"All actual, fee paying, discretionary accounts... what does it mean?

Often when meeting with clients or teaching a class on the Global Investment Performance Standards (GIPS(R)), I mention the basic requirement that all actual, fee paying, discretionary accounts must be included in at least one composite. But what do these words mean? They can be confusing, so let's briefly touch on them:

1. Actual: a REAL account; i.e., not a model account, the results of back-testing, or a hypothetical account. You ARE permitted  to show the results of model, back-tested, and hypothetical accounts as supplemental information, but their results cannot be linked to those of an actual account and they aren't to be included in composites.
2. Fee paying: the client pays an advisory fee for the investment services. Granted, you can include non-fee paying accounts in composites, too, but additional disclosures are needed if you do this.
3. Discretionary: this is the most challenging word. We're not talking legal discretion, but rather the ability for the manager to execute their strategy. That is, if a client has imposed restrictions will their results be representative of the composite's style? If yes, then it's fine to include them; if no, then the firm should have a policy that would exclude them.

Hopefully this makes sense.