ITEM 5. FEES AND COMPENSATION
As provided under the governing documents of the Funds, YCM or its affiliates will receive from the
Master Fund and Long Focused Master Fund both a management fee (the “Management Fee”) and an
annual performance allocation based upon the performance of the Funds, as described further below.
Although YCM has entered into agreements with the Funds providing for the below fees, YCM and the
General Partner may negotiate alternative fees on a client-by-client basis with other funds or separate
account clients that they manage in the future. Different client facts and circumstances will be considered
in determining such fees, including the client’s investment strategy, assets under management, account
composition, reporting requirements, economies of scale, if any, and any other factors YCM or the
General Partner deem relevant. All such fees will be set forth in agreements with such clients.
Management Fee
Master Fund
YCM charges the Master Fund an annual management fee of 1.35% of the capital account balance of each
limited partner of the Master Fund calculated and payable monthly in advance. Subscription proceeds
received after the first day of a month will incur management fees as if the subscription had been received
on the first day of the month. Generally, fees are not negotiable, provided, however, YCM may reduce or
eliminate the Management Fee with respect to any limited partner of the Master Fund in its sole
discretion.
Long Focused Master Fund
YCM charges the Long Focused Master Fund an annual management fee of 1.0% of the capital account
balance of each limited partner of the Long Focused Master Fund calculated and payable monthly in
advance. Subscription proceeds received after the first day of a month will incur management fees as if
the subscription had been received on the first day of the month. Generally, fees are not negotiable,
provided, however, YCM may reduce or eliminate the Management Fee with respect to any limited
partner of the Long Focused Master Fund in its sole discretion.
For purposes of calculating the Management Fee for the Master Fund and the Long Focused Master Fund,
capital account balances include an investor’s share of net realized and unrealized profits and losses,
interest, dividends and other gains or losses. There is currently no provision for refunding management
fees in the event the investment management agreement between YCM and a Fund is terminated before
the end of a month after Management Fees have been paid.
Performance Allocation
Master Fund
As of the close of each fiscal year, a performance allocation is debited against the capital account of each
limited partner of the Master Fund and simultaneously credited to the capital account of the General
Partner. The performance allocation is equal to 15% of each limited partner’s allocable share of net
profits of the Master Fund for the fiscal year. The performance allocation is subject to a modified “high
water mark” limitation. Thus, if a net loss occurs in a fiscal year that results in a limited partner’s capital
account balance at the end of such fiscal year being lower than such limited partner’s capital account
balance as of the close of the last year in which a performance allocation was made (or, if no such
performance allocation has been made, the capital account balance at establishment), then the
performance allocation shall be 10% of such capital account’s allocable share of net profits, if any, until
such time as the capital account has been allocated subsequent net profits in an aggregate amount equal to
250% of the net losses allocated to such capital account since the establishment of the existing high water
mark. Thereafter, the performance allocation reverts to 15%. Net profits are calculated net of
management fees and all other expenses of the Master Fund, but before the performance allocation. If a
limited partner makes a withdrawal at a time when its capital account balance is below its “high water
mark” level, the level is ratably reduced to reflect such withdrawal. The performance allocation is
generally calculated and charged to each limited partner at the end of each fiscal year. A performance
allocation is also calculated and charged (i) with respect to any limited partner permitted or required to
withdraw, (ii) with respect to a limited partner making a partial withdrawal of such limited partner’s
capital account, as of any time other than the close of a year on the basis of net profits allocated to such
limited partner through the withdrawal date (but only with respect to the amount withdrawn on a pro rata
basis in the event of a partial withdrawal), (iii) with respect to any limited partner effecting a transfer of
its interest in the Master Fund, upon the admission as a substitute limited partner of a person to whom any
interest of such limited partner has been transferred; and (iv) upon the final distribution to a limited
partner following the dissolution of the Master Fund.
Long Focused Master Fund
The General Partner is entitled to a performance allocation (a “Performance Allocation”) at the end of
each Performance Period (as defined below), which is calculated and charged separately with respect to
each capital account of each limited partner for each Performance Period, equal to 12.5% of the amount,
if any, by which the Performance Change for such capital account, exceeds the sum of (i) the Loss
Carryforward Account for such capital account, plus (ii) the Performance Hurdle for such capital account.
No Performance Allocation will be debited from a capital account of a limited partner until the Loss
Carryforward Account for such capital account is reduced to (but not below) zero. Performance Period
means, with respect to each capital account of each limited partner, the period commencing as of the date
of the establishment of the capital account (in the case of the initial Performance Period) and thereafter
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