ITEM 5 FEES AND COMPENSATION
Compensation earned by the Firm for the provision of investment advisory services to our clients
is primarily comprised of management fees based on a percentage of assets under management
during the investment period. In certain circumstances, the Firm charges performance fees for its
services as further described herein. Fees and compensation are described within the Governing
Documents for each client account that we manage.
Except as noted below, all advisory fee invoices are sent to Clients at the end of each calendar
quarter for services rendered in the prior quarter. Fees are deducted directly from Client custodial
accounts if the Client has consented to such deductions in writing. Clients may request that fees
not be automatically deducted and, depending upon the custodian used, the Firm seeks to
accommodate those requests. For certain wrap fee program Clients, invoices related to advisory
fees are sent directly to the wrap fee program sponsor and advisory fees are paid directly by the
wrap fee program sponsor to the Firm. In such cases, no individual Client invoices are generated
by the Firm.
Note that management fees are generally calculated either by the custodian (in case of Registered
Fund accounts) or by the Administrator or TJH as per the Governing Documents (in the case of
Private Funds or SMAs).
TJH, through its Valuation Committee, oversees the valuation of securities. The Valuation
Committee maintains procedures requiring, to the extent possible, pricing from an independent
third party pricing vendor as determined by its approved pricing hierarchy. The Valuation
Committee also looks to other observable inputs for its valuations. If a vendor price or other
observable inputs are unavailable or deemed unreliable, the Valuation Committee makes a
reasonable determination of a security’s fair value.
The following is a general description of fees typically charged by TJH for each type of client.
However, some fees fall outside of the stated ranges, and fees may be negotiated in certain
circumstances. Investors and clients should refer to the Governing Documents for complete
information on fees and compensation.
Advisory Fees for the Registered Fund
In its capacity as investment manager to the HERZ Fund, TJH is entitled to receive an investment
management fee in the amount of 1.25% of the Fund’s net assets and an incentive fee of 10% of
returns that surpass a 9% hurdle. Registered Fund fees and expenses are described in the Registered
Fund’s proxy materials, prospectus and statement of additional information.
Advisory Fees for Private Funds
In its capacity as investment manager to the Private Funds, TJH typically receives an investment
management fee that ranges from 0.75% to 1.50% of the respective Fund’s net assets, depending
upon share class and other factors applicable to specific investors. In addition, TJH is entitled to
receive from the Private Funds’ investors a performance-based fee (also known as an incentive
allocation) equal to 10% of the appreciation in an investor’s capital balance during the year, subject
to various contingencies such as a hurdle rate, high water mark and/or other conditions. TJH Private
Fund fees are described in more detail in each Private Fund Offering Memorandum and/or
respective Limited Partnership Agreement or other Governing Documents. See Section 6 below for
a description of Performance Based Fees.
Advisory Fees for SMAs
The basic fee schedule for separately managed accounts ranges from 0.50% to 1.50% of assets
under management depending on product, asset type, and size of account. Generally, the fee
schedule for separately managed accounts is fixed after negotiation with the client or the
applicable wrap fee program sponsor and may be lesser or greater than the range set forth above
depending upon a client’s specific requirements.
Fees are generally billed quarterly, in advance or in arrears, based on the market value of the
account(s) as specified in the investment management agreement or other Governing Documents.
In addition to securities, market values include cash, cash equivalents, accrued dividends and other
income. If an account is opened or closed during a billing period, the advisory fees are pro-rated
for that portion of the billing period during which the account was open. TJH may agree to certain
fee reductions or waivers. Any such agreements are memorialized in writing.
General Information
Fees may vary from the applicable schedules above based on factors such as client type, asset class,
pre-existing relationship, service levels, portfolio complexity, number of accounts, account size or
other special circumstances or requirements and are negotiable in some cases. Some existing clients
pay higher or lower fees than new clients. Related accounts may be aggregated for fee calculation
purposes in certain circumstances. TJH will manage some accounts of TJH’s employees, affiliate
employees, former employees, or their family members without an advisory fee.
When TJH calculates fees, unless otherwise provided in a Client’s investment management
agreement, valuations of account assets are determined in accordance with TJH’s valuation
procedures, which generally rely on third party pricing services, but may permit the use of other
valuation methodologies in certain circumstances. TJH’s determinations may differ from valuations
reflected in a client’s custodial statements.
Other Fees and Expenses
TJH may invest in closed-end funds, open-end funds, exchange traded funds (ETFs), exchange
traded notes (ETNs), and other pooled investment vehicles on behalf of its clients. When TJH
invests client assets in such vehicles, unless otherwise agreed and where permitted by law, the
client will bear its proportionate share of fees and expenses as an investor in such vehicles in
addition to TJH’s investment advisory fees.
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