The fund may loan portfolio securities to qualified broker - dealers or other institutional investors provided: (1) the loan is secured continuously by collateral consisting of U.S. government securities, letters of credit,
cash or
cash equivalents or other appropriate instruments maintained
on a daily marked - to - market basis in an amount at least equal to the current market value of the securities loaned; (2) the fund may at any time call the loan and obtain the
return of the securities loaned; (3) the fund will receive any interest or dividends paid
on the loaned securities; and (4) the aggregate market value of securities loaned will not at any time
exceed one - third of the total assets of the fund, including collateral received from the loan (at market value computed at the time of the loan).
So far example, rather than giving the sponsor a 20 % promote for anything above a 12 % IRR, they'd receive a 20 % promote for every year they
exceed a 12 %
return on equity, then receive 20 %
on the backend in excess of whatever
return brings the
cash flows above 12 % IRR.