Item 5. Fees and Compensation
Asset-Based Compensation
The Adviser charges each of its pooled investment vehicles an investment management fee of up to 2.0%
per annum based on the value of the pooled investment vehicle’s assets under management. Investors
in the pooled investment vehicles are subject to such management fees indirectly through their
investment in the pooled investment vehicle.
Investment management fees will be paid each quarter in advance based on the total market value of the
assets on the first day of the quarter. While it is unlikely that an investor in a pooled investment vehicle
will withdraw/redeem mid-month, the Adviser will refund the unearned portion of any pre-paid
management fees if a withdrawal/redemption is made before the end of a billing period and such refund
will be calculated based on the value of the assets on the first day of the quarter and prorated based upon
the portion of the relevant period during which it provided services.
The Adviser deducts client accounts for investment management fees quarterly by instructing the client’s
custodian.
The investment management fees are generally not negotiable, however, the Adviser, in its sole
discretion, may waive or reduce the fees for certain investors in the pooled investment vehicles who are
members, employees or affiliates of the Adviser, relatives of such persons and for certain large or strategic
investors.
Performance-Based Compensation
The Adviser receives a performance-based allocation that is based on a share of capital gains on, or
capital appreciation of, the assets of a pooled investment vehicle. This compensation may equal up to
20% of net profits, subject to a loss carryforward.
The performance-based fees are generally not negotiable, however, the Adviser, in its sole discretion,
may waive or reduce the fees for certain investors in the pooled investment vehicles who are members,
employees or affiliates of the Adviser, relatives of such persons and for certain large or strategic investors.
In addition to paying investment management fees and performance-based fees, the pooled investment
vehicles are also subject to other investment expenses, which may, among other expenses, include:
legal, compliance, administrator, audit and accounting expenses (including third party accounting services);
organizational expenses; investment expenses such as commissions, research fees and expenses
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(including research-related travel); risk management expenses; interest on margin accounts and
indebtedness; borrowing charges on securities sold short; custodial fees; bank service fees; client-related
insurance costs (including D&O and E&O insurance for the Adviser and outside directorship liability) and
any other expenses related to the purchase, sale or transmittal of client assets. Client assets are invested
in a master-feeder structure. Feeder funds will bear a pro rata share of the expenses associated with the
related master fund. In addition, clients will incur brokerage and other transaction costs. Please refer to