ITEM 5 – FEES AND COMPENSATION
A. Advisory Fees and Compensation
Management Fees
• Pooled Investment Vehicles: With the exclusion of Deep Field Fermi Fund, LLC (“Fermi”), DFAM
receives a management fee (the “Management Fee”) from the applicable Fund on the first day of
each quarter in advance equal to 0.375% (approximately 1.50% on an annual basis) of each
Investor’s total capital account balance as of the first day of such quarter. The Management Fee is
normally paid by deduction from an Investor’s capital account. The Management Fee is prorated
for interests held for less than a full quarter. Management Fees can vary amongst Fund share classes
and any other future Fund, as outlined within the applicable Governing Documents.
• In the case of Fermi, DFAM typically receives a one-time Management Fee of 1% of the initial
investment at the time of investment. The Management Fee is normally paid by deduction from an
Investor’s capital account.
It is critical that Investors refer to the relevant Governing Documents for a complete understanding
of fees and expenses they will bear through participation in a DFAM Fund. The information
contained herein is a summary only and is qualified in its entirety by such documents.
• Separate Accounts: Separate account clients will generally charged Management Fees based on the
amount of assets managed by DFAM, subject to the terms of the relevant Investment Management
Agreement. Management Fees can be individually negotiated with DFAM. The Management Fee
is normally paid by deduction from a separate account client’s account. Separate account clients
will be responsible for payment of their prorated fees through the date of termination and refunded
to the extent any such fees are paid in advance.
Performance-Based Allocation and Fees
Typically, for Funds that pursue a Public Equities Strategy, on December 31 of each year, Funds allocate
to the General Partner a performance-based allocation or fee (the “Performance Fee”) equal to 20% of the
appreciation of the Investor’s capital account during the year. The Performance Fee is made only if, and to
the extent that, the net capital appreciation of a Limited Partner’s capital account for the year exceeds any
net capital depreciation in the capital account (reduced pro rata for any withdrawals) accumulated in prior
years (i.e., a “high water mark”).
DFAM can be allocated Performance Fees with regard to unrealized appreciation as well as realized gains
in the Investor’s capital accounts, with the exception that Performance Fees are not recognized with respect
to Special Securities (discussed below) until such time as they are no longer designated Special Securities.
If an Investor withdraws all or a portion of its capital account on a date other than December 31, the
Performance Fees will be charged on the amount withdrawn for the period from the prior January 1 to the
date of withdrawal and any unearned Management Fee will be refunded to the Investor.
For Funds that pursue a Private Equity or other strategy, DFAM is allocated a performance-based allocation
(“Carried Interest”) based upon the cash, securities and other property (“Investment Proceeds”) distributed
to the members of the Fund. Typically, Investment Proceeds are first distributed to members based upon
their aggregate capital contributions. Second, Investment Proceeds are distributed to members until each
member has received a prescribed internal rate of return per annum, compounded annually. Then, typically,
the remaining Investment Proceeds are distributed subject to a waterfall as provided in a Fund’s offering or
other organizational documents.
Separate account clients may be charged an annual Performance Fee based on the capital appreciation of
the separate account client’s account during the year Subject to the terms of the relevant Investment
Management Agreement, Performance Fees can be individually negotiated between DFAM and the
separate account client.
Advisory Fee Adjustments
DFAM has the authority to waive some or all of the Management Fee and Performance Fees borne by any
Client or Investor in its sole discretion. DFAM can also on occasion pay or redirect a portion of its
Management Fee and/or Performance Fee attributable to a Client or Investor’s interest to persons who have
introduced such Client or Investor.
Adjustments to the advisory fees charged to separate account clients must be individually negotiated
between them and DFAM.
Management Fee and Performance Allocation on Special Securities in the Funds
For certain Funds, DFAM will receive a Management Fee with respect to Special Securities (as defined
within the Fund’s Governing Documents). If, after giving effect to a withdrawal, a Limited Partner only
has an interest in Special Securities, the Management Fees with respect to such Special Securities will be
assessed against holdbacks, reserves or proceeds from any realization or deemed realization of the Special
Securities.
DFAM will receive a Performance Fee with respect to Special Securities of the Funds, although DFAM
will not receive a Performance Fee with respect to a Special Security until such Special Security has been
liquidated, distributed in kind or DFAM determines that it will no longer be characterized as a Special
Security.
B. Payment of Advisory Fees
As described above, with the exclusion of Fermi, Fund Management Fees are charged quarterly, in advance
of the calendar quarter. For Fermi, Management Fees are charged once at the time of investment. The
Performance Fees are charged on an annual basis, subject to a high-water mark. Any potential adjustments,
reductions, or prorations of such advisory fees are outlined within the applicable Governing Documents.
Certain affiliated persons of DFAM are generally not subject to such advisory fees.
...