News & Views

ANNOUNCEMENT - DECEMBER 15, 2008

Don B. Howie Joins The Advisory Board

Michael R. Sprung, President, Sprung & Co. Investment Counsel Inc. is pleased to announce that Don B. Howie has joined the Firm's Advisory Board.

Don has extensive experience in the financial services sector. As President of D.B. Howie & Associates he provides consulting services to a major US life company, an e-commerce business-to-business education firm, a major Canadian supplier of employee benefit technology and a national wealth management organization. Over the past three years, Don provided services as CEO to a large financial services organization culminating in its successful sale in August of 2008.

Don's previous experience includes senior positions with:
• Assante Asset Management, Vice president, Business Development, North America;
• Manulife Financial, Vice President, Financial Planning;
• Canada Trust, Vice President & General Manager, C.T. Financial Planning Group;
• MD Management Limited, Vice President, Financial Services; as well as,
• Bank of Montreal and Great West Life.

He holds a Bachelor of Commerce (Honours) from the University of Manitoba and he has attended the course in Strategic Marketing Management at Harvard University.

We look forward to Don's insight and guidance as a member of the Advisory Board.

ANNOUNCEMENT - JANUARY 14, 2008

Joie P. Watts, CFA, FCSI

Michael R. Sprung, President, Sprung & Co. Investment Counsel Inc. is pleased to announce that Joie Watts has joined the firm as Vice President, Portfolio Management (registration pending) effective immediately.

Joie is a seasoned executive with over 30 years of experience in the investment industry. Most recently, Joie was Chief Executive Officer of Shorcan ATS Limited which operated a specialized block discovery marketplace for equity dealers trading on an anonymous, principal basis.

Prior to Shorcan, Joie was the Managing Director of Instinet Canada Limited for over 10 years. Instinet Canada is a wholly owned subsidiary of Instinet Corporation which operates as a global institutional agency electronic broker. Joie has also held senior positions at Burns Fry Limited, Merrill Lynch Canada Inc., and Nesbitt Thomson Inc.

At Sprung & Co., Joie will be responsible for client development as well as assisting in research and portfolio management.

In addition to holding the CFA and FCSI designations, Joie has a Bachelor of Arts degree with an Economics major from the University of Guelph. He is active in community service and charity work as well as music and sports.

Sprung & Co. welcomes Joie to its senior team of investment professionals providing personal and professional investment management services to investors focused on meeting their long term objectives.

ANNOUNCEMENT - DECEMBER 28, 2006

Fred Palik, CFA

Michael R. Sprung, President, Sprung & Co. Investment Counsel Inc. is pleased to announce the appointment of Fred Palik as Vice President, Fixed Income.

Fred joins Sprung & Co. with over 25 years of experience in the investment management business. Fred has extensive experience in fixed income management in a variety of senior positions in the insurance and hospital sectors. He started his career as a credit analyst with a major brokerage firm. Fred's experince has also included participation at a senior level on investment policy and asset mix matters.

At Sprung & Co., Fred will be responsible for all fixed income and cash management. In addition, he will be a major participant on the Investment Committee. Fred also brings experience in Information Technology with emphasis on investment management applications.

Fred is a Chartered Financial Analyst (CFA) and has a B. Comm. from Concordia University. He is a member of the Toronto CFA Society.

Sprung & Co. Investment Counsel Inc. is a boutique investment counselor catering directly to the needs of private clients, foundations, trusts and endowments. For more information, please go to www.sprunginvestment.com.

ANNOUNCEMENT - SEPTEMBER 19, 2006

Advisory Board

Michael R. Sprung, President, Sprung & Co. Investment Counsel Inc. is pleased to announce that Gregory C. Liddy And Electa M. Aust have joined K. Michael Albrecht on the Advisory Board of Sprung & Co. Investment Counsel Inc.

Gregory C. Liddy is President of Koeval Investment Management Inc., a specialized investment advisory firm established in 1994. With over 25 years of capital markets and investment management experience, primarily in fixed income management, Mr. Liddy was previously a director of Merrill Lynch Canada and a partner in BBN James Capel Inc. He has served as an expert witness to the Standing Committee on Resource Development of the Ontario Legislature and as a consultant to the Embassy of the United States of America, Ottawa with respect to trade matters. He has also served as the Canadian representative on the Financial Reporting Policy Committee of the CFA Institute (formerly the Association for Investment Management and Research). Mr. Liddy was also a past director of Hawker Siddely Canada Inc. and the chairman of its audit committee.

Electa M. Aust is a private investor, currently a candidate for a Bachelor of Fine Art at the Ontario College of Art and Design. Ms. Aust previously was a Vice President at Knight, Bain, Seath & Holbrick Capital Management Inc. (subsequently KBSH Asset Management) where she managed a Canadian equity portfolio in excess of $3.5 billion and served on the Asset Mix Committee. Prior to that, she was a Director of Bunting Warburg Inc. (subsequently UBS Bunting Warburg) and was ranked Canada's number one gold analyst for six years by two widely recognized industry studies. At Wood Gundy Inc.(now CIBC World Markets), Ms. Aust was a Director and responsible for all base metal and gold mining research. While at Wood Gundy she was ranked number one or two for four years. She is a Chartered Financial Analyst (CFA), a past Director of the Toronto CFA Society and has an MBA from the University of Toronto.

Sprung & Co. Investment Counsel Inc. is a boutique investment counselor catering directly to the needs of private clients, foundations, trusts and endowments. Michael R. Sprung has over twenty-seven years of portfolio management experience managing institutional and private client assets. For more information, please go to www.sprunginvestment.com.

ANNOUNCEMENT - SEPTEMBER 1, 2006

Lois O'Sullivan, CFA

Michael R. Sprung, President, Sprung & Co. Investment Counsel Inc. is pleased to announce the appointment of Lois O'Sullivan as Vice President.

Lois joins Sprung & Co. with over 26 years of experience in the investment management business. Lois is an expert in operations, with experience and expertise in all aspects of fund management. At Sprung & Co. Lois will be responsible for all fund administration duties and trading execution.

Prior to joining Sprung & Co., Lois was a founding shareholder of Sprucegrove Investment Management, a successful firm specializing in international markets. She also was the Manager of Investment Services for Confed Investment Counselling and was the manager of Securities Research at Confederation Life Insurance Company.

Lois is a Chartered Financial Analyst (CFA) and a Fellow of the Life Office Management Institute (FLMI).

In addition, Lois serves as a director of the Victorian Order of Nurses (VON) where she has chaired the Finance and Investment Committee and served as Secretary, Treasurer of the Hamilton Foundation Board.

Sprung & Co. Investment Counsel Inc. is a boutique investment counselor catering directly to the needs of private clients, foundations, trusts and endowments. Michael R. Sprung has over twenty-seven years of portfolio management experience managing institutional and private client assets.

DOW JONES INTERVIEWS MICHAEL SPRUNG

CANADA TIP SHEET: Sprung Somewhat Of A Contrarian

By Stuart Weinberg
DOW JONES NEWSWIRES
June 13, 2006

TORONTO (Dow Jones) - When it comes to picking stocks, Michael Sprung isn't interested in the flavor of month.

"To tell you the truth, we find that often our investment positions are somewhat contrarian," he said.

Sprung, president of Sprung & Co. Investment Counsel, invests with a three-to-five-year time horizon in mind. He tries to determine if a stock's current valuation is merited based on a company's projected return on equity. "Basically, what you're trying to find out is what are you paying for what you're getting," he said.

That question coupled with Sprung's buy and hold philosophy accounts for the portfolio's contrarian flavor. Lumber stocks, for instance, haven't exactly dominated discourse on the Canadian stock market lately, yet the largest holding in the C$30-million portfolio is a lumber stock - International Forest Products Ltd. (IFP.A.T)

Sprung said he began establishing a position in International Forest, or Interfor, about a year ago. He said the strong U.S. housing market made the environment favorable for building products. In addition, demand for lumber in the U.S. was heightened due to damage wrought by by Hurricane Rita and Hurricane Katrina, he said.

Furthermore, if the softwood lumber dispute between the U.S. and Canada is resolved in Canada's favor, Interfor could be reimbursed a significant sum for duties being held on deposit in the U.S., Sprung said. Intefor stands to gain as much as C$2 a share, or about C$100 million, he said. But even without this potential windfall, Interfor is attractive, he said. The manager is forecasting a 10% increase in return on equity for Interfor in each of the next three to five years.

Missed Run-Up And Pullback In Gold Sector

While Sprung's investing style helps him find value in unlikely places, it sometimes results in missed opportunities.

For instance, the portfolio's only exposure to gold during the sector's recent run-up was Teck Cominco Ltd. (TEK.SV.B.T). "Unfortunately, gold is one area where I haven't had significant exposure and I guess the reason for that has been it has always appeared to be ahead of what I was willing to pay," Sprung said.

Sprung noted that gold was trading at less than US$600 an ounce just several months ago, yet gold-stock valuations suggested the metal was going to increase in a straight line for years. While that may or may not happen, gold equities surged in April and May as the price of gold shot past US$600 and briefly exceeded US$700.

While he missed the run-up, Sprung also avoided the subsequent decline, as the price of gold - and gold equities - has pulled back substantially. Gold is now trading just slightly above US$600 an ounce and Sprung said he still believes gold stocks are overvalued.

Regarding Teck Cominco, Sprung said he is confident the firm won't overpay for Inco Ltd. (N). Teck made an unsolicited cash-and-stock bid for Inco in May. Sprung said he doesn't own any Inco stock. "I'm sorry I don't," he said.

Sprung said the portfolio is slightly underweight the energy sector, noting he has been taking profits recently. One holding that he pared down was Imperial Oil Ltd. (IMO), although he said the recent pullback in energy may afford an opportunity to add back some integrated plays. Other energy holdings in the portfolio include Petro-Canada (PCZ), Talisman Energy Inc. (TLM), Pengrowth Energy Trust (PGH) and Parkland Income Fund (PKI.UN.T).

Regarding Pengrowth, Sprung said he likes the company's balance of oil-and-gas assets, as well as its "sustainable" payout ratio. He said he also likes the firm's production profile and the fact that its assets have a longer reserve life than the assets of other trusts with similar yields.

Sprung said Parkland Industries, which operates gas stations and convenience stores in rural areas of western Canada, is often the "only game in town." While the firm's profitability depends on the spread it can obtain between the retail and wholesale price of gas, it also makes a decent profit from the convenience store side of the business, he said. He said he also likes the company because it's expanding. In the last couple of years, Parkland has gone from 200 outlets to more than 500, he said. "I think they'll continue to do quite well," he said.

ANNOUNCEMENT - APRIL 12, 2006

K. Michael Albrecht

Michael R. Sprung, President, Sprung & Co. Investment Counsel Inc. is pleased to announce that K. Michael Albrecht has joined the firm.

Michael has had several senior positions with leading Investment Firms over the past 40 years. His former affiliations have been with:

- Canavest House (Founder)
- MBA Securities (Founder)
- Levesque Beaubien (Senior Vice President and Director), and,
- Maison Placements Canada (Vice President and Director).

Michael joins Sprung & Co. as a member of the Advisory Board and to participate in portfolio management, securities research and client development.

He is a member of the Royal Canadian Yacht Club and The Albany Club of Toronto. Michael enjoys tennis, sailing and golf.

ANNOUNCEMENT - MARCH 23, 2006

Sprung & Co. Investment Counsel Inc. in Association With Sigma Analysis & Management Ltd.

Michael R. Sprung, President, Sprung & Co. Investment Counsel Inc. and David Rudd, Chairman and COO, Sigma Analysis & Management Ltd., are pleased to announce that Sprung & Co. and Sigma have entered into an association. Sprung & Co. will provide Sigma with investment management services and assist Sigma in identifying market opportunities and expanding their growing product offerings. In exchange, Sigma will make resources and consulting services available to Sprung & Co. to enhance risk management investment processes. Both firms have agreed to align compliance and investment procedures to meet the needs of varied market participants.

Sprung & Co. Investment Counsel Inc. is a boutique investment counselor catering directly to the needs of private clients, foundations, trusts and endowments. Michael R. Sprung has over twenty-seven years of portfolio management experience managing institutional and private client assets. For more information, please go to www.sprunginvestment.com.

Sigma Analysis & Management Ltd. offers consulting and investment services to manage risk in applications requiring sophisticated, state-of-the-art methodologies. David Rudd has over twenty years experience trading commodity and financial products. Dr. Luis Seco, President CEO and Director, is a professor with the Fields Institute located at the University of Toronto and a Director of RiskLab, a co-operation agreement between the University and Algorithmics. For more information, please go to www.sigmanalysis.com.

NEWS ARTICLE - OCTOBER 19, 2005

As Published In THE FINANCIAL POST
Off The Record - by Barry Critchley

Dreaming of money

If the dream of every money manager is to end up owning his or her own operation, then Michael Sprung has achieved success. Sprung, who has spent almost three decades in the money management business, has set up Sprung & Co. Investment Counsel Inc., a Toronto-based firm that will focus on meeting the investment needs of high net-worth individuals.

And with good reason: Pension fund sponsors and consultants are not much inclined to award mandates to new managers. The working rule is that a three- to four-year track record is required.

"The idea is to create a firm that will excel on client service while giving clients direct access to the key decision-makers," said Sprung, who describes his investment style as "a value manager with some elements of growth. "But value is the key consideration. And our overriding emphasis is on capital preservation while meeting, indeed exceeding, clients' objectives."

Sprung has worked with a number of firms, including the former Ontario Teachers' Pension Plan Board; Ontario Hydro; Goodman & Co. and YMG Capital Management. Most recently he was with GlobeInvest Capital Management, whose major shareholder is B.C.-based Graydon Elliott. His new business will be seeded with the assets of some long-time private clients. Sprung said there are about $15-million of such assets.

Sprung plans to offer segregated investment management - meaning that clients' assets won't be tossed into pools. In this way, each client has, in effect, a customized portfolio.

"The idea is to tailor the management of the assets to their circumstances and goals." Sprung plans to invest in all asset classes, including fixed income. "The asset mix [the split between asset classes] will be driven by the value investment discipline," said Sprung, who expects that a typical, individual account will be split 60/40 between equities and fixed income.

Make money! Save taxes! Organize your life!

Don't pay the taxman more than you have to. Tips to pad your wallet.

PHYSICIAN LIFE - PERSONAL FINANCE, JUNE 30, 2007 VOLUME 4 NO. 12
BY MICHAEL SPRUNG

"Don't let the tax tail wag the investment dog!" This caution is often offered by investment professionals to clients suffering 'sticker shock' on receiving their annual tax bill. You may have heard it yourself. The thing to remember is that a large tax bill is the result of gains and income realized over the year. Better to pay taxes on gains than have no gains at all.

While paying taxes when necessary is understandable, paying more taxes than necessary is not! Arranging and managing your investment portfolio in a tax efficient manner is only prudent. The ultimate objective of investing is to fund your current and future requirements by maximizing your returns in a manner consistent with your means, future needs and risk tolerance.

Here are a few items to consider:

1. The structure - Hold your assets in a structure that makes sense for your circumstances. This structuring is part of the estate planning process and should involve your family/tax lawyer, accountant and investment professional. In addition to holding assets directly in individual cash accounts and RRSPs, as a physician you also have the option of utilizing personal corporations and/or family trusts.

2. Incorporating - A corporate structure can make sense for collecting fees, paying office expenses and holding assets for long periods. When needed, funds can be paid out to shareholders as dividends. The tax rate on dividends is now 21% (down from 31%), so they're much more attractive. An added benefit is that up to $31,000 dollars can be paid to shareholders who have no income from other sources, tax free. Dividends flow tax free to other corporations. If family members are employed by the corporation, effectively income can be allocated in a tax efficient manner. Small business deductions can often be taken advantage of to defer some corporate tax. When the corporation is sold, it may qualify for a lifetime enhanced capital gains exemption of up to $750,000 (up from $500,000). There are several other advantages, including the opportunity to shelter funds in an Individual Pension Plan (IPP). For more on incorporation do a search for "Incorporation" on www.nationalreviewofmedicine.com.

3. Family trusts - As a physician you might also look into family trusts, perhaps in conjunction with a holding company. This can be a good way of both creditor proofing and income splitting. As much as $42,000 can be distributed to children by way of dividends without incurring tax. At the highest marginal rate in Ontario, salary paid directly to individuals is taxed at 46% while dividends are taxed at 21%. Funds may accumulate within retained earnings of a small business corporation after paying tax of 18.6%. By engaging the proper professional team up front, your assets can accumulate in a more efficient manner.

4. Mutual funds - Once you've structured your affairs, consider the kind of investments that suit your needs and are tax effective. Mutual funds are an option, but from a tax vantage point may have some deficiencies. Mutuals tend to be mass marketed to retail investors who are primarily investing for their RRSP. Few funds are managed with tax efficacy in mind and, depending on when they're bought, the purchaser may be buying some capital gain exposure but not the rewards that come with it. Watch for a future column on pooled funds, yet another option for wealthier individuals.

5. Self managed - Your other alternatives are to self manage your investments or hire an investment counsellor/portfolio manager (typically 1% to 2% management fee). Few doctors have the time or inclination to self manage their portfolios. Working with a portfolio manager, you'll likely want to generate income in your RRSP and make capital gains non-registered accounts since they're taxed at a lower rate than income. At any point in time, your portfolio manager will be weighing the tax merits of bonds (income) versus preferred shares and common shares (dividends) and income trusts (return of capital and income). Throughout the year, your taxable position should be reviewed with your portfolio manager and tax advisor. You may opt to manage tax liabilities by using flow-through shares and charitable giving. Flow-through shares allow the investor to receive a tax credit for exploration or other activities undertaken by the company issuing the certificates. Charitable giving has been made a lot more attractive recently through allowing shares to be donated at current market value without attributing the capital gain back to the donor. Regardless of which strategy you choose to manage your taxes, always keep your longterm goals and objectives at the forefront. If paying a little more tax will enhance reaching those goals, pay the tax! In other words, "Don't let the tax tail wag the investment dog!"

Michael Sprung, president of Sprung & Co Investment Counsel Inc, can be reached at 416-934-7160 or msprung@SprungInvestment.com