ITEM 5: FEES AND COMPENSATION
In consideration for our advisory services, we generally receive management fees from our clients. The
fees applicable to each client are described in detail in the applicable account documents. A brief summary
of our basic fee schedule is provided below.
Investment Management Fees – SMAs
Annualized Fees
Clients are generally charged an annual management fee of 1% of assets under management, billed
quarterly in advance, subject to a minimum quarterly fee.
We may negotiate the amount of management fees depending upon the circumstances of each client,
including, but not limited to, account composition, account complexity, and other client, employee, or
family relationships, which may result in different fees being charged for accounts that are similar in
composition and objectives. Our employees and their family-related SMAs may be charged a reduced fee
for our services.
The SMA custodian may charge fees, which are separate from and in addition to advisory fees. SMAs may
also incur transaction costs and other fees. Clients should note that fees for comparable services vary, and
lower or higher fees may be charged by other providers for similar services.
Either party may terminate the advisory agreement upon written notice. Unless otherwise agreed to in
writing, the termination of the advisory agreement will be effective within five (5) business days of receipt
of the termination notice. If Client terminates the advisory agreement before the end of a calendar
quarter that has already been billed, Black Swift will promptly refund any unearned portion of the advisory
fee. The refund will be calculated on a pro-rata basis based on the number of days remaining in the billing
period following the effective termination date. Refunds will generally be processed within 15 business
days following termination. Black Swift does not impose any termination fees or penalties.
With respect to SMAs, the advisory fee is payable quarterly in advance, within ten days of the start of
each quarter. The fee is calculated as a percentage of the market value of all assets in the Account, with
short positions valued at their absolute value, on the last day of the preceding calendar quarter. The
custodian is instructed by the Adviser to debit the fee directly from the SMA. The custodian will pay the
amount communicated by the Adviser and is under no obligation to verify the fee calculation. Internal
audits are conducted periodically by the Adviser to confirm that the fees charged to SMAs are correct.
Any discrepancies identified between the fees charged and the results of the audit will be corrected and
offset in the subsequent billing cycle. Clients receive periodic statements from their custodian showing
the amount of advisory fees charged and are encouraged to review these statements and confirm the
accuracy of the charges.
If a client contributes additional assets to their SMA during a quarter, such assets are billed in arrears at
the next fee billing period. If a client’s relationship with us begins or ends on any date other than the last
day of a calendar quarter, the client’s fees are prorated for the applicable number of days completed or
remaining in the quarter.
In addition to management fees, clients are responsible for all brokerage commissions and other fees or
charges associated with securities transactions executed through brokerage firms, stock exchange fees,
and other charges mandated by law or regulation. We do not receive any portion of these transaction
costs or fees. See "Brokerage Practices" below for a further description of the factors Black Swift considers
in selecting broker-dealers for client transactions and in determining the reasonableness of their
compensation (e.g., commissions).
Clients should understand that mutual funds, exchange traded funds, private funds, or other investment
products in which client assets may be invested by us or by others impose separate investment
management fees and other operating expenses, described in such funds’ prospectuses or private
placement memorandums, for which the client will be charged separately from the fee paid to us.
Clients should be aware that similar or comparable services may be available from other firms including
other investment management firms at a cost higher or lower than that available through Black Swift.
Investment Management Fees – Funds
We serve as the investment adviser to the Black Swift Special Situations Fund, LP, the Pro Cyclist Fund, LP,
and the Pro Cyclist Institutional Fund, LP (together, the "Funds"). Each Fund pays us an annual
management fee based on the net asset value of each investor’s interest.
For the Black Swift Special Situations Fund, LP the management fee is generally one percent (1%) of the
net asset value of each investor’s interest. For the Pro Cyclist Fund, LP, qualified clients under Rule 205-3
of the Investment Advisers Act of 1940 pay a management fee of one percent (1%), while non-qualified
clients pay two and a half percent (2.5%). The Pro Cyclist Institutional Fund management fee rate is
generally one percent 1% of the net asset value of each investor’s interest.
We may, at our discretion, reduce or waive the management fee for any investor. Each Fund pays the
management fee monthly in advance.
In addition to management fees, the Black Swift Special Situations Fund, LP allocates a performance-based
fee to Black Swift Partners LLC, the Funds' general partner and our affiliate. This performance allocation
equals ten percent (10%) of each qualified investor’s share of the Fund’s net profits for the fiscal year,
subject to a high-water mark. Investors who are non-qualified are not assessed a performance-based fee.
For the Pro Cyclist Fund, LP and the Pro Cyclist Institutional Fund, LP, the performance allocation is twenty
percent (20%) of each investor’s share of net profits, also subject to a high-water mark.
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