ITEM 5: FEES AND COMPENSATION
Item 5.A.
Management Fee. The General Partner receives a quarterly management fee calculated at an annual rate of
1.0% (0.25% per quarter) of each Limited Partner’s capital account (the “Management Fee”). The
Management Fee is calculated and paid quarterly in advance based on the value of each Limited Partner’s
capital account as of the first day of the calendar quarter. If a Limited Partner makes a capital contribution
at any time other than at the beginning of a calendar quarter, a pro rata portion of the Management Fee will
be paid to the General Partner based on the actual number of days remaining in such partial quarter. The
Management Fee is generally not negotiable, but the General Partner may elect to reduce, otherwise modify,
or waive the Management Fee with respect to any Limited Partner.
Incentive Allocation. In addition to its proportionate share of the Funds’ net income and net losses based
on its capital account balance, the General Partner receives an allocation with respect to each Limited
Partner, generally annually, equal to 20% of the net income allocated for the year to such Limited Partner’s
capital account (the “Incentive Allocation”). The Incentive Allocation is calculated and accrued on a yearly
basis and is also assessed on amounts withdrawn as of the effective time of withdrawal by a Limited Partner.
Incentive Allocations are subject to a “high water mark” provision under which the General Partner receives
an Incentive Allocation from a Limited Partner only to the extent net income allocated to that Limited
Partner’s capital account exceeds any net losses previously allocated since the last date an Incentive
Allocation was assessed (or the original date of contribution if no Incentive Allocation has previously been
assessed). The “high water mark” provision prevents the General Partner from receiving an Incentive
Allocation on net income that simply restores previous net losses. The Incentive Allocation is generally not
negotiable, but the General Partner may elect to reduce, otherwise modify, or waive the Incentive Allocation
with respect to any Limited Partner.
The fees and compensation payable to Medici are generally described in each Fund’s Governing
Documents. The specific terms applicable to each Fund may vary, and investors should refer to the
applicable Governing Documents for complete details.
Item 5.B.
As described above, Management Fees are paid quarterly in advance and are deducted from Fund assets.
Incentive Allocations are calculated and accrued annually and made through allocations from Limited
Partner capital accounts to the General Partner’s capital account.
Item 5.C.
Each Fund bears its own expenses, including, but not limited to, Management Fees, investment-related
expenses such as the Fund’s brokerage commissions, interest on margin accounts and other indebtedness,
custodial fees, bank service fees, withholding and transfer fees, taxes, systems and technology expenses
(including Bloomberg), third-party research tools, corporate licensing fees, legal and auditing expenses,
accounting, fund administration (including middle and back office services), order management systems,
portfolio management systems, outsourced operations and financial costs (including fees paid to an
outsourced chief operations officer and/or chief financial officer of the Fund or General Partner),
technology and computer services, Fund-related insurance costs and indemnification payments (including
insurance for the General Partner), costs and expenses relating to the Fund’s and General Partner’s
regulatory compliance, outsourced risk management advisory and software, investment-related consultants
and travel costs that are research related, expenses incurred with respect to the preparation, duplication, and
distribution of the Fund’s offering documents, annual reports and other financial information, and any other
services or service provider expenses deemed necessary by the General Partner on behalf of the Fund.
The General Partner bears its own expenses, including office space and utilities, computer equipment and
software (not otherwise paid by the Fund), and secretarial, clerical, employee-related and other personnel,
except as assumed by the Fund or except as paid for through the permitted use of commission dollars.
Item 5.D.
As described above, Management Fees are calculated and paid quarterly in advance. If a Limited Partner’s
capital account in either Fund is withdrawn at any time other than at the beginning or end of a calendar
quarter, the Management Fee shall not be refunded to the Limited Partner for such partial quarter.
Item 5.E.
Neither Medici nor any of its supervised people accept any compensation for the sale of securities or other
investment products, including asset-based sales charges or service fees from the sale of mutual funds.
The foregoing discussion in Item 5 represents Medici’s basic compensation arrangements. The
Management Fees and Incentive Allocations described above are structured to comply with Rule 205-3
under the Investment Advisers Act. Fees and other compensation are negotiable in certain circumstances
and arrangements with any particular investor may vary. Although Medici believes its fees are competitive,
lower fees for comparable services may be available from other investment advisers.