Fee Example #1 - Adjusted Fee Calculation Clause Samples
The 'Fee Example #1 - Adjusted Fee Calculation' clause defines how fees are recalculated when certain variables or circumstances change during the course of an agreement. Typically, this clause outlines the method for adjusting the original fee based on factors such as changes in scope, duration, or other agreed-upon metrics. For instance, if the scope of work expands or the project timeline is extended, the fee may be increased proportionally according to a specified formula. The core function of this clause is to provide a clear and fair mechanism for modifying payment terms, thereby preventing disputes and ensuring both parties understand how financial adjustments will be handled.
Fee Example #1 - Adjusted Fee Calculation. The following example serves as a guide for the calculation of the Adjusted Fee when the cumulative excess return of the portfolio versus the Index falls within the stepped adjustment range: “Exceeds by more than +6%.” Assume the Adjusted Fee for the fiscal quarter ending May 31, 2013, is being calculated, and the month-end net assets of the Frontier Portfolio over the rolling 36-month period applicable to such fiscal quarter are as follows:
Fee Example #1 - Adjusted Fee Calculation. The following example serves as a guide for the calculation of the Adjusted Fee when the cumulative excess return of the portfolio versus the Index falls within the linear adjustment range: “Greater than 0% up to and including +9%”. Assume the Adjusted Fee for the fiscal quarter ending July 31, 2010, is being calculated, and the month-end net assets of the AXA R▇▇▇▇▇▇▇▇ Portfolio over the rolling 36-month period applicable to such fiscal quarter are as follows: 2007 751 752 753 754 755 2008 756 757 758 759 760 761 762 763 764 765 766 767 2009 768 769 770 771 772 773 774 775 776 777 778 779 2010 780 781 782 783 784 785 786 Also, assume the cumulative performance of the AXA R▇▇▇▇▇▇▇▇ Portfolio over the rolling 36-month period applicable to such fiscal quarter is +20%, and the cumulative performance of the Index over such period is +13.25%. Thus, the excess return of the AXA R▇▇▇▇▇▇▇▇ Portfolio over the applicable period is +6.75%. The Adjusted Fee payable by the Fund to the Advisor for the fiscal quarter ending July 31, 2010, would be $736,950.00 and is calculated as follows:
a. Base Fee of $486,000.00, which is calculated as follows. The average daily net assets of the AXA R▇▇▇▇▇▇▇▇ Portfolio over the fiscal quarter ending July 31, 2010 (assumed to be $784,500,000), with an Annual Percentage Rate of 0.25% applied to the first $750 million and an Annual Percentage Rate of 0.20% applied to the remaining $34.5 million. Therefore, the Base Fee is equal to:
a = Average daily net assets over the fiscal quarter ending July 31, 2010 a1 = $750,000,000 a2 = a – a1 = $34,500,000 b1 = Annual Percentage Rate applied to first $750 million, (= 0.25%) b2 = Annual Percentage Rate applied to next $750 million, (= 0.20%)
b. Performance Adjustment of $250,950.00, which is calculated as follows. The average month-end net assets of the AXA R▇▇▇▇▇▇▇▇ Portfolio over the rolling 36-month period applicable to the fiscal quarter ending July 31, 2010, are $768,500,000. The excess return of the AXA R▇▇▇▇▇▇▇▇ Portfolio (+20%) over the Index (+13.25%) over such period is +6.75%. An excess return of +6.75%, when applied to the Performance Adjustment Schedule, corresponds to an excess return of 0% up to and including +9%, which corresponds to an Adjustment Percentage of +52.5%. The performance adjustment percentage is calculated as follows: