Global conflicts in trade are beginning to impact economic outcomes in very fundamental ways. The disruption resulting from these trade skirmishes is evident in both the bond and equity markets. The times they are a-changin’… In Canada, the S&P/TSX Total Return Index advanced 2.6% in the second quarter of 2019, bringing the year to date to 16.3%. The US market advanced 4.3% in the quarter as measured by the US dollar denominated S&P 500 Total Return Index. The S&P 400 MidCap Total Return Index lagged the 500 with a 3.0% return in this quarter. Markets represented by the MSCI EAFE Price Return index posted a positive 2.5% return as measured in US dollars or a 0.5% return in Canadian dollars. The Canadian dollar appreciated 2.2% to its US counterpart in Q2.

1. SECOND QUARTER 2019
RETROSPECTIVE AND PROSPECTIVE
The Times They Are A-Changin’
121 Richmond Street West, Suite 1101,
Toronto ON M5H 2K1

2. 121 Richmond Street West, Suite 1101, Toronto ON M5H 2K1| 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.

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SECOND QUARTER 2019
RETROSPECTIVE AND PROSPECTIVE
The Times They Are A-Changin’
Come gather 'round, people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone
If your time to you is worth savin'
And you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'- Bob Dylan
Global conflicts in trade are beginning to impact economic outcomes in very fundamental ways. The
disruption resulting from these trade skirmishes is evident in both the bond and equity markets. The
times they are a-changin’…
In Canada, the S&P/TSX Total Return Index advanced 2.6% in the second quarter of 2019, bringing the
year to date to 16.3%. The US market advanced 4.3% in the quarter as measured by the US dollar
denominated S&P 500 Total Return Index. The S&P 400 MidCap Total Return Index lagged the 500
with a 3.0% return in this quarter. Markets represented by the MSCI EAFE Price Return index posted a
positive 2.5% return as measured in US dollars or a 0.5% return in Canadian dollars. The Canadian
dollar appreciated 2.2% to its US counterpart in Q2.
Canadian Dollar US Dollar
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD
Toronto Stock
Exchange 13.3% 2.6% % % 16.2%
S&P 500 11.2% 1.1 % % % 13.2% 13.6% 4.3% % % 13.6%
MSCI EAFE* 6.7% 0.5% % % 7.3% 9.0% 2.5% % % 11.8%
91 Day T-Bill 0.4% 0.4% % % 0.8%
CUBI** 3.9% 2.5 % % % 6.5%
CDN/US dollar 2.1% 2.2% % % 4.3%
* Europe, Asia and Far East Index
** Canadian Universe Bond Index

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In the second quarter, financial markets have reflected the fear and uncertainty investors face given the
growing global geopolitical tensions that have been exacerbated by trade disputes. This has been most
evident in the bond market as 10-year US Treasury notes have repeatedly flirted with dropping below
the 2% level indicating that investors’ expectations of economic growth are diminishing. The equity
markets have reacted with greater volatility in pricing as market participants continuously adjust
directions to often conflicting data.
In the first quarter of 2019, inventory accumulation appeared to overshadow the slowdown in business
investment and capital expenditures resulting in a positive market reaction following the dismal
performance in the fourth quarter of 2018. However, markets have been less sanguine as more recent
data has tended to highlight the negative trends in business investment which has resulted in forecasts of
future economic growth to be adjusted downward.
Coincident with lower expectations of growth have been statistics reporting weakening manufacturing
volumes and slower service sector output. The continuing trade uncertainties are causing businesses to
question an ongoing reliance on production in China and examine opportunities elsewhere.
Europe is also facing the prospect of even slower economic growth. Trade issues have reduced the
outlook for exports resulting in lower manufacturing activity. Business investment and capital
expenditures have also been slipping. Slowing activity in China, a major recipient of European exports,
is also a concern.
The UK faces greater challenges as issues surrounding Brexit have served to destabilize domestic
politics. In an already tepid business climate, trade concerns and political uncertainty are only making
the outlook for restoring or even stabilizing the economy less likely.
Despite all of these concerns, global equity markets have all tended to the positive side over the quarter
although the ride has been turbulent. It is worth noting that without the USA, global markets have not
reached new highs and still remains about 15% below the cycle’s peak. In the US, without the
FAANGM (Facebook, Apple, Amazon, Netflix, Google, Microsoft) stocks, the S&P 500 has returned
closer to 6% per annum over the past six years, as opposed to the all-in figure of over 11%.
We are in the eleventh year of what has been a slow but positive period of economic expansion. In fact,
this is now the longest economic expansion in modern history. In part, credit must be given to the overly
accommodative monetary policies of the global central banks following the financial crisis. These
policies have allowed the developed economies to partake of a sustained period of tightening labour
markets in an environment of low inflationary pressures. While politicians may have thought that they
have discovered the elixir to defeat the business cycle, there have been excesses and imbalances
percolating below the surface, not the least of which are massive debt levels in both the public and
private sectors. With the prospect of slower economic growth, central banks are likely to continue to
restrain rates.
A big concern would be that central banks in the developed nations respond to the threat of recession
with massive fiscal and monetary stimulus leading to a result similar to Japan in the 1990’s: three

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decades of low growth, low interest rates and even larger deficits (Note: this would be preferable to a
total meltdown). While we do not believe that the business cycle has been defeated, we do not think that
a protracted period of stagnant growth need result from policy initiatives. Technology is accelerating
change and productivity enhancements are likely to follow…
Yes, the times they are a-changin’…

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SECOND QUARTER 2019 FIXED INCOME COMMENTARY
"If plan A doesn’t work, the alphabet has 25 more letters - 204 if you’re in Japan.” ~ Claire Cook
Interest rates continued their decline in the second quarter, extending an essentially unbroken slide since
the beginning of the fourth quarter. The mood has definitely changed from an expectation of central
banks raising rates that was prevalent not all that long ago.
Central banks have shifted their message towards a more cautious stance. Comments have been
forthcoming with repeated references that changes will be “data driven” or that any rate hikes would be
forthcoming in some future time period thus kicking the proverbial can down the road. If anything,
totally separate from President Trump’s fulmination regarding Fed interest policy, speculation has been
gaining momentum that there may well be some rate cuts forthcoming.
The change in attitude stems from the fact that economic performance, while quite reasonable, has been
slowing globally. Normally one would have expected significantly greater recovery and more
inflationary pressures to result from the low interest rate policies of the central banks over that last ten
years. This has not happened.
The bond market, a safe haven for investors looking for a place to park their money at a time of
uncertainty, is signaling caution. One has to just look at European markets where ten-year bonds in
Germany, Netherlands and Switzerland are posting negative rates. Essentially investors are willing to
forgo returns for a safe government backed security. Deposit insurance writ large!
While Canadian rates have not declined to the same extent, speculation has centered on what the
reaction of the Bank of Canada would be if the US Federal Reserve lowered interest rates. While the
knee jerk reaction of a similar cut appears unlikely, the already rising value of the Loonie would be
further enhanced by declining US rates. The Bank of Canada has stated in the past that they were not in
the business of managing the exchange rate. Nevertheless, a rising dollar would put pressure on exports
thereby exacting an economic cost. This will likely factor into the Bank’s decision making when the
time comes.
The total return performance of the bond market as measured by the FTSE TMX Canada Universe Bond
Index for the second quarter was an increase of 2.5%. 91-day Treasury bills returned 0.4% over the
same period.
The benchmark ten-year Government of Canada bond yield declined by 0.16% over the course of the
first quarter to end the period with a 1.46% yield. Over the same period the Canadian dollar appreciated
by 1.6 cents from 74.8 cents US to 76.4 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.
Stay connected with Sprung Investment Management:
Twitter @SprungInvest
Facebook http://www.facebook.com/SprungInvestment
Linkedin http://www.linkedin.com/company/1699967
See Michael on BNN Bloomberg’s Market Call http://www.sprunginvestment.com/videos/