Item 5. - FEES AND COMPENSATION
Fee Options
CornerStone offers several fee arrangements to Advisory Clients and investors in the Funds. We offer an
option where Advisory Clients pay a management fee and an incentive fee; an option where Advisory Clients
pay a management fee only; and a fee arrangement for Fund investors who are not also our advisory clients.
Option #1: Management Fee + Incentive Fee:
CornerStone’s fees for this option, which (unless exceeded by the minimum fee) will not be more than the
maximum annual rate of .40% of the client assets CornerStone advises plus a performance-based incentive
fee, are specified in the agreement between CornerStone and the client. CornerStone charges an annual
minimum OCIO fee of $800,000.
Option #2: Management Fee Only:
CornerStone’s fees for this option, which (unless exceeded by the minimum fee) will not be more than the
maximum annual rate of .48% of the client assets CornerStone advises, are specified in the agreement
between CornerStone and the client. CornerStone charges an annual minimum OCIO fee of $800,000.
Option #3: Investors in The Funds
Like our Advisory Clients, investors in the Funds will be subject to annual management and incentive fees,
payable quarterly in advance, as specified in the private placement memorandum for each of the Funds.
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The annual management fee will not be more than the maximum rate of .75%. As discussed in Item 4
above, the Funds waive their management fee for current Advisory Clients and CornerStone employees
(current and former), their family members, and their investment vehicles. Advisory Clients who have
invested in the Funds are subject instead to the agreed to advisory fee at the Advisory Client account level
only for assets invested in the Funds. Advisory Clients who have terminated their advisory agreement with
CornerStone but remain invested in the Funds will be subject to the fees as outlined in the private
placement memorandum for each of the Funds.
CornerStone’s fees are potentially subject to negotiation. CornerStone's longer-time clients pay fee rates
that are lower than fee rates paid by new clients.
One of the potential conflicts of interest that may arise in connection with fee calculations is related to
valuation. Valuation of investments (which will indirectly determine the amount of the management and
incentive fee) may involve uncertainties and judgmental determinations; should such valuations prove to
be incorrect, Advisory Clients may be affected adversely. Independent pricing information may not be
available at times with respect to certain securities and other investments. Accordingly, while custodians,
administrators, and managers use their best efforts to establish the accurate current market value of all
investments held in Advisory Clients’ accounts, certain investments can be difficult to value and may be
subject to varying interpretations of value. Private investment funds are valued based on quarterly
statements or monthly estimates provided by the underlying manager, which statements are typically
received on a delayed basis, are unaudited and subject to change.
Payment Terms
The first CornerStone management fee payment related to Advisory Clients is due upon execution of the
investment management agreement and will be assessed pro rata if the agreement is executed at any time
other than the first business day of the calendar quarter. Thereafter, the management fee is billed and
payable quarterly in advance. CornerStone’s fee is calculated on the net asset value of the Advisory Client’s
investment portfolio as of the last trading day of the previous calendar quarter. The management fee
payment related to the Funds is due quarterly in advance, based on the value of each limited partner’s
capital account as of the first business day of each calendar quarter.
The investment management agreement is terminable by either party on prior written notice as specified
in the IMA. Following termination, unless we have agreed otherwise in our agreement with the Client, we
will refund a pro-rated amount for unearned, prepaid fees we may have received prior to the termination
date.
Other Expenses
CornerStone’s management fee is separate from, and in addition to, the fees and expenses of third parties
associated with the investment of the Advisory Clients’ assets. Clients are responsible for such fees and
expenses, including fees charged by third-party investment managers, fees and expenses of mutual funds,
ETFs and private investment funds, custodial charges, brokerage fees or commissions, transaction fees,
borrowing charges, exchange fees, taxes, and other related costs and expenses incurred by Advisory Clients
Form ADV Part 2A: Uniform Application for Investment Adviser Registration 7
accounts. Fees and expenses will reduce an investment’s returns.
Investors in private funds are responsible for their share of the expenses related to the Fund’s investments
and operations, such as legal, accounting, administration, audit and other professional fees and expenses,
custodial fees, bank service fees, the Fund’s pro rata share of the expenses of the portfolio funds, investment
management fees and incentive fees paid to portfolio managers and/or underlying funds, and other expenses
described in the limited partnership agreements for the Funds. Fees and expenses will reduce an
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