Item 5: Fees and Compensation
The advisory fees typically charged by SandPointe are described forth below. The types of fees and specific
fee rates to be paid by the RIC are as set forth in a written advisory agreement entered with SandPointe, are
confidential, negotiable, and may differ substantially from those described in this firm brochure. Additional
details about the fees charged to the underlying investors in the RIC are available in the current Prospectus.
The RIC’s primary investment adviser, TAS, is responsible for the provision of administrative, marketing,
and shareholder services, including any necessary disclosures to prospective and current shareholders of
the RIC. Prospective investors in the RIC should carefully review the Prospectus before investing in the
RIC.
Advisory Fees. SandPointe is compensated for its investment advisory services to the RIC through payment
of a combination of asset-based management fees and performance-based fees. Our asset-based
management fees are calculated as a percentage of the assets we manage on behalf of the RIC. Our
performance-based fees are calculated as a percentage of “New Net Profits” (as defined herein) achieved
above a “High-Water Mark” within the RIC’s account, subject to meeting a “Hurdle” performance rate.
The nature of these fees is further described below.
Asset-based Management Fees. We typically charge the client a maximum asset-based
management fee at a rate of 2.00% per annum of the value of the client’s account (the
“Management Fee”). The Management Fee is typically calculated and paid monthly, in arrears,
based upon the total value of the client’s account, including any cash balances, as of the last
business day of the billing period. Management Fees for the initial billing period shall be pro-rated
where our investment management agreement is executed at any time other than the first day of a
calendar month.
Performance-based Fees. We typically charge an annual performance-based fee at a maximum
rate of 20.00% of any “New Net Profits” (as defined below) generated in the client’s account,
appropriately adjusted for any deposits and withdrawals during the period (the “Performance
Fee”). Our Performance Fee is charged only to clients who meet the definition of a “qualified
client” under Rule 205-3 of the Advisers Act, as applicable.
“Net New Profit” is any amount by which the value of your account exceeds the “High Water
Mark” for such account, after achieving a rate of return of at least 5.00% (the “Hurdle Rate”). The
“High-Water Mark” for your account is the value of such account immediately after the assessment
of the most recent Performance Fee (deducting the amount of any withdrawals since such
assessment) or, if the account has never been assessed a Performance Fee, the net asset value of
such account when it was established (deducting the amount of any withdrawals since it was
established).
The “High-Water Mark” is calculated net of the Performance Fees charged against your account.
This means that SandPointe is not required to restore the amount of any prior Performance Fees
charged against your account before participating in future appreciation in the value of such account
in accordance with the formula described above. Although the High-Water Mark for an account
carries forward from period to period until exceeded, our firm is not required to “repay” any
Performance Fee previously paid in the event your account subsequently experiences losses.
Our Performance Fee will be calculated and paid in arrears at the end of each calendar year, and
will be pro-rated for partial periods. In the event the client makes a complete withdrawal from its
account on a date other than the end of the billing period, Performance Fees will be due at the time
of withdrawal. If your account does not generate New Net Profits in a given period, no Performance
Fee will be due unless your account experiences New Net Profits in a subsequent period. The
amount of the Performance Fee due to us, if any, will typically be determined independently with
respect to each calendar year during which your account is open.
Billing Procedures. Portfolio valuations for the RIC’s account(s) are generally determined by (i) the RIC’s
custodian and (ii) SandPointe, using its own asset valuations. SandPointe’s valuations are based upon
information we receive from the independent custodian bank or broker of the RIC’s account. Following
reconciliation of such valuations, if any, SandPointe shall deliver a written invoice to the RIC showing the
opening and closing value of the RIC’s account, any profit or loss experienced during the period, and the
calculation of any advisory fees then due. SandPointe receives its advisory fees in arrears from the RIC
and/or TAS (as the primary investment adviser to the RIC) typically within thirty (30) calendar days of the
close of each billing period, as applicable. Such fees may be separate and in addition to the fees TAS charges
the RIC’s underlying investors. We do not directly debit our advisory fees from the RIC’s account(s) or
from the accounts of the RIC’s underlying participants.
Termination of Advisory Services. The RIC (or TAS, as its primary adviser) or SandPointe may terminate
the written advisory agreement for any reason, and without penalty of any kind, upon advance written notice
of at least thirty day’s (30) to the non-terminating party. The RIC will incur a pro-rata charge for services
rendered prior to termination in proportion to the number of days in the terminating billing period during
which services were rendered by SandPointe.
Additional Fees and Expenses. The RIC will be subject to custodial, brokerage and other transaction costs
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