ITEM 5 FEES AND COMPENSATION
A. DESCRIPTION AND BILLING
The Fund is currently offering one class of limited partner interests (“Class A investors”),
pursuant to the Fund’s Offering Document. The Fund may in the future, without the consent
of the existing investors, offer additional classes of investor interests that have terms that
differ from those described herein, including, among other things, management fees,
expenses, performance allocations, withdrawal rights, reporting, lock-ups, and/or capacity.
For Class A investors, no management fees will be paid to DWD or the Sub-Advisors by the
Client. Prelude does not currently charge the Fund a management fee. However, it’s possible
in the future the Fund may invest in an underlying fund that charges management fees.
The Fund is entitled to 100% of the net profit produced by Fund’s invested capital in the
underlying fund. The Fund is also entitled to 50% of the net profit which corresponds to the
capital provided by the underlying fund in excess of the Fund’s invested capital in the
underlying fund.
Therefore, with the initial minimum investment by the Fund and the corresponding
underlying fund’s capital provided, the Fund is entitled to 55% of the total portfolio
performance in the underlying fund sub-account in any given performance period, so long
as the ratio of the capital accounts of the Fund remains the same. The 55% total performance
allocation is then split as follows: The General Partner is entitled to 30% of the total
performance, while Class A investors are entitled to 25% of the total performance subject to
their respective pro-rata share of their classes of interest in the Fund, together summing to
the 55% total. If the first-loss and provider fund capital accounts at the underlying fund
change, the General Partner is entitled to its proportionate performance allocation of the
Fund’s returns (equivalent to 30% divided by 55%, or approximately 54.55%).
For the calculation of performance allocation of Fund, with respect to each Class A investor,
the General Partner is entitled to a performance-based profit allocation (a “Performance
Allocation”) with respect to each month of the Partnership (and/or such other periods of
time as discussed below) generally equal to 54.55% of the amount by which the monthly net
new profits allocated to the Fund exceeds an investor’s prior loss carryforward. No
Performance Allocation will be debited until the Loss Carryforward Account for the managed
account capital accounts is reduced to (but not below) zero. The terms “Performance
Change,” and “Loss Carryforward Account” are explained, generally, in the Offering
Documents. The Sub-Advisors may be compensated by the General Partner and indirectly
shall receive a portion of the Performance Allocation.
If an investor makes a withdrawal from its capital account at a time when there is a balance
in the Loss Carryforward Account with respect to such capital account, such Loss
Carryforward Account will be reduced in the same proportion that the withdrawal amount
bears to the investor’s total capital account balance immediately prior to the withdrawal.
The Performance Allocation with respect to any investor may be waived or altered by the
General Partner in its sole discretion.
B. OTHER FEES AND PAYMENTS
The Client may pay expenses as described in the Offering Document or related disclosure. In
addition to a performance-based fee, the Fund shall bear any and all costs, fees and expenses,
including attorney’s fees and expenses, associated with any litigation, arbitration or any
similar proceedings involving the Fund. For the avoidance of doubt any such expense shall
be shared by the investors and the General Partner on a pro-rata basis in proportion to their
percentage interests in the Fund. For Class A investors, the General Partner shall bear all
organizational fees, operational fees, or expenses associated with the Fund, including
custodian fees, interest and taxes.
C. REFUND AND TERMINATION POLICY
An investor is permitted to initiate complete or partial withdrawals of the balance of a capital
account as of the last day of the calendar quarter (and/or such other days as the General
Partner may determine) occurring at least twelve (12) calendar months following the date
on which the investor made the capital contribution relating to such capital account (for the
avoidance of doubt a January 1 subscription shall be eligible for a December 31 withdrawal
in the same year). Notice of any withdrawal must be provided in writing to the General
Partner at least thirty (30) calendar days prior to the withdrawal date.
D. OTHER COMPENSATION
Neither DWD nor its supervised persons accept any compensation for the sale of securities
or other investment products, including asset-based sales charges or services fees from the
sale of mutual funds.