1. MANAGED RISK INVESTING
Joe Jugovic, CFA
President & CEO
QV Investors

2. QV INVESTORS
History
Founded in 1996 on the principles of quality and value
Employee-owned, independent investment counsel
Repeatable, proven value-based processes
Top quartile manager with returns for QV Small-Cap Fund of 15.5% (vs. 5.9% for the benchmark*) and returns of 14.6% for QV Canadian Equity Fund (vs. 6.6% for the benchmark**) over 14 years (July 31’13)
All employees of QV are personally invested in the funds they manage
*BMO Small-Cap Unweighted Index
**S&P/TSX Total Return Index

3. EQUITY INVESTING Investment philosophy
We buy a portfolio of enduring businesses run by capable, committed, and candid people. We select equities on good value, that is the price we pay for a company’s assets and their return on equity. We hold our good business positions for an indefinite period.
Objective: to create a portfolio of companies to provide consistent growth with below average risk

4. EQUITY INVESTING Company analysis and security selection Management
Share ownership, years of leadership, succession planning, compensation, board and operational team, corporate governance.
Financial record
Demonstrated record of growth in equity, earnings, sales and cash flow or demonstrated management of asset base.
Franchise and outlook
Innovation, service, product or resource development. Competitive position. Business outlook.
Balance sheet strength
Equity financed balance sheet versus debt. Sensible allocation of capital.
Valuation
P/E’s, P/CF’s, P/B’s and NAV’s below market. Reasonable relative to ROE’s and ROIC’s above market. Assessment of downside risk.
Free cash flow to increase dividends. Culture of dividends. Sensible capital allocation.
Dividends and capital
allocation
Portfolio enhancement
New selections enhance quantitative portfolio characteristics – quality, value, diversification and growth.

5. EQUITY INVESTING Buy discipline – Empire Company Ltd.
Book value per share
Return on equity (%)
Dividends / Share
Consistent long-term appreciation in firm value with a commitment to shareholders
Source: Capital IQ

6. EQUITY INVESTING Buy discipline – Empire Company Ltd.
Source: Capital IQ

7. EQUITY INVESTING Buy discipline – Empire Company Ltd.
Source: Capital IQ

8. EQUITY INVESTING Buy discipline – Atco Ltd.
Book Value per Share
Return on Equity (%)
Dividends / Share
Consistent long-term appreciation in firm value with a commitment to shareholders
Source: Capital IQ

9. EQUITY INVESTING
Buy discipline – Atco Ltd.
Source: Capital IQ

10. EQUITY INVESTING
Buy discipline – Atco Ltd.
Source: Capital IQ

11. EQUITY INVESTING Sales discipline
Failure of our buying tests or attractive alternative:
Management turnover / material change in firm direction
Breakdown in profit / cash flow consistency
Erosion of competitive position / negative future outlook
Increasing financial leverage
Excessive valuation / dividend failure

12. EQUITY INVESTING
Company analysis & security selection – Canadian equity
Sale candidate - Canadian Oil Sands Trust – P/B
Price to Book
Source: Capital IQ

13. EQUITY INVESTING
Company analysis & security selection – Canadian equity
Sale candidate - Research In Motion P/B
Price to Book
Source: Capital IQ

14. Our process keeps us consistent over time
EQUITY INVESTING
Risk management philosophy
Risk is the permanent loss of our clients’ capital.
We manage the valuation, growth, balance sheet,
and diversification risks of the portfolio.
Our process keeps us consistent over time

15. EQUITY RISK MANAGEMENT
United Canadian Equity Small-Cap Pool
Price to earnings
Four-year average ROE
United Cdn Equity Small-Cap
BMO Small Cap Index
Source: Capital IQ 15

16. EQUITY RISK MANAGEMENT
United Canadian Equity Small-Cap Pool
Debt to equity
Dividend yield
United Cdn Equity Small-Cap
BMO Small Cap Index
Source: Capital IQ 16

17. EQUITY RISK MANAGEMENT
Sector allocation – United Canadian Equity Alpha Corporate Class
As of July 31, 2013
Diversification measures
Industry
25% maximum
Portfolio positioning
29 holdings
1% minimum - limit
6% maximum - limit
Source: QV Investors & Capital IQ

18. EQUITY RISK MANAGEMENT
Top 10 holdings – United Canadian Equity Alpha Corporate Class
As of July 31, 2013
Source: QV Investors & Capital IQ

19. PERFORMANCE REVIEW United Canadian Equity Alpha
Annualized returns as at July 31, 2013
United Canadian Equity Alpha
Annual calendar returns
Source: QV Investors

20. EQUITY RISK MANAGEMENT
Sector allocation – CI Can-Am Small Cap Corporate Class
As of July 31, 2013
Diversification measures
Industry
25% maximum
Portfolio positioning
31 holdings
1% minimum - limit
6% maximum - limit
Source: QV Investors

21. EQUITY RISK MANAGEMENT
Top 10 holdings – CI Can-Am Small Cap Corporate Class
As of July 31, 2013
Source: QV Investors

22. PERFORMANCE REVIEW CI Can-Am Small Cap Corporate Class
Annualized returns as at July 31, 2013
CI Can-Am Small Cap
Corporate Class
Annual calendar returns
Source: QV Investors

23. Current environment and outlook

24. WHAT’S NEXT? Prefer equities over bonds
Businesses are generally healthy
Would the real economy please stand up!
Investor psychology
Paying the right price for yield 24 24

25. EQUITIES BETTER VALUED
Source: John Aitkens, TD Securities, July 2013

26. VALUATION
Source: John Aitkens, TD Securities, August 2013

27. DIVERSIFICATION WILL MATTER
Source: RBC Capital Markets, Haver Analytics

28. ECONOMICS VS. COMPANY ANALYSIS
After-tax profit margin from current production,
Source: Ed Yardeni,
The Gloom, Boom & Doom Report, October 2010

29. CORPORATE CASH BUFFER
Source: BMO Capital Markets, Global Equity Weekly June 07, 2013

30. S&P 500 Index and quantitative easing
FADING EFFECT OF INTERVENTION
S&P 500 Index and quantitative easing
Last Point 2/27/13: 1,516
Source: Thomson Reuters and A. Gary Shilling & Co., March 2013

31. PSYCHOLOGY
Source: Barry Bannister, Stifel Nicolaus

32. PSYCHOLOGY - INDIVIDUALS
Source: IFIC & BMO

33. BONDS: THE FAVORED ASSET CLASS
“For the first time in at least 12 years, reports the 2012 Milliman Pension Funding Study, a canvass of corporate America’s 100 largest defined benefit plans, pension managers have ear-marked more funds for fixed income (41.4%) than equities (38.1%). Just five years ago, stocks got twice the allocation of bonds (60.3% vs. 29.3%)…”
GRANT’S Interest Rate Observer, Vol. 30, No. 7, April 6, 2012

34. OPPORTUNITY – DIVIDENDS MATTER
Source: RBC Capital Markets Quantitative Research

35. THE PRICE OF YIELD Source: Ned Davis Research Group
(S&P Capital IQ Compustat, S&P Index Alert)

36. CONCLUSION Strong companies provide more stability
Great businesses provide growing income
Risk management protects capital 36 36

37. Thank you
Commissions, trailing commissions, management fees and expenses may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
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