Overview
Individual Investors are unique. The automobiles they drive are representative of their lifestyle. The place they live is reflective of their personal style and taste. Most certainly their investment portfolio is unique to their specific goals. For this very reason, more and more investors are searching for a familiar investment that will reflect their needs and ultimately help them attain their goals.
LaSalle Direct Access Notes may be the solution. DANs are specifically designed to allow individual investors the ability to purchase original issue bonds of U.S. corporations (including Government Sponsored Enterprises) through the broker-dealer community. DANs provide flexibility by offering investors a variety of coupon payments and maturity options that simplify the investment process.
DANs are a revolutionary investment approach intended to gain direct access to this market segment and can be a useful tool in the creation of a stable, diversified portfolio.
Key Features
DANs offer many advantages that simplify and streamline the investment process: - Well Recognized Issuers. Investors are likely to be very familiar with the DANs issuers. DANs issuers are generally large, well-established corporations with proven track records and household name recognition.
- Easy to Understand. DANs are available to the individual investor usually at par ($1,000 per bond). DANs trade and settle on a regular-way basis, with no accrued-interest. This convention allows the investor to know the coupon and cost on the investment prior to the purchase.
- Simple to Purchase. All DAN are sold by Prospectus or Offering Circular only through a national network of broker-dealers.
- Low Minimum Investment of $1,000 - Investors can purchase DANs without a large capital commitment.
- Variety of Investment Choices
| | - Maturities. Time is a critical factor in determining the appropriateness of any investment and different investors have different time horizons. DANs offer the fixed-income investor a variety of maturities (9 months to thirty years) so that the investment decision is consistent with the time requirements of the individual's portfolio.
- Payment Dates. The timing of cash flows is also an important consideration for the fixed-income investor. DANs offer a variety of payment options including monthly and semi-annual payment dates.
- Callable and Non-Callable. DANs offer both Callable & Non-Callable options for the individual investor.
- Yields. Chances are that DANs will offer a bond or a combination of bonds to fit the needs of any investor's portfolio. Since new rates are posted each week, the yields offered are based on the current market conditions.
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- On-going Availability. DANs are designed for individuals who make their investment decisions wisely and deliberately. DANs are posted and, in most cases, are available for 7 days. This allows individual investors the time to weigh the value of the investment. New offerings are announced periodically, generally weekly, and that information is available through your registered representative or on this web site under the rates section for each issuer.
- Diversification. The key to managing the overall risk of any portfolio is the proper combination of securities with varying risk profiles. As a fixed-income product, DANs diversify portfolio risk away from equities. As an alternative to other fixed-income products, DANs offer diversification of call risk, credit risk, yield curve risk, and market risk vis-à-vis other notes, bonds, or preferred securities
- Consistent Income Stream. DANs can provide a steady stream of interest income to any portfolio. Rate of Return on DANs is fully disclosed and known prior to the investment. Once purchased, DANs have no additional fees or expenses.
- DANs vs. Bond Funds. The vast majority of DANs buyers purchase their note, receive the interest payments, and receive their principal upon maturity. Bond funds, on the other hand, actively manage their bond portfolios rarely holding bonds to maturity. While DANs prices may fluctuate after their original issue, DANs issuers agree to return the invested principal on a stated date.
- The Survivor's Option. In the event of an investor's death prior to maturity, this estate planning feature allows the estate of the beneficial owner the right to sell the note back to the issuer at par. (Limitations apply. May not be available on certain issues.
- Secondary Market. DANs are most suitable for investors with a buy and hold outlook. However, if investors wish to sell their note prior to maturity, it is intended that a secondary market will be maintained, although there is no obligation to do so. The value of the note sold prior to maturity in the secondary market will be subject to then prevailing market conditions and may include a transaction charge. The sale proceeds of the note may be less or more than the original purchase amount paid.
Risks
Your investment in Direct Access Notes (DANs), like any financial instrument, will involve a number of risks. Each issuer's prospectus or offering circular contains a discussion of the risk factors associated with the particular investment. You should consider carefully these risks, with the help of your own financial and legal advisors, before you decide that an investment in DANs is suitable for you. Below are some of the risks you should consider.
Secondary Market
DANs are most suitable for investors who plan to hold them until they either mature or are redeemed by the issuer (if callable). Investors who wish to sell their notes prior to maturity must do so in what is commonly referred to as the secondary market. There may be a limited number of buyers when you decide to sell your notes, which may adversely affect the price you receive or your ability to sell your notes at all.
Interest Rate Risk and Other Market Considerations
The value of notes sold in the secondary market may be more or less than the original amount invested, and will depend on many factors. These factors include, but are not limited to, characteristics of the note being sold, such as interest calculation method, time remaining until maturity and redemption features, as well as general market conditions at the time of sale. In most cases, a significant factor is the general level of interest rates - bonds tend to decrease in value when interest rates rise and increase in value when interest rates fall - but other factors such as volatility and yield difference between similar corporate bonds and Treasury bonds can also play a role. If the DANs are held to maturity, you will receive the face amount (par) regardless of the factors mentioned above.
Credit Risk
DANs are generally the unsecured debt of each individual issuer. Each issuer's credit quality - its ability to make timely payments on its debt - is evaluated by rating services such as Moody's Investors Service (Moody's) and Standard & Poor's (S&P).
The credit quality of the issuer is important to investors for two reasons. Most obvious is the adverse effect of an issuer failing to make payments to investors on time. Another consideration is the effect that changes in the issuer's credit rating may have on the secondary market value of the investment.
Your financial advisor can provide you with more information about the credit ratings of a particular DANs issuer.
Redemption Risk
If the notes you purchase are "callable" they may be redeemed at the option of the issuer only prior to the stated maturity date. While an issuer may call a note for any reason, as a practical matter, it will usually choose to do so when prevailing interest rates are relatively low. In this case, you may not be able to reinvest the proceeds in a comparable security that pays an equivalent interest rate. If the note is not called by the issuer, you should be prepared to hold it until maturity.
While the foregoing is intended to provide a general overview of the risk factors associated with an investment in DANs, it may not describe all of the risks of an investment in the notes. Thus, it is important for you to review the prospectus or offering circular associated with a particular DANs offering carefully before investing. You should consult your own financial, tax and legal advisors regarding the risks and suitability of an investment in the notes, in light of your particular circumstances.
Issuer Prospectuses
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