ITEM 5 – FEES AND COMPENSATION
It is critical that Investors and Advisory Clients refer to the relevant Governing Documents for a
complete understanding of fees and expenses they pay to SoMa. The information contained herein
is a summary only and is qualified in its entirety by such documents.
A. Advisory Fees and Compensation
Management Fee
SoMa generally charges an annual Management Fee that can range from 1.0% to 2.0% of the net
assets under management, payable monthly in advance (“Management Fee”).
It should be noted that SoMa has engaged Morgan Stanley Smith Barney LLC (“MSSB”) and
Stifel, Nicolaus & Company (“Stifel”) as placement agents, whereby MSSB and Stifel will
coordinate Investor introductions for investment into SoMa funds. SoMa Management Fees
charged to investors coming through this placement agent arrangement pay higher Management
Fees, since SoMa will pay a portion of such Management Fees to the placement agent for their
assistance with ongoing servicing of these Investors. The terms of such compensation, as well as
any placement agent relationships, are disclosed to potential investors prior to investment in a
SoMa-managed fund. Please see Item 14 of this Brochure for more information regarding these
placement agent arrangements.
Performance-Based Compensation
SoMa will generally be entitled to receive a special profit allocation (the “Performance-Based
Compensation”) of the net profits (including both realized and unrealized gains and losses)
otherwise allocable to the limited partners in a Fund. The Performance-Based Compensation can
vary from 15.0% to 20.0% of a Fund’s net profits in the case of SoMa’s hedged strategy. Additional
share classes for the long only strategy include a Performance Allocation of 15% of the profit and
loss in excess of the NASDAQ Composite Index, the hurdle. Performance-Based Compensation
is typically assessed in arrears on an annual basis and is only applied to the portion of profits
that exceed the cumulative losses previously allocated or incurred by the respective Fund, subject
to a high water mark as described in applicable Governing Documents.
Advisory Fee Adjustments
SoMa, or the General Partner, has the discretion to alter, reduce or waive the standard Management
Fees and/or Performance-Based Compensation set forth in the Governing Documents. SoMa has
reduced or waived the Management Fee and Performance-Based Compensation for its initial
Investors, employees, former employees, and certain family members.
If an Investor withdraws capital during lock up periods as detailed in the Governing Documents
after initial investment in the Fund(s), it must pay the Fund a withdrawal fee that can range from
3% to 5% of the amount withdrawn. Further, if an Investor is permitted to withdraw funds on a
date other than a permitted withdrawal date, SoMa may require the investor to pay to the Fund a
withdrawal fee of the greater of $3,000 or 1% of the amount withdrawn.
Side Letters
SoMa maintains side letters with select legacy Investors that include different Advisory Fees terms
than what is described in this Brochure and its standard Governing Documents. Such side letters
are negotiated on a case-by-case basis and only for select Investors such as founding investors.
B. Payment of Fees
SoMa generally deducts its fees from Investors’ assets invested in the Funds. Investors do not have
the ability to choose to be billed individually or directly for advisory fees incurred.
Generally, with respect to the Investors, the Performance-Based Compensation is allocated from
each Investor to the General Partner at the end of each calendar year.
SoMa believes that its fees are competitive with fees charged by other investment advisers for
comparable services. Comparable services may be available, however, from other sources for
lower fees.
C. Other Client Fees and Expenses
Fees of the Administrator. The Master Funds and the Funds pay to the Administrator an asset-
based fee, subject to a minimum monthly amount, plus fixed fees for certain add-on services. These
fees are based on the Administrator’s standard fee schedule. Prospective Investors may request
additional information regarding those fees from the Funds.
Director Fees. The Funds pay the Directors of the offshore funds an annual fee and reimburses
the Directors for their reasonable out-of-pocket expenses.
Organizational Expenses. The Funds bear the costs and expenses related to the formation and
organization of the Master and Feeder Funds, offering and sales of shares or interests, and the
negotiation, execution and delivery of the organizational and governing documents of the Funds,
any side letters, investment management agreements, and related or similar documents, including
related legal and accounting fees. The organizational expenses may be amortized over a period of
sixty (60) months from the date the Fund commences operations. The amortization of
Organizational Expenses is not in accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”) and could result in an exception opinion in the auditors’ report in the Fund’s audited
financial statements if the difference between amortization and recognition of Organizational
Expenses when incurred is deemed material to such financial statements. SoMa or the offshore
Board of Directors may accelerate the amortization of Organizational Expenses in its sole
discretion.
Other Operating Expenses. The Funds bear all costs and expenses of its organization,
investment activities and operations and reimburses SoMa for any of such expenses paid by
it. These include, without limitation: (i) third-party legal and accounting fees and expenses
associated with subsequent offerings and sales of shares (including costs and expenses associated
with creating any new class of shares, or otherwise changing the structure or any term of the Fund
to accommodate any investor); (ii) trading costs and expenses (such as, for example, brokerage
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