Item 5: Fees and Compensation
Management Fee. The Fund pays an asset-based management fee to Triaxiom that is
calculated monthly in advance. The management fee is generally 1.75% per annum of the
value of the Fund’s assets under management. The initial investor (founders’) class pays
1.5% per annum.
The separate account also pays an asset-based management fee in the same range as the Fund.
The management fees paid by each separate account client are individually negotiated and set
forth in that client’s separately managed account agreement.
Performance Compensation. In addition, Triaxiom is entitled to a special allocation of net
profits experienced by the investors in the Fund, called an “incentive allocation.” The
incentive allocation is generally calculated and paid annually, generally in an amount equal to
20% of the net profits (realized and unrealized), if any, from the performance of the Fund.
The incentive allocation with respect to the founders’ class is 17.5%. An incentive allocation
is also calculated and allocated upon an investor’s withdrawal or redemption from a Fund, but
only on the amount withdrawn. Payment of the incentive allocation to Triaxiom is subject to
a “high water mark:” paid only after losses, if any, have been recovered.
Triaxiom Capital, LLC Form ADV Part 2A
The separate account client also pays Triaxiom performance compensation: an incentive fee
based on net profits similar to the incentive allocation allocated by the Fund. The amount of
the incentive fee may differ among separate accounts.
Triaxiom will only charge any performance fees to clients and fund investors that are
“qualified clients” as defined in paragraph (d) of Rule 205-3 under the Investment Advisers
Act of 1940, as amended (the “Investment Advisers Act”) and otherwise in accordance with
the provisions of California CCR Section 260.234.
Payment. Triaxiom deducts management fees (calculated by the Fund’s administrator) from
the Fund’s assets (each investor’s account, as applicable), and incentive allocations annually
and when investors withdraw. Fund investors do not have the ability to choose to be billed
directly for fees incurred. The Fund calculates management fees in advance (based on the
size of its assets at the beginning of the month), which is debited to (deducted from) investor
capital accounts. If an investor were permitted to withdraw during the month (which could
happen only in extraordinary circumstances), that investor would not receive a refund of any
pre-paid management fees.
For the separate account, Triaxiom calculates and charges the management fee monthly in
arrears (as of month-end). To the extent there are net profits after recovery of any prior
losses, incentive fees are calculated and charged annually, as of the end of the year, to the
separate account. The payment procedure for the current separate account client is the
following: Triaxiom calculates the management fee and incentive fee; sends the invoices to
both the client and the custodian; and the client, upon review of the invoice, instructs the
custodian to make the payment to Triaxiom. Triaxiom, therefore, does not deduct, and does
not instruct the custodian to deduct, any fees directly from the separate account. Triaxiom
may agree with other clients through those clients’ separately managed account agreement for
direct deduction of the management and incentive fees.
As a general matter, fees and other compensation are negotiable in certain circumstances and
arrangements with particular investors and separate account clients may vary.
The foregoing represents Triaxiom’s basic compensation arrangements. Although Triaxiom
believes its fees are competitive and reasonable in light of the type of services Triaxiom
provides and in light of Mr. Lee’s experience and expertise, lower fees for comparable
services may be available from other investment advisers.
Expenses. In addition to Triaxiom’s investment management fees and incentive
allocations/fees, the Fund also bears all expenses incurred in connection with its investment
activities. Those expenses reduce returns. Expenses include investment expenses such as
futures transaction costs, exchange fees and commissions and brokerage commissions; fees of
the Fund’s administrator; legal, accounting and audit fees and expenses; governmental fees
and taxes; bookkeeping and other professional fees; costs of investor meetings and other
communications with investors; and all other reasonable costs related to the management and
operation of the Fund, as disclosed in the Fund’s Offering Memorandum.
Separate Account Expenses. Each separate account bears its own expenses such as
investment-related expenses and such other expenses as specifically agreed between Triaxiom
and the client, as detailed in the separately managed account agreement.
Please see “Item 12: Brokerage Practices” in this Brochure for further information on
arrangements that may relieve Triaxiom from certain costs and expenses.
Neither Triaxiom nor any of its supervised persons accepts commissions or other
compensation for the sale of securities or other investment products.
Triaxiom Capital, LLC Form ADV Part 2A