Zacks Investment Research, Inc. | 10 S. Riverside Plaza, Suite 1600 | Chicago, Illinois 60606

www.zacks.com/ultimate/blackboxtrader

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Contents

Introduction 2

Section 1: The Mental Aspect 3

Section 2: Getting the Most Out of Black Box Trader 4

Section 3: Follow the Leader 5

Section 4: How to Read Black Box Trader Daily Alerts 6

Section 5: How to Read Black Box Trader Daily Summary 7

Section 6: Virtues of Money Management 8

Section 7: Tying it All Together 9

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Introduction:

Congratulations on getting started with the Black Box Trader.Like anything in life, to be successful, you need a good strategy. Something as simple as traveling somewhere you’ve never been before requires a strategy (a map or route on how to get to where you want to go). If you want to lose weight, you need to follow a sound food plan to do so. And if you want to make more money in the market, you should follow a proven, profitable method for picking winning stocks.

Following a proven strategy that works can help you achieve your goals. You’re also more likely to stick with it. And you’ll grow more confident as you do.

The confidence part is just as important as a good strategy. As the saying goes, “the strategy works best when you use it”. And the more confident you are in anything you do, the more likely you’ll be to keep doing it. And that is the recipe for success.

Shhh, It’s a Secret

Our goal with the Black Box Trader was to create a winning strategy to help you beat the market. We call it Black Box because we don’t want to make public exactly what goes into it. But, of course, it incorporates some of the most profitable items we espouse at Zacks, including the Zacks #1 Rank, the top Zacks Ranked Industries, and a special combination of various Growth, Value, and Momentum style inputs.

We also specifically stripped out one key element -- human bias. Instead of providing a write up on the qualitative reasons why each stock is being added or deleted from the portfolio (which could lead a user to favor a stock, or disfavor another, contrary to the signal), this portfolio is a straightforward quantitative model.

And while nothing is perfect, there’s no need to second-guess yourself as it’s highly unlikely that reading one extra news story or stressing about something in the market will outdo the countless hours of testing that went into creating the strategy in the first place; a strategy that has been tested over both bull and bear markets; beaten the S&P in 10 out of the last 10 years; and more than quadrupled its returns while doing so. With this strategy, we know we’ve applied the best time-tested analysis to every stock that comes through. And it automatically does this each and every time, so you don’t have to.

Whether you’re a seasoned trader or brand new to the market, we think you’ll enjoy the Black Box Trader, and approaching the market in an entirely different, and emotion-free way. And let’s not forget profitably.

Before you begin, please be sure to read the rest of this guide. It will help you get the most outof this service. If at any time you have any questions or comments, please feel free to contact us. We want to hear from you.

Thanks again. And good trading.

Sincerely,

Black Box Trader

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Section 1:

The Mental Aspect It is important to realize how much investment success is related to what goes on between your ears. There are so many ways to get distracted and to question yourself while trading. You must be in the right frame of mind and have reasonable expectations to achieve success with this or any investment service. So be sure to pay attention to the tips in this section carefully; they will get you headed in the right direction.

NOBODY IS 100% PERFECT

First of all, there will be losing picks, but if we cut them out early to minimize losses and maximize gains on winners, then we can achieve great results. Hopefully, due to the nature of fund investing, big losses will be significantly curtailed, though there is always the potential for negative performance with any investment.

OUR BRAND OF TRADING

The Black Box Trader uses a system that identifies stocks with the potential to beat the market. The focus of our technique relies on a proprietary blend of metrics as well as a combination of Growth, Value, and Momentum inputs to pinpoint these stocks.

USE LIMIT ORDERS

There might be times that we move into lower volume stocks, so using limit orders will be advantageous in order to get a good price. For many stocks, market makers can easily step in and bring new shares to the market—assuming that these stocks are relatively liquid—so don’t reach too far from current prices.

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Section 2:

Getting the Most Out of Black Box TraderIt is our job to provide you with timely and profitable picks, but there are steps that you can take to ensure your success with Black Box Trader. Here are a few things you can do to get the most out of the product.

1. Read this guide carefully

� This guide is your friend. It has valuable information on how to use the product and succeed with the assistance of Black Box Trader.

� It gives you step-by-step instructions on how to receive alerts and what to do when you receive them.

� It has important money management tips.

2. Have a working email address

� This is necessary to receive trading alerts. Make sure you can access your email in a timely fashion because acting on trades is essential to success.

� The Daily Summary email will be sent at 8:00 p.m. EST, which summarizes the positions held in the portfolio.

� Intra-day trading alerts will typically be sent within the first hours of the trading day.

� Unfortunately, many Internet service providers have software programs that filter out emails you want to receive, like Zacks Black Box Trader Daily Summaries. To get optimal delivery of our emails follow this link for quick and easy instructions.

3. Have an online trading account

� We are not advocating any particular company for this, but ideally lower commissions will help you achieve a higher overall return. You will make several trades a month, and high commissions can really eat into your profit margin, especially if you have limited capital.

4. Access the site

� To access the site, go to www.zacks.com/ultimate/blackboxtrader and enter your username and password. This will take you to the main page where you can view the portfolio and any pending trades.

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Section 3:

Follow the Leader � The strategy was created using a one week rebalancing period holding 10 stocks.

On the first week when the list comes out, you’ll buy all of the stocks in an equal dollar weighted manner. Each subsequent week, when the trades come out, simply buy the new ones that are on the list and sell the ones that you own that are no longer on the list.

� If you prefer to trade less frequently, you can rebalance your portfolio every two weeks or even every four weeks. These holding periods have also outperformed the market. But it should be noted that the one week rebalancing period has produced the best returns.

The process to receive our trades is very simple, yet we feel it is so important that we are going to spell it out for you. Here are the four steps:

� Receive the email with the daily summary or intra-day signal

� Read the email to determine appropriate action

� Place trades through your broker with the appropriate % allotted

� Follow the emails to determine when to sell

ACT PROMPTLY = MOST SUCCESS

And if you don’t beat the market, you can take advantage of our 100% Money Back Guarantee.

SPEAKING OF THE GUARANTEE…

We feel that if we are not able to live up to our word and help you beat the market then we shouldn’t be deemed worthy enough to take your money. So in addition to the 90-day, no hassle guarantee, there is a 100% Money Back Performance Guarantee.

There are a few conditions that have to be met first, but the bottom line is that we have to perform. Click here for details.

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Section 4:

How to Read Black Box Trader AlertsThis strategy will often have a trading alert during the trading day. When a Buy Alert or Sell Alert is sent out, you should receive the alert within the first hours of the trading day detailing what stocks are being added or sold. It is important that you act as soon as you can. Here is an example:

Signal = The type of alert. It will be a green ball for a “buy” alert or a red ball for a “sell”.

Company Name = The name of the stock that is being added to or sold from the Black Box Trader portfolio.

Symbol = Ticker symbol of stock being added to or deleted from the portfolio.

Date Added = The date on which the stock was added to the portfolio.

Intraday alerts use the average of the price at the time of the alert and the closing price that day.

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Section 5:

How to Read Black Box Trader Daily Summary The Daily Summary provides a snapshot of the portfolio each day. This summary may have new signals as well as the current open portfolio with daily commentary. This is valuable information as it conveys what positions are being held, and % change for each position. This is emailed to you at 8:00 p.m. EST. In regards to the price added for the portfolio, Zacks uses the average of the price at the open and the closing price on the day the stock is added or deleted.

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Section 6:

Virtues of Money Management Money management can be the difference between realizing large gains and going broke, even if the winning percentage is the same. How can this be? The key point is that winning investors know to ride their winners and cut their losses quickly, and stick with a plan that has proven to work in the past.

Here are a few rules that you can follow to further improve your returns:

First of all, don’t dump your entire portfolio into these recommendations. Only allocate that portion of your capital that can be comfortably devoted to speculation.

This portfolio will hold 10 positions. You should be able to sleep soundly and act rationally if you are only trading with your speculative money.

Keep in mind that reinvesting profits and the power of compounding are your friends in this portfolio.

EVER-PRESENT CLICHÉ RINGS TRUE

It has been said millions of times before, but it is so important it needs to be said again: Don’t put all your eggs in one basket. Even if you are the most brilliant investor in the world, there is no way of knowing for sure that an investment will go in the right direction. There will be losing trades. The key is staying in the game and building your equity over time in a systematic way. This can only be done when diversification is put to use.

Not that we have to remind you, but the main point is that your capital was earned through years and years of hard work. Capital conservation sounds boring, but without it, you are fighting a losing battle. We don’t want to see the money you have put your blood, sweat, and tears into evaporate due to lack of discipline.

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Section 7:

Tying it All Together It is our goal at Zacks to enhance your investing results via the Black Box Trader service. This guide touches upon the details of the service and provides several useful tips to realize the vast potential that these recommendations hold. We feel it is our job to let you know that we are here to help you get the most out of the Black Box Trader.

Again, let’s go over some of the important points made in this booklet.

� Small Gains Add Up To Big Results

� Not Every Trade Will Be A Winner

� Timeliness Is Of The Essence

� Money Management Matters Greatly

� Have A Working Email Address

� We Are Here To Help

The last point is important as we have free customer support that should be taken advantage of. Any additional questions that you may have can be answered by just picking up the phone and giving us a call or emailing us:

1.888.775.8348

(outside the US, 1.312.265.9309)

blackbox@zacks.com