Brownstone Core Fixed Income Portfolio Overview The Brownstone Canadian Bond Portfolio offers investors a separately managed account consisting of high quality Federal, Provincial, and Corporate fixed income securities. Brownstone offers a customized approach to privately managed fixed income portfolios. The goals of our fixed income process include capital preservation, cash flow to meet the needs of each client, and the potential for capital appreciation. Our fixed income style is based on the belief that superior long-term returns can be achieved with lower-than-market risk by focusing the investments in high-quality securities and by adding value through active duration management. Brownstone can customize fixed income portfolios to provide a maximum degree of safety through adjustments to its duration. Controlling Risk Our fixed income program focuses on yield maximization within the constraints of portfolio volatility. Preservation of capital is of paramount importance to our clients and is an explicit objective of the investment philosophy of Brownstone. To build wealth while controlling risk is foremost in our minds as we manage our clients’ portfolios. Yield Curve - Duration Management Our fixed income portfolio has an average term to maturity of 6 to 9 years. This moderate duration provides maximum yield without subjecting the portfolios to the more volatile longer end of the bond market. Although the bond market typically offers safety to investors from the volatility of the equity markets, it has the potential to exhibit characteristics that are as volatile as equities. Yield enhancement can be realized through the addition of corporate bonds to the portfolio. Brownstone applies rigorous analysis to its corporate bond selections to ensure the highest quality and safety. Investment Style Duration Management - The average duration of a bond portfolio is central to establishing the degree of risk associated with the portfolio. At Brownstone we strive to preserve capital in the bond market through maintaining an average duration of 6 to 9 years. At this level, we reduce volatility while still picking up solid yield performanc. Laddered Securities Structure - Brownstone’s Fixed Income Management employs a strategy where bond holdings are scheduled to mature in a proportional, sequential pattern designed to control risk and yield. Rating Minimums - Our fixed income portfolio contains mainly bonds rated “A” or above by DBRS. At Brownstone we believe that return can be enhanced through the addition of BBB rated securities that pass our stringent analysis, however; these securities are limited to 5% of the portfolio. Brownstone’s Bond Portfolio place a significant emphasis on corporate bonds for purpose of yield enhancement and total return. Only bonds that pass minimum credit ratings and our internal research are included in our portfolios. Income Stream - We understand certain clients’ desire for income generation as a primary objective from their bond portfolios. At Brownstone we work towards the creation of a fixed income portfolio that provides cash flow stability and capital risk minimization. Rate Anticipation Swap - Although we believe it is impossible to predict interest rates accurately, we do support the notion that broad economic conditions offer great insight on the general expected direction of interest rates. On that basis, we engage in rate anticipation swaps, where we will alter the duration and/or specific bond holdings in anticipation of broad directional changes in interest rates. Credit Rating Swap - All bonds are rated for credit quality. This technical component is particularly important for corporate bonds. At Brownstone we pay exacting attention to credit quality to seek opportunity on rating changes This results in the highest of quality fixed income portfolios. Cash Flow Matching - On occasion, a client requires a specific amount of capital to fund a specific need. At Brownstone, we can match the maturity schedule of fixed income securities to the anticipated cash need.