Glossary

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A

AC

See “Funds in anticipated creation

ADDI

Sum of Deemed Distributed Income after December 31, 1993, which has not yet been subject to withholding tax. The ADDI is an amount with 4 decimals, changes once a year when the DDI is published and must be made available together with the redemption's price.

Addressee's subscription

In the framework of specific addressees, each addressee receives information on instruments according to a subscription, which the Administrative and Accounting Agent must first define. This subscription details the dissemination parameters of the information sent (frequency and transmission times, format, currency and dissemination language) as well as the list of instruments concerned by the transmission of information. Definition of the list of instruments concerned may be simplified by the creation of one or more samples.

Aktiengewinn

The “Aktiengewinn“ contains income related to shares and represents the part of the redemption price, which is subject to the half income tax regime or the participation exemption. The "Aktiengewinn" is expressed as a percentage.

Asset allocation

Strategic allocation of the fund available assets between a variety of investment types (money market instruments, bonds, equities, real estate etc.).

Asset manager

See : Investment manager.

Auditor/auditing firm

Independent third-party from the fund management and the custodian bank. He/it makes sure that legal requirements are complied with. The auditing firm/individual must be approved by the supervisory authority, i.e. the Commission for the Supervision of the Financial Sector (CSSF). For each fund mentioned on the portal, the name of the auditor is taken from the latest official document (prospectus, prospectus addendum, annual report, semi-annual report) in Bourse de Luxembourg possession or any document coming directly from the central administration or from the CSSF.

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B

Bearer security

A negotiable instrument which is payable on demand to the holder, regardless of whom it was originally issued to.

Blue chips

Stocks from companies demonstrating excellent solvency, large market capitalization, high performance ratio and strong financial basis.

Bonds

A bond is a tradable debenture certificate which represents a fraction of a loan issued by a company, a public body or a government. As his income is contract-based, the bondholder does not support the business risk of the issuing entity. However, he has no corporate right and he is not entitled to receive a dividend and to take part in the issuing entity's management.

Bond fund

Fund principally invested in bonds and other fixed/variable interest-rate instruments. Bond funds are generally denominated in a specific reference currency.

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C

C

see “Closed funds

Fundsquare station

The Fundsquare Station is a group of programs made up of:

- at least a portal and a sending service, which can be used by a Central Administration (CA) or its Administrative and Accounting Agent (AAA) for the communication of data to or from Fundsquare,

- the software and infrastructure supporting its use and information flows.

The Fundsquare Station can be accessed by users through an internet station and includes a sending service, allowing automatic or semi-automatic transmission of data files.

Central administration

Professional of the financial sector (often linked to the fund promoter's group) handling day-to-day accounting of the fund, regular calculation of the NAV and publication of the annual and semi-annual reports. The central administration acts also as transfer agency. It can delegate these taks to third parties, provided that this delegation does not harm the exercise of these functions. For each fund mentioned on the portal, the name of the central administration is taken from the latest official document (prospectus, prospectus addendum, annual report, semi-annual report) in Bourse de Luxembourg possession or any document coming directly from the

Closed funds

Funds whose real end-of-activity date has passed. Only funds that have been closed in the last two years are visible on the Fundsquare site.

Closed-end fund

Investment fund constituted as a stock company with fixed capital and no obligation to repurchase its shares upon investor's request.

COMA 

Other commission

Conversion fee

A conversion fee may be charged when the investor redeems his shares/units of a sub-fund for acquiring shares/units of another sub-fund from the same umbrella fund.

Convertible bond

A bond convertible in equities.

Corporate bond

Bond issued by a private corporation/company.

Country fund

Investment fund investing most of its assets in securities from a specific country.

Coupon

A certificate which represents the interest or dividend attached to a security. Such a certificate entitles the holder to cash in the income and the related rights.

CSSF code

Code issued by CSSF for the Luxembourg registered funds to facilitate identification, transfer and trading.

Custodian

The custodian keeps in custody the assets of the fund and is responsible for the issuance and redemption of the shares/units. Additionally, the custodian makes sure that legal requirements applicable to the investment fund are complied with by all the parties concerned. For each fund mentioned on the portal, the name of the custodian is taken from the latest official document (prospectus, prospectus addendum, annual report, semi-annual report) in Bourse de Luxembourg possession or any document coming directly from the central administration or from the CSSF.

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D

Derivatives

Financial instruments whose valuation is linked to that of an underlying commodity or financial asset, (e.g. a future or option).

Descriptive data form

Form accessible from the “Fund information & Reporting” page. Descriptive data forms allow Administrative and Accounting Agents to create, modify and close instruments.

Dissemination product

The details of the information on instruments sent to addressees.For example, the current dissemination product of specific addressees is made up of:

  • codes (ISIN, telekurs, Wkn)
  • fund, sub-fund, share class names
  • NAV information.

Documents and envelopes received

A search function allowing Administrative and Accounting Agents to consult the responses that Fundsquare or the Authorities may send to them following the receipt of a descriptive data transmission from UCIs to Fundsquare or of a regulatory report transmission to Fundsquare or the Authorities.

Documents and envelopes sent

A search function allowing Administrative and Accounting Agents to recover all of their transmissions to Fundsquare in relation to UCI descriptive information and regulatory reports.

Domicile of the fund

The fund is domiciled in the country in which it has been set up or the one of the supervisory authority under which it has been registered.

Domiciliary agent

Professional of the financial sector (often linked to the fund promoter group) providing an address to the fund and issues, receives, keeps the related correspondence.

Distributor

Partner of the investment fund promoter in charge of selling (and repurchasing) to investors the promoter's product(s).

Dividend

Short-term profits, stock dividends or interest incomes distributed by the fund to its shareholders.

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E

e-file

e-file.lu is a financial information exchange platform between, on the one hand, Luxembourg fund industry professionals and the competent local authorities, on the other. As a result of this tool, such communication can be carried out in a totally secure environment that guarantees confidentiality and traceability of exchanges through procedures defined by the recipient authority.

e-file procedures

This is a specific operation that is initiated by a filing entity to an authority in order to comply with the legal and regulatory requirements in force. Examples of typical procedures that may be sent to the CSSF include approval requests for new UCIs and the transmission of a regulatory report.

Emerging markets fund

Investment fund investing its assets in emerging countries, i.e. from Asia or Latin America.

Equity fund

Investment fund investing most of its assets in listed equities. Main categories of equity funds are country and regional funds, emerging markets funds, sector funds or index tracker funds.

EUSD: EU Savings tax Directive

The European directive on taxation of savings income in the form of interest payments

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F

FCP

A "Fonds Commun de Placement" is a collective investment vehicle managing contributions in capital from the public. The assets are managed according to risk spreading principles. The fund is not a legal entity and is managed under a fiduciary agreement. The investor has no ownership right on the fund's assets but has a right to participate in the assets and to benefit of capital gains from fund appreciation.

Financial statements (annual report/semi-annual report)

Within four months following the end of the financial year, the promoter publishes an audited annual report for each investment fund which it manages. The annual report provides information on the yearly accounts, the inflow and outflow of capital, a list of the assets, and the auditor's report. A non-audited semi-annual report is issued within two months following the end of the first half of the financial year.

Financial year

Period between two annual closings of funds' accounts. The financial year may differ from the calendar year.

Floor fund

An investment fund that provides a large measure of protection against losses exceeding a specified percentage.

Forward Rate Agreement

This is an agreement on an interest rate to be paid on a future operation.

Funds in anticipated creation

Funds whose date of constitution has not yet been reached.

Fund information & Reporting

Service offered by Finesti allowing Administrative and Accounting Agents to transmit UCI descriptive data to Fundsquare and regulatory reports to Fundsquare and the Authorities.

Fund of funds

Investment fund investing only in the shares/units of other investment funds.

Future

A standardized, transferable, exchange-traded contract that requires delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date. The parties to a future agreement agree to buy or sell a specific quantity of an underlying asset at a predetermined price and on a specific day.

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G

Government bond

Bond whose issuer is a state or government agency.

Green/ethical fund

Investment fund whose investment policy relies on environment protection and ethical principles.

Guaranteed fund

A fund which commits to return all or part of the initial capital invested and/or guarantee a minimum return on capital. Guaranteed funds generally have investment programs limited in time and assets cannot be withdrawn during this period.

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H

Hedge fund

Hedge funds seek superior average returns but are not covered by prudential regulation (in terms of owners' equity and risk spreading). Since these funds are aimed at generating absolute income, they make investments which conventional funds are not allowed to make (speculation on market declines, short sales, use of derivatives, financing investments by borrowing). This enables hedge funds to record positive returns irrespective of the market situation.

High yield bond

Bonds issued by borrowers with lower credit ratings. Such bonds offer higher rates of interest, but at the same time there is also a higher risk of default, i.e. that interest payments will not be paid or that the face value will not be repaid.

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I

Index fund

An investment fund which replicates a chosen stock market index in its stock selection and weightings its portfolio as exactly as possible.

Index-linked bond

Bond paying a coupon whose fluctuations depends on an underlying index.

Index tracking method

The purpose of this investment method is to closely track a given stock exchange index.

Instrument

A UCI, a sub-fund or a share class.

Investment fund

Generic term for undertakings for collective investment (FCP, SICAV, SICAF etc.).

Investment manager

Investment specialist managing the assets of the whole investment fund (or selected compartment(s)). They decide which securities to buy and sell within the defined investment principles. Also called asset or portfolio managers.

Investment policy

It describes how the investment objective must be fulfilled (selection of the securities, purchase and sale dates, share of cash, etc.). The investment policy is described in the fund's prospectus.

ISIN code

Internationally recognized securities code.

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J

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K

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L

Large caps

A company whose market capitalization is substantially higher than the average on its own market.

Long-term bond

Bond with a maturity longer than 5 years.

Luxembourg-incorporated fund

Investment fund incorporated in Luxembourg and managed by a Luxembourg-domiciled fund company.

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M

Management company

Joint-stock company which manages investment funds for the account of the investors, independently and in its own name. It decides on the issue of units and on investments, determines the issue and redemption prices as well as the distribution of income and exercises all rights associated with the investment fund. It may delegate investment decisions and other partial duties, but is liable for actions of its agents as if they were its own actions.

Management fee

The charge levied by the management company for the administration of an investment fund. The amount of the fee is expressed in percentage or tenth of a percentage of the fund assets or in basis points.

Market countries

Countries where the fund has been duly approved for distribution by the local supervisory authorities.

MAXI 

Maximum amount.

Medium term bond

Bond with maturity (or term) of 3 to 5 years.

MFFD

Fix amount expressed in currency.

MFVD 

Variable amount by bracket in relation with the duration.

MFVM 

Variable amount by bracket in relation with the summon.

Mid caps

A company which has an average market capitalization.

Money market fund

A fund which invests in fixed-rate and short-term (inferior to 1 year) instruments in specific currencies.

Money market instruments

Securities with maturities of no more than one year which are traded on the money market (Treasury bills and notes, commercial papers, certificates of deposit…).

My Fundsquare transmissions

The group of pages available through the Fundsquare portal that permit follow-up of the transmission of NAV prices and dividends from an Administrative and Accounting Agent to Fundsquare.

My external dissemination

The group of the pages available through the Fundsquare portal that permit follow-up of all information dissemination concerning a given client. Viewing of all information disseminations depends on the role of the participant (for example Administrative and Accounting Agent) and the dissemnination products subscribed to.

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N

NAV/Dividend transmission

Service offered by Fundsquare allowing Administrative and Accounting Agents to transmit to Fundsquare the NAV prices and the dividends of funds under administration.

NAV form

Form accessible from the “NAV/Dividend transmission” page. NAV/dividend forms allow Administrative and Accounting Agents to transmit to Fundsquare NAV prices and dividends of administered funds.

Net asset value (NAV)

The value of a fund's assets calculated at market prices after the deduction of any liabilities.

Net asset value by share/unit (NAV by share/unit)

The net asset value per share/unit is the fund's net asset value divided by the number of shares/units outstanding.

NP

Active and non-public funds.

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O

Offshore fund

Fund legally established in a jurisdiction offering tax benefits and exemptions.

Open-end fund

A variable-capital investment fund which may constantly issue new shares/units and has to repurchase its shares/units at their net asset value when so requested by the investors.

Options

The buyer of an option acquires the right but not the obligation to purchase (call option) or sell (put option) a specified quantity of an underlying asset for a given period of time and at a predetermined price. To acquire this right he pays a premium to the seller of the option (option price).

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P

Paying agent

Institution or bank appointed by the fund promoter to perform day-to-day business operations with the fund shareholders, e.g. payment of dividends and interest.

Pension fund

Investment fund set up by a company, a trade union or a government to provide for the financing of pensions of employees/participants.

Performance

Percentage change in the value of an investment, plus any accumulated income, and corrected for inflows and outflows of funds during a defined period of time.

Performance fee

On top of the usual management fee, an investor investing in a non-conventional investment vehicle, such as a hedge fund, often has to pay a performance-related fee, which amounts to a percentage of the fund's annual capital gain.

PFIX 

Percentage fixed.

Portfolio

Composition of an investment fund's assets.

Portfolio manager

See : Investment manager.

Promoter

Asset management specialist who creates an investment fund (target clients, investment policy, legal and administrative structure of the investment vehicle). The promoter provides the initial capital of the fund and ensures all management functions throughout the life cycle of the fund. ). For each fund mentioned on the portal, the name of the promoter is taken from the latest official document (prospectus, prospectus addendum, annual report, semi-annual report) in Bourse de Luxembourg possession or any document coming directly from the central administration or from the CSSF.

Property fund

Capital collected by a great number of large and small investors to invest collectively in property assets.

Prospectus

Official document which defines the rights and duties of the parties linked to the fund's activity. It includes the investment guidelines, the distribution rules and the nature and type of costs supported by the fund or the investors.

This document is regularly updated. Updates are based on corporate events of the investment fund, such as changes to the investment policy, the creation of a new sub-fund, or a change in the day of the general meeting of shareholders.

PVTD

Variable percentage by bracket in relation with the duration.

PVTM

Variable percentage by bracket in relation with the summon.

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Q

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R

Redemption

Repurchase by the investment fund of an investor's shares/units at last known net asset value.

Redemption fee

Fee charged by the investment fund when repurchasing shares/units held by an investor.

Regional fund

Fund investing its assets in a specific area of the world (e.g. Nordic countries) or a given economic space (e.g. Euroland).

Registrar

See Transfert agent and Registrar.

Registered security

Certificate entry in a company's books specifying the owner's name. A registered security may be transferred provided it has been endorsed by the owner and communicated to the registrar/transfer agent. With this type of securities, both the capital and the interest may be registered. In the second case interest is paid by check and not against a coupon attached to a certificate.

Regulatory report

def.

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S

Sample

Grouping of instruments whose NAVs may be sent to one or several specific addressees. A sample is made up of instruments (UCIs, sub-funds, share classes). A sample made up of a UCI contains all the sub-funds and all share classes of the UCI. If the UCI structure is modified, the sample changes accordingly. A sample made up of a sub-fund contains all the share classes of the sub-fund. If the sub-fund structure is modified, the sample changes accordingly.A sample may be attributed to an addressee. It is then a part of the addressee’s subscription. The details of the information sent makes up the dissemination product.

Sector fund

A fund investing only in a specific business sector.

Securitized debt

Securitization is a financial technique enabling to enhance a company's asset liquidity. Typically the assets, which have been selected for their guarantee grade, are pooled in a specific vehicle that acquires the assets through issuing securities offered to investors. The vehicle collects the interest from and repayment of the debt which it has purchased and, in turn, remunerates the investors through interest and repayment of their securities. Initially the method was used by credit institutions to refinance the credits outstanding and turn their client loans into securities.

Shares

Certificate representing ownership in a company. The shareholder is granted a number of rights in relation to the company's life (voting rights, right to access information) and the company's assets (right to receive part of the profit, subscription right).

Share/unit of a fund

It represents the rights to which, in relation to his holding, the investor is entitled in the assets and income of the fund.

Short-term bond

Bond with a maturity (term) of 1 to 3 years

SICAF (Fixed-capital investment company)

Fixed capital investment company. The fund operates as a separate entity in the form of a "société anonyme". Units are issued in the form of shares.

SICAV (variable-capital investment company)

A SICAV is an open-end fund incorporated as a "société anonyme" and issues shares.

Speculative fund

An investment fund not covered by prudential regulation (in terms of owner's equity and risk spreading) and not supervised by a supervisory authority. Hedge funds are speculative funds which use leveraging methods and are therefore risky investment vehicles.

Specific addressee

Administrative and Accounting Agents that provide information to Fundsquare have the opportunity to disseminate information on NAVs of funds under administration to recipients belonging to their branches, subsidiaries, the distribution network of the CA, and, for a fund, to the promoter of the fund. These recipients are defined by their name, first name and email. Such recipients are called specific addressees. Following validation by Fundsquare, the specific addressee receives the NAVs of the instruments to which they are subscribed according to the specific dissemination parameters of their subscription.

Small caps

Companies with a market capitalization under 300 million EUR.

SSOB 

Non significant.

Sub-funds

In an umbrella fund, a sub-fund is an investment vehicle targeted at a specific investment type/objective. The investor may participate only in the sub-fund of which he holds shares/units.

Subscription

In connection with investment funds, a subscription is a purchase of shares/units of funds at their net asset value.

Subscription fee

A subscription fee is charged to the investor when he is sold shares/units by the issuing fund.

Swap

The widest definition of a swap is an exchange between two entities for a given period of time. The two parties must find some benefits in this exchange which can be for financial assets or commodities. An interest rate swap, for example, is based on comparing a floating rate and a guaranteed rate and paying the interest rate differential without exchanging capital.

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T

TID : Taxable interest in dividend

The portion of interest in the dividend on each dividend distribution.

TIS : Taxable income per share

The portion of interest income in the NAV on each NAV calculation

Transfert agent and Registrar

Financial services provider maintaining the register of the fund investors (name and address of the investors and related number of shares/units held). Additionally, the registrar manages the subscription/redemption orders. Its role can be broaden to the communication of information to the investors (reports, prospectuses, financial statements, marketing documentation etc.). For each fund mentioned on the portal, the name of the transfer afent is taken from the latest official document (prospectus, prospectus addendum, annual report, semi-annual report) in Bourse de Luxembourg possession or any document coming directly from the central administration or from the CSSF

Type of income : capitalization

The income produced by a fund is automatically reinvested in the fund concerned.

Type of income : distribution

Automatic distribution of the fund's gains to the shareholders.

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U

Umbrella fund

An umbrella fund consists of a number of sub-funds but forms a single legal entity. All sub-funds are covered by the same prospectus. After the umbrella fund has been admitted to listing, additional sub-funds can be created.

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V

Venture capital fund

Investment fund investing more than 2/3 of its assets in venture capital companies or in companies applying for admission to official stock exchange listing.

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W

Warrants

A warrant is a tradable right which entitles the holder to acquire or sell a defined number of shares at a predetermined price until a day indicated in the terms and conditions of the contract.

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X

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Y

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Z

Zero coupon note

A zero-coupon note generates no periodic interest payments and is issued at a discount from face value. All return is realized at maturity.

Zwischengewinn

Amount expressed in value per share, which may be negative and changes on each NAV calculation.

 

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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