Advent Capital Balanced Strategy Update

BALANCED STRATEGY Step 1: Screen the Convertible Securities Universe Use a convertible valuation model to identify theoretically cheap convertibles with attractive risk/reward profiles offering 75% - 85% of the underlying equity upside, while limiting downside risk to approximately 50%. Step 2: Analyze Credit Quality Extreme focus on the credit quality of potential investment. Seek to identify stable-to-improving trends in cash flow and interest coverage. Confirm that investment value provides worthy downside protection. Step 3: Analyze Equity Fundamentals Examine the equity fundamentals, identifying company and industry dynamics that may act as intermediate catalysts for stock price appreciation including accelerating earnings momentum, changing industry dynamics, new product announcements, and corporate developments including restructuring or takeover and relative valuation. ADVENT CAPITAL MANAGEMENT, LLC Step 4: Security Selection and Portfolio Construction Utilize a bottom-up process to identify theoretically cheap convertibles with stable-to-improving fundamentals. Investment ideas are put forward and reviewed in an interactive process between portfolio managers and analysts. Investment meetings are held twice weekly (or on an ad hoc basis) to discuss new issues, analyst recommendations and portfolio investments. Once a recommended security is approved by the portfolio managers, it is added to the Reservoir. Security position sizes are determined in order to achieve the optimal risk/reward. Step 5: Continual Portfolio Monitoring and Risk Management Determine whether each security is maintaining its investment potential and adhere to a sell discipline if the security no longer offers the appropriate risk/reward characteristics. Idea Generation Credit Fundamentals Equity Valuation Security Selection & Portfolio Construction Portfolio Monitoring & Risk Management 12

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