Item 5 - Fees and Compensation
A. Advisory Services and Fees
Our fees and compensation are described in the advisory contracts we enter into with our clients.
Currently, the Domestic Fund and the Offshore Fund invest substantially all of their assets in the
Master Fund through a master-feeder structure. The Offshore Fund has an incentive allocation at
the Master Fund level while the Domestic Fund has an incentive allocation at the Feeder Fund
level.
We receive a management fee at the rate of 0.1666% per month (equivalent to a rate of 2.0% per
annum) of the assets of each of the Feeder Funds (excluding assets allocable to the Adviser or the
General Partner), in consideration of the investment advisory, management and administrative
services provided to the Funds and our assumption of various overhead and operating expenses.
The management fee is calculated based upon the value of each investor’s capital account at the
opening of business on the first business day of each calendar month (after giving effect to capital
contributions and withdrawals) and is payable in advance. We or the General Partner (as
applicable) may waive or reduce the management fee chargeable to an investor.
At the end of each fiscal year (or partial year if capital is withdrawn from the Domestic Fund or
the Offshore Fund), we (or the General Partner) receive an incentive allocation from the Offshore
Fund or the Domestic Fund equal to 20% of the net profits (realized and unrealized) initially
allocated to each investor, but only on a “high water mark” basis (i.e., any prior losses allocated
to an investor’s capital account or shares, as applicable, must be recouped by subsequent
allocations of net profits before we (or the General Partner) may receive an incentive allocation as
to the capital account or shares, as applicable. We (or the General Partner), as applicable, in
our/its sole discretion may waive or reduce the incentive allocation with respect to any investor.
We structure any fee arrangement in accordance with Section 205(a)(1) of the Advisers
Act and the rules and regulations thereunder, including the exemption set forth in Rule
205-3 permitting performance fee or allocation arrangements with “qualified clients.”
Any funds, or Managed Accounts, we advise currently, or in the future, may have different
compensation structures than those described above.
FrontFour Capital Group LLC Form ADV: Part 2A Page 5
B. Payment of Fees
We directly deduct our management fees from the Feeder Funds on a monthly basis, in advance.
Generally, the General Partner receives performance-based fees or allocations from the Feeder
Funds on an annual basis in arrears and upon redemptions by investors in the Feeder Funds.
The determination of whether fees are directly deducted from a Managed Account is determined
on a case-by-case basis.
C. Additional Expenses and Fees
The Funds are generally responsible for all operating expenses and other costs of the Funds not
required to be borne by the Adviser. In addition, the Domestic Fund and the Offshore Fund are
responsible for their pro rata shares of the costs and expenses of the Master Fund. Such costs and
expenses include, but are not limited to: (i) accounting and auditing fees, including tax return
preparation and costs, relating to the Funds’ accountants, fees of bookkeepers and related
services; (ii) legal fees and expenses; (iii) insurance and bonding costs; (iv) fees (including legal
fees) or assessments in connection with any regulatory registrations, qualifications or approvals
of the Funds or the Adviser deemed appropriate by the Adviser in connection with the activities
of the Funds, including fees and expenses incurred in connection with preparing and filing reports
relating to the Fund’s trading activities (including under investment advisory laws, such as Form
PF); (v) all trading expenses and transaction costs, including brokerage commissions and
expenses relating to short sales, clearing and settlement charges, interest on loans and debit
balances, margin interest, broker service fees, other clearing and custodial expenses, and expenses
associated with proxy contests; (vi) such research and portfolio management expenses as the
Adviser shall deem appropriate, which may include, but are not limited to, costs of software
programs related to investment modeling and screening, risk management systems and software,
costs of research reports, data feeds and databases, news wires and quotation services, periodical
subscription fees, and fees of outside consultants and experts; (vii) the cost of preparation and
distribution of reports and statements to investors; (viii) the management fee; (ix) the fees and
expenses of the administrator, the directors and other third parties retained by the Funds. Certain
research and brokerage expenses of the Funds and/or the Adviser may be borne or reimbursed by
broker-dealers executing transactions for the Funds. (See Item 12 “Brokerage Practices” below.)
The expenses that are charged to the Managed Accounts are determined on a case by case basis.
We may also allocate a portion of certain clients’ capital to money market funds or exchange-
traded funds that are managed by other investment managers. In addition to the fees and
expenses discussed above, clients will indirectly incur similar fees and expenses if we invest
client’s capital in such money market funds or exchange traded funds, as these funds in turn pay
similar fees to their investment managers and other service providers.
D. Prepayment of Fees
Management fees that are paid in advance are generally not refundable, and management fees that
are paid in arrears are paid through the date of termination.
E. Additional Compensation and Conflicts of Interest
We do not accept compensation for the sale of securities or other investment products.
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