Understanding Hedge Fund Fees: Implications for Hedge Fund Managers

LOSS CARRYFORWARD DILUTION EXAMPLE Day One 10 Shares issued at $100 per Share Losses of 10% per Share NAV per Share $90 Day Two 100 Shares issued at $90 Day Three • Day Four • K&L GATES Gains of $200 NAV per Share [$91.81 - Performance Fee] Performance Fee of $20, paid by shares issued at $100 as well as by those issued at $90 klgates.com 16

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