ENGAGE IN THE MARKET WHILE MANAGING DOWNSIDE RISK

BUFFERED NOTE PRIMERAn Introduction to Buffered Notes

buff•er(verb) lessen or moderate the impact of (something)

WHAT IS A BUFFERED NOTE?Just as the name implies, a Buffered Note is designed to absorb, or “buffer”, some or all the downside performance of an underlying asset while still participating in upside performance. Generally, the per-formance of a Buffered Note is linked to a common stock index, such as the S&P 500 (SPX) or the Russell 2000 Index (RTY); however, the performance may also be linked to a geographic region, sector, industry, or other market reference.

Generally, when investing in Buffered Notes, the investor receives a single payment at maturity based on the point-to-point return of the underlying asset, meaning the difference between the final value of the underlying asset and its initial value. Returns can be capped or uncapped depending on the participation rate and individual terms of the investment. The note is protected against a decline in the underlying asset (subject to the credit risk of the issuer of the note) up to a predetermined amount.

Buffered Notes should be considered buy-and-hold investments and may not be appropriate for inves-tors who cannot hold them to maturity as they are not traded on an exchange, and there may be little to no secondary market available. Buffered notes typically do not pay interest or dividends during the term of the note.

HOW THE “BUFFER” IN A BUFFERED NOTE WORKSIf a Buffered Note provides a 20% buffer, the investor would receive their initial principal investment at maturity as long as the underlying asset does not exceed -20%, as shown in A and B in the figure below. If the performance of the underlying asset declines past this -20% buffer at maturity, the buffer would absorb the first 20% of the loss. The investor would be exposed to the difference, as shown in C in the figure below.

A Underlying declines by 10% at maturity, investorreceives 100% of their initial principal investment.

B Underlying declines by 20% at maturity, investorreceives 100% of their initial principal investment.

C Underlying declines by 30% at maturity, investorexperiences a 10% loss of their initial principal investment.

AB C

0%

-10%

-20%

-30%

Buffered Notes can complement traditional equity investments or serve as a tactical alternative to traditional ETFs or index-tracking mutual funds.

HOW BUFFERED NOTES FIT IN PORTFOLIOSOn the following pages, we will review two main types of Buffered Notes and their various features as well as payout scenarios. Buffered Notes commonly fit within the equity portion of a diversified portfolio strategy. They may be used to capitalize on a specific market view, or to gain exposure to a specific asset class or sector otherwise difficult to access.

Buffered Notes are designed to be held to maturity, and may also be appropriate for:

h Investors with a tactical view on the underlying asset.

h Investors looking for partial downside market protection.

h Investors who hold the underlying asset and are looking to mitigate market fluctuations.

h Investors willing to hold the Buffered Note to maturity and who are comfortable with the creditworthiness of the issuer.

Buffered Notes may not be appropriate if:

h Investors do not want to be exposed to any negative performance beyond the downside buffer of the underlying asset.

h Investors do not wish to forgo periodic dividend or interest payments on the underlying.

h Investors who are not willing to hold the Buffered Note to maturity.

h Investors who are not comfortable with the creditworthiness of the issuer.

HYPOTHETICAL EXAMPLE BUFFERED NOTEA traditional Buffered Note generally provides uncapped, 1-to-1 upside participation in the performance of an underlying asset, while offering some protection against a decline, typically 10-25% and subject to the issuer’s credit risk.

The hypothetical example below assumes the following terms:

The graph below illustrates the hypothetical payout of a Buffered Note with the above terms.

HYPOTHETICAL PAYOFF SCENARIO

Maturity: 3 yearsUnderlying Asset: S&P 500 Index Participation Rate: 100% (1-for-1 upside participation)Cap: UncappedBuffer: 20% downside buffer

This hypothetical example is for illustrative purposes only. Buffered Notes are sold only by prospectus and you should read the prospectus carefully before making an investment decision. Specific terms and conditions will vary for each Buffered Note offering, resulting in different payout structures and risks. Any payment is subject to the issuer’s credit risk. Typically, the issuer of the structured investment maintains a secondary market; however, there is no obligation to do so. Returns usually depend on being held to maturity and failure to do so could result in loss of principal.

Index performance is positive.At maturity, investor receives 100% participation inthe upside return of the S&P 500 (uncapped).

Index Return Buffered Note Return10% 10%25% 25%

Index performance is negative, but within the buffer.At maturity, investor receives their principal investment.

Index Return Buffered Note Return-5% 0%-20% 0%

Index performance is negative and exceeds the buffer.At maturity, investor experiences 1-to-1 negative performance beyond the 20% buffer.

Index Return Buffered Note Return-25% -5%-40% -20%

1

2

3

Underlying Asset (S&P 500 Index)

-40% -30% -20% -10% 0% 10% 20% 30% 40%

0%

1-for-1 upside marketparticipation (uncapped)

Downside buffer

1-for-1 loss beyondthe buffer

Buffe

red

Not

e Re

turn

s at M

atur

ity

Buffered Note ReturnS&P 500 Index ReturnFirst loss protection (20% buffer)

10%

-10%

-20%

-30%

-40%

20%

30%

40%

3

2

1

HYPOTHETICAL EXAMPLE ENHANCED RETURN BUFFERED NOTESometimes referred to as Buffered Return Enhanced Notes (BRENs) or Accelerated Market Participation (AMP) Notes, Enhanced Return Buffered Notes offer investors enhanced or leveraged upside partici-pation in the underlying asset, which is generally capped. Like traditional Buffered Notes, they provide some protection against a decline in the underlying asset, subject to the issuer’s credit risk.

The hypothetical example below assumes the following terms:

The graph below illustrates the hypothetical payout of an Enhanced Return Buffered Note with the above terms.

Maturity: 2 yearsUnderlying Asset: S&P 500 Index Participation Rate: 200% (2-for-1 upside participation)Cap: 30% maximum capBuffer: 20% downside buffer

This hypothetical example is for illustrative purposes only. Buffered Notes are sold only by prospectus and you should read the prospectus carefully before making an investment decision. Specific terms and conditions will vary for each Buffered Note offering, resulting in different payout structures and risks. Any payment is subject to the issuer’s credit risk. Typically, the issuer of the structured investment maintains a secondary market; however, there is no obligation to do so. Returns usually depend on being held to maturity and failure to do so could result in loss of principal.

Index performance is positive, but exceeds the maximum cap.At maturity, investor receives 200% of the upside return of the S&P 500 Index, up to the maximum capped return of 30% of their initial principal investment.

Index Return Buffered Note Return16% 30%25% 30%

Index performance is positive and below the maximum cap.At maturity, investor receives 200% of the upsidereturn of the S&P 500, up to the maximum cap.

Index Return Buffered Note Return5% 10%12% 24%

Index performance is negative, but within the buffer.At maturity, investor receives their principal investment.

Index Return Buffered Note Return-5% 0%-12% 0%

Index performance is negative and exceeds the buffer.At maturity, investor experiences 1-to-1 negative performance beyond the 20% buffer.

Index Return Buffered Note Return-25% -5%-40% -20%

Buffered Note ReturnS&P 500 Index ReturnFirst loss protection (20% buffer)Enhanced return potential

1

2

3

4

Downside buffer

2-for-1 upside market

Maximum cap

1-for-1 loss beyondthe buffer

Buffe

red

Not

e Re

turn

s at M

atur

ity

Underlying Asset (S&P 500 Index)

3

4

21

-40% -30% -20% -10% 0% 10% 20% 30% 40%

0%

10%

-10%

-20%

-30%

-40%

20%

30%

40%

ADDITIONAL CONSIDERATIONSTax Considerations

If a Buffered Note is held longer than one year, the gains or losses will generally be treated as long-term capital gains or losses.

Neither AAM, nor its affiliates and employees provide tax advice and investors should consult their tax advisor before investing in any Structured Product.

Statement Value ConsiderationsThe statement value of a Buffered Note will differ from traditional investments and will most likely be lower than the original principal amount invested on Day One. Statement values are an estimate of the current market value of the Buffered Note and are affected by a variety of factors, including: performance of the underlying asset, interest rate movements, market values, and time remaining until maturity.

It is important to remember statement values do not affect an investor’s return at maturity and should not be considered an exact valuation. Investors should refer to the terms outlined in the offering documents for complete details.

Risk ConsiderationsThe information contained herein is not intended to be a complete description of the terms, risks, and benefits associated with any specific Buffered Note offering. Buffered Notes are not principal protected and therefore investors may receive less than their initial investment at maturity.

Buffered Notes are considered complex and may not be suitable for all investors. Buffered Notes are sold only by prospectus and investors should read the prospectus and pricing supplement carefully before investing as they contain a detailed explanation of the risks, tax treatment, and other relevant information about the investment. Investors should consult accounting, legal, or tax advisors before investing. Structured products are sold through financial professionals.

Buffered Notes are unsecured obligations of the issuer, and therefore subject to risk of default. The issuer’s creditworthiness is an important consideration in evaluating a structured product. Typically, the issuer of a Structured Product maintains a secondary market; however, there is no obligation to do so.

The inflation-adjusted value of a Buffered Note may be less than the original investment at maturity. Additional factors which may affect the investment value of the Structured Product include: interest rates, volatility of the underlying asset, liquidity, and time remaining until maturity.

Advisors Asset Management, Inc.Advisors Asset Management, Inc. (AAM) is a trusted resource for financial professionals across the U.S. offering competitive and objective access to the Structured Products market, maintaining a flexible and scalable platform which provides broad access to offerings from a wide selection of issuers.

Deeply rooted in the Capital Markets since 1979, AAM has provided financial professionals with comprehensive access to the fixed income market in conjunction with simple and efficient trading support. Our long-standing relationships and Capital Markets expertise allows establishment and maintenance of an attractive inventory of securities, offering advisors the opportunity to capitalize on pricing, yields, and quality issues.

AAM works closely with your financial professional, providing quality investment ideas and portfolio solutions. In addition to the Capital Markets, AAM offers access to unit investment trusts (UITs), mutual funds, managed accounts, and ETFs.

This brochure is for informational purposes only and does not pertain to any 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.

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 publication and should understand that statements regarding future prospects may not be realized. Past performance does not guarantee future performance. All expressions of opinions are subject to change without notice.

©2020 Advisors Asset Management, Inc. All rights reserved.Advisors Asset Management, Inc. (AAM) is a SEC registered investment advisor and member FINRA/SIPC.

18925 Base Camp Road, Monument, CO 80132 | (888) 969-2663 | www.aamlive.com | CRN: 2020-0723-8452 R (Link: 6755)

Next StepsTo learn more about Buffered Notes and how they may play a role in your investment plan, contact your financial advisor.