EFTA01375548.pdf

Au:vis Spectrum Asset Management! Principal o' • nnualized Returns(%) 8.3 Spectrum Preferred Securities is managed to an intermediate duration. and is predominantly 7.5 1 comprised of $25 Par Preferred Securities that trade on the NYSE. Spectrum feels that because retail 6.8 investors are the primary owners of $25 Par Preferred Securities, there is more inefficiency, and more 6.0 trading opportunities that can be exploited than are usually found with other fixed income sectors that 5.3 are owned primarily by institutional investors. Spectrum's strategy provides yield enhancement over traditional fixed income portfolios without subjecfing the portfolio to increased credit risk. 4.5 3.8 3.0 2.3 1.5 Spectrum invests in issues that offer high quality. risk-adjusted yield premiums and E 0.8 compensation for any subordination, liquidity, maturity, and call differences. Only issuers whose 0.0 senior unsecured debt is rated BBB-. or above by at least two credit rating agencies are re YTD I Year 3 Yeats 5 Yeats 10 Yeats included in Spectrum's investment universe. Key drivers in the security selection process are credit strength and yield. For a security to be considered for investment, the credit status of the ImS0tHettee (grew Spectrum Pfds(nee) BotAsti. Pine Food Rm. issuer must be improving or stable. The security yield must be attractive, given the credit rating Quarter YTD 1 Year 3 Years 5 Years 10 Years and credit trend relative to other preferred securities. Sell decisions can be either a function of Spectrum Pfds (gross) 1.0 1.0 6.1 6.1 7.5 5.5 a credit development or recognition that the preferred yield has become "rich" relative to the debt level. Approximately 30-40% of the portfolio will qualify for the 15% tax rate on dividends. Spectrum Pfds (net) 0.6 0.6 4.7 4.7 6.0 4.1 BofAML Rids Fixed Rate 1.6 1.6 5.7 5.7 6.8 3.3 ... ..... ....... ..... III ...... ...... 2015 2014 2013 2012 2011 2010 ...... ..... Spectrum Pfds (gross) 9.1 16.5 -3.9 17.0 3.1 15.2 Date Founded 1/1/1987 US Equity 96 14.07 Firm Assets ($8) 17.9 Non-US Equity % Spectrum Pfds (net) 7.6 14.9 -5.3 15.4 1.7 13.6 3.85 Firm Employee Ownership (%) BofAML Prfds Fixed Rate 7.6 15.4 -3.7 13.6 4.1 13.7 Prof Stock % 75.91 II r Inception Date 3/31/1989 Vehicle Assets ($B) 1.3 Cash % 6.t7 Ong Top Quartile ow 2nd Quartile 3rd Quartile Bottom Quartile • nalyst Cornrnentar 8.3 Spectrum underperformed the Bank of America Merrill Lynch Preferred Stock Fixed Rate Index 7.5 (P0P1) in O1 (+1.0% vs. +1.6%). During the quarter, relative underperformance came from a variety of areas, including Domestic Banking, Foreign Banking, Industrial, REIT Preferreds, and 6.8 Utilities. From a security selection standpoint. Banking names that were relative detractors 6.0 • included Wells Fargo, JP Morgan, UBS, and HSBC. Additional detractors included General 5.3 Electric. Public Storage. Aegon, Partner Re. and the Southern Company. Conversely, sectors 4.5 that generated relative gains for the Strategy included Life Insurance, Media, and Foreign 3.8 • Reinsurance. Among the names that provided positive contributions to return were Royal Bank of Canada, Met Life, BofA, US Bank, Renaissance Re, American Express, and Capital One. .O ce 3.0 The Manager continues to believe that due to Preferreds' subordinated nature and subsequent 1 2.3 yield prenaum, they offer an attractive opportunity versus high-yield, corporate, and U.S. 2 1.5 Treasuries. This Strategy seeks to maintain a target allocation to qualified dividend investments 0.8 of 30-40%. 2 0.0 YID 1 Year 3 Years 5 Years 10 Years Past performance is no guarantee of future results. x Spectrum Pfds (net) • Spectrum Pfds (gross) BofAML Prfds Fixed Rate Penorrnance 'schwa) torn gross and net of fees Net of fee returns reflect deduction or me maximum I eti annual fee Data frequency is monthly and all performance data and analysis is for the pence ere no as or cument quarter end unless otnenmse indicated Deutsche Bark Wealth Management These documents are for use in oneon.one nem presentations Page 1 of 5 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0071059 CONFIDENTIAL SDNY_GM_00217243 EFTA01375548