ITEM 5 – FEES AND COMPENSATION
Pragma’ Basic Management Fees
Clients pay a fee based upon the percentage of assets under management at fixed annual
rates, generally in a range from 0.3% to 0.5% and subject to negotiation. The
compensation method is explained and agreed with the client in advance before any
services are rendered. Management fees may be billed monthly or quarterly in arrears
pursuant to the written investment management agreement, and may vary on a client to
client basis, being based on ordinary fee, ordinary fee and performance fee and funds’
fee, which is not included in the management account. Fund’s fees are paid on a monthly
basis, and management accounts’ ordinary fees are paid twice a year, while performance-
based fees are paid annually.
Fees for Pragma’s Funds depend upon the vehicle and strategy (equities, currency, hedge,
etc.). Funds typically pay a management fee based upon the percentage of assets under
management at fixed annual rates, generally in a range from 0.15% to 2%, subject to
negotiation, and depending upon the strategy of the privately offered vehicle.
Pragma’s actual fees, minimum fees and minimum account sizes may also be negotiated
and may vary from the fees described above. A client may pay more or less fees than
similar clients depending on the particular circumstances of the client, size, liquidity
terms, additional or differing levels of servicing or as otherwise agreed with specific
clients.
Calculation and Deduction of Advisory Fees
In addition to performance-based fees described in Item 6 below, Pragma will generally
calculate and accrue its management fees daily. Its management fees generally will be
payable monthly in arrears as of certain valuation dates. When Pragma provides direct
investment advisory services for clients on a discretionary basis, clients may elect to be
billed directly for management fees or to authorize Pragma to directly debit management
fees from client accounts. In this case, the Client must authorize each debit for purposes
of payment and transfer the amount to Pragma. Pragma is not authorized to discretionally
debit any client’s account. Upon termination of any account, any prepaid, unearned fees
will be promptly refunded, and any earned, unpaid fees will be due and payable.
Other Fees and Expenses
In addition to investment management fees and performance-based fees, investors in the
Funds will indirectly bear any other costs charged to the Funds. Such costs will vary and
typically include, though are not limited to, accounting, legal, fund administration fees
and other related costs. Fees charged by the Funds managed directly by Pragma are
generally deductible from the fees otherwise due under the investment management
agreement of each client. Furthermore, Pragma’ fees are exclusive of brokerage
commissions, transaction fees, and other related costs and expenses which shall be incurred
by the client. The impact of mark-ups and mark-downs shall also be incurred by the client.
Clients may incur certain charges imposed by custodians, brokers, and other third parties
such as fees charged by sub-managers, custodial fees, transfer taxes, wire transfer and
electronic fund fees, and other fees and taxes on brokerage accounts and securities
transactions. Such charges, fees and commissions are exclusive of and charged before
Pragma’ fees, and Pragma shall not receive any portion of these commissions, fees, and
costs.
Item 12 further describes the factors that Pragma considers in selecting or recommending
broker-dealers for client transactions and determining the reasonableness of their
compensation (e.g., commissions).
Prepaid Fees
Pragma generally does not charge clients fees in advance.
Compensation for the Sale of Securities
Neither Pragma nor Pragma’ supervised persons accept compensation for the sale of
securities or other investment products, including asset-based sales charges or service
fees from the sale of investment funds.