Sprung Investment Management is an independent investment management firm that serves high net worth private clients. It focuses on creating customized portfolios to achieve clients' long-term investment goals through principled analysis and integrity. The firm takes a value-driven approach to selecting undervalued securities with a margin of safety for preserving capital and delivering income and growth. It has a track record of low volatility returns since 2005 and performance numbers are available upon request.

1. THIRD QUARTER 2014
RETROSPECTIVE AND PROSPECTIVE
Cyclical Behaviour
25 Adelaide Street East, Suite 1914
Toronto ON M5C 3A1

2. Sprung Investment Management our focus is to create investment portfolios for our clients that
enable them to achieve their unique, long-term investment goals. In this endeavour, we strive to act
with the utmost integrity, utilising all of our analytical skills, knowledge and intuitions.
PRIVATE CLIENT FOCUS
Sprung Investment Management is an independent discretionary investment management firm that
serves the investment needs of high net worth private clients including business owners and
entrepreneurs, professionals, family trusts, estates, and private charitable foundations.
OUR PEOPLE
At Sprung Investment Management, the investment team collectively has over 120 years of diversified
investment experience. All of our principals hold the Chartered Financial Analyst designation and as
such adhere to the CFA Institute Code of Ethics. Each has made a commitment to continuing education.
RISK PERSPECTIVE
We understand that our clients have worked hard to get where they are and we appreciate that they don’t
want to lose it. As the chosen stewards of their investment assets, our risk management approach is to
preserve their capital by purchasing under-valued securities, with a margin of safety that we expect will
deliver income and capital appreciation over the long term.
PERFORMANCE
Sprung Investment Management has a track record of low volatility of returns since company inception
in June 2005. This has served our clients well over this relatively difficult investment period that
includes the bear market of 2007- 2008. Our performance numbers are available by request.
CLIENT SERVICE
At Sprung Investment Management, satisfying our client’s financial needs is our top priority. Each and
every client is special and receives individual attention and customized investment advice based on
his/her specific objectives and risk tolerance. Our principals are always available to speak directly to
clients.
INVESTMENT STYLE
In building equity portfolios, individual security selection is based on “bottom up” research that is value-driven
and often contrarian to current popular thinking. We assess quality and continuity of return on
equity, current price relative to intrinsic value, economic value added and quality of management.
Although our typical investment horizon is two to five years, we constantly evaluate our current
holdings against new opportunities that may offer better value. Our view is that a strong sell discipline is
a critical component to long-term investment success.
Our investment approach on the fixed income side is to conduct rigorous credit analysis in the context of
future economic and interest rate expectations.
25 Adelaide St. E., Suite 1914, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 2

3. THIRD QUARTER 2014
RETROSPECTIVE AND PROSPECTIVE
Cyclical Behaviour
“The house of delusions is cheap to build but drafty to live in.”- A.I. Housman
“Anyone who lives within their means suffers from a lack of imagination.”- Oscar Wilde
It all seemed so easy. The elixir of low interest rates and successive rounds of quantitative easing by the
central banks created an environment wherein stock and real estate prices have risen, private equity and
credit deals proliferated, corporations lowered their cost of capital with low rates and sub-prime
borrowers regained access to capital. Until this quarter, investors were content to drink this elixir as
markets steadily climbed out of the depths from 2008. The politicians taking credit and the central
bankers implementing these policies cannot be accused of a lack of imagination.
Geopolitical events continued to buffet investors’ concerns. While the fight between the Ukraine and
Russia appeared to abate to some extent, conditions in the Middle East continued to deteriorate as the
US started to pressure allies to support renewed intervention. Ongoing concerns in the South China Sea
remained prevalent while investors’ attention was diverted to the potential fallout from the Scottish vote
on independence and a surge of pro-democracy activity in Hong Kong. In addition to these events, a
resurgence of the deadly Ebola virus appeared toward the quarter end.
In September, markets deteriorated as investors sought to protect profits earned to date.
Canadian Dollar US Dollar
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD
Toronto Stock
Exchange 6.1% 6.4% -0.6% 12.2%
S&P 500 5.9% -1.4% 6.1% 14.1% 1.8% 5.2% 1.1% 8.3%
MSCI EAFE* 4.0% -0.6% -1.8% 1.5% 0.0% 2.9% -6.4% -3.6%
91 Day T-Bill 0.2% 0.2% 0.2% 0.7%
DEX** 2.8% 2.0% 1.1% 5.9%
CDN/US dollar -3.9% 3.5% -4.7% -5.1%
* Europe, Asia and Far East Index
** Canadian Bond Universe Index
25 Adelaide St. E., Suite 1914, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 3

4. As investors began to bolt from the equity markets, they sought a safe haven in the US dollar. The
Canadian dollar depreciated 4.7% against the US dollar in the quarter, largely reflecting softening
energy and commodity prices. Against other currencies, the Canadian dollar performed relatively better
as they were hit even harder. Are we witnessing a race to the bottom as governments try to spur
economic activity and exports through lower currency values? Certainly, it will be difficult to raise
interest rates significantly in this environment.
Inflation has yet to appear despite the expansion of central bank balance sheets by some $US7 to $US8
trillion since 2007. Government deficits continue to exacerbate already extremely high debt levels
globally. France will post a 4% deficit this year while Japan will post close to 8%. In the US, the deficit
is approaching 6%; slightly ahead of the UK (5.3%) and Spain (5.5%). As a result of these accumulating
deficits, Japan now has over a 250% debt to GDP ratio! Debt to GDP is through 100% in the US and
through 90% in the UK. In Canada, we are approaching 90%. How long will the bond markets continue
to allow these debts to expand at these low interest rates? Yet, in many countries, deflation remains a
valid concern as some prices fall. In the longer term, demographic headwinds in the developed
economies will certainly contribute to these deflationary concerns.
In Europe, economic stagnation has yet to be conquered by attempts to stimulate growth in part by
devaluing the Euro. Signs of slowing growth in the emerging economies and especially China have put
pressure on commodity prices. With this in mind, energy prices have hit a near perfect storm in the
short term with fears of waning demand at a time of record production and high inventories. In Canada,
Energy and Materials were the worst performing sectors this quarter declining 7.3% and 10.5%
respectively.
Market volatility has picked up in this environment. There has been greater activity in mergers and
acquisitions and Initial Public Offerings (IPO’s). The largest IPO ever was floated in the quarter as
Alibaba went public raising $25 billion. Despite this renewed level of activity, markets retreated sharply
in the latter month of the quarter. During these market declines, emerging markets and smaller
companies have been the hardest hit.
Is this the pullback that we referred to as a possibility in the last quarter?
To a large extent, we think that it is just that; a pullback. As noted previously, valuations were running
somewhat ahead of fundamentals. We had been taking some profits and building cash positions. As the
US economy continues to expand, Canada will be a beneficiary. We are sticking with our valuation
discipline and monitoring many situations seeking opportunities to deploy cash.
25 Adelaide St. E., Suite 1914, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 4

5. THIRD QUARTER 2014 FIXED INCOME COMMENTARY
“The job of the Central Bank is to worry.” ~ Alice Rivlin
Fixed income markets in the third quarter remained relatively unchanged in line with continued
expectations of a low interest rate environment.
Economic indicators continued to signal a modest, but steady improvement in the US. This will allow
the Federal Reserve to continue with its phasing out the Quantitative Easing program in October. In the
statement released subsequent to the September 16 / 17 FOMC (Federal Open Market Committee)
meeting, it was indicated that they expected a more rapid increase in interest rates looking out to 2017.
At the same time, European conditions are less rosy. There have been ongoing concerns about the spotty
economic recovery and fears about the possibility of deflation manifesting itself. European Central
Banker Draghi has vowed to ensure that adequate liquidity and stimulus will be available. This
potentially pro inflationary stance, while understandable from the perspective of mitigating the risk of
deflation, is fundamentally opposed by Germany given their painful historical experience with out of
control inflation.
In Canada, the neutral language from the Bank of Canada regarding interest rates has combined with a
modest rise in inflation to feed the erosion in the value of the Canadian dollar. Low interest rates have
been fuelling growth in consumer debt and driving increasing house prices, especially in the hot Toronto
and Vancouver markets. This has even gained the attention of the IMF, which expressed its concerns.
The various economic cross currents have left politicians and central bankers in a sticky situation. On
one hand, they clearly do not want to increase interest rates in an uncontrolled manner that would choke
off the uneven recovery. On the other hand, higher rates would tame debt growth and likely introduce
some inflation that would allow them to retire debt with a devalued currency in the future. Of course
monetary policy is not a precise tool and caution is warranted.
An issue that concerns us is the fundamental disconnect between investors reaching for yield by
investing in potentially ever more risky investments. Italian and Spanish ten-year bonds for example are
yielding less than equivalent US Treasuries. Similar distorted valuations are evident in high yield
corporate bonds also. One needs to reflect on the question that perhaps investors are being lulled into a
false sense of security and risk is once again being mispriced.
The total return performance of the bond market as measured by the FTSE TMX Canada Universe Bond
Index (formerly DEX Universe Bond Index) for the second quarter was an increase of 1.1%. The
benchmark ten-year Government of Canada bond yield remained unchanged at 2.2%. Over the course of
the quarter the Canadian dollar declined by 4.4 cents from 93.7 cents US to 89.3 cents US.
25 Adelaide St. E., Suite 1914, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 5

6. Our Team
Michael Sprung, CFA: Chief Investment Officer
msprung@sprunginvestment.com
• Chief Investment Officer
• More than 30 years experience in Canadian Investment industry, overseeing portfolios up to $2.5B
• Senior level positions with YMG Capital Management, Goodman & Company, Ontario Teachers’ Pension Fund,
Ontario Hydro and Cassels Blaikie & Co.
• Frequent contributor to BNN-TV, Globe & Mail, National Post and Money Sense
Fred Palik, CFA: Vice President, Fixed Income
fpalik@sprunginvestment.com
• Extensive experience in fixed income management in a variety of senior positions, primarily in the insurance
and hospital sectors.
• Member of the Toronto CFA Society and the CFA Institute.
Lois O’Sullivan, CFA: Vice President
loiso@sprunginvestment.com
More that 25 years experience in investment management.
• Co-founder of Sprucegrove Investment Management, specializing in international markets.
• Senior level roles at Confed Investment Counselling and Confederation Life Insurance Company.
• Fellow of the Life Office Management Institute (FLMI), the Toronto CFA Society and the CFA Institute.
Joie P. Watts, CFA, FSCI: Vice President & Portfolio Manager
jpwatts@sprunginvestment.com
• Over 30 years of progressive experience in the securities and investment industry.
• Senior level roles at Burns Fry Limited, Merrill Lynch Canada and Nesbitt Thomson.
• Managing Director of Instinet Canada Limited for over 10 years
• CEO of Shorcan ATS Limited, a specialized marketplace for equity dealers trading as principal.
Robert D. Champion, MSEd: Vice President, Client Services
rchampion@sprunginvestment.com
• Joined Sprung Investments Management in 2012 after several years with Successful Investor Wealth
Management.
• Prior to that, he had a fifteen-year career in OEM industrial sales.
• Manager with investment-publishing division of MPL Communications in the 1980s and early 1990s. MPL
publish Investor’s Digest and Investment Reporter.
• Robert is a Chartered Investment Manager (CIM) candidate.
Stay connected with Sprung Investment Management:
Twitter https://twitter.com/SprungInvest Twitter handle @SprungInvest
Facebook http://www.facebook.com/SprungInvestment
Linkedin http://www.linkedin.com/company/1699967
Google+ https://plus.google.com/+Sprunginvestment/
See Michael on BNN http://www.sprunginvestment.com/videos/
25 Adelaide St. E., Suite 1914, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 6