FEES AND COMPENSATION
A. Advisory Services and Fees
Written investment advisory agreements, and organizational and offering documents of
the Client Accounts, govern the terms of compensation, and the manner in which we charge fees
to each of our clients. The fees we charge for our advisory services may be negotiable
depending on the circumstances of the client’s account and the service levels we provide to the
client. We generally bill our fees on a monthly or annual basis. Our fees are payable in advance.
For a detailed description of our fee arrangements, see “Item 5 Fees and Compensation − Fees”
below.
In addition to our fees and compensation, each client pays all of its operating expenses
and administrative expenses, which are set forth in the applicable written investment advisory
agreements, and organizational and offering documents of the clients. Operating expenses and
administrative expenses may include, but are not limited to, all taxes; administrative expenses;
investment expenses (e.g., expenses that are determined to be related to the investment, or the
proposed investment, of the client’s assets, such as brokerage and commission expenses, margin
and interest expenses; out-of-pocket costs related to specific investment opportunities and
investments, including consultants and their expenses, research and market data expenses,
including without limitation, news, quotation, statistics, computer and pricing services, and
hardware, software, data bases, and other technical and telecommunication services and
equipment); fees, charges, and disbursements of escrow agents, custodians, and any sub-
custodians; costs and expenses of investments and withdrawals by investors; legal expenses;
insurance expenses (including, without limitation, indemnification insurance); governmental fees
and regulatory expenses (including filing fees); and auditing, tax preparation, and accounting
expenses related to the client and its investments. Each client is also generally responsible for its
own extraordinary expenses (such as, to the extent applicable, litigation expenses and
indemnification expenses). We bear the costs of providing our services to the clients, including
our general overhead, salary, office, and travel expenses (other than travel related to the
investment, or the proposed investment, of the clients’ assets), and we receive reimbursement for
any non-investment advisory expenses we incur on behalf of the clients.
We do not receive brokerage commissions or other compensation attributable to the sale
of securities or other investment products.
For a discussion of the factors that we consider in selecting or recommending broker-
dealers for client transactions and determining the reasonableness of commissions and
compensation for such broker-dealers, see “Item 12 Brokerage Practices − Selection of Broker-
Dealers and Reasonableness of Compensation.”
B. Payment of Fees
The fees relating to our trading strategies for the Funds are generally as follows:
• A management fee is payable to us monthly, in advance, at an annual rate ranging
generally from 1.5% to 2% of the applicable Fund’s net assets attributable to each
Fund investor’s account.
• A performance allocation is allocable to us by a Fund at a rate equal to between
15% and 30% of the net gains allocable to an investor’s account. The
performance allocation is generally allocable on an annual basis in arrears. The
performance allocation is subject to a high water mark.
• Such fees are deducted from the applicable Client Account.
The fees relating to our trading strategies for our Managed Accounts are negotiable. We
do not currently assess fees with respect to any of our current Managed Accounts.
We may elect to waive or reduce the incentive allocations and the management fees
described above, without notice to, or the consent of, any client (or underlying investors in the
Funds). There are no current side letter agreements that would negatively impact our clients.
Pursuant to the terms of the client’s investment advisory agreement, or other advisory
arrangement, if the investment advisory relationship is terminated (or funds are withdrawn) as of
any date other than the last business day of the applicable payment period, we typically charge a
prorated management fee based on the ratio that the number of days for which investment
advisory services were rendered bears to the total number of days in that payment period, and we
return any unearned fees to the client or underlying investor. In the event that the investment
advisory relationship is terminated (or funds are withdrawn) other than at the end of a
performance fee or allocation calculation period, such termination (or withdrawal) date shall
typically be treated as the end of a performance fee or allocation calculation period, and, if
earned, we charge such client a performance fee or allocate a performance allocation in
connection with such client’s account, as applicable.