Item 5. Fees and Compensation
Coast charges each Fund an investment management fee based on the value of the Fund’s
net assets under management and a performance-based fee, which is compensation that is
based on a share of new capital gains on or new capital appreciation of the assets of a Fund
(such as a Fund that is an alternative investment or other pooled investment vehicle).
The fee structure for our Fixed Income product is set forth below. Management fees and
performance-based fees described below are determined separately as to each class and series
of shares or interests.
The fees payable to Coast by a Fund (or an investor within such Fund) may be negotiated
separately with investors, and certain investors may pay fees that are higher or lower than other
investors. These different fee arrangements may be negotiated individually in side letter
agreements or through a separate class of shares/interests offered by a supplement to the
offering memorandum. As of December 31, 2020 there are no different fee arrangements in
place.
In addition to the management and performance based-fees, as applicable, described below,
certain Funds also pay to Coast an allocated portion of the salaries of staff of Coast and other
overhead costs and expenses of Coast, including legal costs.
1. FIXED INCOME PRODUCT - FUND FEE STRUCTURE
MANAGEMENT FEE
Coast receives a monthly Management Fee in arrears equal to 0.167% of the prior month-
end Net Asset Value (a 2.0% per annum rate) of the Fund’s account. Management fees are
payable monthly.
INCENTIVE FEE
Coast receives an incentive fee equal to 25% of any new appreciation at the end of each
calendar month. Payment of the incentive fee is subject to a loss carry forward provision and is
payable monthly.
TRADER COMPENSATION
To the extent that an employee trader other than David Smith trades for the benefit of a Fund,
the Fund reimburses Coast the relevant portion of such trader’s incentive compensation. This
compensation, which is separate from the management fee and the incentive fee, generally is
up to 20% of the gross trading profits realized by the relevant trader without deduction for the
Fund’s operating expenses but after deduction of certain trader expenses. A trader may
receive performance compensation based on the trading profits realized by the relevant trader
even for a period during which a Fund as a whole realized a net loss. In Coast’s discretion, a
portion of such trader incentive compensation may be advanced to such trader as a non-
refundable draw.
In addition to paying investment management fees and, if applicable, performance-based fees or
other compensation, Funds may be subject to other investment expenses such as custodial
charges, administration charges, brokerage fees, commissions and related costs, interest
expenses, taxes, duties and other governmental charges, transfer and registration fees or similar
expenses, costs associated with foreign exchange transactions, other portfolio expenses, and
costs, expenses and fees (including, investment advisory and other fees charged by
investment advisers with, or funds in, which a Fund invests) associated with products or
services that may be necessary or incidental to such investments or accounts.
As described in Item 4 - Advisory Business, Fund assets may be invested in pooled investment
vehicles. In these cases, Funds will bear their allocated share of the underlying fund’s operating
and other expenses including, in addition to those listed above: sales expenses, legal expenses;
internal and external accounting, audit and tax preparation expenses; and organizational
expenses. Fund assets may be invested in a master-feeder structure. Feeder funds bear
an allocated share of the expenses associated with the related master fund. In addition, Funds
will incur brokerage and other transaction costs. Please refer to Item 12 – Brokerage Practices
for a discussion of Coast’s brokerage practices.