Item 5 - Fees and Compensation
Management Fees
As the investment adviser to the Clients, Bishop Rock receives management fees at an annual
rate of 1.5% of each Investor’s account balance. These management fees are payable quarterly, in
advance, and are prorated for any investment period that is less than a full calendar quarter.
The Firm, in its sole discretion, may reduce, waive or calculate differently the management fee for
certain Investors and waives the management fee and performance fee for employees of Bishop
Rock.
Performance-Based Compensation
Bishop Rock, or an affiliate of the Firm that serves as the general partner of a Fund (the
“General Partner”), as applicable, is entitled to receive an annual performance-based
compensation (“Incentive Allocation”), equal to either 15% or 20% of the net capital
appreciation of each Investor’s capital account.
Other Expenses
In addition to paying performance-based compensation, the Clients are subject to investment and
other expenses, either directly or through the Master Fund, including, among other things:
organizational expenses, the fees paid to Bishop Rock, fees and expenses of Fund directors (as
applicable), fees paid to any proxy agent, legal, accounting, auditing and other professional
expenses, Fund-related insurance costs (including a portion of Bishop Rock’s Directors’ and
Officers’ liability insurance), administration expenses and fees, research expenses, investment
related travel and entertainment expenses in connection with investment and research activity,
investment expenses (such as commissions (see Item 12-“Brokerage Practices” below), expenses
attributable to regulatory filings which are made with respect to the Funds or assets of the Funds
Bishop Rock Capital, L.P. Form ADV Part 2A
(including Form PF filings, Section 13 filings)), custodial fees, bank service fees, expenses related
to obtaining and maintaining order management and similar systems and other expenses related
to the purchase, holding, sale or transmittal of the Clients’ assets.
If Bishop Rock incurs any of the expenses mentioned above on behalf of the Funds, then it will
allocate such expenses among the Funds in proportion to the size of the investment made by
each in the activity or entity to which the expense relates, or in such other manner as Bishop
Rock considers fair and reasonable. Managed accounts pay their pro rata share of research
expenses and of expenses related to assets and investments but do not share in the costs of
Fund-specific expenses.
The allocation of expenses by the Firm between it and any Fund and among Funds represents a
conflict of interest for the Firm. The Firm has adopted an expense allocation policy that is
designed to address this conflict.
Item 6 - Performance Fees and Side by Side Management
Certain Clients may have more favorable performance-based compensation arrangements than
other Clients. Since Bishop Rock will advise multiple Clients, which may have different
compensation arrangements, a potential exists for one Client account to be favored over another
Client account. In addition, as management fees and performance-based compensation will be
based directly on Clients’ net asset values, Bishop Rock may have a conflict of interest in valuing
the assets held in Client accounts. To mitigate these risks, Bishop Rock has implemented policies
and procedures intended to address conflicts of interest relating to the management of multiple
Clients, the allocation of investment opportunities and the valuation of Client assets. Allocations
of investment opportunities among multiple Clients generally are made on a pro-rata basis taking
into account the Client’s available capital, strategies and restrictions. To the extent orders are
aggregated, Client orders are price-averaged. Bishop Rock follows documented valuation policies
and consults with each Client’s third-party administrator, as and if applicable, to mitigate the risk
associated with valuing Client assets.
For a more detailed discussion on incentive allocations, please see the relevant Client
Documents.