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Assumptions
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Capital Contribution (Rs.)a5,000,000
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Management Fee (%age per annum)b0.75%
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Other Expenses (%age per annum)c0.50%
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Performance (%age per annum)d20.00%
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Hurdle Rate of Return (%age per annum)e8.00%
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Brokerage and Transaction costf0.20%
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Hybrid Fee IllustrationScenario 1Scenario 2Scenario 3
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Gain of20%Loss of-20%No Change0%
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Capital Contributed / Assets under Management ii = a5,000,000 5,000,000 5,000,000
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Gain / (Loss) on Investment based on the Scenario iiii= i*Scenario1,000,000 -1,000,000 -
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Gross Value of the Portfolio at the end of the year iiiiii= I + ii6,000,000 4,000,000 5,000,000
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Daily Weighted Average assets under management iviv= (i + iii) / 25,500,000.00 4,500,000.00 5,000,000.00
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Other Expensevv= iv x c-27,500 -22,500 -25,000
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Brokerage and Transaction costvivi= iv x f-11,000 -9,000 -10,000
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Management Fees viivii = (iv + v + vi) x b-40,961 -33,514 -37,238
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Total charges before Performance fee.viiiviii = v + vi + vii-79,461 -65,014 -72,238
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Gross Value of the Portfolio before Performance feeixix = iii + viii5,920,539 3,934,986 4,927,763
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High Water Mark Value (HWM) (Capital contributed for 1st year and second year onwards as defined in the PMS agreement.x5,000,000 5,000,000 5,000,000
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Hurdle Rate of return or as defined in the PMS agreementxixi = i x e400,000 400,000 400,000
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Gross Value of the Portfolio before Performance fee is greater than High Water Mark Value + Hurdle rate of returnxiixii = ix > (x+xi) then Yes else No P FeesYesNo PfeeNo Pfee
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If Yes, proceed to performance fee calculation else 0 (zero) performance fee for the period)
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Portfolio return subject of Performance Feexiiixiii = ix - x - xi520,539 0 0
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Performance feexivxiv = xiii x d-104,108 0 0
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Net value of the Portfolio at the end of the year after all fees and expensesxvxv = ix + xiv5,816,431 3,934,986 4,927,763
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% Portfolio Return xvixvi = ((xv - i) / i) %16.33%-21.30%-1.44%
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High Water Mark to be carried forward for next year. xviixvii = Max (ix , x)5,920,539 5,000,000 5,000,000
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Notes:
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1In the illustration, Management fee is assumed to be charged annually. However, the Portfolio Manager can charge fee at any frequency i.e. Daily, Monthly, Quarterly, Semi-annually, Annually or at any other frequency as defined in the PMS agreement and as permitted under SEBI regulations.
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2Portfolio Manager can charge Management Fee on Average portfolio value for the management fee period or the closing portfolio value or in any other manner as defined in the PMS agreement.
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3Returns are assumed to be generated linearly through the year.
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4Other Expenses includes Account Opening charges, stamp duty /Audit Fee/ Bank charges / Fund Accounting charges / Custody Fee / demat charges or other miscellaneous expense
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5Brokerage and transaction cost for the illustration purpose is charged on the Average AUM. However, Brokerage and Transaction cost are charged on basis the actuals trades.
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6All Fees and charges are subject to GST.
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7For this illustration, High Water Mark for the 1st Year is the Capital invested and from second year onwards if performance fee is charged, it’s the year end closing value after all charges and fees, else it remains the same. However, in actual, High Water Mark is defined in the PMS agreement and may differ from this illustration.
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8For this illustration, Hurdle rate is calculated on Higher of (HWM or previous year closing capital). However, in actual Hurdle Rate of return is defined in the PMS agreement and may differ from this illustration.
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9Hurdle rate is prorated in case the performance fee period is less than 1 year OR if there are inflow/outflows from the portfolio
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10The above illustration shows the High Water Mark to be carried forward in different scenario for equal and fair treatment to the investor.
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11All the amounts rounded off to nearest rupee
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