Item 5: Fees and Compensation
CommonWealth is compensated for advisory services by a fee based on assets under
management. Investors in the CWOC I Funds will generally pay a monthly management fee
calculated at the rate of 0.1667% (i.e., approximately 2.0% per year) of the net assets of the
applicable Fund (the “Management Fee”). Investors in the CWOC II Funds will generally pay a
Management Fee at the rate of either 0.125% (i.e. approximately 1.5% per year) or 0.1458%
(i.e., approximately 1.75% per year) generally depending (but not necessarily) on the class
subscribed to (the 1.5% annual rate is generally attributable to class A shares/interests, which
are currently in issue but are no longer being offered). CommonWealth may, and indeed in
some instances does, offer to waive, reduce or rebate all or any portion of the Management Fee
for investors in the Funds. Management fees charged on SMAs, if any, are/will be negotiated
separately at the time of the applicable accounts’ opening and may be significantly lower than
the Management Fee.
The Management Fee is paid monthly in arrears based on the net assets of a Fund as of the last
day of each month, and net assets for this purpose will be calculated prior to any reduction for
performance-based fee and without regard to the effect of any month-end
redemptions/withdrawals. The Management Fee will be prorated for any period that is less
than a full month. Frequency of payment of the Management Fee charged on SMAs and the
method of calculation is/will be negotiated separately at the time of the applicable accounts’
opening.
As described more fully under Item 6, CommonWealth is also compensated with performance-
based fee or allocations from all Clients. Fees are not being pre-paid.
CWOC I Fund Clients will typically pay all expenses deemed necessary and desirable by
CommonWealth, including, but not limited to, all investment, administrative and operating
expenses incurred on behalf of such CWOC I Fund Clients. These expenses may include, but will
not be limited to: (1) brokerage commissions and other transaction charges (for additional
disclosure regarding brokerage practices please see Item 12); interest; fees and expenses
incurred in the borrowing and lending of securities; the costs implicit in repurchase and reverse
repurchase agreements; custodial fees and expenses; tax and other reporting expenses; external
legal, compliance, administrative, accounting and audit fees and expenses; fees relating to
investment banking and other financial services, whether payable to parties affiliated with
CommonWealth or others; due diligence expenses, including travel, related to proposed
investments or existing investments; governmental, registration, license and membership fees
(including those payable to regulatory as well as self-regulatory organizations); and the costs
and expenses related to the offer and sale of Shares; (2) taxes and other governmental charges;
(3) all expenses incurred in connection with any threatened, pending or anticipated litigation,
examination or proceeding; (4) all expenses incurred as a result of CWOC I Funds’ obligations to
indemnify certain persons against losses, liabilities and expenses incurred in connection with the
performance of their duties on behalf of, or the provision of services to, such Funds; (5) all
expenses and fees of third-party valuation agents, if any; (6) all expenses and fees incurred in
connection with any actual or proposed investment or other participation in, or any holding or
disposition of any interest in, another investment entity, business entity or organization; and
(7) all other expenses and liabilities incurred in connection with or arising out of
CommonWealth’s business, including extraordinary or non-recurring charges.
CWOC II Fund Clients will typically pay all expenses deemed necessary and desirable by
CommonWealth, including, but not limited to, all investment, administrative and operating
expenses incurred on behalf of such CWOC II Fund Clients. These expenses may include, but will
not be limited to:(1) brokerage commissions and other transaction charges (for additional
disclosure regarding brokerage practices please see Item 12); interest; fees and expenses
incurred in the borrowing and lending of securities; the costs implicit in repurchase and reverse
repurchase agreements; custodial fees and expenses; tax and other reporting expenses; external
legal, compliance, administrative, accounting, audit and other professional fees and expenses
(including fees charged in negotiating prime brokerage, ISDA Master Agreements and related
custody and segregation agreements or other trading or financing arrangements); fees relating
to investment banking and other financial services, whether payable to parties affiliated with
CommonWealth or others; pricing services, market data and software fees; bank and wire
service transaction fees; ticket charges; prime brokerage fees; give up fees; borrow costs;
interest on margin account and other indebtedness and similar charges; investment research
expenses (including, without limitation, travel, due diligence expenses and the costs of
publications and periodicals) related to proposed investments or existing investments;
governmental, registration, license and membership fees (including those payable to regulatory
as well as self-regulatory organizations); and the costs and expenses related to the offer and sale
of Interests; (2) taxes and other governmental charges; (3) all expenses incurred in connection
with any threatened, pending or anticipated litigation, examination or proceeding; (4) all
expenses incurred as a result of the CWOC II Funds’ obligations to indemnify certain persons
against losses, liabilities and expenses incurred in connection with the performance of their
duties on behalf of, or the provision of services to, CWOC II Fund and/or the Master Fund; (5) all
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