Education

Before you invest in any X-Links™ ETN, you should read the relevant X-Links™ ETN prospectus to understand fully the terms and risks of the relevant X-Links™ ETNs and other considerations that are important in making a decision about investing in X-Links™ ETNs.

An X-Links™ ETN is an unsecured debt obligation issued by Credit Suisse AG (“the Issuer”). At maturity or upon an early redemption, call or acceleration, the Issuer pays X-Links™ ETN holders a return based on the performance of a reference index over the term of the X-Links™ ETN, less product fees. The reference index may be an index tied to MLPs, commodities, mortgage REITS, a specific industry sector or other assets or investment strategies. Because it is traded on an exchange, an X-Links™ ETN may offer access to market sectors, asset classes and/or investment strategies that may be difficult to obtain in an efficient and cost-effective way with other types of investments.

Investing in an X-Links™ ETN also involves a number of risks not associated with an investment in conventional debt securities.

Buying and Selling

Can you buy and sell X-Links™ ETNs in the secondary market?

Similar to other publicly traded securities like common stocks and exchange traded funds (“ETFs”), X-Links™ ETNs are listed on a securities exchange (e.g., NYSE Arca or NASDAQ) and can be bought and sold at their trading price on the secondary market anytime during trading hours, subject to the existence of a listing and trading market. Although the X-Links™ ETNs are listed on a securities exchange, an active trading market for the X-Links™ ETNs may not exist at a given time and the liquidity of the X-Links™ ETNs may be limited. In addition, the Issuer is not required to maintain any listing of the X-Links™ ETNs on any exchange or quotation system. In the event an investor sells an X-Links™ ETN in the secondary market, the investor may be required to pay a fee to their broker or other fees or charges. For more information about closing indicative value, intraday indicative value and market value of X-Links™ ETNs and how these values differ, see “Closing Indicative Value, Intraday Indicative Value and Market Value of X-Links™ ETNs” below.

Are there additional ways to buy an X-Links™ ETN?

The Issuer can sell units of an X-Links™ ETN to investors and to brokers from its inventory and/or by issuing new units of an X-Links™ ETN. Sales by the Issuer from inventory and of new units are usually executed at a price based on the X-Links™ ETN’s closing indicative value and may also include commissions and charges imposed by your broker.

Can the Issuer suspend issuance of an X-Links™ ETN?

It is important to note that the Issuer may at any time impose conditions on or suspend further sales from inventory and/or further issuances of units of an X-Links™ ETN. It is possible that the imposition of conditions or a suspension could influence the market value of the units of the suspended X-Links™ ETN. Limitations on sales and/or issuances can cause an imbalance of supply and demand in the secondary market for the units of the affected X-Links™ ETN, which may cause it to trade at a premium in relation to its indicative value. Therefore, the purchase of units of an X-Links™ ETN in the secondary market may be at a price significantly higher than their intraday indicative value.

Are there additional ways to sell an X-Links™ ETN?

Subject to certain conditions, X-Links™ ETN investors can also “sell” units of an X-Links™ ETN directly to the Issuer upon an early redemption, or may even be required to sell their units to the Issuer upon an acceleration or Issuer call at the Issuer’s option or upon an acceleration event or at maturity. Each of these scenarios is summarized below. Upon any such sale, the Issuer is obligated to pay to the investor a cash amount per X-Links™ ETN unit based on the performance of the reference index, less product fees, as described in the relevant X-Links™ ETN prospectus. Any payment by the Issuer on its X-Links™ ETN is subject to its ability to pay its obligations as they become due.

  • Early Redemption
    Generally, an investor may instruct his/ her broker to deliver to the Issuer a redemption notice whereby the investor elects to require the Issuer to redeem all or a part of its X-Links™ ETN holdings on any trading day prior to the maturity date (an “early redemption”), provided that certain conditions are met, as described in the relevant X-Links™ ETN prospectus. For example, the prospectus will usually state that the investor’s redemption notice must be delivered by certain dates and times and that the investor must elect to redeem at least a specified minimum principal amount of the X-Links™ ETN, expressed either as a dollar value, say one million dollars, or a number, say 50,000 units of the X-Links™ ETN. The early redemption feature is not available to investors for less than the specified minimum amount. Upon an early redemption, investors will receive on the applicable payment date a cash payment per X-Links™ ETN unit calculated in accordance with the procedures described in the relevant X-Links™ ETN prospectus. Such cash payment will reflect an early redemption fee or charge imposed by the agent for the offering and, possibly, fees, commissions or other charges imposed by your broker. Typically, investors will not know the amount of such cash payment per X-Links™ ETN unit for any units they elect to redeem prior to maturity at the time they make such election; this is due to the lag between the time the investor delivers a redemption notice and the applicable early redemption valuation date.
  • Issuer Call or Acceleration at the Issuer’s Option
    Some X-Links™ ETNs may be accelerated or called by the Issuer, as described in the relevant X-Links™ ETN prospectus. Upon the Issuer’s acceleration or call, the Issuer will deliver a call notice or notice of acceleration, and investors will receive on the announced payment date a cash payment per X-Links™ ETN unit calculated in accordance with the procedures described in the relevant X-Links™ ETN prospectus.
  • Acceleration Event
    Some X-Links™ ETNs will be accelerated or “automatically terminated” upon the occurrence of an event (e.g., if the X-Links™ ETN’s indicative value reaches a certain price or the reference index reaches a certain level), as specified in the relevant X-Links™ ETN prospectus. Upon the occurrence of an acceleration event, the Issuer will deliver a notice of acceleration, and investors will receive on the announced payment date a cash payment per X-Links™ ETN unit calculated in accordance with the procedures described in the relevant X-Links™ ETN prospectus.
  • Maturity

    Unless an investor’s X-Links™ ETNs units were previously redeemed, called or accelerated, the Issuer will pay to investors on the X-Links™ ETN’s maturity date a cash payment per X-Links™ ETN unit calculated in accordance with the procedures described in the relevant X-Links™ ETN prospectus.

    For more information on early redemption, acceleration at the Issuer’s option (or Issuer call), acceleration events and maturity, please refer to the relevant X-Links™ ETN prospectus.

Fees and Other Charges

There are various potential fees and other charges associated with X-Links™ ETNs. Generally, X-Links™ ETNs have product fees that equal a fixed percentage of the X-Links™ ETN’s indicative value and reduce an investor’s return by an amount that depends upon the performance of the reference index. Because an X-Links™ ETN tracks the performance of a reference index, an X-Links™ ETN’s closing indicative value will also reflect any fees or charges associated with the applicable reference index. Sales by the Issuer from inventory and of new units of an X-Links™ ETN may include commissions and charges imposed by your broker. In the event an investor sells an X-Links™ ETN in the secondary market, the investor may be required to pay a fee to their broker or other fees or charges. Additionally, in the event of an early redemption, any payment in respect of an early redemption will reflect an early redemption fee or charge imposed by the agent for the offering and, possibly, fees, commissions or other charges imposed by your broker.

For information on the fees and other charges associated with a particular X-Links™ ETN, please refer to the relevant X-Links™ ETN prospectus.

Closing Indicative Value, Intraday Indicative Value and Market Value

An X-Links™ ETN’s closing indicative value and intraday indicative value are not the same as the X-Links™ ETN’s market value or trading price, or any other price at which an investor may be able to sell his/her X-Links™ ETNs in the secondary market, if a secondary market exists. The liquidity of the market for any X-Links™ ETNs could vary materially over the term of such X-Links™ ETNs.


Closing Indicative Value

The closing indicative value or “CIV” of an X-Links™ ETN is designed to reflect the end-of-day economic value of such X-Links™ ETN. It is calculated according to a formula specified in the relevant X-Links™ ETN prospectus and is an approximation of the cash payment an investor would receive at maturity or upon an early redemption, upon acceleration at the Issuer’s option (or Issuer call) or upon an acceleration event. The CIV will reflect any fees or charges associated with the applicable reference index and any product fees. For more information on how an X-Links™ ETN’s CIV is calculated, please refer to the relevant X-Links™ ETN prospectus.

Intraday Indicative Value

The intraday indicative value or “IIV” of an X-Links™ ETN is intended to provide investors with an approximation of the effect that intraday changes in the level of the reference index have on the value of the X-Links™ ETN at a given time during the relevant trading day. The IIV at any time is based on the most recent intraday level of the reference index and is generally calculated and published every 15 seconds on each trading day during normal trading hours. It is calculated using the same formula as the CIV, except that instead of using the closing level of the reference index, the calculation is based on the most recently reported level of the reference index at the particular time. For more information on how the IIV is calculated, please refer to the relevant X-Links™ ETN prospectus.

Market Value or Trading Price

The market value or trading price of an X-Links™ ETN at any given time is the price at which an investor may be able to sell the X-Links™ ETN in the secondary market at such time, less applicable commissions and other broker costs, provided that a secondary market exists. In the absence of an active secondary market for the X-Links™ ETN, the last reported trading price may not reflect the actual price (less broker costs) at which an investor may be able to sell such X-Links™ ETN at a particular time. Moreover, the trading price of an X-Links™ ETN at any time in the secondary market is not the same as the indicative value of such X-Links™ ETN at such time, even if a concurrent trading price in the secondary market were available at such time.

The trading price of any X-Links™ ETN at any time may vary significantly from the indicative value of such X-Links™ ETN at such time due to, among other things, imbalances of supply and demand, lack of liquidity, transaction costs, credit considerations and bid-offer spreads. Any resulting premium in the trading price may be reduced or eliminated at any time.

Paying a premium purchase price over the indicative value of an X-Links™ ETN could lead to significant losses in the event the investor sells such X-Links™ ETNs at a time when such premium is no longer present in the marketplace or such X-Links™ ETNs mature or are redeemed, called or accelerated. Investors should consult their financial advisors before purchasing or selling X-Links™ ETNs, especially X-Links™ ETNs trading at a premium over their indicative value.

ETNs vs. ETFs

What is the difference?

X-Links™ ETNs are often confused with ETFs. While X-Links™ ETNs and ETFs share several characteristics, they also differ in several meaningful ways. The following table is a summary of such similarities and differences.


X-Links™ ETNs ETFs
Structure Unsecured debt obligations of the Issuer Funds representing an underlying portfolio of assets
Liquidity Can be bought and sold daily on an exchange, provided a trading market exists Can be bought and sold daily on an exchange, provided a trading market exists
Transparency Performance of an X-Links™ ETN depends on the return of its reference index, less applicable product fees. The Issuer (or its agent) publishes the value of its X-Links™ ETN at the end of each trading day (the closing indicative value or CIV) and an estimate of its value every 15 seconds during the trading day (the intraday indicative value or IIV). Such values are calculated according to specific formulas described in the relevant X-Links™ ETN prospectus Performance of an ETF depends on the return on a portfolio of securities or instruments held by the fund, less applicable product fees. An ETF publishes the value of its portfolio of assets by publishing an end-of-day net asset value (NAV) and by disseminating an estimate of its value every 15 seconds during the trading day (the intraday indicative value or IIV). Such values are based on the market value of the securities or instruments in the portfolio held by the fund
Accessibility Accessed through a brokerage account, though certain brokerages may have restrictions on product availability Accessed through a brokerage account, though certain brokerages may have restrictions on product availability
Creation and Redemption Mechanism Yes, but creation of new units may be suspended Yes, but creation of new units may be suspended
Early Redemption by Investor Usually daily and directly to the Issuer, subject to minimum size requirements and potential product fees Usually daily via custodian, subject to minimum size requirements and potential product fees
Risk to Principal Market risk and Issuer credit risk Market risk
Tracking Error to Reference Index* None. This is because an X-Links™ ETN’s CIV reflects the end-of-day economic value of the X-Links™ ETN, which is directly related to the performance of its reference index, less product fees Minimal to high. This is because an ETF’s NAV reflects the performance of a portfolio of assets that are intended to correspond generally to the performance of the ETF’s reference index or benchmark, less product fees, rather than the reference index or benchmark
Trading Price versus Economic Value(CIV/NAV) Trading price may not track CIV due to, among other things, imbalances of supply and demand, lack of liquidity, transaction costs, credit considerations and bid-offer spreads Trading price may not track NAV due to, among other things, imbalances of supply and demand, lack of liquidity, transaction costs and bid-offer spreads
Product Fees As disclosed in the relevant X-Links™ ETN prospectus. Generally, product fees equal a fixed percentage of the X-Links™ ETN’s indicative value and reduce an investor’s return by an amount that depends upon the performance of the reference index. Product fees may also include a redemption fee or charge As disclosed in the relevant ETF prospectus. Generally, product fees equal a fixed percentage of the ETF’s NAV and reduce an investor’s return by an amount that depends upon the performance of the ETF’s portfolio of assets
Expenses and Other Costs No additional expenses beyond product fees disclosed in the relevant X-Links™ ETN prospectus In addition to product fees, which equal a fixed percentage of the ETF’s NAV as stated in the ETF prospectus, there may be variable expenses such as taxes and other operating expenses, which are paid indirectly by the investor as a percentage of the value of their investment

Interest and Coupon Payments

While an X-Links™ ETN is a debt obligation of the Issuer, most X-Links™ ETNs do not pay interest to investors. However, some X-Links™ ETNs may make periodic coupon payments as specified in the relevant X-Links™ ETN prospectus. Such coupon payments, even where described as a feature of the X-Links™ ETN, are not guaranteed. In addition, any payment by the Issuer on its X-Links™ ETN is subject to its ability to pay its obligations as they become due.

Leveraged ETNs

Leveraged X-Links™ ETNs aim to provide leveraged long exposure to the price return version of the applicable reference index. These X-Links™ ETNs can be more volatile than a non-leveraged investment linked to the same reference index. These X-Links™ ETNs reset their stated exposures on a periodic basis (e.g., monthly), or more frequently upon the occurrence of a Leverage Reset Event, as stated in the relevant X-Links™ ETN prospectus.

Because these X-Links™ ETNs reset their stated exposures at least monthly, investors will be exposed to the leveraged compounding of returns at least monthly. As a result, the performance of the ETNs for periods greater than one month is likely to be either greater than or less than the leveraged performance of the reference index (before accounting for any relevant fees or charges). It is possible that an investor will suffer significant losses in leveraged X-Links™ ETNs even if the long-term performance of the reference index is positive and it is possible for the level of the reference index to increase over time while the market value of the leveraged X-Links™ ETNs declines over time. Consequently, these X-Links™ ETNs may not be appropriate for buy-and-hold investors. An investor in these X-Links™ ETNs should regularly monitor their holdings of the X-Links™ ETNs to ensure that they remain consistent with their investment strategies.

Other Selected Investment Considerations

  • The terms of X-Links™ ETNs differ from those of ordinary debt securities in that the X-Links™ ETNs do not pay interest nor guarantee any payment at maturity, upon redemption, Issuer call or acceleration, and you may incur a loss of your initial investment.
    Because the payment due on your X-Links™ ETNs may be less than the amount you originally invested in your X-Links™ ETNs, your return on your X-Links™ ETNs may be negative. Even if it is positive, your return on your X-Links™ ETNs may not be enough to compensate you for any loss in value due to inflation and other factors relating to the value of money over time.
  • Although the return on X-Links™ ETNs will be based on the performance of the reference index, the payment of any amount due on X-Links™ ETNs, including any payment at maturity, is subject to the credit risk of the Issuer.
    Investors are dependent on the Issuer’s ability to pay all amounts due on X-Links™ ETNs, and therefore investors are subject to the Issuer’s credit risk. In addition, any decline in the Issuer’s credit ratings, any adverse changes in the market’s view of the Issuer’s creditworthiness or any increase in the Issuer’s credit spreads may adversely affect the market value of X-Links™ ETNs prior to maturity.
  • Any decline in the Issuer’s credit ratings may affect the market value of an X-Links™ ETN.
    The Issuer’s credit ratings are an assessment of the Issuer’s ability to pay its obligations, including those on the X-Links™ ETNs that it has issued. Consequently, actual or anticipated declines in the Issuer’s credit ratings may affect the market value of the X-Links™ ETNs.
  • Past performance of the reference index is no guide to future performance.
    The actual performance of the reference index over the term of an X-Links™ ETN, as well as the amounts payable on an X-Links™ ETN, may bear little relation to the historical values of that index. The Issuer cannot predict the future performance of an index.
  • Owning X-Links™ ETNs is not the same as directly owning the assets included in the reference index.
    The return on an X-Links™ ETN will not reflect the return you would realize if you actually purchased the assets or instruments included in the reference index. You will not have any rights that holders of such assets or instruments have.
  • You will have no rights against the entities with discretion over the reference index.
    As owner of an X-Links™ ETN, you will have no rights against the index sponsor, even though the amount you receive at maturity or upon redemption, call or acceleration will depend on the level of the reference index. By investing in an X-Links™ ETN, you will not acquire any interest in the assets or instruments included in the reference index. The index sponsor is not in any way involved in offering an X-Links™ ETN and has no obligations relating to X-Links™ ETNs or to the holders of X-Links™ ETNs.
  • The Issuer’s right to use a reference index may be suspended or terminated.
    The Issuer has been granted a right to use a reference index and related trademarks in connection with the offering of an X-Links™ ETN. If the Issuer breaches its obligations under any license, the index sponsor to which such license relates may have the right to terminate the license. If the index sponsor chooses to terminate its license agreement with the Issuer, the Issuer may no longer have the right under the terms of the license agreement to use a reference index and related trademarks in connection with an X-Links™ ETN. If the Issuer’s right to use a reference index to which an X-Links™ ETN is linked is suspended or terminated for any reason, it may become difficult for the Issuer to determine the level of such reference index and, consequently, the payment at maturity or any other amounts payable on such X-Links™ ETN.

Additional Links

The relevant prospectus and addendum, as applicable, for each ETN can be obtained at the following links:

Credit Suisse AG ("Credit Suisse") has filed a registration statement (including prospectus supplement and prospectus) with the Securities and Exchange Commission, or SEC, for the offering of securities. Before you invest, you should read the applicable pricing supplement, the Prospectus dated June 18, 2020 and Prospectus Supplement dated June 18, 2020 to understand fully the terms of the ETNs and other considerations that are important in making a decision about investing in the ETNs. You may get these documents without cost by visiting EDGAR on the SEC website at www.sec.gov. The securities related to the offerings are not deposit liabilities and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency of the United States, Switzerland or any other jurisdiction.