HIDDEN DESCRIPTION SLIDE — NOT TO BE SHOWN TO THE PUBLIC Basics of Mutual Fund Investing Catalogue code: B18 Full presentation or module? Presentation Slide numbers: B18-1 to B18-21 Registered/Non-Registered Usage: Used by all — send to Brandon to confirm (Choices: registered rep use only, not for registered rep use, allowed for all, partial limitations) Last update info: Date updated: Project #18001 Description of changes: Filed with FINRA? No If yes, date: Notes:

Basics of Mutual Fund Investing B18-1

Financial Activities Basics of Mutual Fund Investing  Spending  Saving  Investing B18-2

Financial Activities Basics of Mutual Fund Investing  Spending Daily needs Things we want  Saving  Investing B18-3

Financial Activities Basics of Mutual Fund Investing  Spending  Saving Storing money away Used for emergencies and short-term goals Concerned with maintaining principal and avoiding risk  Investing B18-4

Financial Activities Basics of Mutual Fund Investing  Spending  Saving  Investing Desire to be more faithful stewards Used for longer-term goals Willingness to risk investment principal for the potential for higher returns B18-5

Investment Asset Classes Basics of Mutual Fund Investing  Cash equivalents  Bonds  Stocks B18-6

Cash Equivalents Basics of Mutual Fund Investing  Short-term debt securities that pay a modest return with an emphasis on maintaining principal  Historically, least volatile investment with lowest returns  Return is predominately from interest B18-7

Cash Equivalents Basics of Mutual Fund Investing  Factors that impact cash equivalents: Inflation Interest rates  Types of cash equivalents: Bank savings accounts CDs U.S. Treasury bills Money market accounts B18-8

Bonds Basics of Mutual Fund Investing  Loan that investors make to corporations, governments or government agencies  Historically, not as volatile as stocks but fluctuate more in value than cash equivalents B18-9

Bonds Basics of Mutual Fund Investing  If held to maturity, return is from interest payments received and payment of face value  If sold before maturity, return is from interest payments received and difference between purchase price and sale price B18-10

Bonds Basics of Mutual Fund Investing  Factors that impact bonds: Interest rates Credit/default risk Inflation Market influences  Characteristics of bonds: Maturity Yield Credit quality Issuer B18-11

Stocks Basics of Mutual Fund Investing  Represent ownership in a corporation  Historically, stocks provide the highest long-term returns but with the greatest risk  Return consists of income (dividends) and appreciation or depreciation of stock price B18-12

Stocks Basics of Mutual Fund Investing  Factors that impact stock prices: News about the company Economic news and forecasts Interest rates Investor confidence  Characteristics of stocks: Capitalization Style Origination B18-13

Mutual Funds Basics of Mutual Fund Investing  Companies that pool money from investors and invest in a diversified portfolio of securities B18-14

Mutual Funds Basics of Mutual Fund Investing  Professional management  Diversification  Affordability  Liquidity B18-15

Mutual Funds Basics of Mutual Fund Investing  Advantages: Professional management Diversification Affordability Liquidity B18-16

Mutual Funds Basics of Mutual Fund Investing  Disadvantages: Lack of control Price uncertainty Costs despite negative returns B18-17

Mutual Funds Basics of Mutual Fund Investing  Categories: Money market funds Bond funds Stock funds B18-18

Mutual Funds Basics of Mutual Fund Investing  Ways funds earn money: Dividend payments Capital gains distributions Increase in net asset value B18-19

B18-20