Item 5: Fees and Compensation
A. Describe how you are compensated for your advisory services. Provide your fee schedule. Disclose whether
the fees are negotiable.
Asset-based Fee
Sio shall receive a management fee from the Funds (“Management Fee”) calculated and payable quarterly, in
advance, in an amount equal to 0.375% (1.5% annually) of the value of each Investor’s capital account as of the
first day of each quarter.
Sio shall receive a Management Fee from the SMAs calculated and payable quarterly, in arrears, in an amount
equal to 0.375% (1.5% annually) on the aggregate separately managed account’s NAV. Sio may waive, rebate,
or reduce all or part of the Management Fee with respect to certain SMAs without waiving, rebating, or reducing
the Management Fee charged to other SMAs.
Performance-based Fee
Generally, at the end of each fiscal year, 20% of the net income allocated to the capital account of an Investor,
as adjusted for the Management Fee, is paid to the Adviser (“Performance Fee”). The Performance F e e shall
be subject to a “ Loss Carryforward” provision (sometimes referred to as a “high water mark”). This means
that if an Investor’s capital account has a net loss in any fiscal year, this loss will be recorded and carried
forward as to such Investor to future fiscal years (such amount is referred to as the “Loss Carryforward”). The
Adviser will not receive the Performance Fee from such Investor in any future fiscal year until the Loss
Carryforward amount for such Investor has been recovered (i.e., when the Loss Carryforward amount has
been exceeded by the cumulative profits allocable to such Investor for the fiscal years following the Loss
Carryforward). In the year the Loss Carryforward has been recovered, the Performance Fee shall be based
on the excess profits (over the Loss Carryforward amount) as to such Investor, rather than on all profits. The
“high water mark” procedure prevents the Adviser from receiving the Performance Fee as to profits that
simply restore previous losses and is intended to ensure that the Performance Fee is based on the long-term
performance of an investment in the Funds.
The Performance Fee charged to the SMAs is generally equal to 20% of the account’s profits above a high-water
mark, as detailed in such Client’s investment management agreement. Sio may waive, rebate, or reduce all or part
of the Performance Fee with respect to certain SMAs without waiving, rebating, or reducing the Performance Fee
charged to other SMAs.
Sio offers an alternate fee structure to investors that consists of a higher performance fee and no management fee.
Under this fee structure, investors would not be charged a management fee and would instead pay an annual
performance fee of 30% on a gross return between 0% and 10% and an annual performance fee of 40% on the
portion of the gross return that exceeds 10%.
When an Investor withdraws capital, any Loss Carryforward will be adjusted downward in proportion to the
withdrawal.
For purposes of calculating the Management Fee, a side pocket account invested in an illiquid investment
will be valued at the lower of cost (or carrying value as of the date such investment was designated an illiquid
investment) or fair value. Sio does not receive a Performance Fee on side pocket account assets until they are
reallocated into the capital accounts of the Investors. The respective Offering Documents of the Funds will
disclose the M a n a g e m e n t F e e a n d P e r f o r m a n c e F e e arrangements associated with different share
classes offered to Investors.
Sio may waive, rebate, or reduce all or part of the Management Fee and Performance F e e / P e r f o r m a n c e
Allocation with respect to investments made by certain Investors without waiving, rebating, or reducing the
Management Fee and Performance F e e / P e r f o r m a n c e A llocation charged to other Investors.
In addition, as explained in Item 4, Sio may, from time to time, enter into side letters or other similar agreements
with one or more Investors as outlined in the Funds’ Offering Documents. Sio may also, from time to time,
enter into side letters or other similar agreements with one or more separately managed accounts.
Current and prospective Investors should refer to the Client’s Offering Documents for detailed information
with respect to the fees associated with Investors in the Clients. The information contained herein is a summary
only and is qualified in its entirety by such documents.
B. Describe whether you deduct fees from clients’ assets or bill clients for fees incurred. If clients may select
either method, disclose this fact. Explain how often you bill clients or deduct your fees.
Sio deducts Management Fees and Performance Fees out of the capital account of each Investor in the Funds.
Sio will charge the SMAs for Management Fees and Performance Fees; the Client may pay the fees or other
expenses of the account directly or by payments/disbursements from the account.
C. Describe any other types of fees or expenses clients may pay in connection with your advisory services, such
as custodian fees or mutual fund expenses. Disclose that clients will incur brokerage and other transaction
costs, and direct clients to the section(s) of your brochure that discuss brokerage.
Sio’s Clients will pay expenses as outlined in their respective Offering Documents.
Sio’s Funds and SMAs will pay or reimburse the General Partner, Sio and/or their affiliates for the following
expenses:
1. Organizational Expenses
All expenses related to organizing and offering the Funds, including, but not limited to, legal fees
and accounting fees, administrator fees, director fees, and government filing fees.
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