Item 5. Fees and Compensation
Detailed information regarding the fees charged to the Funds is provided in the Governing
Documents. CenterBook receives a Management Fee of up to 1% annually based on the
net asset value of the Funds. CenterBook will also be paid performance-based
compensation (“Incentive Fee”) of up to 30%, which is compensation that is based on the
annual net profit, if any, of the Funds, subject to a high water-mark. The CGAX Funds
Incentive Fee is calculated as a percentage of the excess returns vs. the MSCI ACWI index.
The Management Fee is charged in advance on the first day of each quarter. Incentive Fees
are paid annually in arrears. Subject to the terms of the Governing Documents, CenterBook
deducts fees from client accounts. Management Fees and Incentive Fees for CenterBook’s
and Alpha Theory’s principals and employees or their family members and related vehicles
and certain large or strategic investors are reduced or waived entirely.
For advisory services provided to Separate Account Clients, fees will be individually
negotiated and set forth in the relevant investment advisory agreement. If for any reason
a Separate Account Client wishes to terminate an investment advisory contract, the Client
will be required to provide prior written notice in accordance with the terms of their contract
and any fees paid in advance will be returned.
In addition to Management Fees and Incentive Fees, Clients bear certain expenses, which
generally include, but are not limited to, (i) expenses related to the development,
management and monitoring of the Client’s portfolio, including the following: due
diligence, legal and other costs related to onboarding, retaining and terminating
prospective and selected Contributors; 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),; travel
expenses; due diligence expenses including consulting; brokerage, prime brokerage and
futures commission merchant fees, commissions and expenses; expenses relating to short
sales; clearing and settlement charges; fees and expenses of any third-party providers of
"backoffice" and "middle office" services relating to accounting and related operations;
custodial fees and expenses; bank service fees; interest expenses and fees related to
financings or refinancings; fees and expenses of proxy research and voting services; and
fees and expenses of third-party professionals, including consultants, attorneys and
accountants; the cost of a fidelity bond under Section 412 of ERISA, if applicable; (ii)
organizational and reorganizational expenses; and (iii) operational expenses, including the
following: the costs and expenses of communications equipment; fees and expenses
relating to information technology hardware, software or other technology (including costs
of software licensing, implementation, data management and recovery services and custom
development) used to develop, manage and monitor the portfolio, 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 securities otherwise manage Clients or any
trading vehicle, such as Bloomberg terminals, market data feeds, trade matching services;
the costs and expenses of portfolio management, risk management and risk reporting
software and services; 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; the cost of contributor
payments provided to Contributors, directly or indirectly through the use of “soft dollars”
(an average amount of $100,000 per Contributor per year); third- party audit and tax
preparation expenses; insurance expenses, including premiums for cybersecurity insurance
and liability insurance covering CenterBook and its affiliates and their respective partners,
officers, employees and agents, each member of the Board of Directors; fees and expenses
(including director registration fees) of directors and officers (including any AML Officers);
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, 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 Fund interests and other
similar expenses; extraordinary expenses, including thefollowing: indemnification expenses
(including those indemnification expenses required to be paid with respect to Contributors
and Alpha Theory); fees and expenses incurred in connectionwith any tax audit by any taxing
authority, including any related administrative settlement and judicial review; and fees and
expenses incurred in connection with reorganization, dissolution, winding-up or
termination.
Effective January 1, 2026, subject to applicable expense limitations, Clients may bear the
estimated trade market impact expense paid to a Contributor associated with trading the
same security on the same day as the Contributor and each such trade, an “Overlapping
Trade”. In determining an Overlapping Trade, the trades made by the Contributor are
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