Program Strategies

Program Portfolios^® strategies are based on an underlying Program Model that utilizes filters called Bond Types, not specific securities. Bond Types are a collection of attributes such as product type, duration, yield, maturity, rating and over 90 additional attributes used to evaluate and compare bonds. Bond Types are used during the portfolio construction and maintenance process to select bonds that have similar structural and risk characteristics to the parameters defined for the investment strategy. A specified number of bonds must be purchased for each Bond Type in the Program Model. As a result, the bonds held in a portfolio constructed using the Program Model may differ from investor to investor. BondWave Advisors offers a number of pre-defined Program Portfolios strategies, as described below.

+ Municipal Index Targeted Programs

Index-based allocation strategies for tax-exempt municipal securities

Attempt to emulate the performance of different maturity components of a Barclays Capital Municipal Bond Index

Varying levels of volatility and principal value fluctuations are available, according to the selected maturity

Seek to offer principal preservation and predictable income

+ Municipal Peak Income Programs

Yield-driven allocation strategies for tax-exempt municipal securities

Strategies weigh yield and risk for points along the municipal bond yield curve

Varying levels of volatility and principal value fluctuations are available, according to the selected rating

Seek to optimize returns (yield) without taking on unnecessary maturity risk

+ Municipal Index Targeted / Peak Income Blended Programs

Combine a core index-based allocation strategy (a Municipal Index Targeted Program) with a yield and income enhancing segment (a Municipal Peak Income Program)

Varying levels of volatility, yield and principal value fluctuations are available, according to the selected maturity and rating

Seek to offer principal preservation and predictable income along with higher yield opportunities

+ Municipal Ladder Programs

Offer an income-oriented investment strategy designed to produce predictable federally tax-free income in a municipal bond portfolio

Seek to preserve principal through a basic bond ladder investment approach

Varying levels of volatility, yield and principal value fluctuations are available, according to the selected maturity and rating

+ Government/Credit Taxable Index Targeted Programs

Index-based allocation strategies for taxable fixed income securities

Attempt to emulate the performance of different components of the of the Barclays Government/Credit Index

Allocations include U.S. Treasuries, agencies, and publicly issued U.S. corporate debentures

Varying levels of volatility and principal value fluctuations are available, according to the selected maturity

+ Government/Credit Taxable Index Targeted Programs (TIPS Enhanced)

Index-based allocation strategies for taxable fixed income securities

Attempt to emulate the performance of different components of the of the Barclays Government/Credit Index

U.S. Treasury Inflation Protection Securities (TIPS) replace the U.S. Treasury security component of the Index to provide partial inflation protection

Varying levels of volatility and principal value fluctuations are available, according to the selected maturity

+ Corporate Index Targeted Programs

Index-based allocation strategies for taxable corporate fixed income securities

Attempt to emulate various components of the Barclays Corporate Index

Include corporate, domestic and non-domestic issuers in U.S. dollar-denominated issues only

Varying levels of volatility and principal value fluctuations are available, according to the selected maturity

+ Build America Bond Ladder Programs

Offer an income-oriented investment strategy designed to produce predictable federally taxable income in a municipal bond portfolio

Seek to preserve principal through a basic bond ladder investment approach

Varying levels of volatility, yield and principal value fluctuations are available, according to the selected maturity and rating

Custom strategies may also be defined according to your firm’s desired fixed income investment approach.

Risk Considerations

An investment in bonds should be made with an understanding of the risks involved, such as interest rate risk, inflation, economic recession and the possible deterioration of either the financial condition of the issuers or the general condition of the bond market. You should be aware that portfolios constructed using the program are comprised of bonds which involve additional risks. You should consider the portfolio’s investment objectives, risks, and charges and expenses carefully before investing. Contact your financial advisor before investing.

The strategies do not guarantee future correlation to the stated objective or underlying index, nor should they be used as a predictor of future returns. There can be no assurance the Program Portfolios^® strategies will match or outperform a given index or sampling over any time period or that it will have positive results. The strategies have a potential for loss.