CSA Mixta-BVG Basic Questions and Answers. Credit Suisse Investment Foundation December 30, 2016

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1 CSA Mixta-BVG Basic Questions and Answers Credit Suisse Investment Foundation December 30, 2016

2 The Benefits of CSA Mixta-BVG Basic at a Glance The ideal entry product for an investment in securities: Low volatility and thus reduced risk compared to high-risk investments Higher returns expected over the medium to long term than a Pillar 3a account solution Constant performance of the investment over the last few years (see graphic, page 3) Short investment horizon is possible Particular feature of CSA Mixta-BVG Basic: The inclusion of Swiss real estate and Swiss mortgages diversifies the investment categories within this investment group. The investment group therefore differs from conservative investment funds, which are mainly invested only in bonds and the money market. Risk of CSA Mixta-BVG Basic: All investments involve the risk of value fluctuations and other risks. Credit Suisse Investment Foundation December 30, of 13

3 Constant Performance of the CSA Mixta-BVG Basic Historical returns and financial market scenarios are no guarantee of current and future results. Credit Suisse Investment Foundation December 30, of 13

4 What Is the Long-Term Investment Strategy? Particular Features: No Equities, No Foreign Currencies Average asset allocation 5% 38% 27% Swiss real estate Mortgages Switzerland Swiss Bonds Liquidity 30% Source: Credit Suisse Investment Foundation Credit Suisse Investment Foundation December 30, of 13

5 Information on the Mortgage Component Implementation and Quality Requirements Implementation: The mortgage component is realized indirectly through the use of collective investments. The CSA Mixta-BVG Basic investment group does not itself advance mortgage-backed credit. Quality requirements: Mortgage-backed credit principally secured with mortgage notes and mortgage assignments. Mortgage-backed credit principally secured on residential and commercial properties and, to a lesser extent, also on hotels and restaurants (max. 5%) which are located in Switzerland. No mortgage-backed credit on agricultural or industrial real estate. The loan may not exceed two-thirds of the market value of the property. Average remaining term of the mortgages 1.89 years. Mortgage notes and mortgage assignments must total no more than 10% of the total assets Credit Suisse Investment Foundation December 30, of 13

6 Information on the Real Estate Component (1) Implementation and Quality Requirements Implementation: The real estate component is realized indirectly through the use of collective investments, of which the major share is invested in CSA real estate investment groups. The minor share is invested in appropriate investment funds, which are licensed for distribution in Switzerland. The CSA Mixta-BVG Basic investment group does not invest directly in real estate. Observations on CSA real estate investment groups: CSA real estate investment groups are evaluated on a net asset value (NAV) basis. In other words, changes in the NAV correspond to a change in the intrinsic value. This is estimated periodically and adjusted where necessary. In addition, the budgeted distribution is updated pro rata temporis. Claims can be subscribed for and returned, as required, via the Foundation. They are not traded via the stock exchange. An advantage of real estate vehicles that are evaluated on an NAV basis is that they do not generate a premium and exhibit virtually no price fluctuations. Credit Suisse Investment Foundation December 30, of 13

7 Information on the Real Estate Component (2) What Makes up the Real Estate Component? Real estate categorized by use as of December 30, % 1% 6% 15% 50% 16% Source: Credit Suisse Investment Foundation Credit Suisse Investment Foundation December 30, of 13

8 Information on the Real Estate Component (3) What Makes Up the Real Estate Component? Geographical distribution as of December 30, % 5% 11% 34% 16% 22% Source: Credit Suisse Investment Foundation Credit Suisse Investment Foundation December 30, of 13

9 What Happens If Interest Rates Rise? (1) Impact on Bonds, Mortgages and Real Estate Bonds: The investment group's fixed income investments have a shorter residual term, on average, than the benchmark index. As a result, the drop in value caused by an interest rate rise can be reduced. In addition, some inflation-protected instruments are used to reduce the potential loss to the bonds share if inflation were to rise. Mortgages: With an average residual term of 1.89 years, the mortgage portfolio has a risk profile comparable to high-quality fixed-income investments with a residual term of 1 3 years. Interest rate increases generally impact portfolios with shorter terms less severely. The net portfolio yield of 0.31% is well above that of comparable fixed income investments. Credit Suisse Investment Foundation December 30, of 13

10 What Happens If Interest Rates Rise? (2) Impact on Bonds, Mortgages and Real Estate Real estate: Historical data shows that real estate investments with high premiums and long-dated fixed income investments can be subject to higher rate fluctuations or losses in value when interest rates rise. In the CSA Mixta-BVG Basic, around 90% of the real estate investments have no premium and are not traded on a stock exchange (for explanation, see page 6). Total portfolio: An internal interest rate sensitivity analysis by Credit Suisse showed that an interest rate rise of 1.0% could cause the performance of the CSA Mixta-BVG Basic investment group to decline by around 3%. Simulated results are neither an indicator nor a guarantee of future profits. Credit Suisse Investment Foundation December 30, of 13

11 Return Performance of CSA Mixta-BVG Basic in 2016 Last year, the CSA Mixta-BVG Basic investment group was able to generate attractive returns of 1.21%. The average returns of the Swiss Bond Index Domestic AAA-BBB was at its highest at 0.37% at the beginning of 2016 and was at 0.22% by the end of the year. Therefore, the fixed income investments were also able to make a positive contribution towards CSA Mixta-BVG Basic last year. In 2016, CSA Mortgages Switzerland generated a positive return of 0.57%, while comparable investments with an average remaining term of 1.89 years resulted in losses for investors. Real estate investments in non-listed investment groups, as well as in listed real estate funds, had a successful year again in Credit Suisse Investment Foundation December 30, of 13

12 Positioning in CSA Mixta-BVG Basic The CSA Mixta-BVG Basic investment group is expected to retain its moderate overweight in real estate investments in 2017, mostly at the expense of fixed income investments. With regard to bonds, we have further developed the overweight in inflation-protected and corporate bonds. Credit Suisse Investment Foundation December 30, of 13

13 Disclaimer The information provided herein constitutes marketing material. It is not investment advice or otherwise based on a consideration of the personal circumstances of the addressee nor is it the result of objective or independent research. The information provided herein is not legally binding and it does not constitute an offer or invitation to enter into any type of financial transaction. The information provided herein was produced by Credit Suisse Group AG and/or its affiliates (hereafter "CS") with the greatest of care and to the best of its knowledge and belief. The information and views expressed herein are those of CS at the time of writing and are subject to change at any time without notice. They are derived from sources believed to be reliable. CS provides no guarantee with regard to the content and completeness of the information and does not accept any liability for losses that might arise from making use of the information. If nothing is indicated to the contrary, all figures are unaudited. The information provided herein is for the exclusive use of the recipient. Neither this information nor any copy thereof may be sent, taken into or distributed in the United States or to any U. S. person (within the meaning of Regulation S under the US Securities Act of 1933, as amended). It may not be reproduced, neither in part nor in full, without the written permission of CS. Credit Suisse Investment Foundation, Zurich, is the issuer and manager of CSA products. Credit Suisse (Switzerland) Ltd., Zurich, is the custodian bank. The articles of incorporation, regulations and investment guidelines, as well as the most up-to-date annual report and fact sheets, may be obtained free of charge from the Credit Suisse Investment Foundation. Only pension funds domiciled in Switzerland that are not subject to tax are permitted as direct investors. Copyright 2017 Credit Suisse Group AG and/or its affiliates. All rights reserved. Credit Suisse Investment Foundation December 30, of 13