ITEM 5 – FEES AND COMPENSATION
Item 5.A Describe how you are compensated for your advisory services. Provide your fee
schedule. Disclose whether the fees are negotiable.
Quantlab does not charge the Partnerships any management fees or performance-
based fees. The Partnerships bear expenses related to their operations, as
described below.
Item 5.B Describe whether you deduct fees from clients’ assets or bill clients for fees
incurred. If clients may select either method, disclose this fact. Explain how often
you bill clients or deduct your fees.
Not applicable.
Item 5.C Describe any other types of fees or expenses clients may pay in connection with
your advisory services, such as custodian fees or mutual Partnership expenses.
Disclose that clients will incur brokerage and other transaction costs, and direct
clients to the section(s) of your brochure that discuss brokerage.
The Partnerships will bear their own expenses and their pro rata share (based
upon revenue generation) of the Trading Partnerships’ expenses. The Trading
Partnerships are responsible for payment of all costs and expenses incurred by or
on behalf of the Partnerships including, without limitation, interest on the
Partnerships’ borrowings (on margin or otherwise), all costs and expenses
associated with negotiating and entering into contracts and arrangements in the
ordinary course of the Partnerships’ business, all trading costs and expenses (such
as, for example, expenses relating to short sales, brokerage commissions, clearing
and settlement charges, custodial fees and service fees), all costs and expenses
associated with the organization of the Partnerships or the offering or sale of
interests therein (including, without limitation, filing fees and legal and
accounting fees), all costs of communication with investors and potential
investors, printing costs, and all third party bookkeeping, recordkeeping,
administrative, legal agency, registrar, legal, accounting, tax preparation,
professional, expert and consulting fees and expenses (including the fees and
expenses of counsel for Quantlab) arising in connection with the Partnerships’
business. As noted below, one of the expenses borne by the Partnerships are
brokerage commissions paid to an affiliate of Quantlab, QLB. As noted below,
the level of brokerage commissions paid to QLB are nominal.
Quantlab bears all of its other operating, general, administrative, and overhead
costs and expenses, and does not charge the Trading Partnership for any thereof.
The organizational expenses of the Partnerships were paid and expensed by each
respective Partnership.
The information contained herein is a summary only and is qualified in its
entirety by the relevant Term Sheets or other Governing Documents (as
applicable) of the Partnerships. Partnership Investors are encouraged to
refer to these documents and/or contact Quantlab for additional
information.
Item 5.D If your clients either may or must pay your fees in advance, disclose this fact.
Explain how a client may obtain a refund of a pre-paid fee if the advisory contract
is terminated before the end of the billing period. Explain how you will determine
the amount of the refund.
Not applicable.
Item 5.E If you or any of your supervised persons accepts compensation for the sale of
securities or other investment products, including asset-based sales charges or
service fees from the sale of mutual Partnerships, disclose this fact and respond
to Items 5.E.1, 5.E.2, 5.E.3 and 5.E.4.
Not applicable.
Item 5.E.1 Explain that this practice presents a conflict of interest and gives you or your
supervised persons an incentive to recommend investment products based on the
compensation received, rather than on a client’s needs. Describe generally how
you address conflicts that arise, including your procedures for disclosing the
conflicts to clients. If you primarily recommend mutual Partnerships, disclose
whether you will recommend “no-load” Partnerships.
Not applicable.
Item 5.E.2 Explain that clients have the option to purchase investment products that you
recommend through other brokers or agents that are not affiliated with you.
Not applicable.
Item 5.E.3 If more than 50% of your revenue from advisory clients results from commissions
and other compensation for the sale of investment products you recommend to
your clients, including asset-based distribution fees from the sale of mutual
Partnerships, disclose that commissions provide your primary or, if applicable,
your exclusive compensation.
Not applicable.
Item 5.E.4 If you charge advisory fees in addition to commissions or markups, disclose
whether you reduce your advisory fees to offset the commissions or markups.
Note: If you receive compensation in connection with the purchase or sale of
securities, you should carefully consider the applicability of the broker-dealer
registration requirements of the Securities Exchange Act of 1934 and any
applicable state securities statutes
Not applicable.