Item 5: Fees and Compensation
5.A. Adviser Compensation
FE ETF
Pursuant to the investment advisory agreement, FE ETF pays Fundsmith an annual management
(unitary) fee of 1.00% of the Fund’s average daily net assets. Fundsmith provides investment advisory
services and pays all of the FE ETF’s operating expenses in return for a “unitary fee,” except that the
FE ETF is responsible for the payment of brokerage and other expenses of executing FE ETF
transactions; taxes or governmental fees; interest charges and other costs of borrowing funds; litigation
and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of
the FE ETF’s business.
The Private Funds
In compensation for the sub-advisory services provided to the Private Funds, Fundsmith is entitled to
receive an annual fee equal to a percentage of the management fee received by its affiliate, Fundsmith
LLP. The section below titled “Item 10.C. Material Relationships or Arrangements” provides
further information on the arrangement between Fundsmith and Fundsmith LLP.
Unaffiliated Funds
The management fees for sub-advisory services that Fundsmith provides to Unaffiliated Funds are
separately negotiated between Fundsmith and the clients but will typically be based upon a percentage
of assets under management.
5.B. Direct Billing of Advisory Fees
The annual management fee is paid monthly by FE ETF to Fundsmith, as soon as practicable after the last
day of each month.
The billing process for Unaffiliated Funds will vary depending on the individual client; however, it
will typically involve monthly or quarterly invoicing or client-provided calculations, which will be
subject to Fundsmith’s review. Fundsmith is not authorized to charge and deduct fees directly from
Unaffiliated Funds.
5.C. Other Non-Advisory Fees
Private Funds
The Private Funds (with certain exceptions described in the Governing Documents) pay for all costs
and expenses incurred in connection with the investments in their accounts, which may include (but
may not be limited to):
(i) the fees and expenses payable to the custodian;
(ii) expenses incurred in acquiring and disposing of investments, including brokerage commission,
fiscal charges and other disbursements which are necessarily incurred in effecting transactions
for a Private Fund and normally shown in contract notes, confirmation notes and difference
accounts as appropriate (Please refer to “Item 12. Brokerage Practices” for further information
on Fundsmith’s execution arrangements);
(iii) fees and expenses for Private Fund administration, pricing, valuation, fund accounting and
related services;
(iv) any cost incurred in preparing, printing and distributing reports, accounts, statements, contract
notes and other like documentation;
(v) any fees, expenses or disbursements of any legal, tax or other professional adviser of the Private
Fund;
(vi) any costs incurred in taking out and maintaining any insurance policy in relation to the Private
Fund and/or the general partners or Fundsmith;
(vii) interest on permitted borrowings and charges incurred in effecting or terminating such
borrowings or in negotiating or varying the terms of such borrowings;
(viii) taxation payable in respect of the Private Fund assets or on the issue or withdrawal of interests;
(ix) the audit fees of the auditors and any properly incurred expenses of the auditors;
(x) any costs incurred in amending the Private Fund’s LPA or PPM;
(xi) any amount payable by the Private Fund under any indemnity provisions contained in the LPA
or any agreement with any service provider to the Private Fund;
(xii) any costs incurred in the formation of the Private Fund and the offering of the interests; and
(xiii) any other payments permitted to be paid out of the assets of the Private Fund as provided in the
LPA, as described in greater detail in the Governing Documents for each Private Fund.
FE ETF
FE ETF’s expenses include taxes, interest, fees and salaries of the fund’s trustees and officers who are
not trustees, officers or employees of FE ETF’s service contractors, SEC fees, state securities
qualification fees, costs of preparing and printing prospectuses for regulatory purposes and for
distribution to existing shareholders, advisory and administration fees, charges of the custodian and of
the transfer and dividend disbursing agent, certain insurance premiums, outside auditing and legal
expenses, costs of shareholder reports and shareholder meetings and any extraordinary expenses.
Subject to certain exceptions discussed above, Fundsmith provides investment advisory services and
pays all of the FE ETF’s operating expenses in return for a “unitary fee.”
Unaffiliated Funds
The expenses of an Unaffiliated Fund will vary depending on the individual client, however such
expenses will typically be similar to those described above under “Private Funds”.
5.D. Advance payment of fees
Management fees are not due in advance.
5.E. No Compensation for Sale of Securities or Other Investment Products
Neither Fundsmith nor its supervised persons will receive any compensation with respect to the
purchase or sale of securities or other investment products.