Item 5: Fees and Compensation
The fees applicable to each of the Funds are set forth in detail in the corresponding Offering
Documents. A brief summary of such fees is provided below.
Management Fee
Flow State is paid a monthly investment management fee (“Management Fee”) calculated
as a percentage of the net asset value of each series or capital account of a Fund.
The Management Fee is prorated and payable as of the Subscription Date (see Offering
Documents) for any subscription by an Investor that is effective other than as of the first day
of a fiscal month.
The Investment Manager, in its sole discretion, may waive or modify the Management Fee for
any Investor.
The Fund will not bear any of the internal operating costs and overhead expenses of Flow
State, such as employee salaries and bonuses, rent, utilities and other similar items.
The Principal and other employees of Flow State receive a portion of the Management Fees
and Performance Fees received by Flow State and/or the General Partner.
Other Types of Fees or Expenses
Flow State is authorized to incur and pay in the name and on behalf of the Funds all expenses
which they deem necessary or advisable.
The Firm is responsible for and shall pay, or cause to be paid, all of their own ordinary
administrative and overhead expenses, including, without limitation, all costs and expenses
related to rent, furniture, fixtures, equipment, office supplies, clerical expenses and all
salaries, bonuses and benefits paid to, or on behalf of, personnel of the Firm.
The Master Fund will bear all expenses relating to its ongoing structure and operation
(including direct expenses of the Feeder Funds) including: (i) the Management Fee; (ii) all
investment-related costs and expenses (i.e., expenses that, in the Investment Manager’s sole
discretion, are related to the investment of the Funds’ assets, whether or not such
investments are consummated), including commissions and charges, interest on margin
accounts and other indebtedness, expenses relating to short sales, clearing and settlement
charges, stock loan expenses, option premiums and custodial and service fees, research-
related expenses, expenses relating to consultants, attorneys, brokers or other professionals
or advisors who provide research, advice or due diligence services with regard to investments;
(iii) select fees and expenses related to portfolio exposure and performance management
systems, risk management software and/or services, software and/or services related to trade
reconciliation, treasury, margin, financial and counterparty management, risk monitoring,
performance reporting, valuation quotation services (e.g., Bloomberg terminals, historical and
live financial data and other similar services and data feeds) and trade order management
systems (including systems that facilitate trade compliance, commission management, stock
locates and transaction cost analysis, and third party service providers used for
implementation, custom reporting, updates, consultations, support, maintenance, monitoring
and data extracts); (iv) the Funds’ legal, accounting (including fees associated with accounting
software and systems), tax preparation and other tax-related expenses (including preparation
and mailing costs of financial statements, tax returns and other reports to investors), auditing,
consulting and other professional expenses; (v) third-party administration costs, fees and
expenses (including any costs, fees and expenses related to investor communications,
relations, reporting or other investor materials, tax preparation and related reporting,
performance information, data extraction and other types of reporting and any audit or
accounting services provided by a third-party administrator); (vi) all fees and charges of
custodians, clearing agencies and banks; (vii) compliance and reporting expenses and
expenses attributable to regulatory filings that are made with respect to the Funds or assets
of the Funds (including Section 13, Section 16, Form D, Form PF, FATCA, anti-money laundering
compliance (including the fees and expenses of the Master Fund’s and Feeder Funds’ anti-
money laundering compliance officer, money laundering reporting officer and deputy money
laundering reporting officer), state security filings, general regulatory compliance and non-
U.S. position reporting filings, if applicable, and non-U.S. filings, if any); (viii) the Funds’ pro
rata share of Fund-related insurance costs (including the Funds’ pro rata portion of director’s
and officer’s insurance, errors and omissions insurance, fidelity insurance and other similar
policies covering the General Partner, the Investment Manager, the Feeder Funds’ directors
and/or the members of the Governance Committee); (ix) any taxes (including but not limited
to any withholding taxes, transfer taxes, stamp duties and other governmental or self-
regulatory agency-related charges or duties); (x) all costs and expenses incurred in attempting
to protect and enhance the value of a Funds or Master Fund investment (including any fees
and expenses associated with any pending or threatened litigation, audit, investigation,
administrative or other proceeding, as well as any settlement costs); (xi) any fees and
expenses related to the Funds’ liquidation, if applicable; (xii) fees paid to proxy and securities
class action advisory firms; (xiii) independent Feeder Funds directors’ fees and expenses and
independent Governance Committee members’ fees and expenses; (xiv) fees and expenses
related to the cost of maintaining registered offices in the Cayman Islands; (xv) other
reasonable expenses related to the purchase, sale, preservation or transmittal of the Funds’
assets and (xvi) any extraordinary expenses (e.g., indemnification expenses).
Certain expenses of the Master Fund that are specific to the Feeder Funds may be specially
charged to the Feeder Funds, as applicable. As a result, the Funds’ performance may be
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