Item 5. Fees and Compensation
Railroad Ranch receives a management fee and performance-based compensation (“Performance
Allocation(s)”) from Clients. Such compensation arrangements are set forth in the relevant Governing
Documents of the applicable Fund. A brief summary of those fees is provided below.
The Firm receives a fixed management fee from the limited partners (“Limited Partners”) of the Funds,
paid quarterly in advance, in an amount generally equal to an annual rate of 1.5% of the net asset value of
the capital account of each Limited Partner. The General Partner may reduce or waive the management fee
for certain investors or Clients, including employees and affiliates of the Firm, in its sole discretion.
An affiliate of the General Partner (the “Special Limited Partner”), is entitled to an annual performance-
based profit allocation at the end of each calendar year generally between 15% and 20% of the Fund’s net
profits. The Performance Allocations are subject to a high-water mark and/or loss carryforwards. The
General Partner, in its sole discretion, may waive or modify the Performance Allocation for certain
investors or Clients, including employees and affiliates of the Firm.
The Manager, General Partner, and the Funds have entered into separate arrangements with strategic
investors (“Strategic Investors”) whereby, the Strategic Investors receive a share of the management fee
and share in any performance-based allocation received by the Manager and Special Limited Partner.
The management fee, Performance Allocation, and Strategic Investor arrangement, as well as other terms,
are more fully described in the respective Governing Documents for each Fund. Potential investors should
review such Governing Documents for full details as to how the management fees and Performance
Allocations are calculated and collected.
Railroad Ranch renders services to the Funds at its own expense and is responsible for overhead cost
including salaries, office rent and other general overhead costs of the General Partner and/or Manager.
The underlying investors in the Funds bear the costs and expenses of the fund, including without limitation
trading costs and expenses (such as brokerage commissions, interest on margin accounts, expenses related
to short sales, clearing and settlement charges), ongoing legal, accounting and bookkeeping fees and
expenses, and fund administrator fees. Each Fund’s Governing Documents discuss the fund expenses in
detail.
See Item 12 of this brochure for a more detailed discussion of Railroad Ranch’s brokerage practices.
As discussed in 5.A., the management fee paid by Limited Partners of the Fund is calculated and paid
quarterly in advance.
As the Manger requires at least forty-five (45) days prior written notice for capital account withdrawals,
and such withdrawals may only occur on the last day of each calendar quarter, there is generally no
requirement to refund any portion of pre-paid fees.
Neither Railroad Ranch nor its supervised persons are compensated for the sale of securities or other
investment products. Certain other expenses are paid by the Fund and are described more fully in the
Governing Documents for each Fund.