ITEM 5: FEES & COMPENSATION
Ratan Funds
Ratan is generally entitled to receive two types of fees as compensation for the investment
advisory services provided to the Ratan Funds: (i) a management fee equal to 2.0% per annum,
based on the net asset value of an Investor’s capital account (or shares in the case of the Offshore
Fund) and (ii) an incentive allocation equal to 20% of the net profits attributable to an Investor’s
capital account or shares (as applicable). The Firm only charges the full incentive allocation
when an Investor’s account is above its “high-water mark”, or, in other words, when an
Investor’s account value as of the end of the relevant period has recovered any losses from prior
periods.
Adi Fund
Ratan receives two types of fees as compensation for the investment advisory services provided
to the Adi Fund: (i) a management fee equal to 1.0% per annum, based on the net asset value of
an Investor’s capital account; and (ii) an incentive allocation generally equal to 10% of the net
profits in excess of a non-cumulative hurdle return if any subject to a loss carryforward
provision, attributable to an Investor’s capital account.
The hurdle return with respect to each Investor shall be equal to the amount that would have been
credited or debited to such Investor’s capital account for the fiscal year if the rate of return had been
equal to the total return of the MSCI World Index. In the event that the MSCI World Index ceases
to exist, the hurdle return will be calculated using an alternative index selected by the General
Partner that, in the good faith discretion of the Adi General Partner, measures the performance of
the global equity markets in a manner similar to the MSCI World Index.
When calculating the incentive allocation, net profits will be reduced by the management fee,
and all items of income, loss and expense incurred at the partnership level and the master fund
level will be taken into account. Since the Adi General Partner will receive the incentive
allocation at the partnership level, no incentive allocation will be made at the master fund level.
For the avoidance of doubt, if there are no net profits attributable to a capital account in a given
fiscal year and/or there are not enough net profits attributable to a capital account to exceed the
hurdle rate, there will be no additional catch-up amount of net profits required before any
incentive allocation is allocated in a subsequent fiscal year.
The Adi General Partner has previously and may waive or modify the incentive allocation for
Investors that are members, employees or affiliates of the Adi General Partner or the Firm,
relatives of such persons, and for certain large or strategic investors.
Please refer to Item 6 for further information about performance-based compensation and our
conflicts of interest.
Valuation Procedures
Ratan’s fees are based on the net asset value of the Funds, as calculated by the Funds’ independent
administrator, NAV Fund Administration (the “Administrator”). We anticipate that most of the
Funds’ securities and other investments will be actively traded on an exchange, and will be valued
at the current market price in the principal market where traded. All market prices are obtained
from recognized data providers, typically Bloomberg and Reuters. Securities or other investments
not traded on an active market will be valued in accordance with the pricing procedures established
by Ratan from time to time.
Please refer to the offering documents for further information about our valuation procedures
and the calculation of the Funds’ net asset value.
Payment of Fees
Management fees are paid quarterly in advance and incentive allocations for the Ratan Funds
and the Adi Fund are paid annually in arrears as of the end of each year. All fees, allocations
and carried interest amounts are calculated by the Administrator and deducted directly from the
Funds upon receiving approval from Ratan. If an Investor withdraws capital from the Ratan
Funds or the Adi Fund, the incentive allocation on that capital will be deducted from the
Investor’s account and paid to the Ratan General Partner or the Adi General Partner as if the
withdrawal date were the last day of the year and any loss carryforward will be reduced on a
pro-rata basis. An Investor is not permitted to choose to have the management fee, incentive
allocation or carried interest amount billed directly for payment.
Early Withdrawal Fees
Withdrawals from the Ratan Funds and the Adi Fund requires prior notice and can be made only on
a periodic basis. Interests in the Ratan Funds are subject to a “soft” initial lock-up of one year,
meaning that capital may be withdrawn prior to the first anniversary of issuance, subject to an early
withdrawal fee payable to the Ratan Funds.
Negotiability of Terms
Fees and other terms are generally non-negotiable. Ratan retains the authority and discretion to
waive all or a portion of the management fee and incentive allocation or any other term.
Other Fees & Expenses
Ratan’s fees are exclusive of expenses relating to the operation, administration and management
of the Funds, including research expenses (including research-related travel and the costs of
research-related publications and periodicals); filing and registration fees and expenses
(including Forms 13D, 13F, 13G, 13H and PF); legal fees (including the costs of negotiating
trade-related and account-specific counter-party documentation and side letters); expenses of
the continuous offering of Interests, including marketing related travel and associated expenses,
the cost of producing and distributing offering memoranda and other marketing materials;
printing and distribution costs; accounting, audit, and tax preparation expenses; any taxes and
duties payable in any jurisdiction in connection with the Funds trading and operations;
administration fees, costs and expenses (including the fees and out-of-pocket expenses of the
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