Opportunities come again

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Opportunities come again again, your
investment principal comes but once.

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Knott Capital Firm Summary

• Boutique Investment Advisory Firm Headquartered
  in Exton, PA
• Disciplined and Risk-Averse Investment
  Methodology
• Approximately 1 Billion in Assets Under
  Management
• Diverse Mix of Institutional and Advisor Clients
• Business Model Investment Process that are
• Definable
• Scalable
• Sustainable

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The Road Less Traveled
Two roads diverged in a wood, and I I took the
one less traveled by, And that has made all the
difference. Robert Frost

• Specialized
• Independent
• Controlled Growth

- A single, proprietary investment process with
a proven record - Active employees
own firm - Proper alignment of interests -
Employees, principals and corporate assets
invested in firms products - We have declined
mandates to manage hot money that could
diminish results for long-term investors.
- Focused on long-term relationships.
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Investment Philosophy

• Cornerstones of Our Philosophy
• Preservation of capital
• Opportunities come again again, your investment
  principal comes but once
• The economy interest rates are the ultimate
  arbiters of investment outcomes

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Unique Investment Process
Through the combination of top-down and bottom-up
analysis, risk is assessed, monitored and
controlled at each step in our process.
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1 Macroeconomic Analysis
Our proprietary macroeconomic forecast utilizes
factors, including

• U.S. Tax and Fiscal Policy
• Employment Data
• Inflation-Deflation Studies
• Federal Reserve Policy Monetary Data

• GDP Analysis
• Interest Rate Analysis
• Corporate Earnings
• Currency and Global Trade Data

Understanding what the market is discounting
correctly vs. incorrectly is the key to managing
risk and capturing reward.
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2 Sector Evaluation
Sector and sub-sector weightings account for
approximately 80 of overall portfolio returns.
Our macro forecast enables us to identify/exploit
the most attractive sectors and avoid those
facing headwinds.
SP 500 Sector Composition ()
-
Highlights a period of meaningful change.
Historic SP sector data provided by CSFB
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2 Sector Evaluation

• Case Study The Energy Sector
• Our Top-Down Analysis Improves Our Perspective
• Our research in 1999 identified shifting sector
  fundamentals
• Global changes in supply/demand
• Production - Waning global production levels in
  hydrocarbons
• Utilization - Growing industrial demand from
  China and India
• Markets/Wall Street/individual security prices
  were discounting very low long-term energy
  pricing
• Lack of capital investment in both Exploration
  Production and Refining Marketing
• Knott Capital Began to Overweight Energy in 1999

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2 Sector Evaluation
Case Study The Energy Sector We analyzed
individual sub-sectors and focused on the one
with the most favorable outlook

• SP 500 Sub-sectors
• Oil Gas Equipment Services
• Oil Gas Exploration and Production Natural Gas
  looked attractive
• Oil and Gas Refining Marketing
• Oil and Gas Storage Transportation
• Integrated Oil Gas
• Oil Gas Drilling
• Coal Consumable Fuels
• Key Energy Sector metrics replacement of
  expended reserves and cash flow.
• The only sub-sector that had regularly replaced
  reserves was domestic natural gas exploration and
  production companies.

Detailed sub-sector analysis enables us to
capitalize on opportunities that would be missed
through bottom-up analysis alone.
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3 Fundamental Security Analysis

• As a result of our macro and sector analysis, our
  fundamental security research can be more
  precisely focused on a smaller number of
  companies.
• Rigorous financial-statement analysis, company
  visits, and discussions with management are
  combined with independent and traditional Wall
  Street research. We look to identify companies
  that exhibit the following characteristics
• Strong earnings growth relative to economic
  drivers
• Prudent valuation from a sector, sub-sector and
  historical perspective
• Patent, niche or competitive advantage that will
  maintain or increase pricing power
• Strong management team
• Solid balance sheets

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4 Ongoing Portfolio Management

• Active portfolio management does not end with
  security selection.
• We further control risks and add value
  through
• Trading
• Active Dynamic
  Models
• Holding Tank

We foster a synergistic relationship between
traders and portfolio managers to analyze
market impact, opportunity costs and liquidity
constraints. Our model portfolios
address continuously evolving risk/reward
relationships We only add
securities that are Active Buys to new client
portfolios.
Our portfolio is actively managed and dynamic,
supported by our ongoing macroeconomic review.
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Sell Discipline

• We may reduce or sell holdings based on the
  following drivers
• Change in macroeconomic outlook interest rate
  forecast
• Deterioration in sector or sub-sector evaluation
• Change in company-specific valuation or
  fundamentals, distinguishing between short-term
  earnings fluctuations and long-term earnings
  impacts

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Current Portfolio Positioning As of 6/30/07

• Defensive (but flexible) Healthcare and
  Consumer Staples overweights
• Avoiding energy, housing-related, and most
  industrial sub-groups

Characteristics as of 6/30/2007 and are subject
to change. This information is presented as
supplemental information and complements the full
disclosure presentation on page 18.
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Performance in Rising Falling Markets As of
6/30/07
Down Market Capture
Up Market Capture
Gross of fee results are shown gross of
transaction costs and are therefore presented as
supplemental information. Up Market comprised of
quarters when the SP 500 rose. Down Market
comprised of quarters when the SP 500 fell.
Capture Ratios based on quarterly returns from
inception as of 3/31/07.
Please see Knott Capitals disclosure
presentation on page 18 of this document.
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Annualized ReturnsAs of 6/30/07
1 Year
3 Year
5 Year
Since Inception (1/1/99)
7 Year
Gross of fee results are shown gross of
transaction costs and are therefore presented as
supplemental information
Please see Knott Capitals disclosure
presentation on page 18 of this document.
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Growth of 1,000,000 Inception through 6/30/07
2,338,049
2,109,555
1,530,230
Please see Knott Capitals disclosure
presentation on page 18 of this document.
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Annual Returns vs. SP 500As of 6/30/07
Gross of fee results are shown gross of
transaction costs and are therefore presented as
supplemental information
Please see Knott Capitals disclosure
presentation on page 18 of this document.
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Knott Capital Management (KCM) Equity Composite
Disclosure
-

• Gross of fee results are shown gross of
  transaction costs and are therefore presented as
  supplemental information

KCM Equity Composite contains fully discretionary
equity accounts. For comparison purposes, is
measured against the SP 500 Index. The minimum
account size for this composite is 100 thousand.
Knott Capital has prepared and presented this
report in compliance with the Global Investment
Performance Standards (GIPS). Knott Capital is a
registered investment adviser. The firm
maintains a complete list and description of
composites, which is available upon request.
Results are based on fully discretionary accounts
under management, including those accounts no
longer with the firm. Past performance is not
indicative of future results. The U.S. Dollar is
the currency used to express performance.
Returns are presented gross and net of management
fees and include the reinvestment of all income.
Gross returns of non-wrap accounts will be
reduced by investment advisory fees and other
expenses that may be incurred in the management
of the account. Net of fees is calculated using
actual fees with the exception of accounts that
pay their fee separately from the account. Net
of fee performance for these accounts was
calculated using the highest management fee.
Wrap accounts are included in this composite.
Gross returns for these accounts are stated gross
of all fees and transaction costs net returns
have been reduced by all fees and transaction
costs incurred. Wrap fees are generally based on
quarterly market values determined by the
custodian and may include any combination of
management, transaction, custody and other
administrative fees. Wrap fee schedules are
provided by independent wrap sponsors and are
available upon request from the respective wrap
sponsor. The annual composite dispersion
presented is an asset-weighted standard deviation
calculated for the accounts in the composite the
entire year. Additional information regarding
the policies for calculating and reporting
returns is available upon request. The management
fee schedule is as follows 1.00 on the first 5
million and 0.75 thereafter. Actual investment
advisory fees incurred by clients may vary.
Custody fees, if any, are charged separately by
the custodian. The KCM Equity Composite was
created July 31, 2003. Knott Capital
Managements compliance with the GIPS
standards has been verified for the period
January 1, 1999 through June 30, 2006, by Ashland
Partners Company LLP. A copy of the
verification report is available upon request.
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Investment Team Members
Charles A. Knott CIO Chairman - Principal
J. Michael Barron CEO Portfolio Manager -
Principal
Mr. Knott has more than 39 years experience in
the investment industry. Prior to founding Knott
Capital, he was the Senior Investment Officer and
head of the trust departments at several large
banks additionally he has served as Deputy Bank
Commissioner for the State of Maryland. Mr.
Knott has been called upon by the Federal Reserve
to provide expert testimony. He is a regularly
featured guest on such well know shows as CNBCs
Power Lunch, Closing Bell, and Bloomberg News.
For over 17 years he has written a monthly
commentary on the state of the economy and the
markets that is widely read by the investment
community. He is a graduate of Loyola college in
Baltimore with a B.S. in Accounting.
Michael has spent 13 successful years in the
investment industry. Before joining Knott
Capital, he served as Director of Real Estate
Securities for INVESCO, overseeing the management
of more than 1 billion in client assets. Prior
to that, he served as the Vice President and
investment committee member for a boutique
investment advisory firm. He has worked closely
with CIO Charles Knott for more than a decade.
Michael is frequently interviewed by well known
industry sources such as Investors Business
Daily, Institutional Investor, Bloomberg, and
Barrons. He earned his B.S. degree in business
administration from Villanova University and has
completed executive study at MITs Sloan School.
A.J. McCrery Research Analyst
Peter M. Schofield, CFA
Managing Director Portfolio
Manager
A.J. is responsible for fundamental security
research and analysis. He is a graduate of Yale
University with a double major in History and
Economics. Prior to joining the firm full-time,
A.J. spent two summers as a research intern here
at Knott Capital. A.J. is currently a CFA Level
2 candidate.
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Corporate Bios
J. Bradley Baker Managing Director
H. Dallas Kerley III Managing Director
Dallas joined Knott Capital in 2000, bringing
over 17 years of marketing and client service
experience.  He is responsible for business
development at Knott Capital, where he works with
institutions, high net worth individuals and
financial advisors, helping them to integrate
Knott Capital into their investment goals.  Prior
to joining Knott Capital, Dallas worked for Chase
Manhattan Bank, where he was responsible for
customer relations.  He later worked in the auto
industry in sales, finance and marketing.  Dallas
earned a B.S. in Economics and a minor in History
from the University of Delaware. 
Brad Baker brings more than eight years of
investment industry experience to Knott Capital
and is a member of the investment team. Brads
responsibilities include product branding and
distribution with an emphasis on articulating the
firms current strategy to business partners and
clients. Prior to joining Knott Capital, he was a
Managing Director for Sovereign Asset Management,
a division of John Hancock, where he worked as a
Separate Account Specialist. Brad began his
career with Legg Masons Investment Consulting
Group where he held the title of Regional Sales
and Marketing Manager. He received the Certified
Investment Management Analyst (CIMA) designation
from the Wharton School of Business in 2004. Mr.
Baker is a graduate of Lehigh University.


June G. Scanlon Director of Operations
Megan Chatley Head Equity Trader
Prior to joining Knott Capital in 2005, June
worked for a wealth management firm in Boston,
where her primary responsibility was to manage
and maintain their mission-critical software.
At Knott Capital June oversees all aspects of
Knott Capitals day-to-day operations, including
portfolio accounting, back office operations and
general office administration. As Chief
Compliance Officer, she is also responsible for
administering and maintaining Knott Capitals
compliance program. June earned a Bachelor of
Science in Business Administration from
Shippensburg University of Pennsylvania.
Megan joined Knott Capital Management in May of
2005 as Head Equity Trader with more than 15
years industry experience. Prior to joining the
firm, she served as Vice President of Trading at
Quaker Securities in Valley Forge, an
institutional broker dealer specializing in
equities and options trading. Megan brings to
Knott a deep background that includes experience
on the Philadelphia Options Exchange, and also
the NYSE and AMEX. She is a graduate of Hood
College, earning Bachelor of Arts degrees in both
Economics and Finance.