Item 5: Fees and Compensation
Fees and Expenses applicable to the Funds
The fees and expenses applicable to a Fund are set forth in detail in the Fund’s Offering
Documents. A general summary of the fees and expenses applicable to the Funds is
provided below.
Asset-Based Compensation paid by the Funds
Each of the Funds pays the Adviser an asset-based investment management fee each quarter
in advance ranging from 1.25% to 1.5% per annum based on the value of the net assets of
the Fund on the first business day of each calendar quarter (the “Management Fee”). The
Adviser may waive or modify the Management Fee for Fund Investors that are members,
partners, principals, employees or affiliates of the Adviser, the general partner of the Fund
(the “General Partner”), relatives or entities of such persons, and for certain large or strategic
investors.
Performance-Based Compensation paid by the Funds
As a general matter, the General Partner, which is an affiliate of the Adviser, is 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, at a rate ranging from 15% to 20%. The Incentive Allocation is subject to
a loss carryforward provision. The General Partner may waive or modify the Incentive
Allocation for Fund Investors that are members, principals, employees or affiliates of the
Adviser, the General Partner, relatives or entities of such persons, and for certain large or
strategic investors.
Expenses applicable to the Funds
In addition to bearing the Management Fee and the Incentive Allocation, the Funds will also
be subject to other expenses related to its investments and operations, such as investment-
related costs and expenses (i.e., expenses that, in the Adviser’s sole discretion, are related
to the investment of a Fund’s assets, whether or not such investments are consummated),
including commissions and charges, interest on margin accounts and other indebtedness,
expenses relating to short sales, clearing and settlement charges, option premiums and
custodial and service fees, research-related expenses (including research-related travel
expenses) and expenses relating to consultants, attorneys, brokers or other professionals or
advisors who provide research, advice or due diligence services with regard to investments;
fees and expenses related to portfolio exposure and performance management systems, risk
management services and software related to trade reconciliation, treasury, margin, financial
and counterparty management, risk monitoring, performance reporting, valuation quotation
services (e.g., Bloomberg terminals, historical and live financial data and other similar
services and data feeds) and trade order management systems (including systems that
facilitate trade compliance, commission management, stock locates and transaction cost
analysis, and third-party service providers used for implementation, custom reporting,
updates, consultations, support, maintenance, monitoring and data extracts); a Fund’s legal,
accounting, tax preparation and other tax-related expenses (including preparation and
mailing costs of financial statements, tax returns and other reports to Fund Investors),
auditing, consulting and other professional expenses; third-party administration costs, fees
and expenses (including any costs, fees and expenses related to investor communications,
relations, reporting or other investor materials, performance information, data extraction
and other types of reporting and any audit or accounting services provided by a third-party
administrator); compliance and reporting expenses and expenses attributable to regulatory
filings that are made with respect to the Fund or its assets (including Section 13, Section 16,
Form D, Form PF, the Foreign Account Tax Compliance Act, anti-money laundering
compliance, state security filings, general regulatory compliance and non-U.S. position
reporting filings, if applicable, and any other non-U.S. filings); a Fund’s pro rata share of
Fund-related insurance costs (including a Fund’s pro rata portion of director’s and officer’s
insurance, errors and omissions insurance, fidelity insurance and other similar policies
covering the General Partner and the Adviser); any taxes (including, without limitation, any
withholding taxes, transfer taxes, stamp duties and other governmental or self-regulatory
agency-related charges or duties); all costs and expenses incurred in attempting to protect
and enhance the value of a Fund investment (including any fees and expenses associated
with any pending or threatened litigation, audit, investigation, administrative or other
proceeding, as well as any settlement costs); fees and expenses related to any activist-related
activities; any fees and expenses related to a Fund’s liquidation, if applicable; fees paid to
proxy and securities class action advisory firms; expenses relating to the offer and sale of
Interests and withdrawals and transfers thereof; a Fund’s pro rata share of the expenses of
the master fund (which may include expenses of a Fund and other investment vehicles that
invest in the master fund); other reasonable expenses related to the purchase, sale,
preservation or transmittal of a Fund’s assets; and any extraordinary expenses (e.g.,
indemnification expenses).
Fees and Expenses applicable to the Sub-Advised Funds
The compensation paid to the Adviser by a Sub-Advised Fund, including asset-based fees
and performance-based fees, and the expenses payable by the Sub-Advised Fund, are
detailed in the investment advisory agreement entered into between the Adviser and the
Sub-Advised Fund, and the offering documentation of the Sub-Advised Fund.
Allocation of Expenses
The allocation of expenses by the Adviser between the Adviser and a Client, and among
Clients, represents a conflict of interest for the Adviser. The Adviser has adopted an
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