Sprott Canadian Equity Fund
Investment Team

Eric Sprott
Chief Executive Officer; Chief Investment Officer; Senior Portfolio Manager
Eric Sprott
Chief Executive Officer; Chief Investment Officer; Senior Portfolio Manager
Eric Sprott has accumulated 35 years of experience in the investment industry. After earning his designation as a chartered accountant, Eric entered the investment industry as a research analyst at Merrill Lynch. In 1981, he founded Sprott Securities (now called Cormark Securities Inc.), which today is one of Canada's largest independently owned securities firms. After establishing Sprott Asset Management Inc. in December 2001 as a separate entity, Eric divested his entire ownership of Sprott Securities to its employees.
Eric's investment abilities are well represented in his track record in managing the Sprott Hedge Fund L.P., Sprott Hedge Fund L.P. II, Sprott Bull/Bear RSP Fund, Sprott Offshore Funds, Sprott Canadian Equity Fund, Sprott Energy Fund and Sprott Managed Accounts. In December 2004, the Sprott Hedge Fund L.P. was awarded the Opportunistic Strategy Hedge Fund Award at the Canadian Investment Awards. In addition, the Sprott Offshore Fund Ltd. won the 2006 MarHedge Annual Performance Award under the Canada-Based Manager category. Furthermore, in October 2006, Eric was the recipient of the 2006 Ernst & Young Entrepreneur of the Year Award (Financial Services) and the 2006 Ernst & Young Entrepreneur of the Year for Ontario. In December 2007, Eric was named Fund Manager of the Year by Investment Executive, a widely circulated publication for Canadian financial advisors. In October 2008, the Sprott Offshore Fund Ltd. won the award for the Best Long/Short Hedge Fund globally by HFM Week, a leading publication for the global hedge fund industry.
Eric's predictions on the state of the North American financial markets have been captured throughout the last several years in an investment strategy article that he authors titled "Markets At A Glance".

Allan Jacobs
Senior Portfolio Manager, Director of Small Cap Investments
Allan Jacobs
Senior Portfolio Manager, Director of Small Cap Investments
Allan Jacobs joined SAM in August 2007 as a Director of Small Cap Investments with focus on the Sprott Small Cap Funds. Prior to joining SAM , Allan was head of Canadian Small Cap equities at Sceptre Investment Counsel, a field he has specialized in for the past 20 years. He was also the Portfolio Manager of the Sceptre Equity Growth Fund, as well as Portfolio Manager of the Sceptre Canadian Equity Small Cap Pooled Fund and the Canadian small cap component of all other institutional portfolios. He managed the Sceptre Small Cap Opportunities Fund (a hedge fund), which was launched on January 31, 2007 (now called the Sprott Small Cap Hedge Fund). He was an integral part of the Canadian Equity team at Sceptre since 1993 and was appointed a Managing Director of Sceptre in 1996.
Allan was acknowledged for his achievements at Sceptre on several occasions. The Sceptre Equity Growth Fund was awarded the Best Canadian Small Cap Fund over one-, three-, five- and ten-year periods at the 2007 Canadian Lipper Fund Awards. The Sceptre Equity Growth Fund was also a finalist for the 2006 Small Capitalization Equity Fund of the Year and was chosen Canadian Equity Fund of the Year in 2005. Furthermore, Allan was chosen the 2006 Fund Manager of the Year at the Canadian Investment Awards. The Small Capitalization Canadian Equity Pooled Fund, also managed by Allan, was awarded Canadian Small Cap Pooled Fund of the Year.
The experience he brought to Sceptre in 1993 included his management of the largest equity fund in South Africa (a $5 billion fund for Old Mutual) and his four years at Canada Life Investment Management Limited as the portfolio manager of Small Cap Canadian equities.

Peter Imhof
Investment Strategist
Peter Imhof
Investment Strategist
Peter Imhof joined SAM in August 2007 as an Investment Strategist and member of the small cap team. Together with Allan Jacobs, Peter's focus is the new Sprott Small Cap Funds. Prior to joining SAM , Peter worked at Sceptre Investment Counsel as a member of the Canadian Equity Small Cap Team and was appointed as Managing Director in December 2006.
Peter was a significant contributor to the award-winning management team of the Sceptre Equity Growth Fund and the Small Capitalization Canadian Equity Pooled Fund. He began his investment career at Sceptre in March 1998. From 1998 to 2000 he was involved in quantitative analysis and portfolio construction in Canadian Equities.
Fund Details
| Fund Status | Open |
| Distributions | Income and Capital Gains Distributed Annually (if any) Distributions are reinvested automatically |
| Fund Code |
SPR 001 - (A) SPR 111 - (LL) SPR 100 - (F) |
| Inception Date | 9/27/1997 |
| Nature of Securities | Mutual Fund Trust Units |
| Type of Fund | Canadian Equity Fund |
| Valuations | Daily |
| Redemptions | Daily |
| Minimum Initial Investment | $1,000 CDN |
| Minimum Subsequent Investment | $100 CDN |
| Minimum Investment Term | 180 days (3% penalty) |
| Management Fee | 2.5% annual - (A) |
| Performance Fee | 10% of excess over S&P/TSX Composite Total Return Index |
| Eligible for Registered Plans | Yes |
| Investor Risk Tolerance | Medium to High |

Q4 Market Commentary
The Sprott Canadian Equity Fund Series A (the "Fund") gave up 6.3% during the fourth quarter, trailing the 3.6% advance experienced by its benchmark S&P/TSX Composite Total Return Index.
The Fund's most significant performance detractor was its allocation to gold equities. Throughout the year the Fund reduced its allocation to gold bullion by approximately half and deployed the proceeds into gold stocks that were trading at what we believed to be exceedingly cheap valuations. Although this strategy did not translate into positive results, the premise for this strategy remains fully intact.
We still maintain that financial markets, on the whole, are chaotic. Throughout the year we witnessed a string of events that created exceptional nervousness and severe downside volatility. We could measure the level of fear by simply observing the CDS spreads blowing out on the shares of major financial institutions. Of course, governments and central banks came to the rescue every time. We regarded this monotonous profligacy as being "extend-and-pretend", which proved yet again to be ineffective in stabilizing financial markets. And although QE, TARP, TALF and other euphemisms for printing money have provided little-to-no economic benefit, we expect the printing to continue. This inherently inflation practice lends credence for increasing allocations to precious metals, which have historically flourished in similar circumstances.
While gold bullion in Canadian dollar terms returned in excess of 12% during 2012, shares of gold stocks retreated. There are many examples of large cap companies that have grown their earnings 2 or 3 fold yet their market caps have remained the same or even decreased. Gold stocks represent deep value couple with attractive earnings growth. We believe that if another sector exhibited the fundamental ratios that the gold sector currently is, there would be a frenzy of investor buying. We also anticipate that gold stocks will experience a recovery similar to that of October 2008 - represented by the HUI Gold Index which surged more than 300%.
The Fund remains committed to its established silver theme, represented by its approximate 24% allocation to silver bullion. While the futures and paper markets, along with some notable participants, created enormous volatility that resulted spot silver falling 8% in CAD terms, there is fundamental supply/demand data indicated that silver is poised for a significant upwards move.
Although 2011 was a disappointing year for the Fund, we will adhere to our proven investment approach that has resulted in long-term outperformance.