Item 5 Fees and Compensation
General
For discretionary services provided to Funds, Prisma and certain other subsidiaries of its direct
parent company, Prisma Capital Holdings LLC (each, a “Prisma Entity” and, collectively, the
“Prisma Entities”), generally may receive (a) a fee based on a percentage of assets under
management, typically between approximately 0.50% and approximately 1.80% per annum,
payable quarterly in advance or monthly in arrears; and (b) performance-based compensation
equal to a percentage up to 20% of the realized and unrealized appreciation of assets or the
realized and unrealized appreciation of assets generally in excess of a benchmark (e.g., the return
on three-month U.S. Treasury Bills), generally payable annually. The asset-based fee is adjusted
for additions made to a Fund by an investor that occur during a calendar quarter; if an investor
withdraws assets from the Fund prior to quarter-end, Prisma refunds any unearned management
fee. Fees payable by the Funds are generally deducted directly from the investors’ accounts.
Fees payable by a Fund with respect to certain large or other strategic investors (and borne by
such investors), as well as other terms related to redemption rights, transfers and reporting may
be subject to negotiation based upon various factors such as the size of the investment or
regulatory status of a particular investor. Any such arrangements or terms may be set forth in a
side letter or similar agreement with the specific investor. In addition, investments in Funds by
employees and other associated persons of Prisma, as discussed below in Item 6, are not subject
to such fees. In certain circumstances, Prisma’s asset based fees may be subject to minimum
annual amounts.
For Crossover Services, Prisma or other Prisma Entities may receive asset-based fees in addition
to fees received for discretionary investment advisory services. These fees are negotiated on a
case-by-case basis, and vary depending on the scope and terms of the overall client relationship.
In the future, Prisma may receive an annual flat fee in exchange for providing discretionary
investment advisory services to a client.
The fees applicable to each Fund are more fully described in their offering materials, disclosure
documents, investment management agreements, and/or governing documents, which may also
include side letters or other similar agreements with particular investors in a Fund, which would
have the effect of establishing rights under, altering, or supplementing the terms of such Fund’s
governing documents with respect to such investors in a manner more favorable to such investors
than those applicable to other investors (see Item 11 for additional information regarding side
letters and other arrangements).
The fees charged to Accounts are subject to negotiation based upon the size of the account, the
services provided, the reporting requirements of the underlying investor, and the Prisma
Account’s investment strategy, among other factors, and are set forth in the investment
management agreements and/or other governing documents relating to such Prisma Account.
For such Accounts, asset-based fees are generally payable quarterly in advance or monthly in
arrears, at the election of the investor, and performance-based compensation is generally paid
annually. If Accounts are initiated during a calendar quarter, the investor will be charged a
prorated fee. If fees are paid in advance and assets are withdrawn from a Prisma Account or the
Account is terminated prior to the end of the period to which such fees relate, Prisma refunds any
unearned fees. Investors in Accounts may also elect to be billed directly for fees or authorize
Prisma to directly debit fees from the Accounts.
Managers of Portfolio Funds (“Portfolio Managers”) generally receive management fees in the
range of 0% per annum to 2.5% per annum and incentive fees of in the range of 0% to 25.0%,
subject, at times, to a high water mark and/or hurdle.
Prisma’s fees are exclusive of custodial, administrative, and other service provider fees, and
other related costs and expenses which may be incurred by a Fund or Account, as applicable, and
which are more fully described below and in the Fund’s or Account’s offering materials,
disclosure documents, investment management agreements, and/or governing documents.
Prisma does not receive any portion of these fees, costs, or expenses. In connection with the
management and oversight of the Funds and Accounts, neither Prisma nor any of its supervised
persons accept compensation from third parties for the sale of securities or other investment
products, except as described above. Prisma structures performance-based compensation it
receives, if any, in accordance with the U.S. Investment Advisers Act of 1940, as amended (the
“Advisers Act”).
Prisma has entered into and may in the future enter into strategic partnerships or other multi-
strategy or multi-asset class arrangements with investors that commit capital to a range of
Prisma’s platform of products, investment ideas, and asset classes. In certain cases, strategic
partnerships may also include commitments to products, investment ideas, and asset classes
managed, advised or sponsored by PAAMCO and its affiliates. Such arrangements may include
Prisma granting certain preferential terms to such investors, including blended fee and carried
interest rates that are lower than those applicable to other investors in a Fund when applied to the
entire strategic partnership. The allocation of a portion of the profits of a Fund, whether
allocated to the capital account of a Prisma GP or distributed to a Prisma GP, is referred to herein
as “carried interest”). Where a strategic investor participates in a Fund through a dedicated
investment vehicle or account as part of such arrangement, such vehicle or account may be
granted terms, including management fees, performance-based compensation, or carried interest,
...