The last aspect we have to know to understand everything about closed-end funds is related to profit mechanisms. That means we have to understand in which way both the AMC and the investors are going to receive profit. What we know till now is that investors will receive money at the end of the fund, that means at year 10 or year 13 accordingly with the length of the fund, but we have to understand more. Mechanisms of profit are regulated by the internal code of activity. That means for every internal code of activity for every closed-end fund there will be mechanisms specified to calculate profit both for the agency and for the investors. We have to start understanding in what way the AMC receives a profit. What we discover is that coming from the best practices in the market, the AMC is going to receive two different types of profit or revenues. The two types of revenues are represented by management fee and current interest. These two labels are very relevant, not only in closed-end funds, but in any kind of vehicle in private equity in every part of the world. So, weâ€™ll start understanding it now with closed-end funds, but it will be very useful for any kind of vehicle investing in private equity. Let's start with the management fee. The management fee is the amount of money the AMC company receives every year from the closed-end fund. If we think a bit, the closed-end fund is the vehicle generating revenues and costs because in a closed-end fund, as revenues, we have capital gains, hopefully thereâ€™s a lot generated by the exit of investment, some dividends we receive from the companies in which the closed-end fund is going to invest, and also losses in case the exit is not successful. From the amount of money of the closed-end fund, the AMC takes a management fee every year. The management fee is a fixed percentage of money calculated on the value of the fund in the beginning. Just to make a very simple example, if we say there is a closed-end fund of 100 million Euros and the management fee is 2%, it means that the AMC is going to receive two million euros every year, from the closed-end fund. Obviously, with the management fee the AMC has to work and the AMC has to face a lot of expenses. Because the aAMC has to pay the managers, has to face operating costs, but also the AMC has to take advice of the companies helping the AMC to do its job. Also, the AMC has to pay the so-called technical committee. That is the committee of wise people supporting the managers of the AMC to do their jobs, so there are a lot of expenses. It's really crucial to understand who are the owners of the AMC because in case the AMC belongs to a bank or to a large banking group, it's not a problem to face these expenses. If the AMC is an independent boutique of private equity it could be hard. However this is the management fee, but we also have another relevant source of revenue which is honestly, the aim, or the desire of an AMC, and this amount money is the carried interest. The carried interest is calculated only at the end of the life of a closed-end fund. The mechanism of the carried interest is relatively simple. The carried interest is a fixed percentage the AMC is going to receive, calculated on the difference between the final IRR of the funds, and a hurdle rate, which is a sort of threshold, negotiated at the beginning. Just to make an example, if I say that carried interest is at 30%; itâ€™s a standard, 25 to 30% is the standard, and the hurdle rate is 8%, which is, again, a standard, because hurdle rates range between 7 and 8%, it means that the AMC is going to receive the carried interest only if the final IRR of the fund is bigger than 8%. If the IRR is bigger, the AMC is going to receive 30% of the difference between the final IRR and the hurdle rate. This formula of the carried interest is mentioned many times as waterfall mechanisms, and what is interesting is that the waterfall mechanisms can be applied with or without catch-up. We say without catch-up if the carried interest is calculated on the difference between the final IRR and hurdle rate. We say with catch-up if the current interest is calculated directly on the entire amount of the final IRR. The carried interest is fundamental to calculate the amount of money the AMC is going to receive. As a consequence, at the end of the closed-end fund, investors will receive the amount of money of the fund, minus the carried interest received by the AMC.