Guidelines for the annual reporting of costs

Fund management companies shall, pursuant to chapt. 4 §§ 22 and 23 of the Swedish Investment Funds Act, notify every unit holder annually, in writing, of the total cost and management cost, including depository cost, of a given unit holding. These guidelines, adopted by the Board of Directors of the Swedish Investment Fund Association on 22nd April 1999, revised in December 2002, on 4th June 2004 and on 23rd July 2008[1], specify how this shall be done.

Definitions

Total cost comprises the sum of Management costs, Interest costs, Other costs and Taxes (including income, wealth and coupon tax), in accordance with the Income Statement, drawn up in accordance with chapt. 19 of FFFS 2008:11 plus transaction costs to the extent that they are not included under Other costs in the Income Statement. Management cost comprises the Management costs item, in accordance with chapt. 19 of FFFS 2008:11.

Information for unit holders

The yearly accounting to unit holders shall, in accordance with relevant legislation, include details of the Total cost and Management cost including depository costs in connection with the fund assets. If the fund management companies deem it appropriate, the difference between Total cost and Management cost may also be specified under the heading, “Interest costs, Other costs and Taxes”.

Total cost, Management cost and, to the extent deemed appropriate by the fund management company, the “Interest costs, Other costs and Taxes” item, shall be calculated for every day that the fund management company calculates the NAV rate, expressed as a cost per unit. Unit holders shall be provided annually with details of the costs accruing to the unit holder, calculated on the basis of every NAV calculation day’s costs and unit holding. If the management cost is also calculated for days when the NAV rate is not calculated, the calculation for such days shall also be included.

If the “Interest costs, Other costs and Taxes” item is to be specified, the error tolerance shall be limited to 0.0001% (one ten thousandth of a percent) with regard to the cost calculation per unit and day. If the account only includes Total cost and Management cost, the error tolerance is 0.001% (one thousandth of a percent) per day[2].

 

 

 

[1] The revision in 2008 only regard references to regulation (FFFS).

[2] “Interest costs, Other costs and Taxes” normally comprise a significantly smaller percentage of the Total cost than the Management cost. If an excessively high error tolerance is permitted, the sum of the Management cost on the one hand and the Interest costs, Other costs and Taxes item on the other will not add up to the Total cost, because a substantial percentage of the latter cost item will have come in under the rounding-off limit.

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