SCOTT INVESTMENT ADVISORS, L.P.

INSIDE THE STRUCTURE OF THE SAM PORTFOLIO

The Green Triangle represents the entire population of potential portfolios within the scope of policy limitations for the SAM Balanced Portfolio Strategy. The population can be narrowed down to those portfolios considered "optimum" that lie along the slope of the triangle between the lower left corner and the upper right. We call this slope reflecting optimum portfolios at various levels of risk and return  as the Efficient Frontier.

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Each of the portfolios along the Efficient Frontier contain hundreds of potential individual securities. Among the many securities we specifically focus on are those that have differing correlations. After analysis and computer-assisted searching using algorithms written for our search criteria, we construct a matrix of 13 portfolios of varying degrees of risk from bullish (6) to bearish (6) and neutral in the middle.  The return factor has already been built into these portfolios as optimum, as identified by our computer program. 

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Once our matrix of potential portfolios is complete, it is then our job to select the one that best captures our view of the road ahead.  The individual Field Structure for each of the 7 SAM Portfolios is re-assessed annually.  During the year however we may add or remove securities if it benefits the current position without changing the degree of risk. 

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Each security, whether an ETF (index-based) or individual, is assessed in terms of their fundamental financial characteristics within the context of the current economic and capital markets environment before we consider making any changes.