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shall pay the Manager as full compensation for the services
performed hereunder an annual fee based on the Manager's fee
schedule in effect from time to time; and, agrees that such
compensation may be deducted directly from the Assets by the
Manager and paid when due." The fee was fixed at 0.25, 0.50 or
1.00 percent of the value of the client's net assets placed with
LTD, depending upon the category of investment made by the
client. During 1986, LTD began using a revised Discretionary
Authorization in which LTD's fee was increased to 0.50 or 1.00
percent of the value of the client's net assets placed with LTD,
depending upon the category of investment made by the client.
The gross receipts and direct costs (viz, commissions to
promoters) relating to LTD’s "Management Fees" for each taxable
year are as follows:
TYE June 30 Gross Receipts Direct Costs
1985 $273,279 $33,852
1986 565,222 88,112
1987 655,223 51,978
1988 886,017 27,620
1989 1,119,259 (11,359)
2. Interest Income
a. U.S. Certificates of Deposit
and Bank Deposits
All investments made by or on behalf of LTD's clients were
made in accordance with the terms of the discretionary
authorization and power of attorney. With regard to any funds
transferred to LTD's client clearing account for investment, the
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