Item 5: Fees and Compensation
DESCRIPTION OF COMPENSATION AND FEE SCHEDULE
In consideration of our advisory services, we and our affiliates generally are entitled to receive management fees and
performance-based compensation from or with respect to our clients. While the applicable fees and compensation
are described in detail in the applicable offering, governing and/or account documents, a summary of our basic fee
schedule is set forth below.
Funds
Asset-Based Charges. The Master Fund generally bears, as of the beginning of each calendar quarter in advance, an
asset-based charge (the “Asset-Based Charge”) equal to a percentage of the net asset value of each separate account
of an investor as of the beginning of such calendar quarter. A portion of the Asset-Based Charge (the “Management
Fee”) is payable to us in consideration of our services with respect to the Funds, and the remaining portion of the
Asset-Based Charge (the “Guaranteed Payment”) is payable to the Strategic Investors. With respect to each separate
account of a Founders’ Class investor, the Asset-Based Charge percentage generally ranges from 0.25% (1.0% per
annum) to 0.375% (1.5% per annum) of the net asset value of such separate account as of the beginning of each
calendar quarter, depending upon the net asset value of the Master Fund (including the net asset value of any pooled
investment vehicle sponsored by us or an affiliate that invests on a side-by-side or parallel basis with the Master
Fund (other than the feeder funds into the Master Fund) (the “Aggregate NAV”)) as of the beginning of such
quarter. With respect to each separate account of a Class D investor, the Asset-Based Charge percentage generally
ranges from 0.25% (1.0% per annum) to 0.4375% (1.75% per annum) of the net asset value of such separate account
as of the beginning of each calendar quarter, depending upon the Aggregate NAV as of the beginning of such
quarter. With respect to each separate account of a Class E investor, the Asset-Based Charge percentage generally
ranges from 0.25% (1.0% per annum) to 0.375% (1.5% per annum) of the net asset value of such separate account as
of the beginning of each calendar quarter, depending upon the Aggregate NAV as of the beginning of such quarter.
Performance Allocation. Subject to certain terms, limitations and conditions, at the end of each fiscal year (and such
other times set forth in the partnership agreement of the Master Fund) one of our affiliates and the Strategic
Investors generally are entitled to receive a performance-based allocation equal to a percentage of the net profits
allocated to each separate account of an investor for the applicable period (subject to certain adjustments and a “high
water mark”). The performance allocation percentage generally is (i) 15% with respect to each separate account of a
Founders Class investor, (ii) 20% with respect to each separate account of a Class D investor and (iii) 17.5% with
respect to each separate account of a Class E investor. The performance allocation is calculated and determined
separately with respect to each separate account of an investor.
A “cumulative net loss” account (also known as a “high water mark”) is maintained by the Master Fund with respect
to each separate account of an investor (a “Cumulative Net Loss Account”). At the end of each fiscal period, each
Cumulative Net Loss Account is (a) debited with the sum of the cumulative amount of net losses, if any, allocated to
the relevant separate account since the immediately preceding date as of which a calculation of the performance
allocation was made (or if no calculation has yet been made with respect to such separate account, since such
separate account was established) and the cumulative amount of any asset-based charges charged with respect to
such separate account and (b) credited (but not below zero) with the cumulative net profits, if any, allocated to such
separate account or since the immediately preceding date as of which a calculation of a performance allocation was
made (or the date such separate account was established, if applicable). No performance allocation will be made
with respect to a separate account of an investor until the debit balance in the corresponding Cumulative Net Loss
Account has been reduced to zero.
Each investor generally is required to certify that it is, among other things, an “accredited investor” (as such term is
defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended) and a “qualified purchaser”
(as such term is defined in Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended).
Our advisory fees with respect to each investor generally are not negotiable. However, subject to certain conditions
and limitations, the management fee and/or performance allocation with respect to any investor may be waived or
reduced by us or our affiliate.
Advisory Account
Management Fee. We generally receive a management fee, payable quarterly in arrears, equal to a percentage
(typically 1% per annum) of the net asset value of the Advisory Account as of the end of each such quarter (which is
subject to reduction in the event that the net asset value of the Advisory Account, together with the net asset value of
all other accounts managed by us with a substantially similar investment strategy, exceeds a certain amount).
Management fees with respect to the Advisory Account client generally were negotiated based upon various factors,
including, but not limited to, the size of the Advisory Account and the nature of the advisory services provided.
Performance Fee. Subject to a high-water mark and the satisfaction of a “hurdle” and a performance condition with
respect to each performance period, we generally are entitled to receive from the advisory client a performance-
based fee equal to 10% of the net profits allocated to the Advisory Account for such performance period.
DEDUCTION OF ADVISORY FEES
Funds
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