ITEM 5. FEES AND COMPENSATION
For our services to the Fund, we charge a management fee and a performance-based fee as
described below.
Management Fee – PCS receives quarterly management fees equal to ¼ of 1% (or one percent on
an annualized basis) of the value of the net assets of the Fund as of the end of each quarter. The
management fee will generally be calculated and payable to PCS quarterly, in arrears, as of the
last day of each quarter. PCS receives no fees, brokerage commissions or other compensation
from any of the managers with which the Fund invests.
Performance Fee – The profits and losses of the Fund will be allocated among all of the investors
as of the end of each year. Profits and losses from any restricted investments will be allocated
only to investors eligible to participate therein. To the extent that the profits allocable to an
investor in the Fund, in proportion to his or her capital (after deducting applicable fees and
expenses), should amount to a positive investment return in excess of 10% per annum (or a pro
rated annualized 10% return for any fraction of a year), then the lesser of the amount of such
excess or 1% of such investor’s capital shall be reallocated to PCS. The profits or losses of the
Fund for a particular period will be measured in terms of the increase or decrease in the value of
the net assets of the Fund from the beginning to the end of the period, after giving effect to the
expenses of the Fund for such period. Investments will therefore reflect unrealized gains and
losses in addition to dividends, interest and realized capital gains and losses. In each case, profits
and losses will be allocated among the investor’s pro rata in proportion to the value of their
respective capital accounts at the beginning of the applicable period. Investors should be aware
that the performance fee is not subject to a loss carry-forward.
General Information
Personal Investments in Funds: Certain executive officers and/or other employees of PCS and/or
their family members have invested or may invest a portion of their personal net worth in the
Fund. In addition, certain trusts and other entities formed for the benefit of certain managing
members’ family members have invested in the Fund, and, in some cases, in some of the
underlying funds in which the Fund has invested.
Different Fee Schedules: The management fee and the performance fee may be discounted or
waived with respect to any investor for any particular period of time at the sole discretion of PCS.
Such discounted rate or waiver is not available to all or even most investors in the Fund.
Termination: An investor may withdraw from the Fund altogether as of the end of the first full
calendar year of twelve consecutive calendar months next succeeding the date on which such
investor was admitted to the Fund and as of the last day of each year thereafter by giving not
less than forty-five (45) days’ prior written notice to PCS. Distribution of an amount equal to 90%
of the estimated capital account of a withdrawing investor will be made to such investor or his
legal representatives within fifteen (15) days after the end of the year, and distribution of the
balance of such capital account, as finally determined, will be made within fifteen (15) days after
the receipt by the Fund of its audited financial statements for the year in which such withdrawal
took place, except that each such distribution will he subject to receipt by the Fund of
distributions from the partnerships, managed accounts or registered investment companies in
which the Fund is then invested. PCS may in its sole discretion, waive or modify any of the terms
of withdrawals for certain investors who are relatives, employees or affiliates of PCS or its
principals, or for certain large or strategic investors as well as in any other case.
Investors in the Fund should refer to the Fund’s private placement memorandum and offering
documents for complete information regarding withdrawals of investments.
Other Fees and Expenses: Prospective investors in the Fund, itself a fund of funds, should note
that he/she will incur at least two layers of fees: Our management fee and performance-based
compensation, as set forth above, as well as the management fee and/or a performance-based
compensation charged by the underlying hedge funds or separately managed accounts in which
the Fund invests. This layering of fees is incorporated in the net income or loss of the Fund, is not
readily apparent to investors and will lower the investor’s overall return.
While it is not anticipated that open-ended mutual funds will be included in the clients' portfolios,
money market mutual funds may be used to “sweep” unused cash balances until they can be
appropriately invested. In addition, from time to time, as appropriate, we may invest a portion of
the Fund’s assets in real estate investment trusts (“REITs”) or other publicly traded closed-end
funds. Investors should recognize that all fees paid to PCS for investment advisory services are
separate and distinct from the fees and expenses charged by mutual funds, REITs, exchange
traded funds (ETFs) and other funds to their shareholders. These fees and expenses are described
in each fund's prospectus. These fees will generally include a management fee, other fund
expenses, and a possible distribution fee.
The Fund will also generally be responsible for certain Fund expenses, including, but not
necessarily limited to, legal expenses, professional fees (including, without limitation, expenses
of consultants and experts) relating to investments, accounting expenses, auditing and tax
preparation expenses, organizational expenses, government fees and taxes, expenses incurred
in connection with the offering and sale of the Fund’s interests and other similar expenses related
to the Fund.
In addition to fees paid to our firm and to each of the underlying fund managers, investors will also be
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