Item 5 Fees and Compensation
Fees for the private funds and separately managed accounts are discussed in this item.
Private Funds
The fees and expenses applicable to each private fund are described in such private fund’s offering memorandum or
organizational documents. The rates at which our fees are charged vary across our private funds and, as to a particular
private fund, may also vary across investment options available to investors. As compensation for our investment
advisory services to the private funds, we generally receive an annual management fee equal to a percentage of the
applicable private fund’s net assets, calculated in accordance with the applicable fund’s governing documents. In
addition, Kodai and/or its affiliates are entitled to receive an incentive fee for its services, calculated as a percentage of
net profits achieved over a high water mark. Any incentive fee is generally calculated and paid at the end of the fiscal
year and at the time of withdrawal. Management fees and incentive fees are deducted directly from investors’ assets in
the applicable private fund. The management fee and incentive fee is prorated with respect to any partial period. Any
prepaid but unearned fees will be refunded.
We reserve the right to apply a different management fee and/or incentive fee to different investors and to waive any
management fee and/or incentive fee in whole or in part for particular investors in our discretion, including principals
and employees of Kodai.
Separately Managed Accounts
The fees and expenses applicable to each separately managed account, and the specific manner in which they are
calculated, are described in such account’s investment advisory agreement. Depending on the client, we generally charge
an annual advisory fee calculated as a percentage of client assets under management and/or an incentive fee, generally
calculated as a percentage fee of net profits achieved over a high water mark. The structure of the fees applicable to a
separate account client are negotiable and can vary from the general discussion set forth in this Brochure.
If the investment advisory agreement is executed at any time other than the first day of an applicable billing period or
terminated prior to the end of an applicable billing period, our fees will apply on a pro rata basis. Any prepaid but
unearned fees will be refunded. We typically will invoice the client for payment of fees. We urge our clients to review
all statements received from their custodians for accuracy.
We may launch or manage other funds or accounts with higher or lower fees and/or different compensation structures.
Different client facts and circumstances, including the client’s investment strategy, liquidity profile, and prevailing
market terms, will be considered in determining applicable fees.
Additional Fees and Expenses
Our fees are exclusive of, and clients may incur certain other fees and expenses, including brokerage commissions,
banking fees, interest, custodial fees, transaction fees, and other investment related costs and expenses, including
research expenses (such as computer software, news and information services and licensing costs which benefit our
clients). Brokerage commissions, custodial fees, and other transaction expenses and fees are typically imposed by
broker-dealers, custodians, and other third parties. Please refer to Item 12 for a description of the factors we consider in
selecting or recommending broker-dealers for client transactions and determining the reasonableness of their
compensation.
Clients may also be subject to organizational, operating, administrative, legal, audit, and other professional expenses.
Clients may also bear their share of expenses attributable to regulatory and other filings which are made with respect to
the client’s holdings. In some instances, certain clients will be responsible for extraordinary expenses, including the
expenses of litigation. Each client will be responsible for their own taxes. Please refer to the applicable governing
documents of a client for more information.
Client costs and expenses are the responsibility of, and may be paid directly by, the applicable client. However, where
we have the ability to do so in respect of our clients, we may pay client costs and expenses directly out of our own
account for and on behalf of the client, and in those cases, we are entitled to reimbursement from the client. Certain
costs and expenses may be incurred for the benefit of, or be shared by, multiple clients which may include clients which
do not bear any responsibility for such costs and expenses. Such shared expenses generally will be allocated across the
applicable clients pro rata or in such other manner as we deem appropriate. We may directly bear the responsibility for
the portion of such shared costs and expenses otherwise allocable to one or more clients which benefit from such shared
costs and expense.
Neither Kodai nor any of its supervised persons is compensated for the sale of securities or other investment products.