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To my Partners:
30Sep13

Over the 25 years or so I have been an investor, there have been periods to sow and periods to harvest. We are in harvest mode. The impact of this is twofold: one: our cash position has risen and therefore our volatility ought to be reduced; and two, we have the capacity to invest when presented with interesting opportunities. This does not mean we do not own cheap stocks. We buy and sell based on the margin of safety which is the difference between a stocks price and our estimate of its intrinsic value. When this margin narrows, we sell. I dont really have a market opinion beyond there are fewer obvious bargains these days. Whether or not people actually feel better is up for debate however they are acting more aggressively primarily because of low interest rates. Of course, interest rates are a price just like any other good. Artificially pushing rates to non-equilibrium levels increases instability and may cause unexpected distortions. This does not mean things have to end badly just that the ride may be a little more exciting than people are expecting. Our non-Canadian portfolio has performed well. We have realized profits and reduced our exposure to both Japan and the US. I continue to trim our position in Howard Hughes Corp. I have discussed Howard Hughes in the past; you may recall it consists of both planned community developments primarily in Las Vegas and Texas as well as several asset conversion projects in cities including New York City and Honolulu. It has almost been a triple for us over the past 2 or so years the Trust has owned it. Our Canadian holdings have in aggregate performed in line with the averages. On the positive side, strong results in EGI Financials core non-standard auto insurance business combined with an increased focus on capital allocation resulted in the shares doing well this year. At the other end of the spectrum, the shares of Glacier Media continue to languish. I have recently met with management and believe it is a cheap stock. People love to create noise in the investment business. By noise, I mean there is no shortage of gurus providing commentary. I truly believe the ability to ignore this noise is a competitive advantage for us. Many years ago I had the privilege of meeting Sir John Templeton. Sir John once commented that an advantage of living in the Bahamas was he received the Wall Street Journal a day late and therefore did not get caught up in the mood of the day. I think about that often. Performance: The McElvaine Investment Trusts 30Sep2013 net asset value for the Series B units was $19.0020. This represents a gain for the first nine months of 2013, net of all fees and expenses, of 12.4%. During this period, the S&P/TSX Composite Total Return Index rose by 5.3%. Conclusion: As always, many thanks for all your support and confidence. I appreciate your trust. All the best,

Tim McElvaine 18Oct13

McElvaine Investment Management Ltd. 312- 737 Yates Street, Victoria BC V8W 1L6 www.avaluefund.com Phone: (250) 708-8345 Fax: (250) 708-8346