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The high watermark clause is applied in connection with success-dependent fees (performance fees). The asset manager calculates his fee on the basis of the increase in value compared to the last peak. This means that the performance fee only becomes due once any losses have been made up in full. Example: If a client invests CHF 100,000 and only has CHF 90,000 at the end of the year, no fee will be charged. If the portfolio increases to CHF 95,000 in the following year, no fee may yet be charged. Only when the portfolio increases for example to CHF 110,000 may the asset manager charge a performance fee for the amount exceeding the original CHF 100,000, i.e. in this case CHF 10,000.

Term-Nr.: 430

German: High Watermark (415)

Source: SFO D15 2010 m. e. E., 24.04.2010

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