Falmouth Investment Company, Inc.
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For pooled investments, Falmouth Investment Company, Inc. ("Falmouth"), an affiliate of Paragon, will form a private investment company and will serve as manager member to such entity. Falmouth provides investment advisory services to the investment pools, including the formation and organization of the pool, performing due diligence on investment managers to be utilized by each pool, ongoing monitoring and performance evaluation of the managers and annual accounting for each pool.
Falmouth will charge an administrative fee to such entity for providing the investment advisory services. Falmouth generally charges a fee for the organization of each pool, then an annual asset management fee, paid quarterly in advance, for the ongoing services provided to each fund. This fee will cover the due diligence time, the time involved in monitoring and reporting on the underlying investment activities of the selected managers and the administration of cash receipts and disbursements. The annual administrative fee typically ranges from 0.4% to 1% of the net asset value of the individual investment pool. In some instances, the administrative fee may be calculated as a percent of capital committed to the pool by its investors. For certain investment pools, Falmouth charges an additional distribution fee of a percentage of cash distributions in excess of capital commitments. In addition to the management compensation paid to Falmouth, the managers of the Underlying Investment Funds will charge advisory and/or incentive fees to the funds in which the Company's capital is invested. Thus, investors will pay two levels of advisory fees for the management of their assets in these pools, one directly to Falmouth and one indirectly to the Underlying Investment Funds. In some cases, Falmouth may defer fees until the entity has a profit in any year. The fee for each pool is based on the amount of anticipated involvement that Falmouth may have in the investment.
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