Preferred Securities Overview & Preferences

CIO – Global Wealth Management –– 10 July 2019 Month ly

Frank Sileo, CFA, Senior Fixed Income Strategist

The enclosed list is not a template for the construction of your personal portfolio. You should discuss investment decisions with your Financial Advisor.

This report has been prepared by UBS Financial Services Inc. (UBS FS). Analyst certification and required disclosures begin on page 18. Preferred Securities Overview and Preferences

Will preferreds stay cool this summer? At the midway point of 2019, the preferred securities sector has generated impressive year-to-date gains of more than 11%, ______driven largely by declining interest rates. And it appears that Preferred valuations appear reasonable rate risk may have diminished further with the Federal Reserve's Yield spread over Treasuries in basis points latest signalling. Following its 19 June meeting, the Fed alluded 450 to an increase in market uncertainties, and Fed projections for 400 the federal funds rate now show that eight of 17 members 350 forecast at least one rate cut in 2019. At CIO we expect the Fed 300 to cut rates by 50 basis points on 31 July unless we see unusual- 250 ly strong economic data. And while we still expect rates to rise 200 over the next year, we lowered our 12-month forecast for the 150 10-year Treasury yield to 2.4% from 2.8%. USD25 par preferreds A more benign rate environment should help support preferred Source: Bloomberg, ICE BAML, UBS, as of 5 July 2019 stocks into the summer months. However, in summers past, Based on adjusted-yield of Core Plus Fixed Rate Preferred Index preferred stock valuations have had a tendency to move toward the "tight side" during the third quarter. Yield premiums can help the sector absorb credit or rate volatility. However, over the past three years, preferred sector yield premiums hit the lows for the year in July through September. And in each of the past three years, fourth-quarter performance was the year's worst. Specifically, the USD 25 par preferred sector saw yield spreads reach 52-week lows in September 2018 followed by a loss of 4.4% in the fourth quarter. There was a similar pattern two years earlier, when yield premiums troughed in September 2016 and then a 4.2% loss followed in the fourth quarter. In 2017, yield spreads hit the lows in July, which preceded marginal monthly gains of 0.5% or less for the remainder of the year (and a fourth-quarter gain of just 0.4%). Steady ETF inflows have been su pportive So far, however, overall valuation seems fair. Price appreciation Asset flows in USD mn has been tempered and not excessive. ETF inflows, which can 650 occasionally amplify performance, have picked up but not to 450 extremes. Therefore, against a backdrop of plunging Treasury 250 yields, we have actually seen some widening in yield spreads. 50 This may buffer near-term volatility. -150 In the months ahead, if yield premiums tighten toward histori- -350 cally lower levels, preferreds may see a pullback if yields then -550 suddenly and rapidly rise to meaningfully higher levels due to -750 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 higher interest rates or rising credit spreads (i.e., risk aversion). But so far preferred sector valuation is beginning the third quar- Source: Bloomberg, ICE BAML, UBS, as of 9 July 2019 ter at reasonable levels. We continue to favor fixed-rate preferreds with above-average coupons and F2Fs with longer-term call dates. Specifically, our preference is for those F2Fs with at least four years of call protection, high reset spreads, and strong prospectus language regarding coupon calculation in the absence of Libor. .

CIO GWM 10 July 2019 2

Preferred Securities Overview and Preferences

List Changes Attractive List Identifer: Action: From: Rationale: Goldman Sachs L + 67bps; 4.0% floor GS pr D move Neutral Current yield / intermediate duration Goldman Sachs L + 75bps; 4.0% floor GS pr C move Neutral Current yield / intermediate duration Morgan Stanley L + 75bps; 4.0% floor MS pr A move Neutral Current yield / intermediate duration Goldman Sachs 5.30% fixed to call; then YTC valuation / reset spread / call 38148BAC2 move Neutral L+383.4bps date Morgan Stanley 5.85% fixed to call; then YTC valuation / reset spread / call MS pr K move Neutral L+349.1 date Quality / yield / high coupon vs issuer Public Storage 5.4% perpetual PSA pr B move Neutral complex Call date / yield / high coupon vs Digital Realty Trust 5.85% perpetual DLR pr K new ---- issuer complex Quality / Call date / yield / high Public Storage 5.60% perpetual PSA pr H new ---- coupon vs issuer complex Nextera Energy Capital 5.65% due Quality / Call date / yield / high NEE pr N new ---- 3/1/2079 coupon vs issuer complex Neutral List Identifer: Action: From: Rationale:

Ebay Inc. 6.00% 2/1/56 EBAYL move Attractive Weaker valuation / low yield-to-call DTE Energy 6.00% 12/15/2076 DTY move Attractive Weaker valuation / low yield-to-call Southern Co. 6.25% 10/15/2075 SOJA move Attractive Weaker valuation / low yield-to-call Bank of America Corp. 6.20% perpetual BAC pr C move Attractive Weaker valuation / low yield-to-call J.P. Morgan Chase & Co. 6.10% perpetual JPM pr G move Attractive Weaker valuation / low yield-to-call J.P. Morgan Chase & Co. 6.15% perpetual JPM pr H move Attractive Weaker valuation / low yield-to-call American Express 5.2% fixed to call; then Preference for longer call protection 025816BJ7 move Attractive L+ 342.8bps / higher reset spread Capital One Financial 5.55% fixed to call Preference for longer call protection 14040HBH7 move Attractive date; thereafter L+380bps / higher reset spread Public Storage 5.15% perpetual PSA pr F new ---- Favor higher coupons PS Business Parks, Inc. 5.25% perpetual PSB pr X new ---- Favor higher coupons Unattractive List Identifer: Action: From: Rationale: Digital Realty Trust 5.25% perpetual DLR pr J new ---- Low coupon Public Storage 5.05% perpetual PSA pr G new ---- Low coupon PS Business Parks, Inc. 5.20% perpetual PSB pr Y new ---- Low coupon Refinanceable List Identifer: Action: From: Rationale: Aegon 6.500% perpetual AED removed ---- Called and redeemed ING Groep NV 6.375% perpetual ISF removed ---- Called and redeemed Public Storage 6.00% perpetual PSA pr Z removed ---- Called and redeemed Source: UBS

CIO GWM 10 July 2019 3

Preferred Securities Overview and Preferences

Top Picks - Highlighted preferreds Security Name Symbol/ Last Next YTWYTWYTW YTM / CY YTCYTCYTCEffEffEff 1 2 3 CUSIP Price Call Date (%)(%)(%) 11 (%)(%)(%) 22 (%)(%)(%) DurDurDur 33 Attractive $1000 par fixed-to-floating coupon (Not NRA eligible, pays qualified dividend) Bank of America 6.25% fixed to call date; 060505EH3 $108.60 9/5/2024 4.40% 5.60% 4.40% 4.6 thereafter 3mo LIBOR+370.5bps Bank of America 6.10% fixed to call date 060505EN0 $108.60 3/17/2025 4.30% 5.60% 4.30% 5.0 then 3m LIBOR+389.8bps Citigroup 6.25% fixed to call date; thereafter 172967KM2 $110.10 8/15/2026 4.60% 6.00% 4.60% 5.9 3mo LIBOR+451.7bps Goldman Sachs Group, Inc. 5.30% fixed to 38148BAC2 $104.60 11/10/2026 4.50% 5.60% 4.50% 6.3 call date; thereafter 3mo LIBOR+383.4bps

Attractive $25 par fixed-rate coupon Brighthouse Financial Inc 6.25% 9/15/2058* BHFAL $26.00 9/15/2023 5.30% 6.00% 5.30% 8.6 Digital Realty Trust 5.85% perpetual** DLR K $26.10 3/13/2024 4.80% 5.60% 4.80% 8.6 Brighthouse Financial Inc 6.60% perpetual +++ BHFAP $26.70 3/25/2024 5.00% 6.20% 5.00% 7.5 Nextera Energy Capital 5.65% due 3/1/2079* NEE N $26.10 6/15/2024 4.80% 5.40% 4.80% 10.0 Source: Bloomberg, UBS, as of 9 July 2019 *NRA-eligible, pays fully taxable interest income. **Not NRA-eligible, pays fully taxable interest income. +++ Not NRA eligible, pays qualified dividend income 1YTW = "yield to worst" is the lowest estimated yield among possible redemption date scenarios. 2YTM calculation for F2Fs uses assumed LIBOR rates based on the forward curve through Bloomberg analytics. CY for fixed rate coupon is current yield. 3Duration is calculated using Bloomberg analytics.

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Preferred Securities Overview and Preferences

Floor coupon floaters Floating-rate preferreds with coupon floors and low reset spreads could trade with low "fixed" coupons, since the combination of low reset spread and coupon floor could create a high hurdle for the coupon to begin floating. There- fore, the floater may behave more like a low coupon fixed-rate preferred, with those low coupons comprising the only compensation for both credit and interest rate risk. So they could have high sensitivity to interest rates and to credit spreads. Still, their "quirkiness" could provide diversification benefits from a portfolio management standpoint. Security Name Symbol/ First Reset (a) Calculated (b) Coupon (a) - (b) Last Discount Current EffEffEff CUSIPCUSIPCUSIPCall Date SpSpread read Coupon (%) Floor (%) Difference PrPrice icePrice to Par YieldYieldYield DurDurDur $25 par Aegon 3mo LIBOR+87.5bps;4% floor AEB 12/15/2010 87.5 3.22 4.00 (0.78) 22.70 -9% 4.40 6.2 Bank of America 3mo LIBOR + 35bps; 4% floor BAC pr E 11/15/2011 35 2.69 4.00 (1.31) 22.50 -10% 4.40 7.2 Bank of America 3mo LIBOR + 50bps; 4% floor BML pr L 5/21/2012 50 2.84 4.00 (1.16) 21.70 -13% 4.60 7.7 Bank of America 3mo LIBOR + 65bps; 3% floor BML pr H 11/28/2009 65 2.99 3.00 (0.01) 19.50 -22% 4.10 4.5 Bank of America 3mo LIBOR + 75bps; 3% floor BML pr G 11/28/2009 75 3.09 3.00 0.09 19.90 -20% 4.10 4.2 Bank of America 3mo LIBOR + 75bps; 4% floor BML pr J 11/28/2010 75 3.09 4.00 (0.91) 22.10 -12% 4.50 6.8 Goldman Sachs 3mo LIBOR + 67bps; 4.0% floor GS pr D 5/24/2011 67 3.01 4.00 (0.99) 20.60 -18% 4.80 7.5 Goldman Sachs 3mo LIBOR + 75bps; 3.75% floor GS pr A 4/25/2010 75 3.09 3.75 (0.66) 19.80 -21% 4.70 6.6 Goldman Sachs 3mo LIBOR + 75bps; 4.0% floor GS pr C 10/31/2010 75 3.09 4.00 (0.91) 20.70 -17% 4.80 7.3 MetLife, Inc. 3mo LIBOR+100bps; 4% floor MET pr A 9/15/2010 100 3.34 4.00 (0.66) 23.60 -6% 4.20 5.1 Morgan Stanley 3mo LIBOR+70bps; 4% floor MS pr A 7/15/2011 70 3.04 4.00 (0.96) 20.90 -16% 4.80 7.5 SunTrust Banks 3mo LIBOR +53bps; 4% floor STI pr A 9/15/2011 53 2.87 4.00 (1.13) 22.90 -8% 4.40 6.7 US Bancorp 3mo LIBOR+60bps; 3.5% floor USB pr H 4/15/2011 60 2.94 3.50 (0.56) 20.00 -20% 4.40 6.6 Average 4.484.484.48 $1000 par US Bancorp 3mo LIBOR+102bps; 3.5% floor 902973866 4/15/2011 102 3.36 3.50 (0.14) 79.81 -20% 4.50 5.0 Goldman Sachs 3mo LIBOR + 77bps; 4.0% floor 381427AA1 6/1/2012 76.75 3.11 4.00 (0.89) 81.00 -19% 4.90 7.3 Goldman Sachs 3mo LIBOR + 77bps; 4.0% floor 38144QAA7 9/1/2012 77 3.11 4.00 (0.89) 80.20 -20% 5.00 7.2 Average 4.804.804.80 Source: Bloomberg, UBS, as of 09 July 2019

CIO GWM 10 July 2019 5

Preferred Securities Overview and Preferences

Attractive list

Preferred securities on the Attractive List are those that we view favorably based on (1) fundamental credit quality, (2) valuation and (3) structure (security characteristics). To mitigate rate and spread volatility we favor preferreds that pay high fixed coupons. When it comes to fixed-to-floating rate preferreds, we favor those with call protection, high coupons, high back-end spreads, and consider floating-rate calculation in the absence of LIBOR.* The preferreds on this list are issued by companiesIssuer that we consider to be "core issuers" within theCUSIP preferred Maturity sector that have investment grade senior debt ratings. Note: the credit rating agencies typically notch the rating of preferred securities lower than that of the issuer rating. Therefore, these core issuers may have non-investment grade rated preferreds.

Security Name Symbol/ Last NextNextNext YTCYTCYTC YTMYTMYTM YTM (f) CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice Call Date (%)(%)(%) (%)(%)(%) 111 (%)(%)(%) 222 (%)(%)(%)RiskRiskRisk Subordinated notes (NRA 3 eligible, pays fully-taxable interest income) Brighthouse Financial Inc Brighthouse Financial Inc 6.25% 9/15/2058 BHFAL $25.99 9/15/2023 5.30 6.00 n/a 6.00 Medium

Hartford Financial Hartford Financial 7.875% fixed to call date; then 3mo HGH $28.37 4/15/2022 2.70 6.70 6.70 6.90 Medium LIBOR+559.6bps; matures 4/15/2042

Nextera Energy Capital newnewnew Nextera Energy Capital 5.65% due 3/1/2079 NEE pr N $26.08 6/15/2024 4.80 5.40 n/a 5.40 Medium

Unum Group Unum Group 6.25% 6/15/2058 UNMA $26.39 6/15/2023 4.70 5.90 n/a 5.90 Medium

Floating-rate or Fixed-to-floating rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) $1000 par Bank of America Corp Bank of America 6.25% fixed to call date; thereafter 3mo 060505EH3 $108.55 9/5/2024 4.40 5.60 5.50 5.80 Medium LIBOR+370.5bps Bank of America 6.50% fixed to call date; thereafter 3mo 060505EL4 $110.70 10/23/2024 4.20 5.90 5.80 5.90 Medium LIBOR+417.4bps Bank of America 6.10% fixed to call date thereafter 3mo 060505EN0 $108.63 3/17/2025 4.40 5.70 5.60 5.60 Medium LIBOR+389.8bps Bank of America 6.30% fixed to call date; thereafter 3mo 060505EU4 $112.25 3/10/2026 4.20 6.00 5.90 5.60 Medium LIBOR+455.3bps

Citigroup Inc. Citigroup 6.25% fixed to call date; thereafter 3mo 172967KM2 $110.07 8/15/2026 4.50 6.10 6.00 5.70 Medium LIBOR+451.7bps

Goldman Sachs Group Inc/The Goldman Sachs Group, Inc. 5.30% fixed to call date; change 38148BAC2 $104.63 11/10/2026 4.50 5.60 5.60 5.10 Medium thereafter 3mo LIBOR+383.4bps

PNC Financial Services PNC Financial Services 6.75% fixed to call date; thereafter 693475AK1 $106.62 8/1/2021 3.40 5.80 5.60 6.30 Medium 3mo LIBOR+367.8bps

Wells Fargo Wells Fargo & Co. 5.875% fixed to call date; thereafter 949746RN3 $108.93 6/15/2025 4.10 5.70 5.60 5.40 Low 3mo LIBOR+399bps

Floating-rate or Fixed-to-floating rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) $25 par KeyCorp KeyCorp 6.125% fixed to call date; thereafter 3mo LIBOR KEY pr I $27.96 12/15/2026 4.30 5.50 5.40 5.50 Medium +389.2bps

CIO GWM 10 July 2019 6 Preferred Securities Overview and Preferences

Attractive list

Security Name Symbol/ Last NextNextNext YTCYTCYTC YTMYTMYTM YTM (f) CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice Call Date (%)(%)(%) (%)(%)(%) 111 (%)(%)(%) 222 (%)(%)(%)RiskRiskRisk Morgan Stanley Morgan Stanley 6.875% fixed to call date; thereafter 3mo MS pr F $27.76 1/15/2024 4.20 5.80 5.70 6.20 Medium LIBOR+394bps Morgan Stanley 6.375% fixed to call date; thereafter 3mo MS pr I $27.21 10/15/2024 4.50 5.60 5.50 5.90 Medium LIBOR+370.8bps Morgan Stanley 7.125% fixed to call date; thereafter 3mo MS pr E $28.28 10/15/2023 3.80 6.00 5.90 6.30 Medium LIBOR+432bps Morgan Stanley 5.85% fixed to call date; thereafter 3mo change MS pr K $26.80 4/15/2027 4.70 5.40 5.40 5.40 Medium LIBOR+349.1bps

PNC Financial Services PNC Financial Services 6.125% fixed to call date; PNC pr P $27.14 5/1/2022 3.40 5.90 5.80 5.60 Medium thereafter 3mo LIBOR+406.7bps

State Street Corp State Street Corp 5.35% fixed to call date; thereafter 3mo STT pr G $26.71 3/15/2026 4.20 5.40 5.30 5.00 Low LIBOR+370.9bps

Wells Fargo Wells Fargo 6.625% fixed to 3/2024; thereafter 3mo WFC pr R $28.57 3/15/2024 3.40 5.40 5.20 5.80 Low LIBOR+369bps

Fixed rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) Bank of America Corp Bank of America Corp. 6.00% perpetual BAC pr B $26.93 5/16/2023 4.00 5.60 n/a 5.60 Medium

Brighthouse Financial Inc Brighthouse Financial Inc 6.60% perpetual BHFAP $26.77 3/25/2024 5.00 6.20 n/a 6.20 Medium

Capital One Financial Co Capital One Financial 6.00% perpetual COF pr H $26.50 12/1/2021 3.60 5.70 n/a 5.70 Medium

Hartford Financial Hartford Financial 6.00% perpetual HIG pr G $27.30 11/15/2023 3.80 5.50 n/a 5.50 Medium

JP Morgan Chase & Co. J.P. Morgan Chase & Co. 6.00% perpetual JPM pr C $27.25 3/1/2024 4.00 5.60 n/a 5.50 Low

KKR & Co. LP KKR & Co. 6.50% perpetual KKR pr B $26.70 9/15/2021 3.40 6.10 n/a 6.10 Medium

MLP / LLC Preferreds (K-1 LP, Not NRA 3 eligible, Pay-fully taxable dividend income) Apollo Global Management, LLC Apollo Global Management 6.375% perpetual APO pr A $25.86 3/15/2022 5.20 6.20 n/a 6.20 Medium Apollo Global Management 6.375% perpetual APO pr B $25.99 3/15/2023 5.30 6.20 n/a 6.10 Medium

CIO GWM 10 July 2019 7 Preferred Securities Overview and Preferences

Attractive list

Security Name Symbol/ Last NextNextNext YTCYTCYTC YTMYTMYTM YTM (f) CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice Call Date (%)(%)(%) (%)(%)(%) 111 (%)(%)(%) 222 (%)(%)(%)RiskRiskRisk REIT Preferred Securities (Not NRA 3 eligible, Pay-fully taxable dividend income) Digital Realty newnewnew Digital Realty Trust 5.85% perpetual DLR pr K $26.06 3/13/2024 4.80 5.60 n/a 5.60 Medium

Public Storage newnewnew Public Storage 5.60% perpetual PSA pr H $26.34 3/11/2024 4.30 5.30 n/a 5.30 Low

Callable currently or within 2 years Senior notes (NRA 3 eligible, pays fully-taxable interest income) Entergy Corp Entergy New Orleans 5.50% 4/1/2066 ENO $26.11 4/1/2021 2.90 5.20 n/a 5.30 Medium

Floating-rate or Fixed-to-floating rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) $1000 par Bank of New York Mellon Corp Bank of New York Mellon 4.95% fixed to call date; then 064058AD2 $101.15 6/20/2020 3.50 5.70 5.50 4.90 Low 3mo LIBOR+342bps

Citigroup Inc. Citigroup 5.80% fixed to call date; thereafter 3mo 172967HZ7 $100.63 11/15/2019 3.50 6.40 6.20 5.80 Medium LIBOR+409.3bps Citigroup 5.875% fixed to call date; thereafter 3mo 172967JK8 $101.05 3/27/2020 4.10 6.30 6.10 5.80 Medium LIBOR+405.9bps Citigroup 5.95% fixed to call date; thereafter 3mo 172967JZ5 $102.05 8/15/2020 3.90 6.30 6.10 5.80 Medium LIBOR+409.5bps Citigroup 6.125% fixed to call date; thereafter 3mo 172967KD2 $102.73 11/15/2020 3.90 6.60 6.40 6.00 Medium LIBOR+447.8bps

Goldman Sachs Group Inc/The Goldman Sachs Group, Inc. 5.375% fixed to call date; 38148BAB4 $100.62 5/10/2020 4.40 6.20 6.00 5.30 Medium thereafter 3mo LIBOR+392.2bps

JP Morgan Chase & Co. J.P. Morgan Chase & Co. 5.30% fixed to call date; 46625HKK5 $101.22 5/1/2020 3.60 6.10 5.80 5.20 Low thereafter 3mo LIBOR+380bps

Morgan Stanley Morgan Stanley 5.55% fixed to call date; thereafter 3mo 617474AA9 $101.24 7/15/2020 4.10 6.10 5.90 5.50 Medium LIBOR+381bps

CIO GWM 10 July 2019 8 Preferred Securities Overview and Preferences

Attractive list

Suntrust Bank Suntrust Bank 5.625% fixed to call date; thereafter 3mo 867914BJ1 $100.88 12/15/2019 3.10 6.20 5.90 5.60 Medium LIBOR+386bps

$25 par Goldman Sachs Group Inc/The change Goldman Sachs 3mo LIBOR + 67bps; 4.0% floor GS pr D $20.62 Anytime n/a 4.00 n/a 4.80 Medium change Goldman Sachs 3mo LIBOR + 75bps; 4.0% floor GS pr C $20.70 Anytime n/a 4.00 n/a 4.80 Medium

Morgan Stanley change Morgan Stanley 3mo LIBOR+70bps; 4% floor MS pr A $20.91 Anytime n/a 4.00 n/a 4.80 Medium

Fixed rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) Capital One Financial Co Capital One Financial 6.20% perpetual COF pr F $25.96 12/1/2020 3.80 6.00 n/a 6.00 Medium

Citigroup Inc. Citigroup 6.30% perpetual C pr S $26.42 2/12/2021 3.20 6.00 n/a 6.00 Medium

Huntington Bancshares Huntington Bancshares 6.25% perpetual HBANO $26.10 4/15/2021 3.60 6.00 n/a 6.00 Medium

Wells Fargo Wells Fargo & Co. 6.00% perpetual WFC pr V $26.14 12/15/2020 3.00 5.80 n/a 5.70 Low

REIT Preferred Securities (Not NRA 3 eligible, Pay-fully taxable dividend income) Public Storage change Public Storage 5.40% perpetual PSA pr B $25.76 1/20/2021 3.40 5.30 n/a 5.20 Low

Source: Bloomberg, UBS. Note: All financial information is as of 7/9/19 1 For fixed-to-float coupon preferreds, the YTM calculation uses a constant rate based on current LIBOR. 2 For fixed-to-float coupon preferreds, the YTM(f) calculation uses assumed LIBOR rates based on the forward curve. 3 NRA eligible pertains to the dividend tax treatment of the security for non resident alien accounts. Those preferreds labeled as "not NRA eligible" may be subject to dividend withholding tax of up to 30%, which may be eligible for reduction under specific country tax treaties. * See LIBOR phase-out could cause coupon conundrum, 24 Sept 2018

CIO GWM 10 July 2019 9 Preferred Securities Overview and Preferences Unattractive list We may deem these preferred securities to be Unattractive for valuation reasons, or because of their structure. In general, preferreds are listed here because (1) they have low fixed-rate coupons and therefore would exhibit greater interest rate or credit spread sensitivity, or (2) they are fixed-to-floating rate coupons with a low back-end spread or a possibly weak floating- rate coupon calculation in the absence of LIBOR.* The preferreds on this list are from "core issuers" that have investment grade senior debt ratings, therefore, fundamental credit drivers are not a consideration unless specified. Note: credit rating agencies notch the ratings of preferred securities lower than that of the issuer rating. Threfore, core issuers may have non- investment grade rated preferreds.

Security Name Symbol/ Last NextNextNext YTCYTCYTC YTMYTMYTM YTM (f) CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice Call Date (%)(%)(%) (%)(%)(%) 111 (%)(%)(%) 222 (%)(%)(%)RiskRiskRisk Subordinated notes (NRA 3 eligible, pays fully-taxable interest income) Allstate Corp Allstate Corp. 5.75% fixed to call date; thereafter 3mo 020002BB6 $105.63 8/15/2023 4.20 5.10 n/a 5.40 Medium LIBOR+293.8bps; matures 8/15/53 Allstate Corp. 5.10% fixed to call date; thereafter 3mo ALL pr B $26.01 1/15/2023 3.80 5.20 n/a 4.90 Medium LIBOR+316.5bps; matures 1/15/53

Nextera Energy Nextera Energy Capital 4.80% fixed to call date; then 3mo 65339KAV2 $95.18 12/1/2027 5.50 5.00 n/a 5.00 Medium LIBOR+240.9bps; matures 12/1/2077

Prudential Financial Inc Prudential Financial Inc. 5.875% fixed to call date; then 744320AL6 $107.65 9/15/2022 3.30 5.80 n/a 5.50 Medium 3mo LIBOR+417.5bps; matures 9/15/2042 Prudential Financial Inc. 5.625% fixed to call date; then 744320AM4 $107.25 6/15/2023 3.60 5.60 n/a 5.20 Medium 3mo LIBOR+392bps; matures 6/15/2043 Prudential Financial Inc. 5.20% fixed to call date; then 744320AN2 $103.91 3/15/2024 4.20 5.10 n/a 5.00 Medium 3mo LIBOR+304bps; matures 3/15/2044 Prudential Financial Inc. 5.375% fixed to call date; then 744320AV4 $105.39 5/15/2025 4.30 5.00 n/a 5.10 Medium 3mo LIBOR+303.1bps; matures 5/15/2045 Prudential Financial Inc. 4.50% fixed to call date; then 744320AW2 $100.69 9/15/2027 4.40 4.60 n/a 4.50 Medium 3mo LIBOR+238bps; matures 9/15/2047 Prudential Financial Inc. 5.70% fixed to call date; then 744320BF8 $108.68 9/15/2028 4.50 4.80 4.80 5.20 Medium 3mo LIBOR+266.5bps; matures 9/15/2048

Southern Co Southern Co / Georgia Power 5.00% 10/1/2077 GPJA $25.68 10/1/2022 4.10 4.90 n/a 4.90 Medium

Floating-rate or Fixed-to-floating rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) $1000 par Bank of America Corp Bank of America 5.20% fixed to call date; thereafter 3mo 060505ED2 $101.58 6/1/2023 4.70 5.40 5.20 5.10 Medium LIBOR+313.5bps Bank of America 5.875% fixed to call date; thereafter 3mo 060505FL3 $105.00 3/15/2028 5.20 5.20 5.20 5.60 Medium LIBOR+293.1bps

Bank of New York Mellon Corp Bank of New York Mellon 4.50% fixed to call date; then 064058AB6 $98.47 6/20/2023 4.80 4.80 4.70 4.60 Low 3mo LIBOR+246

CIO GWM 10 July 2019 10 Preferred Securities Overview and Preferences Unattractive list We may deem these preferred securities to be Unattractive for valuation reasons, or because of their structure. In general, preferreds are listed here because (1) they have low fixed-rate coupons and therefore would exhibit greater interest rate or credit spread sensitivity, or (2) they are fixed-to-floating rate coupons with a low back-end spread or a possibly weak floating- rate coupon calculation in the absence of LIBOR.* The preferreds on this list are from "core issuers" that have investment grade senior debt ratings, therefore, fundamental credit drivers are not a consideration unless specified. Note: credit rating agencies notch the ratings of preferred securities lower than that of the issuer rating. Threfore, core issuers may have non- investment grade rated preferreds.

Security Name Symbol/ Last NextNextNext YTCYTCYTC YTMYTMYTM YTM (f) CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice Call Date (%)(%)(%) (%)(%)(%) 111 (%)(%)(%) 222 (%)(%)(%)RiskRiskRisk Citigroup Inc Citigroup 5.35% fixed to call date; thereafter 3mo 172967GR6 $101.20 5/15/2023 4.90 5.70 5.50 5.30 Medium LIBOR+346.6bps Citigroup 6.30% fixed to call date; thereafter 3mo 172967HQ7 $104.50 5/15/2024 5.20 5.70 5.50 6.00 Medium LIBOR+342.3bps Citigroup 5.95% fixed to call date; thereafter 3mo 172967JM4 $105.12 5/15/2025 4.90 5.90 5.80 5.70 Medium LIBOR+390.5bps Citigroup 5.95% fixed to call date; thereafter 3mo 172967GD7 $104.02 1/30/2023 4.60 6.10 n/a 5.70 Medium LIBOR+406.8bps Citigroup 5.90% fixed to call date; thereafter 3mo 172967GF2 $103.73 2/15/2023 4.70 6.20 n/a 5.70 Medium LIBOR+423bps

Edison International Edison Int'l (So Cal Ed) 6.25% fixed to call date; then 3mo 842400FU2 $99.25 2/1/2022 6.50 6.60 6.40 6.30 Medium L+420bps

Fifth Third Bancorp Fifth Third Bancorp 4.900% fixed to call date; thereafter 316773CR9 $98.85 9/30/2019 9.00 5.60 5.30 4.90 Medium 3mo LIBOR+312.9bps Fifth Third Bancorp 5.10% fixed to call date; thereafter 316773CM0 $99.37 6/30/2023 5.20 5.40 5.20 5.10 Medium 3mo LIBOR+303.3bps

Goldman Sachs Group Inc/The Goldman Sachs Group, Inc. 5.00% fixed to call date; 38148BAD0 $96.24 11/10/2022 6.20 5.40 5.20 5.20 Medium thereafter 3mo LIBOR+287.4bps

JP Morgan Chase & Co. J.P. Morgan Chase & Co. 4.625% fixed to call date; then 48128BAD3 $97.07 11/1/2022 5.50 5.00 4.90 4.80 Low 3mo LIBOR+258bps

MetLife, Inc MetLife, Inc. 5.875% fixed to call date; thereafter 3mo 59156RBT4 $106.53 3/15/2028 4.90 5.20 5.10 5.50 Medium LIBOR+295.9bps

State Street Corp State Street Corp 5.625% fixed to call date; thereafter 857477BA0 $101.53 12/15/2023 5.20 5.00 4.80 5.50 Low 3mo LIBOR+253.9bps

$25 par Citigroup Inc Citigroup 7.125% fixed to call date; thereafter 3mo C pr J $27.83 9/30/2023 4.20 5.80 n/a 6.40 Medium LIBOR+404bps Citigroup 6.875% fixed to call date; thereafter 3mo C pr K $27.73 11/15/2023 4.40 6.00 n/a 6.20 Medium LIBOR+413bps

CIO GWM 10 July 2019 11 Preferred Securities Overview and Preferences Unattractive list We may deem these preferred securities to be Unattractive for valuation reasons, or because of their structure. In general, preferreds are listed here because (1) they have low fixed-rate coupons and therefore would exhibit greater interest rate or credit spread sensitivity, or (2) they are fixed-to-floating rate coupons with a low back-end spread or a possibly weak floating- rate coupon calculation in the absence of LIBOR.* The preferreds on this list are from "core issuers" that have investment grade senior debt ratings, therefore, fundamental credit drivers are not a consideration unless specified. Note: credit rating agencies notch the ratings of preferred securities lower than that of the issuer rating. Threfore, core issuers may have non- investment grade rated preferreds.

Security Name Symbol/ Last NextNextNext YTCYTCYTC YTMYTMYTM YTM (f) CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice Call Date (%)(%)(%) (%)(%)(%) 111 (%)(%)(%) 222 (%)(%)(%)RiskRiskRisk Edison International Edison Int'l (SCE Trust III) 5.75% fixed to call date; then SCE pr H $24.57 3/15/2024 6.30 5.50 n/a 5.80 Medium 3mo L+299bps Edison Int'l (SCE Trust IV) 5.375% fixed to call date; then SCE pr J $24.24 9/15/2025 6.10 5.60 n/a 5.50 Medium 3mo L+313bps Edison Int'l (SCE Trust V) 5.45% fixed to call date; then SCE pr K $24.31 3/15/2026 6.00 6.10 n/a 5.60 Medium 3mo L+379bps

Fixed rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) Capital One Financial Co Capital One Financial 5.20% perpetual COF pr G $25.35 12/1/2021 4.80 5.20 n/a 5.10 Medium

Edison International Edison Int'l (SCE Trust II) 5.10% perpetual SCE pr G $23.04 Anytime n/a 5.60 n/a 5.50 Medium Edison Int'l (SCE Trust VI) 5.00% perpetual SCE pr L $22.85 6/26/2022 8.40 5.50 n/a 5.50 Medium

Southern Company Southern Co / Alabama Power 5.00% perpetual ALP pr Q $25.98 10/1/2022 3.70 4.80 n/a 4.80 Medium

US Bancorp US Bancorp 5.15% perpetual USB pr O $25.29 Anytime -7.80 5.10 n/a 5.10 Low

Wells Fargo Corp. Wells Fargo & Co. 5.20% perpetual WFC pr N $25.04 Anytime 5.50 5.20 n/a 5.20 Low Wells Fargo & Co. 5.125% perpetual WFC pr O $25.14 Anytime 2.20 5.10 n/a 5.10 Low Wells Fargo & Co. 5.25% perpetual WFC pr P $25.16 Anytime -0.70 5.20 n/a 5.20 Low

REIT Preferred Securities (Not NRA 3 eligible, Pay-fully taxable dividend income) Digital Realty Trust newnewnew Digital Realty Trust 5.25% perpetual DLR pr J $25.08 8/7/2022 5.20 5.20 n/a 5.20 Medium

PS Business Parks Inc PS Business Parks, Inc. 5.20% perpetual PSB pr W $25.04 10/20/2021 5.20 5.20 n/a 5.20 Medium newnewnew PS Business Parks, Inc. 5.20% perpetual PSB pr Y $24.94 12/7/2022 5.30 5.20 n/a 5.20 Medium

Public Storage Public Storage 5.125% perpetual PSA pr C $25.24 5/17/2021 4.60 5.10 n/a 5.10 Low Public Storage 4.95% perpetual PSA pr D $24.89 7/20/2021 5.30 5.00 n/a 5.00 Low Public Storage 4.90% perpetual PSA pr E $24.91 10/14/2021 5.10 4.90 n/a 4.90 Low newnewnew Public Storage 5.05% perpetual PSA pr G $25.21 8/9/2022 4.80 5.00 n/a 5.00 Low

CIO GWM 10 July 2019 12 Preferred Securities Overview and Preferences Refinanceable list We deem these currently-callable, preferreds to be Refinanceable, with an "even money" likelihood of being called at anytime. Traditional relative value measures such as YTC or option adjusted spread (OAS) are not applicable since they can result in large, negative values (distorted by annualization). The distance to "break-even" (measured in months) is more meaningful and is a function of the price of the preferred, relative to the amount and frequency of the dividend. Although it's a rough estimate, generally speaking, the lower the distance to break-even, the more fair or cheaper the pricing, and current holders may opt to "clip the coupon." We highlight " featured " refinanceables as those with low or negative distance to B-E. NOTE: small changes in current pricing may produce large changes in distance to break-even and thus meaningfully alter the value proposition.

Security Name Symbol/ Last Callable YTCYTCYTC YTMYTMYTM Distance CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice SinceSinceSince (%)(%)(%) (%)(%)(%) 111 to B-E 444 (%)(%)(%)RiskRiskRisk Enhanced Trust Preferred Securities affected by the Dodd-Frank Act (NRA 333 eligible, pays fully-taxable interest income) Bank of America Corp Bank of America ICONs 6.450% 12/15/66 MER pr K $26.49 10/18/2018 -68.70 6.10 10.6 6.10 Medium

Traditional Trust Preferred Securities not affected by the Dodd-Frank Act (NRA 333 eligible, pays fully-taxable interest income) Citigroup Inc. Citigroup Capital XIII floater; 3mo L+637bps 10/30/40 C pr N $27.91 10/30/2015 -96.70 8.80 13.0 8.00 Medium

Senior notes (NRA 3 eligible, pays fully-taxable interest income) MFA Financial Inc MFA Financial Inc 8.00% 4/15/42 MFO $26.24 4/15/2017 -80.40 7.70 5.0 7.60 Medium

United States Cellular Corp United States Cellular Corp 6.95% 5/15/60 UZA $25.42 5/15/2016 -10.70 6.90 2.2 6.80 Medium

Subordinated notes (NRA 3 eligible, pays fully-taxable interest income)

PPL Corp PPL Capital Funding Inc. 5.90% 4/30/2073 PPX $25.53 4/30/2018 -7.20 5.80 1.9 5.80 Medium

Prudential Financial Inc Prudential Financial Inc. 5.70% 3/15/53 PRH $25.57 3/15/2018 -20.70 5.60 3.5 5.60 Medium

Floating-rate or Fixed-to-floating rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) $1000 par Goldman Sachs Group Inc/The Goldman Sachs Group, Inc. 5.70% fixed to call date; partial call 38148BAA6 $100.16 5/10/2019 2.90 6.20 0.3 6.40 Medium 6/12/2019 thereafter 3mo LIBOR+388.4bps

JP Morgan Chase & Co. J.P. Morgan Chase & Co. 7.90% fixed to call date; partial call 46625HHA1 $100.63 4/30/2018 3.50 5.80 1.2 6.00 Low 9/27/2018 thereafter 3mo LIBOR+347bps

Wells Fargo Wells Fargo & Co. 7.98% fixed to call date; thereafter 3mo 949746PM7 $100.79 3/15/2018 1.10 6.10 1.5 6.10 Low LIBOR+377bps

Fixed rate, perpetual preferreds (Not NRA 3 eligible, pays qualified dividend income) Allstate Corp Allstate Corp. 6.625% perpetual ALL pr D $27.17 4/15/2019 -91.90 6.10 14.9 6.10 Medium Allstate Corp. 6.625% perpetual ALL pr E $25.55 4/15/2019 -2.80 6.50 3.8 6.50 Medium

BB&T Corp BB&T Corp. 5.85% perpetual BBT pr D $25.35 6/1/2017 -0.10 5.80 1.1 5.80 Low BB&T Corp. 5.625% perpetual BBT pr E $25.37 8/1/2017 -0.50 5.60 1.2 5.50 Low

Bank of America Corp featured Bank of America Corp. 6.625% perpetual BAC pr W $25.41 9/9/2019 -0.10 6.60 1.2 6.50 Medium

CIO GWM 10 July 2019 13 Preferred Securities Overview and Preferences Refinanceable list We deem these currently-callable, preferreds to be Refinanceable, with an "even money" likelihood of being called at anytime. Traditional relative value measures such as YTC or option adjusted spread (OAS) are not applicable since they can result in large, negative values (distorted by annualization). The distance to "break-even" (measured in months) is more meaningful and is a function of the price of the preferred, relative to the amount and frequency of the dividend. Although it's a rough estimate, generally speaking, the lower the distance to break-even, the more fair or cheaper the pricing, and current holders may opt to "clip the coupon." We highlight " featured " refinanceables as those with low or negative distance to B-E. NOTE: small changes in current pricing may produce large changes in distance to break-even and thus meaningfully alter the value proposition.

Security Name Symbol/ Last Callable YTCYTCYTC YTMYTMYTM Distance CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice SinceSinceSince (%)(%)(%) (%)(%)(%) 111 to B-E 444 (%)(%)(%)RiskRiskRisk Capital One Financial Co Capital One Financial 6.00% perpetual COF pr P $25.52 9/1/2017 -12.50 5.90 2.2 5.90 Medium Capital One Financial 6.25% perpetual COF pr C $25.47 9/1/2019 -2.50 6.20 1.8 6.10 Medium

Goldman Sachs Group Inc called Goldman Sachs Group, Inc. 6.20% perpetual GS pr B $25.35 10/31/2010 2.60 2.60 0.1 6.10 Medium

JP Morgan Chase & Co. J.P. Morgan Chase & Co. 6.30% perpetual JPM pr E $25.76 9/1/2019 -10.20 6.20 3.4 6.10 Low

Morgan Stanley Morgan Stanley 6.625% perpetual MS pr G $25.53 7/15/2019 -2.20 6.50 3.5 6.50 Medium

Regions Financial Corp Regions Financial Corp. 6.375% perpetual RF pr A $25.56 12/15/2017 -3.50 6.30 2.9 6.20 Medium

Wells Fargo Wells Fargo & Co. 6.00% perpetual WFC pr T $25.49 9/15/2019 -2.70 5.90 2.6 5.90 Low

Fixed Rate Non-U.S. QDI Preferreds (NRA 3 eligible, Not DRD eligible, pays qualified dividend income (for individuals)) Aegon NV Aegon 6.375% perpetual AEH $25.90 6/15/2015 -34.80 6.20 5.5 6.20 Medium

Deutsche Bank AG Deutsche Bank Contingent Capital Trust II 6.55% DXB $24.40 5/23/2017 n/a 6.80 -6.1 6.70 Medium Deutsche Bank Contingent Capital Trust V 8.05% DKT $25.04 6/30/2018 8.40 8.10 -0.3 8.00 Medium

HSBC Holdings PLC HSBC Holdings plc 6.20% perpetual HSBC pr A $26.42 12/16/2010 -62.00 5.90 9.8 5.90 Medium

ING Groep NV ING Groep NV 6.125% perpetual ISG $26.09 1/15/2011 -10.40 5.90 8.1 5.90 Medium

REIT Preferred Securities (Not NRA 3 eligible, Pay-fully taxable dividend income) Ashford Hospitality Trust partial call Ashford Hospitality Trust 8.45% perpetual AHT pr D $23.50 7/18/2012 n/a 9.00 -8.8 9.00 Medium 11/8/2017

Digital Realty Trust Digital Realty Trust Inc. 5.875% perpetual DLR pr G $25.28 4/9/2018 -6.70 5.80 1.4 5.80 Medium

Kimco Realty Corp Kimco Realty Corp. 6.00% perpetual KIM pr I $25.25 3/20/2017 -10.10 5.90 1.8 5.90 Medium Kimco Realty 5.50% perpetual KIM pr J $25.08 7/25/2017 -0.60 5.50 0.4 5.50 Medium featured Kimco Realty 5.6250% perpetual KIM pr K $25.04 12/7/2017 2.10 5.60 0.0 5.60 Medium

PS Business Parks PS Business Parks, Inc. 5.75% perpetual PSB pr U $25.75 9/14/2017 -30.40 5.60 5.0 5.60 Medium featured PS Business Parks, Inc. 5.70% perpetual PSB pr V $25.57 3/14/2018 -21.80 5.60 3.9 5.60 Medium

CIO GWM 10 July 2019 14 Preferred Securities Overview and Preferences Refinanceable list We deem these currently-callable, preferreds to be Refinanceable, with an "even money" likelihood of being called at anytime. Traditional relative value measures such as YTC or option adjusted spread (OAS) are not applicable since they can result in large, negative values (distorted by annualization). The distance to "break-even" (measured in months) is more meaningful and is a function of the price of the preferred, relative to the amount and frequency of the dividend. Although it's a rough estimate, generally speaking, the lower the distance to break-even, the more fair or cheaper the pricing, and current holders may opt to "clip the coupon." We highlight " featured " refinanceables as those with low or negative distance to B-E. NOTE: small changes in current pricing may produce large changes in distance to break-even and thus meaningfully alter the value proposition.

Security Name Symbol/ Last Callable YTCYTCYTC YTMYTMYTM Distance CYCYCY IssuerIssuerIssuer CUSIPCUSIPCUSIPPricePricePrice SinceSinceSince (%)(%)(%) (%)(%)(%) 111 to B-E 444 (%)(%)(%)RiskRiskRisk Public Storage featured Public Storage 5.6250% perpetual PSA pr U $25.49 6/15/2017 -18.30 5.50 3.3 5.50 Low Public Storage 5.375% perpetual PSA pr V $25.18 9/20/2017 -2.00 5.40 0.7 5.30 Low

SITE Centers (fka DDR) Corp. SITE Centers (fka DDR) Corp. 6.250% perpetual SITC pr K $25.66 4/9/2018 -31.30 6.10 4.8 6.10 Medium

SL Green Realty Corp SL Green Realty Corp. 6.50% perpetual SLG pr I $26.02 8/10/2017 -47.80 6.20 7.3 6.20 Medium

Vornado Realty Trust Vornado Realty Trust 5.70% perpetual VNO pr K $25.13 7/18/2017 0.30 5.70 0.4 5.70 Medium Vornado Realty Trust 5.40% perpetual VNO pr L $25.10 1/25/2018 0.50 5.40 0.2 5.40 Medium Source: Bloomberg, UBS. Note: All financial information is as of 7/9/19 1 For fixed-to-floatcoupon preferreds, the YTM calculation uses a constant rate based on current LIBOR. 2 For fixed-to-float coupon preferreds, the YTM (f) calculation uses assumed LIBOR rates based on the forward curve. 3 NRA eligible pertains to the dividend tax treatment of the security for non resident alien accounts. Those preferreds labeled as "not NRA eligible" may be subject to dividend withholding tax of up to 30%, which may be eligible for reduction under specific country tax treaties. 4 Distance to Break-Even (measured in months) is a function of the price of the preferred, relative to the amount and frequency of the dividend.

CIO GWM 10 July 2019 15 Preferred Securities Overview and Preferences

Appendix

Terms and Abbreviations Description / Definition Symbol / CUSIP The preferred security’s trading symbol if applicable. Otherwise, cusip is displayed.

Next Call Date The next date that the issuer has the option to redeem the security. Once a preferred security’s first call date has passed, the issuer can redeem the security at anytime within 30 days notice.

Strip Price The strip price removes the accrued dividend from a preferred’s exchange-traded price to get a better reflection of the underlying value of the security.

YTC (Yield to Call). The YTC is the internal rate of return that equates the security’s strip price with the sum of its total discounted cash flows to the next call date.

(Yield to Maturity). YTM is the internal rate of return that equates the security’s strip price with the sum of its total discounted cash flows to the maturity date. In the case of perpetual preferreds, Bloomberg YTM analytics defaults to a maturity of 12/31/49. For fixed-to-float, adjustable-rate coupon preferreds, the YTM calculation uses a constant rate based on current LIBOR.

(Current Yield). CY is the security’s current yield as calculated by the annual dividend divided by the strip CY price.

Duration is calculated as the weighted average maturity of a security’s total cash flows and is used a measure of the security’s price sensitivity to changes in yields. Effective duration takes into account how Eff / Mod Duration the preferred’s embedded call option will affect the security’s future cash flows. Modified duration is computed via the yield to worst calculation.

The average of the preferred security's existing credit ratings by Moody’s, S&P, Fitch and DBRS. NR = not Ratings Composite rated.

NRA Eligible "NRA-eligible" means non-US holders are not subject to additional withholding and NOT NRA-eligible means non-US holders are subject to additional withholding (unless relevant IRS forms are filed).

QDI Qualified dividend income. Indicates that the security pays dividend income that qualifies for the reduced dividend tax rates to individuals.

Dividends-received deduction. Indicates that the security is eligible for the dividends-received DRD deduction to U.S. corporations. This allows 70% of the dividends received from the preferred stock to be excluded from the corporation's taxes. This tax benefit does not have an expiration date.

CIO GWM 10 July 2019 16 Preferred Securities Overview and Preferences

Appendix

WMR Issuer Risk Rating Definitions

The UBS CIO issuer credit risk rating reflects the opinion of the relevant UBS CIO analyst regarding an issuer's risk of a near- to intermediate-term dividend deferral on preferred securities, and/or issuer payment default on debt obligations.

Low Risk: The issuer is considered to be in solid financial condition with strong credit fundamentals and low likelihood of a near- to intermediate-term dividend deferral, and/or issuer payment default. The issuer's securities are of generally high quality.

Medium Risk: The issuer is considered to be in adequate financial condition with satisfactory credit fundamentals relative to the near- to- intermediate-term dividend deferral, and / or issuer payment default. The issuer's securities are of medium to weaker credit quality and may have higher volatility than those of Low Risk issuers. These instruments should therefore only be held by risk tolerant investors.

High Risk: The issuer is considered to be in weak financial condition with deteriorating credit fundamentals or the state of the issuer's financial condition and credit fundamentals may be uncertain due to volatile market conditions. Sector considerations may be a dominating factor. There is a relatively higher likelihood of a near- to intermediate- term dividend deferral, and / or issuer payment default. The issuer's securities are speculative.

Note: Distinctions in the credit quality of individual security instruments may vary based on the maturity of the instrument, as well as the relative priority within an issuer's capital structure. These distinctions will be discussed in our future credit reports, as applicable. In regions outside the United States, the UBS CIO office will map these distinctions to security-level risk flags.

List definitions Attractive: Preferred securities on the Attractive List are those that we view favorably based on (1) fundamental credit quality, (2) valuation and (3) structure (security characteristics).

Neutral: We believe that issuers of preferreds on the Neutral List are likely to meet the coupon payment but we do not deem the preferreds to fit the definition of our Attractive or Unattractive Lists.

Unattractive: We may deem the preferred securities on the Unattractive List to be Unattractive for fundamental reasons, for valuation reasons, or because of their structure. In the case of fundamental drivers, we have concerns that the credit profile may deteriorate. Sector considerations may also be a factor. In the case of valuation, we believe that price/yield levels do not adequately compensate investors for the risks.

Refinanceable: Currently callable, premium preferreds can not be analyzed with traditional relative value calculations such as YTC or OAS, and can not be placed on our Attractive, Neutral or Unattractive lists.

Issuer Type definitions Core: Issuers that have investment grade senior debt ratings. Note: the credit rating agencies typically notch the rating of preferred securities lower than that of the issuer rating (or senior debt rating) to reflect the subordination of preferreds in an issuer's capital structure. Therefore, Core issuers may have non-investment grade rated preferreds.

High Yield: Issuers we deem to be "high yield issuers," even if they are not actually rated by the credit rating agencies are those that may have non-rated or high yield rated senior debt.

CIO GWM 10 July 2019 17 Preferred Securities Overview and Preferences

Appendix

Statement of Risk Fixed income - Bond market returns are difficult to forecast because of fluctuations in the economy, investor psychology, geopolitical conditions and other important variables. Corporate bonds are subject to a number of risks, including credit risk, interest rate risk, liquidity risk, and event risk. Though historical default rates are low on investment grade corporate bonds, perceived adverse changes in the credit quality of an issuer may negatively affect the market value of securities. As interest rates rise, the value of a fixed coupon security will likely decline. Bonds are subject to market value fluctuations, given changes in the level of risk-free interest rates. Not all bonds can be sold quickly or easily on the open market. Prospective investors should consult their tax advisors concerning the federal, state, local, and non-U.S. tax consequences of owning any securities referenced in this report.

Preferred securities - Prospective investors should consult their tax advisors concerning the federal, state, local, and non-U.S. tax consequences of owning preferred stocks. Preferred stocks are subject to market value fluctuations, given changes in the level of interest rates. For example, if interest rates rise, the value of these securities could decline. If preferred stocks are sold prior to maturity, price and yield may vary. Adverse changes in the credit quality of the issuer may negatively affect the market value of the securities. Most preferred securities may be redeemed at par after five years. If this occurs, holders of the securities may be faced with a reinvestment decision at lower future rates. Preferred stocks are also subject to other risks, including illiquidity and certain special redemption provisions.

Required Disclosures

Analyst Certification

Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. For a complete set of required disclosures relating to the companies that are the subject of this report, please mail a request to UBS CIO Global Wealth Management Business Management, 1285 Avenue of the Americas, 20th Floor, Avenue of the Americas, New York, NY 10019. Disclosures (10 July 2019) Aegon NV 1, 2, Allstate 1, 2, 3, 5, 7, 8, 9, American Express 1, 2, 7, 8, 9, Apollo Global Management 1, 2, 3, 5, 7, 10, 11, Ashford Hospitality Trust Inc 1, 2, 3, 4, 5, 6, 7, Bank of America 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, Bank of NY Mellon 1, 2, 3, 4, 5, 7, 8, 9, 11, Barclays 1, 2, 3, 4, 5, 6, 8, 9, 13, BB&T Corp. 1, 2, 7, 8, 9, 11, Capital One Financial 1, 2, 11, 15, Chimera Investment Corp 1, 2, 3, 4, 5, 7, 10, Citigroup 1, 2, 3, 4, 5, 7, 8, 9, 11, 12, 14, 23; Deutsche Bank 1, 2, 3, 4, 8, 9, 10, 12, 16, Digital Realty Trust Inc. 2, 10, DTE Energy 1, 2, eBay 1, 2, 7, 8, 9, Edison International 1, 2, Entergy 1, 2, 8, 9, Fifth Third Bancorp 1, 2, 7, 8, 9, 11, GasLog Partners LP 1, 2, 3, 4, 5, 6, 7, Goldman Sachs 1, 2, 3, 7, 8, 9, 10, 11, Hartford Financial Services 1, 2, 7, 8, 9, 10, 11, 15, HSBC Holdings (UK) 1, 2, 8, 9, 10, 12, 17, Huntington Bancshares Inc. 1, 2, 3, 4, 5, 8, 9, ING Groep 1, 2, 3, 4, 5, 8, 9, JPMorgan 1, 2, 3, 4, 5, 7, 8, 9, 11, 12, 18, KeyCorp 1, 2, 3, 4, 5, 6, Kimco Realty Corp. 1, 2, 3, 4, 8, 9, KKR and Co 1, 2, 3, 4, 5, 6, 7, 11, 15, Merrill Lynch 8, 9, MetLife 1, 2, 3, 5, 7, 8, 9, 11, MFA Financial Inc 1, 2, 7, 10, Morgan Stanley 1, 2, 7, 8, 9, 10, 11, 12, NextEra Energy Inc. 1, 2, 3, 4, 5, 19, PNC Financial Svcs 1, 2, 7, 8, 9, 11, PPL Corp. 1, 2, 3, 5, 7, 11, Prudential Financial Inc. 1, 2, 3, 4, 5, 7, 8, 9, 11, 20, PS Business Parks 2, 10, Public Storage 1, 2, 3, 4, 5, 6, 7, RBS Group 2, 3, 4, 5, 6, Regions Financial Corp. (New) 1, 2, 3, 4, 5, 6, 7, 8, 9, SL Green Realty Corp. 2, 3, 5, Southern Company 1, 2, 3, 4, 5, 7, 8, 9, State Street 1, 2, 3, 4, 5, 7, 11, SunTrust Banks Inc. 1, 2, 3, 4, 5, 7, 8, 9, 10, 11, 21, U.S. Bancorp 1, 2, 3, 4, 5, 7, 8, 9, 10, Vornado Realty Trust 1, 2, 10, Wells Fargo 1, 2, 3, 5, 7, 8, 9, 10, 11, 22, 1. Within the past 12 months, UBS Securities LLC and/or its affiliates have received compensation for products and services other than investment banking services from this company/entity. 2. UBS Securities LLC makes a market in the securities and/or ADRs of this company.

CIO GWM 10 July 2019 18 Preferred Securities Overview and Preferences

Appendix

3. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity or one of its affiliates. 4. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of this company/entity or one of its affiliates within the past 12 months. 5. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided. 6. UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services from this company/entity within the next three months. 7. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided. 8. This company/entity is, or within the past 12 months has been, a client of UBS Financial Services Inc, and non- investment banking securities-related services are being, or have been, provided. 9. Within the past 12 months, UBS Financial Services Inc has received compensation for products and services other than investment banking services from this company. 10. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of this company's common equity securities as of last month's end (or the prior month's end if this report is dated less than 10 days after the most recent month's end). 11. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided. 12. UBS AG, its affiliates or subsidiaries held other significant financial interests in this company/entity as of last month's end (or the prior month's end if this report is dated less than 10 working days after the most recent month's end). 13. UBS has been granted conditional leniency or conditional immunity from antitrust authorities in certain jurisdictions in connection with potential antitrust or competition law violations related to certain benchmark submissions. For further information, please see the disclosures in UBS's current quarterly report. 14. The fixed income analyst covering this company, a member of his or her team, or one of their household members has a long common stock position in this company. 15. An employee of UBS AG is an officer, director, or advisory board member of this company. 16. UBS AG London branch or affiliates acts as liquidity provider or market maker in the financial instruments of this company. 17. UBS Securities Hong Kong Limited is a market maker in the Hong Kong-listed securities of this company. 18. UBS AG, its affiliates or subsidiaries owns a net long position exceeding 0.5% of the total issued share capital of this company. 19. UBS Financial Services Inc., its affiliates or subsidiaries owns a net long position exceeding 0.5% of the total issued share capital of this company. 20. UBS AG London Branch acts as broker to this company. 21. UBS Financial Services Inc. its affiliates or subsidiaries owns a net long position exceeding 0.5% of the total issued share capital of this company. 22. The equity analyst covering this company, a member of his or her team, or one of their household members has a long common stock position in this company. 23. Frank Sileo, or one of his/her household members has a long common stock position in Citigroup.

Preferred Securities Ratings Definitions Rating Definition Preferred securities on the Attractive List are those that we view favorably based on (1) fundamental Attractive credit quality, (2) valuation and (3) structure (security characteristics). We believe that issuers of preferreds on the Neutral List are likely to meet the coupon payment but we Neutral do not deem the preferreds to fit the definition of our Attractive or Unattractive Lists. We may deem these preferred securities to be Unattractive for fundamental reasons, for valuation reasons, or because of their structure. In the case of fundamental drivers, we have concerns that the Unattractive credit profile may deteriorate. Sector considerations may also be a factor. In the case of valuation, we believe that price/yield levels do not adequately compensate investors for the risks.

CIO GWM 10 July 2019 19 Preferred Securities Overview and Preferences

Appendix

Disclaimer

UBS Chief Investment Office's ("CIO") investment views are prepared and published by the Global Wealth Management business of UBS Switzerland AG (regulated by FINMA in Switzerland) or its affiliates ("UBS"). The investment views have been prepared in accordance with legal requirements designed to promote the independence of investment research. Instrument/issuer-specific investment research – Risk information: This publication is for your information only and is not intended as an offer, or a solicitation of an offer, to buy or sell any investment or other specific product. The analysis contained herein does not constitute a personal recommendation or take into account the particular investment objectives, investment strategies, financial situation and needs of any specific recipient. It is based on numerous assumptions. Different assumptions could result in materially different results. 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CIO GWM 10 July 2019 20 Preferred Securities Overview and Preferences

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