Item 5. Fees and Compensation
Asset-Based Management Fee. The fee schedules for the Funds are described in detail in each respective
Fund’s offering memorandum. All Funds and Fund Investors are “qualified purchasers” as defined in
Section 2(a)(51) of the Investment Company Act of 1940, as amended (the “Investment Company Act”).
As a general matter, the Funds will pay the Adviser an asset-based investment management fee each
quarter in advance based on the value of the net assets of the respective Fund on the first day of each
quarter and adjusted for contributions or subscriptions and withdrawals or redemptions made during each
quarter (the “Management Fee”). The Management Fee is prorated with respect to any limited partnership
interests that do not participate in the Funds for the entire quarter.
The Adviser, in its sole discretion, may cause the Management Fee to be paid at the master fund level
rather than at the feeder fund level. In such event, Stone Forest Advisers, LLC (the “General Partner”) and
the Adviser will be authorized, without the consent of the investors in the Funds, to take such actions as
may be required to give effect to such change. Any such change will have no material economic impact on
the investors so that the amount of Management Fee received by the Adviser, directly or indirectly in respect
of any investor, will not be affected by the change.
The Adviser may, in its sole discretion, waive, reduce or rebate the Management Fee otherwise payable by
certain investors, including, but not limited to, its employees, affiliates, the family members of its employees
or affiliates, or for any investor, without entitling any other investor to a waiver, rebate or reduction and
without notice to or the consent of any other investor.
Performance-Based Compensation. As a general matter, the General Partner also will be entitled to receive
annual performance-based compensation (the “Incentive Allocation”) from the Funds, which is compensation
that is based on a share of net capital appreciation of the assets of a Fund.
The Incentive Allocation will be taken by the General Partner at the feeder fund level, however the General
Partner may determine, based on relevant changes in applicable tax laws or for other reasons as it may
determine, to cause the Incentive Allocation to be taken at the master fund level or to make such change
in the manner in which the applicable amounts are paid or credited (e.g., the conversion of an allocation to
a fee or vice versa or the payment of such amounts to the Adviser) as the General Partner may determine
is appropriate. In such event, the General Partner and the Adviser (if applicable) will be authorized, without
any action on the part of the investors, to take such actions as may be required to give effect to such
change. Any such change will have no economic impact on the investors so that the amount of the Incentive
Allocation or incentive fee borne by each investor will not be affected by the change.
The General Partner or the Adviser, as applicable, may waive, reduce or rebate the Incentive Allocation (or
any incentive fee) that would otherwise be imposed on certain investors, including without limitation, its
employees, affiliates, the family members of its employees or affiliates, or for any investor, without entitling
any other investor to a waiver, rebate or reduction and without notice to or the consent of any other investor.
Expenses. In addition to bearing the Management Fee and Incentive Allocation, if any, the Funds will also
be subject to other expenses related to its investments and operations, such as Fund-related legal,
compliance, administrator, audit and accounting expenses (including third party accounting, valuation and
appraisal services); organizational expenses (including a feeder fund’s pro rata share of the organizational
expenses of a master fund, if applicable); investment expenses, including, without limitation: legal,
compliance, governmental and regulatory fees, audit, tax, accounting, fees and expenses of the
administrator, fees and expenses related to risk services; valuation services; only those research expenses
(including professional fees and expenses of consultants) related to legal, compliance, government and
regulatory fees, audit, tax and accounting matters; expenses of purchasing, carrying and disposing of
portfolio positions such as commissions, interest on margin accounts and other indebtedness (but only to
the extent permitted); prime brokerage fees; custodial fees; clearing costs; exchange fees; insurance costs
(including, without any limitation, errors and omissions insurance); brokerage fees and bank charges;
extraordinary expenses, if any (e.g., indemnification expense, litigation expenses or damages); and any
other expenses related to the purchase, sale or transmittal of Funds’ assets.
The allocation of expenses by the Adviser between it and a Fund and among Funds represents a conflict
of interest for the Adviser. The Adviser has adopted an expense allocation policy that is designed to
address this conflict. The Adviser allocates expenses to each Fund in accordance with the Fund’s offering
documents. The Adviser seeks to allocate any shared expenses for products and services benefitting
multiple Funds or both the Adviser and a Fund, and not covered in the Fund’s offering documents, in a fair
and reasonable manner.
More detailed information regarding the fees and expenses paid by the Funds may be found in the offering
documents of each Fund.