Item 5: Fees and Compensation
A. Compensation Arrangements
No fees are charged by ClearAlpha for non-discretionary investment advisory services we may provide.
The following summary outlines the fees and expenses associated with the Fund. For a detailed
explanation, prospective investors should review the Fund’s governing documents. ClearAlpha reserves
the right to waive or reduce fees and expenses allocated to any class of interests in the Fund and/or to
any particular investor’s capital account or shares, provided that the reduced or waived amount will be
borne by ClearAlpha and not any other investor (absent that investor’s consent).
B. Management Fee
The Fund does not pay a management fee to ClearAlpha, except as contemplated in the Fund’s governing
documents. Instead, the Fund has adopted a full pass-through expense model, and bears all manner of
start-up, ongoing operational, and other expenses of ClearAlpha as summarized below and more fully
described in the governing documents.
C. Incentive Allocation
The Fund’s governing documents outline the applicable incentive allocation rate for each class of interests
in the Fund. Generally, at the end of each fiscal year, Niche Plus GP LLC, an affiliate of ClearAlpha, receives
an allocation from each class of interests in the Fund (other than the class of interests issued to ClearAlpha
employees and other related investors, as described in more detail in the Fund’s governing documents),
which is equal to either (i) the net realized and unrealized appreciation in the net asset value (“NAV”) of
that class of interests, or (ii) the net realized and unrealized appreciation in the NAV of that class of
interests in excess of a benchmark (the S&P 500 Total Return Index), in each case, multiplied by the
applicable incentive allocation rate. The incentive allocation is subject to a “high water mark” meaning
that the incentive allocation is only made with respect to the appreciation of the NAV of the Fund
exceeding the NAV of that class of interests immediately following (A) the initial issuance of such class or
(B) the date the last incentive allocation for that class was determined, as applicable.
D. Deduction of Fees and Expenses
ClearAlpha (or its affiliate) has authority to withdraw assets from the Fund for payment of fees and
expenses. As is further described in Item 15 below, ClearAlpha has implemented controls reasonably
designed to safeguard Fund assets from misappropriation. ClearAlpha does not have the authority to
access the assets of non-discretionary clients.
E. Other Fees and Expenses
Expenses
The Onshore Feeder and the Offshore Feeder each bear all organizational, offering and start-up expenses
and all ongoing expenses related to the investments, administration, and operation of the applicable
Fund, as well as their proportional share of these same expenses of the Master Fund (collectively referred
to as “Fund Expenses”). Additionally, the Fund also bears almost all of ClearAlpha’s organizational, start-
up expenses, and ongoing operating and other expenses (collectively referred to as “Investment Manager
Pass-Through Expenses”) in lieu of paying a management fee. The Fund’s governing documents offer a
detailed explanation of the Fund Expenses and Investment Manager Pass-Through Expenses payable by
the Fund. The Fund’s governing documents also outline certain limited types of expenses that the Fund
is not responsible to pay (“Excluded Investment Manager Expenses”). If any of the Investment Manager
Pass-Through Expenses are incurred for the Fund as well as for any non-discretionary investment advisory
accounts, such expenses will be allocated among the Fund and such other accounts based on their
respective utilization, benefits, and other factors. To the extent that investors invest directly in the Master
Fund, such investors will only bear expenses associated with the Master Fund. However, data, research,
and other services acquired by ClearAlpha in connection with managing the Fund may incidentally benefit
certain non-discretionary investment advisory clients that do not pay for such data, research, and other
services.
The portion of the Fund’s expenses allocable to each Investor’s capital account or shares are generally
based on the investor’s interest in the Fund. However, any expenses determined to be attributable to a
particular subset of investors are allocated directly to those investor(s)’ capital accounts or shares.
ClearAlpha determines the timing of charging Fund Expenses and/or Investment Manager Pass-Through
Expenses to the Fund, and these expenses may be pre-paid as an estimate by the Fund to ClearAlpha for
the upcoming month.
Certain share classes of the Fund are subject to a cap on non-investment-related expenses, as described
more fully in the Fund’s governing documents. Any such expenses in excess of the cap are allocated to the
other share classes as set forth above.
ClearAlpha is compensated through an incentive allocation (described above) which generally is only
earned if performance generated by the Fund is in excess of Fund Expenses and Investment Manager
Pass-Through Expenses. This incentivizes ClearAlpha to reduce, manage, or limit expenses necessary to
operate the Fund and the business, and, in regard to investment related expenses, to focus on the level
of returns which can be generated from additional resources used to manage the Fund, such as people,
data, and services. Nonetheless, the amount of such expenses allocable to the Fund may be meaningful,
and the portion of these expenses borne by a particular investor depends, in large part, on the size of the
Fund and the size of their interest in the Fund. Expenses will reduce returns and will require that the
Master Fund make a substantial level of profit from its investing activities in order for an investment in
the Fund to break even.
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