Item 5. Fees and Compensation
The Fund’s limited partnership agreement provides for payment to the General Partners
of asset-based fees for investment management services. This fee is 2% of net asset value
per annum and is paid quarterly in advance from the Fund’s assets. Due to Russia’s
attack on Ukraine and in the wake of ensuing sanctions, management fees applicable to
the Fund’s Russian and Ukrainian securities are being waived until the General Partners
determine that more normal conditions have returned to the market.
The Fund holds illiquid assets that have been designated by the General Partners to be
treated as “side-pockets”, in which case, pursuant to the Fund’s limited partnership
agreement, management fees are generally charged based on cost at the time of
designation without adjustment for market value.
Expenses
In addition to the asset-based fees, the Fund also bears expenses incurred by the Adviser
and/or related persons in connection with the services provided to the Fund, such as their
respective operating expenses and other expenses of the Fund. The most common
expenses include (i) expenses incurred in connection with identifying, evaluating,
structuring and negotiating any potential Fund investment (including broken deals) and
the acquisition, holding, sale, proposed sale or valuation of any Fund investments
(including brokerage, custody and other types of fees); and (ii) ordinary administrative
expenses, fees of auditors, attorneys, appraisers and if applicable, the Fund’s valuation
agent or administrator, and other professionals, cost of meetings, and reports to limited
partners.
Pursuant to its limited partnership agreement, the Fund shares in the allocation of its
proportionate share of operating expenses, including, but not limited to, compensation
(excluding compensation to the Principals), benefits and travel and accommodation of
employees of the Adviser or its related persons working on behalf of the Fund and
overhead of the Adviser or its related persons allocable to the Fund, including, but not
limited to, office rental, office services and equipment, telephone and utilities.
The Fund also bears the cost of incentive compensation to employees of the Adviser or
its related persons working on behalf of the Fund. The incentive program includes
bonuses and/or commissions paid to traders, profit sharing on investments and/or
compensation based on a share of distributions to the Fund from portfolio companies.
In addition, the Fund’s portfolio companies may directly compensate employees of the
Adviser or its related persons when such employee performs duties for a portfolio
company, including, but not limited to, serving as a board member or director. There is
no reimbursement or offset of management fees by the investment manager for this
compensation. In some cases, an employee may be paid partly by the Fund (and/or
portfolio company) and partly by NCH.
Cornerstone Capital Corp.
Form ADV 2A
March 29, 2024