Item 5. Fees and Compensation
Congruence’s compensation is negotiable and varies. According to the Fund’s published fee
schedule, Congruence receives a quarterly management fee of 0.375% of the net asset value of
that investor’s Fund interest (approximately 1.5% annually) and CCCFGP receives an incentive
allocation of 20% of the increase in the net asset value of an investor’s capital account (after
reduction for the management fee and other expenses charged to the capital account).
The management fee for the Fund is initially set at 1.50% per annum (paid quarterly at 0.375%)
and shall decline by one basis point (0.01%) per annum for every $25 million over $250 million
in Firm AUM until the management fee reaches 1.00% per annum. Firm AUM means the
Congruence’s net assets under management as of each management fee determination date. The
determination date is defined as the last calendar day of the prior quarter. Management fees are
payable in advance.
The incentive allocation for the Fund is assessed annually in arrears (and on withdrawals or
redemptions during the year with respect to the amount withdrawn or redeemed) and is applied
only to profits that exceed the cumulative losses previously incurred by or allocated to clients.
CCCFGP may reduce, waive or otherwise modify the Incentive Allocation with respect to certain
Limited Partners, including, without limitation, affiliates of CCCFGP and/or Congruence.
Management fees and incentive allocations for separately managed account clients are calculated
on a similar basis, but the percentages charged, frequency of calculation and payment, and other
terms are negotiable and do vary.
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Congruence deducts management fees and performance compensation directly from its investors
in the Fund. Separately managed account clients may (and currently all do) select management
fees and performance compensation to be billed separately from the accounts.
Congruence believes that its fees are competitive with fees charged by other investment advisers
for comparable services, but comparable services may be available from other sources for lower
fees than what Congruence charges.
Withdrawals and Termination
A Fund investor generally may, on at least 60 days’ advance written notice, withdraw all or part
of its interest in the Fund as of the end of any quarter. In addition, Congruence’s relationship with
the Fund is terminable on dissolution of the Fund or on Congruence’s withdrawal or termination
as investment adviser of the Fund.
In all cases, allocable expenses, the pro-rata portion of the management fee and the performance
allocation through the date of withdrawal or termination are charged to the Fund.
An investor who withdraws or redeems from the Fund on a date other than the last day of a quarter
does not receive a refund of the management fee previously paid. Similarly, any separately
managed account client that pays management fees in advance will not receive a refund if they
terminate their agreement or withdraw assets between management fee calculation dates.
Expenses
The Fund is responsible for the following expenses: brokerage and other transaction costs; clearing
and settlement charges; Bloomberg services and other market data services and other data
associated with the calculation and distribution of the Fund’s net asset value; third party valuation
expenses; consulting, legal and other professional fees relating to potential and actual investments
whether or not such investments are consummated; interest on debit balances; legal fees and other
expenses in connection with initial and ongoing due diligence and negotiating the terms of
investments (including investment-related travel expenses incurred with respect to potential or
existing investments), regardless of whether such investments are consummated; fees and
expenses for order management systems and risk management reporting; costs of any liability
insurance obtained on behalf of the Partnership (including, without limitation, directors and
officers insurance); custody fees; proxy voting-related expenses; costs of any litigation or
investigation involving Fund activities; indemnification expenses; research related fees and
expenses (including service contracts related to online research); investment consulting expenses;
the fees and expenses of professionals providing services to the Fund, including legal, audit,
accounting, tax and administration (including Fund Administrator costs), if applicable; the fees
and expenses of any Advisory Board, if formed; any issue or transfer taxes chargeable in
connection with any securities transactions; any entity level taxes, regulatory costs and expenses
(including regulatory filing and license fees); the costs of reporting and providing information to
investors (including updates to offering documents); expenses relating to any amendment to the
Fund’s Partnership Agreement; costs associated with dissolving, winding up, liquidating,
termination, or restructuring the Funding; and any extraordinary expenses.
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To the extent any such expense also benefits any separately managed account client, Congruence
will seek to allocate a pro rata amount of such expense to such client, subject to any limitations set
out in the agreement with such client. In the event of any such limitation, Congruence (and not the
Fund) will pay that part of any expense that would otherwise have been allocable to the managed
account client.
For more information on Congruence’s brokerage practices, please refer to Item 12 below.