Item 5 – Fees and Compensation
Portfolio Management Fees for Trust Clients
As compensation for the investment management services provided under the IMAs, Clients agree to pay
to the Investment Manager a monthly investment advisory fee. Investment fees vary based on whether
the monies invested are for private investments, U.S. Trust Funds, or Canadian Trust Funds. Canadian
Trust Funds are charged a total annual fee of 10 bps while U.S. Trust Funds are charged based on AUM
under management according to the chart below (the “Advisory Fee”). Management fees for publicly listed
securities (cash and cash equivalents) held within the U.S. and Canadian trusts are calculated based on
the net asset value of the portfolio at the close of each month. All fees are charged in arrears and clients
receive a bill rather than the adviser deducting the fee from the clients account(s).
All assets held in Client accounts will be subject to the Advisory Fee, including assets, such as cash, that
are temporarily awaiting investment. To the extent that Client engages Investment Manager any time after
the first day of month, the Advisory Fee will be prorated from the date of engagement through the end of
the month.
Kahu Capital Partners, Ltd. P a g e |4
U.S. Trust Assets under Management Fees (basis points)
$0 - $500 million 60 bps
$500 million - $1 billion 50 bps
$1 billion + 40 bps
Private Investment Management Fees
The Investment Manager charges Canadian and U.S. private investments 100 bps of AUM based on the
average net asset value for each fiscal year, payable monthly. If a Canadian investment originated prior to
the effective date of the Investment Manager taking over management of the monies, the advisory fee is
only 10 bps. If a US investment originated prior to the effective date of the Investment Manager taking
over management of the monies, the advisory fee is only 60 bps. All assets held in Client’s account will be
subject to the Advisory Fee, including assets, such as cash, that are temporarily awaiting investment.
The Investment Manager also charges a performance fee of 20% on private investments the Investment
Manager brings into the fund, including but not limited to non-publicly listed equity, debt and structured
products. The performance fee is subject to a high-water mark and is calculated on a per private investment
basis. The performance fee is calculated and accrued quarterly and paid out annually after the 4th quarter.
Any Client charged a Performance Fee shall be a “qualified client” as defined in Rule 205-3 under the
Advisers Act. For more information on the performance fee, please see Item 6 below.
General Fee Information
The Investment Manager may amend and/or increase the fees assessed on an Account provided such Client
is given written notice of the amendment 30 days in advance. While the information provided represents
the general fee structure of the Investment Manager, fees are subject to some negotiation.
Under each IMA, the Client has appointed Argent as the custodian to carry their account (the “Custodian”).
Client authorizes the Custodian to charge his or her account the amount of Advisory Fee, and to remit such
fees to Investment Manager in accordance with Client’s instructions. Client acknowledges that it is Client’s
responsibility to verify the accuracy of the Custodian’s calculation of the Investment Manager’s fee.
Fund Management Fees
The Investment Manager receives a management fee paid monthly in arrears equal to 0.125% (1.5% per
annum) of the ending Capital Account balance of each Limited Partner or Fund investor for such calendar
month. The Capital Account of a Limited Partner making a withdrawal other than the last day of a month
will be charged a pro rata portion of the Management Fee immediately prior to such withdrawal based on
the number of days elapsed during such month and the portion withdrawn from such Capital Account.
Currently, all Funds charge the same fee amounts.
Other Fund Expenses
All expenses of the Offering and organization of the Partnership (including legal and other expenses)
(“Organizational Expenses”) will be paid by the Fund and/or reimbursed by the Fund to the extent paid by
the Investment Manager. The Organizational Expenses will be amortized and charged to the Partners’
Capital Accounts on a monthly basis over a period of five (5) years commencing from the launch of the
Fund’s investment activities.
The Fund also pays (or reimburses the Investment Manager ) for all ordinary and reasonable operating and
other expenses necessary for the Fund’s operations, including, but not limited to, investment-related
expenses (e.g., brokerage commissions, clearing and settlement charges, custodial fees, interest expenses,
expenses relating to consultants, brokers or other professionals or advisors who provide research, advice
or due diligence services with regard to investments, appraisal fees and expenses); research costs and
expenses (including fees for news, quotation and similar information and pricing services); legal expenses
(including, without limitation, the costs of on-going legal advice and services, blue sky filings and all costs
and expenses related to or incurred in connection with the Investment Manager’s compliance obligations
under applicable federal and/or state securities and investment adviser laws arising out of its relationship
to the Partnership, as well as extraordinary legal expenses, such as those related to litigation or regulatory
investigations or proceedings); the Management Fee; accounting fees and audit expenses; administrative
fees; tax preparation expenses and any applicable tax liabilities (including transfer taxes and withholding
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