Compliments equity component to lower portfolio risk

Ranges: Intermediate maturities (2 - 8 years)

Laddered based on best risk / reward characteristics

Add value by allocating between U.S. Treasuries, agencies, municipal, & corporate bonds based upon best total return opportunities

Interest rate risk

1. Avoid long bonds
2. Ladder maturities to take advantage of different interest rate periods for reinvestment
3. Use higher coupon bonds

Strict credit criteria - equity approach

Diversify among U.S. Treasuries, agencies and investment grade municipal and corporate bonds. No more than 5% of portfolio held in any one issuer.