Item 5 – Fees and Compensation
A. Describe how you are compensated for your advisory services. Provide your fee
schedule. Disclose whether the fees are negotiable.
In consideration for the investment management services provided to the Fund, the Fund deducts a
quarterly management fee from the capital account of each investor in the Fund (the “Management
Fee”) in an amount equal to a percentage of the net asset value of such account. The Management
Fee for capital accounts relating to Class A interests is 2% annually; the Management Fee for capital
accounts relating to Class B interests is 1.5% annually. The Management Fees are adjusted pro rata for
any capital contributions or withdrawals during the relevant calendar quarter. Management Fees are
payable without regard to the overall success or income earned by the Fund.
1060 Capital, in its sole discretion, may elect to reduce or waive the Management Fee with respect to
any investor, including principals and employees of the Investment Manager or its affiliates (the
“substitute management fee”). In such event, the amount of the Management Fee paid by the Fund
to the Investment Manager will be adjusted accordingly. The principals or other employees of 1060
Capital may receive a portion of the Management Fees, Incentive Allocation (defined in Item 6 below),
or other compensation received by 1060 Capital or the General Partner.
Managed Account Clients pay management and/or performance fees to 1060 Capital as negotiated
and reflected in the IMA for each Managed Account but generally are in an amount of up to 1.5%.
Investors should refer to the governing documents of the Fund or Managed Account for a complete
understanding of how 1060 Capital is compensated for its advisory services. The information
contained herein is a summary only and is qualified in its entirety by such documents
B. Describe whether you deduct fees from clients’ assets or bill clients for fees incurred.
If clients may select either method, disclose this fact. Explain how often you bill clients or
deduct your fees.
The Investment Manager deducts Management Fees from the capital account of each investor in the
Fund on a quarterly basis in arrears. The Investment Manager does not deduct fees directly from
Managed Accounts. Instead, the Accounts are either sent an invoice quarterly with the fees that are
owed to the Investment Manager, or the Investment Manager is paid directly by the Account’s third-
party administrator.
C. Describe any other types of fees or expenses clients may pay in connection with your
advisory services, such as custodian fees or mutual fund expenses. Disclose that clients will
incur brokerage and other transaction costs, and direct clients to the section(s) of your
brochure that discuss brokerage.
Subject to the limitations described below, the Fund bears such costs and expenses as reasonably
necessary, appropriate, advisable or convenient to carry on its business and realize its objective,
including without limitation: (i) organizational costs and expenses, and offering costs and expenses
incurred in connection with the sale of interests issued on the date of the initial closing; (ii) the costs
and expenses incurred in connection with the ongoing offer and sale of interests; (iii) Management
Fees and substitute management fees; (iv) direct operating costs and expenses, including
administrative, legal, accounting, auditing, record-keeping, compliance and consulting costs and
expenses (including costs and expenses associated with obtaining systems and other information
designed to facilitate Fund accounting or record-keeping, including related hardware and software);
fees, costs and expenses of third-party service providers that provide such services (including fees,
costs and expenses of attorneys retained by the General Partner or the Investment Manager to
represent the General Partner or the Investment Manager in connection with the business and affairs
of the Fund, to the extent such fees, costs and expenses relate to advice provided to the General
Partner or the Investment Manager by such attorneys with respect to such business and affairs);
insurance costs and expenses (including premiums for liability insurance covering the Fund and other
persons); fees, costs and expenses paid to the advisory board; bank service fees; costs and expenses
associated with preparing investor communications; and printing and mailing costs; (v) fees and taxes
imposed by any federal, state, local or foreign government, governmental agency or regulatory body
or self-regulatory organization, including licensing, filing, registration and exemption fees and
withholding, transfer and franchise taxes; (vi) the Fund’s indemnification obligations under the limited
partnership agreement, the IMA and other agreements to which the Fund may be a party; (vii) costs
and expenses incurred in connection with the direct investment and reinvestment of the Fund’s assets,
including brokerage commissions, dealer mark-ups, mark-downs and spreads, and related clearing and
settlement charges; (viii) borrowing charges and other costs and expenses associated with short sales;
(ix) the Fund’s indemnification obligations; and (x) any extraordinary costs and expenses, if any.
Expenses charged to the Managed Account Clients vary by account and as negotiated by each such
Managed Account.
Each of the General Partner and the Investment Manager is responsible for all salaries, bonuses and
employee benefit expenses of their principals and employees who are involved in the management
and conduct of the business and affairs of the Clients (as well as related overhead, including office
space and equipment, utilities, telephone and telecopier costs and other similar items.) For a
description of brokerage costs incurred, please see Item 12.
In good faith and in its fair and reasonable discretion, 1060 Capital determines on a case by case basis
...