Fee's Question

Good Morning guys,

I have a quick question about some Investment fees for a client, I was hoping I could get someone’s input on. This is for a fund of funds. Thanks in advance for looking over this and the help!

Fixed Advisory Fee = 0.40% per annum on assets up to $500 million

Incentive fee = The incentive fee of 3.0% of the aggregate net profits for the calendar year, if any, in excess of a 10% hurdle return subject to a loss carry forward. No incentive fee will be paid until net losses have been offset by subsequent net profits, and the hurdle return for the year has been exceeded. The incentive fee will only be payable on net profits that in ecess of the hurdle return. The hurdle return is a non-cumlative, non-compounded rate of 10% per annum.

Q1)Let's assume the client has $105,000,000 to start, and the fund returned 8.5%
- The only fee would be the fixed cost, since 8.5% is lower than 10%. Would the fee be 0.40% of $105,000,000 or the ending MV of 113,925,000. I'm assuming it will be ending, so the fee would be $455,700 for the year.

Q2) Let's assume the client has $105,000,000 to start, and the fund returned 12.0%. ending MV would be 117,600,000.

The fixed cost would be $470,400.

How would we calculate the incentive fee? I'm assuming that it will be

(12%-10%) = 2% of 117,600,000= $2,352,000. Then 3% of this is 70,560.

So the total fee would be = 470,400+ 70,560 = $540,960

Is this correct?

THANKS!