Item 5 Fees and Compensation
As outlined in our Investment Management Agreements, we shall receive the following compensation
related to our management of the Funds:
Advisory Fees and Compensation
Deepwater Asset Management, LLC's fee schedules for Funds and Separate Accounts provide for the
payment of (i) a management fee at a rate of 0.5% to 2.5% per annum of the value of the assets of the
Fund or Separate Account, and (ii) an incentive fee or allocation calculated at the end of each
calendar year equal to 15% to 20% of the net profits during the year, subject to a loss
carryforward provision, or based on the outperformance above the S&P 500 Total Return Index for the
relevant year.
Payment of Fees
For the Funds, fees charged are deducted from the Funds' assets. Management fees are paid
quarterly in advance with respect to certain Funds and in arrears with respect to certain other Funds.
Incentive allocations are calculated and payable annually (and in certain cases more frequently upon
the withdrawal of capital). For the Separate Accounts, the management fee is calculated and billed
quarterly or calculated monthly and billed quarterly to the investor in arrears. Incentive fees are
calculated and billed annually to the investor (and in certain cases more frequently upon the withdrawal
of capital). Fees are generally payable within 30 days of receipt of the fee statement.
ETF Fee Structure
Deepwater is an adviser to a range of exchange-traded funds (ETFs), each with its own specific fee
structure. The services and fees with respect to such Clients are negotiated on an individual basis.
Generally, fees for the management of these ETFs are assessed as a percentage of the fund's daily
net assets and are factored directly into the net asset value (NAV) of each ETF.
• Management Fees: These are annual fees calculated daily from the fund's assets and
subtracted from the fund's NAV. The specific management fee rate varies by ETF and
compensates Simplify for the portfolio management, trading, administrative, and operational
services provided.
• Total Expense Ratios: In addition to management fees, each ETF may also incur various
operating expenses, such as costs for custodial services, compliance, legal and audit fees,
among others. These expenses are combined with the management fees to form the total
expense ratio, which is also expressed as a percentage of the fund's average daily net assets.
The total expense ratio reduces the fund's NAV and is a critical factor for investors to consider
when evaluating the cost efficiency of the fund. Please refer to the specific ETF prospectus for
further details of fees and expenses.
Sub-Advisory Services
We provide sub-advisory services pursuant to a sub-advisory agreement between the adviser and an
investment adviser registered with the SEC. Fees and payment arrangements are negotiable and will
vary on a case-by-case basis. All RIC information is contained in the Fund materials.
Other Fees and Expenses
Other fees and expenses generally payable by the Funds and/or Separate Accounts include: legal,
accounting and administrative, auditing and other professional expenses, investment expenses such
as commissions, borrowing charges on securities sold short, interest on margin accounts and other
indebtedness, custodial fees, bank service fees and any other reasonable expenses related to the
purchase, sale or transmittal of Fund/Separate Account assets. Clients may not be subject to one or
more of the expense items described above.
Prepayment of Fees
The management fee charged to the Funds is paid quarterly in advance with respect to certain Funds
and in arrears with respect to certain other Funds. The management fee is prorated for any period that
is less than a full quarter.
Additional Compensation and Conflicts of Interest
Deepwater Asset Management, LLC nor any of its supervised persons accept any form of
compensation for the sale of securities or other investment products.
Fees are negotiable and will be set forth in our Investment Management Agreement and the Operating
Agreement of the Fund.
Additional Fees and Expenses
The funds will pay a fee to Deepwater Asset Management, LLC which is partially used to pay certain
fees, costs, expenses, and liabilities relating to the operation of the funds, research fees, third-party
administrator fees and third-party professional fees.
As part of our investment advisory services, we may invest, or recommend that you invest in exchange
traded funds. The fees that you pay to our firm for investment advisory services are separate and
distinct from the fees and expenses charged by exchange traded funds (described in each fund's
prospectus) to their shareholders. These fees will generally include a management fee and other fund
expenses. You will also incur transaction charges and/or brokerage fees when purchasing or selling
securities. These charges and fees are typically imposed by the broker-dealer or custodian through
whom your account transactions are executed. We do not share in any portion of the brokerage
fees/transaction charges imposed by the broker-dealer or custodian. To fully understand the total cost
you will incur, you should review all the fees charged by exchange traded funds, our firm, and others.
For information on our brokerage practices, refer to the Brokerage Practices section of this brochure.
Our Investment Management Agreements may be terminated by either party only for cause upon 45
days' written notice of termination. Guaranteed payments will be prorated to the date of termination;
any accrued portion of the unpaid guaranteed payments will be paid to us by the Fund; any unearned
portion of prepaid guaranteed payments will be refunded by us.