1. Kevin M. Wilson, ChFC, PhD President/CEO/CIO Dheenu Sivalingam, MBA AVP/CCO/Senior Analyst 1405 Medical Arts Building 324 W. Superior Street Duluth, MN 55802 Office: 218-464-4399 Toll Free: 877-327-5062 Fax: 218-464-4397 Email: info@bluewater-cap.com www.bluewatercapitaladvisors.com Monthly Market Review “Bonds Have More Fun” (An Exercise in Contrarian Thinking) March 21, 2013 11 Ted A. Pavlovich, WMS VP Wealth Management

2. INTRODUCTION TED A. PAVLOVICH 2

3. BOND, JAMES BOND TED A. PAVLOVICH 3 What Markets Fear

4. 4 Fed Interventions Have Supported Treasuries

5. 5 Bonds Are Seemingly Quite Risky Now

6. 6 No One On Wall Street Likes Long Bonds, But Look How They’ve Done!

7. Uncertainty Has Kept The Public Buying Bonds For Safety & Yield 7

8. BOND TRADING OPPORTUNITIES KEVIN M. WILSON 8

9. 9 Models Projecting A Rise In Yields Assume Normal Recovery From Here - And At Some Point It Will Happen

10. 10 But There Are Reasons For A Treasury Rally First – Especially If Stocks Fade

11. 11 Treasuries Will Help Offset the Risk of Stocks

12. 12 History Also Suggests Yields Can Go Lower As Economy Pays Off Debt Bubble Excesses

13. 13 Fed Also Wants Debt Service To Stay As Cheap As Possible

14. 14 Massive Buying By Fed Won’t Stop Because of Continued Deficit Spending

15. 15 Fed Has Caused A Supply Problem, Which Provides Support For Higher Prices

16. 16 The European Crisis Also Drives Demand For US Treasuries

17. 17 Other Bonds That Should Do Well If Interest Rates Stay Low Include “Build America Bonds” and Mortgage-Backed Bonds

18. 18 Corporate Bonds Should Continue To Do Well

19. 19 High Yield (Junk) Bonds Also May Rally, But Are Extremely Risky At This Level

20. 20 Convertible Bonds Will Rally When Stocks Go Up… …And Bank Loan Securities Are Less Risky Than In The Past

21. EMERGING MARKET BONDS 21 DHEENU V. SIVALINGAM

22. The Case For Emerging Markets Bonds  More than 80% of the world’s 6.5 billion people live in emerging markets such as Brazil, Mexico and Indonesia.  Many of these markets have young, expanding populations, a rising middle class, and improving economic and political stability leading to growth opportunities in these economies.  Most surprising to investors, many emerging market countries now offer greater fiscal stability than many developed markets. 22

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24. Conversely, the world’s developed markets have experienced a surge in debt levels, slow growth and downgrades of many advanced economies. 24

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28. SUMMARY/Q & A 28 KEVIN M. WILSON 1)When the Next Stock Pullback Occurs, Long Treasuries Will Do Well 2)Mortgage-Backed Bonds Will Do Moderately Well At The Same Time 3)Build America Bonds Will Likewise Do Well 4)When the Stock Pullback Ends, All of These Will Sell Off Again, But The LT Yield Trend May Continue 5) At Which Time It Will Pay To Buy CB’s, BLB’s, HYB’s, & EMB’s

29. This report is provided for informational purposes only and does not constitute an offer or solicitation to purchase or sell any security or commodity and is not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Any opinions expressed herein are subject to change at any time without notice. Information has been obtained from sources believed to be reliable, for its accuracy and interpretation are not guaranteed. Investing in securities involves risk, including possible loss of principal. Past performance should not be taken as an indication of guarantee of future performance and no representation, express or implied, is made regarding future performance. The firm does not provide tax advice; clients should contact their attorney, accountant, or other tax adviser regarding tax matters. “BWCA is a state registered investment adviser in all states in which it is required to be registered. All Blue Water Capital Advisors’ customer assets are held in the customer name with Fidelity Institutional Services, clearing through National Financial Services (NFS), Member SIPC, a Fidelity Investments Company as Qualified Custodian.” Disclaimer 29