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W.E. Donoghue Power Dividend Index SM (PWRDX) A Tactical Dividend Strategy for Today’s Volatile Market For more information call: 800 642-4276.

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Presentation on theme: "W.E. Donoghue Power Dividend Index SM (PWRDX) A Tactical Dividend Strategy for Today’s Volatile Market For more information call: 800 642-4276."— Presentation transcript:

1 W.E. Donoghue Power Dividend Index SM (PWRDX) A Tactical Dividend Strategy for Today’s Volatile Market For more information call:

2 For Broker Dealer Use Only For Broker Dealer use only S&P 500 Index Since the Turn of the Millennium 2 Since January 2000, the S&P 500 Total Return Index has Offered a Great Deal of Volatility Without the Returns. Source Bloomberg, as of 10/31/ /31/12 Cyclical Bull %

3 For Broker Dealer Use Only Challenges Facing Investors Today 3 For Broker Dealer use only  Secular Bear Market with Volatile Swings  Global De-Leveraging Process  Sluggish Economic Growth Prospects  Historically Low Interest Rate Environment  U.S. Aging Boomer Demographic

4 For Broker Dealer Use Only Why Dividend Paying Stocks? 4 For Broker Dealer use only  Dividends Accounts for 100% of the S&P 500 Returns from the Beginning of 2000 to the End of September 2012  Dividend Stocks Pay Income and Potentially Hedge Inflation  Dividend Paying Stocks Tend to be Less Volatile  Dividend Paying Stocks Can Potentially Offer Preferential Tax Treatment

5 For Broker Dealer Use Only Why Tactical Asset Management? 5 For Broker Dealer use only  It’s Not What You Make, It’s What You Keep  S&P 500 Index has Offered Significant Volatility with Little Reward for the Last Decade or So  Shifting Defensively During Periods of Market Decline Can Potentially Preserve Capital and Enhance Returns

6 For Broker Dealer Use Only Why Equal Weighting? 6 For Broker Dealer use only  Avoids Domination by Mega-Cap and Large-Cap Stocks  e.g. Top Ten Stocks in Cap Weighted S&P 500 = ~20%  e.g. Top Ten Stocks in Equal Weighted S&P 500 = ~2%  SDOGX Avoids Sector Concentration Based on Market Cap  All Ten Sectors Are Equal Weighted  Lowers Allocations to Financials and Information Technology  Cap Weighting Gives Index Momentum Bias  Best Performing Stocks Get Higher Weights with Each Rebalancing  Worst Performing Stocks Get Lower Weights with Each Rebalancing

7 For Broker Dealer Use Only W.E. Donoghue Power Dividend Index Description SM For Broker Dealer use only 7  Entirely Rules Based and Transparent Tactical Asset Allocation (TAA) Methodology  Dynamically Allocates Index Market Capitalization between a Portfolio of Stocks That Replicates the SDOGX Index and 90-Day US Treasury Bills  Shifts in Allocations Are Made Based on Intermediate Term Exponential Moving Average Crossovers  Bullish Crossover Index Invests in Dividend Paying Stocks  Defensive Crossover Index Invests in 90 Day US Treasury Bills

8 For Broker Dealer Use Only W.E. Donoghue Power Dividend Index Description SM For Broker Dealer use only 8  Moving Averages Based on the Closing Prices of the S-Network Dividend Dogs Total Return Index (SDOGXTR)  Reallocations Occur on T+1 – Next Trading Day Following Crossover Signal  No Qualitative Screens Are Applied to Allocation Methodology

9 For Broker Dealer Use Only Power Dividend Index Selection Process For Broker Dealer use only 9 Top 5 Dividend Paying Stocks in 10 GIC Sectors Exponential Moving Average Crossovers Stocks or T-Bills

10 For Broker Dealer Use Only Historical Performance 10 For Broker Dealer use only The W.E. Donoghue Power Dividend Index’s TAA Overlay Has Substantially Diminished the Impact of Market Downturns, Improving Performance Significantly Over Time. Source: Standard & Poor’s, as of 11/7/2012

11 For Broker Dealer Use Only 11 For Broker Dealer use only What is Buried in the Power Dividend Numbers?* Source Bloomberg, as of 10/31/2012 JanFebMarAprMayJunJulAugSepOctNovDecYear %-7.66%11.59%0.73%4.41%-4.40%-2.16%5.93%-1.56%3.16%-1.12%5.14%6.50% %0.95%-1.56%7.12%3.52%0.34%1.87%-1.43%-7.51%-1.31%3.06%2.16%12.10% %0.79%4.04%-4.57%2.23%-8.18%-0.38%0.14% -0.36%0.10%0.11%-6.83% %0.09%0.10%-0.40%7.14%1.19%0.15%3.76%-1.28%5.85%1.63%9.57%30.28% %1.48%-1.55%-1.38%0.36%3.43%-1.61%1.86%1.23% 5.19%3.33%15.26% %4.64%-1.30%-2.33%2.61%1.13%3.14%-1.10%0.90%-2.67%1.92%0.49%3.40% %0.28%1.29%0.45%-1.39%2.11%1.49%1.93%2.83%3.05%1.61%1.83%18.38% %0.14%0.48%2.71%3.78%-0.91%-5.10%0.95%2.44%0.60%-6.91%0.27%-0.73% %0.18%0.13%-0.39%0.14%0.16%-0.35%0.14%0.13%-0.43%0.03%0.00%-0.51% %0.02% -0.49%2.56%-4.31%13.49%8.39%7.49%-3.63%7.06%4.88%39.13% %2.68%7.12%2.03%-7.14%-4.00%6.40%-2.56%9.29%2.70%-0.87%6.43%17.98% %4.29%1.72%2.79%0.79%-1.86%-4.23%-5.84%0.00%-0.51%0.59%2.59%0.79% %4.86%0.89%-1.14%-5.79%4.94%2.23%1.31%1.90%0.15% *See Disclosure

12 For Broker Dealer Use Only 12 For Broker Dealer use only Risk/Return: PWRDXTR vs. SPX Source Bloomberg, as of 10/31/2012

13 For Broker Dealer Use Only 13 For Broker Dealer use only Index Drawdown Source Bloomberg, as of 11/7/2012

14 For Broker Dealer Use Only Current Dividend Yield Comparison 14 For Broker Dealer use only Index NameDividend Yield W.E. Donoghue Power Dividend Index SM (Net 2% Fee) 4.60% S&P 500 Total Return Index 2.14% The Current Dividend Yield of the W.E. Donoghue Power Dividend Index SM Is 115% Greater Than the Dividend Yield of the S&P 500.* * When Index Market Capitalization is allocated to T-Bills, Dividend Yield Matches T-Bill Yield. Source Bloomberg, as of 10/31/2012

15 For Broker Dealer Use Only Index Allocation 15 For Broker Dealer use only AllocationBegin DateEnd Date Equities12/31/199911/1/ Day T-Bills11/2/200111/14/2001 Equities11/15/20016/25/ Day T-Bills6/26/20025/12/2003 Equities5/13/200311/19/ Day T-Bills11/20/20075/27/2009 Equities5/28/20098/16/ Day T-Bills8/17/201111/3/2011 Equities11/4/2011Current Since January 2000, All Allocations to Equities Have Lasted for More Than One Year, Thereby Qualifying for Long-Term Capital Gains. Source Bloomberg, as of 10/31/2012

16 For Broker Dealer Use Only Year-On-Year Performance 16 For Broker Dealer use only Power Dividend TR Index (Net 2% Fee)S&P 500 TR Index+/- vs S&P 500 TR Index 12/29/ %-9.105%15.607% 12/31/ % %23.983% 12/31/ % %15.269% 12/31/ %28.684%1.600% 12/31/ %10.882%4.378% 12/30/ %4.912%-1.515% 12/29/ %15.794%2.589% 12/31/ %5.494%-6.220% 12/31/ % %36.490% 12/31/ %26.464%12.661% 12/31/ %15.063%2.919% 12/30/ %2.112%-1.322% 10/31/ %14.293%-4.908% Source Bloomberg, as of 10/31/2012 The W.E. Donoghue Power Dividend Index SM as Outperformed the S&P 500 in 10 of the Past 12 Years.

17 For Broker Dealer Use Only Index Fundamentals 17 For Broker Dealer use only The W.E. Donoghue Power Dividend Index SM Has Produced Higher Returns with Lower Volatility Compared to the S&P 500. Index Fundamentals (since inception) vs S&P 500 TR Index Outperformance243.37% Correlation60.74% Periodic Tracking Error (%)3.75% Annual Tracking Error (%)13.00% Average % ALPHA0.67% Information Ratio17.81% Index Volatility Power Dividend TR Index (Net 2% Fee) S&P 500 TR Index Source Bloomberg, as of 10/31/2012

18 For Broker Dealer Use Only Statistical Profile I 18 For Broker Dealer use only Price Appreciation Power Dividend TR Index (Net 2% Fee)S&P 500 TR Index Since Inception %22.069% 10 Year %94.997% 7 Year %35.689% 5 Year68.045%1.809% 3 Year46.050%45.090% 1 Year12.889%15.207% Compound Annual Growth Rate Power Dividend TR Index (Net 2% Fee)S&P 500 TR Index Since Inception10.626%1.566% 10 Year12.655%6.906% 7 Year11.681%4.456% 5 Year10.939%0.359% 3 Year13.458%13.209% 1 Year12.889%15.207% Standard Deviation (Monthly) Power Dividend TR Index (Net 2% Fee)S&P 500 TR Index Since Inception Year Year Year Year Year Source Bloomberg, as of 10/31/2012

19 For Broker Dealer Use Only Statistical Profile II 19 For Broker Dealer use only Correlation (Monthly) vs S&P 500 TR Index Since Inception Year Year Year Year Year Tracking (Monthly) vs S&P 500 TR Index Since Inception Year Year Year Year Year Sharpe Ratio Power Dividend TR Index (Net 2% Fee)S&P 500 TR Index Since Inception Year Year Year Year Year Source Bloomberg, as of 10/31/2012

20 For Broker Dealer Use Only Statistical Profile III 20 For Broker Dealer use only Outperformance vs S&P 500 TR Index Since Inception % 10 Year % 7 Year81.011% 5 Year66.237% 3 Year0.959% 1 Year-2.317% Information Ratio vs S&P 500 TR Index Since Inception Year Year Year Year(0.0229) 1 Year(0.2176) Source Bloomberg, as of 10/31/2012

21 For Broker Dealer Use Only Statistical Profile IIII 21 For Broker Dealer use only Beta (Monthly) vs S&P 500 TR Index Since Inception Year Year Year Year Year R-Squared (Monthly) vs S&P 500 TR Index Since Inception Year Year Year Year Year Source Bloomberg, as of 10/31/2012

22 For Broker Dealer Use Only Index Details & Data Distribution 22 For Broker Dealer use only  Index Values are Disseminated in US dollars via the New York Stock Exchange  Price Index: PWRDXPX  Total Return Index: PWRDXTR  Values Distributed Once Daily at approximately 4:30PM  Data Available via All Major Providers of Financial Data (BBG, TR, Google, Yahoo, etc.)  Comprehensive Historic Data (including simulated back-tests from 12/31/1999)  Quarterly Portfolio Snapshots (Historic Constituents and Weights)  Extensive Analytic support  Quarterly Reports (“Index Insights”)  Industry Overviews  Extensive Statistical Data

23 For Broker Dealer Use Only Disclaimer 23 For Broker Dealer use only The Power Dividend Total Return Index (Ticker: PWRDXTR) is a Service Mark of W. E. Donoghue & Co., Inc. The Power Dividend Index Portfolio is based on the Power Dividend Total Return Index (PWRDXTR) with an inception date of 12/31/1999; one cannot invest directly in an index. The Index is a rules based index, which the Power Dividend Index Portfolio follows; reflects the theoretical performance an investor would have obtained had it invested in the manner shown and does not represent returns actually obtained and does not represent returns an investor actually attained, as investors cannot invest directly in and index. The Power Dividend Index Portfolio returns represented in this material do not reflect the actual trading of any client account. No representation is being made that any client will or is likely to achieve results similar to those presented herein. The Power Dividend Index Portfolio performance is net of a two percent (2.00%) annual fee deducted from the account balance quarterly. The annual fee is derived from the average daily balance of the previous quarter. The Portfolio performance includes the reinvestments of all dividends and distributions. Additional fees will apply for transactions and trading which will be determined by the Custodian of the account and will decrease the return experienced by a client. Individual client account results will vary from the Power Dividend Index Portfolio and the Power Dividend Index (PWRDXTR) returns. Past performance is no guarantee of future results or returns. Therefore, no current or prospective client should assume that future performance will be profitable. The Power Dividend Index Portfolio inception date is 11/30/2012. The inclusion of the S&P 500 (S&P) Index results are for comparison purposes only. The S&P 500 Index is a market capitalization weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard and Poor’s chooses the member companies based upon market size, liquidity, and industry group representation. Included are stocks of industrial, financial, utility, and transportation companies. The historical performance results of the S&P 500 Index (and all other indexes) are unmanaged; do not reflect the deduction of transaction and custodial charges, or the deduction of a management fee, the incurrence of which would have the effect of decreasing indicated historical performance results and cannot be invested in directly. Economic factors, market conditions and investment strategies will affect the performance of any portfolio, and therefore are not assurances that it will match or outperform any particular benchmark. Drawdown calculations are based upon month end values beginning 12/31/1999. Drawdown is the percentage loss from the highest month end value to the lowest month end value in the drawdown period. Recapture is the number of months required to return to, or exceed, the account value at the beginning of the drawdown period, including the months of the decline. The S-Network Sector Dividend Dogs Index, SDOGX and SDOGXTR ("Index") are service marks of S-Network Global Indexes, LLC ("Licensor") and have been licensed for use by W. E. Donoghue & Co., Inc. Any financial product based on the Index or any index derived there from ("the Product") which is offered by W.E. Donoghue & Co. Inc. is not sponsored, endorsed, sold or promoted by S-Network Global Indexes, LLC and S-Network Global Indexes, LLC makes no representation regarding the advisability of investing in the Product. Licensor makes no representation or warranty, express or implied, to the owners of the Product or any member of the public regarding the advisability of investing in securities generally or in the Product particularly. Licensor’s only relationship to the Licensee is the licensing of certain service marks and trade names of Licensor and of the Index that is determined, composed and calculated by Licensor without regard to the Licensee or the Product. Licensor has no obligation to take the needs of the Licensee or the owners of the Product into consideration in determining, composing or calculating the Index. Licensor is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Product to be issued or in the determination or calculation of the equation by which the Product is to be converted into cash. Licensor has no obligation or liability in connection with the administration, marketing or trading of the Product. LICENSOR DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN AND LICENSOR SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. LICENSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED THEREIN. LICENSOR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL LICENSOR HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and have been licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain purposes by W.E. Donoghue & Co., Inc. S-Network Global Indexes LLC’s trademarks are trademarks of the S-Network Global Indexes LLC and have been licensed for use by S&P Dow Jones Indices LLC and W.E. Donoghue & Co., Inc. The "W.E. Donoghue Power Dividend Index" is a product of S&P Dow Jones Indices LLC, and has been licensed for use by W.E. Donoghue & Co., Inc. W.E. Donoghue & Co., Inc.'s Power Dividend Index is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates, or S-Network Global Indexes LLC and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, their respective affiliates or S-Network Global Indexes make any representation regarding the advisability of investing in such product(s). For additional information please call or


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