Item 5 - Fees and Compensation
The extent to and specific manner in which our clients are responsible for fees,
performance-based compensation and/or expenses are set forth in each client’s applicable
written agreement with us (and, in the case of clients that are private investment funds, in
the Fund Documents for such funds).
In general, we intend to deduct our management fees from the Funds monthly. We
generally intend to receive performance-based fees or allocations from the Funds on an
annual basis and upon the distribution of capital (such as a withdrawal by a Fund investor).
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Unless provided otherwise in the applicable Fund Documents, clients that are private
investment funds generally bear all costs and expenses associated with their operations,
including, without limitation: (i) all expenses associated with the organization and ongoing
administration of such private investment funds, including legal and accounting fees, (ii)
all expenses incurred in connection with communications with investors and the ongoing
offer and sale of interests in the private investment funds, (iii) all third party administration,
accounting, tax preparation, audit, bookkeeping, governmental fees and taxes and legal and
compliance fees and expenses of, or relating to, the private investment funds, (iv) all
expenses incurred for the benefit of the private investment funds related to the maintenance
and procurement of information technology and data related services, systems and
equipment, valuation services, proxy voting services and insurance, (v) all direct and
incidental expenses relating to research and due diligence of existing and potential
investments (including, without limitation, the use of consultants and attorneys) and
research materials, and (vi) all trading and investment related costs and expenses (e.g.,
brokerage commissions, margin interest, expenses related to short sales, custodial fees,
clearing and settlement charges and other transaction costs).
The fees, performance-based compensation and/or expenses that are charged to any
separately managed accounts that we may manage are negotiated on a case-by-case basis.
Clients other than private investment funds, such as any separately managed accounts that
we may manage, will likely have management fee, performance-based compensation
and/or expense arrangements that differ in one or more respects from those applicable to
our private investment fund clients.
Management fees, performance-based compensation and/or expenses may be reduced or
waived in certain circumstances, including, without limitation, with respect to investments
in Funds by our personnel and/or other related persons. Our clients may pay our
management fees in advance. Management fees and performance-based fees or allocations
are generally not refundable, including upon the termination of the advisory contract.
To the extent that we incur any expenses for the benefit of multiple clients, we generally
will allocate such expenses in any manner that we deem equitable, taking into account our
written agreements with such clients (and, if applicable, Fund Documents in the case of
clients that are Funds) and applicable facts and circumstances, including the relative size
of the applicable entity or account, the nature or source of the product or service and the
benefits derived from and the extent of use of the product or services. Nonetheless, the
portion of an expense that we allocate to a client for a particular product or service might
not reflect the relative benefit derived by such client from that product or service in any
particular instance. Furthermore, it is possible that under some of our advisory contracts
we may not require a client to incur certain expenses, despite the fact that such client will
receive a benefit in connection with our incurrence of such expenses. In such an event, our
other clients may bear the additional share of any such expenses that would have been
allocable to the client that is not required to incur such expenses. Our expense allocations
often depend on inherently subjective determinations, but the expense allocations made by
us will be in good faith. There may be situations in which the appropriate allocation of
expenses in the course of evaluating potential investments may not be clear (for example,
if a client and one or more other clients considered making an investment that was not
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consummated). Expenses will typically be allocated among the clients participating in the
relevant investment or potential investment, except to the extent stated otherwise in the
applicable client agreement or Fund Documents. However, in all cases, subject to
applicable legal, regulatory, contractual or similar restrictions, we will make expense
allocation decisions in our sole discretion in good faith.
We may allocate a portion of certain clients’ capital to money market funds, exchange-
traded funds or similar fee-bearing products, or private investment funds and accounts, that
are managed by other investment managers. In that case, such client accounts generally
would be responsible for paying any and all fees, performance-based compensation and
expenses associated with such products, which would be in addition to those discussed
above.
The Adviser and its personnel generally can be expected to receive certain intangible and/or
other benefits and/or perquisites arising or resulting from their activities on behalf of clients
and client portfolio investments, including benefits and other discounts provided from
service providers. For example, airline travel or hotel stays incurred as a client expense
typically result in cash rebates, “miles,” “points” or credit in loyalty/status programs, and
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