Annex VII of the Delegated Regulation, Table 2 on composition of costs: Cost elements in the
“composition of costs” table are to be presented assuming a 0% annual return which is consistent
with the p

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Annex VII of the Delegated Regulation, Table 2 on composition of costs: Cost elements in the
“composition of costs” table are to be presented assuming a 0% annual return which is consistent
with the presentation of the cumulated costs for the 1 year holding period in the table “costs over
time”. What does this assumption mean for the presentation of performance fees. In most cases,
performance fees in funds will not be accrued in case of net performance of 0%. Does this mean that
a performance fee of zero will need to be presented in the “composition of costs” table and taken
into account as such for the 1 year cumulated cost calculations, even if performance fees have been
charged by the fund during the last five years?

ESA Joint Committee (EBA, ESMA, EIOPA) · Accepted Answer

The amendments to the Delegated Regulation do not intend to amend the method for calculating
performance fees specified in point 24 of Annex VI. This is indicated in point 69 of Annex VI.
Therefore, the costs shown in both Table 1 and Table 2 in Annex VII (consistent with the EUR amount
for performance fees used in the calculation of Total costs in the first column of Table 1) should reflect
the average over the last 5 years.
As indicated in Annex VII, the narratives within Table 2, composition of costs, are examples. These might
be adjusted, such as to the following:
“The actual amount will vary depending on how well your investment performs. The estimation in this
document includes the average over the last 5 years”.

Annex VII of the Delegated Regulation, Table 2 on composition of costs: Cost elements in the “composition of costs” table are to be presented assuming a 0% annual return which is consistent with the p

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