Glossaire

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Diversification: Mixing various types of assets in a portfolio to reduce its risk exposure.

Direct investment: Investment made directly in equities, as opposed to equity investments via investment funds.

Direct (or theoretical) yield: The profit distribution of an investment fund. It is direct if the fund distributes dividends to unit holders, and theoretical if earnings are reinvested in the fund.

Dividend: Proportional share of fund profits to which a unit holder is entitled.

Dividend policy: A fund may choose to distribute dividends regularly (normally once a year) to its clients or to reinvest profits in the fund.

Domestic market: Trading environment specific to a local or national market.

Due diligence: Detailed procedure involving the investigation, selection and monitoring of investments in a fund. It covers, among other aspects, assessment of the investment strategy being implemented, the team pursuing the strategy and the operational back-up for the fund.

Duration: Average life span of a bond portfolio in years; it makes it possible to measure the extent of interest-rate risk.

Efficient frontier: The chart curve representing the optimal risk/reward ratios.

Emerging markets: Countries or regions in the process of economic development.

FBC: See Federal Banking Commission.

Federal Banking Commission (FBC): Swiss supervisory authority for banks and investment funds.

Financial instruments: Instruments available in finance to manage, circulate and remunerate capital (e.g. investment funds are a type of financial instrument which is accessible to and suitable for the general public).

Fixed administration costs: Commissions paid to the custodian bank and management company, in addition to all other charges payable by the latter in connection with fund management (printing of annual reports, official publications, price publication, auditors' fees, etc.).

Floor: Indicates, in a floor or ratchet fund, the limit between the protected and the risk-prone segments of the fund. At the fund's inception, the floor corresponds to the difference between the initial investment (100%) and the maximum risk as defined by the cushion.

Foreign-exchange effect: Impact of currency-market trends on the performance of a fund or portfolio.

Foreign investment funds: Funds domiciled abroad that meet applicable legal and tax requirements. However, funds distributed in Switzerland require FBC approval and are subject to the Investment Fund Act.

Fund assets: Total amount invested in a fund.

Free float: Number of a company's shares in free circulation in the market (as opposed to restricted shareholdings).

Fund compartment: Sub-fund or segment of an umbrella fund.

Fundamental analysis: Classic financial analysis, based on a company's accounts and annual reports, as well as on company visits.

Fund manager: Person or team that defines a fund's investment policy and advises on the purchase and sale of positions. The fund manager can be independent of the fund's management company.

Fund of funds: Investment fund invested in other mutual funds.

Fund prospectus: Compulsory publication by the fund's management designed to inform unit holders of the funds, investment strategy, performance history and prospects.

Fund's domicile: Country whose laws govern the fund's operation.

Fund unit: Security corresponding to a share in the fund's assets.

Futures contract: A standard traded contract under the terms of which one of the parties makes a commitment to buy a financial asset on a specific future date for a fixed price (long position); the other contracting party makes a commitment to deliver this asset (short position).