5. FEES AND COMPENSATION
In its role as discretionary investment adviser, James River receives management fees and a
share of net profits, if any, of each investor in the Funds in the form of an incentive fee,
incentive allocation or carried interest. In addition to compensation payable to James River,
each Fund pays its own investment, administrative, organizational and operating expenses.
James River’s fee structure, the method of payment of such fees and the other expenses
applicable to each category of Funds are as follows:
Multi-Strategy Funds of Funds
Management and Performance Fees.
James River is entitled to receive a management fee from each fee-bearing class of James
River Multi-Strategy Fund Ltd. equal to 0.0833% of the month-end net asset value of such
class (a 1% annual rate) and from each reduced-fee bearing class a management fee equal to
0.020833% of the month-end net asset value of such class (a 0.25% annual rate).
For Turbo Multi Strategy II Ltd., fee-bearing classes of shares pay James River a management
fee equal to 0.0833% of the month-end net asset value (a 1% annual rate) of such class, after
reduction for all other fees and expenses for the month attributable to such class and paid
pursuant to the manner described in “Method of Payment of Fees”
below. Each such fee-bearing class of shares will also pay to James River an annual incentive
fee equal to 10% of cumulative “net profit” attributable to such class. “Net profit” with
respect to each such class for any calendar year is the net profits, if any, attributable to the
operations of such class during such year, after reduction for all other fees and expenses of
such class. Any loss carryforward from prior periods must be recouped before net profit can
again be generated. Net profit is not reduced by incentive fees previously paid to James
River.
With respect to Turbo Multi-Strategy LLC, fee-bearing classes of units pay no management
fees or performance compensation at the level of that Fund, however, are subject to
management fees and incentive fees at the level of Turbo Multi Strategy II Ltd. in the same
amount applicable to fee-bearing classes of shares of Turbo Multi Strategy II Ltd.
Because the value of the derivative trades of Turbo Multi Strategy II Ltd. is based upon a
multiple of the net asset value of the relevant shares of James River Multi-Strategy Fund Ltd.,
the performance of each share of Turbo Multi Strategy II Ltd. (and, indirectly, each unit of
Turbo Multi-Strategy LLC) will be reduced by the applicable fees and expenses charged at
the level of James River Multi-Strategy Fund Ltd. For example, if a derivative trade gives a
class of shares in Turbo Multi Strategy II Ltd. and a class of units in Turbo Multi-Strategy LLC
exposure to shares of James River Multi-Strategy Fund, Ltd. that is 3.5 times greater than the
amount invested by Turbo Multi Strategy II Ltd. in the trade, investors holding those shares
of Turbo Multi Strategy II Ltd. or units in Turbo Multi-Strategy LLC will effectively bear 3.5
times the management fee to which the applicable shares of James River Multi-Strategy Fund
Ltd. are subject. Additional detail regarding the fees and expenses of James River Multi-
Strategy Fund Ltd. which impact the performance of shares in Turbo Multi Strategy II Ltd.
(and, indirectly, the units in Turbo Multi-Strategy LLC) is provided in the relevant Fund’s
offering materials.
Method of Payment of Fees.
All fees or allocations received by James River are deducted directly from the Multi-Strategy
Funds of Funds. As applicable for the particular Multi-Strategy Fund of Funds and relevant
class of units or shares in such Fund, management fees accrue monthly and are paid
quarterly while incentive fees, if any, are paid annually as well as upon any redemption in
respect of the relevant class of shares redeemed. In all cases, management fees and incentive
fees are paid after the service is provided.
Fund Operating Expenses.
In addition to compensation payable to James River, the Multi-Strategy Funds of Funds also
pay for their routine legal, accounting, audit, printing, filing, mailing, computer,
administration, reporting, regulatory, insurance (including expenses related to D&O
insurance for directors, as applicable), registrar and transfer agency fees, directors’ fees,
taxes or similar amounts, trustee expenses, if applicable, offering costs, due diligence and
research expenses and other operating costs and their pro rata share of the operating
expenses of any Sub-Fund in which a Multi-Strategy Fund of Funds invests. The Funds will
also pay any extraordinary expenses such as indemnification payments and non-routine
legal expenses, if any.
Brokerage and Transaction Costs.
The Multi-Strategy Funds of Funds are charged brokerage commissions, mark-ups, bid-ask
spreads, interest expense, banking charges, fees and expenses relating to credit facilities, fees
and expenses of the Sub-Funds, any derivative contract break fees, commitment, custodial
and clearing fees and other transaction costs and expenses in connection with their trading
and investment activities. For a discussion of the brokerage arrangements applicable to the
Multi-Strategy Funds of Funds, see Item 12-“Brokerage Practices.”
Negotiation of Fees; Waivers.
James River may, in its discretion, waive all or a portion of its applicable management fees
and incentive fees for a particular investor.
THE CALCULATION OF JAMES RIVER’S COMPENSATION IS COMPLEX. IT IS CRITICAL
THAT INVESTORS REFER TO THE RELEVANT FUND GOVERNING DOCUMENTS AND
OFFERING MATERIALS FOR A COMPLETE UNDERSTANDING OF APPLICABLE FEES AND
EXPENSES. THE INFORMATION CONTAINED HEREIN IS A SUMMARY ONLY AND IS
QUALIFIED IN ITS ENTIRETY BY THESE DOCUMENTS.