Fees and Compensation
We receive two forms of compensation in connection with providing investment advisory services to the Holocene
Funds: (i) fixed asset-based management fees payable quarterly in advance (“Management Fees”), and (ii) annual
performance-based compensation in the form of (a) in the case of the Holocene Advisors Funds, incentive fees
payable to Holocene (“Incentive Fees”) and (b) in the case of the Children’s Fund, incentive allocations reallocated
(“paid” for purposes of this Brochure) to Holocene’s affiliate, the Fund General Partner (“Incentive Allocations”;
together with the Incentive Fees, “Incentive Compensation”; together with Management Fees, “Fees”).
Management Fees are based on the total value of the assets of the applicable Holocene Fund (less those assets
attributable to (x) investors that are not subject to the Management Fee, as discussed below, and (y) Special
Investments held by the Children’s Fund, as discussed below). Incentive Compensation is based on the net income
or outperformance, as applicable, earned on assets of the applicable Holocene Fund, if any, that is attributable to
investors that are subject to such Incentive Compensation, as discussed below.
The Holocene Advisors Funds
The Master Fund generally pays Holocene on the first day of each calendar quarter Management Fees calculated
at rates up to 2.0% per annum of the capital account balance attributable to each Feeder Fund investor’s interest.
The portion of the Management Fee applicable to an investor’s Feeder Fund capital account or shares, as applicable,
will be charged to its corresponding series of shares of the Master Fund. Generally, at the end of each fiscal year,
the Master Fund pays Holocene Incentive Fees of 20% of the net realized and unrealized appreciation in the net
asset value of each series of shares of the Master Fund over such series’ prior high net asset value (i.e., its “high
water mark”).
The Holocene Children’s Fund
The Children’s Fund generally pays Holocene on the first day of each calendar quarter Management Fees calculated
at rates up to 1.75% per annum of the capital account balance attributable to investors in the Children’s Fund;
provided, however, that (i) certain tranches of interests in the Children’s Fund are not subject to any Management
Fee and (ii) interests held in a Special Investment account, regardless of the tranche of interest held by the relevant
investor, are not subject to any Management Fee. Generally, at the end of each fiscal year, the Children’s Fund
“pays” the Fund General Partner an Incentive Allocation at rates up to either: (a) 20% of net returns (i.e., gains or
losses) above a benchmark return (the S&P 500 Total Return Index (the “SPTX”)) allocated to the relevant capital
account, subject to an underperformance recovery account (the “Benchmark Incentive Allocation”), or (b) 25% of
the net realized and unrealized appreciation allocated to the relevant capital account provided such net capital
appreciation was above a fixed hurdle rate (4%) and such Incentive Allocation does not cause the net capital
appreciation to be less than the hurdle rate. In addition, the Children’s Fund may “pay” the Fund General Partner a
“catch-up” payment in subsequent fiscal years to the extent there is insufficient gains from which to pay the
Benchmark Incentive Allocation in the fiscal year it is earned (a “Catch-Up Payment”). Certain tranches of interests
in the Children’s Fund are not subject to any Incentive Allocation. Notwithstanding the foregoing, the portion of
any capital account balance attributable to a Special Investment is not subject to any Management Fee and is subject
to an Incentive Allocation, calculated separately from any Incentive Allocation to which the relevant tranche of
interests is otherwise subject and without the application of a high water mark, of 20% of the net gains realized or
deemed realized on such Special Investment.
Additional Information Regarding Holocene Fees
Notwithstanding the foregoing, certain founding investors in the Feeder Funds and in the Children’s Fund are
charged Fees at reduced rates, and, in the case of the Master Fund, certain of such rates are subject to adjustment
based on the total net asset value of the fee-paying assets of the Master Fund. In addition, Holocene and the Fund
General Partner, as applicable, may elect, in their respective sole discretion and subject to applicable law, rule and
regulation, to reduce, waive or calculate differently Management Fees and Incentive Compensation with respect to
any employee (or former employee) or affiliate of Holocene or the Fund General Partner, any family member
thereof, or trusts, estate planning and other investment accounts and/or vehicles established by or for the benefit of
such persons. To the extent the Employee SPVs invest in interests in any Holocene Fund, such interests are not
subject to Management Fees or Incentive Compensation.
Management Fees and Incentive Compensation are paid out of the assets of the Master Fund and the Children’s
Fund, respectively. Neither the amount of such compensation nor the method of payment is negotiable. Except
where otherwise noted, the following description applies to Management Fees and Incentive Compensation charged
by both the Master Fund and the Children’s Fund.
Management Fees are charged quarterly, as of the beginning of each quarter, and are prorated for an investor that
invests at a time other than at the beginning of a quarter. Similarly, if an investor were to redeem from a Feeder
Fund or the Children’s Fund at any time other than the last day of a quarter, such investor would be entitled to a
refund of a prorated portion of the Management Fee based on the actual number of days remaining in the quarter.
Incentive Compensation is generally charged annually at the end of each fiscal year; provided, however, that
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