ITEM 5: FEES AND COMPENSATION
Compensation
Compensation received by Corriente from the Fund consists of fees based on a percentage of assets
under management. In addition, performance-based amounts, as more fully described below, are
received by the Special Limited Partner from the Fund.
Corriente receives a management fee from the Fund, in advance and on a quarterly basis, at a rate
equivalent to an annual rate 2.0% of each limited partners’ capital account balance. The GP
maintains the authority to reduce or waive the management fee at its discretion.
The Special Limited Partner is entitled to a performance-based profit allocation at the end of each
calendar year (and/or at certain other times) equal to 20.0% of the amount by which the Fund’s net
profits allocated to the limited partners’ capital account for the current calendar year exceeds the
balance in such limited partners’ carry-forward account in accordance with the fund documents.
All fees or allocations received from the Fund by the Special Limited Partner are deducted from the
Fund or investor accounts.
Operating Expenses, Including Brokerage and Other Transaction Costs
In addition to the compensation payable to Corriente, the Fund pays its ongoing operating and
offering costs as set forth in the offering documents for the Fund, including, but not limited to:
brokerage commissions, dealer mark-ups and other costs of executing transactions, which
are discussed in more detail below;
interest expense;
legal, auditing, reporting and accounting expenses, and regulatory reporting expenses
(including, but not limited to, expenses incurred in connection with complying with Securities
and Exchange Commission and Commodity Futures Trading Commission reporting
obligations, such as expenses associated with reports of beneficial ownership of securities
held by the Fund, as well as costs of preparing regulatory filings by the Fund or by Corriente
with respect to the Fund (including, but not limited to, Form PF));
consulting fees and charges and the fees and charges of third parties retained by Corriente to
assist in evaluating prospective investments and monitoring existing investments by the
Fund, including research-related travel expenses;
fees of the Fund administrator;
due diligence costs associated with evaluating trades in which the Fund invests, including
travel expenses and payments to third parties for services such as identifying, evaluating,
analyzing, pricing and developing trading strategies for trading in certain markets and
implementing, managing and evaluating these strategies;
computer software, data and information sources (such as Bloomberg) and licensing costs;
research costs;
costs and expenses related to directors’ and officers’ insurance;
fees incurred in connection with the custody of assets of the Fund; and
extraordinary expenses, including expenses relating to litigation or administrative
proceedings.
In some cases, Corriente may choose to pay certain expenses directly and obtain reimbursement from
the Fund.
The Fund is charged brokerage commissions, bid-ask spreads and other transaction costs and
expenses in connection with trading and investment activities as well as custodian fees for Fund
assets held in cash or securities at various banks, broker-dealers and other financial institutions. For
a discussion of the brokerage arrangements that Corriente enters into on behalf of the Fund, see Item
12 below. In addition, from time to time, the Fund may invest in unaffiliated money market funds,
mutual funds or exchange-traded funds, which charge management fees and expenses as disclosed
in the specific fund’s prospectus.
When Corriente incurs an expense, it must determine whether to pay the expense directly or allocate
all or a portion of the expense to the Fund. Corriente makes these determinations in accordance with
the language contained in the Fund’s offering documents but there is some discretion involved. This
creates a potential conflict of interest in that expenses allocated to the Fund are borne by the
investors rather than by Corriente. Corriente has adopted and implemented written compliance
policies and procedures designed to address this conflict and ensure that Corriente abides by its
fiduciary duty to act in the best interests of its Fund.
Negotiation of Fees; Waivers
Compensation payable to Corriente is generally not negotiable, but under certain circumstances,
Corriente may, in its discretion, waive all or a portion of its management fees and/or performance
compensation for a particular investor.
Pre-Payment of Fees
As discussed above, management fees are paid by the Fund quarterly in advance but do not accrue
until the end of each month. If an investor withdraws during a calendar quarter, Corriente will refund
a pro rata portion of the management fee applicable to the withdrawn capital for that quarter, based
on the timing of the withdrawal date.
Early Withdrawal Fees
In certain circumstances set forth in the Fund’s offering documents, investors may be charged an
early withdrawal fee of 3.0% for withdrawing capital prior to their scheduled liquidity dates. In the
event that this fee is charged, the fee will be paid to the Fund and will not be paid directly to Corriente.
A withdrawal request may be revoked by the limited partner up until the withdrawal date subject to
certain fees. A revocation submitted two weeks or more in advance of the withdrawal date will be
subject to a 0.10% fee payable to the Fund. A revocation submitted less than two weeks in advance
of the withdrawal date will be subject to a 0.15% fee payable to the Fund.