Item 5: Fees and Compensation
Items 5.A. and 5.B.
Lucha Capital typically receives compensation from the Clients from the following sources: (a) fees based
on a percentage of assets under management and (b) fees based on a percentage of the performance of the
Client accounts. With respect to one Sub-Advisory Client, Lucha Capital receives reimbursement of an
agreed upon amount of the Firm’s operating expenses in lieu of a management fee, as provided in that Sub-
Advisory Client’s Governing Documents. Fees for Sub-Advisory Clients are negotiable. Lucha Capital may
enter into side letter agreements with some Investors varying the terms of their investment, including lower
fee arrangements. Current and prospective Clients and Investors should carefully review all fees charged
by Lucha Capital.
Management Fee
In consideration for its services to the Fund, Lucha Capital is generally entitled to a management fee at an
annual rate of 1.5% of each Investor’s capital account balance (the “Management Fee”). For more details
regarding the Management Fee, please refer to applicable Fund Governing Documents.
Generally, the Management Fee is calculated and paid each calendar quarter in advance. Lucha Capital may
reduce or eliminate the Management Fee with respect to any Investor in its sole discretion. Lucha Capital
and its affiliates will not be charged any Management Fee with respect to their interests in the Fund.
If an Investor contributes capital as of a date other than a quarter’s first day, Lucha Capital will prorate the
Management Fee as to that capital contribution. Similarly, if an Investor withdraws capital other than as of
the end of a quarter, that Investor would be refunded the unearned portion of the Management Fee paid as
to the withdrawn capital for the quarter in which the withdrawal is made.
Incentive Allocation
Subject to certain terms and limitations disclosed in the Governing Documents, Lucha Capital is entitled to
receive performance based compensation (the “Incentive Allocation”) in an amount equal to 20% of the
net capital appreciation (including unrealized appreciation) attributable to each Investor’s capital account
in the Fund (after taking into account expenses of the Fund, including any Management Fees). The Incentive
Allocation is calculated at the fiscal year end of the Fund or anniversary or the close of the fiscal period
defined in the Fund’s Governing Documents. However, if the Investor withdraws from the Fund before
year‐end, an Incentive Allocation will be determined as of the date of redemption. The Incentive Allocation
will be calculated on the basis of the aggregate balance in an Investor’s capital account, irrespective of how
many or when capital contributions are made to such capital account by such Investor.
The Incentive Allocation is subject to what is commonly known as a “high water mark.” That is, if the
Fund underperforms during a calendar year or other fiscal year as defined in the Fund’s Governing
Documents, the net underperformance will be recorded and carried forward to future calendar or fiscal years
(such amount is referred to as the “Loss Carryforward”), and Lucha Capital will not receive the Incentive
Allocation for future years until the Loss Carryforward amount has been recovered (i.e., when the Loss
Carryforward amount has been exceeded by the cumulative net outperformance in the years following the
Loss Carryforward). Once the Loss Carryforward has been recovered, the Incentive Allocation shall be
based on the excess net capital appreciation over the Loss Carryforward amount, rather than on all net
capital appreciation. The “high water mark” procedure prevents Lucha Capital from receiving the Incentive
Allocation for net capital appreciation that simply restores previous underperformance and is intended to
ensure that the Incentive Allocation is based on the long-term performance of the Investors’ account. If an
Investor makes a partial redemption from an account, the Loss Carryforward amount will be reduced by a
corresponding percentage.
Sub-Advisory Clients are also subject to the management fee and incentive allocations. Such fees may vary
by Sub-Advisory Client, based on the Sub-Advisory Client’s investment objectives and limitations and in
accordance with each Sub-Advisory Client’s Governing Documents.
Lucha Capital deducts fees directly from the Fund. Fees for the Sub-Advisory Client accounts are typically
billed to the Sub-Advisory Client account and paid from the assets of such account. If a Sub-Advisory
Client terminates its account agreement or withdraws part of the balance from the account before the end
of a calendar quarter, Lucha Capital generally will reimburse a pro rata of any fees collected in advance
based on the number of days remaining in the quarter.
Lucha Capital renders its services to the Clients at its own expense and is responsible for its overhead
expenses including: office rent; utilities; furniture and fixtures; stationery; secretarial/internal
administrative services; salaries and bonuses; entertainment expenses; employee insurance and payroll
taxes. As noted above, a Sub-Advisory Client compensates Lucha Capital for its advisory services to the
Sub-Advisory Client through the reimbursement of an agreed upon amount of the Firm’s operating
expenses, as detailed in the Sub-Advisory Client’s Governing Documents.
Item 5.C.
Other Expenses Charged to the Clients
Expenses described below are general in nature and not intended to be exhaustive. For more information
regarding expenses associated with investing in the Fund, please refer to applicable Fund Governing
Documents. Sub-Advisory Client expenses vary by client and are negotiated directly with each prospective
client prior to commencement of advisory services.
Investors are subject to the following expenses associated with their investments in the Fund, in addition to
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