ALTERNATIVE INVESTMENTS

PROCESS
Investors start by selecting suitable Fixed Rate, Structured & Exchangeable Corporate Securities for investment and then open a standard brokerage account at FISN in their name. A brokerage account can hold many corporate securities from any corporate issuer linked to any reference stock. The investor wires funds or sends a check to fund this new account. FISN sends new account paperwork and purchase confirmations to the investor. The brokerage forms are completed and the transaction confirmation is verified. Only one account needs to be opened for each ownership category. Paperwork is returned to FISN along with the required identification.

CREDIT QUALITY        
International bank issuers of Fixed Rate, Structured & Exchangeable Corporate Securities offered by FISN carry an Investment Grade rating. A credit rating is the measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer’s ability to make timely interest payments and repay the investment principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies. The notes are not bank deposits and are not FDIC insured.

The Issuer Credit Rating is an indication of the credit standing of the issuer and not for the referenced Exchangeable Equity Security. The creditworthiness of the issuer does not affect or enhance the likely performance of the investment other than the ability of the issuer to meet its obligations therein. The notes are not Principal Protected. At maturity, the investor may receive a return of the original cash principal or stock of the referenced exchangeable security, based upon the performance of the referenced security during the life of the note. If stock is returned it will be worth less than the original investment.

The following is an explanation of the top credit ratings. The rating for each individual investment should be evaluated based the rating criteria. Credit ratings fluctuate with business conditions. Upgrades and downgrades in credit ratings change the risk profile of issuers and possibility the market prices of their securities.

Long Term Credit Ratings

Investment Grade
AAA ratings denote the highest rating assigned. This rating is assigned to the "best" credit risk relative to all other issuers or issues.

AA ratings denote a very strong credit risk relative to other issuers or issues. The credit risk inherent in these financial commitments differs only slightly from the highest rated issuers or issues. 

A ratings denote a strong credit risk relative to other issuers or issues. However, changes in circumstances or economic conditions may affect the capacity for timely repayment of these financial commitments to a greater degree than for financial commitments denoted by a higher rated category. 

BBB ratings denote an adequate credit risk relative to other issuers or issues. However, changes in circumstances or economic conditions are more likely to affect the capacity for timely repayment of these financial commitments than for financial commitments denoted by a higher rated category.

Below Investment Grade
BB ratings denote a fairly weak credit risk relative to other issuers or issues. The payment of the financial commitments is uncertain to some degree and capacity for timely repayment remains more vulnerable to adverse economic change over time.

B ratings denote a significantly weak credit risk relative to other issuers or issues in the country. Financial commitments are currently being met but a limited margin of safety remains and capacity for continued timely payments is contingent upon a sustained, favorable business and economic environment.

See Corporate Bond Ratings chart for a simple description and comparison of credit quality ratings issued by S&P, Moody’s and Fitch.

INVESTMENT FEATURES      
Fixed Rate, Structured & Exchangeable Corporate securities are unsecured and un-subordinated obligations of the corporate issuer. These notes are issued by large, worldwide banking and investment companies for terms usually of three months to one year. The notes are not FDIC insured. The issuer has no relationship to the exchangeable equity security or index which is used as a reference for the investment return. These structured corporate notes pay interest monthly or quarterly for the full term. Interest rates are quoted on a per annum basis. In some cases, the notes will be listed on the American Stock Exchange. At maturity, the note is redeemed in cash for the original purchase price or exchanged for the common stock of the referenced exchangeable equity issue. Only the issuer, not the investor or the broker, can make the redemption payoff determination. At the maturity, if the Final Share Price of the reference common stock or index is higher than the Initial Share Price, or never fallen below the Downside Protection level of the Initial Share Price during the term, a cash payment is made. Or, if the Final Share Price at maturity has fallen below the Initial Share Price, and the price of the reference equity or index has fallen below the protection level of the Initial Share Price sometime during the term, common stock of the referenced company is returned at a price ratio established at issuance. (Downside Protection is breached when the referenced shares have traded or closed below the protection level during the term.) The notes are not principal protected since the value of the investment will be less if shares are paid out rather than cash. The Issuer Credit Quality is an indication of the credit standing of the issuer and not of the Exchangeable Equity Security. The creditworthiness of the issuer does not affect or enhance the likely performance of the investment other than the ability of the issuer to meet its obligations therein. Key information is issuer, the reference security, the credit quality of both the issuer and reference security, the interest rate, the downside protection price level, whether the protection price is breached by a daily closing price or any trade price during the term, and the maturity date. There is no early withdrawal permitted but the notes can be sold in the secondary market. Notes sold prior to maturity are subject to market conditions and could result in a loss. They are sold subject to availability and price.

Read each linked Disclosure for a complete explanation of each referenced security or index and each issue.

See A Guide to Understanding Reverse Convertible Securities. 

See FINRA Investor Alert on "Reverse Convertibles - Complex Investment Vehicles".

ID REQUIREMENTS     
Brokerage accounts are opened at FISN’s brokerage division, First Internet Securities Network. Securities in FISN accounts are carried by National Financial Services LLC, Member NYSE/SIPC, a Fidelity Investments company. FISN is required under U.S. government rules to verify ownership of all accounts. Individuals are required to provide a copy of a government-issued photo identification. Business accounts, trusts and other non-individual accounts have special documentation requirements.

FEES  
There are no investment fees or commissions paid by the investor. The issuers of the securities pay brokers to distribute their newly issued securities. New issue securities are sold at par or a price of 100.0 to the investor. Par is the face amount of the investment on which interest is earned. Most investments require a minimum purchase amount . Secondary market securities are sold net to the investor without any commissions, and are usually offered at a market price indicating a discount or premium to par.