Item 5. Fees and Compensation:
(A) Generally: Clients typically pay a Management Fee (defined below)
that ranges between an annualized 1.0% to 2.0% of the net asset value
of such Client’s account measured at the beginning of the each calendar
month. The Firm may, in its sole discretion, reduce, waive or rebate all
or a portion of the Management Fee with respect to one or more
investors or Clients (including the Firm’s affiliates) for any period of
time, or agree to apply a different Management Fee for any investor or
Client. SMA Clients may be charged a management fee if agreed upon
and memorialized in the Client’s IMA with the Firm.
No portion of the Management Fee will be refunded in the event that an
investor or Client withdraws, whether voluntarily or involuntarily, all or
any of the value in such Client’s account during any month. The Firm
or an affiliate, as applicable, in its sole discretion, may waive or reduce
the relevant Management Fee.
Additionally, investors and/or Clients meeting the definition of
“Qualified Client” may, subject to a loss carryforward, be charged a
performance fee of up to 20% of the net profits of such investor or
Client’s account (including realized and unrealized gains and losses,
irrespective of whether such net income has been paid to the relevant
investor or Client as a distribution, and net of the Management Fee)
(the “Performance Fee”). A Qualified Client is defined in SEC Rule
205-3 under The Investment Advisers Act of 1940 (the “Advisers
Act”), as follows: “A natural person who, or a company that… has at
least $1,000,000 under the management of the investment adviser” or
“A natural person who, or a company that, the investment adviser
entering into the contract (and any person acting on his behalf)
reasonably believes, immediately prior to entering into the contract,
either: a net worth (together, in the case of a natural person, with
assets held jointly with a spouse) of more than $2,100,000…”1. The
1 For purposes of calculating a natural person's net worth: (1) The person's primary residence must not be included as an
asset; (2) Indebtedness secured by the person's primary residence, up to the estimated fair market value of the primary
residence at the time the investment advisory contract is entered into may not be included as a liability (except that if the
amount of such indebtedness outstanding at the time of calculation exceeds the amount outstanding 60 days before such time,
other than as a result of the acquisition of the primary residence, the amount of such excess must be included as a liability);
and (3) Indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the
residence must be included as a liability.
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Firm or an affiliate, in its sole discretion, may waive or reduce OEF’s
Performance Fee.
A pro rata Management Fee will be charged to investors or Clients on
any amounts accepted during a calendar month. The Firm or an
affiliate, in its sole discretion, may waive or reduce the Management
Fee for any period of time, or agree to apply a different Management
Fee for any Client.
A full description of the entire fee arrangement will be disclosed to the
investor or Client in the relevant subscription agreement or IMA. Fees
may be deducted directly from a Client’s account, if so authorized by
Client, and as specified in the relevant subscription agreement or IMA.
The Firm, or an affiliate, will collect the relevant Performance Fee from
Clients. Performance related fees are intended to align the Firm’s
interests with those of its Clients, and to provide the Firm with a greater
incentive to manage assets well. Such fees will be structured and
charged in a manner consistent with the requirements of applicable law.
The nature of the Performance Fee, however, creates potential conflicts
of interest among the Firm, its associated persons, and Clients.
In addition, as the Firm will manage accounts from which it collects
Performance Fees and also manage accounts from which it does not
collect Performance Fees. The Firm has an incentive to favor accounts
for which it receives the Performance Fees because it will receive a
greater profit from the accounts which are charged Performance Fees.
Therefore, the Firm has an incentive to allocate investments that are
expected to be more profitable to accounts from which it collects
...