CAN SLIM® Investment Program - ncamadvisors.com · CAN SLIM® Investment Program Investor...

CAN SLIM® Investment ProgramInvestor Presentation

N O R T H C O A S T I N V E S T M E N TA D V I S O R Y T E A M

2 0 3 . 5 3 2 . 7 0 0 3I N F O @ N O R T H C O A S TA M . C O M

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OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION

PORTFOLIO CONSTRUCTION

RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

Based in Greenwich, CT

$1.8 billion in firm AUM (as of 3/31/2018)

32 Professionals

100% proprietary research, trading, and management

Systematic and rules -based investment execution

Daily risk controls that proved their mettle in drawdowns of 2000-2002 and 2008

EXPERIENCE

STABILITY

PERFORMANCE

Exclusive Agreement with Investor’s Business Daily®

ETF Partnership with BlackRock® iShares®

Recognized as a Financial Times Top 300 Registered Investment Adviser (2014, 2015)

N O RT HC O AS T A S S E T M AN AG E M E N T

Firm data as of 3/31/2018

iShares® and BlackRock® are registered trademarks of BlackRock, Inc. and its affiliates (“BlackRock”) and are used under license. BlackRock makes no representations or warrantiesregarding the advisability of investing in any product or service offered by NorthCoast Asset Management LLC. BlackRock has no obligation or liability in connection with the operation,marketing, trading or sale of any product or service offered by NorthCoast. The 2015 Financial Times Top 300 Registered Investment Advisors is an independent listing produced by theFinancial Times (June, 2015). The FT 300 is based on data gathered from RIA firms, regulatory disclosures, and the FT’s research. As identified by the FT, the listing reflected each practice’sperformance in six primary areas, including assets under management, asset growth, compliance record, years in existence, credentials and accessibility. Neither the RIA firms nor theiremployees pay a fee to The Financial Times in exchange for inclusion in the FT 300.

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OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

Daily quantitative research

Active portfolio construction & security selection

Disciplined, rules-based risk controls

Significant investment made in risk management systems

30 Professionals (including Portfolio Management, Research, Trading, Investor Relations, Operations, & Compliance)

Managing 19 separate account strategies & 1 mutual fund across multiple asset classes

Diligent compliance program led by experienced compliance officer and counsel

7 member Investment Committee - Expertise in quantitative research

Career experience with Research Affiliates, Pyramis, and Numeric

2 CFAs, 2 MBAs, and 7 Masters with concentrations in computer science, engineering, statistics, and computational finance

E X T E N S I V EP A R T N E R S H I P S

T A L E N T E DR E S E A R C H

T E A M

S Y S T E M A T I CI N V E S T M E N T

P R O C E S S

I N S T I T U T I O N A LS T R U C T U R E

Exclusive agreement with Investor’s Business Daily utilizing the CAN SLIM® investment program

ETF partnership with iShares® by BlackRock®

Separate account platform partners include Fidelity, Morgan Stanley, Wells Fargo, UBS, RBC, Raymond James, and others

F I R M O VE RVI E W

OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

I N VE S T M E N T P H I L O S O P H Y

We believe a thoroughly researched and systematic investmentprocess rooted in common sense will outperform over time. Ourresearch shows that markets and securities reward certain factorsand punish others.

To capitalize on these factors, we employ a market exposure modeland a security selection model based on fundamental rationales.These rationales are confirmed by thorough quantitative analysis,are systematically implemented and complemented with extensiverisk controls.

This proven and systematic investment process relies on portfoliomanagers to validate the model outputs daily and traders toimplement the strategy efficiently.

To maintain, refine and enhance our competitive edge, we remaincommitted to a continuous and comprehensive research effort.

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I N VE S T M E N T T E AM

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OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

Patrick Jamin, CFA, FRM

Chief Investment Officer

Partner, Numeric Investors (European / World Fundamental Statistical Arbitrage) Partner, Portfolio Manager, Standard Pacific Capital; Global Long/Short Equity Fund Senior Quantitative Analyst, Invesco; Global Quantitative Fund M.B.A., Harvard Business School, Baker Scholar, Arthur Sachs Scholar M.S. Telecommunications, Ecole Nationale Superieure des Telecommunications de Paris Ingenieur de I’Ecole Polytechnique, Ecole Polytechnique

Julia Zhu,CFA, FRM

SVP – Market & Security Research

Vice President, Research Affiliates - Quantitative research; equities and asset allocation Associate, First Quadrant – Conducted research on GTAA and tactical currency allocation Master of Economics, Yale University, PhD Candidate M.B.A. with concentration in Finance, University of Southern California

Yaqiu Li, SVP – Portfolio Construction

Climate Modeling – National Key Lab of Atmospheric Science, Chinese Academy of Sciences M.S. Quantitative and Computational Finance & M.S. in Statistics, Georgia Tech PhD Candidate CFA Level III Candidate

Slava MalkinSenior VicePresident

Quantitative currency trading strategies – BNP Paribas Portfolio Manager of global macro strategies Research in Global Tactical Asset Allocation strategies – Deutsche Asset Management M.S. in Statistics, Harvard University

Jason Krugly Vice President

Research experience with Bank of America, Merrill Lynch, Credit Suisse, Deutsche Bank M.S. in Financial Engineering, Baruch College B.S. & M.S. in Computer Science, Polytechnic Institute of New York University

Sumanth Amarchinta Vice President

Senior Investment Analyst, Pyramis Global Advisors - Quantitative research M.S. in Computer Engineering, Rochester Institute of Technology B.S. in Electrical Engineering, Roorkee Indian Institute of Technology

OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

H E AD L I N E S

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W H I T E PAP E R: L O N G/C AS H E Q UI T Y

NorthCoast Long/Cash Equity Whitepaper June 2016

Past Performance is not indicative of future results. All investments involve risk, including loss of principal. Source: Bloomberg, HFRI

OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

12 Month Beta12/31/1991 - 4/30/2016

HFRI Equity Hedge HFRI MN HFRI Short Biased

2010-2017 S&P500HFRI Equity

Hedge

Return 13.2% 5.1%

Volatility 11.9% 6.9%

Drawdown -16.5% -13.2%

Correlation 100% 90%

Beta 1.00 0.52


Hedge

Return -0.9% 5.4%

Volatility 16.1% 9.2%

Drawdown -50.9% -30.6%


Beta 1.00 0.42


Hedge

Return 18.2% 23.7%

Volatility 13% 9%

Drawdown -15.4% -9.0%


Beta 1.00 0.42

S E PAR AT E LY M AN AG E D A C C O UN T P L AT F O R M

Over the past decade, NorthCoast has evolved as a result of investor demand and expanded its separate account offerings.

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OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

Learn more about the CAN SLIM® Investment Program. Reference additional information located in the Appendix of this presentation.

TransparencyAccess to daily holdings and transactions

LiquidityManaged account structure offers access to capital without lockups

CustomizationAbility to customize portfolio based on risk exposures, investor mandate, or risk/return attributes.

CostProvide a low cost option giving clients a true alignment of interests

HybridBridging the gap of simply choosing between a long-only manager and a Long/Short Manager

Proprietary market outlook determined by 40+ signals across four dimensions identifies opportunities & risks

Daily market signal analysis

Ongoing research assessment of market signals ensures accuracy and relevance

Rigorous research shows stocks exhibit common characteristics before gains

Daily scoring of 3,000+ stocks with 20+ signals

Seeking stocks with superior risk-adjusted potential

Dynamic optimizer properly maintains risk-adjusted portfolio daily

Assessment of total transaction costs and estimate of implementation shortfall

Higher concentrated portfolio enhances long-term alpha

Proprietary risk model

Controls embedded through investment process

Combination of active and passive risk management methods

Daily monitoring of positions

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OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

I N VE S T M E N T P R O C E S S

NorthCoast applies a multi-step investment process to construct, manage and implement its portfolio solutions.

Market Outlook

Stock Selection

PortfolioConstruction

RiskManagement

OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

D Y N AM I C M AR KE T E X P O S UR E

Leading IndicatorsFederal ReserveJobsGeopolitical

ConsumersProducersCreditSurprise

MomentumReversalFear

HistoricalForwardRate AdjustedInflation Adjusted

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Market outlook determined by 40+ signals across four dimensions identifies opportunities & risks to determine exposure

MACRO-ECONOMIC

SENTIMENTTECHNICAL VALUATION

The chart above shows a hypothetical simulation of NorthCoast’s proprietary market outlook analysis tool. This simulation is generated by using multiple data points across four broad dimensions including Technical, Sentiment, Macroeconomic, and Valuation indicators. The daily result determines equity exposure. It does not represent actual equity exposure.

Market Outlook

Stock Selection Portfolio Construction

Risk Management

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Equi

ty T

arge

t Lev

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NorthCoast Equity Exposure Model1/1/1996 - 12/31/2016

Technicals Sentiment Macroeconomic Valuation

Valuation

Comprehensive Value

Sentiment

Management Behavior

Diffusion of Information

Technical

Institutional Attention

Hypothetical Stock “A” Example

Category Score Weighting Factor Category Score Example Factor

0.4 EBITDA trends vs. Enterprise value

2.4 Historical Earnings Yield relative to peer group

1.0 Earnings Estimates revisions

0.4 Stock buy-back or issuance

2.3 Stock price movement relative to information flow

1.0 Price trends in a 12 month window

-0.7 Short borrowing activity

Composite Score +2.1 Stock Score from -3 to +3 (on a relative scale)

S C O R I N G S T O C KS

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We believe underlying factors drive a stock’s future performance (positive or negative). Our research focuses on identifying these factors.

We utilize 21 individual data points across 7 broad categories.

The data above shows the performance of the top 20%, the total universe, and bottom 20% of stocks ranked according to a proprietary score-based model developed by NorthCoast. Past Performance is not indicative of future results. All investments involve risk, including loss of principal.

OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

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RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

Market Outlook


Risk Management

NorthCoast’s proprietary model scores 3,000 stocks daily on a scale of -3 and +3 based on their expected performance over the next 12 months.

12/31/01-12/31/2016, bottom quintile stocks returned +1.5% annually vs. +10.3% Universe 12/31/01-12/31/2016, top quintile stocks returned +20.7% annually vs. +10.3% Universe

Daily Oversight0

# of Holdings40

current holdings 36

P O RT F O L I O C O N S T R UC T I O N

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FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

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PERFORMANCE

SUMMARY

APPENDIXSector Allocation

+/- 10% weighting within S&P 500 sectors

Dynamic optimizer properly maintains risk-adjusted portfolio daily

Proprietary internal and external transaction cost controls

Corporate actions data to ensure integrity of inputs

Portfolio management validation of trade (Data integrity,updated news, special situations)

Daily portfolio rebalancing minimizes alpha decay

Holdings-level transparency

Reduce exposure when bear market risk is high

Systematic implementation coupled with daily oversight seeks to maximize risk-adjusted return

2%Position Size

4%2.6% Average Weighting

Portfolio data as of 3/31/2018.

Market Outlook


Risk Management

Consumer DiscretionaryConsumer StaplesEnergyFinancialsHealth CareIndustrialsMaterialsInformation TechnologyTelecommunication ServicesUtilitiesCash

R I S K C O N T R O L S

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Risk management is a continuous, multi-dimensional process administered throughout the investment cycle

OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

Risk Control Management Implementation

Account Onboarding(Special Handling)

New cash accounts take 1-3 months to achieve current allocation targetAttractive entry points targeted for new positions to reduce drawdown potential

Daily Monitoring Positions monitored daily and action executed at strategic inflection points

Beta Reduction Analyze volatility and drawdown

Market Exposure Active market outlook monitors macro environment

Sell-Stops Customized sell-stop target per position, depending on expected volatility of individual stock

Profit-Takes Lock in profit with every 25% price increase

Position Sizing Range from target exposure from 2% to 4% to minimize stock specific risk on the downside

Sector Allocation Maintains +/- 10% allocation with market sector allocation to reduce sector-specific risk

Sustainable Research Assessing model behavior for sustained accuracy and relevance

Market Outlook


Risk Management

C A N S LI M ® P E R F O R M AN C EPO

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OVERVIEW

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FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Thru 3/31/2018

CAN SLIM® 12.5% -12.2% 10.1% 17.5% -10.8% 7.9% 26.9% 10.9% -8.0% 1.6% 17.5% 2.7% 94.9%

Tactical Competitor Avg 6.3% -24.9% 19.6% 12.4% -2.9% 9.3% 8.5% 2.7% -5.9% 6.2% 12.3% -1.5% 40.4%

Aggressive Competitor Avg 7.4% -34.4% 29.3% 13.4% -3.4% 13.4% 20.9% 5.6% -2.7% 7.7% 16.1% -1.1% 73.9%

S&P 500 Index 4.9% -37.4% 25.6% 14.4% 1.5% 15.2% 31.5% 13.0% 0.7% 11.2% 21.1% -0.9% 120.2%

Past Performance is not indicative of future results. All investments involve risk, including loss of principal. Results are presented net-of-fees. Please reference theAppendix for additional disclosure information.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

$225,000

$250,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Gro

wth

of $

100,

000

Equi

ty E

xpos

ure

Leve

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CAN SLIM® Investment Program vs. Competititve BenchmarksHypothetical Growth of $100,000: 1/1/2007 - 3/31/2018

Equity Exposure CAN SLIM S&P 500 Index Aggressive Competitor Avg Tactical Competitor Avg


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OVERVIEW

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FOUNDATION

INVESTMENT PROCESS

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PERFORMANCE

SUMMARY

APPENDIX


MONTHLY PERFORMANCE (%) - NET OF FEES AND EXPENSES

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YEAR

2007 2.1 -0.1 1.0 6.3 5.0 -0.6 -2.9 -2.4 3.8 3.3 -3.9 0.7 12.5

2008 -5.1 0.6 -1.4 1.3 3.5 -4.7 -0.8 -0.5 -4.4 -1.9 -0.6 1.4 -12.2

2009 -2.6 -2.7 1.4 2.0 0.3 0.0 2.3 -0.9 5.3 -2.9 4.7 3.2 10.1

2010 -4.4 2.7 4.6 3.8 -6.5 -2.5 1.9 -1.3 9.2 5.6 1.2 2.9 17.5

2011 2.0 2.4 2.1 0.0 -2.0 -2.8 -2.6 -7.2 -2.2 1.5 -0.8 -1.3 -10.8

2012 2.6 5.2 2.4 -0.6 -5.5 1.5 -1.5 1.3 2.3 -3.1 2.4 1.0 7.9

2013 5.5 0.8 4.4 0.3 2.6 -1.5 3.8 -2.7 4.0 2.7 2.4 2.1 26.9

2014 -4.8 5.7 0.0 0.7 2.8 2.5 -2.3 4.6 -1.7 0.1 2.2 0.9 10.9

2015 -5.1 4.2 -1.8 -0.4 1.6 -2.2 0.1 -5.4 -1.8 4.4 -0.5 -0.9 -8.0

2016 -5.7 0.3 3.7 -1.2 1.1 -1.6 3.6 -0.7 1.1 -3.0 3.8 0.7 1.6

2017 1.8 2.0 0.1 0.1 2.3 0.9 1.1 -0.1 2.0 0.9 3.5 1.7 17.5

2018 4.9 -2.6 0.5 2.7

TOTAL 94.9


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INVESTMENT PROCESS

MARKET EXPOSURE

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SUMMARY

APPENDIX


Competitive Risk Metrics (vs. S&P 500 Index)

12/31/2006 – 3/31/2018 CAN SLIM® Tactical Competitor Average

Aggressive Competitor Average S&P 500

Beta 0.54 0.57 0.85 1.00

R259.3% 87.5% 95.2% 100.0%

Standard Deviation 10.3% 8.5% 12.2% 13.9%

Correlation 0.77 0.94 0.98 1.00

Max Drawdown -19.6% -34.1% -45.2% -51.4%

Annualized Returns (Net) -- %As of 3/31/2018

1-Year 3-Year 5-Year 10-Year SinceInception

CAN SLIM® 16.0 5.1 7.4 6.3 6.1

Aggressive Competitor Average 9.6 5.6 7.5 5.8 5.0

Tactical Competitor Average 7.1 2.8 3.4 3.3 3.1

S&P 500 13.3 10.1 12.6 8.8 7.3

S UM M ARYPO

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OVERVIEW

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FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

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RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

Accessible A $100,000 account minimum

Complementary Low correlation to typical benchmarks making it an appealing complement to a strategic or asset allocation portfolio

Defensive Able to shift between 100% equity and 100% cash equivalents or anywhere between, depending on market conditions

Disciplined Quantitative research and rules-based management

Transparent Separately managed account (SMA) structure provides real-time account access

CAN SLIM® Investment Program is a methodical alternative topassive buy and hold strategies. Consider the followingbenefits for your clients:

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SUMMARY

APPENDIX

Creating an institutional product driven from a retail-centric, time-tested investmentprogram utilizing quantitative, rules-based research.

What is C-A-N-S-L-I-M®?A stock management process derived from researching the top-performing stocks in history and identifying 7(C-A-N-S-L-I-M) characteristics that each stock shared prior to significant price gains. Introduced and created bydistinguished investor, William O’Neil; Founder of the Investor’s Business Daily® newspaper & Author of thebest-selling book: “How to Make Money in Stocks.”

Built from its retail origins, NorthCoast has engineered and evolved into a highly institutional investment firm.

Factors Founding Guidelines Institutional Enhancements

C Current Earnings Growth Current earnings up 20% or more Sustainable, reasonable, and industry-adjusted

A Annual Earnings Growth Annual earnings increasing 20% or more Sustainable, reasonable, and industry-adjusted

N New Product or ServiceProduct, service, or management change provides a catalyst

Analyst estimates of forward earnings impact andrelative strength

S Supply/Demand of SharesShares outstanding should be large and trading volume should be big as the stock price increases

Short interest indicators and share buybacks

L Leading Industry Buy the leading stock in a leading industry Historical price, profitability and managementtrends

I Institutional SponsorshipInstitutional ownership by mutual funds in recent quarters should be increasing

Sell side analyst recommendations and estimates

M Market DirectionThe market should be in a confirmed uptrend since three out of four stocks followthe market’s overall trend

Market Technicals complemented with Valuation,Sentiment, and Macroeconomic indicators

E N H AN C E M E N T S T O S T R AT E G Y F O UN D AT I O N

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OVERVIEW

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INVESTMENT PROCESS

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SUMMARY

APPENDIX

I N S T I T UT I O N AL R E S E AR C H P I P E L I N E

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Pitch & Prioritize Hours

Feasibility Weeks

Validity Months

PITC

HPH

ASE

1PH

ASE

2IMPLEMENTATION

MANAGING THE PRINCIPLES

Ideas supported by Investment, Economic and Accounting knowledge

Scientific approach to testing and prioritizing

Phase system improves 5X speed and efficiency versus a linear research pipeline

1000s of ideas generated, 100+ ideas tested, 40 projects completed per year

Establish potential and resource cost per phaseDevelop tests and goals of Phase 1Present to Team and gather feedback - Prioritize

Tests to confirm feasibility, rationale and potentialPresent results and steps for Phase 2

In-depth evaluation of idea, custom testsConfirm validity, added value and model synergies

OVERVIEW

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SUMMARY

APPENDIX

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D I S C L O S UR E I N F O R M AT I O N

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APPENDIX

Beta: A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. You can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock’s beta is 1.2, it's theoretically 20% more volatile than the market.

Alpha: A measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a security and compares its risk-adjusted performance to a benchmark index. The excess return of the security relative to the return of the benchmark index is a security's alpha. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%.R-squared: A statistical measure that represents the percentage of a security's movements that can be explained by movements in a benchmark index. For fixed-income securities, the benchmark is the T-bill. For equities, the benchmark is the S&P 500. R-squared values range from 0 to 100. An R-squared of 100 means that all movements of a security are completely explained by movements in the index. A high R-squared (between 85 and 100) indicates the portfolio’s performance patterns have been in line with the index. A portfolio with a low R-squared (70 or less) doesn't act much like the index.

Standard Deviation: A measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility.Sharpe Ratio: A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. The Sharpe ratio formula is:

The Sharpe ratio tells us whether a portfolio's returns are due to smart investment decisions or a result of excess risk. This measurement is very useful because although one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. A negative Sharpe ratio indicates that a risk-less asset would perform better than the security being analyzed.

Correlation: Correlation is computed into what is known as the correlation coefficient, which ranges between -1 and +1. Perfect positive correlation (a correlation co-efficient of +1) implies that as one security moves, either up or down, the other security will move in lockstep, in the same direction. Alternatively, perfect negative correlation means that if one security moves in either direction the security that is perfectly negatively correlated will move in the opposite direction. If the correlation is 0, the movements of the securities are said to have no correlation; they are completely random.

Drawdown (Max Drawdown): The peak-to-trough decline during a specific record period of an investment. A drawdown is usually quoted as the percentage between the peak and the trough. For our purposes, the max drawdown refers to the maximum peak to trough decline between January 1, 2001 and the present time.


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SUMMARY

APPENDIX

Past Performance is not indicative of future results. All investments involve risk, including loss of principal.

The firm is defined as NorthCoast Asset Management LLC. NCAM was established in 1988 and is an independent Registered Investment Advisor (RIA) registered with the Securities and Exchange Commission (SEC). The firm is a full service investment management company. The firm specializes in quantitative investment programs. NCAM is located in Greenwich, CT, and is not affiliated with any parent organization and has no other offices operating under the same brand name.

Returns are presented net-of-fees. Net-of-fee returns are reduced by trading costs and the portfolio’s actual management fee. Valuations are computed and performance is reported in U.S. dollars. A complete list of composite descriptions is available upon request. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. To obtain a compliant presentation for the associated strategy, please contact one of our advisors at 800.274.5448.

This information contained herein has been prepared by NCAM on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. This material is for informational and illustrative purposes only and should not be viewed as a recommendation or a solicitation to buy or sell any securities or investment products or to adopt any investment strategy.

The CAN SLIM® investment program is a tactical, long-term growth strategy focused on capital appreciation with a secondary objective of downside protection. The strategy invests in leading growth stocks during favorable equity environments and scales to cash to preserve gains when bear market risk is high. The strategy adheres to a flexible investment mandate that allows for allocation shifts that range between 0%-100% exposure to equities. Positions are managed (purchased and liquidated) through a combination of CAN SLIM® guidelines and a proprietary stock scoring system designed to build a comprehensive growth portfolio.

Benchmarks: Aggressive Competitor Avg = Morningstar Allocation--70% to 85% Equity Category Average. Funds in allocation categoriesseek to provide both income and capital appreciation by investing in multiple asset classes, including stocks, bonds, and cash. Theseportfolios are dominated by domestic holdings and have equity exposures between 70% and 85%.. Tactical Competitor Avg =Morningstar Tactical Allocation Category Average. Tactical Allocation portfolios seek to provide capital appreciation and income byactively shifting allocations between asset classes. These portfolios have material shifts across equity regions and bond sectors on afrequent basis. To qualify for the Tactical Allocation category, the fund must first meet the requirements to be considered in anallocation category. Next, the fund must historically demonstrate material shifts within the primary asset classes either through a gradualshift over three years or through a series of material shifts on a quarterly basis. The cumulative asset class exposure changes mustexceed 10% over the measurement period. The S&P 500 Index is used for comparison purposes as it represents a sample of the 500leading companies in leading industries of the U.S. economy. It is generally considered a proxy for the total market.


23

OVERVIEW

FIRM INFRASTRUCTURE

INVESTMENT TEAM

FOUNDATION

INVESTMENT PROCESS

MARKET EXPOSURE

SECURITY SELECTION


RISK CONTROLS

PERFORMANCE

SUMMARY

APPENDIX

This information contained herein has been prepared by NorthCoast Asset Management, LLC ("NorthCoast") on the basis of publiclyavailable information, internally developed data and other third party sources believed to be reliable. NorthCoast has not sought toindependently verify information obtained from public and third party sources and makes no representations or warranties as toaccuracy, completeness or reliability of such information. All opinions and views constitute judgments as of the date of writingwithout regard to the date on which the reader may receive or access the information, and are subject to change at any timewithout notice and with no obligation to update. This material is for informational and illustrative purposes only and is intendedsolely for the information of those to whom it is distributed by NorthCoast. No part of this material may be reproduced orretransmitted in any manner without the prior written permission of NorthCoast. NorthCoast does not represent, warrant orguarantee that this information is suitable for any investment purpose and it should not be used as a basis for investment decisions.

PAST PERFORMANCE DOES NOT GUARANTEE OR INDICATE FUTURE RESULTS. This material should not be viewed as a current or pastrecommendation or a solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy.The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets identified ordescribed herein were or will be profitable and no representation is made that any investor will or is likely to achieve resultscomparable to those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences forcertain investors may occur due to various factors, including timing of investment. Investment return will fluctuate and may bevolatile, especially over short time horizons.

INVESTING ENTAILS RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL OF THE INVESTOR'S PRINCIPAL. The investment views andmarket opinions/analyses expressed herein may not reflect those of NorthCoast as a whole and different views may be expressedbased on different investment styles, objectives, views or philosophies. To the extent that these materials contain statements aboutthe future, such statements are forward looking and subject to a number of risks and uncertainties.

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