ITEM 5 – FEES AND COMPENSATION
All clients of Ghost Tree are “qualified purchasers” as defined in section 2(a)(51)(A) of the
Investment Company Act of 1940, as amended. Ghost Tree is compensated through management
and performance fees or allocations which are described in its advisory contracts with its clients.
Ghost Tree charges each Fund a monthly management fee payable in advance and the management
fee is generally deducted directly from such Fund. Once paid, the management fee is non-
refundable. In addition, a performance fee or allocation accrues on a monthly basis, and at year-
end the performance fee or allocation is crystallized and paid to Ghost Tree, subject to a high
watermark.
Each Fund bears its own fees and expenses including (i) fees to the independent fund administrator
and any other expenses or fees related to third party providers of middle-office or back-office
services; (ii) trading expenses (e.g., expenses which Ghost Tree reasonably determines to be
related to the trading of the Fund’s assets, including, without limitation, brokerage commissions,
expenses relating to short sales, clearing and settlement charges, custodial fees, bank service fees
and interest expenses and the cost of investigating actual or potential trades (including, without
limitation, travel expenses arising from such investigations and third party investigative work))
(see Item 12 “Brokerage Practices” below); (iii) the cost (including, but not limited to, any related
consulting, hardware and maintenance expenses) of: trade execution and management systems,
compliance, risk and portfolio systems and reports, integration and data transfer connectivity costs
to and from third party systems; (iv) the costs of obtaining third party research products and
services (including, without limitation, the cost of research reports and subscriptions or
publications relating to securities, issuers, market segments or geographic regions, the costs of
portfolio modeling and analyses and the costs of computerized financial databases (e.g.,
Bloomberg)); (v) professional fees (including, without limitation, expenses of consultants and
experts) relating to compliance by Ghost Tree with securities and investment advisory laws and
regulations; (vi) legal expenses, accounting expenses, auditing and tax preparation expenses and
the expenses associated with regulatory and statutory filings, including but not limited to Form
PF; (vii) directors’ and officers’ insurance for Ghost Tree; (viii) organizational expenses and
expenses relating to the offer and sale of securities; (ix) other similar expenses related to the Funds;
and (x) extraordinary expenses.
To the extent any expenses are advanced by Ghost Tree on behalf of the Funds, as applicable, such
expenses will be promptly reimbursed.
The compensation for advisory services provided by Ghost Tree to the Sub-Advised Funds is paid
in accordance with each respective investment management agreement.
Ghost Tree, in their or its discretion, may allocate Fund expenses among the different classes of
shares (if applicable) based on the portion of such expenses that are reasonably attributable to such
classes of shares. In addition, Ghost Tree may allocate certain Fund expenses to a particular
shareholder (or shareholders) if the Firm determine(s) that such expenses are directly attributable
to such shareholder(s) (e.g., fees and expenses, including attorney’s fees, incurred in connection
with negotiating, documenting and/or complying with a side letter or similar agreement, or if the
Fund incurs an indemnity obligation or other liability owing to the activity of a particular
shareholder). To the extent any expenses are incurred by Ghost Tree on behalf of the Funds and
one or more other investment vehicles or accounts managed by Ghost Tree, the Firm or one of
their respective affiliates, will allocate such expenses among the Funds and such other investment
vehicles and/or accounts in a manner Ghost Tree determines to be fair and equitable. Ghost Tree
and/or the investment adviser of the Sub-Advised Funds may, in their discretion, waive their right
to be reimbursed for any of the foregoing expenses for any period of time. Any such waiver shall
not require the Firm and/or the investment adviser of the Sub-Advised Funds to waive their right
to be reimbursed for such expenses in the future.