ITEM 5 - FEES AND COMPENSATION
Fees and expenses payable to the Squarepoint Group for management and advisory services are set out
in the applicable Governing Documents, and investors should refer to these Governing Documents for a
full description of relevant fee calculation methodologies and expense mechanisms. These will generally
include a Management Fee (as defined below), a performance-based fee and can also include advances
or re-imbursements for expenses incurred by the Squarepoint Group.
Management Fees
For certain Funds, Squarepoint Group receives a management fee based on the gross asset value (being
the net asset value before taking into account any estimated accrued performance allocation) of that
particular Fund (the “Management Fee”). Management Fees are generally paid quarterly in advance.
Performance-Based Compensation
Squarepoint Group receives performance-based compensation, which is compensation that is based on a
share of income, capital gains or capital appreciation of the assets of a particular fund, over a specified
period and can also be subject to a high-water mark as well as other adjustments, some of which are
detailed below.
Investors should note that performance allocations where OPS is entitled to receive a proportion of the
income generated (“Income Performance Allocation” or “IPA”) by certain assets held by a Fund (the
“Shared Income Funds”, or “SI Funds”) can create a conflict of interest for the OpCos in managing these SI
Funds. The OpCos have the authority to allocate more of the Funds capital to assets that qualify for the
shared income performance allocation as opposed to investing in other assets that do not pay this
performance allocation. To manage this conflict, IPA’s are subject to sliding scales and reduce as a
proportion of the income received, the more income is generated.
For certain Funds, the performance-based fees are subject to a floor based on a percentage of the assets
under management for those funds. Any compensation received due to the fee floor that is over and above
the performance achieved by the manager for a specified period can be recouped from future performance
fees. Additionally, performance-based fees are generally paid annually, whereas AUM based fee floors
are paid quarterly. As a consequence of this feature, should an investor in the fund redeem or be redeemed
during periods when the floor has been in force and prior to any amounts being recouped, any such
amounts would not be reimbursed to the investor.
As noted further below, when sub-delegation agreements have been entered into with unaffiliated parties,
any incentive and management fees agreed with the third-party adviser will be borne by relevant Funds. For
all such Funds, the performance-based fees due to OPS will be based on the performance of the third-
party adviser net of any such agreed incentive and management fees.
Squarepoint Group has, and may in the future, waive, reduce, or modify the performance-based
compensation for a Fund (or any investor therein, as applicable). Please see Item 6 for additional
disclosures with respect to performance-based compensation and associated conflicts.
Expenses Passed Through
As compensation for services provided in respect of certain Funds (“EPT Funds”), OPS is entitled to
receive certain advances and reimbursements of Squarepoint Group operating expenses that have been
agreed between those EPT Funds and the Squarepoint Group. Operating expenses that qualify for this
treatment are related to the operations of the Squarepoint Group and may or may not be of benefit to the
EPT Funds. Payments in respect of these amounts will be made by such Funds to OPS (or another
member of the Squarepoint Group as directed by OPS) and distributed amongst the Squarepoint Group as
determined by OPS. In such circumstances, and as described in their Governing Documents, most
expenses incurred by OPS shall be borne by the EPT Funds and allocated to some but not all classes of
shares issued by each EPT Fund.
Share classes that are not allocated such expenses include management shares, and any holders of any
such class of share will not indirectly bear these costs (see also Item 7). Determinations of such expense
allocations across applicable share classes and Funds are made by OPS acting in its good faith and
reasonable discretion. Notwithstanding the foregoing, certain shares restricted to Squarepoint Group staff
will at times bear expenses related to other investment products of the Squarepoint Group and on a greater
than pro rata basis. This results in certain resources utilized by those Funds that are not EPT Funds (“Non-
EPT Funds”) being subsidized by the EPT Funds.
These expenses can be paid initially by the EPT Funds or the Squarepoint Group. To the extent that such
amounts are paid by the Squarepoint Group they will be reimbursed by the EPT Funds as described below.
Such reimbursement payment will be made to OPS or such other member(s) of the Squarepoint Group at
the direction of OPS.
Payments by the EPT Funds in respect of Squarepoint Group expenses are collected up to 6 months in
advance. Certain unanticipated or non-ordinary course Squarepoint Group operating expenses and the
full amount of Squarepoint Group capital expenditure attributable to the EPT Funds’ investment-related
activities will be advanced by EPT Funds on request by OPS in advance of becoming due or as soon as
practicable after incurrence. Advances by the EPT Funds of amounts in respect of Squarepoint Group
capital expenditure will only be deducted from the assets of the EPT Funds as they are amortized by the
Squarepoint Group. As described in the relevant Governing Documents, certain Funds’ operating
expenses are subject to a per annum cap.
The EPT Funds will also advance to the Squarepoint Group and other service providers from time to time,
on an interest-free basis, such amounts as they may require to make deposits (whether in cash, by providing
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