3rd Quarter, 2017

We are pleased to report that the results achieved by the managers and employees of your companies during the third quarter are exceptionally good. The average revenue gain among your companies rose to over 12% during the quarter which enabled earnings growth to surpass 15%. The excellent earnings in most instances lifted the reporting companies stock prices, which is the result sought by the managements of your companies. Their skill at working toward achieving their goals gives us confidence in their abilities to continue adjusting to change in their markets and the overall economy.

We do not think the stock market is up because of the actions of our president or other politicians. The ever-evolving tax bill leads us to think it may help our economy, but those whom we know who seem the most knowledgeable about tax law are very cautious about what the proposed changes might mean. They remind us that the meaning is found in the specific language used and it’s not there yet. We hope that whatever is enacted is beneficial, but we will continue to confidently hold shares in these companies that we all own and that are run by capable, realistic managers. Incidentally, the S&P companies’ quarterly revenues and earnings were up only 6%.

Red Hat

Red Hat’s results for its fiscal second quarter that ended on August 31, 2017 reflect excellent execution by its direct sales force. They demonstrated the value of its open source software solutions to customers who are modernizing their IT systems to offer better products and services. Growing customer interest in OpenShift, which enables software to run on servers in a datacenter or in the cloud, and Ansible, which speeds the delivery of services and applications by automating routine activities on thousands of servers, contributed to the 44% revenue growth of Application development-related and emerging technologies to $150 million. Revenue from Red Hat’s consulting and training business grew 25% to $85.8 million as more customers engaged the company’s consultants to assess the impact of these new products on their software development processes.

Fiscal second quarter sales grew 21% to $723 million with subscription revenue up 20% to $637.6 million. Revenue for Red Hat Enterprise Linux (RHEL) grew 14% to $487 million. Revenue from RHEL which is purchased as developers use it on the public cloud is growing about 30% to 40% annually and reached an annual run-rate of $200 million during the quarter. GAAP earnings per share of 53¢ increased 66% over earnings per share of 32¢ reported a year ago. Non-GAAP earnings per share of 77¢ rose 40%. Non-GAAP earnings per share excludes stock-based compensation expense, amortization of intangible assets, non-cash interest expense associated with the company’s convertible debt and other one-time items. Red Hat’s stock price has risen 79% since the beginning of the year.


Alphabet’s third quarter revenue of $27.8 billion and earnings per share of $9.57 increased 24% and 32% over the same period a year ago. Operating income rose 35% to $7.8 billion and operating margin increased 2.3 percentage points to 28.0% because a timing shift of employee stock compensation improved Alphabet’s quarterly profitability. Google’s advertising revenue increased 21.4% to $24.0 billion, of which 82% was generated on Google sites. Ad clicks on Google sites increased 55% from a year ago. Most of this growth came from people using their smartphones more to search Google and watch YouTube. Over 1.5 billion people now spend an average of 60 minutes per day watching YouTube videos on their phones. Google’s 2016 overhaul of its mobile ad platform optimizes ads for screen sizes of popular smartphones and allows expanded text headlines and descriptions of the products and services being offered. Advertising revenue from Google Network Members, which include third-party websites and mobile applications that display Google ads, increased 16% to $4.3 billion. Some of the growth came from increased use of Google’s AdMob platform which displays ads in apps developed by third parties. AdMob works on both Android and Apple’s mobile operating system.

Google Cloud Platform was the largest contributor to the 40% growth of Google’s non-advertising revenues to $3.4 billion in the quarter. Google’s new partnership with Cisco will help customers run software on their own servers and in Google’s cloud by using Kubernetes, an open source application development and management tool originally developed by Google. Google’s strong free cash flow generation lifted cash and liquid securities on Alphabet’s balance sheet to $100 billion as of September 30, 2017, or 16% of the company’s market capitalization. Alphabet’s share price is up 26% since February.

CME Group Inc.

CME’s expense discipline remains strong, even as average daily volume rose 10% to 15.7 million contracts. Growth outside the U.S. continues with Europe and Asia volumes up 21% and 17% respectively. Trading volume for all product lines rose during the quarter, except for equities volume which fell 9%. Energy and metals achieved quarterly volume records, rising 17% and 41% respectively. Agricultural commodities, interest rates and foreign exchange volume also rose significantly, up 20%, 9% and 26% respectively. Overall revenues of $890.8 million rose 6.4% and expenses rose just 1% to $322.9 million producing an operating margin of 64%. Adjusted earnings of $1.19 per share rose 13% from a year ago. Open interest, which reflects the number of open futures contracts outstanding, reached a record 129.1 million contracts earlier this year and was 114 million at quarter-end, up 11% from a year ago. Open interest is an indicator of future trading volume as many of these contracts are rolled over at expiration to maintain a hedged position.

Tax reform, if it is enacted, will provide CME with a substantial boost to earnings. Ninety-seven percent of CME’s $2.3 billion of pre-tax income is taxed domestically as CME’s Globex technology platform resides here. Management anticipates that they would retain about 85% of the reduction in the tax rate so if the federal tax rate is reduced from 35% to 20%, CME’s net income would jump by about $275 million, a 17% increase. CME’s total return year-to-date is 34%. On December 6, CME raised its annual variable dividend to $3.50 per share from $3.25 last year. It will be paid January 15 to shareholders of record on December 28. Along with the 66¢ quarterly dividend, CME’s dividend yield for 2017 is 4.9% based upon its average closing price year-to-date.


Visa’s fiscal fourth quarter net revenues of $4.9 billion and earnings per share of 90¢ increased 14% over the same period a year ago. During the quarter, Visa’s global payments rose 10% with strong growth in all regions, particularly in Central Europe, the Middle East and Africa where volume increased 20% in constant currencies. Cross-border transaction volume increased 10% and drove international transaction revenues 20% higher to $1.8 billion. U.S. payments volume, which accounts for 43% of Visa’s total payments volume, rose 9% as Visa’s large contract wins of Costco and USAA were included in payment volume in the year ago period.

For the fiscal year ending September 30, 2017, net revenues of $18.4 billion and adjusted earnings per share of $3.48 rose 22% from fiscal 2016. Operating expenses grew only 19% as Visa leveraged its scale and disciplined expense management to achieve a 67% operating margin. Payments volume of $7.3 trillion in fiscal 2017 grew 30%, or 11% when including Visa Europe’s volume in the prior fiscal year. The number of transactions processed increased 34% to 111 billion. U.S. revenues of $8.7 billion rose 11%, a five-percentage point acceleration from 2016. International transaction revenues rose 36% to $6.3 billion, aided by the addition of Visa Europe. Converting cash to electronic payments remains a significant opportunity in emerging economies such as India, where cash is used for 86% of the country’s $1.1 trillion spent on personal consumption. New payment technologies and the use of smartphones have reduced the cost of credit card acceptance. Visa added as many merchants in India to its network in 2017 as it signed up in the previous five years combined. In October, Visa’s Board of Directors raised the quarterly dividend by 18% to 19.5¢. Visa’s share price has increased 44% since January 1.


Strong demand in all of Mettler-Toledo’s markets and strong execution of marketing and productivity initiatives contributed to third quarter sales of $699 million, up 6% in local currencies over the third quarter of 2016. Earnings per share of $4.36 grew 12% over earnings per share of $3.89 reported a year ago. All geographies contributed to the quarter’s revenue growth with sales up 2% in the Americas, 2% in Europe and 15% in Asia. Revenue in China rose 28% to $125 million and accounted for 18% of the quarter’s sales. The strong performance in both the Lab and Industrial businesses in China reflects the success of the initiatives to shift resources to faster growing markets. Sales in the core industrial business benefited from pent-up demand from purchases that were delayed in 2015 when sales were down 20%. Additional economic activity before the start of the National Congress of the Chinese Communist Party in October lifted sales of the Lab business.

During its earnings call on November 2, 2017, Mettler announced the $105 million acquisition of Biotix, a privately-held company in San Diego that manufactures and distributes consumables for pipettes and other liquid handling systems. With 70% of its sales in the U.S., the company has annual revenue of about $35 million. Mettler will sell Biotix’s products as a second brand through distributors while Rainin, the company’s premium pipette brand, will continue to be sold directly to customers by its sales force. In addition to opportunities for international expansion, Biotix, with access to Rainin’s technology, will have more success providing consumables to companies that sell large liquid handling systems used in life science labs. Mettler-Toledo’s stock price is up 49% since the beginning of the year.

IDEXX Laboratories

IDEXX Laboratories’ third quarter sales of $492 million rose 9% over the same period a year ago in constant currencies. Favorable foreign currency translation added one percentage point to the quarter’s revenue growth in U.S. dollars. Recurring diagnostics revenue, which includes in-clinic instrument consumables, rapid assay tests and reference lab services, grew 13%. Fewer selling days in the quarter, inventory drawdowns at distributors outside the U.S. and a reduction in vet visits because of the hurricanes reduced reported revenue growth by two percentage points. Successful communication of the value of IDEXX’s ecosystem of unique diagnostic tests and information technology platforms which collect and send data to and from the instruments to a vet’s mobile device or to the clinic’s practice management software, contributed to strong growth in premium instrument placements which are up 10% in the U.S. and 36% internationally. The company placed 1,385 Catalyst chemistry analyzers in clinics during the quarter, an increase of 14% globally with 262 instruments or 80% of placements in the U.S. going to new accounts. The expanding installed base of Catalyst analyzers supported the quarter’s 13% revenue growth in instrument consumables to $129 million. Good sales execution led to an increase of more than 10% growth in reference lab test volumes from U.S. clinics and to 13% revenue growth in global reference lab services to $168 million.

Operating income of $100.4 million rose 13.5% from $88.4 million a year ago, while operating margin was 20.4%, up 0.7 percentage points. A $27 million increase in gross profit to $274 million more than offset an additional $9 million in sales and marketing costs incurred to pay 45 new U.S. territory sales reps who are not paid on commission during their first quarter of employment. Earnings per share rose 27% to 79¢ per share. Excluding one-time tax benefits, earnings per share rose 16%. IDEXX Laboratories’ stock price has risen 37% since January 1.

Automatic Data Processing

On November 7, ADP shareholders re-elected all ten ADP Directors at its annual meeting. Bill Ackman and the two directors nominated by Pershing Square received support from less than 20% of the shares outstanding. During its fiscal first quarter, ADP revenues of $3.1 billion and adjusted earnings of 91¢ per share each rose 6% from the prior year. While new business sales declined 3% for the quarter, likely the result of the distraction created by Ackman’s proxy fight, management anticipates a 5-7% increase for the full year. Importantly, client retention increased 160 basis points reflecting customer satisfaction with ADP’s differentiated client-centric products and services. ADP has upgraded 83% of its customers to its strategic cloud platforms. The number of employees on clients’ payrolls rose 2.4% during the quarter while the number of employees paid by its PEO (professional employer organization) rose 10% to 484,000. The company earned $99 million on its client funds balances of $21.2 billion which increased 11% and 6% respectively. This represents an average interest yield of 1.9%, up 10 basis points compared to a year ago. ADP’s total return is 15% since the beginning of the year.

During the proxy contest, we met with ADP CEO Carlos Rodriguez and CFO Jan Siegmund at our office. Our interest in the investments the company has made in its people who are building the cloud-based solutions used by customers prompted management to invite us to visit their Innovation Lab in New York’s Silicon Alley. We met with VP Raj Uttamchandani and learned how ADP uses these labs to recruit smart, technologically sophisticated engineers who upgrade core strategic platforms and develop new data analytics tools and applications for customers. This lab developed the underlying IT platform which enables highly configurable, cloud-based solutions for customers and provides high levels of data security. The Innovation Lab in Atlanta opened in 2010 and develops applications that analyze customer data. The Pasadena lab, which opened in 2015, is upgrading ADP’s tax filing and money movement technology. More than 1,000 of ADP’s 5,000 engineers company-wide now work in one of the three labs and have helped to make ADP a technology-focused company that provides excellent customer service.


Wabtec’s third quarter earnings of 88¢ per share were 7% less than management’s forecast. Surprisingly, sales to freight railroads fell 6% below the volume during the second quarter due to a $20 million decline in high-margin Positive Train Control sales and the absence of anticipated locomotive rebuild orders. The margin on freight sales, which depends upon the volume of North American freight shipments, is more than twice the margin earned on transit system sales which are always contractual. The fluctuations that Wabtec is currently experiencing from its North American freight railroad customers confirms the wisdom of Wabtec’s management’s decision to acquire Faiveley. The addition of its sales to Wabtec’s transit business accounted for 65% of Wabtec’s third quarter sales of $958 million.

The acquisition of Faiveley, which had sales of $1.2 billion last year, reduces the cyclicality of Wabtec’s business while adding businesses run by experienced managers who even before the acquisition closed were enthusiastically applying the Wabtec Excellence Program. It requires a continuous focus upon controlling and then reducing costs. Steady and rigorous application of the Wabtec Excellence Program to the company’s combined transit business will determine the success of the company and our prospective returns. Stéphane Rambaud-Measson, the former President of Faiveley is now an Executive Vice President and Chief Operating Officer of Wabtec reporting directly to Ray Betler, Wabtec’s President and CEO. These two men worked together many years ago at Bombardier and have remained friends ever since. Without that, the acquisition of Faiveley would not have happened. Both men know that success depends upon achieving a steady improvement in transit margins. Wabtec’s stock price has declined 8% since the start of the year.

Ecolab, Inc.

Ecolab’s third quarter revenue of $3.56 billion grew 5% in constant currencies over the third quarter of 2016. Organic growth was 4% for the quarter with acquisitions accounting for two percentage points of the growth, while the impacts from hurricanes Harvey and Irma reduced revenue growth by one percentage point. Higher prices, volume growth and cost savings initiatives offset higher operating costs and investments in the business to deliver operating income of $574 million, an increase of 1% over the same period a year ago. Lower interest expenses, taxes and share count contributed to a 7% rise in the quarter’s earnings per share to $1.37. Earnings exclude one-time tax expenses, charges and gains.

While the Global Industrial and Energy businesses posted organic revenue growth of 3% and 4% to $1.25 billion and $797 million respectively, Global Institutional sales rose 2% to $1.22 billion. The core institutional business, which provides cleaning and sanitizing products and services to hotels, restaurants and long-term care facilities, posted revenue growth of a paltry 1% because of changes in U.S. dining patterns. Management determined that they were not losing share in full and casual-serve restaurants, but to accelerate revenue growth they needed to add salespeople, focus their attention on the most important product categories and sell new, digitally-enabled products to increase the number of services they sell to current customers. These new products will allow Ecolab to capture more information about their use which will improve the effectiveness of the sales reps and the businesses they serve.

On November 1, 2017, Ecolab completed the sale of its Equipment Care business, which had 2016 sales of $180 million, to a private equity firm based in Boston. Although Ecolab improved the quality and profitability of the business over the past five years, it no longer fit with their core businesses. The total return on Ecolab’s stock is 17% year-to-date.

Core Laboratories

Core Laboratories’ third quarter sales and earnings of $166.7 million and 48¢ per share, up 15.8% and 26% respectively over the comparable results for the year ago quarter, provide promising confirmation that the company is growing and positioned for further growth. The quarterly results are reassuring because revenues and profits were diminished by $4 million of unrecoverable costs resulting from flooding and damage from hurricane Harvey. The storm interrupted submission of reservoir fluids that customers collect for analysis at Core’s Houston laboratory from locations in the Permian Basin and offshore rigs and platforms in the Gulf of Mexico. Deliveries from some customers were suspended for weeks. Recurring measurements of the pressure, volume and temperature of the fluids in customers’ producing reservoirs produce 60% of Core’s Reservoir Description revenues.

The discussion of these unfortunate service interruptions resulted in our learning along with many others that Core’s Permian Basin customers are expressing an interest in detailed pressure, volume and temperature analyses of the liquids extracted from customers’ unconventional rock in the Permian. Some existing customers express an interest in testing the injection of miscible gases, nitrogen or carbon dioxide into the producing zones of their shale oil wells. Application of the enhanced recovery techniques Core has developed for these reservoirs offers the possibility of increasing the recovery from shale oil formations. The probable increase could be as much as 50% more of the oil in place from 9% currently to over 13%. We believe, along with Core’s management and many knowledgeable oil and gas industry analysts, that some of the projects offshore South America and Africa that have received Final Investment Determinations from major oil companies, such as Exxon, will start drilling early next year. The total return on Core’s stock is down 15% since the beginning of the year. On July 12 its stock was added to the S&P mid-cap index.

Johnson & Johnson

Johnson & Johnson’s third quarter revenue of $19.7 billion rose 9.5% in constant currencies over the same period a year ago and grew 3.8% excluding acquisitions and divestitures. Favorable foreign currency translation added 0.8 percentage points to revenue growth. Adjusted earnings per share of $1.90 were 13% higher than earnings per share of $1.68 a year ago. Earnings from both periods exclude amortization of purchased intangible assets and acquisition, restructuring and litigation expenses. All three businesses contributed to revenue growth during the quarter, but excellent performance of the Pharmaceutical business contributed most to the quarter’s good results.

Pharmaceutical sales rose 14.6% to $9.7 billion and the pre-tax profit margin increased one percentage point to 41% over the third quarter of 2016. Sales of J&J’s oncology drugs rose 23.8% to $1.9 billion as more patients take these drugs for currently approved treatments for blood and prostate cancers. Patient volumes grow as successful clinical trials increase the types of cancer treated by these drugs. Sales of the company’s immunology drugs grew 5.3% to $3.3 billion with a $310 million (43%) increase in sales of Stelara which is used to treat psoriasis and Crohn’s disease. This gain more than offset a $136 million decline (8.2%) in global sales of Remicade which faces biosimilar competition in Europe and in the U.S. Effective contracting with payers and the fact that U.S. patients currently taking Remicade cannot be switched to a biosimilar enabled the company to maintain 98% of U.S. patient volume. J&J launched Tremfya, its newest drug to treat psoriasis after its FDA approval on July 13, 2017. Based on its superior efficacy to Humira, the most widely used drug to treat psoriasis, as well as a good safety and dosing profile, 900 doctors currently prescribe the drug to about 3,000 patients. Drugs from the Actelion acquisition had sales of $670 million and contributed 7.9% to Pharmaceutical’s revenue growth during the quarter.

The Consumer division’s sales of $3.4 billion rose 1.6% as sales of Tylenol, OGX hair care and Neutrogena products offset revenue declines in Baby Care, Oral Care and Wound Care. Contact lenses and cardiovascular devices posted another quarter of strong sales growth with sales of $800 million and $506 million, increases of 9.1% and 12.5% respectively. J&J has leading technology in these faster growing Medical Device markets. Their sales growth offset weaker results in the orthopedic and surgery businesses which resulted in Medical Device sales of $6.6 billion, up 6.6% with 5.2% of the growth coming from acquisitions. The total return on Johnson & Johnson stock is 25% since the beginning of the year.

Varian Medical Systems

Varian Medical Systems’ fiscal fourth quarter revenue declined 1% to $739 million from $742 million a year ago while revenue for 2017 rose 2% to $2.66 billion. Earnings per share, excluding amortization of intangible assets and one-time charges, were $1.09 for the quarter, an increase of 6% over the same period a year ago. Earnings per share for the year of $3.60 declined 3% from $3.70 a year ago. Oncology Systems’ fourth quarter revenue and full year revenue rose 1% to $686.5 million and $2.49 billion. Orders in the fourth quarter and the year rose 7% to $964 million and $2.9 billion respectively. The number of installed radiation systems rose 4% to 7,833. Varian has received 50 orders for Halcyon from 15 countries since its launch in May. Halcyon can perform all but the most advanced radiosurgery treatments and fits in smaller vaults than a TrueBeam. There was a two hour wait to see Halcyon at the annual meeting of radiation oncologists in September.

Varian received 40 orders for its HyperArc upgrade since its launch in August. It includes new hardware for the TrueBeam and software that automates the planning and delivery of very precise high definition radiation treatments. HyperArc is currently used to treat brain metastases that occur in 20% of all cancer cases. The treatment planning software ensures that as the table holding the patient moves during treatment, it does not collide with the gantry that holds the radiation source. HyperArc’s increased precision allows the treatment of as many as ten brain lesions within a 20-minute treatment interval while sparing more tissue. By simplifying the delivery of very precise doses of radiation, HyperArc increases the confidence of radiation oncologists that they can perform radiosurgery safely and efficiently. Varian’s stock price is up 41% since January 1.


Roche’s nine-month sales of CHF 39.4 billion rose 5% over the same period a year ago with sales of CHF 30.6 billion for the Pharmaceuticals Division and sales of CHF 8.8 billion for the Diagnostics Division, each up 5%. Sales of Roche’s products launched this year in the U.S. contributed CHF 900 million or over 60% of the company’s sales growth from additional sales of Alecensa (lung cancer), Tecentriq (Roche’s immunotherapy drug for bladder and lung cancer, and Ocrevus (multiple sclerosis). With strong demand in all regions for Perjeta (HER2-positive breast cancer), sales rose 17% to CHF 1.6 billion and added CHF 238 million to Roche’s year-to-date sales.

On November 16, 2017, the FDA approved Hemlibra, Roche’s biologic drug that reduces the number of bleeding episodes in children or adults with Hemophilia A, an inherited disease whose sufferers either lack or do not produce enough Factor VIII. Factor VIII is a protein that initiates a critical step in the blood clotting process. About one-third of people with this disease develop an immune response to Factor VIII, which limits its effectiveness in preventing bleeding. Weekly shots of Hemlibra reduced bleeding episodes by over 80% and eliminated the need for infusions that can take up to two hours several times a week. Results from a Phase III trial for people with Hemophilia A who use Factor VIII to prevent bleeding episodes showed that weekly use of Hemlibra resulted in fewer episodes in this population as well. The total return on Roche ADRs is 9% year-to-date.


SGS reports its results every six months and will report second half earnings on January 23. SGS held its annual investor meeting in October. Management highlighted the company’s sustainability leadership, market opportunities, challenges and strategy. Its testing, inspection and certification businesses have grown with expanding regulations and stronger enforcement worldwide. Use of digital technologies to provide real-time information and to replace physical inspection provides SGS with opportunities to improve efficiency and to develop new solutions for customers. SGS delivered 3.4% organic growth in the first half and completed 10 tuck-in acquisitions through October as it continues to streamline business back office functions and generate strong cash flow. Management indicated that it is ahead of its 2017 plan to generate 60 million Swiss francs of procurement savings. Its return on invested capital during the last twelve months was 19%. The total return on SGS’ ADRs since the beginning of the year is 24%.

Air Lease Corporation

Air Lease revenues rose 6% to $376.8 million and comprised $359.5 million of payments from its 236 leased aircraft and $17.3 million in gains on the sale of seven aircraft and management fees from the servicing of 51 aircraft. Earnings of 90¢ per share rose 5% from the prior year. Its current fleet of 236 aircraft has an average age of 3.7 years and average remaining lease term of 6.8 years which will generate $9.6 billion in revenues for the company during the remaining lease term. Air Lease has a total of 288 aircraft on order with Boeing and Airbus for delivery through 2021 valued at $23 billion. Ninety-one percent of the 136 aircraft in its order book through 2019 have been placed with airline customers. Management indicated that there has been an uptick in demand for both new and used single aisle aircraft and that lease rates have been stable.

Despite strong demand for new aircraft and persistent growth in passenger miles flown, many traditional airlines are under pressure from low-cost and ultra low-cost carriers. During the quarter, airline bankruptcies at Air Berlin and Monarch in the U.K. compelled Air Lease to re-lease the five aircraft it had with these two carriers to other airlines at normal market rates. Air Lease offers the most modern in-demand aircraft types which airlines can operate profitably. In the event of bankruptcy of a customer, the company can move the aircraft quickly to another customer. Air Lease has a diversified airline customer-base with average lessee customer concentration of less than 2% of fleet value. Air Lease requires a robust security package from customers including cash security deposits and cash maintenance reserves of $850 million as of September 30. The company announced a 33% increase in its annual dividend to 40¢. The total return on Air Lease’s stock is 29% since the beginning of the year.

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Capital Counsel’s investment strategy combines disciplined fundamental analysis with patient execution. We hope this letter helps you understand that stock selection is at the core of our investment strategy. We seek to invest in profitable well-managed companies that generate recurring free cash flow. These companies should possess strong balance sheets and earn attractive rates of return on shareholders’ capital. We know the companies and their proven execution focused managers well. They deal with problems openly and effectively, and have incentives aligned with shareholders. We evaluate the company, as an informed private buyer might, to determine the value of the business based upon its ability to generate free cash flow. We manage concentrated portfolios which have provided our clients with good long-term results. The financial strength of the companies held in client portfolios has lessened the drop experienced when markets decline.

Client portfolio holdings may change, and stocks of companies noted may or may not be held by one or more client portfolios from time to time. Investors should not consider references to individual securities as an endorsement or recommendation to purchase or sell such securities. Transactions in such securities may be made which seemingly contradict the references to them for a variety of reasons, including but not limited to, liquidity to meet redemptions or overall client portfolio rebalancing. Investing in the stock market involves gains and losses and may not be suitable for all investors. Investment return and principal value of an investment will fluctuate.