Margin Can Be an Advantageous Tool

Margin loans offer several potential benefits, including:

• Ability to continue investing: You can continue to invest for potential growth and income, and defer any capital gains taxes that might result from selling securities.
• Accessibility: Once a margin loan is established, you can borrow available funds 24 hours a day, seven days a week. You can access funds from your margin loan via check, debit card, wire, or ACH transfer.
• Flexibility: You can borrow up to 50% or more of the market value of many types of securities, including fixed income securities (U.S. government and municipal securities, corporate bonds, and agency bonds), U.S. listed common and preferred stocks, unit investment trusts, and U.S. mutual and exchange-traded funds (with some restrictions)¹.

Margin Terms

• You can repay loan balances by depositing cash or selling securities.
• If you wish, dividend and interest payments can automatically reduce your loan balance.
• Typically, there is no set repayment schedule as long as the required value of investments in your account is maintained. You can choose to pay off the loan balance at any time.
• Interest payments are not required and are added to your balance monthly. Of course, interest is still owed on the loan until it is fully repaid.

The Janney Margin Lending Agreement provides specific details about our margin lending program. We recommend reading the agreement carefully to understand the program terms fully.

Risks of Margin Borrowing

Margin borrowing is not ideal for all investors. Margin borrowing risks include the following:

• You will need to keep your account in line with monthly maintenance requirements. If the value of your investments declines, you may face a margin call.
• A margin call occurs when your account value falls below the required minimum “security collateral value” or maintenance level. You are then required to add additional cash or securities until the value of your investments is brought up to the minimum maintenance level. There is no extension of time on a margin call.
• If you fail to meet the minimum requirements in your account, Janney may be forced to sell some or all of your securities with or without your approval and can do so without notice to you.
• If securities are held on margin on the record date for a proxy vote, you will not be entitled to vote by proxy for those securities.
  

Minimizing Margin Borrowing Risks

There are several ways to minimize the risks of margin borrowing. You can consider:

• Selecting less volatile securities as margin collateral
• Borrowing less than the maximum amount permitted against your investments
• Reviewing your portfolio carefully, especially when markets are volatile
• Repaying your margin loan and any related interest as quickly as funds are available
• Diversifying your portfolio to help minimize portfolio fluctuation

Contact your Financial Advisor to determine if a margin loan is right for you.