Trust Investment Advisors

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2014-05-05 TIA PIP Portfolios: Benchmark, Non-Cumulative & Shorter Call Protection

TO:           Investment Consultants

FROM:       Larry K. Pitts, CFA

DATE:        May 5, 2014

SUBJECT:   Preferred Income Portfolios

The purpose of this e-mail is to discuss our different preferred stock portfolios.  The Preferred Income Portfolio (PIP) is our benchmark portfolio with 31 issues and 41 months of call protection.  PIP is e-mailed to you every Monday with its Friday closing statistics.  We also provide a month-end summary for comparative purposes.  We are featuring two new preferred portfolios.  The first is our Non-Cumulative Portfolio (NCP) which has 15 issues all included in our PIP.  This tax-advantaged portfolio will assist you in comparing its’ returns with municipal bonds for high income clients.  All non-cum dividends qualify for the 20% maximum dividend tax rate.  The second is our new Shorter Call Protection (SCP) portfolio with only 10 issues and 21 months call protection.  We plan to increase the number of issues to provide more diversification.  This conservative portfolio will appeal to clients more comfortable with a shorter call period (21 months versus 41 months for PIP).  SCP’s yield to call of 4.86% is extremely attractive compared to 2-year U.S. Treasury Notes 0.42% and 1.00% 2-year Bank CD’s.

The non-cum and shorter call protection portfolios will only be e-mailed as of month-end.  They will be available weekly upon request.  We hope the addition of these two new preferred stock portfolios will assist you and your clients.

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