Item 5: Fees and Compensation
Clarity generally received a fee for overseeing the operation, administration and oversight of the Clarity
Funds and Managers, including (i) negotiating all agreements, including service agreements and
investment management agreements; (ii) performing initial and ongoing due diligence on the
Managers; (iii) monitoring the trading and performance of the Managers for compliance with each
Manager’s trading and risk management policies; and (iv) where appropriate, terminating a Manager (the
“Administrative Services Fee”).
Clarity generally charged an Administrative Services Fee range of 0.00% to 1.00% of assets invested
per annum, but it could be higher depending upon the level of additional services requested
and/or the total assets the Shareholder has invested in Clarity investment funds managed by
Clarity and/or its affiliates. This fee could differ among different investors and the Administrative
Services Fee were paid monthly. Fees charged in arrears were prorated, and those charged in advance
were refunded for any partial period.
The Administrative Services Fee paid to Clarity was deducted from the Clarity Fund assets. The
Clarity Funds also paid certain other fees and expenses which were also deducted from the Clarity
Fund assets such as brokerage, custody, clearing, transaction and give-up fees, withholding taxes,
legal, administrative, registration and regulatory costs, operational due diligence costs, regulatory
reporting, offering costs, and audit & tax preparation fees. The Clarity Funds paid each Manager a
management fee and/or an incentive fee. All such fees and expenses and other important information
regarding an investment in the Clarity Funds were more fully set forth in the Offering Documents.
Certain Private Funds managed by affiliates of Clarity could invest in the Clarity Managed Account
Platform and such Private Funds would also bear their pro-rata share of the fees and expenses of
such Clarity Funds and/or Managed Accounts detailed above, including the Administrative Services
fee paid to Clarity. The details of the fees and expenses paid by the Private Funds were more fully
set forth in their respective Offering Documents.
Clarity generally received no performance-based fees.
Certain supervised persons of Clarity could receive a bonus based in part on the assets managed by
Clarity and its affiliated advisers (together, “Kenmar”). Such persons were also registered with
Kenmar Securities, LLC (“KSEC”), an affiliate of Clarity, and a broker-dealer registered with the U.S.
Securities and Exchange Commission (“SEC”) and is a member of the Financial Industry Regulatory
Authority (“FINRA”). See Item 10 below for additional information about Clarity’s affiliates, including
KSEC.
This practice could present a conflict of interest as it gives Clarity and/or its supervised persons an
incentive to recommend the investment advisory services of Kenmar taking into account the fact that
compensation could have been received based upon an increase in Kenmar’s assets. We do not
believe this conflict to be material because, among other things, such supervised persons were not
incentivized to sell one investment product over another and thus would generally consult with each
prospective investor to select the investment product(s) most appropriate for their specific
investment objectives and requirements. Further, the relationship between Clarity and its affiliates
was disclosed to Clients and investors.
In addition, Clarity had in place fee sharing arrangements, generally between 0.00% and 1.00% with
certain Managers on the platform where a percentage of the Manager’s fees were shared with Kenmar
Securities, LLC or 3rd party referral agents for the purpose of identifying qualified investors for the
Manager’s account.