ITEM 5 – FEES AND COMPENSATION
Item 5.A Describe how you are compensated for your advisory services. Provide your fee
schedule. Disclose whether the fees are negotiable.
The fee schedules for the Sire Funds vary and are described in detail in each of the
respective Sire Fund’s offering memorandum. As a general matter, Sire (or an
affiliate) is paid an annual asset-based fee (the “Base Fee”) and, in some cases,
receives performance compensation (the “Incentive Allocation”).
Sire is generally paid the Base Fee quarterly in advance based on the value of the
relevant assets as of the first day of the quarter. If Sire does not provide advisory
services to an investor for a full quarter, the Base Fee charged to such investor
will be pro-rated for such period.
In addition, on each December 31st, certain investors (as described below) may
pay an Incentive Allocation to the General Partner equal to a percentage of (i) the
net profits allocated to the investor during the fiscal year that exceed the
applicable hurdle rate or (ii) the net profits allocated to the investor during the
fiscal year. An investor will only be subject to an Incentive Allocation if the
investor’s net profits exceed the hurdle rate applicable to the specific Sire Fund.
Please see below for a description of how the Incentive Allocation is calculated
for each Sire Fund.
SP and SPO
Investors in SP or SPO may elect one of the following fee options:
Fee Option A: 1% per annum Base Fee, plus the Incentive Allocation (described
below)
Fee Option B: 1.5% per annum Base Fee, no Incentive Allocation
Fee Option C: An investor’s contribution will be divided into four segments and
will be subject to a Base Fee as follows, plus the Incentive Allocation (described
below):
a. One Year Segment : 0.90% per annum
b. Two Year Segment: 0.80% per annum
c. Three Year Segment: 0.70% per annum
d. Four Year Segment: 0.60% per annum
An investor that elects Fee Option C agrees that his capital contribution, including
any capital appreciation, will be available for withdrawal over a four year period.
Fee Option D: An investor’s contribution will be divided into four segments and
will be subject to a Base Fee as follows, with no Incentive Allocation:
a. One Year Segment: 1.50% per annum
b. Two Year Segment: 1.33% per annum
c. Three Year Segment: 1.17% per annum
d. Four Year Segment : 1.00% per annum
An investor that elects Fee Option D agrees that his capital contribution, including
any capital appreciation, will be available for withdrawal over a four year period.
Incentive Allocation:
If, with respect to any fiscal year, a Fee Option A or Fee Option C investor’s
return (after deducting the Base Fee and all other expenses applicable to such
investor) exceeds the return such investor would have earned if his capital was
invested at the rate of return achieved by the S&P 500, dividends reinvested
(“S&P 500 DRI”) for such year, then 10% of such excess shall be reallocated (i.e.,
paid) to the capital account of the General Partner as of the end of such fiscal
year.
However, an investor will also not pay an Incentive Allocation to the General
Partner if the payment of the Incentive Allocation would cause the investor’s
compound net return on his investment in SP/SPO from the date such capital was
invested in SP/SPO (net of all fees and Incentive Allocations already paid to the
General Partner) (the “SP/SPO Cumulative Historical Return”) to be less than
what the investor would have earned had he invested the same amount of capital
in the S&P 500 DRI over the same time period. In the event that the investor
makes a partial withdrawal/redemption from SP/SPO, the investor’s SP/SPO
Cumulative Historical Return will be reduced proportionately to reflect such
withdrawal/redemption.
Fee Option B and Fee Option D investors are not subject to an Incentive
Allocation.
SDG
Investors in SDG will be subject to both a Base Fee and, if earned, an Incentive
Allocation or Reduced Incentive Allocation (described below).
Base Fee: The Base Fee charged is 0.75%.
Incentive Allocation/Reduced Incentive Allocation:
If, with respect to any fiscal year, an investor’s return from SDG (after deducting
the Base Fee applicable to such investor) exceeds the applicable hurdle rate
(described below), then 10% of the investor’s net profits for the fiscal year shall
be reallocated (i.e., paid) to the capital account of the General Partner as of the
end of such fiscal year. The hurdle rate ranges from 8% to 11% depending on
when the investor first invested in SDG (the “SDG Hurdle”).
An investor may also elect to pay a lower incentive allocation (“Reduced
Incentive Allocation”) if such investor agrees to have his capital contribution
available for withdrawal/redemption over a four year period. An investor electing
the Reduced Incentive Allocation option shall have his capital contribution
divided into four equal segments and the following Reduced Incentive Allocation
rate will be assessed on each segment: 10% of the net profits of the first segment;
9.2% of net profits of the second segment; 8.3% of net profits of the third
segment; and 7.5% of net profits of the fourth segment, for an average rate of
8.75%. An investor will only be subject to the Reduced Incentive Allocation if
the investor’s return exceeds the applicable SDG Hurdle.
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