ITEM 5 - FEES AND COMPENSATION
Fee Schedules; Calculation and Deduction of Fees
PDT does not have a general fee schedule. We generally receive a management fee of a percentage of the
assets under management of each Fund (up to 1.5% per annum). For a certain Fund family, the “PDT
Partners Fund” family, we receive both a 4% management fee on the portion of assets invested in a Mosaic
Fund (as defined below) and a fixed-dollar amount (which varies from time to time—at least annually—
and is significant). The fixed-dollar amount is based on PDT’s total projected expenses, which include
costs and expenses wholly unrelated to the management of the PDT Partners Fund family (some of which
are costs and expenses related to our other Funds).
In addition, we receive performance-based compensation (which is generally allocated to an affiliated
entity), ranging from 20% to 50% and subject to a high-watermark. Such performance-based compensation
is based on absolute performance or performance relative to a benchmark. In the case of performance
relative to a benchmark, performance-based compensation is due even when the Fund experiences negative
overall performance if such performance exceeds the Fund’s benchmark. Information relating to the actual
fees charged to any Fund is set forth in the offering materials for that Fund. Management fees are generally
paid monthly in advance and performance-based compensation is generally paid or allocated annually or
semi-annually. PDT deducts fees directly from the assets of the Funds.
Partners, employees, and affiliates of PDT, as well as investors in the Funds who have negotiated separate
written agreements with PDT or the Funds, are subject to different fees and other terms than those described
in the Funds’ offering materials, and we may waive, reduce, or modify fees or agree to other terms with
respect to any investor in a Fund in the future.
Other Fees and Expenses
In addition to the management fees and performance-based compensation described above, the Funds incur
other expenses. Other expenses borne by some or all of the Funds, whether incurred directly or indirectly,
include, but are not limited to: offering and organizational expenses (including costs relating to the
preparation and modification of governing documents, counterparty agreements, offering memoranda,
marketing materials, questionnaires, subscription agreements, side letters, or other agreements entered into
with any investor, and payments made for historical market data); third-party administrator services to the
Funds, including anti-money laundering services and reporting; external accounting, auditing, and tax
preparation, filing, and consulting fees; external legal or regulatory service provider fees (including fees
relating to statutory representation, fees incurred in connection with obtaining trading and other advice, and
fees associated with (i) updating the Funds’ disclosure documents, (ii) negotiating counterparty agreements,
(iii) obtaining marketing advice, and (iv) negotiating side letters); brokerage, clearing, and settlement fees
(see Item 12 – Brokerage Practices); taxes and regulatory fees; custodial fees; banking fees (including fees
charged for wires that are returned to a Fund as a result of an investor providing PDT with incorrect account
information); expenses relating to the preparation and distribution of reports, financial statements, and other
documents to investors and prospective investors; fees and expenses of a board of directors and/or any
external advisory board; expenses relating to redemptions or transfers; interest and financing expenses;
expenses relating to short sales; expenses relating to making corporate, tax, or regulatory filings, including
filings made by PDT with respect to investments made by the Funds; proxy service provider fees (if such
services are used); fees (including, potentially, contingency fees) paid to third-party service providers to
file class-action settlement claims (if such services are used); costs of investor meetings; costs and expenses
related to the reorganization, dissolution, winding-up, or termination of a Fund; costs and expenses
associated with litigation, arbitration, regulatory examinations, governmental investigations, and other
extraordinary expenses; and the costs and expenses of acquiring and maintaining exchange or other
memberships and/or licenses that are directly or indirectly assets of a Fund. Any sales, use, value-added,
and other taxes, levies, and fees associated with PDT’s purchase and/or use of the particular products or
services described above will also be borne by the Funds.
For certain Funds, some of these expenses are subject to an expense cap. Each Fund has different policies
with respect to which expenses are borne by such Fund and the level of the expense cap (if any). None of
the fees and expenses described in this section reduce the management fee or performance-based
compensation described above.
Many of the expenses described above are first paid by PDT or its agents on behalf of the Funds, with such
parties subsequently being reimbursed by the Funds. In addition, certain of the expenses may be incurred
for the benefit of multiple Funds and certain other related expenses may be aggregated across Funds for
administrative ease. Pursuant to its expense allocation policies and procedures, PDT generally allocates
such shared or aggregated expenses among the Funds based on relative assets under management (“AUM”)
or a similar basis, but at any time may choose one or more other methodologies that we deem equitable in
our sole discretion. Because certain expenses are allocated on the basis of relative AUM, the amount of
expenses allocated to a particular Fund may increase even when the absolute amount of such expenses
remains constant or declines. From time to time, we are likely to change a methodology we use for
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