Item 5: Fees and Compensation
Dynamic’s fees and other client expenses are described below and in greater detail in the governing
documents specific to each client (such as its offering document).
Management Fees
For providing investment advisory services, Dynamic currently receives from its client an asset-based
monthly management fee that ranges from 1/8 to 1/12 of 2% (1.5% to 2% per year) of the month-end
adjusted net asset value of the client. For purposes of calculating the management fee, net asset value
is determined before any incentive fee (as described below) is made to Dynamic or its affiliates and is
not reduced by the current month’s management fee. The management fee is payable monthly in
arrears.
The management fee is non-negotiable. Dynamic may, however, in its sole discretion, waive payment by
clients of some or all of such management fees. Dynamic and certain of its affiliates and related parties
are not subject to management fees.
Incentive Fee
Dynamic and its affiliates are currently entitled to receive a performance-based incentive fee from its
client payable annually in arrears equal to 20% of the trading profits as of the end of each quarter,
subject to a “high water mark” and adjusted for any intra-period redemptions by clients’ owners.
Trading profits include both realized and unrealized profits and losses and are defined more specifically
in the management agreement with each client.
The incentive fee is non-negotiable. Dynamic or its affiliate may, however, in their sole discretion, waive
payment by the client of some or all of the incentive fee. Dynamic and certain of its affiliates and related
parties are not subject to incentive fees.
Other Fee Information
Dynamic’s management and incentive fees are charged as set forth in each client’s management
agreement with Dynamic. For the current client, these fees are calculated independently by the client’s
administrator in accordance with the client’s offering documents and the relevant calculation is sent to
the Dynamic Group for review and approval. Once approved, client is billed for fees owed (monthly
in the case of management fees and annually in the case of the incentive fees) and such fees are
deducted from client accounts.
None of the Dynamic Group’s entities or employees receives compensation for the sale of securities or
other investment products.
Other Expenses
Clients are subject to additional expenses in addition to the management and incentive fee paid to
Dynamic and/or its affiliates. These include, but are not limited to:
Ongoing administrative and offering costs such as ordinary and extraordinary legal,
accounting, administrative and auditing fees, operating expenses as incurred such as costs of
printing and mailing monthly, annual, tax and other reports and notices, expenses of offering
interests in certain clients, insurance costs, charges of the registered agent, governmental filing
fees, regulatory expenses, directors fees (if applicable), listing expenses, and taxes; and
Transaction costs associated with trading and investment activities such as brokerage
commissions, prime brokerage fees, execution, give-up, brokerage, floor, exchange, clearing
and regulatory fees, NFA fees, user fees, exchange data fees and related costs and expenses,
option premiums and other transaction costs and expenses, delivery and custody expenses,
bank, broker and dealer service fees, interest and borrowing charges on margin accounts,
borrowed money and other indebtedness, and related expenses and costs. Additional
information regarding Dynamic’s brokerage practices is disclosed in Item 12: Brokerage
Practices.