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SP♠DE
®
Defense Index
InvestorIdeas.com
Security & Defense Conference
11March 2014
Index: ‘DXS’
Exchange Traded Fund*: ‘PP...
SP♠DE Defense Index
Legal Disclaimers
This presentation is for informational purposes only and is not meant as a solicitat...
SP♠DE Defense Index
SPADE Defense Index (in Blue)
10 Year vs. the S&P500
SP♠DE Defense Index
SPADE Defense Index (in Blue)
1 Year vs. the S&P500
SP♠DE Defense Index
SPADE Defense Index 2013
+48.27% (S&P500 +29.60%)
11 ITT Exelis 69.12%
12 Anaren 68.41%
13 Digital Glo...
SP♠DE Defense Index
SPADE Defense Index YTD (thru 2/2814)
+5.16% (S&P500 +0.60%)
11 Huntington Ingalls 12.58%
12 Rockwell ...
SP♠DE Defense Index
 $1.3 Trillion – Annual Global Spending on Defense
 U.S. Spending: 4-5% of its GDP
Public Markets
$6...
SP♠DE Defense Index
Investing in Defense: Some Key Thoughts
1. Very Long Investment Cycles
2. Not all Downturns are Create...
SP♠DE Defense Index
Many new systems are developed
over 10-15-20 year timeframes.
 IT/Network Centric Warfare and
Battlef...
SP♠DE Defense Index
How Defense Companies Grow
1. Rising Defense Budgets
2. Supplemental Budgets
3. Outsourcing to Private...
SP♠DE Defense Index
Acquisitions
100+ Deals Annually
 Mostly small, <$100 million
 Mostly private
The acquisitions provi...
SP♠DE Defense Index
ISBC / SPADE®
Defense Index
1725 “I” Street, NW; Suite 300
Washington, DC 20006
Tel: (202) 349-3917
Sc...
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Speaker Scott Sacknoff, President, The Spade Defense Index

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Mr. Scott Sacknoff is the Index Manager of the SPADE Defense Index (NYSE: ^DXS), the underlying index for the Powershares Aerospace & Defense ETF (NYSE: PPA). The SPADE® Defense Index (NYSE: ^DXS) is a modified capitalization-weighted index comprised of publicly traded companies that benchmarks the performance of companies involved with defense, homeland security, and space. The Index is composed of more than 50 firms with representative business activities including: naval vessels, military aircraft, missiles and munitions, battlespace awareness, C4ISR, network centric warfare, homeland security including border security and biometric and screening systems, and space systems. Index values are distributed by the NYSEarca under the ticker 'DXS'. The Powershares Aerospace & Defense Portfolio ETF, designed to track the SPADE Defense Index, trades under the ticker 'PPA'. Historical data for the Index is available from 30 December 1997. The ETF was launched on 26 October 2005 and is highly liquid.

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Speaker Scott Sacknoff, President, The Spade Defense Index

  1. 1. SP♠DE ® Defense Index InvestorIdeas.com Security & Defense Conference 11March 2014 Index: ‘DXS’ Exchange Traded Fund*: ‘PPA’ 2014 Investing in the Defense, Homeland Security, and Space Market Presentation by: Scott Sacknoff * ETF offered by Powershares
  2. 2. SP♠DE Defense Index Legal Disclaimers This presentation is for informational purposes only and is not meant as a solicitation or an offer for an investment product. Products based on the SPADER Defense Index are not sponsored, endorsed or sold by the ISBC and the ISBC makes no representation regarding the advisability of investing in any product or vehicles based on the SPADE Defense Index or the defense sector in general. All information is provided ‘as is’ for informational purposes only and is not intended for trading purposes or advice. Neither the ISBC nor any related party is liable for any informational error, incompleteness, or for any actions taken based on information contained herein. The ISBC does not guarantee the accuracy and/or completeness of the SPADE Defense Index or data included therein. The ISBC makes no warranty, expressed or implied, as to the results to be obtained by any person or entity firm from the use of the SPADE Defense Index or any data included therein and hereby expressly disclaims all warranties of merchantability or fitness for a particular purpose with respect to the SPADE Defense Index or any data included therein. SPADE, the symbol ‘♠’, and the SPADE Defense Index are registered trademarks of the ISBC. The ISBC is the owner of the trademark, service marks, and copyrights related to its indices. Parties interested in the Powershares Aerospace & Defense ETF (NYSE: PPA) should contact them directly or visit the powershares.com website for a prospectus. Powershares is a registered trademark of Powershares Capital Management and is the registered licensee for ETF products based on the SPADE Defense Index.. © 2014 ISBC LLC Cover photo credit: (L) NASA, (center,right) D
  3. 3. SP♠DE Defense Index SPADE Defense Index (in Blue) 10 Year vs. the S&P500
  4. 4. SP♠DE Defense Index SPADE Defense Index (in Blue) 1 Year vs. the S&P500
  5. 5. SP♠DE Defense Index SPADE Defense Index 2013 +48.27% (S&P500 +29.60%) 11 ITT Exelis 69.12% 12 Anaren 68.41% 13 Digital Globe 68.37% 14 Hexcel 65.76% 15 Moog 65.59% 16 Lockheed Martin 61.08% 17 Viasat 61.05% 18 Esterline Tech 60.29% 19 Raytheon 57.27% 20 Kratos 52.68% 1 Gencorp 96.94% 2 Alliant Techsystems 96.38% 3 Huntington Ingalls 86.73% 4 Ducommun 84.35% 5 Boeing 83.55% 6 Taser 77.63% 7 Engility 73.42% 8 Oshkosh Truck 69.92% 9 Northrop Grumman 69.59%
  6. 6. SP♠DE Defense Index SPADE Defense Index YTD (thru 2/2814) +5.16% (S&P500 +0.60%) 11 Huntington Ingalls 12.58% 12 Rockwell Collins 11.66% 13 Alliant Techsystems10.77% 14 Transdigm 10.63% 15 Booz Allen 9.82% 16 Lockheed Martin 9.18% 17 Textron 8.00% 18 L3 7.99% 19 Raytheon 7.95% 20 CACI 7.66% 1 KeyW Holdings 36.16% 2 Engility 24.94% 3 Orbital Sciences 21.97% 4 TASER 21.10% 5 OSI Systems 15.74% 6 Oshkosk Truck 14.79% 7 General Dynamics 14.64% 8 FLIR Systems 13.42% 9 Computer Sciences 13.10% 10 SAIC
  7. 7. SP♠DE Defense Index  $1.3 Trillion – Annual Global Spending on Defense  U.S. Spending: 4-5% of its GDP Public Markets $603 Billion Total Market Cap The 49 Companies in the Powershares Aerospace & Defense ETF (NYSE: PPA) $473 Billion – Apple $410 – Exxon Mobil $408 Billion – Google
  8. 8. SP♠DE Defense Index Investing in Defense: Some Key Thoughts 1. Very Long Investment Cycles 2. Not all Downturns are Created Equal Post-Soviet Union <> Post-Iraq 3. To Identify Future Trends Look for Counter and Counter to the Counter
  9. 9. SP♠DE Defense Index Many new systems are developed over 10-15-20 year timeframes.  IT/Network Centric Warfare and Battlefield Visualization  Cyber  Armor and Protection  UAVs / GPS / Etc. -- Put the soldier and equipment further out of harm’s way Technology  1916 – 1918 WWI - Aircraft, the tank, machine guns  1939 - 1945 WWII - Introduction of the jet, missiles  1946-1960+ - Nuclear weapons age  1957- today - Satellite systems  1980s - Stealth technology  2000s - Network-centric warfare, Cyber
  10. 10. SP♠DE Defense Index How Defense Companies Grow 1. Rising Defense Budgets 2. Supplemental Budgets 3. Outsourcing to Private Sector 4. Increasing International Sales Acquisitions 5. Shift in the Investment Cycle from Operations to Investment 6. ‘Internal’ Diversification
  11. 11. SP♠DE Defense Index Acquisitions 100+ Deals Annually  Mostly small, <$100 million  Mostly private The acquisitions provide…  Exposure to long-term contracts  Key personnel (& clearances)  Access to classified programs and personnel  Technology & capabilities DoD Gives Small Business Contract Small Company Acquires Other Firms Small Company Goes Public Large Company Acquires Small Company Small Company Gets Contracts
  12. 12. SP♠DE Defense Index ISBC / SPADE® Defense Index 1725 “I” Street, NW; Suite 300 Washington, DC 20006 Tel: (202) 349-3917 Scott Sacknoff, Index Manager Contact Information Visit www.spadeindex.com to learn about: • Index Rules / Methodology • Index Constituents and Details • Links to historical data and performance For More Information … ♠Index: DXS ETF: PPA

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