Item 5. Fees and Compensation
Advisory Fees and Compensation
Asset-Based Compensation
The Adviser is generally paid in arrears a monthly asset-based investment management fee of 1.0% per
annum, based on a percentage of the value of each Client’s net assets as of the last day of each month
(the "Management Fee"). The Management Fee for each month will be calculated using the following
formula: (x) the value of the assets in the Account as of the last day of such month, without accrual of the
Incentive Fee (as described in Section 4(b)), multiplied by 1%, divided by (y) the number of business days
per year, multiplied by (z) the number of business days in such month.
Performance-Based Compensation
The Adviser will be paid performance-based compensation, which is compensation that is based on a
share of account performance of the assets of each Client. The performance-based compensation is
equal to 15% of the account performance of each Client in excess of a hurdle rate (the “Incentive Fee”).
The “Hurdle Rate” is the return the Client would have received for the applicable fiscal period if the value
of the Client’s account had been invested and earned the total return of the Russell 3000 Index for such
fiscal period. Because the Incentive Fee is determined based on the Client’s account outperforming the
Hurdle Rate for any fiscal period, it is possible that the Adviser will be entitled to receive an Incentive Fee
for a fiscal period even if the Client’s account had depreciated in value during such fiscal period (e.g., the
account depreciated in value by 5% while the Hurdle Rate depreciated in value by 10%).
Payment of Fees. The Adviser reserves the right to determine the advisory fee rate and/or the manner of
payment with any managed account client or prospective managed account client. As a result, fees may
be negotiable under certain circumstances or for certain managed account clients. On a monthly basis,
the broker, Interactive Brokers, deducts the Management Fee from each Client's account with the broker
and credits it to the Advisers account with the broker. The performance-based compensation (if any) is
only collected upon a withdrawal from the Clients' accounts after such withdrawal.
Other Fees and Expenses. In addition to paying investment management fees and performance-based
fees, the Clients are also subject to other fees and expenses such as transaction fees, custodial fees,
brokerage commissions and other transaction-related expenses, each as described in the Adviser’s
investment management agreement. Please refer to Item 12 of this Brochure for a discussion of the
Adviser’s brokerage practices.
The Clients may invest in unaffiliated pooled investment vehicles, and as a result, Clients bear their pro
rata share of the underlying unaffiliated pool's operating and other expenses. Additionally, Client assets
may be invested in money market mutual funds, ETFs or other registered investment companies. In these
cases, a Client will bear its pro rata share of the investment management fee and other fees of the mutual
fund, ETF or other registered investment company, as applicable, which are in addition to the investment
management fee paid to the Adviser.
The allocation of expenses by the Adviser between it and any Client and among Clients represents a
conflict of interest for the Adviser. The Adviser allocates expenses to each Client in accordance with the
Client’s arrangements with the Adviser. The Adviser would seek to allocate shared expenses for products
and services benefitting the Adviser and the Client and not covered in the Client’s arrangements in a fair
and reasonable manner. The Adviser allocates common Client expenses among multiple Clients pro rata
based on assets under management as of the beginning of each monthly period in which the expenses
are paid. The Adviser may deviate from this standard allocation method if it determines that an expense
disproportionately benefits a particular Client.