Structured Products are synthetic instruments that combine derivatives and financial instruments to create securities that have significant risk/return profiles that may not be otherwise achievable in the marketplace and are tied to an investors specific market expectations. They may combine traditional fixed income benefits (principal protection, coupon, payments) with the performance of underlying securities (shares, bonds, indices) linked to derivatives (options, forwards, swaps).

Structured Products arose from the needs of companies which want to issue debt more often and more cheaply. Traditionally, one of the ways to do this was to issue convertible bonds where under certain circumstances they could convert to equity in the company. Structured Products add features to the basic convertible issue debt more often and more cheaply. Traditionally, one of the ways to do this was to issue bond where increased income or enhanced returns within an investment may be possible in exchange for limits on the convertibility of the stock, or principal protection.

Structured products meet a need that cannot be easily obtained in the financial markets. The motive behind designing these structures can be based on a number of factors including economic, legal, tax, and accounting. Synthetic instruments are being used by banks and issuers to customize a non-traditional payoff function for investors.

Interest in these investments has been growing in recent years with high net worth and more sophisticated retail investors. Many products are designed today with low minimums so the general public may participate. Investors use structured products as a way to diversify through asset allocation, as an alternative to a direct investment, or to utilize the current market trend within a structure that provides some protection to their principal.

Structured Products are designed to offer one or more of the following benefits:

• High fixed income yield
• Principal protection of initial investment
• Enhanced equity gains through leverage

Structured Products provide clients with a broad spectrum of investment products linked to:

• Individual equities
• Equity baskets
• Indices
• Interest rates
• Commodities