Item 5: Fees and Compensation
A. Describe how you are compensated for your advisory services. Provide your fee schedule.
Disclose whether the fees are negotiable.
Fees and expenses associated with an investment in the Taproot Funds are set forth in the Offering
Documents for each Taproot Fund. Taproot receives compensation in connection with providing
investment advisory services to the Taproot Funds in the form of: (1) fixed asset-based management
fees payable quarterly in advance and (2) annual performance-based compensation allocated on an
annual basis at the end of each fiscal year (or upon an investor’s withdrawal or redemption from the
applicable Taproot Fund).
Taproot Fund investors and prospective investors should refer to the applicable Offering Documents
for detailed information with respect to how fees are paid with respect to their assets. The information
contained herein is a summary only and is qualified in its entirety by such documents.
B. Describe whether you deduct fees from clients’ assets or bill clients for fees incurred. If
clients may select either method, disclose this fact. Explain how often you bill clients or
deduct your fees.
Fees and compensation paid to Taproot or its affiliates by the Taproot Funds are generally deducted
from the assets of such clients. Management fees are generally deducted quarterly in advance and
performance compensation is generally deducted on an annual basis, in each case, as set forth in the
governing fund documents of the Taproot Funds. Management fees and performance compensation
may be waived or modified in the sole discretion of Taproot and/or its affiliates, as applicable, including
for investors who are affiliated with Taproot.
Taproot Fund investors and prospective investors should refer to the applicable Offering Documents
for detailed information with respect to how fees are paid with respect to their assets. The information
contained herein is a summary only and is qualified in its entirety by such documents.
C. Describe any other types of fees or expenses clients may pay in connection with your
advisory services, such as custodian fees or mutual fund expenses. Disclose that clients will
incur brokerage and other transaction costs, and direct clients to the section(s) of your
brochure that discuss brokerage.
Other Types of Fees or Expenses
In addition to paying management fees and performance compensation, the Taproot Funds are also
subject to other expenses, including, without limitation, the Taproot Funds’ own organizational (which
generally are amortized over a period of time), operating and other expenses. Such expenses include,
without limitation: all costs and expenses incurred in connection with fund formation and organization,
including legal and related fees and expenses in negotiating agreements, side letters and other
documents, expenses incurred in connection with the offering and sale of the fund interests (including
the preparation and amendment of the Offering Documents and other constitutional documents), and
fees and expenses incurred in connection with “world sky” matters and private placement regimes,
and Form D and blue sky and similar fees and expenses; and operating expenses of the Taproot
Funds, including, but not limited to, indemnification expenses; legal and accounting services;
independent audit and tax preparation expenses; investment related expenses, inclusive of prime
brokerage accounts, custody accounts, asset financing costs, clearing and settlement charges,
execution fees, interest expense, borrowing charges on securities sold short, commissions, other
transaction costs and fees and margin account expenses; investment-related research and data
service expenses (paid directly or paid indirectly via “soft dollars”), inclusive of third-party research,
news and quotation equipment and services (e.g., Bloomberg terminals, historical and live financial
data, fees for data and software providers, data and data analysis tools and services, and related
consultants); fees, expenses and software related to cash management, treasury, trade reconciliation,
financial and counterparty management, risk monitoring, and performance reporting; fees and costs
related to portfolio exposure and performance management systems, risk management services, data
and systems (e.g., Barra), trade order execution management systems (including systems that
facilitate trade compliance, commission management, stock locates and transaction cost analysis),
and data warehouse software; certain software development charges and third-party compute
provider costs and expenses (including, but not limited to, costs and expenses related to data storage
and backup and implementation and maintenance of servers and firewalls); investment and trading
consultant expenses; investment-related travel expenses; investment-related legal fees and expenses
(including fees and expenses incurred in responding to formal and informal inquiries); fees and
expenses of fund directors and anti-money laundering officers; insurance costs incurred in connection
with the fund’s business (including, without limitation, acquiring and maintaining cyber insurance and
D&O and/or E&O insurance liability insurance premiums with respect to fund directors, the General
Partner and/or Taproot); regulatory compliance and consultant expenses (including fees and
expenses related to compliance with the rules of any self-regulatory organization or applicable law in
connection with the activities of the Taproot Funds or any trading vehicle, e.g., any governmental,
regulatory, licensing, filing or registration fees or taxes and U.S. and non-U.S. investment related and
non-investment related regulatory filings relating to the Taproot Funds and/or assets of the Taproot
Funds (e.g., Form PF, Section 13, Section 16, Form N-PX, non-U.S. position reporting filings and
other similar regulatory filings), but not including fees or expenses incurred in connection with the
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