Fixed Income Strategy

Investment Philosophy:

Active, risk controlled management, founded on research-driven analysis, uncovers relative values that over the long-term produce returns with less risk.

Investment Process:

Flexibility enables rotation among four tools; generating alpha across multiple environments

1. Security Selection Changing credit quality Out of favor Structure Inefficient pricing	2. Sector Rotation Relative value among sectors Event risk management Historical spread vs. Treasuries Economic cycle outlook
3. Duration / Yield Curve Positioning Inflation expectations Monetary policy Anticipating yield curve shifts	4. Opportunistic Trading Efficiencies Access to inventory of multiple brokers Strong trading relationships Electronic trading conducted only for Treasuries

Municipal Bond/High-Net-Worth:

• Our duration and yield curve management techniques are also applied to our municipal bond portfolios
• We seek high-quality Texas municipal bonds to structure our tax-free bond portfolios

Limited Maturity

• Maximize total return while preserving capital through investments in U.S. Treasury and government agency fixed income securities; maturity range 0-5 years with a quality rating of AAA*
  * = A-rated or higher corporate securities may be added for an average quality rating guideline of AA or better.