Managed Accounts

The 20% performance fees are taken on a high watermark basis. A high watermark is the previous high in the account-participant's account (adjusted for deposit and withdrawals). It ensures that the fees only get deducted based on new performance, rather than just recovery of poor performance. In other words, if an account loses money over a period, the account must first recoup previous losses and then any profit above the high watermark is subject to a 20% performance fee. As an example:

• Account A starts with $5000 initially.
   
• At the end of first month, it makes $300 bringing the equity to $5300, on which there is a 20% performance fee of $60 deducted.
   
• Then, at the end of second month, it loses $400 bringing equity to $4900, on which no performance fees are charged.
   
• At the end of third month, it makes $200 bringing the equity up to $5,100, on which no performance fees are charged since the watermark was not reached.
   
• Lastly, at the end of fourth month, makes $300, bringing the equity to $5,400, which is a new equity high by $100 over the watermark of $5,300 in first month, on which performance 20% fee of $20.

The performance fees are thus influenced by the exact date of entry into the account. Hence participants who enter into the account on different dates will have different watermarks. Watermarks are based on the actual returns in and date of entry for each account, thereby resulting in different watermarks for individual accounts. Since individual account returns will vary based on the entry date into the account, the performance fee calculations are done on a per-account basis.