Item 5 - Fees and Compensation
A. Below is a discussion of how the Adviser is compensated in connection with providing advisory
services to the Clients. In the future, the Adviser may enter into different fee arrangements on a
client by client basis. It is critical that all clients, and investors in all clients, refer to the applicable
client’s Offering Documents for a complete understanding of how the Adviser and its affiliates are
compensated for advisory services. The following information is a summary only and is qualified
in its entirety by the Fund’s Offering Documents:
Management Fee. In consideration of management and advisory service provided by
the Adviser, the Clients pay to the Adviser a quarterly management fee (the
“Management Fee”) in advance equal to a percentage, typically ranging from 0.75%
to 2.0% per annum, of net asset value of the Fund.
Incentive Allocation. In addition to the Management Fee, the Clients pay to an affiliate
of the Adviser or the Adviser, an incentive-based fee based upon a percentage of the
distributions made to each Fund investor (the “Incentive Allocation”).
LOWER FEES FOR COMPARABLE SERVICES MAY BE AVAILABLE FROM OTHER
SOURCES.
Certain investors in a Fund, including, for example, a Fund’s general partners, its affiliates and
certain “friends of the firm” (including any related entity established by any of the foregoing, such
as trusts, charitable programs, endowments or related programs, family investment vehicles and
other estate planning vehicles), pay reduced or no advisory fees at our discretion (though these
investors generally pay their pro rata share of certain Fund expenses).
Please see Item 11 for a description of the side letter agreements we enter into with certain investors
in Funds that provide such investors with customized terms, including with respect to reduced
advisory fees.
B. Management Fees are payable by the Fund to the Adviser quarterly in advance as of the first day
of each calendar quarter and the Performance Fee is distributed by the Fund to an affiliate of the
Adviser at the end of each fiscal year as applicable, in each case on the terms provided for in the
Fund’s governing documentation. In either case, the Adviser deducts fees directly from the Fund’s
assets. The Adviser has the authority to waive or modify the Management Fee for Fund investors
that are members, principals, employees or affiliates of the Adviser, relatives of such persons, and
for certain strategic and large investors.
C. With respect to the Fund, and as more fully described in the Fund’s Offering Documents, the Fund
bears costs and expenses relating to the fund, including, but not limited to: the Management Fee;
Fund legal, compliance (including consultants’ fees); the administrator’s fees and expenses
(including, but not limited to, middle and back office services and software necessary for trade
capture and portfolio management); audit and tax preparation (including third-party tax
preparation) and accounting expenses (including third party accounting services and accounting
software); Organizational Expenses (as defined below); execution and order management system
fees and expenses; fees and expenses associated with risk management services and any related
software or systems; software licensing and technology-related fees and expenses (including any
services agreements or “software-as-a-service” agreement, project and/or development fees and
expenses and any consulting fees and expenses); salaries, and other related employment expenses
associated with developers, engineers and other technology-related employees; investment
expenses such as commissions; research fees and expenses (including Bloomberg and similar
subscriptions and data services); interest on margin accounts and other indebtedness; borrowing
charges on securities sold short; custodial fees; bank service fees; Fund-related insurance costs
(including D&O and E&O insurance for the Adviser and certain affiliates and members of select
committees); fees and expenses of independent committee members; expenses of regulatory
compliance (including compliance with AIFMD, FATCA and any other compliance regimes that
the Fund may become subject to in the future), filings and reporting (including Section 13, Section
16 and Form PF filings); directors' fees; pricing service fees; portfolio valuation expenses
(including third-party valuation agents); and any other expenses related to the purchase, sale,
transmittal or preservation of Fund assets.
Notwithstanding the foregoing, the Operating Expenses (defined below) of the Fund (except as set
forth in the following paragraph regarding the separately managed account) are limited to 0.50%
per annum of the net asset value of the Fund (measured as of the last day of each calendar quarter),
with the excess, if any, to be reimbursed by the Adviser through a waiver of the Management Fee
over the immediately following calendar quarter, and such reduction is allocated pro rata among
each Fund investor. For purposes of calculating Operating Expenses on a quarterly basis, the
Adviser may accrue an Operating Expense during the period in which such expenses were incurred
even if that expense has not been billed, given that certain Operating Expenses are billed on a time
interval that is not quarterly (e.g., an audit expense might be billed annually, but that expense will
be accrued for on a quarterly basis).
For purposes of the Operating Expenses for the separately managed account, the Operating
Expenses, the amount of which may vary from time to time, include, without limitation: (i) the fees
and expenses of the general partner of the separately managed account and its directors (including
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