Our overall investment philosophy in managing fixed income accounts is to add value above a benchmark index by emphasizing sector and issue selection, combined with maturity and coupon mix. Our investment strategy incorporates yield spread analysis to identify sector opportunities. We conduct extensive research on historical and current sector, credit, and term structure spreads. Since the portfolio duration of our portfolios is generally +/- 25% to the benchmark index, our philosophy de-emphasizes interest rate anticipation. All portfolios are customized to each client's specific goals and objectives.

Preservation of capital is stressed through strict adherence to risk controls which are integrated throughout our investment process. Portfolios are well diversified among sectors, issuers and issues.

Risk management is a key component of our process and is carefully monitored. We utilize advanced analytical tools to measure the sensitivity of each sector to changes in interest rates and the shape of sector and quality yield curves. We believe that careful analysis of spread risk allows us to reduce volatility and further enhance returns on a risk-adjusted basis. We also believe that this process allows us to better identify value along the yield curve and within the various sectors of the fixed income markets which we utilize.

All of our portfolios are managed on a team basis by the team of investment professionals. Our professional staff has worked together for over twenty years. Decisions relating to broad strategy, including sector allocation, duration, and yield curve positioning are made by the team of investment professionals.

In addition to daily reviews and economic analysis, each investment professional participates in a weekly investment policy meeting in which strategy is established and reviewed. Furthermore, we hold semi-monthly review and control meetings during which accounts are reviewed for compliance with guidelines and risk management.

Our research team produces a comprehensive series of reports and analysis that complement our top down fixed income approach, including a monthly investment perspective, credit sector and relative value reports, and detailed issuer credit profiles.

Our monthly investment perspective analyzes the macroeconomic environment and its impact on the fixed income market. We provide clients with detailed performance analysis that is incorporated into a discussion of key trends in the fixed income market place. Our investment perspective also highlights our current investment strategy and our rationale.

Our credit sector reports analyze the macro factors influencing specific corporate bond sub-sectors in relation to the spread, or sector risk premium, observed in the current market environment. Factors include industry growth rates, the competitive environment, new product pipelines, trends in revenue, expenses, margins, and key leverage and coverage ratios. Our sector analysis incorporates the performance of various sectors of the credit markets in light of our assessment of the fundamental economic backdrop. We then consider the risks and rewards of each sub-sector utilizing a breakeven analysis approach that is incorporated into our reports. This research complements our study of historical and current sector, credit, and term structure interest rate relationships and is designed to identify sector opportunities.

Our relative value reports highlight selected issuers within specific corporate bond sub-sectors. We draw upon our analytical systems to provide quantitative measures of credit risk that is included in our relative value reports. Our customized reports present financial data in many formats and in comparison to the ratios of similarly rated issuers to assess creditworthiness and to anticipate ratings actions. Qualitative research supports our analysis. Current and historical spreads and spread relationships are also included to establish valuations. These reports identify value in corporate bonds based on actual and implied ratings and are an important ingredient in our security selection process.

Each credit profile includes a summary of the key issues facing the issuer's competitive position and creditworthiness. This qualitative summary typically includes details of the historical performance, review of indenture covenants, collateral and level of subordination, and key financial ratios. We develop this research from a host of sources, including the following:

Sell-side research and investment seminars
- Ratings agencies
- Company presentations
- Conference calls
- Published Offering Memoranda

We typically compile supporting documentation to include with our credit profile. We also maintain a dialogue with analysts and investor relations personnel to answer any questions we may have and to better understand the risks and rewards of the potential investment. Finally, we incorporate this information into our research summary and we compile supporting documentation. Typically, the credit profile also includes ratings agencies reports and Wall Street research opinions.