Item 5: FEES AND COMPENSATION
The Firm is compensated for providing services to Accounts as set forth in the relevant Offering
Documents. Fees and other compensation are negotiated and vary. Management fees are
typically based on a percentage of assets under the Firm’s management. Performance
compensation is based on the net realized and unrealized capital appreciation for each year,
after making up any losses carried forward from prior calculation periods.2
Management fees, generally up to 1.75% depending upon the investment class, are paid
quarterly in advance but will be amortized over the quarter during which such management
fees were earned. Whether fees are billed or deducted from Account assets would generally be
reflected in the relevant Offering Documents.
Performance compensation for the Flagship Funds, generally up to 20% depending upon the
investment class or series, is generally calculated annually as a percentage of the increase in
the net asset value of a series/ capital account (prior to giving effect to redemptions/
withdrawals as of such date) and after the reduction for all fees (including the management
fee, but other than the performance compensation itself) above a high-water mark.
Performance compensation for the Opportunities Funds, generally up to 20% depending upon
the investment class or series, is generally calculated as a percentage of the distributable
proceeds after the return to limited partners of 100% of their capital contributions plus an 8%
preferred return.
Please see Item 6 “Performance-Based Fees and Side-by Side Management” below for further
discussion of such fees and the conflicts of interest they can create. Terms are subject in their
entirety to the relevant Fund Documents.
Other Expenses
In addition to the fees and compensation described above, an Account bears its own ordinary
operating and other expenses including, but not limited to, investment-related expenses, such
as:
• Expenses that the General Partners/Firm reasonably determine to be related to the
investment of Account assets, such as:
o brokerage commissions (please see Item 12 “Brokerage Practices” below for
further discussion of such fees and the conflicts of interest they can create);
o expenses relating to short sales;
2 Portfolio investments are valued in accordance with the firm’s valuation policy. Some investments in the portfolio may be
illiquid, traded infrequently and difficult to value, and accordingly will be valued in good faith and in some circumstances
differently than third-party price indications. The firm may therefore have a conflict of interest in determining the valuation of
its Clients’ assets and liabilities, particularly since higher valuations will have the effect of increasing the amount of fees paid to
the firm.
o clearing and settlement charges;
o bank service fees, custodial fees;
o interest expenses;
o expenses relating to consultants, attorneys, brokers or other professionals or
advisers who provide research, advice or due diligence services with regard to
investments;
o appraisal fees and expenses; and
o investment banking expenses.
• legal expenses;
• taxes;
• accounting, audit, tax preparation and other tax-related expenses (including the cost of
accounting software packages);
• research-related expenses (including, but not limited to, Bloomberg services);
• organizational and offering expenses (including, but not limited to, any expense related
to anti-money laundering due diligence);
• fees of the Administrator and related costs;
• the costs of third-party pricing services and price quotation services;
• costs of printing and mailing reports and notices;
• costs of directors' and officers' insurance policies and other liability insurance covering
the Funds, General Partners, the members of the Board of Directors, the Investment
Manager, and their respective employees, agents and affiliates;
• corporate licensing;
• government fees;
• regulatory expenses (including filing fees);
• compliance expenses (including, but not limited to, any expense related to anti-money
laundering due diligence and the appointment of officers pursuant of officers pursuant
to applicable anti-money laundering laws);
• investment-related travel expenses;
• expenses related to the purchase and sale of illiquid investments; and
• extraordinary expenses and other similar expenses related to the Account as the
General Partners/ Investment Manager determine.
Expenses (except for the Management Fee and Investor-Related Taxes, defined below)
generally will be shared by all of the Fund Investors in each Fund, pro rata, in accordance with
their capital accounts (except with respect to an expense related to a single investor or group
of investors, which would then generally be allocated to such investor or group of investors);
provided, however, that the General Partner will specially allocate expenses related to a
Special Investment to the capital accounts of the investors participating therein, such
allocation to be in proportion to such investors' participating percentages in such Special
Investment; and provided, further, that the Firm will allocate the costs of directors' and
officers' insurance and other liability insurance premiums 20% to the Firm and 80% to the
Funds/ Accounts. If any of the above expenses are incurred jointly for the Fund and other
Accounts, such expenses will be allocated pro rata based on net asset value, or in proportion
to the size of the investment made by each in the activity or entity to which the expense relates,
or in such other manner as the Investment Manager considers fair and reasonable.
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