1. Build a Better Bond James C. McClendon, Chief Investment Officer & Managing Director

2. Interest Rates

3. Fixed Income Sector Returns Source: J. P. Morgan Asset Management

4. Treasuries Mortgage Related Corporates Agencies Asset Backed The Bond Market Has Many Different Components Total Bond Market Interest Rate SensitiveEconomically Sensitive

5. Fixed Income market has changed Source: Guggenheim Partners, SIFMA, Credit Suisse, Barclays. Data as of June 30, 2013

6. Global Bond Market Bond market has evolved, so has volatility

7. Global Opportunities = Higher Vol STANDARD DEVIATION Index1 Year3 Year5 Year Barclays US Aggregate Bond Index2.582.672.83 Barclays Global Aggregate Bond Index4.184.175.19 JPMorgan Emerging Markets Bond Index6.378.027.40

8. Price Impact of 1% Change in Interest Rates Large impact on returns across sectors with 1% increase in rates. No where to run No where to hide

9. Price Impact of 1% Change in Interest Rates Floating Rate Fixed income Portfolio would be down -0.1% 30yr UST Portfolio would be down -17.4% Portfolio returns could range from -0.1% to -17.4%

10. Taper Tantrum 4 month return = -4.5%

11. Taper Tantrum 10 4.5% Drawdown

12. Rolling Returns One Year Rolling Returns J F M A M J J A S O N D J F M A

13. Rolling Returns Three Year Rolling Returns JFMAMJJASONDJFMAJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASOND

14. Barclays Intermediate Government/Credit Rolling Returns 1 – 15 years

15. Expectations of Return For Returns: BONDS* Average Return Range of Returns 1 Yr -1.93 to 18.1 3 Yrs 2.90 to 15.19 5 Yrs 3.99 to 11.18 7 Yrs 4.39 to 11.15 9 Yrs 4.23 to 11.07 11 Yrs 4.13 to 9.77 1 Yr 7.23 3 Yrs 7.16 5 Yrs 7.06 7 Yrs 7.03 9 Yrs 6.95 11 Yrs 6.92 *BARCLAYS INTERMEDIATE GOVT/CREDIT Interm Index (1/1/1984 through 12/31/2013)

16. Interest Rates

17. Rates and bond prices move in opposite directions

18. A Better Bond Portfolio

19. Traditional Balanced Portfolio Combining stocks and bonds in a Balanced Portfolio offers investors diversification and an opportunity to achieve improved risk- adjusted performance

20. Bridging the performance gap between stocks and bonds (10yrs)

21. S&P 500 TR Traditional Balanced Portfolio Barclays Agg Bond

22. Drawdown (10 yrs) 21

23. Taper Tantrum 4 month return = -4.5% How did Traditional Balanced Portfolio performed during 4/2013 through 11/2013?

24. Taper Tantrum 23 Barclays drop = -4.5% Traditional Balanced drop = -1.3%

25. Traditional Balanced Portfolio The 60/40 Traditional Balanced portfolio provides an opportunity for improved risk-adjusted performance, capturing 90% of the return delivered by equities with only 65% of the volatility

26. Risk/Reward profile

27. Traditional Balanced Portfolio Higher return than Bond Portfolio Lower volatility than Equity Portfolio Steady, consistent, predictable returns

28. A Better Balanced Portfolio TPFG Better Balanced Portfolio

30. 29 TPFG Balanced 30% Fixed, 70% Equity Traditional Balanced TPFG Balanced 50% Fixed, 50% Equity TPFG Balanced 70% Fixed, 30% Equity Barclays US Agg Bond S&P 500

31. Taper Tantrum 4 month return = -4.5% How about TPFG Better Balanced Portfolio performance during this time?

32. Taper Tantrum Barclays Agg with 0% loss Barclays Agg.

33. Taper Tantrum 32 Traditional Balanced drop = -1.3% Barclays drop = -4.5% TPFG Better Balanced Portfolios never dropped below zero

35. Deliver predictable results with reasonable risk TPFG’s ROLE

36. THANK YOU! QUESTIONS?

37. Risk Management

38. Use the right tools to build the right portfolio for your client