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Ulland Investment Advisors, Inc. Defensive Growth Strategy Using Preferred Securities and Subordinated Debt A Compelling Solution for Today’s Low Yield Environment For Period Ending 7/31/2016 Strategy Description Strategy Details The Defensive Growth Strategy provides aboveaverage yields and preservation of capital with investments primarily in preferred and hybrid securities issued by large banks. A typical portfolio maintains an average asset weighting of 40% US and European hybrid securities, and 60% traditional preferred securities, exchange traded debt, and similar securities. 70%-80% of the dividends are treated as qualified dividends, which are tax advantaged. Portfolios favor short to midrange maturities/redemptions to guard against a rise in interest rates. All securities used are publicly traded. Client accounts are separately managed. Strategy Performance 240% 220% 210% 200% 206% 180% Assets Under Mgmt. $295 million Assets in Strategy Min. Account Size Strategy Inception Current Yield $225 million $300,000 1/1/2009 6.75% Summary of Returns Year 2009 2010 2011 2012 2013 2014 2015 2016 Return for Period 32.78% 15.82 -2.13 16.17 6.61 3.49 -2.09 5.94 Assets in Strategy $47 million $96 million $123 million $169 million $200 million $230 million $200 million $225 million Top 5 Company Holdings 160% 140% 139% 120% Citigroup Bank of America 100% J.P. Morgan 80% Wells Fargo 60% Morgan Stanley Fee Schedule UIA Defensive Growth Strategy Using Preferred Securities and Subordinated Debt (Gross returns) Bank of America ML Core Fixed-rate Preferred Securities Index $300,000 to $2 million 1.00% Barclays Capital US Aggregate Index $2 million to $5 million 0.75% Over $5 million 0.50% On April 1, 2002, Ulland Investment Advisors began offering the Defensive Growth style to a limited number of clients so that the style would be seasoned before being generally offered. Performance is shown on a time-weighted basis as calculated in Axys portfolio software. Performance is presented gross of fees. Calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Employee accounts are included in performance figures. Performance does include positions where clients requested that certain securities be allowed to exceed 10% of the portfolio’s value. It should not be assumed that recommendations made in the future will be profitable or will equal the performance shown above. Portfolio holdings and asset allocation are subject to change at any time and are different based on client preferences. Ulland Investment Advisors 4550 IDS Center 80 South Eighth Street Minneapolis, MN 55402 Tel: 612.312.1400 www.ullandinvestment.com Contact: [email protected] Ulland Investment Advisors, Inc. Defensive Growth Strategy Using Preferred Securities and Subordinated Debt A Compelling Solution for Today’s Low Yield Environment For Period Ending 7/31/2016 Current Yield 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 6.75% 3.66% 3.14% 1.45% Ulland Defensive Growth 10 Year BBB Corporate Bond 10 Year BBB US Municipal Bond 10 Year US Treasury Preferred and hybrid securities have maintained their yield advantage over traditional fixed income investments like US Treasuries and corporate bonds Historical Current Yield 9.00% 8.00% 7.00% 6.00% 5.00% Current spread 361 bps 4.00% Current spread 530 bps 3.00% 2.00% 1.00% 0.00% UIA Defensive Growth Strategy Using Preferred Securities and Subordinated Debt Yield on composite 10-year BBB US$ corporate bond Yield on US 10-year Treasury Ulland Investment Advisors 4550 IDS Center 80 South Eighth Street Minneapolis, MN 55402 Tel: 612.312.1400 www.ullandinvestment.com Contact: [email protected]