The Performance Fee operates on a no profit, no fee based on high watermark principle. If your account shows profit from the beginning of the month to the beginning of the next a performance fee is deducted from your account (handled by the broker). The performance fee is defined as 25% of profit on a client account. This is based on the high-water mark equity principle.

Working Example Of 25% Performance Fee:

Month 1:

Initial Balance 100,000 USD (initial high-water mark, no fee will be paid until the end of month equity exceeds this initial balance)
End of month equity 108,000 USD (total profit for month is 8,000 USD)
Performance fee charged is 2,000 USD (25% of 8,000 USD), leaving 106,000 USD in the account.
The new high water mark for this account is 106,000 USD (you will not pay a performance fee until the next time an end of month equity exceeds this 106,000 USD)

Month 2:

High water mark 106,000 USD (from month 1) End of month equity 111,000 USD (total profit for month is 5,000 USD)
Performance fee charged is 1,250 USD (25% of 5,000 USD), leaving 109,750 USD in the account.
The new high water mark for this account is 109,750 USD

Month 3:

High water mark 109,750 USD (from month 2) End of month equity 109,000 USD (total profit for month is -750 USD)
Performance fee charged is 0 USD. No profit, no fee.
The high water mark for this account is still 109,750 USD

Month 4:

Balance 109,000 USD (from month 3), High water mark 109,750 USD (from month 2)
End of month equity 112,000 USD (total profit for month is 3,000 USD)
Performance fee is only paid on what exceeds the high water mark, therefore although the profit is 3,000 USD you only pay fee on 2,250 USD (112,000 USD - 109,750 USD) Performance fee paid is 562.50 USD, balance for this account is 111,437.50 USD (you will not pay a performance fee until the next time an end of month equity exceeds this 111,437.50 USD)