investment alternative for investors interested in holding physical silver bullion without the
inconvenience that is typical of a direct investment in physical silver bullion. The Trust invests and intends to continue to invest primarily in long-term holdings of unencumbered, fully allocated,
physical silver bullion and does not speculate with regard to short-term changes in silver prices. The Trust has only purchased and expects only to own "good delivery bars" as defined by the London
Bullion Market Association ("LBMA"), with each bar purchased being verified against the LBMA source.

The
Trust's registered office is located at Suite 2700, South Tower, Royal Bank Plaza, 200 Bay Street, Toronto, Ontario, Canada, M5J 2J1.

Sprott
Asset Management LP (the "Manager") acts as the manager of the Trust pursuant to the Trust Agreement and management agreement with the Trust. RBC Investor Services Trust, a trust
company organized under the laws of Canada, acts as the trustee of the Trust. RBC Investor Services Trust also acts as custodian on behalf of the Trust for the Trust's assets other than physical
silver bullion. The Royal Canadian Mint acts as custodian on behalf of the Trust for the physical silver bullion owned by the Trust.

The
financial statements of the Trust as at and for the year ended December 31, 2013 were authorized for issue by the Manager on March 31, 2014.

2. Basis of Preparation

The
financial statements have been prepared in compliance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB" or
the "Board").

The
financial statements have been prepared on a historical cost basis, except for physical silver bullion and financial assets and financial liabilities held at fair value through profit or loss,
that have been measured at fair value.

The
financial statements are presented in U.S. dollars and all values are rounded to the nearest dollar unless otherwise indicated.

2.1 Summary of Significant Accounting Policies

(i) Cash and cash equivalents

Cash and cash equivalents consist of cash on deposit with the Trust's custodian, which is not subject to restrictions.

(ii) Silver bullion

Investments in silver bullion are measured at fair value determined by reference to published price quotations, with unrealized and realized gains and losses
recorded in income based on the International Accounting Standards ("IAS") 40Investment Propertyfair value model as IAS 40 is the most relevant
standard to apply. Investment transactions in physical silver bullion are accounted for on the business day following the date the order to buy or sell is executed.

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(iii) Other financial liabilities

This category includes all financial liabilities, other than those classified at fair value through profit and loss. The Trust includes in this category
management fees payable, due to brokers and other accounts payable.

(iv) Share Capital

Classification of redeemable units

Redeemable units are classified as equity instruments when:



In
addition to the redeemable units having all the above features, the Trust must have no other financial instrument or contract that has:



The
Trust continuously assesses the classification of the redeemable units. If the redeemable units cease to have all the features or meet all the conditions set out to be classified as equity, the
Trust will reclassify them as financial liabilities and measure them at fair value at the date of reclassification, with any differences from the previous carrying amount recognised in equity.

(v) Fees and commission expenses

Fees and commission expenses are recognized on an accrual basis.

(vi) Income taxes

In each taxation year, the Trust will be subject to income tax on taxable income earned during the year, including net realized taxable capital gains. However,
the Trust intends to distribute its taxable income to unitholders at the end of every fiscal year and therefore the Trust itself would not have any income tax liability.

(vii) Functional and presentation currency

The Trust's functional and presentation currency is the U.S. Dollar. The Trust's performance is evaluated and its liquidity is managed in
U.S. Dollars. Therefore, the U.S. Dollar is considered as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions.

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3. Significant Accounting Judgements, Estimates and Assumptions

The
preparation of the Trust's financial statements requires the Manager to make judgments, estimates and assumptions that affect the amounts recognized in the financial statements. However,
uncertainty about these assumptions and estimates could result in outcomes that may require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Judgements

In the process of applying the Trust's accounting policies, management has made the following judgements, which have the most significant effect on the amounts
recognized in the financial statements:

Going Concern

The Trust's management has made an assessment of the Trust's ability to continue as a going concern and is satisfied that the Trust has the resources to
continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Trust's ability to continue as a going
concern. Therefore, the financial statements continue to be prepared on a going concern basis.

Estimation Uncertainty

For tax purposes, the Trust generally treats gains from the disposition of silver bullion as capital gains, rather than income, as the Trust intends to be a
long-term passive holder of silver bullion, and generally disposes of its holdings in silver bullion only for the purposes of meeting redemptions and to pay expenses. The Canada Revenue Agency has,
however, expressed its opinion that gains (or losses) of mutual fund trusts resulting from transactions in commodities should generally be treated for tax purposes as ordinary income rather
than as capital gains, although the treatment in each particular case remains a question of fact to be determined having regard to all the circumstances.

The
Trust based its assumptions and estimates on parameters available when the financial statements were prepared. However, existing circumstances and assumptions about future developments may change
due to market changes or circumstances arising beyond the control of the Trust. Such changes are reflected in the assumptions when they occur.

4. Certain Relevant Standards, Interpretations and Amendments Issued But Not Yet Effective

Standards
issued but not yet effective at the date of the issuance of the Trust's financial statements are listed below.

IFRS 9,Financial Instruments("IFRS 9"), will replace IAS 39,Financial Instruments: Recognition and
Measurement("IAS 39"). In November 2013, the IASB removed the mandatory effective date of January 1, 2015 and has not proposed a future effective date.
IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules presently in IAS 39. The approach in
IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard
also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39.

There
are no other IFRS interpretations which are not yet effective that would be expected to have a material impact on the financial statements.

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5. Segment Information

For
management purposes, the Trust is organized into one main operating segment, which invests in physical silver bullion. All of the Trust's activities are interrelated, and each activity is
dependent on the others. Accordingly, all significant operating decisions are based upon an analysis of the Trust as one segment. The financial results from this segment are equivalent to the
financial statements of the Trust as a whole. The Trust's operating income is earned entirely in Canada and is primarily generated from its investment in physical silver bullion.

6. Cash and Cash Equivalents

As
at December 31, 2013 and 2012, cash and cash equivalents consisted entirely of cash on deposit.

7. Fair Value of Financial Instruments

IFRS 13, Fair Value Measurement, ("IFRS 13") establishes a single source of guidance under IFRS for all fair value measurements.
IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS. IFRS 13 defines fair value as an exit price.
As a result of the guidance in IFRS 13, the Trust re-assessed its policies for measuring fair values. IFRS 13 also requires additional disclosures. The application of IFRS 13 has
not materially impacted the fair value measurements of the Trust.

As
at December 31, 2013 and 2012, due to the short-term nature of financial assets and financial liabilities recorded at cost, it is assumed that the carrying amount of those instruments
approximates their fair value.

All
assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:



Silver
bullion is measured at fair value on a recurring basis. The fair value measurement of silver falls within Level 1 of the hierarchy, and is based on published price quotations.

8. Unitholders' Capital

The
Trust is authorized to issue an unlimited number of redeemable, transferable Trust Units in one or more classes and series of Units. The Trust's capital is represented by the issued, redeemable,
transferable Trust units. Quantitative information about the Trust's capital is provided in the statement of changes in equity. Under the Trust Agreement, Units may be redeemed at the option of the
unitholder on a monthly basis for physical silver bullion or cash. Units redeemed for physical silver bullion will be entitled to a redemption price equal to 100% of the NAV of the redeemed Units on
the last business day of the month in which the redemption request is processed. A unitholder redeeming Units for physical silver bullion will be responsible for expenses in connection with
effecting the redemption and applicable delivery expenses, including the handling of the notice of redemption, the delivery of the physical silver bullion for Units that are being redeemed and the
applicable silver storage in-and- out fees. Units redeemed for cash will be entitled to a redemption price equal to 95% of the lesser of (i) the volume-weighted average trading price of the
Units traded on the NYSE Arca, or, if trading has been suspended on the NYSE Arca, on the TSX for the last five business days of the month in which the redemption request is processed and
(ii) the NAV of the redeemed Units as of 4:00 p.m., Eastern Standard time, on the last business day of the month in which the redemption request is processed.

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When
Units are redeemed and cancelled and the cost of such Units is either above or below their stated or assigned value, the unitholders' capital is reduced by an amount equal to the stated or
assigned value of the Units. The difference between the redemption price and the stated or assigned values of the Units is allocated to the Unit premiums and reserves account (equal to the 5%
reduction to the redemption price for Units redeemed for cash as described above) and the Retained earnings account based on the allocated portion attributable to the redemption. For the year ended
December 31, 2013, the Trust issued no Units (December 31, 2012: 69,951,752 Units) and redeemed 1,917 Units (December 31, 2012: 81,645 Units).

Net Asset Value

Net Asset Value ("NAV") is defined as the Trust's net assets (fair value of total assets less fair value of total liabilities, excluding all liabilities
represented by outstanding Units, if any) calculated using the value of physical silver bullion based on the end-of-day price provided by a widely recognized pricing service.

Capital management

As a result of the ability to issue, repurchase and resell Units of the Trust, the capital of the Trust as represented by the Unitholders' capital in the
statement of financial position can vary depending on the demand for redemptions and subscriptions to the Trust. The Trust is not subject to externally imposed capital requirements and has no legal
restrictions on the issue, repurchase or resale of redeemable Units beyond those included in the Trust Agreement. The Trust may not issue additional Units except (i) if the net proceeds per
Unit to be received by the Trust are not less than 100% of the most recently calculated NAV immediately prior to, or upon, the determination of the pricing of such issuance or (ii) by way of
Unit distribution in connection with an income distribution.

The
Trust's objectives for managing capital are:



Refer
to "Financial risk management objectives and policies" (Note 10) for the policies and procedures applied by the Trust in managing its capital.

9. Increase (decrease) in total equity per Unit

Increase
(decrease) in total equity per unit is calculated by dividing the net income (loss) for the year attributable to the Trust's unitholders by the weighted average number of units outstanding
during the year.

|                                                                 |  | For the year endedDecember 31, 2013 |   | For the year endedDecember 31, 2012 | 
|---------------------------------------------------------------- |  | ----------------------------------- | - | ----------------------------------- | 
|                                                                
|Net income (loss) for the year attributable to the Trust's units |  | $(543,485,732                       | ) | $46,985,945                         | 
|                                                                
|Weighted average number of units outstanding                     |  | 127,366,663                         |   | 95,012,327                          | 
|                                                                
|Increase (decrease) in total equity per unit                     |  | $(4.27                              | ) | $0.49                               | 
|                                                                

10. Financial Risk and Management Objectives and Policies

Introduction

The Trust's objective in managing risk is the creation and protection of unitholder value. Risk is inherent in the Trust's activities, but it is managed through
a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. The process of

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risk
management is critical to the Trust's continuing profitability. The Trust is exposed to market risk (which includes price risk, interest rate risk and currency risk), credit risk and liquidity
risk arising from the silver bullion that it holds. Only certain risks of the Trust are actively managed by the Manager, as the Trust is a passive investment company. The risks are managed in
accordance with the Trust's offering documents.

Risk management structure

The Trust's Manager is responsible for identifying and controlling risks.

Risk mitigation

The Trust has investment guidelines that set out its overall business strategies, its tolerance for risk and its general risk management philosophy.

The
discussion below clarifies the Trust's management of various risks:

Excessive risk concentration

The Trust's risk is concentrated in the value of physical silver bullion, whose value constitutes 99.2% of total equity as at December 31, 2013 (99.0% as
at December 31, 2012).

Price risk

Price risk arises from the possibility that changes in the market price of the Trust's investments, which consist almost entirely of silver bullion, will result
in changes in fair value of such investments.

If
the market value of silver increased by 1%, with all other variables held constant, this would have increased total equity and comprehensive income by approximately $9.6 million
(December 31, 2012: $15.0 million); conversely, if the value of silver bullion decreased by 1%, this would have decreased total equity and comprehensive income by the same amount.

Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect the value of financial instruments. The Trust does not hedge its
exposure to interest rate risk as that risk is minimal.

Currency risk

Currency risk arises from the possibility that changes in the price of foreign currencies will result in changes in carrying value. The Trust's assets,
substantially all of which consist of an investment in silver bullion, are priced in U.S. dollars. Some of the Trust's expenses are payable in Canadian dollars. Therefore, the Trust is exposed
to currency risk, as the value of its liabilities denominated in Canadian dollars will fluctuate due to changes in exchange rates. Most of such liabilities, however, are short term in nature and are
not significant in relation to the net assets of the Trust, and, as such, exposure to foreign exchange risk is limited. The Trust does not enter into currency hedging transactions.

As
at December 31, 2013, none (December 31, 2012: $100,070) of the Trust's liabilities were denominated in Canadian dollars.

Credit risk

Credit risk arises from the potential that counterparties will fail to satisfy their obligations as they come due. The Trust primarily incurs credit risk when
entering into and settling silver bullion transactions. It is the Trust's policy to only transact with reputable counterparties. The Manager closely monitors the creditworthiness of the Trust's
counterparties, such as bullion dealers, by reviewing their financial statements, when available, regulatory notices and press releases. The Trust seeks to minimize credit risk relating to unsettled
transactions in

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silver
bullion by only engaging in transactions with bullion dealers with high creditworthiness. The risk of default is considered minimal, as payment for silver bullion, is only made against the
receipt of the bullion by the custodian.

Liquidity risk

Liquidity risk is defined as the risk that the Trust will encounter difficulty in meeting obligations associated with financial liabilities and redemptions.
Liquidity risk arises because of the possibility that the Trust could be required to pay its liabilities earlier than expected. The Trust is also subject to redemptions for both cash and silver
bullion on a regular basis. The Trust manages its obligation to redeem units when required to do so and its overall liquidity risk by only allowing for redemptions monthly, which require 15-day
advance notice to the Trust. The Trust's liquidity risk is minimal, since its primary investment is physical silver bullion, which trades in a highly liquid market. All of the Trust's financial
liabilities, including due to brokers, accounts payable and management fees payables have maturities of less than three months.

11. Related Party Disclosures

The
following parties are considered related parties to the Trust:

Investment Manager  Sprott Asset Management LP

The Trust pays the Manager a monthly management fee equal to 1/12 of 0.45% of the value of net assets of the Trust (determined in accordance with
the Trust Agreement) plus any applicable Canadian taxes, calculated and accrued daily and payable monthly in arrears on the last day of each month. Total management fees for the year ended
December 31, 2013 amounted to $5,345,220 compared to $5,271,462 for the same period in 2012.

Ownership and Other

As at December 31, 2013, the Trust's related parties included, Eric Sprott, CEO of the Manager, the Sprott Foundation, a charitable organization
established by Mr. Sprott's family, the Manager, and Sprott Inc., the parent company of the Manager. The Sprott Foundation owned 0.33% (2012: 3.93%) of the units of the Trust and
the Manager owned 0.32% (2012: 0.32%) of the units.

There
have been no other transactions between the Trust and its related parties during the reporting period.

12. Independent Review Committee ("IRC")

In
accordance with National Instrument 81-107, Independent Review Committee for Investment Funds ("NI 81-107"), the Manager has established an IRC for a number of funds managed by it,
including the Trust. The mandate of the IRC is to consider and provide recommendations to the Manager on conflicts of interest to which the Manager is subject when managing certain funds, including
the Trust. The IRC is composed of three individuals, each of whom is independent of the Manager and all funds managed by the Manager, including the Trust. Each fund subject to IRC oversight pays a
share of the IRC member fees, costs and other fees in connection with operation of the IRC. The IRC reports annually to unitholders of the funds subject to its oversight on its activities, as required
by NI 81-107.

13. Soft Dollar Commissions

There
were no soft dollar commissions for the years ended December 31, 2013 and 2012.

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14. Personnel

The
Trust did not employ any personnel during the period, as its affairs were administered by the personnel of the Manager and/or the Trustee, as applicable.

15. Events After the Reporting Period

There
were no material events after the reporting period.

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Corporate Information

Head Office

Sprott Physical Silver Trust
Royal Bank Plaza, South Tower
200 Bay Street
Suite 2700, PO Box 27
Toronto, Ontario M5J 2J1
Telephone: (416) 203-2310
Toll Free: (877) 403-2310
Email: ir@sprott.com

Auditors

Ernst & Young LLP
Ernst & Young Tower
P.O. Box 251, 222 Bay Street
Toronto-Dominion Centre
Toronto, Ontario M5K 1J7

Legal Counsel

Heenan Blaikie LLP (to February 17, 2014)
P.O. Box 2900, Suite 2900
333 Bay Street
Bay Adelaide Centre
Toronto, Ontario Canada M5H 2T4

Baker
& McKenzie LLP (from February 18, 2014)
Brookfield Place
Bay Wellington Tower
181 Bay Street, Suite 2100
Toronto, Ontario Canada M5J 2T3

Seward &
Kissel LLP
901 K Street NW, 8th Floor
Washington, DC 20001

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