Item 5: Fees and Compensation
Fees and compensation are described in the advisory contracts we enter into with each Client,
as well as in the applicable offering memorandum for each Client. The below is intended as a
summary, and prospective Investors should refer to the offering documents for the Client in
which they are considering investing for a more complete description.
Hallstatt generally charges each Client (without duplication for Investors in a master-feeder
structure), a quarterly management fee at an annual rate of up to 1.5% of the net assets of the
Client. Management fees are generally deducted from client accounts each quarter in advance
based on the total market value of the assets in the applicable Client’s accounts (including net
unrealized appreciation or depreciation of investments and cash, cash equivalents and accrued
interest) on the first day of the quarter. The management fee will generally be prorated for
additions to and withdrawals from a Client during a particular quarter. The management fee
accrues monthly. Affiliates of the Firm also generally charge each Client (without duplication
for Investors in the master-feeder structure) performance compensation equal to 15% to 20%
of the increase in net asset value of the applicable Client, subject to a high water mark.
Generally, such affiliates receive performance-based fees or allocations from client accounts
on an annual basis in arrears and upon redemptions by Investors with respect to such Investors.
The Firm will negotiate fee structures for any separately managed account clients and such fee
structures will likely differ from the fees described above.
We retain the right to waive or reduce fees, or charge different fees, with respect to Investors.
Expenses
Hallstatt’s Clients will generally be obligated to pay certain fees and expenses of, and pertaining
to, the applicable client.
Without limiting the foregoing, the Clients shall pay for their Firm legal, compliance (including
consultants’ fees), risk management expenses (including software licensing and consultants’
fees), administrator (including, but not limited to, middle and back office services and software
necessary for trade capture and portfolio management), audit and tax preparation (including
third-party tax preparation) and accounting expenses (including third party accounting services
and accounting software); Organizational Expenses (as defined below); execution and order
management system fees and expenses; investment expenses such as commissions, research
fees and expenses (including Bloomberg and similar subscriptions and data services and
research-related travel (including meals and lodging)); interest on margin accounts and other
indebtedness; borrowing charges on securities sold short; custodial fees; bank service fees;
Firm-related insurance costs (including D&O and E&O insurance for the Investment Manager
and the General Partner and members of the Governance Committee); independent Master Fund
Governance Committee members’ fees and expenses; expenses of regulatory compliance
(including compliance with AIFMD and AEOI), filings and reporting (including but not limited
to Section 13, Section 16 and Form PF filings); directors’ fees; pricing service fees; portfolio
valuation expenses (including data feeds and third-party valuation agents); and any other
expenses related to the purchase, sale or transmittal of Firm assets. The Firm will also bear its
pro rata share of the Master Fund’s expenses.
The organizational expenses of the Firm (including expenses of the initial offer and sale of
limited partnership interests) (the “Organizational Expenses”) will be paid by the Firm.
Organizational Expenses, for net asset value purposes and in the sole discretion of the General
Partner, may be amortized over a period of up to 60 months from the date the Firm commences
operations, although, if the Firm deems it appropriate, such amounts may be accelerated.