Item 5: Fees and Compensation
The Master Fund will pay the Adviser a monthly “Management Fee” with respect to each investor
generally equal to one-twelfth of that investor’s Management Fee rate applied to the balance in that
investor’s capital account as of the end of that month. The Management Fee will be calculated and
paid monthly in arrears. The Management Fee rate will generally be 1.5% per annum, but for
“Founders Interests” it will be 1.0% per annum. The Founders Interests will be considered the initial
$250 million (subject to spillover) invested into the Funds.
As discussed above (Item 4), ASIM has agreed to reduce the Management Fee rate applicable to
the Strategic Investment. ASIM may vary the Management Fee for other particular investors by
separate agreement with them and generally does not expect to receive Management Fees on
interests held by the General Partner, the Adviser, the Principal, persons who are commonly known
to maintain a close relationship with the Principal, other employees, partners, and members of
ASIM, and family members and retirement and estate planning vehicles for any of them (“A&S
Related Persons”).
Organizational and Initial Offering Costs. Each Feeder Fund will bear its and such Feeder Fund’s
share of the Master Fund’s costs and the costs of initially offering Interests and/or Shares, as
applicable. Organizational and initial offering costs include formation charges and legal,
accounting, other professional and consulting fees, and expenses in connection with preparing the
Funds’ organizational and contractual documents, as well as costs of preparing, revising,
reproducing, and disseminating initial offering materials and supplemental materials (but will not
include marketing, client relationship management, travel, and related costs, or any placement agent
fees or commissions).
The Funds currently intend to amortize these costs over sixty (60) months. If this treatment of these
costs would result in a qualification of the auditor’s opinion on a Feeder Fund’s or the Master Fund’s
financial statements, the Feeder Fund may accelerate the expensing of such costs for financial
reporting purposes but not for purposes of calculating net asset value (although it may accelerate
such costs for net asset value purposes as well). In such circumstances, investor’s net asset value
statements may differ from the Fund’s audited financial statements to the extent of such difference.
If a Fund is dissolved prior to the completion of the amortization of these costs, the amortization
period will end on the effective date of dissolution.
Operating Costs. Each Feeder Fund will bear its share of the Master Fund operating costs as well
as costs arising out of its own operations and activities. The Feeder Funds or the Master Fund may
pay these costs directly, or ASIM may advance costs and be reimbursed by the Feeder Fund or the
Master Fund. Operating costs include, among other things:
• brokerage commissions and other transaction-related compensation and charges arising out of
transactions involving Master Fund assets (please also see important disclosures in Item 12);
• interest and borrowing charges on securities sold short and margin and other borrowings;
• custodial and bank service fees;
• costs of systems, facilities, and third-party services for order placement, order management,
clearance and settlement, and risk management functions;
Form ADV Part 2A Brochure | Arts & Sciences Investment Management, L.P. March 8, 2019
• costs directly related to researching, identifying, and/or acquiring Master Fund investments,
including costs of (A) third-party investigative, analytical, research, reporting, and/or consulting
services for potential investments; (B) systems and services for modeling, testing, and managing
investment research and for other analysis of portfolio construction, attributes, and/or risks
(including portfolio management systems); and (C) deliberations and negotiations regarding
potential Fund investments;
• costs directly related to holding, monitoring, protecting, and/or enhancing the value of, and/or
otherwise managing Master Fund investments, including costs of (A) third-party investigative,
analytical, research, reporting, and/or consulting services relating to investments and potential
investments; (B) systems and services for modeling, testing, and analysis of portfolio
construction, attributes, and/or risks (including portfolio management systems); (C) proxy voting
research and administration; (D) membership on creditors’ or equity-holders’ committees (both
formal and informal); and (E) participating in deliberations and negotiations regarding Master
Fund investments and potential investments and in activities intended to protect and/or enhance
the value of Master Fund investments (including as to any of the foregoing activities, costs of
travel, accommodations, and meals incurred in connection with those activities);
• costs of quotation, computerized news, pricing, and/or statistical services or software;
• auditing, accounting, third-party-administration (including the Administrator’s), external
bookkeeping, tax preparation and reporting, tax planning, legal, and other professional fees and
costs (including fees and costs paid to ASIM and/or other affiliates’ counsel for services in
connection with the Feeder Funds and/or the Master Fund’s activities (which include
documentation and negotiation of special arrangements between a Feeder Fund and any
investor)), and costs incurred by the Master Fund’s “tax matters partner” or “partnership
representative,” in its capacity as such;
• fees and costs in connection with any lawsuits, arbitrations, or other controversies (whether
pending or threatened) in which the Fund and/or Master Fund may be involved, such as, among
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