> For the complete documentation index, see [llms.txt](https://doc.xwin.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://doc.xwin.finance/fees/book-cost-vs-high-water-mark.md).
# Book Cost vs High Water Mark
Performance fee has two settings: book cost or high water mark. They both have very different calculations and can impact users even when they deposit.
**Book Cost:**
The fee is calculated when the user deposits into the fund. The fund notes the price the user deposits and calculates the fee when the user withdraws.
Performance fee of 10%
| Deposit | | Withdraw | |
| ----------- | ---- | ---------- | ---- |
| Unit Price | 1.00 | Unit Price | 1.5 |
| Amount USDT | $500 | | |
| Shares | 500 | Shares | 500 |
| Amount | $500 | Amount | $750 |
A profit of $250 was made and 10% will be taken when the user withdraws which would cost $25. If the user does not make any profit, there will be no performance fee.
**High Water Mark:**
The high water mark (HWM) is calculated based on the time and percentage. For example, there could be an HWM fee every 6 months for 10% the fund starts at 1.00 USDT per share and increases to 1.5 USDT per share over 6 months, and then the increase of 0.5 USDT will be subject to the performance fee of 10%. The baseline would be 1.5 USDT per share. In the next 6 months, if the unit price drops to 1.2 USDT, then the fund will not get the performance fee as it compares to the last unit price which is 1.5.
Note: xWin Finance evaluates the HWM every 5 days.
The performance fee is 10% per 6 month in this example
| | Fund Start | 6 Month | 12 Month |
| ---------------------------------- | ---------- | ------------ | -------- |
| Unit Price Per Share | 1.00 | 1.5 | 1.2 |
| Shares | 100,000 | 100,000 | 100,000 |
| Total Value | 100,000 | 150,000 | 120,000 |
| Profit compared to last unit price | N/A | 50,000 | 0 |
| Performance Fee | N/A | 50,000 x 0.1 | 0 |
| Total Performance Fee | N/A | 5,000 | 0 |
This is a general explanation of the High Water Mark, and while xWIN Finance calculates it every five days, many hedge funds calculate it every month, but this depends on the calculation method used by each fund.
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