Groesbeck Investment Management Corporation Our Growth of Income Investment Management Process Kovack Securities, Inc National Conference Robert P. Dainesi, Portfolio Manager Al Dudley, Marketing Representative October 21, 2009

Groesbeck Investment Management 2 Corporate Profile Professional Experience  Robert P. Groesbeck, CFA, has over 35 years of experience managing assets for taxable and tax-exempt clients. Bob started the firm in  Robert P. Dainesi has 23 years of portfolio management and security analysis experience. Bob joined the firm in  Theodore M. Groesbeck, CFA, has 16 years investment experience. Ted joined the firm in  John D. Mattesich, CFA, has 14 years research experience. John joined the firm in Consistency of Approach and Results  Research driven stock selection disciplines  Philosophy implemented over the long term  Above-market risk-adjusted results  Minimal dependence on market and street forecasts  Fundamentally driven stock selection and sell methodologies  Continuity of philosophy and strategy over many market cycles Corporate Structure  An employee owned corporation managing approximately $400 million  A client base including pension plans, endowments, foundations, Taft Hartley, and high net worth individuals.

Groesbeck Investment Management 3 Empirical evidence supports the case for a dividend-based stock selection strategy. As illustrated below, dividends consistently accounted for a significant portion – and sometimes the majority - of total returns in the S&P 500 index. On average, since 1940, dividends contributed approximately 43% of the total return provided by the S&P 500. Dividend Portion of Total Return of the S&P 500 Annual Annual Dividend % Decade % Change Dividend Total Return Total Return 1940s 3.0% 6.5% 9.5% 68.3% 1950s 13.6% 5.8% 19.3% 29.8% 1960s 4.4% 3.4% 7.8% 43.7% 1970s 1.6% 4.4% 5.9% 72.7% 1980s 12.6% 5.0% 17.5% 28.2% 1990s 15.3% 2.9% 18.2% 15.8% 2000s* -3.9% 1.6% -2.3% ????? Source: Bloomberg * Through 7/31/2009 After three of the last four recession-driven bear markets, high yield stocks posted accelerating excess total returns over the S&P 500. Importantly, excess returns from dividend payers were nearly flat or negative in the first year following the market bottom, but investors that stuck with the strategy would have been handsomely rewarded over the longer-term in three out of the four scenarios. The Importance of Dividends

Groesbeck Investment Management 4 Source: Ned Davis Research Very Favorable Risk/Return Profile of Dividend Payers versus Non-Payers (1/31/72-12/31/08)

Groesbeck Investment Management 5 Growth of Income Returns Return vs. Risk Groesbeck Mgmt. Wrap Growth-Inc. Standard & Poor’s 500

Groesbeck Investment Management 6 Growth of Income Returns as of 6/30/09 5-YEAR ROLLING DOWN-MARKET CAPTURE Universe: PSN Large Cap Core

Groesbeck Investment Management 7 Growth of Income Returns as of 6/30/09 5-YEAR ROLLING RETURNS Universe: PSN Large Cap Core

Groesbeck Investment Management 8 Growth of Income Returns as of 6/30/09

Groesbeck Investment Management 9 Benefits of a Dividend-Paying Stock Selection Strategy Dividend paying stocks are typically less volatile than the overall stock market, thereby reducing risk. (Our Growth of Income composite has a ten year standard deviation and beta of 14.8 and 0.62, versus 17.0 and 1.0, respectively, for the S&P 500) Consistent dividend payout policy is an indication of a well-managed, fundamentally sound company Regular dividend payments help align management and shareholder interests, and provide a deterrent to investing in low-return capital projects A dividend increase is a positive signal of future financial strength

Groesbeck Investment Management 10  Superior Sustainable Earnings Growth - Growing companies, based on trailing operating earnings, producing earnings growth superior to the S&P 500. Our target is portfolio earnings growth of 10% or more.  Attractive Growth of Dividends - Compared with industry and market benchmarks. We buy companies which have increased their dividends each and every year.  Superior Dividend Yield - Dividends must be attractive relative to the S&P 500 and other alternatives.  Superior Revenue Growth - Positive growth of revenues from sustainable ongoing business operations.  Strong Financials - Ensuring companies purchased have strong balance sheets.  Low Dividend Payout Ratio - Ensuring that management is not paying out in dividends an excessive portion of earnings.  High Return on Equity - Investing in only companies having high return on equity, an important measure of overall corporate profitability.  Liquidity - We actively monitor the trading volume of all qualified stocks in an attempt to reduce market price impact. The First Step: Quantitative Analysis Groesbeck Investment Management’s investment process begins with the search for:

Groesbeck Investment Management 11 Dividend Criteria  Consistent growth of dividends in the future  Dividend growth exceeding industry and market averages  Potential for significant growth Validate Fundamentals  Underlying sales, earnings, margin trends  Operating & free cash flows  Balance sheet strength Evaluate Business  Market leadership and market share  Industry outlook  Factors affecting sustainability of sales and earnings Valuation Analysis  P/E multiple on trailing operating earnings, relative to the S&P, its industry, and its history  P/E relative to growth rate (PEG Ratio); the current PEG Ratio is 1.0x  Attractiveness of dividend yield The Next Step: Fundamental Analysis For those companies possibly qualifying for our portfolio, we perform in-depth fundamental analysis: Our process avoids deep cyclical companies such as the paper, auto, chemicals, metals, and transportation companies

Groesbeck Investment Management 12 Portfolio Statistics as of 6/30/09 Groesbeck Growth of IncomeS&P 500 Trailing 12 Month P/E12.8x21.4xLower Dividend Yield3.5%2.5%Higher 1 yr EPS Growth2.0%-44%Better 5 yr EPS Growth4.0%-7.0%Better 1 yr Dividend Growth14%-3.5%Better 5 yr Dividend Growth14.8%3.4%Better Projected 3 yr Dividend Growth6.1%-5.0%Better Dividend Coverage2.5x1.6xBetter Payout Ratio43%63%Better Price to Book3.6x3.2xHigher Price to Cash Flow8.7x10.8xLower Price to Sales1.6x1.5xIn-Line Average ROE26.4%24.6%Better Portfolio Beta Less Volatility 5 yr STD Deviation Above 10 yr Std Deviation Less Volatility

Groesbeck Investment Management 13  Construction of a Diversified Portfolio  Fully Invested At All Times  companies  Over 15 industries Portfolio Construction: Growth of Income Process Portfolio Sector Weights ( 6/30/09 )

Groesbeck Investment Management 14 Representative Holdings (6/30/09) 5 Year Annualized Growth Current Yield EPS* Dividend S&P Rank The Growth of Income portfolio holds companies with strong balance sheets that achieve above-average earnings and dividend growth and high profitability. Becton Dickinson1.9%15.5%18.4%A Johnson & Johnson A+ United Technologies A+ Praxair A PepsiCo., Inc A+ Chevron A- Procter & Gamble A+ Illinois Tool Works A+ McDonalds A- AFLAC A

Groesbeck Investment Management 15 Our reasons for selling:  Weakening Revenues and Earnings Trends We want to own companies producing growing revenues and earnings.  Declining Margins A reduction in profit margins is often a warning for not only one stock but possibly several members of a sector.  Failure to Increase the Dividend This would cause an automatic sale of the holding.  Reduced Growth Rate of Dividend This triggers a review and possible sale.  Positions Sold When Fully Valued  Superior Alternatives We monitor other candidates closely, and make portfolio changes which increase the income stream.  Positions Trimmed as Prices Advance Stocks exceeding 7% of the portfolio will be trimmed back to 5% or less. Sell Disciplines