Since the inauguration on January 20, we have all been inundated by media reports on the first one hundred days of the Trump administration. While stock market participants entered the year with apparently high expectations, towards the end of this 90 day quarter there has been wavering of sentiment as the realization that not all of Trump’s campaign promises are likely to be delivered.

1. FIRST QUARTER 2017
RETROSPECTIVE AND PROSPECTIVE
The First Ninety Days
(DoD photo by U.S. Marine Corps Lance Cpl. Cristian L. Ricardo)
25 Adelaide Street East, Suite 500
Toronto, ON M5C 3A1

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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.

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FIRST QUARTER 2017
RETROSPECTIVE AND PROSPECTIVE
The First Ninety Days
“We can ignore reality, but we cannot ignore the consequences of ignoring reality.”- Ayn Rand
“Recognizing risk often starts with understanding when investors are paying it too little heed.”- Howard
Marks
Since the inauguration on January 20, we have all been inundated by media reports on the first one
hundred days of the Trump administration. While stock market participants entered the year with
apparently high expectations, towards the end of this 90 day quarter there has been wavering of
sentiment as the realization that not all of Trump’s campaign promises are likely to be delivered.
North American stock markets finished the quarter in positive territory. The enthusiasm in the US
propelled the S&P 500 up 5.5% (6.1% in US dollars) as investors focused on the prospects of lower
taxes and reduced regulation that were the cornerstones of the Trump campaign. The Canadian market
was not as robust. Weak energy prices and faltering economic prospects in Alberta and Ontario weighed
on the enthusiasm of investors in Canada. The Toronto Stock Exchange recorded an increase of 2.4% in
the quarter lead by Utilities (7.3%), Consumer Discretionary (7.0%) and Information Technology
(7.0%). Health Care (-10.0%) and Energy (-5.5%) were the only sectors with negative performance.
Canadian Dollar US Dollar
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD
Toronto Stock
Exchange 2.4% 2.4%
S&P 500 5.0% 5.0% 6.1% 6.1%
MSCI EAFE* 5.4% 5.4% 6.5% 6.5%
91 Day T-Bill 0.1% 0.1%
CUBI** 1.2% 1.2%
CDN/US dollar 0.8% 0.8%
* Europe, Asia and Far East Index
** Canadian Universe Bond Index
Contrary to the predictions of the pundits in the media, the US stock market entered a period of euphoria
following the US presidential election in November. Expectations appeared to be focused on the
promises made during the campaign with respect to health care reform, tax reductions, regulatory relief
and massive government spending programs on infrastructure and the military. That sentiment persisted
through the first two months of 2017. In March, political reality began to sink in as discussions on health

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care reform began in earnest and the administration planned to present a Bill on March 23rd
. As support
for the legislation began to break down, confidence in the Trump administration’s ability to garner
approval for their agenda began to falter. As market participants focused on these deliberations, the S&P
500 gave up a third of the gains achieved in the first two months of the year.
In Canada, investor sentiment was more muted. The Toronto Stock Exchange participated with the US
market post the election until year-end. Thereafter, Canadian investors became concerned as energy
prices came under pressure and fears of the impending NAFTA trade negotiations came to the fore with
the resurgence of the “age old” softwood lumber dispute. Investors felt some relief as the federal budget
was less dramatic than feared and did not contain any increase in capital gains taxes that had been
rumoured. The release of GDP economic indicators stronger that expectations were corroborated by the
fact that the Canadian dollar was able to modestly appreciate against its US counterpart by 0.8%.
European stock markets were reflecting increasing optimism in the economy as factories exhibited
greater activity. The positive economic trends superceded investors’ anxieties over the election in the
Netherlands where fears that the populist candidate could have prevailed, but didn’t. Upcoming elections
in France and Germany will also test those anxieties as populist candidates in both countries are doing
well in the advance polls. While some positive economic indicators are a relief, serious financial
constraints and immigration issues will continue to influence investors’ sentiment.
The Asian economies also reported some positive indications that factories were busier. Exports from
Taiwan, South Korea and China were up significantly compared with a year ago. Japan increased its
outlook for economic growth over the coming year.
There are certainly reasons to be optimistic on the global economy. Orders for capital equipment are on
the rise and employment has been improving. It has been almost ten years since the financial crisis of
2008. Climbing out of the financial abyss has been slow and painful for many as adjustments have taken
time to work through the economy, as is often the case following financial crisis. The result has been
reflected by the increase in populist politics as evidenced by the vote for Brexit and the election of
Donald Trump. While the Netherlands managed to stem the populist tide, there are still the elections in
France and Germany ahead.
Politics and economic cycles are often out of sync. The politics of populism are not as accommodating
to the concepts of free trade and globilization that have sown the seeds for the current recovery; yet
those very politicians may point to the recovery and take credit where none is due. In fact they may sow
the seeds for the next downturn.
There remain many geopolitical and economic issues yet to be resolved: North Korea, Russia and the
Ukraine, Syria, debts in China, Italy and other nations. Valuations in the stock market have reached high
levels on the basis of the favourable economic trends continuing. Perhaps it is not wise to ignore the
other issues.
We remain cautious in the current environment.

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FIRST QUARTER 2017 FIXED INCOME COMMENTARY
“Globalization is the process by which markets integrate worldwide.” ~ Michael Spence
If the first quarter is a harbinger of political turbulence to come, then we are looking forward to
interesting times! The Trump presidency has had a rocky start with changes in tack regarding
appointments and implementation of promised reforms. While new administrations do tend to have their
challenges as they settle into their roles, the Trump administration seems to have had more than their
share. It can only be hoped that they will find their "sea legs" soon.
While the chaos swirling around the White House continues, the Federal Reserve (Fed) has finally
pulled the trigger on the expected rate hike in the first quarter, likely the first of a number. The President
may not be a fan of Chairman Yellen, however having a sober, low key person in charge at the Fed
provides some assurance to investors that there is some continuity in policies that are being carried out.
The US government's large spending program is likely to be inflationary. During a period when
economic growth and labour markets have continued to firm, this growth will give the Fed ample reason
to continue their rate hike program. As the Fed has stated, any action will continue to depend on
subsequent economic readings.
Foreign buyers in turn have been scaling back their purchases of US Treasury securities as the expected
rate hikes and the potentially inflationary actions of the government are likely to put pressure on bond
prices.
Major questions remain regarding Europe. The combination of upcoming elections in France and
Germany, terrorist attacks and growth in populist political movements all add to the uncertainty. As we
have stated in the past, there continue to be overhanging issues, primarily related to debt and borrowing
in various countries. Political uncertainty regarding the future of the European Union and the consequent
stability of the Euro will make investors that much more reluctant to participate in various refinancing
attempts. Weakening of the Union and any further departures along the lines of Brexit would only
increase the pressure on Germany to act as a backstop to the Euro denominated debt; a situation that will
have its limits!
The total return performance of the bond market as measured by the FTSE TMX Canada Universe Bond
Index for the first quarter was an increase of 1.2%. 91-day Treasury bills returned 0.1% over the same
period. The benchmark ten-year Government of Canada bond yield declined 0.09% over the course of
the quarter to end with a 1.63% yield at quarter-end. Over the course of the quarter the Canadian dollar
appreciated by 0.7 cents from 74.5 cents US to 75.2 cents US.

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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.
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