Item 5 - Fees and Compensation
Compensation and Fee Schedules
In consideration of the investment management services provided, SPQI charges management fees
to its clients as well as performance-based fees (see Item 6 below for a discussion of performance
fees). Clients generally pay SPQI a management fee of up to 2% of assets under management per
year, monthly or quarterly in advance. In the case of SMAs, which initially are trading the Futures
Strategy only, management fees are generally deducted from individual client accounts and paid
to SPQI by the custodian. The management fees paid by SMAs are separately negotiated with each
client as set forth in each client’s IMA, and may be changed from time to time as agreed between
SPQI and such client.
With respect to the Funds, fees are paid directly from the Funds. SPQI is authorized under the
Funds’ offering documents and other governing documents (collectively, the “Governing
Documents”), in its sole discretion, to elect to reduce or waive all or a portion of the management
fee based on factors it considers relevant, such as the size of an investor’s account, an investor’s
relationship to SPQI and its employees and its affiliates, and strategic relationships to name a few.
Management fees are typically waived or reduced with respect to SPQI, its affiliates and their
respective members, principals, employees, consultants, directors, owners, relatives and friends,
including retirement or estate planning vehicles for the benefit of such persons.
The following is a schedule of the fees paid to SPQI with respect to the Funds:
SPQI Equity Market Neutral Fund L.P. (Founders Class) 1.0% Management Fee
15% Incentive Fee/Allocation
SPQI Equity Market Neutral Fund L.P. (General Class) 1.5% Management Fee
20% Incentive Fee/Allocation
Deduction of Fees; Timing of Payments; Termination
SPQI is authorized under the IMA in effect with each SMA client from time to time to either (1)
charge and deduct management fees directly from the assets in each custodial account, thereby
reducing such client’s capital account by the amount of such fees, or (2) bill the management fee
to the client, in each case on terms negotiated with each such client and set forth in each IMA.
Each IMA may be terminated as negotiated between SPQI and the SMA client. Upon termination
of the IMA or an SMA client withdrawing capital, any prepaid, unearned management fees will
be promptly refunded, and any earned, unpaid fees will be due and payable to the Firm.
SPQI is also authorized under the Funds’ Governing Documents to charge and deduct management
fees directly from the assets of the Funds. Payment of management fees to SPQI by the Funds is
determined as of the beginning of each month, after giving effect to any capital contributions made
as of the first business day of the month, in accordance with the terms of the Governing
Documents. The specific manner that management fees are charged by SPQI is stated in each
Funds’ Governing Documents, the terms of which supersede this Brochure. The Funds do not
provide for the rebate of any portion of a management fee after it has been paid; because
redemptions and withdrawals are only permitted as of the last day of a month, there is no
foreseeable circumstance under which a claim for a rebate of management fees could arise.
Other Fees and Expenses
In addition to the management fees discussed above, clients typically bear expenses borne by the
Funds (directly or indirectly) that are related to the Funds’ investment, operating and
administrative expenses (“Expenses”).
Expenses paid by clients may include:
• Organizational and initial offering costs and expenses;
• Brokerage commissions and other costs of executing transactions;
• Investment expenses and all other expenses related to the purchase, sale, transmittal or
custody of investments;
• Investment research expenses, including Bloomberg;
• The cost of trading, research and/or data screens, as well as risk management and data
services and systems;
• Custody fees and expenses;
• Third-party legal, accounting, audit, tax and other professional fees and expenses;
• Other professional fees, administrator, director, registered office expenses and taxes;
• Regulatory expenses incurred in connection with the Fund’s regulatory and self-regulatory
filings, reporting, and registrations;
• Insurance (including a portion of the premiums for any directors’ and officers’ coverage
purchased by SPQI), and may include premiums for an ERISA fidelity bond;
• Costs associated with the ongoing offering of the Funds, excluding any third-party
marketing costs; and
• Any indemnification payments and other extraordinary expenses.
The Governing Documents contain full information regarding the above, and supersede this
Brochure.
Other fees and expenses arising from the trading or administration of a SMA will generally be
charged to such SMA client’s account as agreed to in the IMA.
Expenses applicable to more than one Fund or client are allocated in a fair and equitable manner
among clients.
Neither SPQI nor any of SPQI’s supervised persons receive compensation in connection with the
sale of securities or other investments to the Funds.