Exhibit B

BRADLEY FOUNDATION

FINANCE COMMITTEE MEETING

FEBRUARY 26, 2001

ANALYSIS OF "BUY AND HOLD" STRATEGY

"Buy and Hold" Strategy

Advantages

Based on information obtained from Barclays Global Investors (BGI) and other research, the "buy-and-hold" strategy is used primarily by income-maximizing investors interested in large coupon income over a desired horizon. The assumption with adopting such a strategy is a willingness to accept less than maximum return to avoid the inherent risk associated with a higher possible return and to minimize management fees. The strategy also assumes an objective of minimizing the expectational inputs (i.e., expected risk and return usually based on assumptions about the future direction and level of interest rates). Because of this, only default-free or very high quality securities should normally be held. Moreover, securities with embedded options, such as mortgage-backed securities or callable bonds, which introduce uncertain cash flows, are also less appropriate. Government and high quality non-callable straight corporate bonds, thus, are mostly employed.

Disadvantages

The ability to enhance return in the "buy-and-hold" strategy because of the restriction on 1) the use of less-than-highest quality instruments, 2) the use of embedded options securities, and 3) trading in the face of market volatility, are all significant handicaps to the return potential of this strategy. Additionally, adopting a "buy-and-hold" strategy can introduce other, less obvious, problems including:

1.	Transaction costs. The transaction costs, in theory, for a "buy-and-hold" strategy should be low. However, relative to an institutional player such as Barclays Global Investors (BGI) or Vanguard, the cost of the Bradley Foundation executing the periodic trades necessary to reinvest interest income, could turn out to be quite expensive due to the small size of each trade. Additionally, as interest is earned on the new bonds purchased from interest income earned on the original portfolio, successive bond purchases may necessitate odd lot trades, which can add significantly to the cost of these transactions. The alternative to executing these odd lot trades (below $1,000,000), leaving the bonds in cash, results in cash drag and a potential reduction in return compared to a portfolio which is fully invested.

When an investor buys individual bonds through a broker, he pays a commission that's usually hidden because the quoted bond price normally includes a markup and substantial commission. The smaller the investment, the greater the commission.

2.	The asset allocation policy. Because the "buy-and-hold" strategy would be a component of the Foundation's overall asset allocation policy, a policy shift may occur if the strategy is not periodically rebalanced to maintain the policy mix. This may require odd lot purchases/sales to preserve the asset allocation policy. In addition, timely rebalancing could be adversely impacted by unavailability of the appropriate securities.

3.	Purchasing Power (Inflation) Risk. This risk arises because of the variation in the value of cash flows from the bonds due to inflation. For example, assume interest rates (and inflation) are low when the bonds are purchased (they have a 4% coupon rate). If inflation rises to 5%, purchasing power diminishes, and one could now purchase the same bonds in the market with an 8% coupon rate. While most fixed income bonds and strategies are exposed to inflation risk, a "buy- and-hold" strategy maximizes the possibility that inflation could erode the real value of their cash flows. An index fund, on the other hand, continually adds new issues and retires mature bonds. The newly purchased bonds have coupons that are set based on prevailing interest rates, thus purchasing power risk is somewhat mitigated.

4.	Portfolio Management. While managing internally a high quality fixed income portfolio that consists of U.S. Treasuries and high grade bonds is possible, the current Foundation financial staff does not have "hands on" portfolio management and trading experience.

5.	Liquidity. Investors may buy and sell shares in a bond index fund or actively managed portfolio on any business day or with relatively short notice. The "buy and hold" strategy would typically restrict liquidity.

Recommendation

Buy and hold strategies can generate respectable investment returns at a low cost. However, there are total bond market indexes available with management fees of 8 to 10 basis points that have very good risk performance with a broadly diversified portfolio that includes most sectors of the bond market. This broad diversification provides the opportunity to achieve potentially higher risk adjusted returns over time compared to a "buy and hold" strategy. Because of their size, index funds have very efficient trading execution and very low transaction costs. Cash "drag" is minimal.

Given the disadvantages outlined above and the availability of very low management fees (8-10 basis points), it is recommended that a bond index fund approach for a portion of the fixed income bond portfolio is preferable over implementing a "buy and hold" strategy at this time.