Glossar

Definitions and explanations of key terms in the world of banking and finance. 

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

See "Management fee".

The risk-adjusted net return achieved by an investment fund. Alpha is a measure of the risk-adjusted return and is also referred to as the outperformance return. It allows the fund manager's information advantage to be measured against the market. If the alpha is positive and statistically significant, this is an indication that the manager has an information advantage over the market. An index fund has an alpha of zero.

Every year, the fund management company must publish two financial reports on each fund: a semi-annual report and a full-year report. There are clear legal guidelines regarding the scope of this ongoing reporting requirement, which is aimed at benefiting investors. For example, annual reports must contain an accurate, detailed statement of assets and income statement, as well as details on the appropriation of net income, the number of fund certificates redeemed and the number of newly issued certificates, the closing balance of issued units, the net asset value per unit on the final day of the accounting year, an auditor's report, etc. The annual report must be published within four months of the closing date of the fiscal year; the semi-annual report within two months.

Allocation of the available capital to various investment instruments, such as equities, bonds, money market instruments, commodities, and precious metals.

B

In accordance with the Swiss Federal Law on Withholding Tax, provided they have a bank declaration (affidavit) and subject to certain conditions, foreign unitholders have the option to have distributions paid to them gross, i.e. without deduction of Swiss withholding tax, if the distribution is made by a Swiss investment fund that obtains at least 80% of its returns from foreign sources. (See also the "Tax aspects of investment funds").

An index for an investment fund / collective investment that serves as a basis of comparison for the performance of the fund. The benchmark allows the performance of different fund managers to be compared and objectively evaluated. See also "Reference index".

Shares of quoted companies with the highest creditworthiness (default values), solid financial structure, high earning power and an innovative range of products.

A bond is a debt security issued by a private company or public sector entity. The debtor is obliged to repay the full invested amount at maturity and to make the coupon payments determined in advance.

A fund that invests predominantly in fixed income securities in accordance with its fund regulations.

C

The positive difference between the sale and purchase price of an investment.

Capital growth funds continuously reinvest their returns. Therefore, returns are never distributed but are reflected in the growth of the fund's assets. They are therefore the opposite of distribution funds.

Central European Time ("Mitteleuropäische Zeit"), being GMT + 1 hour.

Abbreviation for the Collective Investment Schemes Act. This law was passed on June 23, 2006 and entered into force on January 1, 2007.

Abbreviation for the Collective Investment Schemes Ordinance. This ordinance entered into force on January 1, 2007.

Article 7 of the CISA defines collective investments as a pool of assets from investors for the purpose of collective investment and for the account of the investors. The investors' requirements are satisfied to the same degree.

D

A "dividend" paid to the unitholders on the basis of the income and capital gains accruing to an investment fund. The amount of the distribution is determined by the fund management. A fund can either make a distribution (usually on an annual basis) or reinvest the capital gains (capital growth). 

Diversification is the allocation of investments across different securities for the purpose of risk reduction.

E

An investment fund / collective investment that focuses on developing countries, e.g. in Eastern Europe, Asia or Latin America.

An equity is the ownership of an asset; participation in the share capital of a company.

Collective investments, for example country funds or sector funds, that invest at least two-thirds of their assets in equities.

F

Debt securities such as loans, borrower's notes or mortgage bonds whose coupon remains the same, or fixed, throughout the term of the debt security.

Fund Lab is a non-technical term referring exclusively to the registered name of this product. The name derives from the concept of a laboratory in which various elements (in this case, criteria) are combined with a view to obtaining different results.

A life insurance policy that helps investors to accumulate capital by combining insurance cover with investment in funds. Policies are available in various currencies. Fund-linked insurance allows insurance holders to benefit from the performance of the funds they have chosen. At maturity, the client receives the value of the fund units, paid in the currency of the policy. In the event of death before maturity of the policy, the guaranteed lump sum payable at death is paid to the beneficiary. If the value of the fund units exceeds the guaranteed death benefit, the higher amount is paid out. The LifeFund from CS Life provides a tax-efficient, customized product with a choice of more than 80 investment funds.

A company that manages investment funds independently in its own name for the account of investors. The fund manager decides on the sale and purchase of investments, distributions of income and the entire investment policy. It is also responsible for the fund's accounting and publishes annual and semi-annual reports.

The specialist responsible for the day-to-day decisions regarding the investment of the assets under management.

A company that manages investment funds / collective investments independently for the account and in the name of investors. The fund manager decides on the sale and purchase of investments, distributions of income and the entire investment policy.

The fund regulations form the basis for the business activities of the investment fund and define the rights and obligations of the parties to the contract (fund manager, depository bank and investor). Among other things, they contain details on the investment policy and charges structure of the fund as well as the policy for valuing the fund's assets. The fund regulations and any subsequent amendments to the regulations must be officially approved by the supervisor and cannot be implemented unilaterally by the fund management company. See also "Sales prospectus".

The sale of units in one investment fund and simultaneous purchase of units in another. Usually, lower issuing commission is charged for switching between different Credit Suisse funds.

A 30% discount on issuing commission is applied for fund switches.

G

GMT

Greenwich Mean Time (UK)

H

A hedge fund is an alternative investment that frequently pursues unconventional investment techniques and strategies including the use of derivatives, short-selling and borrowing, in order to achieve a leverage effect. The risks assumed can therefore be considerable. In many case, hedge funds provide an exceptionally useful means of diversification because of their low correlation with traditional investments.

I

IFA

Abbreviation for the Swiss Investment Fund Act. The Investment Fund Act was replaced by the Collective Investment Schemes Act as of January 1, 2007.

Index funds aim to simulate the structure of an index in their selection and weightings of securities. The investor in such a fund therefore acquires a direct replica of the market or market segment underlying the index. The performance of the index fund therefore largely corresponds with that of the index on which it is based. As with all other funds, index funds are subject to the Collective Investment Schemes Act and are supervised by the Swiss Federal Banking Commission (SFBC). See also Credit Suisse IndexMatch funds.

Currencies in which an investment fund / collective investment makes its investments. Not to be confused with the accounting currency or reference currency.

An investment fund is defined as a pool of assets raised from investors as a result of public solicitation for the purpose of collective investment and managed by the fund management company for the account of the investors, generally in accordance with the principle of risk diversification. Investment funds are often referred to as "mutual funds" in the US or "investment trusts" or "unit trusts" in the UK.

The definition of the purpose of a fund or collective investment. The investment objective describes the investment universe, the selection of the securities, and the investment focus in terms of geography or currency.

The investment return is the total growth in value, expressed as a percentage, of an investment fund during a particular time period. It comprises both distributions and price increases. The performance over 1,3 or 5 years corresponds to the average annual performance during the most recent 12, 36 or 60 months. The cumulative return corresponds to the total return of the investment over several years. The year-to-date return shows the return from the January 1 of the current year until a specific date. Quarterly or monthly returns show the returns achieved in a specific quarter or month.

The investment style describes the way in which investment decisions are made, the principles followed for performance optimization, and the management of risks.

The fund regulations form the basis for the business activities of the investment fund and define the rights and obligations of the parties to the contract (fund manager, depository bank and investor). Among other things, they contain details on the investment policy and charges structure of the fund as well as the policy for valuing the fund's assets. The fund regulations and any subsequent amendments to the regulations must be officially approved by the supervisor and cannot be implemented unilaterally by the fund management company. See also "Sales prospectus".

A commission charged to investors when purchasing units in a fund or collective investment.

The issuing price corresponds to the net asset value of the units plus the issuing commission.

L

The official approval for a security to be traded on the stock exchange. The following Credit Suisse funds are listed on the Swiss Electronic Exchange: Interswiss, Siat ("Schweizerischer Immobilienanlagefonds") Real Estate Fund, Siat ("Schweizerischer Immobilienanlagefonds") Real Estate Fund 63, and Swissimmobil Series D. 

M

The annual remuneration paid to the fund management company for its administration of the investment fund. It is expressed as a percentage of the fund's assets.

The price of fund units as quoted on the stock market or as traded over the counter.

The lowest return achieved, expressed as a percentage, in the time period in question.

An investment fund is defined as a pool of assets raised from investors as a result of public solicitation for the purpose of collective investment and managed by the fund management company for the account of the investors, generally in accordance with the principle of risk diversification. Investment funds are often referred to as "mutual funds" in the US or "investment trusts" or "unit trusts" in the UK.

The highest return achieved, expressed as a percentage, in the time period in question. 

Market in short-term debt instruments, with maturities from overnight to one year.

Funds investing in short-term money market paper and loans with a short time to maturity, for example, treasury bills, banker's acceptances, commercial paper, etc.

N

The net asset value of an investment fund unit is the market value of the fund on a specified date, less liabilities and divided by the number of unit certificates issued. The net asset value is generally calculated and published on a daily basis (real estate funds being an exception).

O

Funds that are subject to the Collective Investment Schemes Act (CISA) but do not belong to the securities fund or real estate fund categories. Their investment options are less constrained than securities funds, the latter having a limited risk diversification. 

P

See Investment return

A fee that varies according to the performance of the fund. The performance fee is directly proportional to the fund's return and therefore acts as an incentive for the fund manager. 

A country in which the fund has obtained approval from the state financial authorities to market the fund to the general public, i.e. advertize the fund. 

See "Real estate fund" 

A fund that invests in several different investment instruments. In terms of asset allocation, these instruments are usually in line with the strategy of the bank in question. 

R

Real estate funds invest in land and buildings, spreading risk by geography and by type of property.

Commission that investors have to pay upon the sale of their fund units.

Opportunity given to investors to reinvest the annual distribution in the same fund, but on very favorable terms. 

Fund units can, in principle, be sold back to the management company on any day at the current net asset value. Real estate funds are the one exception to this rule: In accordance with article 41 of the IFA, investors in Swiss real estate funds may redeem their units only at the end of the financial year after having given notice twelve months in advance. However, as our real estate funds under Swiss law are listed on the stock exchange, investors can sell their units at any time at the current stock market price. 

Financial market theory measures the risk of an investment by the fluctuations in returns (i.e. the spread of returns around an average value). In theory, risk and return are directly linked: The higher the risk entered into, the greater the return that should be generated by the investment over time. 

S

Equity funds that invest solely in the shares of a particular sector (e.g. pharmaceuticals).

Commission that investors have to pay upon the purchase of their fund units. 

"Société d'investissement à capital variable." An investment fund structured as a company with variable capital, being a legal entity in its own right. The investors are the shareholders in the company. 

Standard deviation, or volatility, is an indicator of the risk associated with an investment fund. The higher the standard deviation, the higher the inherent risk of the investment fund. 

Subscriptions through stock exchanges are referred to as secondary trading. Stock exchange commission is charged on such orders. It is usually stepped according to the size of the order. 

Equities of small and medium-sized companies. 

Government authorities responsible for supervising the business activities of investment funds and collective investments. In Switzerland, this function is carried out by the Swiss Federal Banking Commission (SFBC) ("Eidgenössische Bankenkommission" or "EBK"). In Luxembourg, the Commission de Surveillance du Secteur Financier ("CSSF") functions as the supervisory authority for the law on investment funds. 

The federal administrative authority entrusted with the supervision of investment funds / collective investments.

T

Tax collected by withholding the tax amount from income payable to the taxpayer. An example of this type of tax is Swiss withholding tax, which levies 35% on investment income. 

The commissions and costs involved in managing the fund are disclosed in the internationally recognized term "Total expense ratio (TER)". This ratio expresses the entirety of all commissions and costs (operating costs) retrospectively as a percentage of the fund assets. 

A measure, expressed as a percentage, of the deviation of the fund return from the benchmark return over a given period of time. The more passively the investment fund is managed, the smaller the tracking error. 

U

A security certificate without a par value that represents a holding in an investment fund. The investment certificate represents the claim of the holder against the fund management in respect of the assets in the fund and the returns generated.

V

The time between the day on which a trade takes place (on which the net asset value is calculated) and the debiting or crediting of the transaction amount to the relevant client account.

See "Standard deviation". 

Y

From the start of the year. An acronym for "year to date" used in detailed presentations of a fund's performance. YTD relates to the performance from the start of the current year so that the period of time being assessed changes.