Item 5. Fees and Compensation
Asset-Based Compensation
The Adviser charges each client an investment management fee based on the value of the client’s assets
under management ranging from 0% to 1% per annum.
Investment management fees are charged each quarter either in arrears or in advance as outlined in the
applicable investment management agreement or limited partnership agreement. Investment management
fees charged each quarter in arrears are 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 last day of the quarter. Investment management fees charged each quarter in
advance are 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 quarter. If a new client account is established during a quarter or a client makes an additional
contribution to its account during a quarter, the investment management fee will be prorated.
If a client’s investment management agreement is terminated or a withdrawal is made from a client account
during a quarter, the fee payable to the Adviser will be calculated based on the value of the assets on the
termination date or withdrawal date and prorated for the number of days during the quarter in which the
investment management arrangement was in effect or such amount was in the account.
Performance-Based Compensation
The Adviser will be paid performance-based compensation, which is compensation that is based on a share
of capital gains on or capital appreciation of the assets of a client (such as a client that is a hedge fund or
other pooled investment vehicle). This compensation may be paid to the Adviser or to a related person of
the Adviser and ranges from 10% to 25%. The receipt of certain performance-based compensation may
be subject to a hurdle rate as outlined in the applicable investment management agreement or limited
partnership agreement.
The investment management fee and the performance-based compensation are not negotiable, but may
be waived or reduced by the Adviser for certain investors that are partners, principals, employees or
affiliates of the Adviser, relatives of such persons, and for certain large or strategic investors.
For pooled investment vehicles, the Adviser deducts the investment management fee that is payable in
arrears from client accounts on a quarterly basis by instructing the client’s custodian. For pooled investment
vehicles, the Adviser generally deducts the investment management fee that is payable in advance from
client accounts on the first day of an applicable initial or additional client account contribution and then on
a quarterly basis thereafter by instructing the client’s custodian. For separately managed accounts, the
Adviser does not deduct the investment management fee from client accounts. Rather, the Adviser bills
clients.
In addition to paying investment management fees and, if applicable, performance-based compensation,
client accounts will also be subject to other investment expenses such as legal, accounting (including third
party accounting services), administration, audit, and other professional fees and expenses, out-sourced
trading expenses, organizational expenses, research expenses (including research-related travel) other
than those incurred in the ordinary course of business, investment expenses such as commissions and
trading and support services (including payments to assisting brokers), trading-related technology software
costs deemed by the Adviser to benefit the funds such as portfolio, order and risk management systems,
compliance expenses of the clients including expenses related to various filings (or portions thereof) the
Adviser is required to make as a result of managing fund portfolios, such as Form PF and expenses related
to registration, filing, and/or reporting requirements, custodial fees, bank service fees and other expenses
related to the purchase, sale, preservation or transmittal of fund assets.
To the extent client assets are invested in a master-feeder structure, feeder funds bear a pro rata share of
the expenses associated with the related master fund. In addition, clients will incur brokerage and other
transaction costs. Please refer to Item 12 of this Firm Brochure for a discussion of the Adviser’s brokerage
practices.