Item 5. Fees and Compensation
The Adviser charges each Fund an investment management fee in an amount ranging from 1% to
1.5% annually based on the value of the Fund’s assets under management.
Investment management fees are charged each quarter in advance based on the total market value
of the assets in each Fund (including net unrealized appreciation or depreciation of investments and
cash, cash equivalents and accrued interest) on the first day of the quarter. If an initial or additional
investment is made to a Fund during a quarter, the investment management fee will be charged as
of the date of such investment based on the value of such investment as of such date and will be
prorated for the number of days remaining in the quarter.
The Adviser or a related person will be paid a performance-based fee or allocation, which is
compensation that is based on a share of capital gains on or capital appreciation of the assets of a
Fund, in an amount ranging from 18% to 20% of such gains or appreciation.
The Adviser deducts investment management fees from the Funds by instructing the Funds’
custodian following the administrator’s calculation of the fee for the relevant period.
In addition to paying investment management fees and performance-based compensation, each
Fund will also be subject to expenses incurred in its investment operations, including all expenses
incurred in connection with the purchase, sale, evaluation or carrying of any securities or
investments, including, without limitation, custody, accounting and transfer fees, brokerage
commissions, and expenses associated with the order management systems and trade allocation
and acceptance services, interest expenses, and any expenses attributable to regulatory filings
which are made with respect to the assets of the Fund (including, without limitation, Section 13,
Section 16 and Form PF filings). Fund assets are invested in a master-feeder structure and bear a
pro rata share of the expenses associated with the related master fund. In addition, the Funds will
incur brokerage and other transaction costs. Please refer to Item 12 of this brochure for a
discussion of the Adviser’s brokerage practices.
The allocation of expenses by the Adviser between it and any client and among clients represents a
conflict of interest for the Adviser. The Adviser allocates expenses to each client in accordance with
the client’s arrangements with the Adviser (including applicable client disclosures). The Adviser
seeks to allocate shared expenses for products and services benefitting the Adviser and the client
and not covered in the client’s arrangements in a fair and reasonable manner. The Adviser may use
a variety of methods to allocate common expenses among its clients, including methods based on
assets under management, relative use of a product or service, the nature or source of a product or
service, the relative benefits derived by the Adviser’s clients from a product or service, or other
relevant factors. Nonetheless, the portion of a common expense that the Adviser allocates to a
particular client for a particular product or service may not reflect the relative benefit derived by such
client from that product or service in any particular instance.