Item 5 Fees and Compensation
As further described in the relevant Governing Documents, the Funds charge management fee
based on a percentage of assets under management, as well as an annual performance fee
(“Performance Allocation”), which is a fee based on a share of capital gains on or capital
appreciation of the assets under management. Management fees are typically 1% per annum (Long
Master Fund and Long Master Fund Ex-China) and 2% per annum (Master Fund) of the net asset
value of each series of shares, payable monthly in arrears as of the last day of each month. A
portion of the management fee will be paid to the Initial Investor (as defined in the Fund offering
memorandum). Although the Funds pay the management fee directly to Carrhae LLP and the
Performance Allocation to an affiliate of Carrhae, these fees are ultimately borne by Investors.
As further described in the relevant Governing Documents, the Performance Allocation will be
calculated by reference to the Net Asset Value of each series of Master Fund Shares before taking
into account any deductions for the Performance Allocation. The Performance Allocation
allocated on an annual basis following the end of each fiscal year, ranges from 10% to 20%. If
Shares are redeemed other than at the end of a fiscal year, a Performance Allocation will be
determined for the corresponding Master Fund Shares as of the Redemption Date.
The Performance Allocation may be waived, reduced or calculated differently with respect to
certain Master Funds’ Shares, including, without limitation, Master Funds’ Shares that correspond
to Shares held by Shareholders that are members, shareholders, partners, affiliates or employees
of Carrhae, members of the immediate families of such persons and trusts or other entities for their
benefit.
As further described in the relevant Governing Documents, in addition to the management fee and
the Performance Allocation, each Fund also incurs operating and investment expenses and their
pro rata share of the applicable Master Fund’s expenses. Operating expenses include, but are not
limited to, investment expenses (e.g., expenses that, in the Manager's or the Company's discretion,
are related to the investment of the Fund's and the Master Fund's assets, whether or not such
investments are consummated, such as brokerage commissions, expenses relating to short sales,
clearing and settlement charges, custodial fees, bank service fees and interest expenses);
investment-related travel expenses (which are travel expenses related to the purchase, sale or
transmittal of the Fund's investments incurred by the Manager or the Company); professional fees
(including expenses of consultants, investment bankers, attorneys, accountants and other experts)
relating to investments; fees and expenses relating to software tools, programs or other technology
utilised in managing the Fund and the Master Funds (including third-party software licensing,
implementation, data management and recovery services and custom development costs); research
and market data (including any computer hardware and connectivity hardware (e.g., telephone and
fiber optic lines) incorporated into the cost of obtaining such research and market data);
administrative expenses (including fees and expenses of the Administrator); legal expenses;
external accounting and valuation expenses (including the cost of accounting software packages);
audit and tax preparation expenses; fees of the Directors; costs of printing and mailing reports and
notices; entity-level taxes; corporate licensing; regulatory expenses (including filing fees);
organisational expenses; expenses incurred in connection with the offering and sale of the shares
and other similar expenses related to the Fund; indemnification expenses; and extraordinary
expenses.
This list is general in nature and not exhaustive and is subject to additional expenses or
modifications to the above expenses, as described in each Client’s Governing Documents.
Where the expenses, described above are incurred jointly for various Clients, such expenses will
be allocated among such Clients in proportion to the size of the investment made by each to which
such expense relates, or in such other manner is as the Funds’ Board of Directors considers fair
and equitable.
Fees for segregated account Clients are negotiated on a case-by-case basis and generally range
from 1.0% per annum of the Net Asset Value of the Account to 1.2%, depending on asset level
and are calculated pursuant to the terms of the relevant investment management agreement and
payable monthly in arrears and pro-rated for partial months. Segregated accounts will also pay a
negotiated performance fee of 15% to 18% of the amount, if any, by which the increase in Net
asset value of the account during the performance period, after the deduction or accrual of
management fees exceeds the balance in the Loss Recovery Account or Carryforward Loss for the
applicable Client account during the performance period, as defined and calculated under the terms
of the relevant investment advisory agreement. Fees for subadvisory services are also individually
negotiated.