Glossary


Bank declaration (Affidavit)	In the case of investment funds established under Swiss law, federal withholding tax amounting to 35% is in principle deducted from distributions of income (interest/dividends). Investors domiciled outside Switzerland receive the distributions without deduction of this tax, provided that at least 80% of the income distributed was generated outside Switzerland and that the investors can produce a bank declaration (affidavit) certifying that their units are deposited at a bank.
Benchmark	Index against which an investment fund’s performance is measured. Also called a reference index.
Best-in-class principle	In addition to traditional financial analysis, SRI company analysis also looks for the companies in selected industries that best meet environmental and social criteria (the best-in-class principle).
Best-of-breed	Seasoned professional investors in the private equity fund and hedge fund business.
Beta	A measure of risk which indicates the sensitivity of an investment, such as an investment fund, to fluctuations in the market, as represented by the relevant benchmark. For example, a beta of 1.2 tells us that the value of an investment fund can be expected to change by 12% if the market is forecast to move by 10%. The relation is based on historical data and is only an approximation. However, the closer the correlation between the benchmark and the investment fund, the better this approximation.
Biotechnology	The use of living organisms (often bacteria), which in many cases have been genetically modified, in technical processes and industrial production.
Blue chips	Term used to describe equities of leading companies with top-class credit ratings, high market capitalisation, strong earnings power and sound financial structure.
Bond funds	Investment funds which invest in bonds and other fixed or variable interest securities. Bond funds generally have a specific reference and investment currency.
Bonds	Debt instruments with a fixed coupon, at times also with a variable rate of interest and generally with a fixed maturity and redemption date. The most common issuers are major companies, government bodies such as the federal government and the cantons, public institutions and international organisations such as the World Bank or the International Monetary Fund.
Bonds in default	Bonds which do not make their interest payments or redemption on the scheduled due dates.
Book profit /loss	The theoretical profit or loss on an investment due to its rise or fall in value, as long as the investment is not actually sold.
Borrowing	This refers to the liabilities of the fund before liquidation taxes as a percentage of the total fund assets.
Business year	See financial year.
Buy-out	This refers to take-overs of companies. The wellknown forms are management buy-outs (MBO), where companies or divisions are acquired by the management, and leveraged buy-outs (LBO), where new investors acquire the majority of a company using borrowed capital. Buy-outs are often used to resolve issues relating to succession of ownership of a family business.

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