ITEM 5. FEES AND COMPENSATION
The Adviser charges each client an investment management fee based on the value of the account’s
assets under management.
• Separate Accounts. Investment management fees for separate accounts are charged each
quarter based upon a percentage of the market value of the account’s assets under
management as of the last day of each quarter. Although the fee is negotiable, the standard
fee for separate accounts is an annual rate of 1.25% on the first $1 million and 1.0% on
amounts above $1 million. Fees are typically billed in advance. The Adviser will refund
unearned fees that have been prepaid. If a new client account is established during a quarter,
the investment management fee can be prorated.
• Private Fund. The private fund for which the Adviser serves as investment manager generally
pays a management fee at an annual rate of 1.0% of the fund’s net assets as of quarter end.
On an annual basis, if the performance of the fund exceeds the high-water mark for each
investor, the Adviser or its related persons are entitled to receive an incentive reallocation of
profits equal to 15% of net profits above a 7% hurdle allocated to the investor or partner in
any year.
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For qualified clients in separate accounts, the Adviser or its related persons may 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, a fund, or an investor’s capital account.
In addition to paying investment management fees and, if applicable, a performance-based incentive
reallocation to the Adviser or its related persons, client accounts will also be subject to other
investment expenses such as custodial charges, brokerage fees, commissions and related costs; bank
service fees; interest expenses; taxes, duties, and other governmental charges; transfer and
registration fees or similar expenses; costs associated with foreign exchange transactions; other
portfolio expenses; and costs, expenses, and fees (including, investment advisory and other fees
charged by investment advisers with, or funds in, which the client’s account invests) associated with
products or services that may be necessary or incidental to such investments or accounts. More
detailed information about the fees and expenses related to the private funds may be found in the
governing documents of such private funds.
Some client assets may be invested in pooled investment vehicles. In these cases, clients will bear their
pro rata share of the underlying fund’s operating and other expenses including, in addition to those
listed above: sales expenses; legal expenses; valuation expenses; internal and external accounting,
audit, and tax preparation expenses; and organizational expenses. Client assets are from time to time
invested in money market mutual funds, ETFs, or other registered investment companies. In these
cases, the client will bear its pro rata share of the investment management fee and other fees of the
fund, which are in addition to the investment management fee paid to the Adviser. Please refer to Item