Item 5. Fees and Compensation
Barrier’s fees are negotiable and vary, but typically it charges clients in an investment limited
partnership an annual fee of 1.5% of assets under management, which amount is payable in
quarterly installments at the beginning or end (depending on the provisions of each client’s
partnership or other account agreement) of each calendar quarter based on the net market value of
each client’s account on the date the fee accrues and becomes payable. Barrier also typically
allocates from each limited partner in an investment limited partnership a performance allocation
equal to 17.5% of net profits (including both realized and unrealized gains and losses) otherwise
allocable to such limited partner. Barrier charges similar performance fees to other clients, the
amounts and calculations of which will be as specifically negotiated by Barrier and those clients.
Performance allocations and fees are assessed in arrears on an annual basis, and are only applied
to the portion of profits that exceed the cumulative losses previously allocated to or incurred by
clients. Barrier reserves the right to waive or reduce the management and performance allocation
fees. Barrier complies with Rule 205-3 under the Investment Advisers Act of 1940, to the extent
required by applicable law. Performance allocations and fees may create an incentive for Barrier
to make more risky and speculative investments than it would otherwise make.
Barrier typically deducts management fees and performance allocations and fees directly from
client accounts. Barrier believes that its fees are competitive with fees charged by other investment
advisers for comparable services. Comparable services may be available, however, from other
sources for lower fees.
Barrier generally receives management fees with respect to its SMAs. Such management fees
typically range between an annual rate of 0.30% to 1% of assets under management (depending on
the provisions of each SMAs agreement), which amount is payable in quarterly installments at the
beginning or end of each calendar quarter.
In addition, SMAs are charged a performance fee, which is negotiated with each separately
managed account client. Such performance fees are typically equal to 20% of the amount that
returns of the SMAs outperform an agreed upon benchmark and, in certain circumstances, an
additional negotiated rate.
SMAs may elect to be billed directly for fees or may authorize Barrier to directly debit fees from
the SMAs account. Barrier negotiates its fees individually with each separately managed account
client and the specific fees will be set forth in the SMAs respective advisory agreement.
The disclosure in this Item 5, together with the disclosure in Item 12, allow a plan that is subject
to the Employee Retirement Income Security Act of 1974 and that invests in an investment limited
partnership of which Barrier is general partner, to use the “alternative reporting option” to report
Barrier’s compensation as “eligible indirect compensation” on the Schedule C of the plan’s Form
5500 Annual Return/Report of Employee Benefit Plan.
Relationships with Barrier’s investment partnership clients are terminable on expiration of the
partnership’s term, dissolution of the partnership or on Barrier’s withdrawal as general partner.
Generally, each limited partner may withdraw from a partnership, on specified prior written notice,
on the last day of any calendar quarter that occurs on or after the day preceding the first anniversary
of such limited partner’s admission to the partnership.
Except as may be otherwise negotiated in particular cases, the holder of an individually managed
account may terminate the account by giving 30 days’ prior written notice.
In all cases, expenses, the pro rata portion of the management fee and the performance allocation
or fee through the date of termination are charged to the account. All prepaid but unearned advisory
fees are refunded on termination of a client’s account. An investor who withdraws from a fund
on a date other than the last day of a quarter, however, does not receive a refund of the management
fee previously paid.
Each account is responsible for its own costs and expenses, including trading costs and expenses
(such as brokerage commissions, expenses related to short sales, and clearing and settlement
charges), ongoing legal, accounting and bookkeeping fees and expenses, and the fees and expenses
charged by any fund administrator for its accounting, bookkeeping and other services. Barrier
bears its own operating, general, administrative and overhead costs and expenses, other than the
expenses described above. All or part of these costs and expenses may be paid, however, by
securities brokerage firms and futures commission merchants that execute clients’ securities
trades, as discussed in Item 12 below.
Barrier and its supervised persons do not receive a brokerage commission or any other
compensation attributable to the sale of securities or investment products.