Scott & Stringfellow is pleased to offer our CHOICE Asset Management portfolios, designed to help our clients better control and maximize the benefits of equity ownership.

Investors have different goals and risk profiles. While we cannot offer an equity portfolio suitable for all investors, we believe our four options can meet most investment objectives. These managed portfolios are offered as separately managed accounts by our CHOICE Asset Management group of Scott & Stringfellow , a Registered Investment Advisor. The minimum investment for each account is at least $100,000, and investment is available to both retail and institutional clients.

Two of the four portfolios are also available as mutual funds that are sub-advised by CHOICE Asset Management and offered through BB&T funds. Clients looking to use the management experience of this group without the minimum investment requirement or the benefits of separate account management should consider this alternative.

CHOICE Special Opportunities Portfolio
Our Special Opportunities Portfolio is designed for moderately aggressive investors seeking to maximize pre-tax capital appreciation.  This is a multi-cap, multi-style portfolio that emphasizes stock picking from all areas of the public equity markets.  We are sensitive to tax considerations, but those cannot be our primary investment consideration. Turnover historically has been less than 50%, although there can be no assurance that will remain constant in the future. Annualized returns (net of fees) since the inception of the portfolio (January 1, 2001) have been 7.7% through June 30, 2010.

Portfolio holdings are likely to be a combination of younger "growth" companies and well-known names we believe are attractively valued. The overall yield has traditionally been less than 1.0%. We evaluate this portfolio primarily against the Russell 3000 Index to reflect the combination of large-, mid-, and small-cap stocks that can define the portfolio.

Although the portfolio’s historical performance has been superior to that of the Russell 3000 Index, we believe it is notable that volatility (as measured by “beta”) nevertheless has been below the Russell 3000 Index since the portfolio’s inception (January 1, 2001).

CHOICE Equity Income Portfolio
If you appreciate the value of a growing stream of income over time, you may find the Equity Income Portfolio appealing.  Only stocks that pay a dividend exceeding the market rate and that have increased that dividend three consecutive years or six of the last ten are considered candidates for Equity Income. The result is a portfolio that should be more conservative than our Leaders and Special Opportunities portfolios, with a beta that is usually less than 2/3 of the market. Dividends have comprised about 40% of the S&P’s total return over the last 75 years, and recent changes in the tax law have made dividend income even more attractive for recipients.

On occasion, convertible preferreds or bonds may be included for current yield and growth from the underlying common stock. The convertible asset class over the last 30 years has participated in 70% of the upward equity market movements, but only 52% of the downside movements, yielding annual returns nearly in line with the market with much lower volatility.

Stock selection is equally as important as dividend history in building this portfolio. Turnover typically has been less than 40%, although there can be no assurance that will remain constant in the future. The performance of this portfolio is measured against the S&P 500. Annualized returns (net of fees) since inception (January 1, 2001) have been 5.3% through June 30, 2010. The portfolio may be less diversified by industry group than others, because the universe of dividend-paying securities tends to be concentrated in certain sectors, but most sectors usually are represented.

CHOICE Leaders Portfolio
Simply stated, the philosophy behind the Choice Leaders Portfolio is that companies which have established themselves as #1 in their respective markets, tend to stay #1 in their markets. Size usually translates to cost advantages in production, marketing, and R&D expenditures that can be re-invested back into the business, making such advantages sustainable. Not insignificantly, industry leaders tend to be well-managed, since it is highly unlikely a company becomes its industry's best via pure luck. Over time, we believe stock of such proven-superior companies thus tend to out-perform stock market averages.

We expect most of the holdings within the Leaders portfolio will be household names, so-called “blue-chip” companies. We believe a company's historical track record is the single best indicator of future financial success, therefore essentially by definition, our qualitative criteria may identify companies that have already enjoyed great success. Depending upon market conditions and specific opportunities, we retain the flexibility to sprinkle in smaller or medium-sized companies that also fit a common-sense definition of industry leadership. In so doing, we believe we distinguish our portfolio from other “large-capitalization” investment alternatives, ideally with the result of boosting long term returns, without taking on commensurate risk. We are sensitive to tax considerations in the portfolio, and benchmark ourselves against the popular S&P 500 index.

The annualized returns (net of fees) for this portfolio since inception (January 1, 2001) have been .5% through June 30, 2010.

CHOICE Enhanced Equity Portfolio
The Enhanced Equity portfolio is designed for investors looking for less volatile investment returns, while managing investment risk through the use of covered calls to generate incremental cash flow. This portfolio includes stocks from the other three CHOICE portfolios with an increased emphasis on positive technical trends. The managers then search for attractive call premiums typically expiring in 60 to 180 days, almost exclusively “out-of-the-money” in order to leave room for targeted price appreciation.

In essence, our call-writing strategy involves a calculated series of low-return but high-probability investments. (A cash return up front is assured in exchange for an obligation to deliver the stock if the stock advances beyond the strike price.) The call-buyer(s) on the other side of our transactions are making a series of low-probability but potentially high-return investments on each stock. Over time, we believe the option premiums we are able to generate may “enhance” our underlying equity performance, while reducing overall volatility. Turnover is likely to be higher, however, than the other CHOICE portfolios.

We benchmark this portfolio's performance against the Chicago Board Options Exchange ("CBOE") Buy-Write Index ("BXM"), which assumes “at-the-money” call writing monthly against the S&P 500 Index. This alternative “cookie-cutter” approach has been adopted by competing investment vehicles to use the volatility reduction inherent in a covered call portfolio. We believe our focus on first selecting stocks and our opportunistic approach to call writing may increase the probability of positive returns. Since its inception in December 2003, the portfolio has generated positive returns in 19 out of 26 quarters, with an annualized return (net of fees) of 2.5% through June 30, 2010.

The Enhanced Equity Portfolio carries a higher minimum investment of $250,000.

 CHOICE Asset Management View of the Current Market

Comments regarding tax implications are informational only. Scott & Stringfellow or its representatives do not provide tax advice. You should consult your professional tax advisor before taking any action that may have tax consequences.