Item 5 - Fees and Compensation
Asset-Based and Performance Compensation
The Adviser is compensated for its investment advisory services through management fees, which
are generally calculated as a percentage of assets under management. The specific fee arrangements
are set forth in the applicable client agreements or governing documents.
In addition to management fees, certain clients, including certain pooled investment vehicles, pay
performance-based compensation (e.g., incentive fees or incentive allocations). Such compensation
is generally based on the performance of a client’s account or capital, measured relative to a specified
benchmark or return threshold and may be subject to features such as hurdles, high-water marks
and loss carryforward provisions, as set forth in the applicable client agreements or governing
documents. This compensation may be paid to the Adviser or to a related person of the Adviser.
Where the Adviser acts as sub-adviser or in a similar capacity, it receives a portion of the
management fees and/or performance fees received by the appointing party as agreed with the
appointing party.
The Adviser may negotiate fees with clients and certain clients have entered into separate
agreements or side letters with the Adviser or a pooled investment vehicle that provide for different
fee arrangements. The fee applicable to any particular client is determined based on a variety of
factors, including, but not limited to, the investment strategy being employed, the client’s investment
objectives and guidelines, the amount of assets under management, the scope and nature of the
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services to be provided, the involvement of an intermediary or sub-advisory relationship, any pre-
existing relationship with the client and other relevant considerations. As a result, not all clients pay
the same fee.
Fees on investments in pooled investment vehicles by principals, employees or those affiliated with
the Adviser or relatives of such persons are waived entirely.
Client Billing Practices
Management fees are typically payable quarterly in arrears and are calculated based on the market
value of the client’s assets under management as of the end of the applicable billing period. For
separately managed accounts the Adviser invoices clients and does not deduct management fees
from assets. If a client’s investment management agreement is terminated or a withdrawal is made
from a client account during a quarter, the management fee payable to the Adviser will be calculated
based on the value of the assets on the termination date or withdrawal date and prorated for the
number of days during the quarter in which the investment management arrangement was in effect
or such amount was in the account.
For clients invested through pooled investment vehicles, management fees are deducted directly
from the vehicles’ assets based on the value of each investor’s interests therein as of the last day of
the applicable period and are charged in arrears. If a new client account is established during a billing
period or a client makes an addition to its account during a quarter, the management fee will be
prorated.
In the case of separately managed accounts, performance-based compensation is generally paid
annually by invoice to clients, while in the case of pooled investment vehicles, it is typically affected
through an allocation of profits. The timing, methodology, and terms of such compensation will vary
by client and are set forth in the applicable investment management agreement or fund
documentation.
Other Fees and Expenses
In addition to paying management fees, and if applicable performance-based compensation, clients
will also be subject to other investment expenses in accordance with the client’s investment
management agreement such as brokerage commissions, research fees, transaction fees, custodial
fees, transfer taxes, wire transfer fees and electronic fund fees, and other fees and taxes charged to
security transactions which are unrelated to the fees collected by the Adviser.
Investors in pooled investment vehicles also bear, as more fully described in the applicable fund
documents, legal, compliance, audit and third-party accounting expenses, fees of the administrator,
fees and expenses related to various filings (or portions thereof) made in connection with managing
the portfolio, organizational expenses, research fees and expenses, bank service fees and other
expenses reasonably related to the purchase, sale or transmittal of assets of the funds.
The allocation of expenses by the Adviser between it and any client and among clients represents a
conflict of interest for the Adviser. To address this conflict, the Adviser has adopted policies and
procedures for the allocation of expenses. The Adviser allocates expenses to each client in accordance
with the client’s arrangements with it (including applicable client disclosures). The Adviser seeks to
allocate shared expenses for products and services benefitting it and clients and not covered in client
arrangements in a fair and reasonable manner. The Adviser allocates common client expenses
among multiple clients, pro rata based on gross assets under management as of the beginning of each
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fiscal period in which the expenses are paid. The Adviser may deviate from this standard allocation
method if it determines that an expense disproportionately benefits a particular client or group of
clients.