I.A. Michael Investment Counsel Limited, established in 1985, is dedicated to managing the ABC Funds. The firm’s objective is performance excellence. We concentrate on securities which we deem to be relatively undervalued and do not necessarily invest in every industry nor in what may be currently in vogue. Instead, we research, analyze and invest in companies which we believe will offer significant growth and free cash flow with potential value catalysts. Value investing has evolved significantly over the years. In the past, hidden assets such as unrecognized real estate appreciation, tax loss carry forwards, cash flows or potential company spinoffs provided excellent value investing opportunities for portfolio outperformance. Today, while hidden assets are still value drivers, the “new economy” of flourishing e-commerce growth, the increasing healthcare demands of aging baby boomers, and expanding technological advances have added a whole new growth dimension to traditional value investing. While we abide by traditional fundamental value disciplines, securities investing more than ever before, now involves additional considerations. For instance, 24-7 market vigilance and analysis of a never-ending flow of meaningful corporate and economic news are incorporated into our asset management duties. More importantly, our investment philosophy also incorporates our Ten Commandments of Value Investing which we apply in our stock selection process. These commandments emphasize such factors as quality of management, consistent earnings performance, undervalued assets or brands and dutiful corporate governance. We remain fully committed to our clients as well as our analytical and portfolio responsibilities. As the largest unitholders of our ABC Funds, our management team endeavors to give 100% of our abilities toward our common goal of investment excellence. Irwin A. Michael, CFA ABC Funds’ Ten Commandments of Value Investing 1. Solid Balance Sheets We search for solvent companies with ample credit facilities and liquidity, stable to improving bond ratings and debt repayment ability. 2. Growing Company Revenues We look for companies with increasing sales and improving pricing power eventually leading to higher profit margins. 3. Positive Industry Outlook We look for companies within expanding industry sectors; this should provide for increasing corporate margins, new business, product innovation and expansion. 4. Discount to Replacement Cost/Net Asset Value We search for companies with undervalued assets and/or trading below replacement costs with brands or products that are extremely dominant in their field of business. 5. Capable Management We look for companies with strong, experienced management who are shareholder friendly, possessing market savviness with a realistic, yet imaginative, vision for the company. 6. Consistent Earnings Generally, if a company is growing and consistently beating earnings guidance, it is implicit that management has a strong handle on the company’s operations. This can result in higher earnings multiples and a greater analyst and investor following. 7. Dutiful Corporate Governance Of critical importance is that the board of directors are aligned with shareholders. For instance, in an unsolicited takeover battle, we expect the directors to fight for maximum shareholder value as opposed to safeguarding management tenure. 8. Solid Common Share Ownership We prefer company shareholders who are motivated, not complacent and are not afraid to fight for positive corporate changes. 9. Quality Assets and Brands We put a lot of value on cash generating assets, growing businesses and valuable brands since they can grow a company’s market position, expand a stock’s trading multiples and act as a floor on a common stock price. 10. Strong Company Cash Flows We look for companies that have growing free cash flows. Free cash flow is important since it can fund mergers and acquisitions, bankroll company expansion, increase common stock dividends and share buybacks and reduce corporate debt.