Completed SweetSpot Trades 1999-2010: [1]

The gross, unhedged returns of all completed SweetSpot trades to date are presented below as the percentage change in price per share of each SweetSpot holding between the date it was bought and the date it was sold, versus the change in price of an S&P-500 index fund during the same period:

• Pacific Basin (fpbfx) bought 12/23/98/sold 12/21/99: +102.8% (s&p +17.9%) [2]
• Canada (ficdx) bought 12/23/98/sold 12/21/01: +43.9% (s&p -3.9%)
• Latin America (flatx) bought 12/23/98/sold 12/21/01: +16.7% (s&p -3.9%)
• Medical Delivery (fshcx) bought 12/23/99/sold 12/28/00: +76.3% (s&p -7.8%)
• Food & Agriculture (fdfax) bought 12/23/99/sold 1/2/03: +23.4% (s&p -35.6%)
• Japan (½ fjpnx + ½ fjscx): bought 12/29/00/sold 1/2/04: +8.8% (s&p -11.7%)
• Pacific Basin (fpbfx) bought 12/29/00/sold 1/2/04: +4.0% (s&p -11.7%)
• Leisure (fdlsx) bought 12/29/00/renewed 1/2/03/sold 1/3/06: +43.1% (s&p +3.8%)
• Industrial Materials (fsdpx) bought 1/8/02/sold 1/2/03: +0.3% (s&p -20.6%)
• Insurance (fspcx) bought 1/8/02/sold 10/15/04: +21.7% (s&p -0.4%) [3]
• Medical Delivery (fshcx) bought 1/8/02/sold 1/3/05: +68.0% (s&p +8.6%)
• Chemicals (fschx) bought 1/2/03/sold 1/3/05: +74.6% (s&p +36.8%)
• Transportation (fsrfx) bought 1/2/03/sold 1/3/05: +68.6% (s&p +36.8%)
• Defense & Aerospace (fsdax) bought 1/2/04/sold 12/29/06: +70.9% (s&p +33.8%)
• Energy Service (fsesx) bought 1/2/04/sold 12/29/06: +126.7% (s&p +33.8%)
• Environmental Services (fslex) bought 1/2/04/sold 12/29/06: +29.8% (s&p +33.8%)
• Automotive (fsavx) bought 1/3/05/sold 1/3/08 +8.3% (s&p +25.4%)
• Industrial Equipment (fscgx) bought 1/3/05/sold 1/3/08 +55.7% (s&p +25.4%)
• Materials (fsdpx) bought 1/3/05/sold 1/3/08 +77.9% (s&p +25.4%)
• Retail (fsrpx) bought 1/3/06/sold 1/5/09 -23.6% (s&p -22.4%)
• Medical Delivery (fshcx/ptj*) bought 1/3/07/sold 1/4/10 -9.3% (s&p -14.5%)
• Natural Gas (fsngx) bought 1/3/07/sold 1/4/10 +5.5% (s&p -14.5%)
• Paper & Forest Products (fspfx/cut**) bought 1/3/07/sold 1/4/10 -14.5% (s&p -14.5)

*In 2007, SweetSpot expanded its investment universe globally and began trading sector ETFs along with mutual funds.  When more than one fund in the same sector was held, their combined performance is reported.

**SweetSpot’s initial position in paper & forest products was Fidelity Select Paper & Forest Products.  When the fund was merged out of existence in 2009, it was replaced it with the Claymore/Clear Global Timber ETF.  The new fund’s price was adjusted for the defunct fund’s prior performance during the period it was held.

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Disclosures

Performance figures for SweetSpot Unhedged relate to trades that were made in real time.  Performance figures for SweetSpot Hedged represent the real-time returns of SweetSpot Unhedged in combination with hypothetical, back-tested returns for a market-hedging program that was instituted in September 2009.  Improvements in real-time returns that were achieved by adding to positions opportunistically when share prices fell below initial entry prices are ignored.

All prices were adjusted to reflect the reinvestment of dividends and other fund distributions.

Most positions were bought and/or sold within a few days before or after December 31 each year.  Returns reported on this page were calculated based on exact trade dates, but elsewhere positions (and the market) were treated as if they had been traded at the close on December 31 each year.  These adjustments did not result in a material difference from actual returns.  Since January 2003, most trades have been entered and/or exited on the first or second trading day of Q1.

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Performance Update – January 2010

2009 SweetSpot Performance, All Positions:  +47.2%

S&P 500: +26.4%    Global stocks:  +32.7% [4]

Change since Purchase:

2009 positions (1/5/2009-1/4/2010):   +46.0%

S&P 500:  +24.9%    Global stocks:  +31.8%

2008 positions (1/3/2008-1/4/2010):  -5.1%

S&P 500:  -15.9%    Global stocks:  -17.3%

2007 position (1/3/2007 – 1/4/2010): +4.5%

S&P 500:  -14.5%    Global stocks:  -10.0%

2006 positions (1/3/2006-1/4/2010):  +11.5%

S&P 500:  -10.4%

[1] All trades occurred in real time and are documented by account statements showing the date, price, and amount of each trade; as well as records of email transmittals to investors recommending each trade.  Trades entered on 12/23/98 were based on information provided by Morningstar and Lipper. Trades beginning on 12/23/99 through 1/3/06 were based on a proprietary formula using data for all non-diversified Fidelity mutual funds. Collectively, those funds served as a proxy for the overall market.  Beginning in 2007, the formula was applied to data for the entire universe of non-diversified mutual funds and exchange-traded funds, thus increasing the likelihood that market behavior will be accurately gauged.

Until 2005, a position was sold a year or two early if it landed near the bottom of the annual rankings.  This sell signal was abandoned when both real-time and backtested results showed that its use did not materially improve performance and thus complicated matters unnecessarily.

[2] “s&p” is the S&P 500 index as reflected by the returns of the Fidelity Spartan 500 Index Fund (ticker symbol: fsmkx) for trades entered before 2007, and the SPDR S&P 500 ETF (symbol: spy) for trades entered after 2006.  The S&P’s performance corresponding to each trade is reported parenthetically. Returns assume the reinvestment of all dividends and other distributions.

[3] In October 2004 Fidelity Select Insurance (fspcx) was sold 2.5 months early when widespread fraud in the insurance industry was revealed. Barring such developments, each trade is held for three years.

[4] In 2007 SweetSpot expanded its investment universe to adapt to the ongoing trend toward globalization that had blurred the line between domestic and international sectors.  SweetSpot’s most representative benchmark became the global stock market.  For trades entered in 2009, global performance is represented by the Vanguard Total World Stock Index ETF (symbol: VT).  For trades entered in 2007 and 2008 that pre-date VT’s inception, global performance is represented by the three ETFs that, in proportion to the dollar value of their constituent markets, comprise the global stock market:

– S&P 500 SPDR ETF (SPY) (U.S. stocks);
– iShares MSCI EAFE ETF (EFA) (foreign developed-market stocks); and
– iShares MSCI EMIF ETF (EEM) (emerging-market stocks).

The S&P 500′s performance is also provided for each trade, as it remains the benchmark most commonly used by domestic money managers, and is the benchmark for SweetSpot trades entered before 2007.

In 2007 and 2008, SweetSpot Investments LLC traded a strategy alongside SweetSpot called “HotHands” that represented approximately 25% of the Portfolio.  Intended to temper SweetSpot’s “deep value” style, HotHands was a momentum-based trading strategy that dictated buying the best-performing sectors from the previous year and holding them for one year.  The decision to cease trading HotHands was made in July 2008 (effective January 2009), due to:

• the excessive total number of Portfolio positions that would be held after 2008; and
• the growing sense that, in practice, HotHands did not complement SweetSpot’s investment philosophy but instead contradicted it.

HotHands’ performance during the period it was traded is not included here.  HotHands is not relevant to, and even distorts, SweetSpot’s record as it used to be traded, is currently traded, and will be traded in the future.

Investors FastTrack is the source of price data for 1999-2007.  Subsequent data was obtained from Yahoo!Finance>>>Historical Prices.  All data is adjusted for dividends and other fund distributions.

It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.  Past performance is not an assurance of future returns.

Disclaimer: SweetSpot Investments LLC is a registered investment adviser in the State of Michigan, and is authorized to do business under various exemptions in other States and foreign Nations.  The firm will not solicit or accept business in any jurisdiction in which it is not properly qualified to conduct business.

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