The following describes, in general, the two primary NOCM Equity Strategy portfolios - Core-Satellite and Equity Based Income Approaches:

Core-Satellite Approach

Core At the core of the portfolio, exchange traded funds are used to gain access to broad parts of the equity markets such as U.S. equities, international equities, commodities, and real estate. This core is well-diversified and adds a stabilizing factor to the overall portfolio. Tactical asset allocation is implemented at the core where weighting decisions are made not only between each asset class, but also within each asset class. For instance, it may make sense to overweight large cap stocks relative to small cap stocks depending on which stage of the business cycle the economy is in and vice versa. Also, if economies in emerging markets are growing faster than developed markets and the valuations are cheap on a relative basis, it would make sense to overweight emerging markets relative to developed markets. Finally, within each asset class another decision has to be made between value and growth stocks. If the economy is coming out of a recession, history suggests that investors would benefit by overweighting growth stocks relative to value stocks.

Satellite The satellite piece of the portfolio represents specialty areas of the markets that we find undervalued and offer higher returns than that expected of the general markets. Areas in the part of the portfolio may include common stocks, sector bets such as energy, and thematic plays such as water, alternative energy, and infrastructure. Exposure to these areas may be attained via the use of exchange traded funds and/or individual common stocks. Rigorous in-house fundamental analysis is complimented with external research to aid in the decision making process.

Equity Based Income Approach

Overview This portfolio is an actively managed income product which we believe offers a solid alternative to the fixed income markets. Specifically, we are offering a portfolio which invests primarily in common stocks of large, well-established companies with above-average dividend yields, histories of regular dividend increases, and the prospects pointing to a continuation of that policy. We expect that over time, this component of the portfolio will approximate 80% of the total assets. These carefully selected common stocks will have as a requirement a growth rate in net income after taxes which exceeds the growth of the economy as a whole. Specifically we are looking for companies with a three to five year projected growth per share rate in excess of 5%. This should build in a long-term growth component to this portfolio. The remaining 20% will be invested in other attractive, above-average, high-yielding securities which may include master limited partnerships, preferred stocks, high-yield utilities, ETFs of convertible securities, and selected fixed income securities.

Portfolio Characteristics The portfolio is designed to be broadly diversified with representation in all ten of the Standard and Poor’s 500 Stock Index economic sectors. Diversification will be generally limited to no sector weighting exceeding 20% and averaging about 10%. The portfolio will contain 30-35 individual holdings or an average portfolio size of about 3%. Annual turnover is estimated to be 20-25%. The portfolio is further designed to have less volatility than the S&P 500 Stock Index (measures by the five year Beta).

Please contact us for specific information regarding our equity strategy.