AAM Structured CD Brochure1

Structured Certificates of Deposit

Diversification

Seeking principal protection Customization

Market participation

Intelligent Investments. Independent Ideas.

Structured Solutions for Almost Any Portfolio, in Almost Any Market Many investors want to preserve their capital and limit downside risk, without sacrificing the ability to participate in upside market movements. Structured Certificate of Deposits (CDs) can be one solution. It is important to note that Structured CDs are not suitable for all investors and are sold only by prospectus.

Overview of Key Features of Structured CDs

Structured CDs combine the safety of an FDICinsured Certificate of Deposit1 (known as the protection component) with the potential for supplemental returns based on the performance of a second asset (known as the growth component).

Because they offer exposure to a variety of investment types and market sectors, structured CDs can often be targeted at your unique investment objectives, risk tolerance, and market views, and they have the potential to complement other parts of your portfolio.

The growth component is an option linked to the

Structured CDs can play a role in almost any portfolio and can be particularly attractive to investors seeking exposure to specific markets or sectors, while helping to manage downside risk.

Capital Preservation: The Protection Component

How Structured CDs Are Created A typical structured CD is created when the issuer combines a zero-coupon CD with an option on the underlying asset, such as a basket of stocks or a market index. For example, if an investor makes an initial investment of $1,000, the issuer may allocate $900 toward the discounted value of the zero-coupon CD (the protection component), and the remaining $100 can then be allocated to an option on the underlying asset (the growth component).

1

2

Structured CDs are issued in $1,000

denominations.

The protection component – the CD – provides

100% principal protection when held to maturity. performance of an underlying asset, such as a basket of securities, market index, or other market benchmark. Any supplemental return on a structured CD, above your initial investment, depends on the performance of the underlying asset. The S&P 500®, Dow Jones Industrial AverageSM, Dow Jones AIG Commodity Index®, US Dollar Index®, and emerging market indexes are among the benchmarks used to determine the return on the growth component.

Structured CDs offer the potential to provide investors with peace of mind. With 100% principal protection and FDIC insurance1, even if the growth component has a negative return, your initial investment – the principal amount of your CD – is protected, as long as you hold it to maturity.

Please see page 5 for more information regarding the risks associated with Structured CDs.

Please note that the basic FDIC Deposit Insurance coverage limits are: Single Accounts (owned by one person) $250,000 per owner; Joint Accounts (two or more persons) $250,000 per co-owner; IRAs and certain other retirement accounts $250,000 per owner; and Trust Accounts $250,000 per beneficiary subject to specific limitations and requirements. These deposit insurance coverage limits refer to the total of all deposits that an accountholder (or accountholders) has at each FDIC-insured bank. These are the most common ownership categories that apply to individual and family deposits, and assumes that all FDIC requirements are met. Additional information is also available at: http://www.fdic.gov/deposit/deposits/insured/ownership.html.

Market Participation: The Growth Component Your return, if any, above your initial investment – comes from the growth component, and is determined by the performance of the index or other underlying asset to which this component is linked.

There may be limits on your upside participation as a trade-off for the security of the principal protection component, including one or more of the following features:

Structured CDs generally specify a participation

rate, which is the percentage of any appreciation in the growth component included in your total return. Some structured CDs offer 100% participation.

Some structured CDs include an upper cap

on participation in any appreciation of the growth component. For example, you may have 100% participation in appreciation of the underlying asset, capped at a maximum of 75% return on your initial principal.

Some structured CDs guarantee a minimum

return, over and above your principal.

It is important to remember that both principal protection and potential return depend on holding the structured CD to maturity.

The structured CD examples on pages 6 and 7 can help you understand how structured CDs work.

The Difference Between a Regular CD and a Structured CD For illustrative purposes only Growth Component: Return Depends on Performance of Underlying Index or Other Asset Guaranteed Interest

CD

2

Return

Potential Return

Initial Investment

Initial Investment

Regular CD

Structured CD

Protection Component: Core CD, FDICInsured2

Please note that the basic FDIC Deposit Insurance coverage limits are: Single Accounts (owned by one person) $250,000 per owner; Joint Accounts (two or more persons) $250,000 per co-owner; IRAs and certain other retirement accounts $250,000 per owner; and Trust Accounts $250,000 per beneficiary subject to specific limitations and requirements. These deposit insurance coverage limits refer to the total of all deposits that an accountholder (or accountholders) has at each FDIC-insured bank. These are the most common ownership categories that apply to individual and family deposits, and assumes that all FDIC requirements are met. Additional information is also available at: http://www.fdic.gov/deposit/deposits/insured/ownership.html.

3

Are Structured CDs Right For You? Factors to Consider Why Investors Choose Structured CDs Principal protection. The FDIC-insured3 100% principal protection component can help cushion a portfolio against market declines.

Customization. There are many different structured CDs offering a range of maturities, participation rates, exposure to different asset classes, and other features. This can enable investors to select a structured CD that fits well with their individual investment objectives, attitudes toward risk, investment time horizon, and views on the direction of markets.

Market participation. Unlike regular CDs, structured CDs provide the opportunity for market participation in the performance of the underlying asset, without sacrificing the security of a CD.

Diversification. Because a wide range of underlying assets can be linked to the growth component, structured CDs can offer participation in asset classes and investment strategies that might be difficult to access through direct investment.

For example, it may be possible to select a structured CD that provides market exposure to specific economic sectors, geographic regions, emerging markets, commodities, or currencies. Some structured CDs offer exposure to asset classes with low correlation to traditional investments, offering the potential to lower overall portfolio volatility.

Survivor option. Many structured CDs offer a survivor option. In the event of death, your survivor or estate may be entitled to receive 100% of the principal amount of the CD, even before maturity. The survivor option is subject to conditions established by the issuer, and you should read the prospectus carefully.

Structuring solutions for individual investment objectives Market Participation benefit from upside market moves

Customization for individual objectives, risk profiles, market views

4

3

See footnote on page 5.

Diversification potential to enhance return and reduce volatility

Principal Protection hedge against market declines

Be Aware of the Risks As with any investment, structured CDs carry risks, and you should carefully consider them before investing. Among the risks are: Liquidity and pricing risk. Structured CDs are generally not traded on any exchange, or may be only thinly traded, and can be difficult to price.

The lack of a liquid secondary market for structured CDs makes them inappropriate for investors who may not be able to hold them to maturity.

Market risk. Volatility and other market forces can affect the value of the asset underlying the growth component, both during the term of the structured product and at maturity, and this can affect your return. Historical performance of the underlying asset class is no guarantee of future performance.

Participation limits. Some structured CDs limit participation in any appreciation of the underlying asset, capping potential return. In addition, even if the underlying asset is linked to equities, investors will not receive any dividend income.

Inflation risk. Even with 100% principal protection, the value of a structured CD at maturity may be less than your inflation-adjusted original investment.

Credit risk. While structured CDs are FDIC-insured up to applicable limits, the issuer’s creditworthiness is still an important consideration, particularly for structured CD investments above the limits of FDIC insurance.

3

Tax considerations. There are important tax considerations related to structured CDs, both during the term of the product and at maturity. You should consult your tax advisor before investing in any structured CD. Structured products are NOT suitable for all investors and are sold only by prospectus. Structured products typically pay an interest or coupon rate substantially above the prevailing market rate. Structured products also frequently cap or limit the upside participation in the reference asset, particularly if some principal protection is offered or if the security pays an above-market rate of interest. Attendant risks may include loss of principal and the possibility that at expiration the investor will own the reference asset at a depressed price. Other factors that may affect the investment value of the structured product include: interest rates, volatility of the underlying asset, liquidity and time remaining until maturity.

While structured products pay interest similar to debt securities, they often exhibit very different profit and loss potential. The profit and loss potential of many structured products is more akin to an option contract, particularly those where principal invested is at risk from market movements in the underlying security. Structured investments are generally backed by the issuing firm. Typically, the issuer of the structured investment maintains a secondary market; however, they are not obligated to do so.

Please note that the basic FDIC Deposit Insurance coverage limits are: Single Accounts (owned by one person) $250,000 per owner; Joint Accounts (two or more persons) $250,000 per co-owner; IRAs and certain other retirement accounts $250,000 per owner; and Trust Accounts $250,000 per beneficiary subject to specific limitations and requirements. These deposit insurance coverage limits refer to the total of all deposits that an accountholder (or accountholders) has at each FDIC-insured bank. These are the most common ownership categories that apply to individual and family deposits, and assumes that all FDIC requirements are met. Additional information is also available at: http://www.fdic.gov/deposit/deposits/insured/ownership.html.

5

Example of Structured CDs: 1 BRIC nations (Brazil, Russia, India and China).

This investment allows you to participate in the positive performance of the index while protecting your principal investment.

You are looking to add currency exposure to your portfolio’s asset allocation model. You may consider a structured CD tied to the positive performance of an equally weighted basket of currencies from the

Hypothetical Terms: Term:

5.5 Year

Denomination:

$1,000

Underlying Asset:

Equally weighted basket of currencies from the BRIC nations (Brazil, Russia, India and China)

Principal Protection:

100% when held to maturity

Participation Rate:

100%

Return:

Principal x (Participation Rate x Appreciation of Referenced Index Basket); but not less than 0.00%

Hypothetical Return Scenarios

Investment Return

60% 50% 40%

This example is for illustrative purposes only and does not constitute a guaranteed return or performance.

Actual investment may have different terms. There are numerous risks associated with investing in commodity related securities. Contact your financial professional.

30% 20%

Principal Protection

-30%

-20%

10%

-10%

Negative index performance results in return of principal

Index Performance

6

10%

20%

30%

40%

50%

60%

Index Performance

Return Equation

Investor Return

40%

$1000 x (100% x 40%) = $400

$1400 (40%)

20%

$1000 x (100% x 20%) = $200

$1200 (20%)

10%

$1000 x (100% x -10%) = -$100

$1000 (0%)

30%

$1000 x (100% x -30%) = -$300

$1000 (0%)

Example of Structured CDs: 2 of the broad U.S. equity market. This investment allows you to participate in the positive returns of the U.S. euqity market while offering a minimum return feature as well as a limit on the upside participation.

You are a moderately conservative investor who wants to increase your portfolio’s exposure to the global markets. You may consider a minimum return structured CD tied to the positive movement

Hypothetical Terms: Term:

5 Year

Denomination:

$1,000

Underlying Asset:

S&P 500 IndexÂŽ

Principal Protection:

100% when held to maturity

Participation Rate:

100%

Minimum Return:

5% (1% per annum)

Return:

Principal x (Participation Rate x Appreciation of Referenced Index Basket); but not less than 0.00%

Capped Value:

30%

Hypothetical Return Scenarios

Investment Return

40%

20%

Principal Protection Plus Minimum Return

-30%

-20%

Capped Value

30%

10% 5% -10%

Negative index performance results in return of principal, plus mimimum return

Basket Avg Performance

10%

20%

30%

40%

This example is for illustrative purposes only and does not constitute a guaranteed return or performance.

Actual investment may have different terms. There are numerous risks associated with investing in commodity related securities. Contact your financial professional.

Index Performance

Return

Investor Return

35%

$1000 x (100% x 35%) = $350

$1300 (30%) Capped

20%

$1000 x (100% x 20%) = $200

$1200 (20%)

0%

$1000 x (100% x 0%) = $0

$1050 (5%) Minimum Return

10%

$1000 x (100% x -10%) = -$100

$1050 (5%) Minimum Return 7

Taking the Next Step To learn more about how Structured CDs might play a role in your investment plan, contact your Investment Advisor. AAM remains as dedicated today as we were when we were founded 30 years ago to developing innovative investment solutions that you and your advisor can leverage to meet your investment needs.

Investors should carefully read the prospectus and pricing supplement prior to investing which contains a detailed explanation of the risks, tax treatment, and other relevant information about investment.

Additionally, investors should consult their accounting, legal or tax advisors before investing. Structured products are sold through financial professionals.

This report is provided for informational purposes only and does not pertain to any fixed income security product or service and is not an offer or solicitation of an offer to buy or sell any product or service. Unless otherwise stated, all information and opinion contained in this publication was produced by Advisors Asset Management, Inc. (AAM) and other sources believed by AAM to be accurate and reliable. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications.

Chart/Graph Disclosure: The charts and/or graphs do not reflect past or current recommendations made by AAM and should be considered academic treatments of empirical data. They are designed for educational purposes only and should not be used to predict security prices or market levels. Any suggestion of cause and effect or of the predictability of economic or investment cycles is unintentional. This report should only be considered as a tool in any broker, dealer, or advisor’s investment decision matrix. Investors should consult their financial advisor when applying the assumptions of the chart or graph.

All expressions of opinions are subject to change without notice. All AAM employees, including research associates, receive compensation that is based in part upon the overall performance of the firm. AAM may make a market in or have other financial interests in any given security with which this analysis suggests may benefit from its conclusions. Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Past performance does not guarantee future performance.

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