ITEM 5: FEES AND COMPENSATION
A. Advisory Fees and Compensation
For its advisory services to the Fund, VIP receives a quarterly management fee calculated at a
rate of 1% per annum (0.25% per quarter) of the net assets of the Fund (the "Management Fee").
VIP may, in its sole discretion, reduce, waive and/or calculate differently the Management Fee
with respect to individual investors in the Fund.
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For purposes of determining the Management Fee, special situation investments, as defined in
the Fund’s private placement memorandum, and special investments of the underlying portfolio
of private investment funds, will be valued at cost, or the value of the special investment as of
the date such special investment was declared.
At the end of each fiscal year, there will be a reallocation (“Performance Allocation”) to the
General Partner from the capital account of each underlying investor in the Fund equal to 10% of
Class A and 7% of Class B investor net profits, subject to a loss carry forward provision and a
hurdle rate. VIP may, in its sole discretion, waive or reduce the Performance Allocation with
respect to any of the underlying investors of the Fund.
The Management Fee will be prorated for any capital contribution or withdrawal by an investor
that is effective other than as of the first day of a quarter. In the event that the Fund is terminated
or an investor withdraws other than at the end of a fiscal year, then for purposes of determining
the Performance Allocation allocable at such time to the General Partner, net capital appreciation
will be determined as if such dates were the end of the fiscal year, subject to certain adjustments.
B. Payment of Fees
The management fees are paid quarterly in advance, based on each investor’s capital balance as
of the beginning of that quarter. Appropriate fee amounts are deducted from each underlying
investor account on a monthly basis. VIP deducts such fees directly from the cash accounts of
the Fund.
The Management Fee is generally paid on a quarterly basis, whereas the Performance Allocation,
if any, is reallocated at year end directly to the General Partner.
C. Additional Fees and Expenses
VIP is responsible for and will pay, or cause to be paid, all ordinary office overhead expenses of
the Fund, including rent, supplies, secretarial expenses, stationary, charges for furniture and
fixtures and compensation of investment and administrative personnel. All other expenses are
paid by the Fund and include legal, audit, accounting and other professional expenses, research
expenses and investment expenses such as commissions, interest on margin accounts, custodial
fees and other reasonable expenses related to the purchase, sale or transmittal of Fund Assets.
In addition to the Fund’s direct expenses, the Fund, as an investor in the Portfolio Funds, will
indirectly bear its pro rata share of the expenses of the Portfolio Funds. These indirect expenses
include the Fund’s pro rata share of each Portfolio Fund’s investment expenses (such as custodial
fees and brokerage commissions) and may include overhead expenses (such as rent, personnel
expenses, equipment, supplies, management and consulting fees and similar expenses). The
Fund will also bear a pro rata share of the Portfolio Funds’ management fees and performance
fees or allocations. Specifically, the Managers to Portfolio Funds may charge a (i) fixed basic
fee and (ii) a performance fee or allocation based upon a percentage of any profits of the
Portfolio Fund.
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D. Prepayment of Fees
Quarterly management fees paid by the Fund to VIP are paid in advance, with any allowances or
differences made up in the following quarter.
E. Additional Compensation and Conflicts of Interest
Given the nature of its operations, VIP does not receive compensation outside of the fees
mentioned above, and does not believe that it has any conflicts of interest.