Item 5 FEES AND COMPENSATION
THE FUNDS
The Funds generally pay Vollero Beach a quarterly management fee (the “Management Fee”),
payable in advance (after giving effect to capital contributions and withdrawals) and expensed
monthly, at the rate of 1.5% per annum of the net asset value of the applicable Fund. Capital
contributed or withdrawn from the Funds during a quarter will be charged a ratable portion of the
Management Fee for the period invested. Vollero Beach may receive payment of the
Management Fee directly from the Feeder Funds or, at its option, from the Master Fund.
An affiliate of Vollero Beach receives an incentive allocation (the “Incentive Allocation”) equal
to 20% of the net profits (including realized and unrealized gains) of the Feeder Funds, if any.
The Incentive Allocation may be made by the Feeder Funds or by the Master Fund. The
Incentive Allocation is calculated subject to a loss carryforward whereby the Incentive
Allocation is not made until prior net losses are first recouped. If the Fund’s net assets are
reduced due to any distributions to, or withdrawals by, investors, there will be a proportional
reduction in any related loss carryforward amount that must be recouped before an additional
Incentive Allocation is incurred.
Vollero Beach or its affiliate may waive all or any portion of the Management Fee and/or
Incentive Allocation with respect to any investor.
The Funds bear certain operating expenses, including the Management Fee and external
accounting, bookkeeping, auditing and legal expenses. Such expenses include the Feeder Funds’
ratable portion of the costs and expenses of the Master Fund, including, among other expenses,
all expenses incurred in the buying, selling and holding of securities and other investments
(including, without limitation, all custody costs, commissions, markups and markdowns and
interest expense); the fees of the administrator or of any other third parties retained by the Master
Fund; and the Master Fund’s own accounting, bookkeeping, auditing and legal expenses. All
business expenses incurred in the organization of the Funds have been paid by Vollero Beach on
behalf of the Funds.
MANAGED ACCOUNTS
Vollero Beach is entitled to receive a management fee (the “Management Fee”) for the advisory
services performed on behalf of the Managed Accounts. The Management Fee rates range from
0.75% to 1.5%, as negotiated with clients, and are calculated based on the assets under
management in each respective Managed Account. In the circumstances where the Managed
Account is funded with a notional amount, the Management Fees will be calculated based on the
levered level (added exposure financed through the margin facilities at the prime broker for the
particular Managed Account), and not the notional level.
Management Fees can be paid either in advance at the start of the quarter, or in arrears at the end
of each month. Management Fees paid in advance are calculated on a quarterly basis (for the
upcoming three month period) and will be based on the assets under management at the start of
the period. Should there be an increase or a decrease in the assets under management during the
quarter due to a reallocation by the client, the difference between the Management Fees paid and
Form ADV Part 2 (Amendment March 30, 2016)
the Management Fees actually earned during the quarter can be made up through an adjustment
to the Management Fees paid for the subsequent quarter. However, fees will not be adjusted for
increases or decreases due to gains or losses in the Managed Account. Fees paid at the end of a
month will be for the one preceding month only and are typically be based on the ending assets
in that account (gross of any Management Fees or Incentive Fees (as defined below) attributed to
that month).
Vollero Beach is entitled to receive an incentive fee (the “Incentive Fee”), paid in arrears on an
annual basis, for positive performance of each Managed Account. Incentive Fees for Managed
Accounts are paid directly to Vollero Beach. The Incentive Fee rates range from 17.5% to
26.5%, as negotiated with clients, and are calculated based on the increase in the value of each
Managed Account as a direct result of positive performance of the Managed Account during the
reference period. For the purpose of calculating the Incentive Fees, the positive performance of
each Managed Account will be net of any Management Fees earned during the period. Certain
clients also have limited clawbacks and the ability to net out non-trading related expenses of the
Managed Account, such as administration, audit and prime brokerage expenses.
The Incentive Fees are calculated subject to a loss carryforward whereby Incentive Fees are not
paid until prior net losses are first recouped. Should the assets under management in a Managed
Account be decreased due to a reallocation by the client during the loss carryforward period,
there will be a proportional reduction in any related loss carryforward amount that must be
recouped before additional Incentive Fees are paid.
Management Fees and Incentive Fees are paid by the client, or the Managed Account’s
administrator, from the applicable Managed Account, or a separate account in the client’s name,
promptly after they are determined.
The fees charged to clients in the future may be the same as or different than the fees described
herein.