Item 5. Fees and Compensation
13D Funds are typically charged an annual management fee based on a percentage of value of the net assets
we manage and according to the current fee schedule of the investment strategy in which they are invested.
Actual fees, minimum fees and minimum accounts sizes may vary depending on the circumstances of the
particular client, or different levels of servicing as otherwise agreed upon with specific clients. Prospective
and current investors should review the fees and compensation information presented in this brochure along
with the applicable Client Constituent Documents.
Asset-Based Compensation
40 Act Fund
13D serves as the investment adviser to the 13D Activist Fund, a registered investment company and a
series of Northern Lights Fund Trust (the “Trust”). The Adviser currently receives a monthly advisory fee
payment from the 40 Act Fund that is equivalent to a fixed annualized percentage of 1.50% based on the
40 Act Fund’s average daily net assets basis. This is a unitary fee structure whereby the Adviser pays the
40 Act Fund’s ordinary operating expenses, including fees payable to other service providers of the 40 Act
Fund out of the asset-based advisory fees it receives from the 40 Act Fund. Advisory fees are reviewed by
the Board of Trustees of the Trust on an annual basis. Shares of the 40 Act Fund are offered by means of a
written prospectus that describes the advisory fees and expenses paid by the 40 Act Fund in more detail.
Private Funds
13D Private Funds are typically charged an annual management fee, calculated based on net asset value of
the Fund and payable monthly in arrears. The precise amount of, and the manner and calculation of, the
management fees paid to the Adviser is described in each Private Fund’s Client Constituent Documents.
The Adviser withdraws management fees, performance-based compensation and other fees and expenses
directly from the Private Funds’ assets by notice to the custodian. Management fees, performance-based
compensation and other fees and expenses described in this brochure are generally subject to modification,
waiver, or reduction by the Adviser in its sole discretion, both voluntarily and on a negotiated basis with
selected investors via side letter and other arrangements, which may not be disclosed to other investors in
the same Private Fund. Fees may differ from one Private Fund to another (or for certain investors therein,
as applicable). Please refer to Item 6 of this brochure for information regarding performance-based
compensation that Private Funds may pay.
Employees, business associates and other friends and family of the Adviser or its personnel (“Adviser
Investors”) will not typically pay management fees or performance-based compensation in connection
with their investment in a Private Fund. Adviser Investors will pay their pro rata share of certain Private
Fund expenses or the pro rata portion of such Adviser Investors’ expenses will be allocated to the Adviser
or the general partner of the applicable Private Fund.
Other Fees and Expenses
Adviser Expenses
To the extent provided in the Client Constituent Documents, the Adviser will bear certain expenses and
costs associated with the performance of its services, including expenses on account of rent, utilities, office
supplies, office equipment, compensation and expenses of its partners, officers and employees and other
normal and routine administrative expenses relating to the services and facilities provided by the Adviser to
the Funds.
Fund Expenses
The Adviser will incur all fees and expenses in the course of evaluating and making investments that are
effectuated for a 13D Fund in accordance with the relevant Fund’s Client Constituent Documents with the
exception of taxes, borrowing expenses, brokerage commissions, fees and expenses of other investment
companies in which a Funds invests and extraordinary expenses. 13D Private Funds may also be subject to
other investment and operating expenses and certain out-of-pocket expenses incurred by the Adviser in
connection with the services provided to such fund as set forth in and in compliance with the Client
Constituent Documents.
From time to time the Adviser will be required to decide whether certain fees, costs and expenses should
be (a) borne by a particular Fund, (b) borne by the Adviser and/or (c) allocated between or among Funds and
/or other parties. There may be occasions when one Fund (the “Payor Fund”) pays an expense common to
multiple funds (the “Allocated Funds”) (e.g., legal expenses for a transaction in which all such funds
participate). On such occasions, each Allocated Fund will reimburse the Payor Fund for its share of such
expense, without interest, promptly after the payment is made by the Payor Fund. While highly unlikely, it
is possible that one of the Allocated Funds could default on its obligation to reimburse the Payor Fund.
With respect to allocating other expenses among Funds, the Adviser will make any allocation determination
on a fair and reasonable manner using its good faith judgment, notwithstanding its interest (if any) in the
allocation. Notwithstanding the foregoing, the portion of an expense allocated to a Fund for a particular
service may not reflect the relative benefit obtained by the Fund from the service received.
The Adviser reserves the right to manage other accounts side-by-side with the 40 Act Fund and Private
Funds for third parties at any time. These additional account(s) may be charged a fixed advisory fee and/or
a performance-based fee and may cause the Adviser and/or the funds to pay additional expenses as warranted.
Please refer to Item 12 of this brochure for information related to brokerage and trading costs.