An investment adviser registered with the Securities and Exchange Commission may only charge a performance fee with respect to “qualified clients.” Under Rule 205-3 of the Investment Advisers Act of 1940, a qualified client currently includes a client who (i) has at least $750,000 under management with the adviser or (ii) has a net worth of more than $1.5 million. On July 12, 2011, the SEC issued an order (the “Order”) raising the dollar thresholds set forth above, such that a performance fee may only be charged if the client (i) has at least $1,000,000 under management of the investment adviser or (ii) has a net worth of more than $2,000,000. These tests are measured at the time the client contract is entered into. This change becomes effective as of September 19, 2011. Certain states including Massachusetts also follow the SEC’s performance fee eligibility test with respect to advisers located in the state, and it is likely they will adjust their standards to match the new SEC tests. It should be noted that Qualified Purchasers (as defined in section 2(a)(51)(A) of the Investment Company Act of 1940) remain eligible to be charged performance fees in all cases.