• Diversified portfolio of stocks and bonds
• PIMCO's total return strategy combined with Cadence's large-cap growth strategy
• Portfolio Managers with Cadence adhere to a strict screening process that enables them to consistently achieve a favorable balance of growth and value characteristics
• Core fixed-income holding utilizing PIMCO's total return fixed-income philosophy
• Experienced, specialized management

PIMCO: Leading Fixed-Income Managers TOTAL RETURN PHILOSOPHY

PIMCO differentiates itself from many managers by taking a total return approach to bond management. Rather than seek only income, PIMCO pursues maximum total return-income plus capital appreciation. Mr. Gross pioneered this philosophy and process over 30 years ago, and it has been critical to the firm's long-term performance record.

LONG-TERM PERSPECTIVE
Supporting PIMCO's focus on total return is a commitment to active portfolio management within a long-term (secular) framework.

• Annual secular forum-Meet, along with leading outside experts, to develop a 3- to 5-year outlook for the economy, inflation and interest rates.
• Quarterly cyclical forums-Apply long-term outlook to the upcoming 3-12 months and forecast specific influencing factors, including interest rate volatility, yield curve movement and credit trends.
• Portfolio guidelines-Use shorter-term outlook to make portfolio-specific decisions, including duration, yield curve position, sector weightings and credit quality.

VALUE-ADDING STRATEGIES
Rather than make big bets on interest rates or maturity, PIMCO uses a variety of value-adding strategies to increase the opportunity for total return potential and to help reduce portfolio risk. Using this range of strategies lessens the portfolio's dependence on any one strategy for success.

CADENCE: DISCIPLINE GROWTH INVESTORS
Cadence employs a conservative growth philosophy, seeking to invest in stocks with strong growth potential and fair market value. This allows the firm to access both the potential of growth stocks and the stability of value stocks.

• Quantitative screening-Apply a systematic selection screen to stocks with the market capitalization spectrum of the Russell 1000 Index. Each stock is ranked by growth and price considerations.
• Qualitative research-Identify stocks with the most favorable profiles and subject these to in-depth research.
• Make investment decisions-Select the securities that offer the best combination of promising growth potential and fair pricing. Continually monitor and analyze the list of opportunities for additional buy candidates.
• Apply rigid sell discipline-Sell holdings when a security shows declining earnings expectations or announces a negative earnings surprise. Holdings are also sold when a security reaches excessive relative valuations or when a better investment idea is discovered.

BENEFITS OF DIVERSIFICATION
Changes in the economy affect stocks and bonds in different ways. By holding a diversified portfolio that includes both, you can lessen the impact of a decline in either market and potentially enhance long-term returns. Our Balanced managed account portfolio is an efficient way to secure these benefits of diversification.

PIMCO and Cadence work together to construct the Balanced managed account portfolio.

• Asset allocation-At the start, 50% of the assets are allocated to the fixed-income portion of the portfolio and 50% to the equity portion. The portfolio will be rebalanced when the allocation shifts by more than 10 percentage points, with the constraint that the market value of the fixed-income portion of the portfolio may not fall below $55,000.
• Fixed-income investments-PIMCO’s total return strategy divides the portfolio into three sections: a core section of individual bonds and two sector-oriented commingled vehicles. The core section represents 60%–80% of the overall portfolio and focuses on extremely liquid bonds of the highest credit quality. The two sector-oriented segments each represent 0%-40% of the portfolio and invest in specialized areas of the bond market on a cost-effective basis. The commingled vehicles offer the ability to gain access to areas of market that would otherwise be difficult to access.
• Equity investments-Cadence applies a systematic selection screen to stocks within the market capitalization spectrum of the Russell 1000 Growth Index. Each stock is ranked by growth and price considerations.  The management team will then conduct qualitative research and subject the top quintile of the screened universe to in-depth, fundamental research and determine the pace and duration of the growth trend.  The 80-100 securities that offer the best combination of growth potential and fair pricing are selected, building an equal-weighted portfolio.

Boston, Massachusetts

Cadence Capital Management is a "growth-at-a-reasonable-price" equity manager investing in stocks with strong growth potential and reasonable valuations. The firm's sensible investment philosophy and disciplined approach have earned Cadence a reputation as a solid core-equity manager.

Newport Beach, California

Led by Founder and Chief Investment Officer Bill Gross, PIMCO is widely recognized as one of the premier bond managers in the world. PIMCO applies this expertise to a range of core and specialized investment portfolios.