ITEM 5 – FEES AND COMPENSATION
A. Basic Fee Schedule
Management fees are generally up to 1.5% per annum of the net asset value of the relevant
Funds. For certain Funds, performance fees are generally up to 20% of the appreciation in
the net asset value per unit above the high watermark, payable annually. The fees paid to
Cheetah by Funds are set out in the respective PPM.
For Funds, there may be subscription and/or redemption charges that are separate payments
due at the time of subscription and/or redemption, details of which are set out in each
Fund’s respective PPM. All redemption charges are retained by the relevant Fund for the
benefit of the remaining Fund investors.
For Managed Accounts, management fees are agreed with the client based on the size of
the account, the complexity of the mandate, the extent of reporting requirements and other
factors. The fees paid to Cheetah are set out in the respective investment advisory / sub-
investment management agreement. Performance fees will only be charged to Managed
Accounts owned by U.S. clients who would meet the definition of a “Qualified Client” as
provided by Rule 205-3 of the Investment Advisers Act and upon agreement with the client.
B. Calculation and Deduction of Fees
Management fees are paid on a monthly or quarterly basis in arrears instructed by the
relevant administrator of the Funds, as specified in each Fund’s respective PPM. For
Managed Accounts, management fees are deducted from the clients’ assets quarterly at the
instruction of the clients.
C. Other Fees or Expenses Payable by the Clients
In addition to management fees and performance fees (mentioned above and in Item 6
below), investors in the Funds will indirectly bear any other costs charged to the Funds.
Such costs will vary and typically include, but are not limited to, accounting, legal, fund
administration fees, custodian fees, audit fees, directors’ fees and other related costs.
Further, the Funds will incur brokerage commissions, transaction fees, and other related
costs and expenses including, but not limited to, charges imposed by custodians,
administrators, brokers, transfer taxes, wire transfer and electronic fund fees, and other fees
and taxes on brokerage accounts and securities transactions.
Managed Account clients will need to bear custodian fees, brokerage commissions,
transaction fees, issue and transfer taxes, administration fees, bank service fees and other
related costs and expenses.
Such charges, fees and commissions are exclusive of and in addition to the fees charged by
Cheetah and Cheetah does not receive any portion of those commissions, fees and costs.
D. Advance Fees Payable by the Clients
Fees charged to clients are not payable in advance. Fees are charged in arrears on the
amount of clients’ assets under management as described in Item 5A. above.
E. Other Compensation
Cheetah accepts compensation for private placement of alternative investment strategies
funds to professional investors within the meaning of the Securities and Futures Ordinance
(“SFO”) in Hong Kong or to Cheetah clients who have signed up as investment advisory
clients solely for this purpose. Such compensation is asset-based and is generally in the
form of trailing fees based on the capital placed by Cheetah.
This practice presents a conflict of interest and may give Cheetah an incentive to
recommend the funds based on the compensation received, rather than on a client’s needs.
To mitigate the conflict of interest, Cheetah only recommends funds that Cheetah considers
as best of class in the specific strategy category and with high conviction regarding the
quality of the portfolio management team. The principals of Cheetah have, in all cases,
meaningful personal investments in the same funds recommended to its clients such that
there is an alignment of interests with the clients. Furthermore, each recommended fund
occupies a unique strategy category that does not overlap with other recommended funds.
As such, clients are presented with only a single product choice for each strategy
recommended. Cheetah does not receive any other fees directly from these professional
investors or from its investment advisory clients. On rare and specific occasions where
such an investment advisory client is also Cheetah's advisory or discretionary client under
another advisory business relationship, such compensation is fully disclosed to those
clients involved.