MDB 401(k)

MyEZ401k investments

Mydiscountbroker.com Self-Directed Discount Brokerage Accounts

Unparalleled 401k Investment Choice

Low Fees

Online Access

Additional Mydiscountbroker.com Services

Mutual Funds Are Popular With 401k Investors

Risk, Return, and Investing

Important Information…

Common Investment Types

Common Investment Terms

Common Investment Objectives

Mydiscountbroker.com self-directed brokerage accounts

With MDB401k, each one of your 401k plan participants receives a self-directed brokerage account with Mydiscountbroker.com to direct their 401k contributions.

-- MDB401k plan participants will have access to Mydiscountbroker's trading platform, MyView.

-- MDB401k plan participants can use FundFinder and FundFinder Pro to search for mutual funds best suited to stated investment objectives.

-- Unless otherwise directed by the plan participant, MDB401k contributions are placed in a Money Market account. The participant can chose to move money from this account at any time.

-- The authorization as to who can move funds from the money market account is established by the participant within the Power of Attorney Agreement each participant must complete for Mydiscountbroker.com.

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Unparalleled 401k Investment Choice

With Mydisocuntbroker.com self-directed brokerage accounts, MDB401k plan participants have access to...

-- Stocks (including your company's listed stock): All major exchanges including NYSE and NASDAQ as well as OTC markets.

-- Options: Covered calls

-- Foreign Securities: Both listed and OTC

-- Mutual Funds: Over 10,000 load and no-load mutual funds including major funds families such as Vanguard, Franklin, Janus, and Putnam load and no-loads.

-- Bonds: Corporate, municipal, and zero coupon

-- Certificates of Deposit: Government obligations, UIT's

To view a current listing of available investments as well as prospectuses and other information, go to the main Mydiscountbroker.com website and select the "Getting Started" then "Product".

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Low Fees

Mydiscountbroker.com charges just $12 per stock transaction of up to 5,000 shares during regular market hours.

-- Extended hours trading is available for an additional charge; see below)

-- Free real-time quotes and account information are provided throughout the Mydiscountbroker.com site. (Streaming quotes are available for an additional charge through NexTrend; see below.)

-- Free investment information is available through the Mydiscountbroker.com site.

-- The Mydiscountbroker.com Mutual Fund Center lets MDB401k plan participants choose from more than 6,000 mutual funds -- many of them no-load, no transaction fee funds -- from top fund families.

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Online Access

Mydiscountbroker.com provides MDB401k plan participants with 24 hour a day, seven days a week access to their 401k investment accounts from any location connected to the Internet.

-- Access to real-time quotes and account information.

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Additional Mydiscountbroker.com Services

Mydiscountbroker.com gives MDB401k plan participants the option of signing up for additional services on a participant-by-participant basis. Participants who use the supplementary services pay for their use themselves. There is no cost to the employer or to plan participants not using the service(s).

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Mutual Funds Are Popular With 401k Investors

Mutual fund investments are popular with 401k investors for several reasons:

-- Most mutual fund investments convert quickly and easily to IRA rollover accounts held at the fund company. The investor can keep the same investments and pursue the same investment strategy as with the 401k even after terminating employment.

-- Mutual funds have exchange privileges that allow investors to transfer money between portfolios within a fund family at no charge or for only a nominal bookkeeping charge.

-- Mutual funds are priced on a daily basis, and it's easy to order printed statements.

-- Mutual funds are usually offered in more than one class of shares. Investors can weigh investment amount, anticipated holding period and other relevant factors in deciding which class of shares to purchase.

-- It's easy for investors to access historical and current investment performance and portfolio details by calling the mutual fund companies directly and speaking with an account service representative or requesting prospectuses on the investments or by using any of MyDB's free services or NexTrend.

-- There are more than 6,500 different mutual fund portfolios available today -- that's double the number available just 10 years ago.

-- An estimated 67 million U.S. households -- nearly 25% -- invest in mutual funds, either directly or through a company-sponsored 401k plan.

-- "Generation X" (ages 18 to 30) has the lowest level of household assets yet the second highest proportion of financial assets in mutual funds.

The flexibility afforded by mutual fund investments is very important to 401k investors, whose goals and retirement savings strategies can change dramatically during the often decades they participate in various 401k plans.

Important Information...

-- All mutual fund purchases are subject to a three (3) business day holding period; no exchange or liquidation is allowed within this three-day period. No-load, no transaction fee funds redeemed within 30 days of the purchase date may incur certain transaction fees. For regulatory reasons, investing in mutual funds is available only to U.S. citizens and permanent residents of the United States.

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Risk, Return, and Investing

Investing is a risk-return dichotomy. Mutual fund money market investments are considered very safe, and offer a relatively low, predictable rate of return, although that return, like any, cannot be guaranteed. At the other end of the risk-return dichotomy are mutual funds that can be extremely violate, offering investors the possibility of dramatic gains (and losses). Mutual fund investments can lose value in a volatile market -- just as they can gain value.

Shares of mutual funds are not deposits of or guaranteed or endorsed by, any financial institution; they are not insured by the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, or any other agency, and they involve risk, including the possible loss of the principal amount invested.

In general, the more volatile a mutual fund investment (i.e., the less predictable its rate of return), the more POTENTIALLY lucrative its earnings. More volatile investments are considered to be more risky investments.

The investment return and principal value of an investment will fluctuate. An investor's shares, when redeemed, may be worth more or less than when purchased.

According to the Investment Company Institute, the mutual fund industry's trade association, for the twelve months from July 30, 1999 to July 30, 2000, approximately 42% of assets in the average stock mutual fund were bought or sold, meaning only a bit more than half the money in the fund actually stayed put for that period. That is up from approximately 40% turnover for the 12 months prior. Some retirement plan experts believe some of this fast trading is occurring in 401k plans.

According to most academic studies, frequent trading of mutual funds to squeeze out a few percentage points of gain a bad idea. Studies confirm what has been suspected by professional money managers for years -- namely, frequent mutual fund trading usually hurts long-term returns.

As reported in The Wall Street Journal, one recent study* by University of California, Davis assistant professor Terrance Odean and professor Brad Barber found that investors who traded mutual funds most frequently had the worst returns for a five-and-a-half year period ending December 1996. During that period the average household earned an annualized return of approximately 15.3% from their mutual fund investments. Frequent mutual fund traders earned an average annualized return of only 10% for the same period.

>*Source: The Wall Street Journal, September 22, 2000, Lucchetti, Aaron, "Frequent Trading Worries Fund Firms."

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Important Information...

Nothing herein is an offer or solicitation to sell securities, products or services in any jurisdiction wherein their offer or sale is not qualified or exempt from regulation.

-- For mutual fund information, investors can contact the mutual fund companies directly or go through Mydiscountbroker.com.

-- Many mutual fund companies offer online viewing of prospectuses.

-- Fund prospectuses are detailed descriptive documents about investments. They are published by the mutual fund company housing the investment and list all fees involved as well as other important information. They must meet stringent disclosure rules.

-- Fund prospectuses are always FREE and should be read carefully before investing any funds.

-- A fund's past performance never guarantees its future results. Performance history should only be one of several determining factors in choosing your plan's investments.

-- Shares of mutual funds are not deposits of, or guaranteed or endorsed by, any financial institution; they are not insured by the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, or any other agency, and they involve risk, including the possible loss of the principal amount invested.

-- The investment return and principal value of an investment will fluctuate. An investor's shares, when redeemed, may be worth more or less than original cost.

-- All mutual fund purchases are subject to a three (3) business day holding period; no exchange or liquidation is allowed within this three-day period. No-load, no transaction fee funds redeemed within 30 days of the purchase date may incur certain transaction fees. For regulatory reasons, investing in mutual funds is available only to U.S. citizens and permanent residents of the United States.

-- Many load mutual funds are offered in more than one of the three classes of shares (A, B and C). Classes differ in their pricing conventions and/or annual fees. Because there is wide variation even within a single class of mutual funds, reading prospectuses is the only way to be certain of particular investment's pricing and fee structure, regardless of its class. In deciding whether to choose a particular class of shares for the company plan, it is important to consider the amounts your employees will likely be investing, the shares' anticipated holding period and other relevant factors explained in each investment's prospectus.

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Common Investment Types

Money Market Fund:
A relatively low-risk mutual fund (when compared with others) managed to maintain a stable $1 share price/NAV. Investments in these funds are neither insured not guaranteed by the U.S. government, and there can be no assurance that a fund will be able to maintain a stable net asset value of $1 per share.

Bond Funds (aka, Fixed Income Funds):
Mutual funds that have higher risks than money market funds but seek to pay higher yields. Not restricted to high-quality or short-term investments (as are Money Market Funds). Because there are many different types of bonds, bond funds can vary dramatically in their risks and rewards. Long-term bond funds invest in bonds with longer maturities (a longer length of time until final payout). The values of long-term bonds can go up and down more rapidly than those of shorter-term bond funds.

Stock Funds (aka, Equity Funds):
Mutual funds that generally involve more risk than Money Market or Bond funds -- but they also can offer the highest returns. A Stock Fund's value (NAV) can rise and fall quickly over the short term, but historically stocks have performed better over the long term than other types of investments. Not all stock funds are the same (e.g., Growth Funds focus on stocks that may not pay a regular dividend but have the potential for large capital gains; other specialize in a particular industry, such as technology).

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Common Investment Terms

Expense Ratio:
The annual fee charged to mutual fund shareholders (usually as a percentage of total investment) for the administration, operation and management expenses associated with a particular fund. May include management fees, 12b-1 fees and other fees, but does not include sales charges. Shows the actual amount that a fund takes out of its assets each year to cover its expenses.

Index:
Indicators of trends in markets, sections of the economy, or other economic indicators, such as precious metal or Treasuries. Some of the most common indices include the Dow Jones Industrial Average, the NASDAQ Composite and the S&P 500.

Investment Objective:
Indicates a particular fund's investment goals, based on the wording in the fund's prospectus.

Mutual Fund:
A collection of money invested in a group of assets (stocks, bonds and other securities) and managed by an investment company (a mutual fund company or other). The combined holdings of the stocks, bonds and other securities and assets the fund owns are known as it s portfolio. Each investor owns shares of the portfolio; each shares represents a percentage ownership in the portfolio holdings.

Net Asset Value (NAV):
The per share market value (price) of a mutual fund; in general, the price offered to purchase one share of the mutual fund. The NAV in most cases is calculated b including the closing day's prices of all securities held in a particular fund, plus all other assets owned by the fund (including cash), subtracting all liabilities of the fund, and then dividing the sum by all the outstanding shares of the fund on that given day. If the fund is a no-load fund, then the offering per share price for the fund and the NAV per share will be the same.

Prospectus:
A fund's formal written statement, generally issued on an annual basis. In this statement the fund sets forth is proposed purposes and goals, and other facts (such as performance history and investment objective) that an investor should know in making an informed decision.

S&P 500:
The Standard & Poor's 500; a market value weighted index of 500 blue chip stocks. An index that's considered to be an overall benchmark of the market as a whole.

Ticker Symbol:
The letters assigned to a particular stock, option or mutual fund used to identify that particular security for trading or quoting purposes.

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Common Investment Objectives

Money Market:
Seeks stable income by investing in short-term IOU's. Yields reflect variations in prevailing short-term interest rates.

Government Bond--General:
Offerings that pursue income by investing in a combination of mortgage-backed securities, treasuries and agency securities.

Corporate Bond--General:
Seek income by investing in fixed-income securities, primarily investment-grade corporate bonds.

Corporate Bond--High Yield:
Seek income by generally investing 65% or more of assets in bonds rated below BBB. The price of these issues is generally affected more by the condition of the issuing company (similar to stock) than by the interest rate fluctuation that usually causes bond prices to move up and down.

World Bond:
Seek current income with capital appreciation as a secondary objectives by investing primarily in debt obligations issued throughout the world. These bonds are frequently foreign government issues.

Balanced:
Seek both income and capital appreciation by investing in a generally fixed combination of stocks and bonds. These funds generally hold a minimum of 25% of their assets in fixed-income securities at all times.

Asset Allocation:
Income and capital appreciation are dual goals for funds with this objective. Managers often use a flexible combination of stocks, bonds and cash; some, but not all, shift assets frequently based on analysis of business-cycle trends.

Equity-Income:
Funds expected to pursue current income by investing at least 65% of their assets in dividend-paying equity securities.

Growth and Income:
Growth of capital and current income are near-equal objectives for these funds. Investments are typically selected for both appreciation potential and dividend-paying ability.

Growth:
Funds that pursue appreciation by investing primarily in equity securities. Current income, if considered at all, is a secondary concern.

Emerging Growth:
Seek rapid growth of capital and that may invest in emerging market growth companies without specifying a market capitalization range. They often invest in small or emerging growth companies and are more likely than other funds to invest in IPS's or in companies with high price/earnings and price/book ratios. They may use such investment techniques as heavy sector concentrations, leveraging and short-selling.

Small Company:
Seek capital appreciation by investing primarily in stocks of companies with market capitalization of less than $1 billion. In this objective, income payments from dividends are unlikely.

World Stock:
Funds that invest primarily in equity securities of issuers located throughout the world, while maintaining a percentage of assets (normally 25% to 50%) in the United States.

Foreign Stock:
Funds that invest primarily in equity securities of issuers located outside of the United States.

Specialty:
Funds that invest primarily in equity securities of issuers within a narrow industrial category (automotive, travel, electronics, etc.).

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