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SEITLEMENT AG REEMENTThis settlement agreement ("Agreeme nt") is entered into between Edward D. Jones &Co., L.P. ("Edward Jones"), a licensed sec urities broker-dealer, on one side and the People ofthe State of California, by and through Atto rney General Edmund G. Brown Jr. or his designatedrepresentative ("Attorney General"), on the ot her side (co llectively the "Part ies").RECITA LSABackground. Whereas, in 2004, the Atto rney General commenced aninvestigation into certain arrangements between various mutual fund co mplexes ("MutualFunds") and a number of securities broker- dealers ("Bro ker-Dealers") whereby Broker-Dealersreceived conside ration from the Mutual Funds in connection with ma rketing the co mple xes'mu tual fund sha res . Depending on the particular Mutu al Funds and Broker-Dealers invo lved,this market ing included, but was not limited to: (i) placem ent on a "preferred list," in a "partnersprogram," o r otherwise being identified as a complex to be accorded a higher degree ofmarketing support than complexes not furni shing such consideration; (ii) obtaining access toBroker-Dealer representatives, incl uding through the Broker-Dealers' intrane t website, in orderto promote the funds; and/or (iii) promotions in communicatio ns with Broker-Dealers' customerssuch as on a Broker-Dealer's internet webs ite or in custome r newsletters ("She lf Sp aceArrangements").B.The Attomev General's Investigat ion of Edward Jones . Whereas, on May 19,2004, the Attorney Ge nera l subpoenaed Edward Jone s regarding the "offer and sale of shares inmutual funds as may pertain to poss ible vio lations of state laws , including wi thout limitationsthe state 's securities law ." The investigation included all of the facts and circumstances set forth

in Paragraph A and with respect to Edward Jones: (1) the receipt of revenue sharing, directedbrokerage, contest and trip reimbursement, and other consideration and business arra ngem entswith certain mutua l fund complexes that Edward Jones labeled as Preferred Fund Fa milies; (2)the incentives to Edward Jones ' brokers (referred to as "Investment Representatives") andowners from the foregoing arrangements; (3) the adequa cy of Edward Jones ' disclosures to theinvesting public of the forego ing arrangement (t'the Investigation").C.The Attorn ey General's Enforcement Action. Wher eas, followin g theInvestigation, on Decembe r 20, 2004, the Attorney General filed suit, pursuant to CaliforniaGovernment Code §§ 12658 and 12660, against Edward Jones alleging violati ons of the antifraudprovisions of the Corporate Securities Law of 1968 ("CSL") during the period from January I ,200 1 through December 31, 2004 titled The Pe ople ofthe State of Califom ia v. Edward D. Jones& Co. in Sacramento County Superior Court (Case No. 04AS05097) ("Action"). Edward Joneshas denied the allegations in the Action.D.Related Actions by Edward Jones. Where as, Edward Jones resolved otherregulatory investigations and private litigation arising out of the same circum stances that were thesubject matter of the Atto rney General's Investigation and Action, including bu t not limited to:(1)In December, 2004, Edward Jones entered into consent orders andagreements with the United States Securities and Exchange Commission, the New York StockExchange, the Natio nal Assoc iation of Securities Dealers (now known as FINRA), and theUnited States Attorne y for the Eastern District of Missouri ("Federal Regulators") that providefor, among other things :(i)Revised ongoing disclosures to custom ers regarding thesubjec t matter of the Investigation and Action;2

(ii)The alteration of the incentives to Edward Jones ' brokersfrom the business arrangem ents subject to the Investigationand Action;(iii)The payment by Edward Jones into a FAIR Fund that wasdistributed to all customers including Edward Jones 'California customers in the amount of 1,854,066 .37; and(iv)The offering ofa free switch to Edward Jones' customers,including California customers, from the Preferred FundFamilies to any mutual fund on Edward Jones ' approvedselling list.(2)Edward Jones entered into class action settlements on behalf of allof its customers purchasing and holding Preferred Mutual Fund shares from 1999 through 2004 intwo consolidated actions, the first captioned Spahn v. Edward D. Jones & Co., L.P. pendingbefore the United States District Court for the Eastern District of Missouri ("Spahn") and thesecond captioned Enriquez v. Edward D. Jones & Co., L.P. pending before the Circuit Court ofthe City of St. Louis, Missouri ("Enriquez") (collectively referred to as the "C lass Action" ),which provide for, among other things :(i)The payment in cash to, among others, fanner EdwardJones ' customers including those in California in theamount of 1,211,85 1.29;3

(ii)The pro viding of in credit vouchers to current EdwardJones ' customers including those in California in theamou nt of 3.236,253 .79; and(iii)Na tionwide inj unctions aga inst the prosecution of anyclaims for or on behalf of any members of the classes formatters released by the Class Action settlements.E.Pumose. Whereas, the Parties des ire to resolve all issue s and disputes betweenthorn related to the Investigation and Action on the terms and conditions set forth below, andEdward Jones, without admitting or denying the allegations in the Action. enters into thisAgree ment and agrees to abide by the terms and co nditions set forth below.TE RM S OF THI S AG REEMENTIn consideration of the mutual term s, covenants and conditions of this Agreement, theParties hereto agree to settle all disputes and claims between them relating to the Invest igationand Actio n on the following terms and conditions (the "Terms"):I.Settlement Payment. Within five (5) business days following theexec ution of this Agreeme nt by the Parties, Edward Jones agree s to pay the Attorne y Generaland the State of California the total sum of SEVEN MILLI ON, FIV E HUNDRED THO USANDDOLLA RS ( 7.500,000.00 ) ("Settlement Payment"), as follows:1.1Fees and Costs. Th e total sum o f TWO MILLION, SEVENHUN DRED THO USAND DOLLARS ( 2.700,000.00) made paya ble to the Attorney General.in recognition of the Attorney Ge neral's fees and costs: (i) incurred and to be incurred inco nnection with the Investigation and the Act ion; (ii) to be incurred in conn ection with the

monitor ing and enforcement of the terms of this Agreement and any litigation related thereto;and (iii) to be incurred in connection with the Attorney General's enforcement of California'ssecurities, co mmodities and unfair competition laws.1.2Civil Pena lties. The total sum of FOU R MILLION, EIGHTHUNDRED THOUSAND DOLLARS ( 4,800,000.00) made payable to the State of California,as civil penalt ies pursuant to California Government Code § 12660.2.Withdrawal of Spahn Motion Within five (5) business days following theexecution of this Agreement by the Parties, Edward Jones shall withdraw its Motion to Show Causecurrently pending before the Spahn Court.3.Dismissal of-Action. Within two (2) business days of both the receipt ofthe Settlement Payment and the withdrawal of the Spahn Motion, the Attorney General shall filea stipulated dismissal with prejudice of the Action with each side to bear its own attorneys ' feesand costs other than the fees and costs Edw ard Jone s has agreed to pay in Paragraph 1 of thisAgreement.4.Releases by Edwa rd Jones. In cons ideration for the ob ligations and mutualreleases set forth in this Agreement , Edw ard Jones, EDJ Holding Co., Inc., The Jones FinancialCompanies, L.L.P. and their respe ctive partne rs, limited partners, subordinated limited part ners,trustees, managing partners, executive committee, management committee , agents, insurers,attorneys, parent corporations, subsidiaries, affiliated and related entit ies, assigns, and otherrepresentatives of any kin d or nature, and their predecessors and successors in interest(vlceleasors"), hereby release, remise and forever discharge the Attorney Ge neral and his agen ts,insurers, attorneys, affiliated and related entities, assigns, and other representatives of any kindor nature, and their predecessors and succ essors in interest, from any and all claims (includingattorneys' fees andlor costs), actions, rights, demands, damages, costs, liabilities of any kind or5

nature, whether known or unknown, sounding in tort. contract or any statutory regulatory orother theory of liability which Releasors now have or have ever had or may hereafter haveagainst the Attorney General, arising out of. in connection with or related to the subj ect matter ofthe Investigation, and allegations contained and which could have been raised in the Act ionand/or Edward Jones' alleged misrepresentations or omissions arising out o f our relat ing toEdward Jones Preferred Fund program, revenue sharing or directed brokerage. Re1easorsacknowledge that they are aware of. and specifically waive. the provisions of California CivilCode § 1542. Releasors acknowledge that they fully and voluntarily waive. release andrelinquish any and all of the rights and benefits which they may have under said Section 1542 orunder the laws of any other state or jurisdiction to the same or similar effect, as pertains to thereleases contained in this Agreement. In connection with such waiver and relinquishme nt,Rcleasors acknowledge that they are aware that they may discover facts in addition to ordifferent from those which they currently know or believe to be true with respect to the subjectmatters of this Agreement. but that it is their intention hereby, to fully, finally and forever settleand release all matters which now exist, may exist, or previously existed between the Parties,whether or not now known or unknown, suspected or unsuspected with respect to theInvestigation and Action. In furtherance of such intent, the release given herein shall be and shallremain in effect as a full and complete release, notwithstanding the discovery or existence of anysuch additional or different facts.Excluded from this release are the Attorney General' s obligations under thisAgreement.5.Releases bv the Attornev General. In consideration for the obligations andmutual releases set forth in this Agreement, the Attorney General in his o fficial capacity and onbehalf of the People of California and his agents, insurers. attorneys, affiliated and related6