Bonds meeting our strict credit quality and structure criteria are evaluated in terms of their absolute and relative yields and overall portfolio fit. Holdings are continually monitored for swap opportunities presented by market anomalies and FBA's own yield curve and spread projections. All trades are executed competitively in the open market so that the client benefits from the highest bid price/lowest offer price available.

• Credit risk is minimized by limiting purchases to Fortune 500 issuers rated A or higher. Corporate holdings are balanced by positions in US Treasury and Federal Agency securities.
  
  
• Issuer-specific risk is minimized by limiting holdings of any one corporate borrower to a maximum of 15 percent of the total portfolio.
  
  
• Studies have shown that over time investors are not rewarded for assuming the additional market risk of longer maturities. We, therefore, generally limit purchases to bonds maturing within 10 years.
  
  
• Reinvestment risk is limited by laddering maturities, with the portfolio's weighted average life ordinarily ranging from 4 to 5 years. To protect the investor's income stream and facilitate active duration management, we typically purchase non-callable bonds.
  
  
• Liquidity is maximized through the use of large, highly marketable issues. Purchases are made in the largest block size possible without sacrificing diversification in order to minimize transaction costs. Private placements are not purchased. Anticipated future liabilities can readily be immunized by taking advantage of market opportunities.

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