Liquidity Markets Overview

1
Liquidity Markets Overview

• February 29, 2012

BofATM Global Capital Management Group, LLC (BofA
Global Capital Management) is an asset management
division of Bank of America Corporation. BofA
Global Capital Management entities furnish
investment management services and products for
institutional and individual investors. BofA
Funds are distributed by BofA Distributors, Inc.,
member FINRA and SIPC. BofA Distributors, Inc. is
part of BofA Global Capital Management and an
affiliate of Bank of America Corporation. BofA
Advisors, LLC is an SEC-registered investment
advisor and indirect, wholly owned subsidiary of
Bank of America Corporation and is part of BofA
Global Capital Management.
CSH-15/211109-0312 12/ARO4C1Q3
2
Macroeconomic Review Growth and Inflation
Factors
Economic and Interest Rate Review

• The second half of 2011 was a period of expanding
  national output, with 9/30/11 GDP posting 1.8
  annualized quarter-on-quarter growth and 12/31/11
  GDP expanding at a 3.0 annualized
  quarter-on-quarter pace. As the first half of the
  year was more stagnant, year-end GDP growth, on a
  year-over-year basis, sat at 1.6, hardly robust,
  but showing positive momentum. Better second-half
  numbers should continue to exert upward pressure
  on year-on-year GDP growth for the first half of
  2012. Stagnating leading economic indicators and
  a projected slowdown of the economy in the second
  half of the year, due to both the higher costs
  associated with the implementation of Obamacare
  and the rollback of the Bush-era tax cuts, should
  serve to keep GDP growth moderate. We are
  projecting first-quarter 2012 GDP to grow at a
  slightly slower 1.5 annualized rate,
  second-quarter GDP to rebound sharply to a 2.5
  3.0 annualized rate, and then a slight slowdown
  in the second half of the year to the 2.4 2.7
  area.
• Inflation remains benign. Year-on-year growth in
  headline CPI, the broad basket of goods and
  services used by the Bureau of Labor Statistics
  to compute consumer prices, ended 2011 at 3 and
  posted a 2.9 reading in January of this year,
  while the same measure for the same basket of
  goods, only excluding the historically more
  volatile food and energy components, grew at a
  2.2 pace by the end of 2011 and 2.3 for the 12
  months ending in January of this year. More
  broadly, commodity prices, which generally fell
  over the course of 2011, started picking up again
  late in the year, led mostly by rising oil
  prices, and this trend has extended into early
  2012. As the bulk of the worlds major economies
  are either stagnating (U.S. and Japan) or
  outright shrinking (the Eurozone as a whole), the
  future path of commodity prices will continue to
  be determined mainly by Chinas output. China is
  revising downward its projection of national
  output to a level below 8 for the first time in
  a decade.

Chart source Bloomberg as of February 29, 2012.
Past performance is no guarantee of future
results.
3
Macroeconomic Review Jobs Picture
Economic and Interest Rate Review

• With inflation in check, the dual nature of our
  Central Banks mandate is such that the Federal
  Reserve is tasked with pursuing policies that
  promote full employment. The U.S. jobs situation
  is looking better, at least on the surface, as
  the nations unemployment has fallen from its
  peak of 10.0 in October of 2009 to 8.5 at
  year-end 2011 and even further to 8.3 as of the
  end of January 2012 (8.26 on an unrounded
  basis). January 2012 saw the creation of 243,000
  jobs, per the Bureau of Labor Statistics Nonfarm
  Payroll Report, the highest level of monthly job
  creation seen since March and April 2011 and,
  before that, May 2010. A reslowing of the
  domestic economy should make job creation more
  difficult by the second half of 2012, a factor,
  along with the European financial/sovereign debt
  situation, that likely explains the Feds
  proclamation of sustained monetary accommodation
  until at least late 2014.
• Below the surface, the employment situation is
  showing some structural difficulties. As is shown
  in the lower chart, between its peak in March
  2007 and its relative trough in December 2009,
  the economy lost most than 6 million jobs among
  those people without a college degree. From its
  relative peak in February 2008 to a trough in
  February 2009, college degreed workers lost only
  1.2 million jobs. Since these respective troughs,
  the economy has added 2.2 million jobs for the
  college degreed but only 901,000 for those
  workers who didnt graduate from
  college. Presumably, those workers without
  college degrees have been employed in the
  manufacturing and construction industries. Manufac
  turing employment in the U.S. has been falling
  for decades, as weve deindustrialized the
  nation, shipping manufacturing jobs offshore in
  search of cheap labor. Construction employment
  had always picked up the slack, providing jobs
  for undereducated workers. Since its peak in
  April 2006, the construction industries have been
  working through a glut of overbuilding. Finding
  employment for these undereducated workers will
  require a resurgence of U.S.-based manufacturing,
  a reawakening of the construction industries, or
  significant and time-consuming retraining, none
  of which appear to be quick fixes for this
  structural employment issue. This proposition is
  likely also weighing heavily on the Fed.

Chart source Bloomberg as of February 29, 2012.
Past performance is no guarantee of future
results.
4
Interest Rate Environment
Economic and Interest Rate Review

• Just as the data appeared to be looking
  bettermore robust third and fourth quarter 2011
  GDP, falling unemployment, etc.the Federal
  Reserves monetary policy-making body, the
  Federal Open Market Committee (FOMC), announced
  that it would maintain an accommodative monetary
  policy stanceit would keep rates extremely
  lowuntil late 2014. Whether this was due to the
  possibility of the domestic economy reweakening
  or the FOMCs fear of widespread uncertainty
  emanating from the Eurozone region, it is not
  clear, but the Fed appears to be firmly committed
  to keeping the front end of the yield curve at
  low levels for an extended period. To be sure, a
  more dovish set of Reserve Bank presidents have
  rotated into voting positions on the FOMC, so
  extended monetary accommodation is not a
  surprise. In fact, a poll released by the FOMC
  after its most recent meeting showed that, while
  most members believe that year-end 2014 will see
  the first increase in the Committees federal
  funds policy rate, four members dont believe it
  will happen until 2015 and a further two believe
  it will not occur until 2016.
• With the ongoing challenges to robustly create
  jobs and the structural difficulties in the jobs
  market that point toward some stagnation, perhaps
  the biggest reason the Fed has its foot off the
  monetary brake is the financial/sovereign debt
  situation in the Eurozone. The lower chart
  displays the yield the market is commanding over
  German debt to hold the sovereign debt of the
  peripheral Eurozone members Greece, Portugal,
  Ireland, Italy, and Spain. The left-hand side of
  the chart shows what the Eurozone, operating
  under a single currency and as a single economic
  bloc, was set up to do all of the debt of the
  many Eurozone nations was trading at very similar
  yield levels. The right-hand side of the chart,
  however, shows the shortcoming of a system set up
  with seventeen nations retaining sovereignty over
  fiscal policy but operating under the monetary
  authority of a single central bank. While its
  undeniably true that Greece, Portugal and
  Ireland, in particular, have large sovereign and
  banking debt problems, it is our contention that
  the problems in the Eurozone will not be solved
  until this dichotomy of multiple fiscal policies
  trying to work in concert with a single monetary
  authority is fixed, and, until it is, fear
  stemming from bad and worsening news coming out
  of the region will likely continue to pressure
  the Fed to keep rates lower for a longer period
  of time unless domestic inflation begins to
  meaningfully rise.

Chart source Bloomberg as of February 29, 2012.
Past performance is no guarantee of future
results.
5
Yield Curves
Economic and Interest Rate Review

• Between the Eurozone crisis, the prospects for a
  reweakening of the economy domestically, two
  rounds of Federal Reserve quantitative easing
  that pumped 2.3 trillion into the markets and
  the Feds Operation Twist in the second half of
  last year whereby the Fed sold some short-term
  securities in Treasury holdings and used the
  proceeds to buy longer-term Treasury securities,
  its no surprise that the yield curve is flat and
  continues to flatten. The very front-end of the
  curve, from overnight out to two years, directly
  reflects the Feds bringing its policy rate to a
  range of 0 to 25 basis points (bp) in the wake of
  the Lehman failure in the fall of 2008, while low
  and falling rates on the long end of the curve
  reflect fear and the impact from the twist
  operation. All but the 30-year part of the term
  structure of interest rates are at or close to
  their all-time lows in terms of yield, and, as
  stated above, the Fed is looking to maintain
  these rates for an extended period.
• The hunt for yield in the money market space
  continues, as roughly 3 trillion in assets is
  chasing paper that matures no longer than in 13
  months. Because of this, the very front-end of
  the curve is almost completely flat, with fed
  funds trading at roughly 11 bp and 1-year
  Treasury bills trading at roughly 16 bp. The
  smaller-than-usual but still meaningful pickup in
  yield going out to the 2- and 3-year parts of
  curve reflect the fact that this is a perennial
  underserved markettoo long for the money funds
  and too short for core bond managers. Given the
  outlook for sustained Fed inactivity, this part
  of the curve offers solid risk-adjusted yield
  opportunities for separate account mandates.
• The fact that the Eurozone situation is both a
  sovereign and a financial institution issue is
  directly reflected in what had been a sustained
  creeping up of LIBOR, as that short rate contains
  a banking credit component to it. More recently,
  however, positive news out of the Eurozone,
  possibly of the nature of nothing more than
  kicking the can down the road and not
  fundamentally solving the true problem, has
  caused LIBOR rates to fall and, along with them,
  the TED spread, or the spread between LIBOR and
  U.S. bill yields. This news is welcome, as it
  reflects a diminution of fear in the market, but
  we fully expect LIBOR to remain volatile in the
  days and months ahead.

Source U.S. Treasury as of February 29, 2012
Source Bloomberg as of February 29, 2012
Past performance is no guarantee of future
results.
6
Short-Term Taxable Yield
Taxable Review

• The short end of the credit curves remains
  extremely flat and compressed. Like the Treasury
  curve, the yields of these securities have
  flattened even further during the past three
  months. All nonfinancial sectors of short-term
  high-grade corporate paper continue to trade in a
  narrow band. The financial sector, on the other
  hand, is showing often large-scale
  differentiation between certain issuers,
  reflecting investors fears of certain firms
  exposures to the Eurozone debt problems.
• The liquidity requirements for money market funds
  that went into effect earlier last year continue
  to apply pressure on the short end of the curve
  as funds meet the 10 daily and 30 weekly
  minimums.
• Another consequence of the liquidity buckets is a
  premium placed on Treasuries and discount notes,
  as both are eligible for the new 2a-7 liquidity
  buckets inside of specified maturities.
• There continues to be minimal yield pickup
  between Treasuries and discount notes. The spread
  between the highest-rated commercial paper (CP)
  and government agencies also remains very tight.

Chart source Bloomberg as of February 29, 2012.
Past performance is no guarantee of future
results.
7
Taxable Credit/Structure Spreads
Taxable Review

• The short-term relief in Europethe staving off
  of a hard default on Greek sovereign debt and the
  European Central Banks solving the areas banks
  possible funding problemsis being felt in a
  continued tightening of spreads in non-Treasury
  fixed-income products relative to Treasury
  yields, as investors, seeking yield in the
  ultra-low-rate environment, are again flocking to
  what they, and we, consider to be possibly safer
  investments in prudently selected corporate and
  asset-backed names.
• Spreads of short corporate paper to like-duration
  Treasury yields, or the added yield commanded by
  the market for compensation for taking on the
  additional risk, fell from its end-of-January
  level of 142 bp to its end-of-February level of
  118 bp, a 24 bp tightening, or nearly 17. Prior
  to the spread widening that began in mid-2007,
  short corporate spreads averaged roughly 55 bp,
  suggesting that further spread tightening is
  possible in this paper. Even if we do not again
  see those tighter spread levels, the additional
  yield in the portfolio from holding this type of
  investment is beneficial to the portfolio, as
  long as individual investments are wisely chosen.
• In the asset-backed securities (ABS) space, the
  story is similar. At the end of January, spreads
  of this paper to like-duration Treasury
  securities stood at 76 bp and fell to 67 bp by
  the end of February, a 9 bp or nearly 12
  tightening. Longer-term averages, again before
  the start of spread widening associated with the
  then- upcoming credit crisis that followed the
  failure of Lehman in 2008, were roughly 55 bp,
  again suggesting the potential for further spread
  tightening. There is relatively little paper
  being issued in the short ABS space, so continued
  strong demand with little supply should lead to
  tighter spreads going forward, absent another
  credit-related shock to the system. 
• As volatility is a measure of risk in the
  marketplace, and there is a strong correlation
  between falling volatility and residential
  mortgage-backed securities (MBS) spreads. The
  high level of fixed-income volatility stemming
  from the European situation makes, in our
  opinion, the purchase of agency-issued MBS a
  risk-efficient method of possibly adding yield to
  a short-term fixed-income portfolio. Agency-issued
  MBS carries with it the creditworthiness of
  Fannie Mae, Freddie Mac and Ginnie Mae, an
  unsurpassed liquidity profile, and additional
  yield that, in our opinion, outstrips the
  uncertainty of the timing of cash flows in the
  paper. 

Chart source Bloomberg as of February 29, 2012.
Past performance is no guarantee of future
results.
8
Yield Curves
Tax-Exempt Review

• SIFMA averaged 0.10 for the month of January and
  February. The SIFMA Index remains low due to a
  variety of pressures lack of new VRDN supply,
  stronger concerns over Eurozone credits creating
  stronger demand for non-Eurozone credits,
  continued government stimulus and continued
  purchasing of tax-exempt securities by taxable
  fund managers, among others.
• January reinvest cash created strong demand from
  both taxable and tax- exempt buyers. The SIFMA
  index should begin to cheapen as cash balances
  are spent down and dealers begin carrying larger
  VRDN inventories. SIFMA should settle in around
  the 0.10 to 0.16 range in March.
• Although yields of short-term municipal
  securities remain low, 1-year AAA-rated municipal
  notes continue to yield more than 112 of 1-year
  Treasury securities.
• The crossover strategy remains prevalent and is
  frequently used as municipal yields remain
  attractive and will likely remain so until
  taxable rates shift higher.

Chart source Bloomberg as of February 29, 2012.
Past performance is no guarantee of future
results.
9
Relative Value Yield Curve Comparison
Tax-Exempt Review

• The 1-year municipal yield curve remains flat out
  to one year with 8 bp of steepness. Yields have
  richened in this space as a result of January
  reinvest cash, 1-month AAA-rated municipals were
  0.03 richer at 0.12 and 1-year AAA-rated
  municipals were 0.05 richer at 0.20.
• Yields on 1-year AAA-rated municipals are 0.07
  richer at 0.18 since January.
• Yields on 2-year AAA-rated municipals are 0.16
  richer at 0.26 since January.
• Yields on 3-year AAA-rated municipals are 0.18
  richer at 0.42 since January.
• Spreads between 1- and 2-year maturities are 9 bp
  tighter at 8 bp since January.
• Spreads between 2- and 3-year maturities are 2 bp
  tighter at 16 bp since January.
• Spreads between 1-year AAA-rated municipals and
  1-year BBB-rated municipals tightened 10 bp to
  120 bp since January.
• Issuance has gotten off to a slow start in
  January, averaging roughly 3.025 billion per
  week in January and 5.060 billion per week in
  February.
• Issuance should start to increase going into
  March - The first week of March produced 8.50
  billion in new issuance.
• The Eurozone remains a concern - financials
  remain cheap to municipals in the 1- to 3-year
  space, but credit risk and volatility should be
  considered. Municipals look attractive to
  industrial corporate names in the 1- to 3-year
  space.
• Headline pressures continue to be an area of
  concern for certain municipalities. This trend is
  expected to remain in place until the overall
  economic picture begins to brighten.
• Keeping an eye on the political landscape - a lot
  of talk about tax reform by both parties - some
  favorable for municipal bonds and taxpayers - one
  not so favorable.

Chart source Bloomberg as of February 29, 2012.
Past performance is no guarantee of future
results.
10
Money Market Fund Strategy Review

• Government and Treasury Funds, continued
• As a result of the influx of Treasury supply, the
  bill market curve out to 6 months was
  approximately 5 bp cheaper and 1-year bills 1 bp
  cheaper. These were the cheapest levels since
  early August 2011(debt ceiling).
• Municipal Funds
• During the month of February, the short-term
  yield curve (MIG1) flattened by 2 bp. The curve
  had 12 bp of steepness. One-month through 6-month
  yields were flat at 12 bp while 1-year yields
  held at 24 bp. The front end of the curve
  remained very well bid as investors remained risk
  adverse due to the uncertainty surrounding the
  Eurozone and potential bank downgrades.
• The SIFMA index averaged 0.14 for the month, up
  7 bp from the previous months average of 0.07.
  Weekly non-AMT VRDNs traded between 12 bp and 16
  bp. As taxable funds tendered back their VRDNs at
  the beginning of the month, SIFMA increased from
  8 bp to 17 bp by mid-month. As a result, daily
  VRDNs reset as high as 12 bp during this period.
  The funds VRDN positions continued to average
  between 70 and 80 of the portfolios.
•  Although 3-month LIBOR averaged 50 bp for the
  month, down 7 bp, tax-exempt CP continued to lose
  its attractiveness from a ratio perspective.
  One-, 2- and 3-month Tax-Exempt CP averaged 11
  bp, 12 bp and 13 bp, respectively. However, there
  continued to be strong investor demand as market
  participants continued to pay a premium to hold
  high quality pure municipal names. As
  longer-dated CP offered no relative value, we
  kept our CP rolls inside of a month as we wait
  for higher SIMFA rates to be reflected in the CP
  scales.
• The Funds WAMs averaged in the mid 30s. Given
  the current outlook on interest rates, we would
  be comfortable with the WAMs in the low/mid 40s.
  However, we continue to monitor what affect, if
  any, that sterilized QE would have on the
  municipal market.

• Prime Funds
• Throughout February, we continued to extend the
  maturities in our prime portfolios in order to
  lock in yield in a tightening spread environment.
  By month-end, most value had been compressed out
  of the market. For example, by late February,
  yields on Canadian and Australian bank
  investments out through 6-month maturities were
  not compelling. The WAM for Cash Reserves, Money
  Market Reserves and Global Dollar were increased
  in the 3- to 7-day range while the WAL for these
  funds were bumped 2 to 6 days longer. Given the
  pending Moodys rating downgrades of European
  banks and Global Capital Market Intermediaries,
  we plan on shortening up the weighted average
  maturity of our rated funds during March in order
  to make the funds more stress test resilient.
• Government and Treasury Funds
• With a combination of more cash in the markets,
  Treasury and mortgage settlements, seasonal
  increase in bill supply and better market
  sentiment, the funds added positions and extended
  WAM while increasing yield. The WAM of Government
  Reserves and Treasury Reserves was extended 8
  days and 6 days, while their weighted average
  lives were pushed out 5 days and 6 days,
  respectively. Government Plus was not extended
  due to larger-than-expected redemptions
  throughout the month. The funds continued to
  ladder 1-month through 3-month securities, as
  well as barbell the portfolios by purchasing
  Treasury and government agency obligations in the
  6-month through 12-month part of the curve.
• Overnight general collateral rates rose sharply
  from the end of December 2011 through January
  2012 by 4 bp to 17 bp. As the outstanding supply
  of coupons 1-year or less continued to increase
  and the stock of bill outstandings continued to
  decline, coupons continued to trade at a discount
  to bills, with a gap of approximately 3 bp to 5
  bp. The Treasury also announced bill auction size
  increases on the heels of the Fed announcing they
  will keep rates exceptionally low at least
  through late 2014.

11
Separate Account Strategy Review
Taxable Review

• Liquidity Focus (BofAML 90-day T-bill Index)
• As the yield curve continues to be almost
  completely flat out to the 1-year maturity tenor,
  we focused on shorter maturities (3- and 6-month
  paper) in spread sectors, mainly CP and
  short-maturity floating rate corporates. For
  those accounts that allow its use, short
  municipal paper offered good diversification
  benefits but remains hard to find (outside the
  VRDN market), certainly at attractive yield
  levels (on a tax-adjusted basis) versus its
  taxable counterparts. It should be noted,
  however, that with rates this low and spreads
  this tight, it is becoming more and more
  difficult to find short paper that provides
  yields greater than what could be earned in money
  market funds, on a fee-adjusted basis. Where
  longer taxable exposure was needed, we preferred
  higher-quality corporate paper, as short agency
  debt spreads have strongly compressed and
  marginal added yield in lower-quality names is
  not, in our opinion, adequate compensation for
  the added risk. Here, too, tax-exempt paper
  provides solid diversification but has richened
  recently versus the taxable markets.
• Enhanced Cash (BofAML 6-month T-bill Index)
• The kink in the shape of the yield curve out past
  one year in both the taxable and tax-exempt
  markets remains notable and provides portfolios
  with added yield potential and better roll-down
  potential. Weve concentrated on adding paper
  here and doing so conservatively, adding longer
  paper for taxable-only accounts in the
  asset-backed sector and in higher-quality
  corporates (emphasizing hard-to-find industrial
  over financial paper for its lower-volatility
  characteristics). For portfolios allowing the
  crossover use of tax-exempt paper, weve seen the
  relative cheapness of the municipal paper
  evaporate over the past several months, but we
  continue to opportunistically buy in to that
  market on relative weakness and when paper is
  available. The other side of this strategy is to
  barbell the portfolios with shorter paper, in a
  similar fashion to what is described in the
  preceding section, to offset this preference for
  longer paper.

• Ultra Short-Term (Citigroup 1-year Treasury Index
  linked to the BofAML 1-year T-bill Index)
• The taxable and tax-exempt portions of the bond
  markets are retaining their relatively sharp
  upward slope past the 1-year part of the term
  structure of interest rates out to the 3- and
  5-year parts of the curve. We therefore have
  focused on taking advantage of these higher
  yields and these bonds ability to appreciate in
  price over the passing of time (rolling down the
  curve) in light of our outlook for medium-term
  Fed inactivity. After pulling in our maximum
  maturity appetite to the 2- to 2.5-year range,
  thinking the Fed may indeed start a tightening
  cycle sooner rather than later, recent
  macroeconomic weakness has allowed the U.S. to
  again go out to the 3- to 4-year part of the
  curve for those accounts that allow us that
  flexibility. As is the case in the Enhanced Cash
  portfolios, we are also focusing our longer-term
  purchasing in the Ultra Short-Term strategy in
  the high-quality and/or well-structured asset
  classes asset-backed securities, defensive,
  high-quality corporate names, and, where and when
  we can, both taxable and tax-exempt municipal
  paper. Offsetting these longer-term buys was
  short-term paper, consistent with the two
  strategies described earlier. In short, we are
  barbelling longer, defensive paper and shorter
  paper carrying appropriate levels of risk.
•  
•  

12
Separate Account Strategy Review
Tax-Exempt Review

• Ultra Short Term
• Three-year AAA-rated municipal bonds richened to
  a 0.42 since January, 0.18 richer. The spread
  between A/AAA municipals in the 3-year space
  tightened 12 bp since January to 0.55. The
  spread between 2-year and 3-year AAA-rated
  municipals tightened 2 bp since January to 0.16.
  Three-year AAA-rated municipals are currently
  trading at 100 of 3-year Treasuries. Yields have
  dropped due to a high level of reinvestment cash
  from January maturities and meager new issue
  supply. Yields should back up going into March as
  cash balances are reinvested and the supply
  calendar improves. Be patient with reinvesting
  cash - the lower yields and tightening of credit
  spreads that January produced can be quickly
  reversed. Corporate bonds and select ABS names
  may be a suitable alternative to municipals. With
  expectations of rates being on hold until 2014,
  our strategy remains on bonds maturing in 2.5 to
  3 years.

• Liquidity Focus
• The yield curve for 1-year municipals has
  continued to flatten. The January Effect has
  stretched into February as a lack of supply and a
  surplus of cash continued to apply pressure on
  yields. The 30-day visible new issuance supply
  has increased and we have seen more robust new
  issuance in late February and early March. The
  increase in supply should relieve some of the
  negative pressure on the yield curve, stabilizing
  and potentially backing up yields in March.
  One-year AAA-rated municipal bonds richened to a
  0.18 since January, 0.07 richer. The spread
  between A/AAA municipals in the 1-year space
  tightened 10 bp since January to 0.35. One-year
  AAA-rated municipals continue to be cheap at 112
  of 1-year Treasuries. With a flat yield curve and
  expectations of rates being on hold until 2014,
  our strategy remains on bonds maturing in 15 to
  18 months.
•  Enhanced Cash
• Two-year AAA-rated municipal bonds richened to a
  0.33 in January, 0.03 richer. The spread
  between A/AAA municipals in the 2-year space
  tightened 12 bp since January to 0.44. Two-year
  AAA-rated municipals currently trading at 87 of
  2-year Treasuries. The 2-year area of the curve
  has been very competitive as short-term investors
  looked for a little more yield opportunity,
  outside of Money Market range. Two-year
  maturities of newly issued deals have been
  heavily oversubscribed. Again, as new issuance
  increases, demand should subside and yields
  bounce back off the January and February lows.
  With expectations of rates being on hold until
  2014, our strategy remains on bonds maturing in
  1.5 to 2 years.

13
Glossary

• Non-Farm Payroll Change Represents total number
  of paid U.S. workers of any business, excluding
  government employees, private household
  employees, farmers, and employees of nonprofits
  that provide assistance to individuals.
• PPI (Producer Price Index) Measures prices
  received by producers at the first commercial
  sale.
• LIBOR (London Interbank Offered Rate) The rate
  of interest at which banks borrow funds, in
  marketable sizes, from other banks in the London
  interbank market.
• TED Spread The price difference between 3-month
  futures contracts for U.S. Treasuries and 3-month
  contracts for Eurodollars having identical
  expiration months. The TED spread can be used as
  an indicator of credit risk.
• AAA GO Curve The curve is populated with U.S.
  municipal general obligations with an average
  rating of AAA from Moodys and SP.
• AAA Reverse Curve The curve is populated with
  U.S. municipal bonds backed by general purpose
  revenues with an average rating of AAA by Moodys
  and SP.
• SIFMA Index comprised of high-grade, 7-day
  tax-exempt variable-rate demand notes. Index is
  produced by Municipal Market Data.

14
Disclosure
Please read and consider the investment
objectives, risks, charges and expenses for any
fund carefully before investing. For a
prospectus, which contains this and other
important information about the fund, contact
your BofA Global Capital Management
representative or financial advisor or go to
www.bofacapital.com. An investment in money
market mutual funds is not a bank deposit and is
not insured or guaranteed by Bank of America,
N.A. or any of its affiliates or by the Federal
Deposit Insurance Corporation or any other
government agency. Although money market mutual
funds seek to preserve the value of your
investment at 1.00 per share, it is possible to
lose money by investing in money market mutual
funds. Please see the prospectuses for a
complete discussion of the risks of investing in
money market mutual funds. The credit quality
ratings represent those of Moodys Investors
Service, Inc. (Moodys) and Standard Poors
Corporation (SP) as of the date of publication
and are subject to change. For information
regarding the methodology used to calculate the
ratings, please visit Moodys at www.moodys.com
or SP at www.standardandpoors.com. Investing in
fixed-income securities may involve certain
risks, including the credit quality of individual
issuers, possible prepayments, market or economic
developments, and yields and share price
fluctuations due to changes in interest rates.
When interest rates go up, bond prices typically
drop, and vice versa. Tax-exempt investing offers
current tax-exempt income, but it also involves
special risks. Single-state municipal bonds pose
additional risks due to limited geographical
diversification. Interest income from certain
tax-exempt bonds may be subject to certain state
and local taxes and, if applicable, the
alternative minimum tax. Any capital gains
distributed are taxable to the investor. Any
guarantee by the U.S. government, its agencies or
instrumentalities applies only to the payment of
principal and interest on the guaranteed security
and does not guarantee the yield or value of
that security.
15
Disclosure
Mutual funds and Separate Account Strategies have
different fee and expense structures. Limitations
and restrictions to investing in Separate Account
Strategies include higher investment limits and
net worth requirements. Separate Account
Strategies are sold exclusively through financial
advisors. Please review prospectuses or offering
documents for specific details. Since economic
and market conditions change frequently, there
can be no assurance that the trends described
here will continue or that the forecasts will
come to pass. The views and opinions expressed
are those of the portfolio managers and analysts
of the affiliated advisors of BofA Global Capital
Management, are subject to change without notice
at any time, may not come to pass and may differ
from views expressed by other BofA Global Capital
Management associates or other divisions of Bank
of America. These materials are provided for
informational purposes only and should not be
used or construed as a recommendation of any
security or sector. This information does not
constitute investment advice and is issued
without regard to specific investment objectives
or the financial situation of any particular
recipient.