Item 5. Fees and Compensation
A. Advisory Fees and Compensation
Discretionary Advisory Service Fees
With respect to its discretionary advisory services, the Adviser charges each client an investment
management fee based on the value of the client’s assets under management. The range of
investment management fees charged by the Adviser is generally from 0% to 1.5% per annum,
depending on a number of factors, including the amount invested and committed duration of
investment. In addition, the Adviser charges certain discretionary advisory clients an
administrative fee based on the value of the clients’ assets under management equal to 0.10%
per annum.
The investment management fee and the administrative fee (together, the “Asset-based Fees”)
are charged each quarter in arrears based on the value of the assets in the client’s account
(including net unrealized appreciation or depreciation of investments) as of the last day of the
quarter. If an initial or additional contribution is made to a client account during a quarter, the
Asset-based Fees will be prorated for the number of days remaining in the quarter. If a client’s
investment management agreement is terminated or a withdrawal is made during a quarter, the
Asset-based Fee payable to the Adviser will be calculated based on the value of the assets on the
termination date or withdrawal date and prorated for the number of days during the quarter in
which the investment management arrangement was in effect or such amount was in the account.
These fees are negotiable.
Non-Discretionary Advisory Services Fees
The fees relating to non-discretionary advisory services in respect of non-discretionary accounts
are negotiated on a case-by-case basis and generally range from 6.25 basis points per quarter (i.e.,
25 basis points per annum) to 10 basis points per quarter (i.e., 40 basis points per annum) of the
value of the accounts. The fees charged to non-discretionary accounts will generally be payable
quarterly in arrears. Fees will be prorated for any period that is less than a full calendar quarter.
Performance-Based Compensation
With respect to its discretionary advisory services, the Adviser may, at the election of investors in
the relevant discretionary client account and in lieu of Asset-Based Fees, receive performance-
based compensation, which is compensation that is based on a share of capital gains on or capital
appreciation of the assets of a client account (such as a client account that is a hedge fund or
other pooled investment vehicle). This compensation may be paid to the Adviser or to a related
person of the Adviser and ranges from 0% to 10%. Please see Item 6 “Performance-Based Fees
and Side-by-Side Management” below for additional information regarding performance-based
compensation paid by clients of the Adviser.
B. Payment of Fees. Asset-based Fees are deducted from discretionary client accounts by each such
client’s third-party administrator, NAV Fund Administration Group. The Adviser, through its third-
party administrator, bills any fees directly to its non-discretionary clients.
C. Other Fees and Expenses. In addition to paying Asset-based Fees for discretionary advisory
services, client accounts will also be subject to other investment expenses such as legal,
compliance, audit, accounting and third party administrator fees and expenses; organizational
expenses; investment expenses such as commissions, research fees and expenses; interest on
margin accounts and other indebtedness; borrowing charges on securities, commodities and
other financial instruments and assets sold short; custodial fees; fund-related insurance costs;
expenses associated with bonding requirements (if any); a client’s pro rata share of the expenses
of any underlying investment vehicles; the management and incentive fees/allocations of any
portfolio managers (or their affiliates); directors’ fees (if any) and any other expenses reasonably
related to the purchase, sale, transmittal or preservation of client assets. The Adviser seeks to
allocate certain expenses between its clients in a manner that is fair and reasonable over time.
Please refer to Item 12 of this brochure for a discussion of the Adviser’s brokerage practices.
For non-discretionary advisory services, all expenses incurred directly or indirectly in connection
with transactions effected by the client in accordance with recommendations made by the
Adviser, including, without limitation, fees paid to the Adviser, custodial fees, and investment
expenses such as commissions related to the purchase, sale or transmittal of assets, are paid by
the client.
Client account assets are invested in pooled investment vehicles. In these cases, client accounts
will bear their pro rata share of the underlying pooled investment vehicles’ operating and other
expenses including, in addition to those listed above: sales expenses, legal expenses; internal and
external accounting, audit and tax preparation expenses; and organizational expenses. Client
accounts will also bear their pro rata share of the investment management fee, performance
compensation, as applicable, and other fees of the underlying pooled investment vehicles, which
are in addition to any fees or other compensation paid to the Adviser.
D. Prepayment of Fees. The Adviser is not paid fees in advance.
E. Additional Compensation and Conflicts of Interest. Neither the Adviser nor any of its supervised
persons accept any form of compensation for the sale of securities or other investment products.