Item 5. Fees and Compensation
DEM’s compensation is negotiable and varies, but typically charges an annual fee of 1% of assets
under management. This amount is payable in quarterly installments on the first day of each
calendar quarter based on the net market value of each Investor’s account on that date. DEM also
typically receives from each limited partner in its partnership a performance allocation equal to
15% of net profits (including both realized and unrealized gains and losses) otherwise allocable to
such limited partner. Performance allocations and fees are assessed in arrears on a quarterly or
annual basis, and are only applied to the portion of profits that exceed the cumulative losses
previously allocated to or incurred by Investors. DEM complies with Rule 205-3 under the
Investment Advisers Act of 1940, to the extent required by applicable law.
DEM typically deducts management fees and performance allocations and fees directly from client
accounts.
DEM believes that its fees are competitive with fees charged by other investment advisers for
comparable services. Comparable services may be available, however, from other sources for
lower fees.
The disclosure in this Item 5, together with the disclosure in Item 12, allow a plan that is subject
to the Employee Retirement Income Security Act of 1974 and that invests in the investment limited
partnership that DEM manages, to use the “alternative reporting option” to report DEM’s
compensation as “eligible indirect compensation” on the Schedule C of the plan’s Form 5500
Annual Return/Report of Employee Benefit Plan.
DEM’s relationship with its investment partnership client is terminable on expiration of the
partnership’s term, dissolution of the partnership or on DEM’s withdrawal as general partner.
Each limited partner may withdraw, on no less than 30 days prior written notice, on the last day of
any calendar quarter after the initial one year anniversary.
In all cases, expenses, the pro rata portion of the management fee and the performance allocation
or fee through the date of termination are charged to the account. Any prepaid but unearned
advisory fees are forfeited to the manager and are not refunded on termination of a client’s account.
An investor who withdraws from the partnership on a date other than the last day of a quarter,
however, does not receive a refund of the management fee previously paid.
Each account is responsible for its own costs and expenses, including trading costs and expenses
(such as brokerage commissions, expenses related to short sales, and clearing and settlement
charges), ongoing legal, accounting, and bookkeeping fees and expenses, and the expenses charged
by any fund administrator for its accounting, bookkeeping and other services. DEM bears its own
operating, general, administrative, and overhead costs and expenses, other than the expenses
described above. All or part of these costs and expenses may be paid, however, by securities
brokerage firms that execute clients’ securities trades, as discussed in Item 12 below.