Item 5 – Fees and Compensation
Detailed below is a brief summary of certain fees and expenses paid by clients. Investors and
prospective investors in a Fund should review the Fund’s Offering Documents and other
constituent materials for an additional discussion of fees and expenses with respect to that
Fund.
In addition, as described in Item 6, certain investors in the Funds also pay performance-based
compensation to the manager of each respective Fund (each, a “Manager”). And Managed
Account Clients may similarly pay performance fees, carried interest or a performance allocation
to the Adviser or its affiliates, as set forth in each Managed Account’s IMA.
Clients whose accounts predate this disclosure document may be subject to pre-existing fee
arrangements which may differ from the below schedule. Clients the Adviser may advise in the
future may bear different fees than those described herein.
Funds
Advisory Fees. The Adviser generally charges asset-based investment advisory fees (which in
other contexts are commonly referred to as “management fees”) to Funds pursuant to their
applicable IMAs. Advisory fees paid by a Fund are indirectly borne by its investors. Such
advisory fees are deducted from Fund assets and generally payable quarterly in advance.
Advisory fees are negotiated with each Fund, are compensation, and are not tied to the Adviser’s
overhead expenses or any other costs incurred by it, and the Adviser has in the past and likely
will in the future receive and retain advisory fees in excess of any such expenses and costs. The
amount of any investment advisory fee is prorated for periods of less than a full billing cycle at
the beginning or end of our provision of investment advisory services provided that sufficient
notice of such withdrawal is received by the Funds’ administrator prior to such relevant
withdrawal date as detailed in each Fund’s Offering Documents. Any prepaid amount in excess
of the prorated fee will be returned upon termination of the relevant IMA. The Adviser’s IMAs
generally impose some restrictions on a Fund’s ability to terminate the IMA. The specific
restrictions may vary depending on the Fund.
The Adviser establishes and negotiates with investors in each applicable Fund the precise
amount of, and the manner and calculation of, the advisory fees. Such Fund’s IMA and Offering
Documents received by each investor prior to its investment in the Fund set forth the amount
of, and the manner and calculation of, the advisory fees. For a Fund that is exempt from
registration as an investment company pursuant to Section 3(c)(1) of the Advisers Act, the
Adviser receives quarterly investment advisory fees from the Fund of 0.25% (equivalent to an
annual rate of 1.00%) of the Net Asset Value of each members’ capital account on the last day of
each calendar quarter.
Expenses. As discussed in more detail below, each Fund generally is responsible for all costs,
fees and expenses incurred in the organization of, the administration and operation of, and the
offering of interests in, the Fund including without limitation, all investment, legal, consulting,
accounting, marketing, printing, administrative, filing, travel and travel-related expenses.
Investors in the Funds may pay other fees such as custodial fees or cash management fees paid
directly to those providing the service. Investors in the Funds will incur brokerage and related
transactions costs (see Item 12) for the purchase and sale of their securities in the Fund. To the
extent that the Funds purchases hedges by going short, or use leverage, investors will pay
interest on short or leveraged positions either in currencies or in securities representing market
indices. If the Funds purchase securities such as ETFs to effect their short strategies, investors
would pay a fee to the sponsor of those securities. In all the aforementioned cases, investors pay
fees to parties other than the Funds or its affiliates.
The Manager, the Adviser, and/or their affiliates will advance the organizational costs of the
Funds and are entitled to reimbursement from the Funds for all amounts expended by them on
behalf of the Funds in connection with the organization of the Funds. Such organizational costs
and expenses will be treated in accordance with the U.S. Generally Accepted Accounting
Principles (“GAAP”), although the Manager may elect to modify its treatment of costs and
expenses in accordance with the needs of the Funds, including, without limitation, the
amortization of organizational costs and expenses over a period of time, generally sixty (60)
months. To the extent this results in a qualified audit opinion, the Manager may elect to expense
such costs as incurred. In the event that a Fund amortizes its expenses and terminates before
such expenses are fully amortized, the unamortized portion of the organizational expenses will
be debited against the Fund’s capital at that time, thereby decreasing amounts otherwise
available for distribution to investors.
Each Fund will bear all expenses relating to its ongoing structure and operation (either directly
or indirectly by reimbursing the Manager for amounts incurred by the Manager on behalf of the
Fund), including: (i) the Management Fee; (ii) all investment-related costs and expenses (i.e.,
expenses that, in the Adviser’s sole discretion, determines are related to the investment of the
Fund’s assets, whether or not such investments are consummated), including commissions and
charges, interest on margin accounts and other indebtedness, clearing and settlement charges,
option premiums and custodial and service fees, research-related expenses (including research-
related travel expenses) and expenses relating to consultants, attorneys, brokers or other
professionals or advisors who provide research, advice or due diligence services with regard to
investments; (iii) fees and expenses related to obtaining data and related research and analysis
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