Two Sigma Investments LP

Item 5. Fees & Compensation
Asset-Based Compensation

Many Clients pay the Adviser management fees (“Management Fees”). For the substantial
majority of private investment funds that pay Management Fees, such fees are deducted by the
Client’s custodian from the Client’s account under the Adviser’s instructions. In its capacity as a
sub-adviser to a registered investment company and as an investment manager to UCITS, the
Adviser receives Management Fees from the primary investment adviser (or in the case of the
UCITS, the management company) of each such entity. The Management Fees are typically based
on the Client’s assets under management and are determined based on an annualized rate.
Currently, such fees have annualized rates of up to 4%, as described in each such Client’s
Applicable Governing Documents (though, as noted below, such rates are higher or lower for
certain investors in Clients). The Management Fees are generally payable monthly or quarterly in
advance or in arrears, depending on the Client.

The Adviser has waived the Management Fees for most Proprietary Funds (as defined below), and
has reduced and/or modified the Management Fees for certain investors in other Clients, including
for Proprietary Capital (as defined below), and may do so in the future. Similarly, the Adviser
(and/or its affiliate, as applicable) has substituted the Management Fees in whole or in part with
incentive allocations or incentive fees as agreed with investors in Clients and may do so in the
future.

Performance-Based Compensation

The Adviser or its affiliate, Two Sigma Principals, LLC (“TSP”), serves as the general partner,
member, allocation shareholder or similar entity, as applicable, of many Clients, and is entitled to
receive performance-based compensation from certain Clients based on a share of capital gains or
capital appreciation of the assets of a Client, in some cases as measured above an applicable
benchmark. Performance-based compensation may be in the form of incentive fees paid to the
Adviser, or an incentive allocation paid to TSP (“Incentive Compensation”). Incentive
Compensation generally ranges from 12.0% to 42.5% of the net profits (in certain cases, above an
applicable benchmark) for each calendar quarter or year. Incentive Compensation is generally
subject to adjustment for unrecovered net losses (or underperformance relative to an applicable
benchmark), subject to certain other adjustments and provisions. Where applicable, the Incentive
Compensation is paid to the Adviser from such Client, or deducted from the Client’s account by
the Client’s custodian, generally as of the close of each such calendar quarter or year. Incentive
Compensation is allocated from investor accounts at Clients to the account of TSP following the
Adviser’s instructions.

The Adviser or TSP, as applicable, has waived the Incentive Compensation for all Proprietary
Funds, and has reduced and/or modified the Incentive Compensation for certain investors in other
Clients, including for Proprietary Capital.

Other Fees and Expenses

Clients typically are responsible for their own operating and investment expenses, including: fees,
costs and out-of-pocket expenses incurred in connection with the formation of a Client; external
legal, auditing, accounting, administration, registered office, trustee, tax return preparation and
other professional fees and expenses; fees and expenses of the Client’s directors, where applicable,
including the costs associated with meetings; fees and expenses of the Client’s administrator; out-
of-pocket costs of the Client’s reporting to regulatory authorities; taxes, fees and governmental
charges or filing fees (including foreign marketing registration and filing fees and expenses); fees
and expenses of prime brokers, futures commission merchants, dealers, custodians, sub-
custodians, transfer agents and registrars; expenses of registering or qualifying securities and other
investments; brokerage commissions and dealer collateral and other fees, charges, payments,
expenses and other costs of trading, acquiring, monitoring or disposing of any investments of the
Client (including, for the avoidance of doubt, exchange membership fees and expenses related to
trading, acquiring, monitoring or disposing of any investments in preparation for an inflow or
outflow of capital); research expenses, including fees and expenses of any third-party research,
data, recommendations and/or services used by the Adviser in its investment decision-making
process (e.g., in connection with the use, implementation and support of alpha capture systems
and/or any other contributor platforms, including those developed by third parties, the Adviser
and/or its affiliates); fees and expenses of valuation and/or pricing services and software; interest
expenses; expenses of preparing and distributing reports, financial statements and notices to
investors in the Client; litigation and other extraordinary expenses; certain insurance expenses
(including fees for directors’ and officers’ liability insurance); and other expenses as detailed in
the Client’s Applicable Governing Documents. Where applicable, Clients also pay their pro rata
share of the expenses of the underlying investment vehicles in which they directly or indirectly
invest.

Please refer to Item 8 of this brochure for further discussion of conflicts of interest with respect to
Client expenses. Please refer to Item 12 of this brochure for further discussion of the Adviser’s
brokerage practices, including the use of soft dollars to pay for research.

Item 7. Types of Clients
The Adviser provides advisory services to Clients that are private investment funds, consisting of
commingled vehicles and funds of one, as well as sub-advisory or investment management
services, as applicable, to various entities, including a registered investment company and a
UCITS. Clients are typically organized as Delaware limited partnerships and Delaware limited
liability companies, Cayman Islands exempted companies or other similar structures. Certain of
the Adviser’s Clients rely on the exemption set forth in Section 3(c)(7) or, in the case of
“employees’ securities companies,” the exemption set forth in Section 6(b) of the U.S. Investment
Company Act of 1940, as amended (“Investment Company Act”).

Clients organized as private investment funds are generally organized in master-feeder structures
wherein each feeder fund invests all or a portion of its assets into a master fund. Most master
funds, and certain Clients not set up in master-feeder structures, then invest all or a portion of their
assets into investment trading vehicles managed by the Adviser. Other than for cash management
purposes, the vast majority of investment activities on behalf of the Clients are currently through
the trading vehicles. Further, certain stand-alone funds and master funds invest, directly or
indirectly, in commingled funds, trading vehicles and/or cash management vehicles. The structure
of any given Client is described in further detail in the Applicable Governing Documents.

With respect to Clients, initial and additional subscription minimums, if any, are disclosed in the
Applicable Governing Documents referencing such Client. The Adviser is typically authorized to
waive, reduce or modify such subscription minimums, subject to certain limitations in accordance
with applicable law or regulation.