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2017-07-15 PIP Quarterly Update

July 15, 2017

Dear Mr. and Mrs. Smith,

The Preferred Income Portfolio (PIP) had a very solid second quarter of 2017. Annual income remains between 6% and 7% and even though interest rates rose modestly in the quarter our average security values also increased.

2017 is a transitional year for PIP. We started the year with 12 issues callable in the year. During the first half of the year we had 7 issues called or sold. We have been able to replace these issues without experiencing a significant loss of yield. We still have 5 issues to evaluate the second half of this year and market conditions will dictate whether they are sold or allowed to be called. The good news is that we still have qualified replacements to maintain the portfolio integrity. All this activity may create excess cash in your account at any given time. Do not be alarmed at this. Due to the way preferred shares accumulate interest we may hold cash for a short time waiting for a buying opportunity to purchase our next issue.

PIP remains the key to our Bridge to Higher Interest Rates (Bridge) strategy. For over 8 years PIP has proven to be a flexible, adaptable, high yield, low volatility portfolio. PIP’s multi-sector diversification helps smooth the effect of market variations. The financial heft (over 5 billion dollars in market value) of each issuing corporation helps mitigate the credit risks. Even in this uncertain interest rate environment TIA’s Bridge strategy is showing PIP to be a viable fixed income investment product for the times.

We welcome your inquiries regarding your Preferred Income Portfolio.

Senior Vice President
Manager Preferred Securities

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