Argus Core Equity Strategy (All Data as of September 30, 2011)
Objective
Argus Core Equity seeks to outperform the S&P 500® by 200-300 basis points per annum, gross of fees, over a full market cycle with a tracking error of approximately 3-4%.
Philosophy
While the majority of equity market participants construct portfolios according to what has happened in the recent past, Argus manages equity portfolios with the understanding that much of future market behavior cannot be reliably forecast. Thus,
Argus constructs portfolios best suited to prosper through unpredictable markets starting with the following key concepts:
> The S&P 500® is an investable universe, not an investment strategy. Index construction methodologies often create risks.
> Industry rotation is a persistent phenomenon in equity markets and a reliable source of alpha. An active strategy designed to benefit from industry rotation can outperform a capitalization weighted index.
> Financial Strength, measured by fundamental analysis, is critical to long-term
investing success.
Advantages
Predictability: Produce dependable, repeatable returns that are systematic and do not rely on short term forecast of earnings or economic trends.
Risk Management: Strict equal weighting and ongoing rebalancing manages individual stock and industry risks.
Downside Protection: Our process maintains true diversification and has produced valuable downside protection in declining market environments.
Annualized Performance - Argus Core Equity Composite
(As of September 30, 2011)*
| Trailing Period | Argus Composite
(Gross) | Argus Composite
(Net) | S&P 500 Benchmark |
| 1 Year | -0.30% | -0.57% | 1.14% |
| 3 Year | 2.67% | 2.36% | 1.23% |
| 5 Year | 0.28% | 0.04% | -1.18% |
| 10 Year | 3.61% | 3.39% | 2.82% |
Risk Analysis - Past Three Years
| Risk Analysis | AIC |
| Alpha(%) | 1.39 |
| Beta | 0.99 |
| STDEV as a % of Index STDEV | 24.00 |
| Upside Capture | 102.48 |
| Downside Capture | 96.76 |
| Information Ratio | 0.50 |
| Tracking Error(%) | 2.89 |
| Supplemental information. Source: Informa Investment Solutions |
Portfolio Characteristics
| Portfolio Characteristics | AIC | S&P 500 |
| P/E Ratio(forward) | 10.70 | 10.90 |
| 1yr Growth Rate %(IBES) | 14.00 | 14.10 |
| Price-to-Book Ratio | 1.93 | 1.91 |
| Dividend Yield % | 2.66 | 2.39 |
| Turnover Rate (5yr) % | 10.51 | -- |
| Number of Issues | 51 | 500 |
| Wtd Market Cap $billions | 83.60 | 87.40 |
| Supplemental information. Source: Bank of New York Mellon Corporation |
Top/Bottom Securities Last Quarter
| Top 5 Contributors | Bottom 5 Contributors |
| Apple Computer Inc | Morgan Stanley |
| Kimberly Clark | Alcoa Inc |
| McDonalds | Ingersoll Rand |
| IBM Corp | Corning |
| Google inc | Schlumberger |
| Supplemental information. Source: Bank of New York Mellon Corporation |
Equity Sectors
| Equity Sectors | AIC | S&P 500 |
| Consumer Discretionary | 11.89 | 10.57 |
| Consumer Staples | 16.80 | 11.67 |
| Energy | 5.89 | 11.63 |
| Financials | 8.72 | 13.59 |
| Healthcare | 12.64 | 12.41 |
| Industrials | 15.86 | 10.27 |
| Information Technology | 19.12 | 19.44 |
| Materials | 6.69 | 3.09 |
| Telecom Services | 2.39 | 3.09 |
| Utilities | 0.00 | 3.37 |
| Supplemental information. Source: Bank of New York Mellon Corporation |
Performance Report
| Annual Performance | 2006 | 2007 | 2008 | 2009 | 2010 | YTD |
| AIC Gross of Fees | 17.68 | 6.20 | -32.91 | 32.85 | 11.30 | -9.18 |
| AIC Net of Fees | 17.51 | 6.04 | -33.07 | 32.49 | 10.97 | -9.37 |
| S&P 500 | 15.80 | 5.49 | -37.00 | 26.46 | 15.06 | -8.68 |
| Relative Return - Gross | 1.88 | 0.71 | 4.09 | 6.39 | -3.76 | -0.50 |
Performance Notes
Argus Investors' Counsel, Inc. (AIC) is an SEC registered investment advisor that provides investment advisory services to institutional and individual investors. The Argus Core Equity Composite contains fully discretionary core equity accounts that for comparison purposes are measured against the S&P 500 Index.
AIC's SEC registration does not imply a certain level of skill or training. The information in this document has not been approved or verified by the SEC or by any state securities authority.
Annual and annualized periods are calculated based upon geometrically linked monthly returns.
Information above is based upon data provided by The Bank of New York Mellon Corporation and Informa Investment Solutions.
It should not be assumed that investments in any of the contributors discussed above were or will prove to be profitable. The contributors discussed above may no longer be held in client portfolios. The holdings of any particular account may vary based on any investment restrictions applicable to the account. This information is for illustrative purposes only, is subject to change at any time and should not be considered investment advice or a recommendation to buy or sell any particular security. In accordance with Rule 206(4)-1 under the Investment Advisers Act of 1940, upon request, AIC will furnish you with a list of all recommendations made by AIC within the immediately preceding twelve months. There is no guarantee that holding securities with relatively high (or low) price-to earnings, price-to-book, or price-to-cash flow will cause the composite to outperform its benchmark or index.
* The Argus Core Equity Composite was created on December 31, 1994. Compliance with the Global Investment Performance Standards (GIPS®) has been verified firmwide by Ashland Partners & Company, LLP from January 1, 1995 through September 30, 2011.
* The US dollar is the currency used to express performance.
* Past results are not indicative of future returns.
AIC claims compliance with the Global Investment Performance Standards (GIPS®).
To receive a complete list and description of AIC's composites and/or a presentation that adheres to the GIPS® standards, contact Jim Tierney at 203-316-9000, or JTierney@argusinvest.com.