Item 5 Fees and Compensation
Clients are charged an annual management fee based upon the portfolio management strategy selected
by the client. The Firm’s standard fee schedules for each strategy are set forth below:
Broad High Yield Market
55 basis points (“bps”) per annum on assets up to and including $50 million
50 bps per annum on assets greater than $50 million up to and including $100 million
45 bps on assets greater than $100 million up to and including $300 million
40 bps on assets greater than $300 million
Short Duration High Yield
55 bps on assets up to and including $50 million
50 bps on assets greater than $50 million up to and including $100 million
45 bps on assets greater than $100 million
The Firm’s management fees are negotiable based upon multiple factors, including but not limited
to the size of the account, nature of the investments to be made, servicing requirements applicable
to the account, and other factors that may be deemed significant by the Firm in any instance.
Accordingly, separately negotiated management fees paid by a particular client can vary from the
otherwise standard fees set forth in the schedule above.
7 of 31
SKY Harbor Capital Management, LLC
In addition to, or in place of, the above asset-based fees, and as further described in Item 6 below,
occasionally, SKY Harbor has entered into arrangements that provide for compensation based upon
the gains generated in a client's account. Such arrangements are individually negotiated with the
client.
SKY Harbor’s management fees are typically charged monthly or quarterly in arrears, based on
the net asset value of the account as of the last day of the preceding applicable period after
accounting for additions or withdrawals. Typically, unless otherwise directed by the client, the
Firm itself performs the valuation of each client’s portfolio and calculates management fees in
accordance with each client's Investment Management Agreement. Valuations generally are
the sum of the cash and market value of the securities in the account as determined by an
independent pricing service. Such market values may not precisely match valuations calculated
by a client's custodian for reasons more fully set forth in Item 15 below. Clients are generally
invoiced for the management fees on a monthly or quarterly basis and pay such fees by check or
wire transfer.
With respect to the non-US registered open-end investment management company and the
remaining Private Fund managed by the Firm, valuations are performed by the respective
unaffiliated fund administrators in accordance with the respective Prospectus or Offering
Memorandum. The Firm’s management fees are paid monthly in arrears, based on the accrued daily
net asset value or the net asset value as of the last day of the preceding month of the Private Fund
after taking account of contributions or withdrawals during the billing period.
Because management fees will be paid in arrears, there are no unearned prepaid fees that need to
be refunded upon termination of a client account during a calendar quarter. A prorated management
fee will be charged on accounts opened or terminated during an interim period.
Additional Fees and Expenses
In addition to the Firm’s management fees described above, clients are responsible for the
payment of other charges and fees that may be assessed by the custodians maintaining their accounts,
the broker-dealers transacting for their accounts and/or by other third parties. These may include
"bid-ask spreads" charged by broker-dealers on fixed income transactions (i.e., the difference
between the prices for which a broker-dealer is willing to buy or sell a particular security),
brokerage commissions on any equity trades that are effected (which are expected to be limited, given
the Firm’s primary focus on high yield fixed income securities), custodial fees, foreign currency
hedging costs, where applicable, wire transfer and electronic fund transfer processing fees, and other
fees charged by third parties. Additional information about SKY Harbor’s brokerage practices is
set forth in Item 12 below. SKY Harbor does not receive any part of the third-party fees or charges
described above, and none of the persons associated with SKY Harbor receive, directly or indirectly,
any compensation for the purchase or sale of any securities or other investments in a client account.
8 of 31
SKY Harbor Capital Management, LLC