ITEM 5 – FEES AND COMPENSATION
Item 5.A – Fees and Performance Allocations
With respect to the Funds, LFCM is paid a management fee monthly equal to one-twelfth of 1.5%
(1.5% per annum) of the net asset value of the capital balances of the investors in the Feeder Funds.
Long Focus Capital Partners receives a special allocation based on investment performance (the
“Performance Allocation”) at the end of each calendar year (and intra-year in association with
redemptions from the Feeder Funds, if any, as explained in the Offering Documents) equal to 20%
of the excess, if any, of the net asset value of each relevant class or series of Master Fund shares
over the previous highest net asset value at which a Performance Allocation was made, adjusted
to take into account redemptions from the Feeder Funds by Feeder Fund investors. The calculation
of the Performance Allocation reflects both realized and unrealized gains and losses. Once made,
a Performance Allocation will not be reversed, even if Feeder Fund investors experience losses in
subsequent periods. The calculations for fees and performance allocations can be complex.
Prospective and current investors are advised to review the Offering Documents for additional
information, including more detail on the calculations.
The Manager or LFCM may from time to time (whether granted through side letters or otherwise)
permit certain Fund investors (including affiliated investors) to invest in a Feeder Fund on different
terms than other investors in the Feeder Fund, including with respect to: (i) redemption rights;
(ii) lower or no management fees and/or performance compensation; and (iii) such other
provisions as LFCM or the Manager may specify. The establishment or existence of different terms
for certain investors will not entitle any other investor or class of investors to the same or similar
terms, and neither the Manager nor LFCM will be required to obtain the consent or approval of,
or give notice to, any investor or class of investors in connection with those terms.
With respect to other clients, the fees and other terms are negotiated with each client and
incorporated into their Advisory Agreement.
Item 5.B – How Fees and Performance Allocations Are Billed
With respect to the Funds, the management fees payable to LFCM are accrued and paid monthly
based on the net asset value of each investor’s capital on the last day of the month. The Funds’
administrator is engaged by the Funds to provide day-to-day administrative and bookkeeping
services and in that capacity calculates the net asset value of the Funds and also the management
fee. Upon LFCM’s verification of the net asset value and the management fee calculation, LFCM
will request that the management fee payment is made from the assets of the Funds and the
corresponding amounts booked against each investor’s capital or shareholder account.
The Funds’ administrator will calculate the amount of the Performance Allocation, if any,
following the determination of the net asset value. Upon LFCM’s verification of the calculation,
the administrator will book the Performance Allocation to Long Focus Capital Partners’ shares of
the Master Fund and the corresponding amounts against each investor’s capital or shareholder
accounts.
With respect to other clients, the negotiated fee terms will vary based on certain factors including
but not limited to the size of the account, the complexity of the investment program based upon
the investment specific investment objectives, the level of monitoring, and account reporting
requirements.
Item 5.C – Other Fees and Expenses
With respect to the Funds, each Fund pays all its expenses incurred in connection with the
organization of the Fund and the continuing offering of its interests, as applicable. These expenses
include, without limitation, legal fees, accounting fees, printing costs, government filing fees, and
out-of-pocket expenses incurred by Long Focus Capital Partner and/or LFCM, as applicable, in
connection with the offering.
In addition, each of the Funds pays all of its ordinary and extraordinary expenses, including (i)
brokerage fees and commissions and other transaction costs and investment-related expenses
incurred in connection with the Fund’s investment and trading activities, including research
expenses and the costs of any independent accountants or other experts or consultants engaged by
LFCM in connection with making investments; (ii) custody charges; (iii) any interest, fees, and
costs of Master Fund-related borrowings (including borrowings related to positions held on
margin); (iv) routine operational costs such as legal, accounting, bookkeeping, licensing or
subscription fees and related support expenses for order and execution and portfolio and risk
management systems, auditing, consulting and other professional expenses, administration
(including the costs and expenses of the Funds’ administrator, including additional fees for
ancillary services), tax preparation expenses, all taxes (if any), costs and expenses related to
regulatory compliance matters, and fees payable to governments or agencies; (v) its pro rata
portion of any errors and omissions insurance (including E&O, D&O, cyber or any other form of
insurance related to the Fund and its management and operations); (vi) exchange, board of trade
or other trading or execution facility membership or participation expenses; (vii) market data, price
quote data and other data, including, but not limited to, Bloomberg data, research data and alternate
data, newswire and data processing expenses, cloud computing and cloud data storage fees and
expenses, and connectivity charges; (viii) fees and costs payable in connection with preparing and
mailing reports to the investors; (ix) compliance related expenses and fees and expenses associated
with preparing and submitting regulatory filings (e.g., expenses relating to the preparation and
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