Item 5. Fees and Compensation
Under its investment advisory agreements, Northern Shipping Fund Management LLC is paid by an
Investment Vehicle a fee equal to 1.5% per year of the aggregate capital commitments during the
commitment period. Thereafter, the Investment Vehicle is paid a fee equal to 1.5% per year of net invested
capital which is comprised of unreturned capital less any investments written off or permanently written
down at the date of measurement and is subject to other arrangements it may have with certain investors.
While the Adviser passes along portfolio investment related transaction expenses of the Investment Vehicles
to its counter-parties, it may be subject to other portfolio investment transaction and fund expenses, including
(i) transaction expenses incurred in connection with the sourcing, evaluation and potential acquisition of
portfolio investments, regardless of whether such acquisitions are actually consummated, and in connection
with the purchase, holding, monitoring, exchange and sale of portfolio investments and other assets,
including, but not limited to, placement fees, asset specialist fees, sales commissions, appraisal fees, taxes,
brokerage fees, underwriting commissions and discounts, unaffiliated third-party investment banking fees,
advisory fees, custodial, trustee, record keeping and other administration fees, and information services; (ii)
legal, auditing, consulting, accounting, valuation services, loan servicing, and other professional expenses;
(iii) organizational costs; (iv) costs and expenses for the preparation of financial statements, tax returns and
IRS Schedules including K-1, 8621 and other tax forms required the Internal Revenue Code or other tax
authorities; (v) expenses attributable to regulatory filings to the extent made with respect to an Investment
Vehicle or its assets; (vi) litigation expenses of an Investment Vehicle; (vii) insurance premiums; (viii) taxes,
fees and other governmental charges; (ix) winding up expenses; (x) expenses relating to investor defaults;
(xi) litigation and the amount of any related judgment or settlement; (xii) costs and expenses related to
Investment Vehicle limited partner advisory committee, board and investor meetings; (xiii) expenses
incurred in connection with any restructuring or amendments to the governing documents of an Investment
Vehicle; and (xiv) any indemnification obligation and any other indemnity contribution or reimbursement
obligations of an Investment Vehicle. The Investment Vehicles may invest through intermediate holding
companies, and in connection therewith, will bear their pro rata share of the holding companies’ operating
and other expenses including, in addition to those listed above: sales expenses, legal expenses; internal
and external accounting, audit and tax preparation expenses; and organizational expenses.
The allocation of expenses by the Adviser between it and any client and among clients represents a potential
conflict of interest for the Adviser. The Adviser has adopted an expense allocation policy that is designed
to address this potential conflict. The Adviser allocates direct expenses to each client in accordance with
the client's arrangements with the Adviser (including applicable client disclosures). The Adviser seeks 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 primarily pro rata based on assets under management as of the beginning of each
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 or group of clients.