Common use of Incentive Fee on Capital Gains Clause in Contracts

Incentive Fee on Capital Gains. Assumptions Year 1: No net realized capital gains or losses Year 2: 6% realized capital gains and 1% realized capital losses and unrealized capital depreciation; capital gain incentive fee = 17.5% x (realized capital gains for year computed net of all realized capital losses and unrealized capital depreciation at year end) Year 1 Incentive Fee on Capital Gains = 17.5% x (0) = 0 = No Incentive Fee on Capital Gains Year 2 Incentive Fee on Capital Gains = 17.5% x (6% -1%) = 17.5% x 5% = 0.875%

Incentive Fee on Capital Gains. Assumptions Year 1: No net realized capital gains or losses Year 2: 6% realized capital gains and 1% realized capital losses and unrealized capital depreciation; capital gain incentive fee = 17.520% x (realized capital gains for year computed net of all realized capital losses and unrealized capital depreciation at year end) Year 1 Incentive Fee on Capital Gains = 17.520% x (0) = 0 = No Incentive Fee on Capital Gains Year 2 Incentive Fee on Capital Gains = 17.520% x (6% -1%) = 17.520% x 5% = 0.8751%