Item 5: Fees and Compensation
The fees applicable to each Client are set forth in detail in the corresponding Offering Documents, trading
advisory agreement and the consulting agreement where applicable. A brief summary of such fees is
provided below.
Management Fee
For its investment management services, the Flagship Master Fund pays to the Investment Manager an annual
asset- based investment management fee (“Management Fee”) of the balance of each Investor’s capital
account. The Flagship Master Fund pays the Management Fee within 10 days of the first day of each fiscal
quarter. The Flagship Master Fund calculates and pays the Management Fee in advance but amortizes the
Management Fee monthly over the fiscal quarter for which such Management Fee is paid. The Management
Fee rate ranges from 1.00% to 1.50%. The Firm, in its sole discretion, may waive or modify the Management
Fee for any Investor. The Management Fee charged (if any) to other Clients (i.e., the SMA and Concentrated
Funds) have negotiated fee rates or different fee structures based on factors such as cumulative asset size
and anticipated future assets, among others.
Other Types of Fees or Expenses
Carronade is authorized to incur and pay in the name and on behalf of the Clients all expenses which it
deems necessary or advisable.
The Firm is responsible for and shall pay, or cause to be paid, all of its own ordinary administrative and
overhead expenses, including, without limitation, all costs and expenses related to rent, furniture, fixtures,
equipment, office supplies, clerical expenses and all salaries, bonuses and benefits paid to, or on behalf of,
personnel of the Firm.
Each Client bears its own expenses and, in the case of the Funds its pro rata share of the relevant Master
Fund’s expenses, and any trading vehicle’s expenses, including the following: (i) the Management Fee (as
applicable); (ii) expenses related to the research, due diligence, provision of public relations and monitoring
of actual and prospective investments (whether or not consummated) and the consummation of such
investments, including the following: third-party investment sourcing fees; fees and expenses related to
obtaining research and market data (including any information technology hardware, software or other
technology incorporated into the cost of obtaining such research and market data) and expenses related to
obtaining, processing and analysing “big data” or “alternative data”; due diligence expenses including
consulting and appraisal fees; travel expenses; brokerage and prime brokerage fees, commissions and
expenses; expenses relating to reorganizations, restructurings and workouts; expenses related to short
sales; clearing and settlement charges; custodial fees and expenses; bank service fees; interest expenses and
fees related to financings or refinancings; and fees and expenses of third-party professionals, including
consultants, investment bankers, public relations personnel, attorneys and accountants; (iii) organizational
and reorganizational expenses; and (iv) operational expenses, including the following: fees and expenses
relating to information technology hardware, software or other technology (including expenses related to
artificial intelligence (“AI”) and any fees or other charges based on usage or consumption for AI models, AI
application programming interfaces (“APIs”), code generation tolls and related platforms) and software
licensing, implementation, data management and recovery services and custom development) used to
research investments, evaluate and manage risk, facilitate valuations, facilitate accounting functions,
facilitate compliance with the rules of any self-regulatory organization or applicable law (including reporting
obligations), facilitate and manage the order execution of financial instruments by the Client or any trading
vehicle or otherwise manage the Client or any trading vehicle, such as Bloomberg terminals, portfolio
management systems, risk management systems and order management systems; fees and expenses of
third-party risk management products, models and services; third-party administrative fees and expenses;
fees and expenses of third-party professionals, including consultants, valuation service providers, attorneys
and accountants (including shadow accountants); the costs of any litigation or investigation involving
activities of the Client or any trading vehicle; third-party audit and tax preparation expenses; insurance
expenses, including premiums for fidelity bond coverage, cybersecurity insurance and liability insurance and
fidelity bond coverage covering the General Partners, the Investment Manager and the members, partners,
officers, employees and agents of any of them and (for the Funds) each member of the Client’s advisory board
(as applicable); fees and expenses (including director registration fees) of any of the Client’s directors and
officers (as applicable) (including any anti-money laundering officers); fees and expenses of the Client’s
advisory board (as applicable); costs of preparing and distributing reports and notices; taxes; expenses
incurred in connection with negotiating and complying with provisions of any side letter agreement; fees
and expenses related to compliance with the rules of any self-regulatory organization or applicable law in
connection with the activities of the Client or any trading vehicle, including any governmental, regulatory,
licensing, filing or registration fees or taxes (including fees and expenses incurred in connection with the
preparation and filing of Form PF, Section 13 filings, Section 16 filings and other similar regulatory filings);
expenses incurred in connection with the offering and sale of the Funds’ interests and other similar expenses
related to the Funds (excluding fees payable to any placement agent) (as applicable); extraordinary
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