This is a summary showing the costs and charges you have paid in connection with your securities holdings/savings at Swedbank during the previous year, including costs for Fixed Income and FX trading. If you had any securities holdings in any account at Swedbank during the reporting period, the summary also displays the change in value for these holdings, both before and after costs are included in the calculation. The summary can be seen as a complement to the annual statement that you receive from Swedbank.

You are receiving this summary because of two EU regulations: MiFID2 and IDD. The regulations state that Swedbank is obligated to send you a report showing your costs and charges and their impact on the value of your savings.

The summary includes only savings that you had during the reporting period and for which costs were applied. On an overall level, the various types of savings are divided into “Savings” and “Endowment Insurance Policies”.

The “Savings” category includes:

• All types of freestanding fund accounts
• Freestanding securities accounts with related cash accounts and any currency accounts
• Individual Savings Accounts (ISKs)
• Individual Pension Savings (IPS)

The “Endowment Insurance Policies” category includes:

• All types of endowment insurance policies: Corporate Endowment Insurance (Företagskapital), Direct Pension Securities Account (Direktpension Depå), Corporate Endowment Insurance Securities Account (Företagskapital Depå), Endowment Pension Fund (Kapitalpension Fond), Endowment Pension Securities Account (Kapitalpension Depå), Direct Pension Fund (Direktpension)

If you have private pension savings in the form of Individual Pension Savings (IPS) or Individual Savings Accounts (ISKs), these are included on page 3 of the summary, where costs and charges for savings are shown.

If you have pension savings in any kind of endowment insurance policy (such as e.g. Kapitalpension or Direktpension), these are shown in the “Endowment Insurance” section of the summary.

On an overall level, the costs and charges can be divided into three categories:

1. Costs for funds and other securities (in some contexts, these costs are also called product costs or instrument costs)
2. Service costs that are regulated within the framework of MiFID2
3. Insurance costs that are regulated within the framework of IDD (generally the same type of costs as Service costs, but also certain insurance-specific costs and charges)

Additional breakdown of costs showing the types of costs:

• Costs for funds and other securities are divided into one-off charges, ongoing charges, transaction costs and other costs.
• Service costs and insurance costs are divided into one-off charges, ongoing charges, transaction costs, charges for ancillary services, and other costs.

There are two costs: credit cost and distribution cost.

Credit cost is charged for trading in Fixed Income- and FX derivatives.

Credit cost is defined as “the difference between the interbank price and the client price”:

• Expressed in SEK
• The present value of the difference between the client price and the theoretical interbank price in the market. In this context, the interbank price is the price at which an interbank counterparty can trade without taking into consideration the risks and costs that arise in transactions with clients.
• The credit cost is theoretically calculated. In accordance with MiFID2, Swedbank is obligated to inform clients of this cost.
• Credit cost is not the same as the XVA markup. XVA is the collective name for the markups that the bank requires in order to cover costs for credit (CVA), funding (FVA) and capital (KVA).
• For short FX contracts, the majority of the credit cost is made up of the markup that is added depending on client classification and on discretionary decisions related to the transaction.
• In contrast, for longer FX- and Fixed Income derivatives, the majority of the credit cost is made up of the XVA markup, i.e. Swedbank’s direct CVA costs to enter the contract; the capital requirements that arise (KVA); and the funding costs (FVA), where these components are a function of the client’s credit rating.

Distribution cost is charged for trading in bonds.

Distribution cost is defined as “the difference between the interbank price and the client price”:

• Expressed in SEK
• The interbank price is the buy/sell price offered by Trading before other costs for distributing the bond are taken into consideration. It is important to understand that this spread shall cover Trading’s costs for keeping the bond in stock and offering liquidity. This spread is not included in the distribution cost and is not a markup.
• The distribution cost is the present value of the Fixed Income markup on the interbank price. For example, if the Fixed Income markup is 40bps per maturity year, then the theoretical present value is approximately 3 x 0.4% = 1.2%. This 1.2% markup is thus the distribution cost and is expressed in SEK. Given that the distribution cost is theoretically calculated and that it is a markup added at the time of purchase, clients then achieve maximum cost efficiency if they hold the bond until maturity. If a bond is held until maturity, then the total distribution cost will correspond exactly to an average in line with the Fixed Income markup; in the above example, it will be 40bps annually.

Although the reporting period for the summary is stated as 1 January to 31 December, the summary covers only the time when you have been a customer of Swedbank. Regardless of whether you became a customer later than January that previous year or concluded your dealings with the bank before 31 December, you have received a report where the reporting period is stated as 1 January to 31 December.

If you have had dealings with two banks, you will receive two summaries: one for the time when you had dealings with the “old” bank, and one for the time when you had dealings with the “new” bank.

These costs have been available to you before – for example, on your annual statements – but they have never been presented in the comprehensive way they are shown in the summary “Costs and Charges for Savings and Trading in Financial Instruments” that you have now received. The intent of the new regulations is for us as a bank to make it easier for you as a customer to easily see and compare your costs and charges in a clear way.

The costs are calculated differently because different regulations govern how costs are calculated in annual statements for funds (regulated by UCITS) and for insurance (regulated by FRL) than for the summary of Costs and Charges for Savings and Trading in Financial Instruments (regulated by MiFID2 and IDD).

Funds

Because two different reporting methods are applied, the costs for a given fund are higher in the summary than they are in the annual statement. The reason is that the transaction costs for the fund are calculated in different ways. MiFID2, and therefore the summary, includes both direct and indirect transaction costs in the calculation. Direct costs include, for example, broker’s commission and currency exchange charges. Indirect costs are calculated values based on the turnover rate of securities in the fund and on the difference between buy- and sell rates. These are not included in the annual statements for funds.

Furthermore, costs for non-Swedbank Robur funds are not part of the annual statements for funds. These are part of the summary of Cost and Charges for Savings and Trading in Financial Instruments where these are either approximated or based on actual values from the external fund companies.

Insurance products

Annual statements for insurance products are regulated by FRL and therefore differ somewhat from the accounting in this summary. The summary includes only costs that relate to the insurance savings itself, while the annual statements also include costs for any risk factors (such as premium exemptions).

To ensure that costs for financial instruments are shown in a consistent way in the summary – for example, regardless of whether a fund is within an insurance policy or in freestanding fund savings, the specification of costs is in accordance with the provisions of MiFID2.

It depends on what type of savings and investments you have. If you have funds, the management fee for the fund is deducted every day in the unit price that the fund reports. The fees that apply for your funds are shown under “Costs for funds and other securities”.

If you trade in Swedish equities, you pay broker’s commission for each equity transaction. This cost is included under “Service costs” and/or “Insurance costs”.

For funds, the most common cost is the fund’s management fee. You pay this fee every day because the charge is calculated into the unit price that is set for the fund every day. You don’t see the payment because it is already deducted from the rate and the value of your fund/s.

A few funds may have a buy- or sell charge that is applied when you buy or sell the fund. In this case, the charge has an impact on how many units your money will cover (for purchases) and how much money you will receive (when you sell). None of the Swedbank Robur funds have this type of fee.

In this summary, no direct difference is made between what is a cost and what is a charge. Think of it as a collective term for the total amount that affects your return.

Inducements are compensation that e.g. various fund companies and insurance companies pay to banks and other financial institutions that sell their funds and insurance products (resellers). A portion of the insurance charges and the management fees that you pay is used for provisions to resellers. (For example, Swedbank Robur pays inducements to Swedbank and the Savings Banks because the latter distribute Swedbank Robur’s funds.)

The inducement shown in the summary does not mean that you are paying any extra charges; instead, it is intended to clarify the proportion of the costs/charges you pay that are used for inducements.

The inducement is part of the management fee that you pay for a fund, and is used for compensating the reseller for supplying the fund company’s funds so that you can buy them.