UnionBanc Investment Services

Mutual funds are investment vehicles operated by professional money managers that invest in a diversified basket of securities, which can include individual stocks, bonds, money market instruments and other assets. They offer the average investor a simple way to diversify their portfolio without having to purchase and/or manage a number of individual securities.

Generally speaking, the low minimum investment required for many mutual funds makes them accessible to a wide range of investors. For these reasons, a mutual fund is one of the most popular investment vehicles.

Exchange traded funds or ETFs are similar to mutual funds in that they represent a diversified portfolio of stocks and bonds. But ETFs are traded on the stock exchange – which means the price of shares is determined by the current market value, while a mutual fund’s share price is calculated once a day. There is no minimum investment required other than the cost of one share.

An annuity is an investment contract with an insurance company which manages your investment on your behalf. You can buy an annuity with a single payment or make periodic payments. Annuities have two broad phases:

• During the accumulation phase, you pay into your annuity and the earnings in your account grow on a fully tax-deferred basis.
• During the distribution phase, typically after age 59-1/2, you receive the full value of your account – principal and interest – in a lump sum or regular payments. Withdrawal of interest earned prior to age 59-1/2 may be subject to a 10 percent federal tax penalty as well as a surrender penalty. Principal and interest are NOT guaranteed for variable annuities.

We offer three types of annuities:

• A fixed annuity pays a set rate of return on your money – guaranteed for a specific time period – so you are protected against market volatility.
• A fixed index annuity offers market participation, opportunity growth and principal protection in the event of a down market.
• A variable annuity gives you the opportunity to earn higher returns by investing in a diversified portfolio of securities. It’s subject to greater volatility, however, including the risk of loss of principal.

A fixed annuity might be a good choice for a conservative investor in or near retirement who wants guaranteed income. A variable annuity could help a younger or more aggressive investor build a retirement nest egg.

529 plans are tax-advantaged savings plans specifically designed to pay for future education costs. Legally known as “qualified tuition plans,” 529 plans are sponsored by states, stage agencies or educational institutions.

Investors should carefully consider the investment objectives, risks, and charges and expenses associated with 529 plans prior to investing. Additional information about 529 plans is available in the issuer’s Official Statement which should be read prior to investing. A copy of the Official Statement can be obtained by contacting your financial advisor or by calling 800-634-1100.

Prior to investing, 529 plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. By investing in a plan outside your state of residence, you may lose available state tax benefits. Make sure you understand your state’s tax laws to get the most from your plan. 529 college savings plans allow earnings to accumulate tax-free until withdrawn and withdrawals for qualified higher-education expenses are also tax-free. If you make a withdrawal for any other reason, the earnings portion of the withdrawal will be subject to both state and federal income tax, and possibly a 10 percent federal tax penalty.

401(k) plans are savings and retirement plans offered by employers. 401(k) plans offer tax breaks for employees as 401(k) contributions are taken before federal or state taxes are withdrawn.

The Bank Deposit Sweep Program (BDSP) allows cash balances (or free credit balances) to be automatically “swept” into an interest-bearing deposit account at U.S. Bank, N.A.

Once swept into the BDSP, funds are covered by FDIC insurance up to the permissible limits. Uninvested funds swept back into your UBIS brokerage account can then be used to purchase stocks, bonds, mutual funds and other securities.

For full disclosure read the Bank Deposit Sweep Program section of UnionBanc Investment Services Commission & Fee Schedule, Disclosures, and Service Agreements (PDF). BDSP funds are FDIC-insured up to applicable FDIC limits when they’ve been swept into U.S. Bank deposit accounts and are SIPC-insured up to applicable SIPC limits when they’ve been swept into a UnionBanc Investment Services (UBIS) brokerage account. In the event U.S. Bank fails, you’ll be an unsecured creditor of U.S. Bank in connection with your deposit in a BDSP account. The FDIC and SPIC are two separate, unrelated insurance entities and have different types of coverage. For more information about FDIC coverage, visit www.FDIC.gov; for more information about SIPC coverage, visit www.SIPC.org.

You’re responsible for monitoring the total amount of deposits you have with U.S. Bank to determine the extent of FDIC insurance coverage available to you. Depending on the number of deposits you have at U.S. Bank apart from your BDSP deposit, you may wish to limit deposits in the BDSP. Although your funds in the BDSP are held in deposit accounts at U.S. Bank, N.A., you can only access your funds through your UBIS brokerage account.

Bank products available through U.S. Bank, N.A., are FDIC-insured within permissible limits.