ITEM 5 – FEES AND COMPENSATION
A. Fees
All clients of Illumination are qualified purchasers as defined in section 2(a)(51) of the
Investment Company Act of 1940 (“Qualified Purchaser”). In addition, each Investor in the
Funds must meet certain eligibility provisions: interests/shares in the Funds are generally
offered to (A) U.S. Investors who are (i) accredited investors within the meaning of Regulation
D of the U.S. Securities Act of 1933, as amended (“Accredited Investors”) and (ii) Qualified
Purchasers; and (B) non-U.S. Investors. Investors and prospective Investors should refer to
the offering documents for the Funds for a detailed description of the fee schedules applicable
to an investment in the Funds.
With respect to the Feeder Funds, clients generally compensate Illumination, directly or
indirectly through the respective Master Fund, with respect to each limited partner’s capital
account attributable to interests/shares quarterly in advance in an amount equal to 0.5% (2.0%
annually) (the “Management Fee”). A portion of the Management Fee will be allocated to
one or more Strategic Investors in the form of special payments or allocations to such Strategic
Investor made at the Master Fund level.
The Management Fee generally is paid from the Master Fund to Illumination on behalf of each
of the Feeder Funds quarterly in advance. Illumination deducts the amount of the Management
Fee applicable to each Investor in the Feeder Fund at the beginning of each quarter.
Illumination deducts fees applicable to the Feeder Fund (and Investors therein) directly from
the applicable Fund’s assets. Clients and Investors do not have the ability to choose to be
billed directly for fees incurred.
Illumination may receive a performance-based fee of 20% of profits, calculated on a high
watermark basis (the “Incentive Allocation”), as is further discussed in Item 10A.
Management Fees and Incentive Allocations for certain Investors in the Feeder Funds may be,
and have been waived or modified at the sole discretion of Illumination. It should be noted
that Illumination has modified the Incentive Allocation and Management Fee for employees
and principals of Illumination.
The Feeder Funds are currently offering only Class A interests/shares. Illumination may create
additional shares/interest in the future pursuant to the detailed terms of the offering documents.
Such shares/interests may be offered at terms that are substantially different or the same as
the Class A shares/interests. As noted above, Illumination advises a Managed Account which
may have substantially different terms than those described in this Item 5.
With respect to the Feeder Funds, Illumination deducts fees from Investors’ assets invested in
the Funds. Investors do not have the ability to choose to be billed directly for fees incurred.
Fee arrangements with the Managed Account are individually negotiated.
B. Client Expenses
Illumination will bear the costs of providing such goods and services including paying its own
administrative costs and expenses, which include rents, salaries, benefits and other
compensation costs, if any, of the Illumination’s employees.
The Feeder Funds will pay all ordinary and extraordinary expenses incurred by it or on its
behalf, including, but not limited to, the Management Fee, investment related expenses,
investment related travel expenses, insurance expenses, legal expenses, professional fees
(including, without limitation, expenses of consultants and experts) relating to investments,
appraisal and valuation expenses, internal and external accounting expenses (including the cost
of accounting software packages), auditing, reporting and tax preparation expenses,
administrative expenses, fund compliance expenses, expenses relating to maintaining the
registered offices of Illumination and the Master Fund in the Cayman Islands, third-party
administrator fees, fees and expenses of service providers retained by the Funds or Illumination
and other similar expenses related to the Funds. Please refer to Item 12 of this Brochure for a
description of Illumination’s brokerage practices.
The Feeder Funds shall bear all costs and expenses, other than fees paid to placement agents,
incurred in connection with the formation and organization (such costs and expenses, the
“Organizational Costs”) of the Feeder Funds as well as its pro rata share of the Organizational
Costs of the Master Fund.
C. Pre-payment of Fees
Management Fees applicable to Investors in the Feeder Funds are paid quarterly in advance.
With respect to refunds of fees, Investors in the Feeder Funds are generally allowed to
redeem/withdraw as of the last day of a calendar quarter. Therefore, generally, Illumination
will not provide a refund of the Management Fee. Investors are encouraged to review the
detailed withdrawal/redemption terms provided in the respective Fund’s offering documents.
Investors in the Feeder Funds generally are able to withdraw/redeem all or a portion of their
capital account balance attributable to its Class A interests/shares upon at least 90 days’ prior
written notice (as specified in the relevant Funds’ Governing Documents). In each case,
withdrawals/redemptions will be subject to significant conditions and restrictions, which are
set forth in the relevant Funds’ Governing Documents. Such conditions, restrictions, and
limitations may include, without limitation:
o The condition that withdrawal/redemption requests be properly submitted in
accordance with the relevant Fund documents and in a timely manner;
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