Item 5: Fees and Compensation
The Marathon Fund charges its investors no management fee but receives an annual
incentive allocation equal to 30% of the its net profits whether realized or unrealized,
subject to a loss carry-forward. The compensation described above may be paid to the
Adviser and/or to an affiliate of the Adviser. Please refer to Item 10 - Other Financial
Industry Activities and Affiliations section for more information about the Adviser’s
affiliates.
The Adviser (or its affiliate) deducts the incentive allocation directly from the Marathon
Fund. Performance allocations are paid annually or upon redemption of capital by an
investor in the Marathon Fund, which investors are permitted to do only on a monthly
basis.
The Marathon Fund pays (i) all direct and indirect expenses of the Adviser including its
operating, general, administrative and overhead costs and expenses (such as office rent,
technology and supplies), as well as all salaries and benefits of employees of the Adviser,
(ii) all direct and indirect costs and expenses of its organization and operation, and (iii) all
direct and indirect costs and expenses of Marathon BD. These expenses (whether
attributable to the General Partner, Marathon BD, or the Partnership) include, These
expenses (whether attributable to the Adviser, Marathon BD, or the Marathon Fund)
include, but are not limited to: office rent; furniture and fixtures; technology; supplies;
secretarial/internal administrative services; salaries and bonuses; business entertainment
expenses; employee benefits, insurance and payroll taxes; legal, compliance,
administrator, audit and accounting expenses (including third party accounting services);
consulting and other professional expenses; organizational expenses; investment
expenses such as commissions, transaction costs, research fees and expenses (including
research related travel), and fees to sub-advisers; expenses for data feeds, quotations,
news services and other information (including hardware and access charges related
thereto); costs and expenses attributable to regulatory filings (including the Adviser’s
registration as an investment adviser and Marathon BD’s registration as a broker-dealer);
trading commissions, costs, and fees; interest on margin accounts and other indebtedness;
borrowing charges on securities sold short; custodial fees; bank service fees; insurance
costs (including D&O and E&O insurance for the Adviser); any other expenses related to
the purchase, sale or transmittal of the Marathon Fund’s assets; and any other expenses
properly attributable to and payable by the Marathon Fund, Marathon BD, or the Adviser.
The Adviser is authorized to incur and pay in the name and on behalf of the Marathon
Fund all of such expenses which it deems necessary or advisable. In addition, to the
extent the Marathon Fund or Marathon BD is invested in money market funds, exchange-
traded funds (“ETFs”) or other registered investment companies, it will bear its pro rata
share of the investment management fee and other fees of the fund, which are in addition
to the fees and expenses paid to the Adviser. Please refer to Item 12 – Brokerage
Practices of this Brochure for a discussion of the Adviser’s brokerage practices.
Total expenses of the Marathon Fund for 2017 (including expenses paid on behalf of
Marathon BD and the Adviser but excluding interest, commissions, and other direct
trading expenses) were in excess of 5% of Marathon Fund’s capital. The costs and
expenses borne by the Marathon Fund are and may continue to be extremely high relative
to other investment funds with similar strategies, either on an actual dollar basis or as a
percentage of the assets of the Marathon Fund, and result in diminished returns to the
Marathon Fund’s investors.