Item 5 – Fees and Compensation
A. Types of Compensation.
i. Management Fees
Partnership. As compensation for its advisory services for the Partnership, RCA
receives management fees from the Partnership, which are generally required to be paid in
advance at the beginning of each quarter. Each of the Partnership’s limited partners pays
an asset-based management fee to RCA. The present management fee is 2.0% per annum.
The management fee is generally not negotiable, although RCA may reduce it for early
investors and/or large investments by institutional and high net worth subscribers.
Separate Accounts. RCA receives management fees from its separate accounts,
which are generally required to be paid in advance at the beginning of each quarter. Fees
for strategy-specific separately managed accounts are subject to negotiation. Factors
such as, but not limited to, the client’s proposed investment size and/or a long-term
commitment may be taken into consideration in negotiating the management fee.
ii. Performance Fees
Partnership. The General Partner of the Partnership may receive performance-
based compensation from the Partnership. Limited partners, who meet the definition of a
“Qualified Client” (as defined in Sec. 205-3 of the Investment Advisors Act of 1940, as
amended) are subject to a “performance fee”, pursuant to which a portion of profits, if any,
initially allocated to each investor is reallocated to the General Partner as of the end of each
fiscal year (December 31) for the Partnership (except that it may be a shorter period in the
event of a withdrawal of an investor as described below). Pursuant to the LP Agreement,
a portion of the profits from the capital accounts of each limited partner is reallocated to
the capital account of the General Partner based on the overall profits and losses of the
Partnership and subject to the limitations set forth in the LP Agreement. If a limited partner
withdraws capital on a date other than December 31, a proportionate amount of the
performance fee will be reallocated from the capital account of the investor to the capital
account of the General Partner. The performance fee of each relevant investor will be no
greater than 20% of “new profits.” As described in detail in the LP Agreement, “new
profits” include realized and unrealized gains and losses but only to the extent those new
profits exceed previous losses that have not been recovered. This limitation, generally
referred to as a “high water mark,” is intended to prevent RCA from receiving a profit
sharing obligation as to profits that simply restore previous losses. In other words, RCA is
entitled to receive a profit sharing obligation only to the extent profits through the current
measurement period exceed the highest level of profits for all prior measurement periods.
RCA’s profit sharing obligation (or “performance fee”) is generally not
negotiable.
RCA believes our fees are competitive; however lower fees for comparable
services may be available from other sources.
Separate Accounts. With respect to separate accounts, RCA may receive
performance-based compensation. Qualified Clients may be subject to a performance fee
similar to that of the Partnership. All such obligations are to be negotiated and
documented in each respective investor’s Investment Management Agreement.
B. Method of billing
Partnership. RCA follows the procedures and regulations under the Advisers Act
for limited partnerships subject to an annual audit. Specifically, management fees are
automatically deducted from the Partnership each quarter. Performance fees are allocated
to the Partnership’s General Partner, RFM, as of the end of each measurement period,
generally annually, or upon the date of a withdrawal, in accordance with the terms of the
Partnership Agreement. Each of the Partnership’s limited partners has a capital account
which is increased by contributions and by allocations of income and are reduced by
distributions, allocations of losses, management fees and any reallocations of profit sharing
obligation from such account. Management fees and profit sharing obligations are
generally non-refundable. RCA may, in its sole discretion, waive these fees for certain
investors in whole or in part.
Separate Accounts. The method of billing is client-specific. Currently, RCA
sends an invoice, including the formula used to calculate RCA’s investment advisory fee(s)
to the client. The client then pays RCA the fee either from their separate accounts or
otherwise. Advisory fees are billed to clients each quarter.
Either the client or Roberts Capital Advisors may terminate the investment advisory
agreement at any time by providing written notice to the other party. Full refunds will only
be made in cases where cancellation occurs within five days of signing our investment
advisory agreement. After five business days, clients are entitled to receive a pro-rata
refund.
C. Other Fees and Costs
Partnership. The Partnership will bear all expenses of its operations. Specifically,
RCA is authorized to pay on behalf of the Partnership all operating expenses related to the
Partnership's operations, including without limitation, (A) the Partnership’s ongoing
accounting, auditing, bookkeeping, tax preparation, administration, legal, consulting and
other professional fees and expenses; (B) all costs of communications with Limited
Partners; (C) investment-related expenses including all commissions, bid-ask spreads,
mark-ups, interest on margin borrowing, costs related to short sales, clearing costs, transfer
taxes, custodian fees, trading terminal fees (including data costs), etc.; (D) all costs of
protecting or preserving any investment held by the Partnership; (E) legal expenses related
to a specific investment, a potential investment opportunity, area of investment, or legal work
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