Item 5. Fees and Compensation
The fees, compensation and expenses applicable to each Fund are set forth in detail in each Fund’s
Offering Document. A brief summary of such fees, expenses and compensation (all of which is qualified
by and subject to the language of the applicable Fund’s Offering Document) is provided below.
Management Fee. As the investment adviser to the Funds, Sunriver receives a management fee at a rate
that is calculated as of the first day of each calendar quarter. The management fee rate for the Long/Short
Funds is 1.5% per annum of the net assets of the Long/Short Funds that are subject to a management fee
when such assets are less than or equal to $500 million. When such assets are above $500 million, the
management fee for amounts over such threshold will incrementally decrease at certain specified asset
thresholds (resulting in a blended management fee). The management fee rate for the Long Only Funds
is 0.75% per annum of the net assets of the Long Only Funds. The management fee is deducted quarterly
in advance, is prorated for any investment period that is less than a full calendar quarter, and is refundable
if the advisory contract is cancelled prior to the end of a billing period.
While the amount of compensation and method of payment are not generally negotiable, Sunriver has,
waived or reduced the management fee for certain Investors that are members, principals, employees or
affiliates of Sunriver or relatives of such persons and for certain strategic Investors.
Other Fees and Expenses. Sunriver renders its services to the Funds at its own expense, including all of
its ordinary office overhead expenses, which include rent, supplies, secretarial/internal administrative
expenses, stationery, charges for furniture and fixtures, salaries and bonuses, employee insurance and
payroll taxes.
All other expenses will be borne by the Funds, including, as applicable, directors’ fees and expenses, proxy
agent fees, legal, accounting, tax preparation (including Foreign Account Tax Compliance Act services),
auditing and other professional expenses, administration fees and expenses, expenses relating to the
Funds’ regulatory compliance (including, without limitation, expenses attributable to regulatory filings which
are made with respect to the Funds or assets of the Funds (including, but not limited to, Form PF, Section
13 and Section 16 filings)), Fund-related insurance costs (including a portion of D&O and E&O insurance
for the Adviser and the General Partner), research expenses (including without limitation third-party
research, news and quotation subscriptions and services (including fees for data and software providers)
and conference fees), investment expenses (such as commissions, interest on margin accounts and other
indebtedness, borrowing charges on securities sold short and direct fees and expenses, such as legal fees
and due diligence expenses, related to the analysis, purchase or sale of investments, whether or not an
investment is consummated), custodial fees, bank service fees, third-party trading and/or portfolio-related
services and support, including software costs such as order management, risk management, portfolio
analytics and similar systems, expenses related to the purchase, holding, sale or transmittal of the Funds’
assets.
When the Funds invest in money market mutual funds, exchange-traded funds (“ETFs”) or other registered
investment companies, the Funds will bear their pro rata share of the investment management fee and any
other fees associated with such investments, which are in addition to any fees or other compensation paid
to the Adviser. Any expenses incurred effecting additional currency hedging transactions for a specific
share class, as determined by Sunriver, in its sole discretion, will be allocated to that share class. The
Long/Short Feeder Funds and the Long Feeder Funds will bear a pro rata share of the Long/Short Master
Fund and Long Master Fund’s expenses, respectively. Therefore, because the Long/Short Master Fund or
the Long Master Fund bear expenses that relate to all of their underlying feeder funds, each feeder fund
that directly or indirectly invests in such a master fund will bear a portion of the expenses of the other feeder
funds that invest in the same master fund, even though they are not directly benefitting from them.
Common expenses frequently will be incurred on behalf of one or more Funds. Sunriver seeks to allocate
those common expenses among the Funds in a manner that is fair and reasonable over time. However,
expense allocation decisions will involve potential conflicts of interest (e.g., an incentive to favor Funds that
pay higher incentive allocation, or conflicts relating to different expense arrangements with certain Funds).
Sunriver generally expects to allocate such common expenses among the Funds pro rata based on relative
assets under management of each Fund. Sunriver may use other methods to allocate certain common
expenses amongst the Funds if it deems such methods more appropriate based on relative use of the
product or service, the nature or source of the product or service, the relative benefits derived by each Fund
from the product or service, or other relevant factors. Nonetheless, Investors should note that the portion
of a common expense that Sunriver allocates to a Fund for a particular product or service will not always
reflect the relative benefit derived by such Fund from that product or service in any particular instance.
Sunriver’s expense allocations often depend on inherently subjective determinations and, accordingly,
expense allocations made by Sunriver in good faith will be final and binding on the Funds.
Certain Investors in certain Funds will also be subject to withdrawal fees if withdrawals are made prior to
the satisfaction of agreed-upon holding periods.
For a more detailed discussion of brokerage and transaction costs, see Item 12 – Brokerage Practices.