Item 5 Fees and Compensation
Private Funds
The Adviser is entitled to receive a management fee at the Master Fund level at the rate of one and
one-half percent (1.50%) per annum of the net asset value of the Master Fund. This fee is payable
in arrears on the first business day of each month and is calculated on the basis of 0.125% of the
Master Fund’s net asset value as of the close of business on the last business day of the prior month
and excludes any accrued incentive allocation (described below).
In the event that capital is contributed to or withdrawn from the applicable Feeder Fund during
any month the management fee is adjusted to reflect average capital during that month. Investors
that withdraw capital during a month are charged a management fee on the withdrawn capital,
which is deducted from the withdrawal payment. Investors that contribute any capital during a
month are charged a management fee based upon the period during which such additional capital
was invested in the Master Fund.
In addition to the above described management fee, at the end of each fiscal year the General
Partner, as holder of allocation shares of the Master Fund, is entitled to receive an incentive
allocation equal to twenty percent (20%) of the aggregate net profits, if any, during such year,
subject to a loss carryforward. If an investor has any prior net losses allocated to it for any previous
fiscal year(s), the General Partner is entitled to receive an incentive allocation, if any, from that
investor only if, and to the extent that, the total allocations of net profits in subsequent periods
(including the current year) exceed and offset such prior net losses (the “Loss Carryforward”). If
an investor withdraws capital from the applicable Feeder Fund, the Loss Carryforward that must
be recovered before an incentive allocation can be made to the General Partner is reduced in
proportion to the withdrawal. In the event of any capital withdrawal by an investor during a fiscal
year, the General Partner is entitled to receive an incentive allocation from such investor as if such
withdrawal date were the end of a fiscal year.
The General Partner, in its sole discretion and in such instances it deems appropriate, may waive
or reduce the incentive allocation and/or the management fee chargeable to any investor, including
owners, officers and employees of the General Partner and/or the Adviser, or re-allocate any
portion of its incentive allocation to any investor.
Managed Accounts
With respect to the Managed Accounts, the Adviser receives asset-based compensation, payable
in arrears that ranges from 0% to 1% of assets under management in the Managed Accounts. With
respect to the Managed Accounts, the Adviser is also paid a performance-based fee ranging from
10% to 30% of the net profits, if any, of each Managed Account at the end of each fiscal year,
upon the termination date of the investment management agreement governing the Managed
Account and/or the net profits, if any, attributable to a withdrawal of assets from the Managed
Account. Such performance-based fee may also be subject to a hurdle based on net profits in
excess of a benchmark. In each case, the Adviser’s performance-based compensation is subject to
a loss carryforward. The Adviser does not have the authority to deduct its asset-based or
performance-based fees from the Managed Accounts but instead the Adviser separately charges
Clients.
The Adviser may, in its sole discretion, waive or modify the management fee and/or the
performance-based compensation for certain Managed Account investors.
The Mutual Fund
The Advisor is the sub-adviser to the Mutual Fund, and accordingly will be paid a portion of a
monthly management fee. The management fee is calculated on the daily net assets of the Mutual
Fund and charged each month in arrears. The Adviser does not earn performance-based
compensation on the Mutual Fund.
Expenses
In addition to paying investment management fees and, if applicable, performance-based
compensation, Clients may also be subject to other investment expenses such as custodial charges,
brokerage fees, transaction-related and related costs (including but not limited to commissions and
margin expenses); taxes, duties and other governmental charges; transfer and registration fees or
similar expenses; costs associated with foreign exchange transactions; all accounting, auditing and
bookkeeping fees and expenses, including tax return preparation costs; other portfolio expenses;
and costs, expenses and fees (including, investment advisory and other fees charged by investment
advisers with, or funds in, which the Clients’ account invests) associated with products or services
that may be necessary or incidental to such investments or accounts.
The allocation of expenses by the Adviser between it and any Client and among Clients represents
a conflict of interest for the Adviser. The Adviser has adopted an expense allocation policy that
is designed to address this conflict. The Adviser allocates expenses to each Client in accordance
with the Client's arrangements with the Adviser (including applicable Client disclosures). The
Adviser seeks to allocate shared expenses, if any, for products and services benefitting the Adviser
and the Client and not covered in the Client's arrangements in a fair and reasonable manner. The
Adviser will allocate common Client expenses, if any, among multiple Clients pro rata based on
gross assets under management. The Adviser may deviate from this standard allocation method if
it determines that an expense disproportionately benefits a particular Client or group of Clients.