Item 5. Fees and Compensation
The fees, performance-based compensation and expenses applicable to each Fund are set forth in
detail in each Fund’s governing and offering documents. Summaries of such fees, performance-
based compensation and expenses are set forth below. Please refer to the documents for each Fund
for a complete description of the fees, performance-based compensation and expenses an investor
in a Fund may bear.
Management Fees
The Funds pay SIR a fixed management fee (the “Management Fee”), calculated and payable
quarterly in advance, in the sum of (i) 0.50% (2.0% annualized) of the beginning net asset value
(“Net Asset Value”) of each series of shares or the beginning balance of each capital account
balance, as applicable (as described in the fund documents) with respect to the Hedged Equity
Funds and (ii) 0.375% (1.5% annualized) of the beginning Net Asset Value of each series of shares
or the beginning balance of each capital account balance, as applicable (as described in the fund
documents ) with respect to new investors in the Energy Opportunities Funds. The Energy
Transition Funds generally charge investors a management fee of 0.375% (1.5% annualized) of
net assets at the beginning of each calendar quarter. The Management Fee will be prorated or
refunded, as applicable, for additions to, and withdrawals or redemptions from, a Fund during a
quarter. The separately managed account is charged a monthly management fee based on a
percentage of the account’s net asset value.
SIR may, in its sole discretion, reduce, waive or calculate differently the Management Fee with
respect to investors that are members, partners or employees of SIR, or any of its affiliates, members,
officers or employees (collectively, “Affiliates”), or members of their immediate families, or entities
formed for the benefit of the principals, such employees or members of their immediate families
(collectively, “Related Persons”) of such persons.
Performance-Based Compensation
Generally, as of each December 31, SIR receives an annual performance-based incentive
allocation (the “Incentive Allocation”), or in the case of the Hedged Equity Offshore Fund, an
annual performance-based incentive fee (the “Incentive Fee”) as described further below.
Hedged Equity Funds
Generally, at the end of each fiscal year of the Hedged Equity Onshore Fund, 20% of the excess of
the net capital appreciation allocated to an investor’s capital account (as described in the fund
documents) for such fiscal year over the Management Fee debited to such investor’s capital account
for such year will be reallocated to SIR, subject to a loss recovery mechanism. An Incentive
Allocation will also be determined with respect to all or a portion of the net capital appreciation
allocated to an investor’s capital account for a partial fiscal year in the event of a withdrawal from
the Hedged Equity Onshore Fund other than as of the end of a fiscal year.
The Hedged Equity Onshore Fund will maintain a memorandum loss recovery account for each
capital account of an investor (a “Loss Recovery Account”), the opening balance of which will be
zero. At the end of each fiscal year, the balance in the Loss Recovery Account attributable to such
capital account will be adjusted as follows: (i) if, in the aggregate, there is net capital depreciation
with respect to such capital account since the immediately preceding date as of which a calculation
of an Incentive Allocation was made, there will be added to such Loss Recovery Account an amount
equal to such net capital depreciation; and (ii) if, in the aggregate, there is net capital appreciation
with respect to such capital account since the immediately preceding date as of which a calculation
of any Incentive Allocation was made, an amount equal to such net capital appreciation will be
subtracted from and reduce any unrecovered balance in such Loss Recovery Account, but not below
zero. For the avoidance of doubt, such net capital appreciation or net capital depreciation is
determined after payment of any Management Fee for the applicable period. In addition, the
unrecovered balance in a Limited Partner's Loss Recovery Account will be adjusted for withdrawals
of capital. Additional capital contributions will not affect a Limited Partner's Loss Recovery
Account.
Generally, at the end of each fiscal year of the Hedged Equity Offshore Fund, an Incentive Fee
will be determined with respect to each series of its shares. Additionally, an Incentive Fee will be
determined with respect to shares redeemed at other times of the year. The Incentive Fee is equal
to 20% of the increase in the net asset value of a series of shares (as described in the fund
documents) (the “Adjusted NAV”) above the Prior High NAV of such series. The “Prior High
NAV” of a series of shares is the net asset value of that series immediately after the determination
of an Incentive Fee with respect to such series (or if no Incentive Fee has yet been determined with
respect to such series, the Net Asset Value of the series immediately following its initial offering).
The Prior High NAV of a series will be appropriately adjusted for issuances and redemptions (on
a dollar-for-dollar basis for (i) issuances and (ii) redemptions made at such time as the Adjusted
NAV is the same as, or greater than, the Prior High NAV; on a pro rata basis for redemptions made
at such time as the Adjusted NAV is less than the Prior High NAV).
With respect to the Hedged Equity Funds, the Incentive Allocation or the Incentive Fee, as
applicable, is paid at the feeder fund level.
Energy Opportunities Funds
Generally, at the end of each fiscal year of the Energy Opportunities Master Fund, an amount equal
to 20% of the excess of the net capital appreciation (other than net capital appreciation in Special
Investments (as defined below)) allocated to the capital account of an investor in the Energy
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