Item 5. Fees and Compensation
As compensation, Greenstone typically charges a 1% annual management fee with respect to each
investor in the Fund for both Class A and Class B investors, payable in quarterly installments at
the beginning of each calendar quarter based on the net market value of each investor’s capital
account balance on that date. Greenstone also typically receives an incentive-based allocation with
respect to each Class A investor in the Fund equal to 20% (15% with respect to each Class B
investor) of net profits (including both realized and unrealized gains and losses) otherwise
allocable to such investor above a 5% hurdle. Performance allocations are made with respect to
each investor at the end of each calendar year (and on withdrawals or redemptions with respect to
the amount withdrawn or redeemed) and are typically only applied to the portion of profits that
exceed the cumulative losses previously allocated to or incurred by those investors or clients.
Greenstone may waive or reduce all or part of the management or incentive-based allocations with
respect to any investor or Fund. For example, Greenstone has waived or reduced the management
fee and/or performance-based allocations for certain strategic investors in the Fund and for certain
employees and family members.
Greenstone complies with Rule 205-3 under the Investment Advisers Act of 1940, to the extent
required by applicable law. Performance allocations create an incentive for Greenstone to make
more risky and speculative investments than it would otherwise make.
Greenstone typically deducts management fees and performance allocations directly from the
Fund.
Greenstone 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.
Relationships with each Fund are terminable on expiration of the Fund’s term, its dissolution or
the termination of Greenstone as the investment adviser to the Fund. Generally, each Class A and
Class B investor may withdraw capital from the Fund on the last day of each calendar quarter on
at least 90 days prior written notice, but Class B investors are subject to an investor-level “gate”
that limits the amount they can withdraw on any calendar quarter to 25% of their capital account
balance. Investors that were invested in the Fund as of December 31, 2019, are entitled to request
withdrawals on 60 days prior notice (rather than the 90 days applicable to other investors).
Each Fund is responsible for its own costs and expenses, including trading costs and expenses,
brokerage commissions, borrowing charges on securities sold short, custodial fees, legal fees and
expenses, research fees and expenses, accounting and audit fees and expenses, tax preparation fees,
governmental fees and taxes, bookkeeping and other professional fees, costs of obtaining consents
of investors, and all other reasonable costs related to the management and operation of the Fund
or the purchase, sale or transmittal of Fund assets. Greenstone’s own costs and expenses may be
paid by securities brokerage firms that execute the Funds’ securities trades, as discussed in Item
12 below.
Funds that invest in mutual funds also pay, indirectly, investment advisory fees to the managers of
those mutual funds.