Item 5 Fees and Compensation
GENERAL FEE INFORMATION
Fees charged for investment advisory services are payable quarterly in arrears, based upon the
market value of the assets on the last business day of the previous quarter. Some engagements
involve payment of a fixed annual retainer fee for investment advisory services or a fixed fee for
specified services, as described below. Mainsail does not require an annual minimum fee or asset
level for it to provide investment advisory services.
Fees paid to Mainsail are exclusive of any and all custodial and transaction costs paid to a
custodian, brokers, or other third-party consultants. Each client should review fees charged by the
Adviser and others as reflected in their quarterly account statements to fully understand the total
amount of fees paid by the client for investment and financial-related services. Additional
information related to brokerage is set forth below under “Item 12 – Brokerage Practices” (page
31).
FEES FOR INVESTMENT ADVISORY SERVICES
Fees for Services to Individuals, Trusts, and Estates
Individuals, trusts, and estates can engage the Adviser to provide investment advisory services (on
both a discretionary and nondiscretionary basis) on a fee-only basis. The Adviser’s annual
investment advisory fee is generally based upon a percentage of the market value of the assets
placed under the Adviser’s management, determined as of the end of the quarter for which the
advisory fee is assessed. For certain investment products that may not have readably ascertainable
market values, our advisory fee may be charged based on a client’s invested capital. Our annual
investment advisory fee includes investment advisory services, and, to the extent specifically
requested by the client, may also include financial planning and consulting services, for which an
additional fee may be charged. Clients are charged quarterly in arrears in accordance with the
following fee schedule:
Assets Under Management % of Assets
First $0 - $500,000 1.25%
Next $500,001 - $1,000,000 1.00%
Next $1,000,001 - $2,000,000 0.80%
Next $2,000,001 - $5,000,000 0.70%
Next $5,000,001 - $10,000,000 0.60%
$10,000,001+ 0.50%
Alternative Fee Arrangements: Adviser, in its sole discretion, will charge a modified investment
advisory fee and/or charge a fixed annual retainer fee based upon certain criteria (e.g., anticipated
future earning capacity, anticipated future additional assets, dollar amount of assets to be managed,
related accounts, account composition, prior fee schedules, competition, negotiations with client,
etc.). Although Mainsail does not require an annual minimum fee or require a minimum asset level,
the Adviser reserves the right to charge a fixed annual retainer fee based upon the facts and
circumstances of the advisory relationship. As a result, similar clients could pay different fees,
which will correspondingly impact a client’s net account performance. Moreover, the services to
be provided by the Adviser to any particular client could be available from other advisers at lower
fees. All clients and prospective clients should be guided accordingly. Since the Adviser’s
representative receives a portion of the advisory fee charged to the client, a material conflict of
interest arises, because an increase in the management fee paid by the client may result in increased
compensation received by the Adviser’s representative. Additionally, the Adviser is incentivized
to undertake riskier investments with the hope of generating higher returns, thus increasing the
asset base on which a client’s advisory fee is based.
In the event Adviser enters into fixed retainer fee arrangement with the client, the client’s annual
fee may exceed the amounts reflected in the above fee schedule.
Fees for Services to Businesses and Other Entities
Adviser’s investment advisory fee for businesses and other entities is based upon various objective
and subjective factors, including, but not limited to, the scope, complexity, and duration of the
engagement. The fee is typically based on a percentage of assets under management (generally the
same as reflected in the table above under “Fees for Services to Individuals, Trusts, and Estates”),
or a fixed fee, or both. See also “Alternative Fee Arrangements” disclosure above.
Fees for Services to Pooled Investment Vehicles
When providing services to the First Avenue Vehicles and other Sponsored Vehicles, Mainsail and
its related persons may be compensated for its advisory services based on a percentage of assets
under management (for example, commitments, invested capital, or net asset value) and can also
receive performance-based compensation from a Sponsored Vehicle, as described below and in
more detail in the offering documents of the applicable Sponsored Vehicle.
Paragraph 1 — Fees Paid to Mainsail
Mainsail provides advisory services to its clients who choose to invest in the First Avenue Vehicles
and other Sponsored Vehicles. In certain circumstances Mainsail also provides advisory services
directly to the Sponsored Vehicles. Mainsail clients who invest in a Sponsored Vehicle pay
Mainsail an advisory fee pursuant to the agreed-upon fee structure between Mainsail and that client,
which is generally based on either an assets under management model or a fixed annual retainer.
The Sponsored Vehicles are included as advisory assets of the client, with fees calculated based on
either the total capital invested by the client in the Sponsored Vehicle or the net asset value of the
...