Item 5. Fees and Compensation
Separately Managed Accounts: Management Fees
Venator charges each separately managed account a management fee which is calculated and
payable quarterly in advance at the beginning of each calendar quarter. Management fees for
separately managed accounts are calculated at the applicable rate set forth below, based on the
market value of the client’s separately managed accounts at the close of business on the last
business day of the prior calendar quarter. Clients have the option of having the applicable
quarterly management fee deducted from their separately managed account or billed and paid
outside of their separately managed account.
The management fees for separately managed accounts may be negotiated with Venator under
certain circumstances and at the sole discretion of Venator. Management fees paid in advance
will be refunded on a pro-rata basis upon termination of the investment management agreement
(contract) prior to the end of the quarter.
Annual Management Fee Schedule for Separately Managed Accounts
Market Value Annual Fee Rate
Less than $2.5 million 1.00%
From $2.5 million to less than $10 million 0.75%
From $10 million to less than $25 million 0.65%
Greater than $25 million 0.50%
Separately Managed Accounts: Other Fees and Expenses
The management fees discussed above are in addition to, and do not include, any fees, costs,
commissions, and/or expenses related to the client separately managed account including, but
not limited to, brokerage, custodial, prime brokerage, wire, and other transactional and
maintenance costs of the account. Any such fees, costs, commissions, and/or expenses related to
the account shall be incurred by the account; provided that Venator shall not cause the account to
incur any costs outside of the normal course of business without the prior written consent of the
client. These fees, costs, commissions, and/or expenses are charged by client custodians
and/or trade executing broker-dealers and are not shared in any way with Venator. For
additional information regarding brokerage practices please refer to Item 12 Brokerage
Practices in this brochure.
Hedge Fund: Management Fee and Performance Allocation
For its services to the Hedge Fund, Venator is entitled to management fees at an annual rate of
1% of each Hedge Fund limited partner’s capital account balance, calculated and paid each
calendar quarter in advance. Capital contributions from Hedge Fund limited partners accepted by
the Hedge Fund after the commencement of a calendar quarter will be subject to a prorated
management fee. Venator may reduce or eliminate the Hedge Fund management fee with respect
to any Hedge Fund limited partner in its sole discretion.
A portion of the Hedge Fund Management Fee is paid to a certain founding limited partner of the
Hedge Fund that provided the initial seed capital to the Hedge Fund (the “Strategic Investor”) in
consideration of its seed investment.
The Hedge Fund GP is entitled to a performance allocation at the end of each calendar year (the
“Hedge Fund Performance Allocation”), which is calculated and charged separately with respect
to each Hedge Fund limited partner, equal to 15% of net profits, subject to a perpetual “high
water mark.” The Hedge Fund Performance Allocation with respect to any Hedge Fund limited
partner may be waived or reduced by the Hedge Fund GP in its sole discretion.
A portion of the Hedge Fund Performance Allocation due to the Hedge Fund GP is allocated to
the capital account of the Strategic Investor in consideration of its seed investment.
Hedge Fund: Investment and Operational Expenses
The Hedge Fund bears all costs and expenses directly related to its investment program including
expenses related to proxies, underwriting and private placements, brokerage commissions,
interest on debt balances or borrowings, custody fees, travel fees, and expenses related to the
Hedge Fund’s offering and any withholding or transfer taxes imposed on the Hedge Fund. The
Hedge Fund also bears all out-of-pocket costs of the administration of the fund, including
accounting, audit and legal expenses, costs of any litigation or investigation involving the fund’s
activities, the costs, fees and expenses of any appraisers, accountants, or other experts engaged
by the General Partner as well as expenses directly related to the Hedge Fund’s investments, and
costs associated with reporting and providing information to existing and prospective Limited
Partners. However, the General Partner may, in its sole discretion, choose to absorb any such
expenses incurred on behalf of the Hedge Fund. The Hedge Fund does not have its own separate
employees or office, and it does not reimburse the General Partner or Investment Manager for
salaries, office rent and other general overhead costs of the General Partner or Investment
Manager.