Item 5: Fees and Compensation
A. Advisory Fees and Compensation
Management Fees
Our compensation generally includes a management fee typically paid in arrears either monthly
or quarterly. Fees for strategy-specific separately managed accounts are subject to negotiation.
Factors such as the client’s proposed investment size and/or a long-term commitment may be
taken into consideration in negotiating the fee.
Management fees payable by the commingled funds may vary and are described in each fund’s
offering materials, or organizational documents. Dalton’s standard management fees charged to
the funds are calculated as a percentage of assets under management and typically range from 1
up to 2.0% per annum, but may be lower per client written agreements. Management fees are
generally payable and deducted from the assets of each Fund quarterly in arrears.
Performance Fees and Allocations
For certain client accounts and commingled funds, including the UCITS funds, we may receive
performance-based compensation. For our funds, our standard performance-based allocation is
typically charged at a year-end generally, at a rate of 20% of all net realized and unrealized
profits (if any) from each investor’s account as of year-end which is then reallocated to the
respective fund’s general partner account. Certain funds may have a performance-based
compensation based on relative performance over a specific benchmark, greater than one year
performance measurement periods and differing performance compensation rates.
The UCITS funds that we sub-advise also include performance-based compensation as described
in their offering materials. The compensation percentages will vary by and among the different
classes within the UCITS.
We are generally not entitled to receive any performance-based compensation to the extent that
there are unrecouped accumulated losses in performance carried forward from prior years.
We may decide to rebate, reduce, or waive either the management fee or performance-based
compensation for certain classes or investors. To the extent that we are sharing portions of the
either management fee or performance compensation with others, it is solely at our cost.
Redemption Amount
We seek to partner with investors who share our long-term view and investment philosophy.
Thus, some of our funds and other collective vehicles may be subject to a fee for withdrawals
made during a lock-up period. In those cases, we may charge an early withdrawal fee ranging
from 5-10% and deduct directly from the early withdrawal amounts.
Some of our separately managed accounts may also have an early withdrawal provision that
provides for a change in fees for early withdrawals.
B. Payment of Fees
We generally charge management fees as of either monthly or quarterly in arrears based upon
assets under management for the respective measuring period. The management fee is typically
pro-rated for contributions or withdrawals made within, depending on the fund, either intra-
month or quarter.
Separate account clients must authorize the payment of management fees on a transaction-by-
transaction basis. In certain cases, upon client request, separate account clients will authorize
such approved fees to be debited directly from their account. Fees paid from commingled funds
are debited directly from the funds.
Payments are due and are charged at the first day after the end of each calendar month or quarter
based on the average value of the assets under management for each client as of the close of
business on the last business day of each month or quarter.
To the extent applicable, management fees are calculated after the accrual of any applicable
performance-based compensation.
C. Additional Fees and Expenses
Any additional fees and expenses for our separately managed account clients will vary and are
subject to negotiation.
Fund investors may pay certain expenses directly or reimburse us for certain expenses paid on a
fund’s behalf as described in their offering materials. Certain investors have limited the amount
of expenses that they pay, pursuant to letter arrangements.
Generally, funds are responsible for operating expenses which may include, but are not limited to
the following:
• brokerage and execution charges, commissions, custodial charges, and fees for quotation
and other data services;
• accounting, trading, portfolio management and risk management systems expenses;
• research subscriptions and expenses;
• travel, legal and consulting fees related to investment research and due diligence;
• broken trade and broken deal fees;
• expenses to register securities and transfer taxes;
• costs and expenses incurred for the purpose of protecting or enhancing a fund’s value of
the assets (including the costs of instituting and defending litigation);
• U.S. federal, state and local taxes, filing and registration fees, including audits associated
with such taxes and filings (other than our corporate taxes);
• investor communications, relations, bookkeeping, accounting and the preparation and
mailing of financial, tax and performance information to investors fees, costs and
expenses;
• fees, costs and expenses incurred in connection with borrowings;
• administration fees, costs and expenses;
• premiums and other costs of D&O/E&O and other insurance;
• fees for attorneys, accountants, consultants and other professionals or experts related to a
fund’s investment; and
• Directors’ fees.
If one of our funds holds other collective managed investments, e.g., mutual funds, those
underlying fund fees, including a management fee, other fund expenses and a possible
distribution fee, are paid by the fund directly and are not deducted or rebated from our fees.
Please note that you can generally purchase mutual funds directly without Dalton’s advisory
services.
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