Asset Allocation in a World Of Known Unknowns

Asset Allocation in a World Of “Known Unknowns” www. riverfrontig. com 9011 Arboretum Parkway, Suite 110, Richmond, VA 23236 April 2010 866. 583. 0744

About River. Front… 1 ¨ We are an independent SEC-registered investment advisor with about $2 billion in Assets Under Management based in Richmond, Virginia ¨ We offer the World in a single account – stocks (including US, international, and emerging markets), fixed income, and commodities ¨ Our process is Dynamic – using both Strategic & Tactical asset allocation in managing our portfolios. ¨ We are the Asset Manager with Glass Walls

Stocks for the Long Run…. . Source: River. Front Investment Group, CRSP*; Past Performance is no Guarantee of Future Results 2

Lesson from History: Price Matters! Large Cap Source: River. Front Investment Group, CRSP*; Past Performance is no Guarantee of Future Results 3

Long Run: Markets are Weighing Machines Large Cap The “ Luck y Lin e” Unlu cky Line ” Source: River. Front Investment Group, CRSP*, Robert J. Schiller prior to 1926 **. Past Performance is no Guarantee of Future Results. Please see the end of this presentation for important disclosures concerning the information on this page. 4

Midcap – Steeper Slope but not as Cheap …. . Mid-cap companies may be hindered as a result of limited resources or less diverse products or services and have therefore historically been more volatile than the stocks of larger, more established companies. Past performance is no guarantee of future results. 5

Midcap –Similar Return Expectations Mid-cap companies may be hindered as a result of limited resources or less diverse products or services and have therefore historically been more volatile than the stocks of larger, more established companies. Past performance is no guarantee of future results. 6

Small Cap – You Get the Picture Small cap companies may be hindered as a result of limited resources or less diverse products or services and have therefore historically been more volatile than the stocks of larger, more established companies. Past performance is no guarantee of future results.

International Equities – Boringly Efficient Markets Investments in international and emerging markets securities include exposure to risks including currency fluctuations, foreign taxes and regulations, and the potential for illiquid markets and political instability. Past performance is no guarantee of future results.

Bonds: Yield Matters! Source: River. Front Investment Group, CRSP* Past performance is no guarantee of future results. In a rising interest rate environment, the value of fixed-income securities generally declines. 9

The End of the Secular Bull Market in Bonds? Source: Federal Reserve; Past Performance is no Guarantee of Future Results 10

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2000 s US Debt Explosion Total Debt as % of GDP: 370% 1930 s 1990 s 1950 s 1980 s © Copyright 2010 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. 12 Past performance is no guarantee of future results.

We’re at the growth peak § Stimulus spending still rising (“shadow” stimulus continues) § Inventories rebuilding § Pent up consumer demand § State and local job cuts just beginning

The “New Normal” Cannot be the “New Normal” Change in Employment = Change in Productivity – GDP In other words, as long as current workers can keep up with the demand for the all the goods and services we need, we don’t need any more workers 14

“In the absence of a more robust export strategy, it is going to be hard for us to rebuild our manufacturing base and employment base in this country. ” President Barack Obama November 9, 2009 15

Why is China the Key? 16

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A Trend Worth Watching… From their low 14 months ago, China imports have surged at over a +50. 0% annual return. And their trade surplus is steadily narrowing. Source: ISI Group 18

“Americans can be counted upon to do the right thing, after they have exhausted all other possibilities” Winston Churchill 19

Outlook 2010: Asset Allocation Themes § Equities: – Priced to be best in 2 out of 4 scenarios – Search for better downside protection § Long Maturity IG US Bonds: Why? § High Yield: Yield plus deferred defaults § Low debt international currencies/bonds for deflation protection § The big policy decisions: China and Congress Please see the end of this presentation for important disclosures concerning the information on this page. 20

But……. . “The market can be irrational longer than you can be solvent. ” John Maynard Keynes 21

Three Tactical Rules: 22 § Don’t fight the Fed § Don’t fight the trend § Beware the Crowd at extremes

“Helicopter Ben” Leh ma Quantitative Easing n. B rot her s Past Performance is no Guarantee of Future Results. 23

Don’t Fight the Trend… Deflation Reflation Lehman Brothers Fails at S&P 1140 © Copyright 2010 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All rights reserved. Past Performance is no Guarantee of Future Results. 24

The primary trend does not change very often…. 1300 1140 950 Past Performance is no Guarantee of Future Results. 25

Credit explains bust and recovery… Lehman Brothers bankruptcy 1200 1998 2004 2009 Source: Standard & Poor’s, Moody’s, River. Front Investment Group; Past performance is no guarantee of future results. 26

“Bull markets are born in Pessimism, grow in Skepticism, mature in Optimism and die in Euphoria. ” Sir John Templeton 27

River. Front SMA Offerings Asset Allocation Portfolios ¨ SMAs – $200, 000 minimum – Three Growth (Conservative, Moderate, and Long-term) – Three Growth & Income (Conservative, Moderate, and Long-term) ¨ ETF-Only Portfolios ¨ SMAs – $100, 000 minimum – Three Growth Models (Conservative, Moderate, and Long-term) Mutual Fund – Long-term Growth NAV shares Mutual Funds and Exchange Traded Funds (ETFs) are sold by prospectus. Please consider the investment objectives, risk, charges and expenses carefully before investing. The prospectus, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest. 28

Disclosures ¨ ¨ ¨ 29 * Information on charts from CRSP: Calculated based on data from CRSP 1925 US Indices Database © 2008 Center for Research in Security Prices (CRSP®), Graduate School of Business, The University of Chicago. Large Cap Universe used in the charts is defined by CRSP based on market capitalization. ** Sources for the pre-1926 data used in this chart are discussed in two books by Robert Shiller -- Irrational Exuberance (Princeton University Press 2000, Broadway Books 2001, 2 nd ed. , 2005) and Market Volatility (Cambridge, MA: MIT Press, 1989). This data set consists of monthly stock price, dividends, and earnings data and the consumer price index (to allow conversion to real values), all starting January 1871. For further information about Robert Shiller’s methodology, please visit www. econ. yale. edu/~shiller/ River. Front is an investment advisor registered with the Securities and Exchange Commission under the Investment Advisors Act of 1940. River. Front manages a variety of asset allocation portfolios utilizing stocks, bonds, and ETFs. The company also offers an ETF exclusive product and two institutional equity portfolios. Opinions expressed in this presentation are those of River. Front Investment Group and subject to change based on market, economic and other conditions. . Investments in international and emerging markets securities include exposure to risks including currency fluctuations, foreign taxes and regulations, and the potential for illiquid markets and political instability. Small- and mid-cap companies may be hindered as a result of limited resources or less diverse products or services and have therefore historically been more volatile than the stocks of larger, more established companies. In a rising interest rate environment, the value of fixed-income securities generally declines. Buying Commodities allows for a source of diversification for those sophisticated persons who wish to add this asset class to their portfolios and who are prepared to assume the risks inherent in the commodities markets. Any commodity purchase represents a transaction in a non-income-producing asset and is highly speculative. Therefore, commodities should not represent a significant portion of a clients portfolio. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.