ITEM 5 – FEES AND COMPENSATION
Management Fee
Academy charges each pooled-investment vehicle client a monthly management fee (the “Management
Fee”) calculated at an annual rate between 0.75%-2% of each client’s assets under management.
Investors in pooled-investment vehicles managed by Academy are subject to such Management Fees
indirectly through their investment in their respective client accounts. The Management Fee is charged
either monthly or quarterly in advance, based on the total market value of the assets in the client account
(including net unrealized appreciation or depreciation of investments and cash, cash equivalents and
accrued interest) on the first day of the month or quarter, as applicable, and is adjusted for subscriptions
and withdrawals/redemptions during the month.
Management Fees are generally not negotiable; however, Academy, in its sole discretion, may waive or
modify the Management Fee for investors in client accounts that are members, employees or affiliates of
Academy or a related person of Academy, relatives of such persons, and for certain large or strategic
investors.
Performance-based Allocation
At the end of each fiscal year, Academy (or its related person) will receive an annual incentive allocation
equal to a rate between 10%-20% of the net profits, if any, attributable to a pooled-investment vehicle
client account, subject to a loss carryforward provision (the “Incentive Allocation”).
The Incentive Allocation allocated to Academy (or its related person) is generally not negotiable;
however, Academy (or its related person), in its sole discretion, may waive or modify the Incentive
Allocation for investors in pooled-investment vehicles that are members, employees or affiliates of
Academy or a related person of Academy, relatives of such persons, and for certain large or strategic
investors.
See Item 6 for discussion of potential conflicts of interest associated with the performance-based
compensation received by Academy (or its related person).
Payment of Fees
Academy deducts the Management Fee from pooled-investment vehicle client accounts by instructing the
client’s custodian. Academy deducts client accounts for the Management Fees monthly or quarterly, as
applicable.
The Incentive Allocation is deducted from pooled-investment vehicle client accounts at the end of each
fiscal year or upon withdrawal or redemption by a client and reallocated to, as applicable, Academy (or its
related person).
Expenses
Academy renders its services to client accounts at its own expense and is responsible for its overhead
expenses including: office rent; furniture and fixtures; secretarial/internal administrative services; salaries
and bonuses; entertainment expenses; employee insurance and payroll taxes.
All other expenses are paid by client accounts and include: (i) legal and compliance, administrator, audit
and accounting expenses; (ii) organizational expenses; (iii) client-related insurance costs; (iv) technology
expenses, data and other similar expenses related directly to trading; (v) directors’ fees and expenses (if
any); (vi) the fees payable to Academy (e.g., the Management Fee); (vii) investment expenses (such as
commissions, exchange fees, borrowing costs and fees paid to counterparties); (viii) interest on margin
accounts and other indebtedness; (ix) custodial fees; (x) bank service fees; and (xi) any other expenses
reasonably related to the purchase, sale or transmittal of client assets. Client assets may also be invested
in a master-feeder structure. Feeder funds bear a pro rata share of the expenses associated with the
related master fund. Notwithstanding the foregoing, certain clients currently have Capped Expenses.
“Capped Expenses” generally include expense items (i), (ii), (iii), (iv) and (v). Academy may, in its sole
discretion, elect to continue to bear Capped Expenses for certain clients.
Please refer to Item 12 – Brokerage Practices, for further information regarding Academy’s brokerage
practices.
Fees and expenses related to separately managed accounts are individually negotiated. The management
and performance-based fees charged to, and expenses borne by, separately managed account clients may
be similar to or different from such fees disclosed above, and Academy may waive either such fee for a
managed account client when the respective advisory arrangement is being negotiated.
Prepayment of Fees
Clients are required to pay the Management Fee in advance. If the advisory contract with a client is
terminated, any pre-paid fees are refunded (if at all) in accordance with each client’s offering documents
or investment management agreement.