BTS Bond Asset Allocation vs. Investment Benchmarks

$500,000 investment net of 5% annual withdrawals

BTS Bond Asset Allocation Program BarCap Aggregate Bond Index U.S. Treasury T-Bills
YTD Return: 3/31/2010 -0.09% 1.78% 0.01%
1-Year Return 2.18% 2.31% -4.84%
3-Year Return -0.66% 0.84% -3.11%
5-Year Return 0.71% 0.17% -2.24%
10-Year Return 1.84% 0.97% -2.29%
CAGR 2.22% 0.94% -1.86%
Standard Deviation 4.58% 3.71% 0.59%
9/11/1996 Investment $500,000 $500,000 $500,000
Value as of: 12/31/1996 $497,854 $497,768 $483,449
Value as of: 12/31/1997 $512,916 $518,674 $483,765
Value as of: 12/31/1998 $547,602 $535,480 $483,623
Value as of: 12/31/1999 $551,689 $504,482 $481,732
Value as of: 12/31/2000 $567,501 $534,999 $485,934
Value as of: 12/31/2001 $590,843 $551,061 $482,033
Value as of: 12/31/2002 $593,485 $577,266 $466,191
Value as of: 12/31/2003 $656,121 $570,930 $447,957
Value as of: 12/31/2004 $654,809 $565,916 $431,210
Value as of: 12/31/2005 $648,969 $550,692 $422,222
Value as of: 12/31/2006 $667,717 $545,812 $420,563
Value as of: 12/31/2007 $678,953 $554,615 $406,527
Value as of: 12/31/2008 $712,471 $554,513 $406,754
Value as of: 12/31/2009 $674,287 $558,049 $387,263
BTS Bond Asset Allocation Program BarCap Aggregate Bond Index U.S. Treasury T-Bills
Income withdrawals
Withdrawal on: 12/31/1996 $26,203 $26,198 $25,445
Withdrawal on: 12/31/1997 $26,996 $27,299 $25,461
Withdrawal on: 12/31/1998 $28,821 $28,183 $25,454
Withdrawal on: 12/31/1999 $29,036 $26,552 $25,354
Withdrawal on: 12/31/2000 $29,868 $28,158 $25,575
Withdrawal on: 12/31/2001 $31,097 $29,003 $25,370
Withdrawal on: 12/31/2002 $31,236 $30,382 $24,536
Withdrawal on: 12/31/2003 $34,533 $30,049 $23,577
Withdrawal on: 12/31/2004 $34,464 $29,785 $22,695
Withdrawal on: 12/31/2005 $34,156 $28,984 $22,222
Withdrawal on: 12/31/2006 $35,143 $28,727 $22,135
Withdrawal on: 12/31/2007 $35,734 $29,190 $22,080
Withdrawal on: 12/31/2008 $37,498 $29,185 $21,408
Withdrawal on: 12/31/2009 $35,489 $29,371 $20,380
Total income withdrawals: $450,275 $401,066 $331,693
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS

The BTS portfolio returns illustrated are net of an initial 2.43% annual fee for Bond Asset Allocation, which includes a representative fee of 1.5%. This hypothetical uses the current BTS fee schedule, with the fee reducing as the size of the investment increases. Please refer to BTS's ADV Part II for complete fee schedule.

BTS Bond Asset Allocation Performance represents hypothetical returns from the program’s inception on 9/11/96 through 6/30/06 (“BAA”) and actual returns since 7/1/06 (the “Select BAA”).

Returns of BAA from its inception on 9/11/96 through 6/30/06 uses a high yield bond composite, a government bond composite, and T-bill. The high yield composite consists of 5 high yield mutual funds that have been in existence since the program's inception and have been used with BTS programs, and the government composite consists of the 5 largest government bond mutual funds by total assets as of 12/31/07. In Select BAA, BTS selects the funds. The inception date of Select BAA is 7/1/06. For performance since 7/1/06, Select BAA returns were used. Since prior to 7/1/06 BTS was not selecting particular mutual funds for this program, it is difficult to determine in hindsight if these funds would have been used. Performance would have been different based on particular funds that could have been used. Results assume that all exchanges were timely. Delays in implementing exchanges may affect performance. The above illustration reflects a generally rising securities market. Mutual funds have their own fund expenses, which costs are borne by Client. Results include the reinvestment of dividends and capital gains. Name of funds furnished upon request. All recommendations for the past year furnished upon request. As with any investment, loss of capital is possible.

Investing directly in the BarCap Aggregate Bond Index and S&P 500 is not possible. Performance will vary depending on the particular funds selected and there is no guarantee that funds used in the program will closely match the above indexes. The S&P 500 includes 500 leading companies in leading industries of the U.S. economy and is a proxy for the total stock market. The Barclays Capital Aggregate Bond Index is comprised of government securities, mortgage-backed securities, asset-backed securities and corporate securities with maturities of one year or more to simulate the universe of bonds in the market.

Inception = beginning of BTS Bond Asset Allocation Program: 9/11/1996

Standard Deviation measures the degree of variation of returns around the average return; the higher the volatility, the higher the standard deviation. CAGR stands for Compounded Annual Growth Rate. It measures since portfolio inception.

BTS Asset Management is affiliated with BTS Securities Corporation. Securities offered through BTS Securities Corporation and other FINRA member firms. Advisory services offered through BTS Asset Management.