ITEM 5: FEES AND COMPENSATION
Item 5.A.
The Funds
Shelter Haven will typically be entitled to receive a management fee quarterly in advance
on the first day of each calendar quarter based on the net asset value of each investor’s
capital account in the Funds, which is typically at a rate equal to 0.375% per quarter
(approximately one-and-one-half percent (1.5%) per annum) (the “Management Fee”).
In addition to the Management Fee, at the end of each fiscal year or upon an investor’s
withdrawal of all or any portion of a capital account, a percentage of the aggregate net
capital appreciation allocated to each capital account of each investor (the “Incentive
Allocation Percentage”) for such fiscal year (or elapsed portion thereof), in excess of the
“Hurdle Amount” (as described below), will be allocated to the to the capital account of
the General Partner (the “Incentive Allocation”), subject to any “High Water Mark”, as
discussed below. The Incentive Allocation Percentage is typically equal to fifteen percent
(15%) to twenty percent (20%) depending on the class of interest held by the investor in
the Fund.
The Hurdle Amount for a fiscal year with respect to a particular capital account will be the
product of (i) the net asset value of such capital account as of the beginning of such fiscal
year (or, if the Capital Account was established during such fiscal year, the net asset value
of such capital account as of the establishment date) (adjusted for withdrawals), and (ii)
the lesser of (x) the interest rate of a 10-year U.S. Treasury Note, as determined on
December 31 immediately preceding such fiscal year (or the date on which an investor
withdraws from their capital account), and (y) 3%. The Hurdle Amount will not be applied
cumulatively, no Hurdle Amount shortfall will be carried forward to any future fiscal year
and the Hurdle Amount will be pro-rated for partial fiscal years.
In order to determine any High Water Mark which the Incentive Allocation will be subject
to, a loss recovery account will be maintained for each investor’s capital account. On each
date that an Incentive Allocation is determined, the balance in each loss recovery account
will be charged with the aggregate net capital depreciation which is allocable to such
capital account since the last date on which a calculation of the Incentive Allocation was
made (or in the case of the first such calculation for the capital account, since the
establishment of such capital account), and will be credited, but not above zero, by the
aggregate net capital appreciation allocable to such capital account since such date. The
effect of the loss recovery account for purposes of calculating the Incentive Allocation is to
reduce the amount of net gain for a particular period by any net loss for prior periods, and
thereby to reduce the Incentive Allocation otherwise allocable during the later period,
thereby creating a High Water Mark.
An investor in any of the Funds who withdraws any portion of his or her capital account
prior to the one-year anniversary of the corresponding capital contribution to the Fund
may be subject to withdrawal charges.
The General Partner has the right to fully or partially waive the Management Fee or
Incentive Allocation with respect to one or more investor’s capital account (including, but
not limited to, affiliated Investors) without notice to, or the consent of, the other investors
in the Fund. The General Partner may agree with an investor in the Fund to apply a
different Hurdle Amount or High Water Mark with respect to such investor without notice
to, or the consent of, other investors.
The Management Fee and Incentive Allocation and other terms regarding fees and
compensation may vary based on the pooled investment vehicle and class of interest
owned by an investor in the Funds. Additionally, the Funds may issue additional classes of
interests on such terms as the General Partner determines in its discretion. Advisory Clients
and investors should consult the offering documents of the Funds for a more detailed
description of the Management Fee and Incentive Allocation for each class of interest in the
Funds.
The Sub-Advised Funds
Management fees and expenses arrangements with respect to the Sub-Advised Funds are
set forth and calculated in accordance with their respective investment advisory
agreements. Please reference this paragraph relating to fees and expenses of the Sub-
Advised Funds in response to Items 5.B, 5.C, and 5.D. below.
Item 5.B.
Shelter Haven deducts the Management Fee and reallocates the Incentive Allocation at the
frequency discussed above in response to Item 5.A.
Item 5.C.
The Funds will bear their own expenses, including expenses directly related to transactions
and positions for the Funds’ accounts, interest expenses, bank service fees, brokerage
commissions, custodial fees, taxes, blue sky fees, costs of borrowing securities to be sold
short, fees for analytics and market data (including online news and quotation services,
Bloomberg service, etc.), research and due diligence fees and expenses (including any
research and/or due diligence related travel) and materials, software used for research,
expenses related to the initial and ongoing offering of Interests (including fees and
expenses of the Investment Manager incurred in connection with the European Alternative
Investment Fund Managers Directive), administration, audit and tax preparation expenses,
expenses associated with regulatory and statutory filings (including, without limitation,
Schedule 13D, Form 13F, Schedule 13G, Form 13H, Annex IV filings, European Markets
Infrastructure Regulation filings, Form PF, Form CPO-PQR and Form CTA-PR), investor
reporting costs, insurance expenses, withholding and transfer taxes, consulting fees and
expenses, outsourced risk analytics and advisory services, legal, accounting and
professional fees and expenses (including related to the Partnership’s compliance with
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