Item 5: Fees and Compensation
Management Fee
EDCM generally charges the Funds a management fee, based on the net asset value of the
aggregate capital account balances of the Funds, payable quarterly in advance. For Fund II,
Fund III, Offshore I, and Offshore III, the management fee is 2.0% per annum for limited
partners or shareholders, respectively. We pro rate such fees in the event of contributions or
withdrawals by investors on other than a calendar quarter-end or other period applicable to the
relevant Fund. Fund II and Offshore I, the portfolio investments of which are and will be held
substantially in Fund I, will not be charged a management fee at the Fund I level. Offshore III,
the portfolio investments of which are and will be held substantially in Offshore II, will not be
charged a management fee by EDCM at the Offshore II level. The Fund I, which is the largest
shareholder of SPV I will not be charged any management fee on the SPV I level. EDCM may
waive or reduce any of the foregoing management fees, in its sole discretion. EDCM waived all
management fees applicable to Fund II and Offshore I in 2013, 2014, 2015, 2016 and 2017. In
addition, for the purposes of management fee calculation for Offshore I and Offshore III, the net
asset value may be calculated on the basis of unaudited information which may vary from the
audited financial information and may be based on sources which EDCM may believe to be
reliable but which accuracy cannot be guaranteed. Such net asset value determination can also
give raise to significant conflicts of interests - See “Material Risks – Investment Risks --
Valuation of Fund Investments” of Item 8 below and Offshore I and Offshore III Confidential
Private Offering Memoranda or other offering documents for additional information and risk and
conflicts disclosures.
This amount is calculated is based on the most recent Net Asset Values available for the entities advised: Hudson River Master
Fund Ltd. (includes Hudson River Russia Fund Ltd. and Hudson River Russia Fund LP) as of August 31 2014; Synergy Hybrid Fund
Ltd. (including Synergy Hybrid Feeder Fund Ltd.) as of September 30, 2016; and Scoragon Partners LP as of December 31, 2016.
The most recent Net Asset Value for the Hudson River Property Investments LP is accounted for, for this Form reporting purposes,
at zero, because the Fund executed its final capital distribution to investors in June 2016 and is under liquidation since such time.
Please see Form ADV Part 1A for further disclosures.
Performance Fee and Allocation
With respect to Fund II, Fund III, and Offshore II, ED Capital LLC, EDCM’s affiliate
charges an annual performance allocation equal to 20% of an investor’s gain (subject to
recoupment of prior loss, if any) in such Funds. No performance fee or allocation is charged to
Fund II on the master fund level. The Performance fee for Offshore I, a feeder to Fund I, and
Offshore III, a feeder to Offshore I, is being calculated at the master fund level only. ED Capital
LLC, as a special limited partner in SPV I, will also be re-allocated 20% of the net cash flow
distributions to investors, including Fund II. In each case, the performance compensation is paid
subject to a loss carryforward provision, if applicable.
The performance-based compensation described above conforms to Section 205(a)(1) of
the Advisers Act in accordance with the available exemptions thereunder, including the
exemption set forth in Rule 205-3. We pro rate performance allocations and fees (and relevant
loss recovery accounts), if applicable, in the event of contributions or withdrawals by investors.
The performance allocation is made at the end of the financial year to which the allocation
pertains or upon a withdrawal or redemption from or termination of a Fund.
EDCM’s and/or its affiliate’s management fee and performance compensation is separate
from brokerage commissions, transaction fees, and other related costs and expenses which are
incurred by the Funds.
Item 12 below further describes the factors EDCM considers in selecting or
recommending broker-dealers for client transactions and determining the reasonableness of their
compensation (e.g., commissions).
Generally, the Funds’ administrators calculate the management fees and, if applicable,
any performance compensation payable to EDCM or its affiliates, and makes payment in
accordance with the terms of the Funds’ governing documents. EDCM has no ability to
withdraw funds directly from Funds’ accounts in connection with the payment of its fees,
allocations or reimbursable expenses other than as described above.