Item 5. Fees and Compensation
Clients of Sierra are typically charged a management fee equal to a percentage of the net assets and an
annual performance fee or allocation equal to a percentage of the net appreciation of each client account
at the end of each fiscal year, which may be paid directly to Sierra or to an affiliate of Sierra.
Sierra charges each client a management fee ranging from 1.0% to 1.5% of the client’s total assets.
Management fees are ordinarily paid quarterly in advance based on the total market value of the assets in
the client account (including net unrealized appreciation or depreciation of investments and cash, cash
equivalents and accrued interest) early in the quarter, as applicable. If a new client account is established
during a quarter or month or a client makes an addition to its account during a quarter or month the
investment management fee will be charged as of the effective date of the investment management
agreement or the date of the additional contribution based on the value of the assets as of the applicable
date and will be prorated for the number of days remaining in the quarter.
Sierra may also be paid a performance-based fee, which is compensation that is based on a share of
capital gains on or capital appreciation of the assets of a client (such as a client that is a hedge fund or
other pooled investment vehicle). This compensation may range from 10% to 20%. Performance fees are
generally paid annually, or upon termination of an account or withdrawal of an investment in a Sierra
Fund.
The Management and Performance Fees may be waived in the sole discretion of Sierra for investors who
are relatives of principals or employees of Sierra Global Associates, L.L.C. or Sierra.
Generally, with respect to the Funds, Sierra will deduct the management fee and performance fee from the
client account, after the Sierra Fund’s administrator has calculated and reviewed the management fee and
performance fee. With respect to separately managed account clients, Sierra generally does not deduct
the management fee from client accounts, but bills the clients. Payment arrangements may be negotiated
with clients on an individual basis.
Sierra, in its discretion, may negotiate, waive or modify the management fees or performance fees or
allocations for certain client accounts and/or investors in a Sierra Fund, including employees and affiliates
of Sierra, without entitling any other investors to a waiver or modification.
Sierra’s fees are exclusive of brokerage commissions, transaction fees, custodial fees, administration fees
and other costs and expenses that will be incurred by the client. The Clients may incur other charges
imposed by custodians, brokers or other counterparties, including: commissions, interest on margin
accounts and other indebtedness (netted against interest earned), borrowing charges on securities sold
short and short sale dividends (netted against long dividends), custodial fees, bank service fees, expenses
associated with insuring the Funds’ assets, accrued audit fees, tax preparation fees, government filing
fees, tax filings, legal and Administrator fees costs associated with foreign exchange transactions and
other reasonable expenses related to the purchase, sale or transmittal of the Sierra Fund's assets. Please
refer to Item 12 of this Firm Brochure for a discussion of Sierra’s brokerage practices.
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