It has been seven years since the last financial crisis. In that seven-year period, the total global debt has increased by even more than it did in the seven years previous (2000-2007). From the end of 2007 through to the end of the first half of last year, total global debt increased by 40%, or $US 57 TRILLION! This massive increase in debt has been a consequence of easy money in a low interest rate environment aided and abetted by programs of quantitative easing (the provision of liquidity by central banks) in order to promote economic growth and investment. The first quarter managed to record some positive results overall, despite severe declines in some sectors.

1. FIRST QUARTER 2015
RETROSPECTIVE AND PROSPECTIVE
Will She or Won’t She
25 Adelaide Street East, Suite 500
Toronto ON M5C 3A1

2. 25 Adelaide St. E., Suite 500, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 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.

3. 25 Adelaide St. E., Suite 500, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 3
FIRST QUARTER 2015
RETROSPECTIVE AND PROSPECTIVE
Will She or Won’t She
“Neither a borrower nor a lender be, For aft loses both itself and friend, And borrowing dulls the edge
of husbandry”- Polonius, Hamlet, Act I , Scene 3
“High debt levels, whether in the private or the public sector, have historically placed a drag on growth
and raise the risk of financial crisis that spark deep economic recessions.”- The McKinsey Institute,
Debt and (not much) Deleveraging
In the first quote above, Polonius is advising his son, Laertes, who is about to leave for Paris to complete
his gentleman’s education, that lending money to friends is risky and can end up causing resentment and
even the loss of the friendship. Furthermore, Polonius points out that borrowing money can endanger
husbandry or thrift. The second quote, taken from a study by The McKinsey Institute, concludes that
high levels of debt can lead to slower economic growth and even financial crisis.
It has been seven years since the last financial crisis. In that seven-year period, the total global debt has
increased by even more than it did in the seven years previous (2000-2007). From the end of 2007
through to the end of the first half of last year, total global debt increased by 40%, or $US 57
TRILLION! This massive increase in debt has been a consequence of easy money in a low interest rate
environment aided and abetted by programs of quantitative easing (the provision of liquidity by central
banks) in order to promote economic growth and investment.
The first quarter managed to record some positive results overall, despite severe declines in some
sectors.
Canadian Dollar US Dollar
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD
Toronto Stock
Exchange 2.6% 2.6%
S&P 500 10.1% 10.1% 1.0% 1.0%
MSCI EAFE* 13.7% 13.7% 4.2% 4.2%
91 Day T-Bill 0.3% 0.3%
DEX** 4.2% 4.2%
CDN/US dollar -8.5% -8.5%
* Europe, Asia and Far East Index
** Canadian Bond Universe Index

4. 25 Adelaide St. E., Suite 500, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 4
Investors’ concerns are now largely centred on the repercussions of these easy money policies and the
massive build up of debt. Debt has increased globally in 22 of the advanced economies and consumer
debt has risen sharply in all of them with the notable exceptions of the US, UK, Spain and Ireland.
Within the emerging markets, US dollar denominated debt now exceeds $9 trillion, up from $2 trillion
just 14 years ago. A large portion of this debt is corporate debt.
In China, debt levels have quadrupled in the last seven years. Twenty-five percent of the corporate debt
in China is denominated in US dollars. Only 8.5% of corporate earnings in China are earned in US
dollars. Five percent of Chinese firms hold over 50% of that debt.
In conclusion, the combination of low interest rates and quantitative easing has flooded the world with
liquidity and made borrowing all too tempting to resist. Japan holds the record with debt now exceeding
250% of their GDP.
In Canada, debt levels have been highlighted by the Bank of Canada as an area of concern particularly
consumer debt that has reached all time highs. Consumer debt is reaching troubling levels in more than
just mortgages. Margin debt (money borrowed to make investments) is near record levels at over $19.2
billion. Margin debt places those investors in a vulnerable position if their investments fall in price and
they are forced to cover that debt.
So, will she or won’t she? The she being Janet Yellen, the Chair of the Federal Reserve in the US. The
question is as to when she may deem it appropriate to raise interest rates.
While there has been a great deal of speculation as to when the first increase in rates may occur, it is not
altogether clear that it will be in the immediate future. There is no doubt that the Federal Reserve would
like to raise rates given the strengthening of the US economy with the commensurate improvement in
employment levels. However, the strength of the US dollar that has appreciated 9% against the
currencies of its major trading partners in the first-quarter, is already a concern as exports from the US
are already facing a competitive disadvantage. The US would not want to risk the economic chaos that
night ensue globally as more fragile economies with large US denominated debt tilt back towards
recession.
The decline in oil prices is beginning to reverberate throughout the world economies, particularly in
Canada and the other large oil producing nations. Over the last seven years, the US has become a large
producer of oil and gas with the success of modern drilling technologies. As we enter the next quarterly
reporting period, we will be looking for the impact that this weakened environment will have on
earnings. In an environment where valuations are looking stretched, in our opinion, we could be
entering a very volatile period in global equity markets.
As we concentrate on the valuations at which individual companies are trading, we will be looking for
opportunities to compliment portfolio exposures in this environment. We are well positioned in this
regard.

5. 25 Adelaide St. E., Suite 500, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 5
FIRST QUARTER 2015 FIXED INCOME COMMENTARY
“Facts are stubborn, but statistics are more pliable.” ~ Mark Twain
Fixed income markets continued to develop a split personality. In the US a consensus seems to be
building towards a June rate hike by the Fed. Of course this is being hedged in various pronouncements
and realistically it will depend on whether economic data continues to show improvements and whether
inflation convincingly rises from the current near zero level.
In Europe on the other hand, concerns have been building about deflation where in a number of
countries at least some debt instruments now carry a negative yield. This effectively requires investors to
pay up for the safety of having high quality government debt instead of more questionable bank
deposits. In addition the seemingly never ending wrangling with Greece about debt repayments vs.
further demands for loans and / or some sort of restructuring doesn’t seem to be ending.
Layered on this has been the issue of geopolitical events that seem to be spinning out of control as the
middle eastern instability seems to be sucking in ever more countries and players. While aerial
bombardment and support for anti ISIL fighters has contained their military advance in Iraq, other
offshoots seemed to have spread to Libya and Yemen. The recent military action by Saudi Arabia in
Yemen has brought yet another player into the fray.
At the same time, the nuclear non proliferation talks with Iran seem to have been progressing at a
somewhat unsatisfactory manner without a clear, comprehensive, agreement in sight. Realistically the
best that seemingly can be expected is an agreement that may slow down their development of nuclear
weapons, but not halt it permanently. This of course translates into a political kicking of the can down
the road to be dealt with at another time by another set of politicians, or more darkly, by military action.
In Canada the precipitous decline in oil prices has not only had its negative effects on Alberta, but has
had a spreading impact on other sectors of the economy. In line with this, Bank of Canada governor
Poloz has warned about the likely “atrocious” first quarter economic performance. Central bank
governors generally fall into one of two categories. Either they speak in riddles and keep markets
guessing so that any direct pronouncements or interest rate actions have that much more impact, or the
kind that gives clear indications as to what the Bank thinks, what are their concerns so that market
participants can take into consideration when formulating their views on the direction of the economy
and monetary policy. Both of these approaches have their successful practitioners, and either is
defensible. What is needed though is consistency. Mr. Poloz does not seem to be able to make up his
mind as to which row to hoe. His surprise January rate cut was unexpected, his atrocious comment was
trying to be clear and forthcoming. The market’s expectation is for another rate cut this year.
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 first quarter was an increase of 4.2%. The
benchmark ten-year Government of Canada bond yield declined by 0.4% to end the quarter at 1.4%.
Over the course of the quarter the Canadian dollar declined by 7.2 cents from 86.2 cents US to 79.0
cents US.

6. 25 Adelaide St. E., Suite 500, Toronto, ON M5C 3A1 | Phone: 416.607.6642 | www. SprungInvestment. com | P a g e | 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.
Stay connected with Sprung Investment Management:
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