Item 5. Fees and Compensation
The Adviser charges each Advisory Client an investment management fee based on the value of each
Investor’s assets under management at a rate ranging from 1.0% to 2.0% annually. Certain sub-advised
funds may not be charged a management fee. Investment management fees of the Advisory Clients are
charged each month in advance based on the total market value of the assets in the Advisory Client
account (including net unrealized appreciation or depreciation of investments and cash, cash equivalents,
accrued interest and dividends) on the first day of the month.
The Adviser or an affiliate of the Adviser is entitled to receive performance-based compensation in the
form of a fee or an allocation, which is based on a share of income on or capital appreciation of the assets
of the Advisory Clients. This compensation rate ranges from 10% to 20%. The mechanics of performance-
based compensation for certain sub-advised funds is negotiated with such sub-advised funds and is
memorialized in the applicable investment management agreement.
The Adviser may waive or modify the management fee and/or the performance-based compensation for
certain Investors, and has done so for employees (including former employees) of the Adviser who have
invested in the Funds.
The Adviser does not deduct the investment management fee from the Funds. Rather, the Adviser sends
a wire request to the administrator of the Funds. With respect to the Sub-Advised Funds, the Adviser does
not deduct any fees. The Adviser bills the relevant Sub-Advised Fund in accordance with the applicable
investment management agreement.
In addition to paying investment management fees and performance-based compensation, if any, the
Funds are also subject to operating and other expenses including legal, third-party accounting, auditing,
tax preparation and other professional fees and expenses; third-party administration fees and expenses;
directors’ fees and expenses; Fund-related insurance costs (including D&O and E&O insurance, as
applicable); research and research-related expenses including, without limitation, news and quotation
equipment and services, risk management software, investment and trading-related computer hardware
and software and research-related travel; investment expenses, including, without limitation, interest on
margin accounts and other indebtedness, borrowing charges on securities sold short, commissions, prime
brokerage and custodial fees; bank service fees; other expenses related to the purchase, sale,
preservation or transmittal of Fund assets, taxes and governmental fees; and expenses relating to the
preparation and distribution of reports, financial statements and notices to the Investors. Fund assets
may be invested in money market mutual funds or exchange-traded funds. In these cases, the Funds
bear their pro rata share of the investment management fee and other fees, which are in addition to the
investment management fee paid to the Adviser. To the extent Fund assets are invested in a master-
feeder structure, any such feeder funds bear a pro rata share of the expenses associated with the related
master fund. Please refer to Item 12 for a discussion of the Adviser’s brokerage practices.
Generally, the Sub-Advised Funds also bear their portion of reasonable charges for research incurred by
the Adviser in connection with investment activities of such Sub-Advised Funds.
The allocation of expenses by the Adviser between it and any Advisory Client and among Advisory Clients
represents a conflict of interest for the Adviser. The Adviser has adopted an expense allocation policy that
is designed to address this conflict. The Adviser allocates expenses to each Advisory Client in accordance
with the Advisory Client’s arrangements with the Adviser (including applicable Advisory Client disclosures).
The Adviser seeks to allocate shared expenses for products and services benefitting the Adviser and the
Advisory Client and not covered in the Advisory Client’s arrangements in a fair and reasonable manner.
The Adviser allocates common Advisory Client expenses among multiple Advisory Clients pro rata based
on gross exposure as of the beginning of each monthly period in which the expenses are incurred. The
Adviser may deviate from this standard allocation method if it determines that an expense disproportionately
benefits a particular Advisory Client or group of Advisory Clients.