Item 5: Fees and Compensation
The fees applicable to each Fund are set forth in detail in each Fund’s offering documents. A
brief summary of such fees is provided below.
Management Fee
The Fund is charged a monthly management fee, in arrears, generally based on the net asset
value of the assets under management, typically at a rate between 1.0% and 2.0% per annum.
In Smith Cove's sole discretion, the Management Fee may be waived, reduced or calculated
differently with respect to certain Investors, including the Fund General Partner. The Fund
General Partner will not be charged the Management Fee. Without the consent of the Investors,
the Management Fee may be charged to, and paid by, the Master Fund instead of the Feeder
Funds.
Smith Cove Capital Management LP Form ADV Part 2A
Other Types of Fees or Expenses
In addition to the Management Fee, each Feeder Fund will bear its own expenses and its pro
rata share of the Master Fund’s expenses and any trading subsidiary’s expenses, including,
without limitation, the following: (i) expenses related to the research, due diligence and
monitoring of actual and prospective investments (whether or not consummated) and the
consummation of investments, including, without limitation, the following: third-party
investment sourcing fees; fees charged by the Investment Manager or its affiliates to provide
investment sourcing services to, or on behalf of, the Fund or any trading subsidiary, provided,
however, that such sourcing fees do not exceed the rate typically charged by third parties
engaged in such sourcing; fees and expenses related to obtaining research and market data
(including, without limitation, any information technology hardware, software or other
technology incorporated into the cost of obtaining such research and market data); due
diligence expenses including, without limitation, consulting and appraisal fees; travel
expenses; brokerage, prime brokerage and futures commission merchant fees, commissions
and expenses; expenses relating to short sales; clearing and settlement charges; custodial fees
and expenses; bank service fees; interest expenses and fees related to financings or
refinancings; fees and expenses of proxy research and voting services; and fees and expenses
of third-party professionals, including, without limitation, consultants, investment bankers,
attorneys and accountants; (ii) organizational and reorganizational expenses; and
(iii) operational expenses, including, without limitation, the following: fees and expenses
relating to information technology hardware, software or other technology (including,
without limitation, costs of software licensing, implementation, data management and
recovery services and custom development) used to research investments, evaluate and
manage risk, facilitate valuations, facilitate accounting functions, facilitate compliance with
the rules of any self-regulatory organization or applicable law (including, without limitation,
reporting obligations), facilitate and manage the order execution of Securities or otherwise
manage the Fund, the Master Fund or any trading subsidiary, such as Bloomberg terminals,
portfolio management systems, risk management systems and order management systems;
fees and expenses of third-party risk management products, models and services; third-party
administrative fees and expenses; loan administration costs; fees and expenses of third-party
professionals, including, without limitation, consultants, valuation service providers,
attorneys and accountants; the costs of any litigation or investigation involving activities of
the Feeder Fund, the Master Fund or any trading subsidiary; third-party audit and tax
preparation expenses; fees and expenses (including, without limitation, director registration
fees) of any trading subsidiary’s directors; costs of preparing and distributing reports and
notices; entity-level taxes; expenses incurred in connection with negotiating and complying
with provisions of any Side Letter Agreement; fees and expenses related to compliance with
the rules of any self-regulatory organization or applicable law in connection with the activities
of the Feeder Fund or any trading subsidiary, including, without limitation, any governmental,
regulatory, licensing, filing or registration fees or taxes; expenses incurred in connection with
the offering and sale of the Interests and other similar expenses related to the Feeder Fund
(excluding fees payable to any placement agent); extraordinary expenses, including, without
limitation, the following: indemnification expenses; fees and expenses incurred in connection
with any tax audit by any U.S. federal, state or local authority, including, without limitation,
any related administrative settlement and judicial review; and fees and expenses incurred in
connection with the reorganization, dissolution, winding-up or termination of the Fund or any
trading subsidiary.
Smith Cove Capital Management LP Form ADV Part 2A
Generally, all expenses borne by the Funds, other than the Management Fee and any expenses
that the General Partner determines should be allocated to a particular Investor or Investors
(e.g., Investor-Related Taxes), will be debited to all of the capital accounts on a pro rata basis
in accordance with their investor percentages. To the extent that expenses to be borne by the
Funds are paid by the General Partner or the Investment Manager, the Funds will reimburse
such party for such expenses.
The Fund does not have a pre-determined limit on its ordinary or extraordinary operating
expenses. The Fund’s actual annual operating expenses are disclosed in the Fund’s year-end
audited financial statements, which are provided to each Investor.