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TIPS

Strategy Summary
Asset Class U.S. Fixed Income
Investment Style Bottom-Up Security Selection
Portfolio Benchmark: Barclays US TIPS Index
Portfolio Assets $153 MM as of 12/31/2016
Separate Account Open

Investment Process

When the "Real Yield," as reflected in TIPS is higher than that implied in the Treasury Coupon market, valuations suggest an opportunity to overweight longer maturity TIPS holdings versus shorter maturities. In such instances, BHMS may consider positioning the TIPS portfolio duration marginally longer than that of the Index.

When the "Real Yield" is below that implied in the Treasury Coupon market, valuations suggest a strategy to overweight shorter maturity issues. In such instances, BHMS may position the TIPS portfolio duration marginally shorter than that of the Index.

The "Yield Beta" (volatility of yield) is lower for TIPS versus the Treasury Coupon market, creating the basis for arbitrage opportunities among various TIPS issues. BHMS utilizes its "value" disciplines to exploit these opportunities through active management and individual security selection decisions to add incremental total return.

Portfolio Characteristics as of 12/31/2016

  Portfolio Benchmark1
Average Credit Quality AA+ AA+
Average Weighted Coupon 1.26 0.82
Average Maturity 7.87 8.30
Effective Duration (yrs) 4.47 4.83
Yield to Maturity 2.21 2.16
Current Yield 1.17 0.79
1Barclays US TIPS Index
Performance as of 12/31/2016
Annualized Portfolio Returns (%)

*3 Month returns are not annualized.

Disclosure

Barrow Hanley's returns are shown before investment management fees and custody expenses. Index returns do not reflect transaction costs, management fees, and other expenses. Performance is expressed in U.S. currency. Characteristics are presented as supplemental information to the BHMS TIPS composite. A full disclosure presentation may be accessed from the link above. Barrow, Hanley, Mewhinney & Strauss, LLC claims compliance with the Global Investment Performance Standards (GIPS®).

All institutional product information has been provided by Barrow, Hanley, Mewhinney & Strauss, LLC. Any questions about this material or requests for additional information may be made directly to the firm from the "Contact Us" link above.

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