BLX's Investment Management Services group specializes in the professional and conservative management of operating funds, reserve funds, bond proceeds, and other public funds. Our investment group provides a full range of investment services, including:

• Discretionary Portfolio Management
• Non-Discretionary Portfolio Management
• Investment Advisory Services
• Investment Policy Review
• Independent Portfolio Review

Because of our focus on the public sector, BLX's investment philosophy emphasizes a conservative, client-specific approach that seeks to control risks within the parameters of each client while maximizing investment return. An emphasis on high quality securities, diversification, and the minimization of market price volatility ensures our client portfolios maintain an appropriate balance of safety and liquidity throughout market cycles. Governing all of BLX's services are procedures to ensure compliance with state codes, investment policies, and federal tax laws (including the "safe harbor" bidding rules and regulations) and a strict adherence to the highest level of ethical standards.

Conservative Investment Philosophy

Focusing exclusively on the public sector, BLX's investment philosophy is guided by three major principles, in order of importance: safety, liquidity, and investment return. Our investment approach is based on the belief that consistent fixed income returns are achieved by maximizing income and reinvestment opportunities through the active management of those sectors of the market that enhance income. We seek to add value without exposing the portfolio to excessive risk through the conservative and disciplined management of four primary variables:

• Shape of the Yield Curve - finding relative value along the term structure of interest rates
• Sector/Quality Spreads - finding relative value amongst those sectors permitted by policy
• Duration - subtle and prudent adjustments relative to benchmark/target
• Issue Selection - identification of individual value opportunities and competitive procurement

Once a portfolio is invested, it is continuously monitored by the investment team. Adjustments are made only when client or market conditions change or when we identify sector or security specific opportunities to add value. Within this context, the conservative and disciplined application of active management strategies within client-defined constraints enables BLX to manage portfolio risk exposure while capitalizing on opportunities to enhance investment return. While all public funds share the prioritized objectives of safety, liquidity, and return, there exist important differences between client circumstances, risk tolerances, and objectives that must be reflected in the overall investment strategy. Therefore, BLX does not attempt to fit our client portfolios into a preconceived model, but rather develops, implements, and conducts an investment strategy that is specifically tailored to each client's unique circumstances and objectives.

Comprehensive Reporting

Comprehensive and accurate reporting is an important component to any successful investment program. BLX maintains detailed records regarding all securities and investment activity and prepares numerous reports to keep our client's apprised of their investment holdings. Each report is reconciled to the underlying trust/custodial statements and includes detailed information regarding security holdings, transactions (purchases, sales, maturities, calls), market value, book value, amortization and accretion, realized and unrealized gains and losses, interest income, yield, and total return, if appropriate. Accordingly, BLX's reports contain all information required by GASB Statement No. 31 Accounting and Financial Reporting for Certain Investments and for External Investment Pools. In addition, to facilitate compliance with GASB 40 Deposit and Investment Risk Disclosures, BLX's reports also contain detailed information regarding the credit quality, maturity, and duration statistics for all securities held, a measure of total portfolio duration by investment type, a maturity distribution analysis, and may include a simulation model illustrating how portfolio market value would be effected by a range of interest rate scenarios over a specified time horizon.

To learn more about BLX's Investment Management services, please contact Mark Creger - Chief Investment officer at 213.612.2200 or email mcreger@blxgroup.com