Item 5. Fees and Compensation
A. Advisory Fees and Compensation.
Asset-Based Compensation
The Adviser charges the Funds and the SMA an investment management fee of up to 2% per annum
based on the value of the Funds and the SMA’s assets under management. Investors in the Funds
managed by the Adviser are subject to such investment management fees indirectly through their
investment in the Funds. The Managed Account is not charged an investment management fee.
Investment management fees are charged either quarterly or monthly in advance, based on the total
market value of the assets in the Funds and the SMA (including net unrealized appreciation or
depreciation of investments and cash, cash equivalents and accrued interest) on the first day of the
quarter or month, as applicable. If a new client account is established during a quarter or month, as
applicable, or a client makes an additional investment in its account during a quarter or month, as
applicable, the investment management fee will be charged as of the effective date of the investment
management agreement or the date of the additional investment based on the value of the assets as of
the applicable date and will be prorated for the number of days remaining in the quarter or month, as
applicable.
The investment management fees are generally not negotiable; however, the Adviser, in its sole
discretion, may waive or modify the fees for certain investors in the Funds who are members, employees
or affiliates of the Adviser or a related person of the Adviser, relatives of such persons and for certain
large or strategic investors.
Performance-Based Compensation
The Adviser (or its related person) will also be paid or allocated, as applicable, 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 the Funds and the SMA. This compensation may be paid or allocated, as applicable, to
the Adviser (or its related person) and may equal up to 20% of net profits, subject to a loss carryforward.
The private pooled investment vehicle underlying the Managed Account pays the Adviser a monthly
performance-based fee in an amount equal to 50% of any net gains of the Managed Account. Net gains
of the Managed Account with respect to any calendar month are first reduced by prior losses.
The performance-based compensation paid or allocated to the Adviser (or its related person) is generally
not negotiable; however, the Adviser, in its sole discretion, may waive or modify such compensation for
certain investors in the Funds who are members, employees or affiliates of the Adviser or a related
person of the Adviser, relatives of such persons and for certain large or strategic investors.
B. Payment of Fees.
The Adviser deducts the investment management fee from the Funds by instructing the client’s custodian.
The Adviser receives the investment management fee from the custodians of the SMA. Investment
management fees are charged quarterly or monthly as applicable.
Performance-based compensation is deducted from client accounts at the end of each fiscal year, monthly
or upon withdrawal or redemption by a client and paid to or reallocated to, as applicable, the Adviser (or its
related person).
C. Other Fees and Expenses.
In addition to paying investment management fees and, if applicable, performance-based
compensation, client accounts will also be subject to other investment expenses such as custodial
charges, brokerage fees, commissions and related costs; interest expenses; taxes, duties and other
governmental charges; transfer and registration fees or similar expenses; costs associated with foreign
exchange transactions; research fees and expenses (including research related travel); other portfolio
expenses; and costs, expenses and fees associated with products or services that may be necessary or
incidental to such investments or accounts. Please refer to Item 12 of this Firm Brochure for a discussion
of the Adviser’s brokerage practices. Client assets may be invested in money market mutual funds,
ETFs or other registered investment companies. In these cases, the client will bear its pro rata share of
the investment management fee and other fees of the fund, which are in addition to the investment
management fee paid to the Adviser. Client assets may also be invested in a master-feeder structure.
Feeder funds bear a pro rata share of the expenses associated with the related master fund.
D. Prepayment of Fees.
The Funds and the SMA are required to pay the Adviser’s investment management fees in advance. If
the advisory contract with a Fund or the SMA is terminated, any pre-paid fees are refunded (if at all) in
accordance with each Fund’s offering documents or investment management agreement.