Item 5. Fees and Compensation
Fund Fees
Faraday’s compensation from limited partners in the Funds is negotiable and varies, but typically,
it charges an annual management fee of approximately 1.75% of the net asset value of each limited
partner’s investment in a Fund, due in advance on the first day of each fiscal quarter based on the
Fund’s net asset value on that date. Faraday also charges each limited partner in a Fund a
performance fee equal to 20% of net profits (including both realized and unrealized gains and
losses) otherwise allocable to such limited partner. Performance fees are assessed in arrears on an
annual basis and are only applied to the portion of profits that exceed the cumulative losses
previously allocated to the limited partners.
General Disclosure
Faraday complies with Rule 205-3 under the Investment Advisers Act of 1940, as amended.
Performance fees charged by the Funds may create an incentive for Faraday to make more risky
and speculative investments than it would otherwise make.
Faraday typically deducts management fees and performance fees (if any) directly from client
accounts.
Accounts that invest in mutual funds or ETFs also pay, indirectly, investment advisory fees to the
managers of those funds.
Faraday believes that its fees are competitive with fees charged by other investment advisers for
comparable services. Comparable services may be available, however, from other sources for
lower fees.
The disclosure in this Item 5, together with the disclosure in Item 12, allow a plan that is subject
to the Employee Retirement Income Security Act of 1974 and that invests in a Fund, to use the
“alternative reporting option” to report Faraday’s compensation as “eligible indirect
compensation” on the Schedule C of the plan’s Form 5500 Annual Return/Report of Employee
Benefit Plan.
Relationships with each Fund are terminable on expiration of the Fund’s term, dissolution of the
Fund or on Faraday’s withdrawal as general partner. Each limited partner may withdraw from the
Fund, on sixty days’ prior written notice, on the last day of any fiscal quarter, subject to certain
withdrawal limitations set forth in the Fund’s offering circular.
In all cases, expenses, the pro rata portion of the management fee and the performance fee through
the date of termination are charged to the account. All prepaid but unearned advisory fees are
refunded on termination of a client’s account. A limited partner who withdraws from a Fund on a
date other than the last day of a quarter does not receive a refund of the management fee previously
paid.
Each account is responsible for its own costs and expenses, including trading costs and expenses
(such as brokerage commissions, expenses related to short sales, and clearing and settlement
charges), ongoing legal, accounting and bookkeeping fees and expenses, and the fees and expenses
charged by any fund administrator for its accounting, bookkeeping and other services. In addition,
some of Faraday’s research and brokerage costs and expenses may be paid by securities brokerage
firms that execute clients’ securities trades, as discussed in Item 12 below.