1. Eric Hatch Christina Haubrock Melissa Hickey November 3, 2009

2.  Industrials Sector Overview  Economic & Business Analysis  Financial Analysis  Valuation & Recommendation

4. Currently overweight by 188 BP

5. Capital Goods Aerospace & Defense Building Products Construction & Engineering Electrical Equipment Industrial Conglomerates Machinery Trading Companies & Distributors Commercial & Professional Services Commercial Services & Supplies Professional Services Transportation Air Freight & Logistics Airlines Marine Road & Rail Transportation Infrastructure

6. SIM OWNED COMPANIES Emerson Electric Co.Capital GoodsEMR First Solar Inc.Capital GoodsFSLR General Electric Co.Capital GoodsGE Oshkosh Truck Corp.Capital GoodsOSK UTI Worldwide Inc.TransportationUTIW Industrials # of Companies % of Industry % of SIM Portfolio Transportation6119.70%17.99% Commercial & Professional Services964.90%0.00% Capital Goods24875.40%82.01%

10. Capital Goods: Capital spending tends to increase midway through the business cycle, as the economy is heating up and higher demand for products leads companies to expand their production capacity. Demand in global export markets is key for agricultural equipment, industrial machinery, and machine tools. http://personal.fidelity.com/products/funds/content/sector/cycle.shtml#7

11.  The Industrials industry as a whole can be placed in the Maturity phase.  Companies in the maturity phase can have new product lines that exist in the Introduction or Growth phases (Oshkosh).  Other companies within the sector can be in the Introduction or Growth phase (First Solar).  Many mature companies can be entering large, untapped growth markets internationally (Emerson or GE).

12.  Outlook for U.S. Industrial activity much better for the rest of ’09 and into ’10 (Morningstar Q4 Outlook 9/30/09).  ISM purchasing managers survey: ratio of new orders to inventories indicates industrial production will be materially higher.  Ratio’s highest point in 30 years.  Been at this level only 10 out of 740 months measured.  The Fed Beige Book offers mixed expectations for near-term outlook on manufacturing (10/21/09).  Expecting slight gains and modest economic growth.  Deferred projects and maintenance to conserve capital.  Increasing optimism leading to more new hires and increased spending on capital goods.

15.  The Industrials sector is strongly correlated with the S&P 500, real GDP, commercial and industrial loans, and durable goods orders.  Industrials appear to be correlated to Capital Spending with the sector acting as a leading indicator by approximately 6 months.  Don’t wait for Capital Spending to completely return before jumping on board Industrials?

21. High30.86 Low16.39 Median20.70 Current30.44

22. Absolute Net Profit Margin High8.40% Low6.40% Median7.10% Current6.90%

23. Net Profit Margin Relative to S&P 500 High 1.20 Low 0.80 Median 0.90 Current 1.10

24. HighLowMedianCurrent CONGL11.19.210.69.2 EEQPM106.18.8 TRKPT7.324.8 AIRFR7.53.45.74.8 INDUST8.46.47.16.9

25. Company EPS Growth (YoY) HighLowMedianCurrent GE19-496.8-36.5 SI208-9620.4-56.4 UPS28.2-38.38.7-16 MMM22.8-19.110.6-19.1 Industry EPS Growth (YoY) HighLowMedianCurrent CONGL23.4-44.77.7-28 EEQPM30.8-38.914.4-17.8 TRKPT100.8-66.56.6-45.7 AIRFR24.8-365.8-28.2 INDUST22-35.39.9-21.3

26. High21.3 Low16.2 Median17.8 Current21.3

28. Correlation =.86 with 0 Lag time One Year

29. Absolute BasisHighLowMedianCurrent% Current to LT Median P/Forward E 26.99.217.816.9-5% P/B 5.91.43.32.5-24% P/S 1.90.61.50.9-40% P/CF 16.74.911.97.3-39% Relative to SP500 HighLowMedianCurrent% Current to LT Median P/Forward E 1.20.81.0 0% P/B 1.40.91.11.29% P/S 1.10.81.00.9-10% P/CF 1.20.71.10.7-36% Ratios indicate that the industrials sector is currently undervalued.

32. 3-MTDYTDP/EP/S Dividend Yield Industrials 5.46%8.35%22.8x0.8x2.41% Transportation 0.30%5.42%54.1x0.8x1.88% Commercial & Professional Services 3.50%5.38%65.4x0.7x1.83% Capital Goods 6.72%9.34%19.2x0.9x2.58%

33. Electrical Equipment and Machinery have a higher correlation with the S&P 500 than the other industries within the Industrials Sector Thomson TickerCorrelation Best Fit Lag Capital Goods Aerospace & Defense aerod0.570.592 Building Products bldgp0.450.5312 Construction & Engineering engnr0.390.511 Electrical Equipmenteeqpm0.66 Industrial Conglomerates congl0.75 Machinerymachn0.45 Trading Companies & Distributors Trade0.280.32 Commercial & Professional Services Commercial Services & Supplies print0.56 Professional Services 0.280.4311.5 Transportation Air Freight & Logistics airfr0.240.3912 Airlines ARLNS0.260.292 Marine shipp0.45 Road & Rail railr0.310.4311 Transportation Infrastructure Truck0.320.3712 Average0.430.48

34. One Year

35. High1.4 Low.7 Median1.2 Current.8

37. High1.1 Low.48 Median.8 Current.97

38. INDUSTRIALS SECTOR SHOULD MAINTAIN THE CURRENT LEVEL OF 188 BASIS POINTS OVERWEIGHT  Positives: FINANCIAL Sector ratios indicate that the sector is undervalued ECONOMIC Improving global economic recovery Increasingly global in scope Favorable impact anticipated from the infrastructure spending  Risks: Slower economic recovery than anticipated Lag time associated with the Industrials Sector