ANNEX V
METHODOLOGY FOR THE PRESENTATION OF PERFORMANCE SCENARIOS
PART 1
General presentation specifications
1. The performance scenarios shall be presented in a way that is accurate, fair, clear and not misleading, and that is likely to be understood by the average retail investor.
2. In all cases, the following narrative explanations from Part 2 of this Annex shall be included:
element A;
element B, which shall appear prominently above the performance scenario table or graph.
3. For all PRIIPs except Category 1 PRIIPs referred to in point 30 of Annex IV:
element C in Part 2 of this Annex shall appear prominently above the performance scenario table;
information on the minimum investment return shall be stated within the performance scenario table and where appropriate element G in Part 2 of this Annex shall be included. Where a minimum return is guaranteed that minimum return shall be stated in monetary amounts for the holding periods for which the guarantee applies. Where no minimum return is guaranteed, or where the guarantee is only applicable for some but not all holding periods, a narrative shall be included for the relevant holding periods stating that retail investors may lose some or all of the amount invested, or, where applicable, that retail investors may lose more than they invested as set out in Part 3 of this Annex.
4. Where a stress scenario is shown, narrative element D in Part 2 of this Annex shall be included.
5. For Category 2 PRIIPs, except those referred to in point 15 of Annex IV, narrative explanations shall be included for the unfavourable, moderate and favourable scenarios using element E in Part 2 of this Annex.
6. For Category 1 PRIIPs except those referred to in point 30 of Annex IV, Category 2 PRIIPs referred to in point 15 of Annex IV, Category 3 PRIIPs and Category 4 PRIIPs, a brief explanation of the scenarios shown shall be included with a maximum of 300 characters in plain language.
7. Elements H, I, J and K in Part 2 of this Annex shall also be included in the case of Category 1 PRIIPs referred to in point 30 of Annex IV.
8. Intermediate holding periods shall be shown in accordance with points 32, 33 and 34 of Annex IV. The interim periods may differ depending on the length of the recommended holding period.
9. For PRIIPs that do not show performance scenarios at intermediate holding periods narrative element F in Part 2 of this Annex shall be included where relevant.
10. Unless otherwise specified, for all PRIIPs except for Category 1 PRIIPs referred to in point 30 of Annex IV, PRIIP manufacturers shall use the templates set out in Part 3 of this Annex to present the performance scenarios, depending on whether it is a single investment or premium PRIIP, a regular payment or premium PRIIP, or a PRIIP as referred to in point 76c of Annex VI.
11. The term ‘exit’ shall be used in the performance scenario table to represent the end of the investment, unless this term may be misleading for specific types of PRIIPs, in which case an alternative term may be used, such as ‘terminate’ or ‘surrender’.
12. For Category 1 PRIIPs as defined in point 4(b) of Annex II, the terminology used shall be adjusted where appropriate to reflect the specific features of the PRIIP, such as to refer to the notional amount of the PRIIP.
13. For insurance-based investment products, additional rows are included in respect of the biometric risk premium and a scenario for the insurance benefits, as illustrated in templates A and B in Part 3 of this Annex. Returns for that scenario shall only be shown in monetary terms.
14. For PRIIPs that involve regular payments or premiums, the templates shall also include information on the accumulated investment amount and where applicable the accumulated biometric risk premium, as illustrated in template B in Part 3 of this Annex.
15. For PRIIPs which are intended to be held for life, the recommended holding period stated in the performance scenarios may indicate that the PRIIP is intended to be held for life and state the number of years that have been used as an example for the calculation.
16. For PRIIPs that are immediate annuities or other PRIIPs that are only intended to pay- out upon the occurrence of the insured event, the performance scenario table shall reflect the following, as appropriate:
the survival scenarios at the recommended holding period shall reflect the accumulated amount of payments made to the retail investor;
where intermediate survival scenarios are included, those shall reflect the surrender values and accumulated amount of payments made to the retail investor at that time;
the insurance event scenarios, such as upon death, shall show the lump sum payment received by the beneficiaries at that time.
17. Where the PRIIP is called or cancelled before the end of the recommended holding period according to the simulation, the presentation of the performance scenarios shall be adjusted accordingly, as illustrated in template C in Part 3 of this Annex, and explanatory notes shall be added, in a way that it is clear whether a certain scenario includes an early call or cancellation and that no reinvestment assumption has been applied. In scenarios where the PRIIP is automatically called or cancelled the figures shall be shown in the column ‘If you exit at call or maturity’ of template C in Part 3 of this Annex. The time periods shown for the intermediate holding periods shall be the same for the different performance scenarios and shall be based on the recommended holding period if the PRIIP is not called, which is expected to be aligned with its maturity. Figures for intermediate holding periods shall only be shown for scenarios where the PRIIP has not yet been called or cancelled before or at the end of that intermediate holding period and shall include any exit costs that apply at that time. If the PRIIP would have been called before or at the end of that intermediate holding period based on the simulation no figures shall be shown at that time period.
PART 2
Prescribed narrative elements
[Element A] The figures shown include all the costs of the product itself, (where applicable) [but may not include all the costs that you pay to your advisor or distributor/and includes the costs of your advisor or distributor]. The figures do not take into account your personal tax situation, which may also affect how much you get back.
[Element B] What you will get from this product depends on future market performance. Market developments in the future are uncertain and cannot be accurately predicted.
[Element C] [The unfavourable, moderate, and favourable scenarios shown are illustrations using the worst, average, and best performance of [the product/a suitable benchmark] over the last [x] years.] (for Category 2 PRIIPs except those referred to in point 15 of Annex IV) [The scenarios shown are illustrations based on results from the past and on certain assumptions] (for other types of PRIIPs). Markets could develop very differently in the future.
[Element D] The stress scenario shows what you might get back in extreme market circumstances.
[Element E] This type of scenario occurred for an investment [add reference to benchmark where applicable] between [add dates in years].
[Element F] This product cannot be [easily] cashed in. If you exit the investment earlier than the recommended holding period [you do not have a guarantee](where there is a guarantee only at the recommended holding period) [and] [you [will/may] have to pay extra costs] (where there are exit costs).
[Element G] The return is only guaranteed if you [describe relevant conditions or refer to where these conditions are described in the key information document, such as the narrative explanations provided in accordance with Annex III].
[Element H] This graph illustrates how your investment could perform. You can compare it with the pay-off graphs of other derivatives.
[Element I] The graph presented gives a range of possible outcomes and is not an exact indication of what you might get back. What you get will vary depending on how the underlying will develop. For each value of the underlying, the graph shows what the profit or loss of the product would be. The horizontal axis shows the various possible prices of the underlying value on the expiry date and the vertical axis shows the profit or loss.
[Element J] Buying this product holds that you think the underlying price will [increase/decrease].
[Element K] Your maximum loss would be that you will lose all your investment (premium paid).
PART 3
Templates
Template A: Single investment or single premium paid
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Recommended holding period: |
[] |
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Example Investment: |
[EUR 10 000 ] |
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(Where applicable) Insurance premium: |
[monetary amount] |
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If you [exit] after 1 year |
If you [exit] after [] |
If you [exit] after |
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(where applicable) |
(where applicable) |
[recommended holding period] |
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[Survival] Scenarios |
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Minimum |
[Monetary amount] or [There is no minimum guaranteed return [if you [exit] before […years/months/days]] (where applicable) . You could lose some or all of your investment [or have to make further payments to cover losses] (where applicable)] |
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Stress |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
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Average return each year |
[] % |
[] % |
[] % |
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Unfavourable |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
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|
Average return each year |
[] % |
[] % |
[] % |
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Moderate |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
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|
Average return each year |
[] % |
[] % |
[] % |
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Favourable |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
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|
Average return each year |
[] % |
[] % |
[] % |
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(Where applicable) [Death] Scenario |
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[Insured event] |
What your beneficiaries might get back after costs |
[] EUR |
[] EUR |
[] EUR |
Template B: Regular investments or premiums paid
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Recommended holding period: |
[] |
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Example Investment: |
[EUR 1 000 ] per year |
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(Where applicable) Insurance premium: |
[monetary amount] per year |
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If you [exit] after 1 year |
If you [exit] after [] |
If you [exit] after |
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(where applicable) |
(where applicable) |
[recommended holding period] |
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[Survival] Scenarios |
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Minimum |
[Monetary amount] or [There is no minimum guaranteed return [if you [exit] before […years/months/days]] (where applicable) . You could lose some or all of your investment [or have to make further payments to cover losses] (where applicable)] |
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Stress |
What you might get back after costs |
[] EUR |
[] EUR |
[]EUR |
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Average return each year |
[] % |
[] % |
[] % |
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Unfavourable |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
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|
Average return each year |
[] % |
[] % |
[]% |
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Moderate |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
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|
Average return each year |
[] % |
[]% |
[] % |
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Favourable |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
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Average return each year |
[] % |
[] % |
[] % |
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Amount invested over time |
[] EUR |
[] EUR |
[] EUR |
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(Where applicable) [Death] Scenario |
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[Insured event] |
What your beneficiaries might get back after costs |
[] EUR |
[] EUR |
[] EUR |
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Insurance premium taken over time |
[] EUR |
[] EUR |
[] EUR |
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Template C: PRIIPs referred to in point 76c of Annex VI (Autocallables)
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Recommended holding period: |
Until the product is called or matures This may be different in each scenario and is indicated in the table |
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Example Investment: |
[EUR 10 000 ] |
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If you [exit] after 1 year |
If you [exit] after [] |
If you [exit] at call or maturity |
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(where applicable) |
(where applicable) |
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Scenarios |
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Minimum |
[Monetary amount] or [There is no minimum guaranteed return [if you [exit] before […years/months/days]] (where applicable) . You could lose some or all of your investment [or have to make further payments to cover losses] (where applicable)] |
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Stress |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
|
(product ends after []) |
Average return each year |
[] % |
[] % |
[] % |
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Unfavourable |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
|
(product ends after []) |
Average return each year |
[] % |
[] % |
[] % |
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Moderate |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
|
(product ends after []) |
Average return each year |
[] % |
[] % |
[] % |
|
Favourable |
What you might get back after costs |
[] EUR |
[] EUR |
[] EUR |
|
(product ends after []) |
Average return each year |
[] % |
[] % |
[] % |