Current Master Material Sept 30, 2009

EQUITY INCOME PORTFOLIO STRATEGY© PORTFOLIO DATA & PERFROMANCE RETURNS AS OF SEPTEMBER 30, 2009

www.deschaineandcompany.com

© All Rights Reserved

A REGISTERED INVESTMENT ADVISOR

EQUITY INCOME PORTFOLIO STRATEGY© Providing Growing Income and Consistent Total Returns

through High Yield Equity Portfolios

Jason M. Loyd Vice President & Portfolio Manager

8 Professional Park Drive Maryville, Illinois, 62062

(618) 288-2200 [email protected]

Mark J. Deschaine President & Chief Investment Officer

128 South Fairway Drive Belleville, Illinois, 62223


Matt T. Powers Vice President & Portfolio Manager

1416 Broadway Highland, Illinois, 62249


A REGISTERED INVESTMENT ADVISOR

deschaineandcompany.com © All Rights Reserved

Deschaine & Company, L.L.C.

Deschaine & Company EQUITY INCOME Portfolio Strategy

CONTENTS

SECTION I: Firm Background

SECTION II: Our All-Cap Equity Income Strategy “The Case for Dividend Investing”

SECTION III: Our Security Selection Process An Example: Altria

SECTION V: Appendix, Current EIP Holdings

SECTION IV: A Bear Market Case for Dividend Investing



ABOUT Deschaine & Company, L.L.C.

Our Mission: “DOUBLE OUR CLIENTS’

DIVIDEND INCOME EVERY 5 YEARS”

► $63 million in assets under investment management for 130 clients.

Founded in 1999, 100% Independent & Privately Owned

A Privately Owned SEC Registered Advisor

3 investment professionals have more than 50-years of investment management experience

Over 10-years of experience managing high yield and dividend growth portfolios

SERVICE ORIENTED

Client portfolios are managed by a team of senior investment professionals

Clients have direct access to their Portfolio Manager

Clients include, foundations, endowments, pension funds and individuals

Client communications personalized to meet each client’s needs

Firm Background



ABOUT OUR TEAM OF PROFESSIONALS Professional Highlights:

► Combined, our team of portfolio managers have more than 50 years of investment & portfolio manage-ment experience. ► In addition, Mark Deschaine has served more than 28 years in the role of Chief Investment officer. ► The team has extensive taxable, tax-exempt, endowment and pen-sion, profit sharing and special fund asset management experience. ► The principles of Deschaine & Company have extensive industry experience operating and growing an investment management busi-ness. They are not learning “on the job” as the firm grows.

At Deschaine & Company, all client portfolios are managed by our team of investment professionals to provide consent super-vision and continuity of management in the event of any dis-ruption of personnel.

Mark J. Deschaine President & Chief Investment Officer Mark has over 30 years of experience in the asset management business, including over 24 as Chief Investment Officer. From 1984 to 1997, Mark was Chief Executive Officer, President and Chief Investment Officer of Investment Counselors Incorporated; a St. Louis based investment advisor. At ICI, Mark was responsible for all aspects of the firm’s investment and corporate operations and was the primary force in developing and implementing the firm’s investment philosophy and strategies. Under Mark’s direction, ICI grew from $20 million in assets and 20 clients to over $650 million in assets and 120 clients before he sold his interest in January, 1997. From June 1981 to February 1984, Mark was an Assistant Vice President of Trust Investments for Boatmen’s Bank (now Bank of America) of Belleville, IL. From April 1979 to Sept 1981 he was Trust Investment Manager for Lumberman’s Bank in Muskegon, Michigan. Mark has a Masters of Business Administration from Southern Illinois University in Edwardsville, Illinois and a Bachelors of Business Administration from Western Michigan University in Kalamazoo, Michigan. Kalamazoo is Mark’s hometown.

Matthew T. Powers Vice President & Portfolio Manager Matt joined Deschaine & Company in July of 2009, as a Vice President and Portfolio Manager. He has over 10 years of investment management experience starting at Edward Jones where he worked of over three years before moving to Smith Barney and then joined Lucco Financial partners where he served as a portfolio manager.

Jason M. Loyd Vice President & Portfolio Manager Jason joined Deschaine & Company in July of 2009, as a Vice President and Portfolio Manager. He has over 10 years of investment management experience starting at Edward Jones where he worked of three years before moving to Bank of Edwardsville prior to joining Lucco Financial Part-ners where he served as a portfolio manager.

Marnie E. Deschaine Chief Operations Officer Marnie is the majority owner of the firm and is responsible for supervising and directing the firm’s business and client administration. She has over 20 years of investment invest-ment industry experience including seven years coordinating the marketing and client service activities at Investment Counselors Incorporated in St. Louis where she served as Vice President of Marketing from 1992 to 1997. Prior to that Marnie served as the firm’s business manager and firm’s client service and back office operations manager.

Firm Background



OUR INVESTMENT PHILOSOPHY

We are long-term investors in quality companies that pay a consistent and growing dividend. We seek to buy them when they’re at trading unusually attractive yields. Successful investing requires the accumulation of quality assets at bargain prices and the patience to see them realize their full value. We focus on stocks that have the ability to pay a consistent and growing dividend, to provide cash for regular reinvestment and to build future income.

We invest our clients’ money as if it is our own. Our firm was founded on the idea that we would develop and refine in-vestment strategies that meet our long-term investment objectives. We also invest our money right along with clients. In other words, we believe in “eating our own cooking.” Put another way, we will never offer an investment or strategy to clients that we would not be willing to put 100% of our personal assets behind.

We are committed to minimizing client fees, brokerage commissions and taxes. You see, we don’t like to pay them either. We start with our fee, which is highly competitive with alternatives in the investment management industry. We also minimize brokerage commissions by utilizing the most efficient internet trading platform available. Finally, we minimize commissions and capital gains taxes by keeping portfolio turnover to a minimum. We really do believe in the long-term ownership of quality assets.

We employ a disciplined, consistent investment and security selection process. We believe successful investment management requires a sound investment philosophy and a consistently applied selection process. Jumping from one investment fad to the next will only produce mediocre investment results. We have developed an equity selection process based on more than 100 years of investment research and stock market history. Our decisions are based on an objective assessment of each invest-ment’s individual merits based on detailed quantitative analysis—not on emotion.

We believe in personalized portfolio management and client communications. Each client account is managed individually within our overall investment strategy to meet their personal investment objectives. We will limit our firm’s growth to provide our clients with a highly personalized investment management service and communications to meet each client’s individual needs.

Fixed income securities (bonds) do not create wealth. They can, however, provide additional current income, principal protection and portfolio diversification.

Firm Background



WHY DIVIDENDS ARE IMPORTANT

Dividends are an important component of total stock returns. From 1926 through 2008, the reinvest-ment of dividends accounts for 96% of the total return from common stocks. To ignore dividends is to ignore the benefits a growing dividend can have on a stock portfolio’s long-term returns. The longer the time horizon, the more valuable steady and growing dividends are to total return due to the power of compounding.

Dividends are a critical component of total stock returns in bear markets. While dividends are im-portant in all markets, they are a critical component of total return for stocks in bear markets—like the one we’ve experienced since 2000. Since 2000, capital returns from stocks are negative while dividends pro-duced a positive return.

Dividends are an objective measure of profitability and a sign of financial strength. You can’t fake dividends, either the company has the financial ability to pay the dividend or not. No amount of accounting manipulation can make up for a lack of cash. A growing dividend is also a sign of a company’s financial strength.

Dividends provide cash for living expenses. Dividends of quality companies tend to grow overtime, pro-viding purchasing power protection ahead of inflation

Dividends provide cash flow for reinvestment. Dividends provide cash for reinvestment. Growing divi-dend income provides the ability to take advantage of buying opportunities without having to sell a stock. This minimizes portfolio turnover and trading costs while maximizing portfolio investment flexibility.

Dividends are much more predictable than capital gains. Dividends are a more consistent and predict-able source of investor return than capital gains. In these uncertain times, that’s reassuring.

Dividend yields are at levels not seen in many years. A carefully selected portfolio today could yield as much as 7% and have the potential to grow dividends at the rate of 8 to 12% annually.

Firm Background



Investment Management Fee Schedule An Annual Investment Management Fee of

1% on the first $2.5 million assets under management,

3/4 of 1% on the next $2.5 million

And 1/2 of 1% on the balance

The fee is payable quarterly in advance.

The State of Illinois and the Securities and Exchange Commission requires a written advisory agreement between the investment advisor and client. Deschaine & Company would be happy to provide a standard investment advisory agreement for review and approval by the client at no charge. Deschaine & Company’s standard agreement is cancelable by either party with a 30 day written notice. The pro-rated portion of any advanced fee will be refunded in the event of a cancellation by either party. In accordance with Rule 204-3 of the investment advisors act of 1940, a copy of the Form ADV-Part II, on file with the State of Illinois, is available upon request. The firm is registered in Illinois and Missouri. Note: The fee quoted above is for investment advisory services provided by Deschaine & Company and does not include brokerage commissions, custody charges or account expenses related to other service providers.

Firm Background



OUR EQUITY INCOME PORTFOLIO STRATEGY

The Benefits of a High-Yield, Dividend Growth Investment Strategy

High Current Income Principal Protection in down markets

Long-term Income Growth Inflation Hedge

Potential for Asset Appreciation Maximizes the Power of Money to Compound

“The greatest mathematical discovery of all time is the

power of money to compound.” —Albert Einstein

“The Case for Dividend Investing”



WHY DIVIDENDS ARE IMPORTANT: THEY Maximize the Power of Money to Compound

“Dividends are good because four times a year they remind

the CEO that it’s not his company.” —Michael Goldstein,

Professor Babson College

43% 50%63%

96%

0%

20%

40%

60%

80%

100%

120%

5 years 10 years 20 years 82 years

Note: common stock dividends are not assured payments. Dividends are paid at the discretion of the board of directors and the amount of dividend can change at any time. From 1926 to 2008, reinvesting dividends accounted for 96% of the stock markets total return after inflation. Source: “The Future for Investors, Jeremy Siegel, 2007

THE CONTRIBUTION OF DIVIDENDS TO TOTAL RETURN OVER TIME




$‐

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

2009

2008

2007

2006

2005

2004

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2001

2000

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1997

1996

1995

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1989

1988

1987

1986

1985

1984

1983

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1971

1970

1969

1968

1967

1966

DIVIDENDS REALLY MATTER: Dividend re-investment dramatically improves results over the long term

Growth of a Dollar from Total Return 1966 to July 2009 ($37.59)

S&P 500 from 1966 to June 2009 ANNUAL CAPITAL RETURN: 7.0%

ANNUAL DIVIDEND RETURN: 3.4%

The longer the time period, the greater dividends and compounding from dividend reinvestment contributes to the stock market’s total return.

Growth of a Dollar from Capital Return ”Only” 1966 to June 2009 ($9.44)

Growth of a Dollar from Dividend Return ”Only” 1966 to 2009 ($4.06)




MAXIMIZE DIVIDEND INCOME (OUR GOAL: DOUBLE DIVIDEND INCOME EVERY FIVE YEARS.*)

Strategy to Achieve Our Investment Objective

Invest in High Yield stocks with a history of dividend growth. Buying them when their current yield > their 5-year average yield. Reinvest all dividend and investment income cash flows in a timely manner.

Secondary Portfolio Objectives

PROTECT PRINCIPAL by: Creating a broadly diversified portfolio of quality stocks And maintaining the flexibility to hold cash reserves

(*Assumes full reinvestment of all dividend income over the five-year period.)




OUR FORMULA FOR MAXIMIZING DIVIDEND INCOME

+ High Dividend Yield

+ High Dividend Growth

+ Timely Dividend Re-investment*

= Growing Income

+/– Gain/Lose on Capital*

= Total Return *(Buy when the current dividend yield is above 5-year average dividend yield to maximize compounding.)

*(We think Capital Returns could be negative over the next ten years!)

MOST INVESTORS

FOCUS HERE

WHILE WE FOCUS HERE




WHAT WE HAVE TO EARN TO DOUBLE DIVIDEND INCOME EVERY 5 YEARS

Our

Target EIP Actual Since 2000

S&P 500 Since 2000

+ High Dividend Yield > 5.0% 6.1% 1.7%

+ High Dividend Growth > 10.0% 12.8% 7.6%

+ Timely Dividend Re-investment*

= Growing Income (Annual Income Growth Rate) 15.0% 17.3% 1.8%

+/– Gain/Lose on Capital* 0.0 1.8% - 4.6%

= Total Return (Annualized Total Return Dec 2000 Sept 2009) NA 7.4% - 2.3%

*Buy when the current dividend yield is above 5-year average dividend yield to maximize compounding. Assumes full reinvest-ment of all dividend income. *We think Capital Returns could be negative over the next ten years!




Portfolio Value @ Cost Dividend

Dividend Growth

Dividend Growth & Reinvestment

Yield on "Cost"

Income Growth Goal

Beginning Portfolio Value $1,000,000 Period $ 1,000,000 0.50 $ 50,000 $ 50,000 5.00% $ 50,000

1 $ 1,055,000 0.55 $ 55,000 $ 55,000 5.50%

Current Dividend Yield 5.00% 2 $ 1,118,828 0.61 $ 60,500 $ 63,828 6.05%

3 $ 1,193,285 0.67 $ 66,550 $ 74,458 6.66%

Annual Dividend Growth Rate 10.00% 4 $ 1,280,640 0.73 $ 73,205 $ 87,354 7.32%

5 $ 1,383,764 0.81 $ 80,526 $ 103,124 8.05% $ 100,000

Assumes Zero from Capital Appreciation 6 $ 1,506,335 0.89 $ 88,578 $ 122,571 8.86% 7 $ 1,653,106 0.97 $ 97,436 $ 146,771 9.74% 8 $ 1,830,285 1.07 $ 107,179 $ 177,179 10.72% 9 $ 2,046,071 1.18 $ 117,897 $ 215,786 11.79%

10 $ 2,311,420 1.30 $ 129,687 $ 265,349 12.97% $ 200,000

11 $ 2,641,158 1.43 $ 142,656 $ 329,738 14.27% 12 $ 3,055,612 1.57 $ 156,921 $ 414,454 15.69% 13 $ 3,583,052 1.73 $ 172,614 $ 527,440 17.26% 14 $ 4,263,384 1.90 $ 189,875 $ 680,332 18.99%

15 $ 5,153,844 2.09 $ 208,862 $ 890,461 20.89% $ 400,000

16 $ 6,337,933 2.30 $ 229,749 $ 1,184,089 22.97% 17 $ 7,939,678 2.53 $ 252,724 $ 1,601,745 25.27% 18 $ 10,146,876 2.78 $ 277,996 $ 2,207,198 27.80% 19 $ 13,249,744 3.06 $ 305,795 $ 3,102,868 30.58%

20 $ 17,706,627 3.36 $ 336,375 $ 4,456,883 33.64% $ 800,000

HERE’S HOW INCOME DOUBLES EVERY FIVE YEARS




OUR EQUITY INCOME PORTFOLIO HISTORICAL RESULTS

Investing $1,000,000 on December 31, 2000, where would you be today?

Deschaine & Company

EQUITY INCOME Portfolio* Vanguard S&P 500 Index Fund

Annual Income* Year End Portfolio Value Annual Income Year End Portfolio Value

2008 $ 176,366 $ 2,137,878 $ 22,975 $ 785,045

2007 $ 166,988 $ 2,821,164 $ 22,247 $ 1,239,545

2006 $ 122,904 $ 2,812,726 $ 18,964 $ 1,176,226

2005 $ 102,053 $ 2,300,422 $ 17,249 $ 1,018,397

2004 $ 93,697 $ 2,207,699 $ 16,696 $ 972,574

2003 $ 80,422 $ 1,767,432 $ 12,076 $ 879,075

2002 $ 84,468 $ 1,314,955 $ 11,295 $ 685,273

2001 $ 49,245 $ 1,216,400 $ 10,504 $ 879,452

*Represents the equity “only” total returns for the Equity Income Portfolio for the periods shown to compare to the equity returns of Vanguards S&P 500 index fund. Returns do not reflect the impact of the cash reserves held in the portfolio. Annual total income growth rate for the Equity Income Portfolio is 17.3% compared to 10.3% for the Vanguard S&P 500 index fund. Note: past performance is not a guarantee of future results.




Potential Annual Returns from: Potential Annual Return Range

Low High

From Current Dividend Yield (As prices go down Yields go up!) 5.0% 7.5%

From Dividend GROWTH (Estimated Annual Dividend Growth rate for EIP: 8-12%) 1.0 1.5

From Timely Dividend Re-investment (Buy when current yield is above 5-year average) 0.5 1.0

Return from Capital Appreciation (We think it will be negative!) -10.0 0.0

Interest income from bonds, cash and preferred securities 1.0 2.0

Equals a potential: 0.0 to 9% long-term expected annual return of: 0.0% 9.0%

OUR POTENTIAL RETURN EXPECTATIONS




Does EQUITY INCOME Make Sense Today?

BULL MARKETS: Incremental returns gained from real, growing cash flow (dividends, interest income.)

BEAR MARKETS: Crucial in generating positive portfolio returns, insulates and protects capital.

STEADY, GROWING INCOME, PROTECTION OF PRINCIPAL, YOU DECIDE:

CONSISTENT COMMONSENSE APPROACH GROWING INCOME

Positive Cash Flows Downside Protection For All Seasons

+ =




The Advantage to High-Yield Strategy in Down Markets

When stock prices go DOWN, dividend yields go UP

When Stock Prices Go

DOWN

Dividend Yields Go UP

Declining stock prices allow us to capture higher and higher dividend yields all the way to the bottom of the bear market!




$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

$2.00

$2.25

$2.50

1Q 09

2Q 09

1Q 09

4Q 08

3Q 08

2Q 08

1Q 08

4Q 07

3Q 07

2Q 07

1Q 07

4Q 06

3Q 06

2Q 06

1Q 06

4Q 05

3Q 05

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4Q 00

Our EQUITY INCOME STRATEGY Total Return Vs. S&P 500 Index (December 31, 2000 to September 30, 2008)

S&P 500 Total Return: Dec 31, 2000 to Sept 30, 2009

EIP Total Return: Dec 31, 2000 to Sept 30, 2009

*EIP Total Return shown are net of management fees at 1/2 of 1 % annually and brokerage transaction fees of $7.00 per trade. Additional performance disclosures are on page 29.




2008 2007 2006 2005 2004 2003 2002 2001 Annualized

Returns

EQUITY INCOME - 17.5 1.1 19.6 3.9 19.7 19.8

7.2

16.3

8.0%

S&P 500 Index - 37.0 5.5 15.8 4.9 10.9 28.7

- 22.1

- 11.9

- 2.9%

*Includes yield on money market funds held in the portfolio.

OUR EQUITY INCOME Portfolio: Gross Annual Returns 2000-2008

Total Cumlt

Returns

85.1%

-20.9%




EQUITY INCOME Portfolio Annualized Returns (For Periods ending September 30, 2008)

EQUITY INCOME Portfolio YTD 2009

One Year

Three Years

Five Years

Total % Returns Since

Inception*

Annualized % Returns

Since Incept

Total Returns 3.4 - 12.8 - 3.1 2.5 89.9% 7.6%

S&P 500 Total Return 19.3 - 6.9 - 5.4 1.0 - 5.3% - 0.63%

* Inception of the Equity Income Portfolio is December 31, 2000

Performance Disclosure: The investment results presented here are for various periods covering the period of December 31, 2000 through June 30, 2008 for the EQUITY INCOME Portfolio strategy outlined in this presentation. The equity “only” returns represent the results of the equity holdings of the portfolio and are calculated using AIMR complainant standards. The total returns represent the net returns for an actively managed portfolio of the recommended holdings of the EQUITY INCOME Portfolio net of fees of .5% annually and $7.00 per transaction commissions but do not take into consideration the impact of taxes in the calculations. Tax consequences are not estimated, but annual portfolio turnover was 20.69% for the nine year history of the portfolio. The results are for an actively managed portfolio of the firm’s EQUITY INCOME Portfolio holdings and are representative of actual client portfolio purchase and sales, industry weightings and activity. Actual client portfolio results may differ from those shown here for any number of reasons, including account inception date, individual portfolio goals and objectives, cash reserves requirements and other factors not in keeping with the recommended EIP strategy outline in this presentation. The information for market data has been prepared from sources deemed reliable, but its accuracy is not guaranteed. It should not be assumed that any securities or strategy discussed in this presentation will be profitable or will equal past performance. Nor should anything in this presentation be construed as an offer to buy or sell any securities discussed herein. Deschaine & Company, and/or one or more of its clients employees, family or friends, or related accounts as defined by the SEC may have a position in the securities discussed herein. @All rights reserved. Reproduction of this publication is strictly forbidden without the expressed written consent from Deschaine & Company or it’s legal representative.

3rd Qrt

2009

7.4

15.6




OUR EQUITY INCOME PORTFOLIO Security Selection Process

STEP 1): Screen domestic universe of 11,600 common stocks for stocks with a DIVIDEND YIELD above 3%. About 1,600 stocks

STEP 2): Screen for 1, 3, and 5-year positive DIVIDEND GROWTH. 300 stocks

STEP 3): Screen for ATTRACTIVE VALUATION (Price to Cash Flow, Price to Sales, etc.)

And Positive and consistent EARNINGS GROWTH. 100 stocks

STEP 4): Track stocks with a Current Dividend Yield above their 5-year Average Dividend Yield. (Final output is highly dependent on prevailing stock market conditions.) 30–60 stocks

STEP 5): We then construct a diversified portfolio from the selections with a current yield above their 5-year average dividend yield. Sector and industry weightings are a direct result of the output of the process. We do over-weight industries and sectors based on the output, subject to the usually portfolio risk controls and client portfolio constraints.

Typical Output

Security Selection Process



AN EXAMPLE: ALTRIA CORP (MO) Dividend & Yield History: March 1980 through December 2008

$-

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

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09

MO Dividend Yield: Above 5.3% Is a Strong Buy Signal

Quarterly $ Dividend (right axis)

Dividend Yield is quarterly dividend rate annualized, divided by month end share price. The peak? March 2000 when tobacco litigation concerns depressed MO’s stock price.

NOTE: all date includes Kraft and Phillip Morris International. As of December 31, 2008, MO was a buy (or an addition to with new cash) as its dividend yield (6.0%) was above it’s 5-year average 4.5%.

(As was KFT and PM) A current yield above the green line is a screaming BUY!

BUY

HOLD

SELL




ALTRIA ANNUAL HISTORICAL RETURN & DIVIDEND RETURN DATA (1980 to 2008) 2006 and beyond include KFT and PM shares from spinoffs.

Year Total

Shares Dividend Per Share

Dividend Growth

Year End Price

Income W/RI

% Income Growth

Income W/Out RI

# Shares Bought

Total Cost

Market Value

% Annual Dividend RT

% Annul Capital RT

Annual Total RT

Current Yield

Ave Yield on “Cost”

Dec-07 56,646 3.86 16.27 99.36 232,623 21.28 62,662 2311 1,485,912 5,628,596 4.57 20.71 25.28 4.11 15.33

Dec-06 54,335 3.32 8.50 85.82 188,175 13.34 53,896 2298 1,272,775 4,663,005 4.52 19.93 24.45 4.01 14.47

Dec-05 52,037 3.06 8.51 74.72 167,531 14.06 49,675 2229 1,097,031 3,888,216 5.10 27.76 32.86 4.28 14.93

Dec-04 49,808 2.82 6.82 61.10 146,145 12.98 45,779 2580 941,970 3,043,297 5.29 18.41 23.70 4.78 15.16

Dec-03 47,229 2.64 8.20 54.42 129,014 15.33 42,857 2881 806,025 2,570,187 6.69 42.99 49.69 5.00 15.62

Dec-02 44,347 2.44 12.44 40.53 113,648 17.97 39,610 2422 685,700 1,797,403 5.43 5.89 -1.07 6.32 16.16

Dec-01 41,925 2.17 7.43 45.85 97,670 13.56 35,227 1844 581,371 1,922,266 5.01 9.00 14.01 5.06 16.35

Dec-00 40,081 2.02 9.78 44.00 85,375 17.84 32,792 2732 492,930 1,763,563 9.07 105.30 114.36 4.82 16.82

Dec-99 37,349 1.84 9.52 23.00 71,428 14.16 29,870 2102 415,051 859,027 3.50 -54.45 -50.94 8.35 16.68

Dec-98 35,247 1.68 5.00 53.50 62,566 9.08 27,273 1291 348,961 1,885,740 3.77 22.73 26.50 3.29 17.33

Dec-97 33,956 1.60 9.59 45.25 54,762 14.26 25,974 1261 291,046 1,536,528 4.31 24.76 29.08 3.54 18.12

Dec-96 32,696 1.46 19.67 37.67 52,635 25.19 23,701 1424 237,953 1,231,545 4.94 30.91 35.85 4.25 21.21

Dec-95 31,271 1.22 19.61 30.08 41,518 26.06 19,805 1427 191,486 940,736 6.49 64.45 70.94 4.39 20.66

Dec-94 29,845 1.02 15.91 19.17 33,500 22.26 16,558 1597 154,370 572,034 5.62 9.22 14.84 5.84 20.53

Dec-93 28,248 0.88 10.00 18.54 24,980 14.16 14,286 1374 124,927 523,768 3.49 -24.19 -20.70 4.75 18.75

Dec-92 26,874 0.80 25.00 25.71 23,843 28.55 12,987 813 100,846 690,874 3.03 -0.90 2.13 3.42 21.92

Dec-91 26,061 0.64 28.00 26.75 18,953 31.93 10,390 692 79,751 697,140 3.75 59.30 63.05 2.69 21.70

Dec-90 25,369 0.50 25.00 17.25 14,330 29.09 8,117 816 63,341 437,619 3.65 28.46 32.11 3.25 20.29

Dec-89 24,553 0.40 17.65 13.88 10,899 22.44 6,494 787 50,903 340,678 4.78 68.84 73.62 3.17 18.80

Dec-88 23,766 0.34 30.77 8.49 8,609 35.85 5,519 1016 41,268 201,773 4.86 24.65 29.51 4.24 17.86

Dec-87 22,750 0.26 23.81 7.12 7,320 28.25 4,221 753 33,399 161,868 4.40 22.85 27.24 4.50 18.21

Dec-86 21,998 0.21 31.25 5.99 5,315 37.01 3,409 802 27,607 131,766 5.79 68.84 74.63 4.01 15.50

Dec-85 21,195 0.16 0.00 3.68 3,411 4.90 2,597 931 23,090 78,041 4.84 14.65 19.50 4.35 11.48

Dec-84 20,264 0.16 33.33 3.36 3,258 39.82 2,597 1026 19,794 68,067 5.46 18.33 23.80 4.76 12.36

Dec-83 19,238 0.12 0.00 2.99 2,324 5.10 1,948 832 16,652 57,522 4.88 25.01 29.89 4.01 10.04

Dec-82 18,406 0.12 50.00 2.50 2,219 57.09 1,948 968 14,404 46,015 6.04 29.93 38.96 4.80 10.63

Dec-81 17,438 0.08 45.45 2.03 1,405 50.51 1,299 665 12,266 35,417 4.50 17.18 21.68 3.94 7.51

Dec-80 16,773 0.06 37.50 1.80 1,015 41.64 893 539 10,904 30,225 9.40 212.28 221.68 3.33 5.86

Dec-79 16,234 0.04 0.59 649 649 274 10,000 9,627 3.42%

18.47% 19.89% 23.70% 18.50% 24.47% 5.09% Ann % GR

Dec-08 59,507 $4.34 12.44% $77.15 $274,258 17.38% $70,455 2861 1,736,103 4,591,002 4.44 -18.43 -13.99 5.96% 15.48%




BUY HIGH: A stock is a buy when its current dividend yield is > its 5-year average yield.

HOLD: A stock is a hold as long as it maintains the current cash dividend.

SELL LOW: A stock is sold if it cuts its dividend (for whatever reason), or if the current yield drops one standard deviation below the stock’s five-year moving average yield.

With Our EQUITY INCOME Strategy it’s: Buy High & Sell Low!




6.88%

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A VALUATION SELL EXAMPLE: KIMCO REALTY (KIM) BOUGHT December 29, 2000 Sold: April 16, 2007

Sold KIM on April 16, 2007. Dividend below 3.0% was an all time low and 86% below the 5-year average of 6.0%

Bought KIM at $10.38 Dividend Yield 7.70%. Yield was above the 5-year average of 6.88%.


BUY

HOLD

SELL

KIM Total Return: 366.5%, S&P 500 over same period 20.8% Since sale on April 16, 2007: KIM -- 74% S&P – 25%

The same was true for the REIT industry in general for this period as they went from undervalued and underappreciated in 2000 (in the throws of the internet, tech “bubble” to record valuations in 2007 and 2008 at the heights of the real estate “bubble.”



A DIVIDEND CUT SELL EXAMPLE: Alliance Bernstein Bought December 29, 2000 Sold: April 30, 2007


* Represents total returns through September 30, 2009

Bought KIM at $10.38 Dividend Yield 7.70%. Yield was above the 5-year average of 6.88%.

BUY

HOLD

SELL

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AB Total Holding Period Return: 111.5% S&P 500 over same period: 12.3% Performance results since sale on April 30, 2007 AB - 70% S&P – 28%*

AB dividend reduced from $1.48 to .87 April 2007 AB: —— S&P 500 ——



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ALTRIA HIGH YIELD + DIVIDEND GROWTH + DIVIDEND REINVESTMENT = Superior Income Growth and Consistent Total Returns!

Altria Group, Inc. (MO) Total Return 1980 to 2008 on an initial investment of $10,000 and all dividends reinvested quarterly.

The Market value of a $10,000 investment in MO and all dividends reinvested. As of December 31, 2008 the MO position would be worth $4,591,002

Total amount of invested capital: initial $10,000 plus total dividends of $1,726,103




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ALTRIA DIVIDEND GROWTH Compared to INCOME GROWTH from REINVESTING ALL DIVIDENDS

Income Growth from reinvesting a growing dividend. An initial investment of a $10,000 in MO at YE 1979 and all dividends reinvested would now be producing annual income of over $270,000.

Which is a 23.8% growth rate annual income. At this point, why would anyone ever sell the stocks as long as they maintain their current dividend?

DIVIDEND GROWTH ALONE: Even without reinvesting the dividends, MO

annual income grew at an 18% annual rate and now would be now producing over $67,000 in

annual income on a $10,000 investment in 1980.




Altria (MO) Versus Standard & Poor’s 500 from Year end 1979 to Year end 2008 Altria (MO) S&P 500 Initial Investment $ 10,000 $ 10,000 Dividend Yield (YE: 1980) 6.48% 3.51% Annual Dividend Income 1980 $ 904 $ 583 Annual Dividend Income 2008 $ 250,191 $ 5,842 Annual Dividend Growth Rate 18.47% 5.58%

Average Annual Dividend Yield 5.17% 3.10%

Annual Capital Return 14.36% 7.88%

Ending Portfolio Market Value $ 4,591,002 $ 191,248

Annual Compounded Rate of Return 18.83% 11.10%

Total Dividends Received $ 1,726,103 $ 111,881

Total Invested Capital $ 1,736,103 $ 79,367

Total Capital Return $ 2,854,889 $ 240,228

Current Dividend divided by Year End 1979 Price 305.00% 25.24%

Dividend Yield (Year end 2008) 5.96% 3.30%

Current Yield on “Invested Capital” 15.54% 7.36%

THE TALE OF THE TAPE: ALTRIA VERSUS THE STANDARD & POOR’S 500 INDEX




# of

Holdings Current

Equity Yield % Paying a Dividend

Total Port Yield*

5-Year Dividend Growth

5-Year Average

ROE Trailing PE Ratio

Weighted Ave Market Cap

EQUITY INCOME Portfolio 62 5.5% 100% 4.3% 16.8% 22.9 9.5x 33.1 Bil

S&P 500 Index 500 2.8% 72.6% 2.7% 6.0% 8.8 64.7x 41.4 Bil

Current Asset Allocation Market Cap Range Vs S&P 500 Index (1)

Equities Cash Total Giant Cap

Large Cap

Mid Cap

Small Cap

Micro Cap

EQUITY INCOME Portfolio 64.9% 35.1% 100% EIP 24.1% 32.7 27.8 5.5 10.1

Current Yield 5.8% 0.25% 3.9% S&P 48.9% 36.6 14.3 .3 0.0

*Includes yield on money market funds held in the portfolio. As of September 30, 2009. 1) Morningstar capitalization definition and ranges.

EQUITY INCOME Portfolio Characteristics A Portfolio Constructed to Provide Growing Income




1) We’re in a Long-Term Bear Market 1) The history of the stock market is one of long alternating bull and bear market cycles that can last as long as 20 years.

In long-term bear markets, investment returns come primarily from income not capital appreciation.

2) Long-term bear markets do not end until price/earnings ratios reach single digit levels. The stock market’s current p/e ratio is about 13.5 on the S&P 500 index.

3) The stock market is “overvalued” making positive capital returns difficult to achieve. Protecting principal as price/earnings multiples erode during a long-term bear market is critical to portfolio results.

2) Interest rates are near 50-Year Lows:

1) In a low (and rising) interest rate environment, long-term bonds are a “risky” investment alternative.

2) Interest rate history indicates that low interest rates are the “norm” and therefore likely to persist indefinitely. Stay short in maturity in bonds to protect portfolio principal and to “capture” rising interest rates.

SINCE 2000 OUR EQUITY INCOME PORTFOLIO Strategy Has Operated under two Primary Assumptions:

A Bear Market Case for Dividend Investing



The Current Bear Market Cycle (In Red)

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1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

The Dow Jones Industrials divided by the $ Price of Gold

Valuing the Stock Market in “Inflation Adjusted” Dollars: 1900 — 2008

1929 Stock Market Peak

1966 Stock Market

2000 Stock Market Peak

As you can see, the highest on record!

Our Market Forecast 2000—2035

1

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3

B A C

30 Years 37 Years 34 Years 35 Years ?

Peak to trough 13 Years

Peak to trough 17 Years

Peak to trough 15years? (9 Years and counting)

D?

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RECORD LOW INTEREST RATES POSE A RISK TO INVESTORS

53 Year average yield: 6.38% Normalized average 5.64%

With interest rates are at record lows and we think they have no where else to go but UP! Not a time to be buying long-term long bonds.

10-Year Treasury Yield 3-Month Treasury Bill Yield




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SO FAR IN THE NEW MILLENNIUM—Little return for investors so far! Does this look like a bull market to you?

The Major Indexes Capital and Income Returns Since Year-End 1999

Index December 31, 1999

July 31, 2009

Index Change

Total Percent Capital RT

Annualized 1999-2008

Dow Jones 11,497 9,172 - 2,325 - 20.23% - 2.60% S&P 500 1,469 988 - 482 - 32.79 - 4.84

NASDAQ 4,069 1,979 - 2,091 - 51.38 - 8.06

Annual Inc Return

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1.76

.19

Annual Total RT

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- 3.08

- 7.87




RETURNS IN BULL MARKETS COME FROM CAPITAL APPRECIATION

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S&P 500 from 1982 to 2000 ANNUAL CAPITAL RETURN : 15.5% ANNUAL DIVIDEND INCOME : 3.0%

ANNUAL TOTAL RETURN : 18.9% S&P 500 Dividend Yield at beginning of bull market (1982): 5.7%

S&P 500 Dividend Yield at peak of bull market (2000) : 1.1%

Capital Appreciation $13.67

Dividend Return $1.75

Investment strategy in bull markets? Throw money at stocks, keep fees low, and hang on as earnings rise and price earnings multiples expand.

Like the 1982 through 2000 Bull Market.




RETURNS IN BEAR MARKETS COME PRIMARILY FROM DIVIDEND INCOME

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S&P 500 From 1966 to 1982 ANNUAL CAPITAL RETURN: 1.1% ANNUAL DIVIDEND INCOME: 4.3% ANNUAL TOTAL RETURN: 5.5%

S&P 500 Dividend Yield at beginning of bear market (1966) : 2.4% S&P 500 Dividend Yield at the end of bear market (1982) : 5.7%

(Current S&P 500 Yield as of October 31, 2008: 2.83%)

Capital Appreciation $1.19 Inflation Adjusted: $.72

Or a 2.03% annual loss in capital

Dividend Return $1.96

During the last long-term bear market from 1966 to 1982, after adjusting for inflation, capital returns for stocks were negative.

The only positive return came from dividends.




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2009200820072006200520042003200220012000

STOCK MARKET RETURNS APRIL 2000 TO JUNE 2008: Negative Capital Returns, Positive Income Returns

S&P 500 Index April 1, 2000 to June 30, 2009

ANNUAL CAPITAL RETURN: -5.7% ANNUAL DIVIDEND INCOME: 1.8% ANNUAL TOTAL RETURN: -3.9% Dividend Returns March 2000 to June 2009 $1.17

Capital Returns March 2000 to June 2008 $.58

2000 2001 2002 2003 2004 2005 2006 2007

Div .27 .28 .28 .29 .33 .34 .38 .33 .36 .39 .52 .45 .48 .44 .51 .41 .41 .43 .48 .44 .45 .46 .49 .47 .46 .48 .51 .46 .47 .48 .49 .48 .54

Cap -2.93 -1.24 -8.09 -12.11 5.52 -14.98 10.29 -.06 -13.73 -17.63 7.92 -3.60 14.89 2.20 11.64 1.29 1.30 -2.30 8.73 -2.59 .91 3.15 1.59 3.73 -1.90 5.65 6.14 .18 5.81 1.56 -3.82 -9.92 -9.00

Total -2.68 -.96 -7.81 -11.83 5.85 -14.64 10.67 .27 -13.37 -17.24 8.44 -3.15 15.37 2.65 12.15 1.70 1.71 -1.87 9.21 -2.14 1.37 3.60 2.08 4.20 -1.44 5.65 6.66 .64 6.28 2.03 -3.36 -9.44 -8.47

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.54

-3.23

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.71

-21.94

-21.23




EVEN IN BULL MARKETS, DIVIDENDS MATTER: Dividend re-investment significantly enhances Bull Market Return

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Growth of a Dollar from Total Return 1982-2000 $23.41 S&P 500 from 1982 to 2000 ANNUAL CAPITAL RETURN: 15.5% ANNUAL DIVIDEND RETURN: 3.0% ANNUAL TOTAL RETURN: 18.9%

No matter what stock market environment we’re in, dividends are an important contribution to long-term stock total returns.

$13.67

$1.75




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OVER THE LONG-TERM DIVIDENDS REALLY MATTER: Dividend re-investment dramatically improves results over the long term

Growth of a Dollar from Total Return 1966 to July 2009 ($37.59)

S&P 500 from 1966 to June 2009 ANNUAL CAPITAL RETURN: 7.0%

ANNUAL DIVIDEND RETURN: 3.4% ANNUAL TOTAL RETURN: 10.5%

The longer the time period, the greater dividends and compounding from dividend reinvestment contributes to the stock market’s total return.

Growth of a Dollar from Capital Return ”Only” 1966 to June 2009 ($9.44)

Growth of a Dollar from Dividend Return ”Only” 1966 to 2009 ($4.06)




Appendix

Appendix

Current List of Equity Income Holdings

As of August 31, 2009



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Appendix

The S&P 500 Index Quarter End Dividend Yield (December 31, 1880 to September 30, 2009)

DOES RECORD LOW DIVIDEND YIELDS MEAN A RECORD LONG BEAR MARKET?

Bull Market

Bear Market


Deschaine & Company EQUITY INCOME Portfolio Strategy Appendix

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DIVIDEND GROWTH FOR THE S&P 500 (1966-2008) A High Return on “Invested” Capital

S&P 500 DIVIDEND HISTORY It’s CURRENT DIVIDEND (Divided by it’s) HISTORICAL MONTH END SHARE PRICES

(January 1966-December 2008)

S&P 500 Dividend Yield: 5.3% Jan 1973

S&P 500 YE 2008 Yield: 3.1%



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LONG-TERM DIVIDEND GROWTH = A High Return on “Invested Capital”

ALTRIA (MO, KFT, PM) CURRENT ANNUAL DIVIDEND ($4.60) DIVIDED BY IT’S HISTORICAL MONTH END SHARE PRICES

(January 1980-December 2008)

MO, KFT & PM combined annual dividend ($4.60) divided by MO’s September 1985 month-end

stock price of $3.13 equals a “yield on invested capital” of 147%

29.6%

21.8%

Current Yield: 6.0%

MO, KFT, PM, Current Combined Quarterly Dividend at YE 2008: $1.15


Documents

Current Master Material Sept 30, 2009