FEES AND COMPENSATION
A. Advisory Fees and Compensation.
The advisory fees applicable to the Private Fund are set forth in detail in the Private Fund’s
confidential offering memorandum and/or constituent documents. A brief summary of such fees
is provided below.
The Private Fund currently offers two classes of interests: Sub-Class A Shares and Sub-Class B
Shares (collectively, the “Interests”). The Sub-Class A Shares and the Sub-Class B Shares are
subject to different Management Fees and Incentive Allocations (as defined below).
The Private Fund pays a quarterly management fee calculated at an annual rate of 0.95% of each
shareholder’s capital account attributable to Sub-Class A Shares (the “Management Fee”). No
Management Fee is charged to a shareholder’s capital account attributable to Sub-Class B Shares.
The Management Fee is paid quarterly in advance, based on the value of each shareholder’s capital
account, as of the first business day of each calendar quarter. The Management Fee will be adjusted
for contributions and withdrawals made during the quarter.
At the end of each fiscal year, the general partner of the Private Fund (the “General Partner”) will
receive an annual Incentive Allocation equal to 20% of the net profits attributable to each Sub-
Class B Share (including unrealized gains and losses), if any, subject to a loss carryforward
provision (the “Incentive Allocation(s)”). No Incentive Allocation will be made with respect to the
net profits attributable to Sub-Class A Shares.
The Adviser, in its sole discretion, has in the past and could in the future waive or reduce the
Management Fee for shareholders in the Private Fund that are members, employees, or affiliates
of the General Partner or the Adviser, relatives of such persons, and for certain large or strategic
investors.
The Adviser may waive or modify the Incentive Allocation for shareholders in the Private Fund
that are members, employees, or affiliates of the General Partner or the Adviser, relatives of such
persons, and for certain large or strategic investors.
Shareholders and prospective shareholders should note that the Private Fund also pays certain
expenses, which are further described in section C below.
Shareholders and prospective shareholders should refer to the Private Fund’s confidential offering
memorandum for more specific information concerning the fees and expenses associated with an
investment in the Private Fund.
The advisory fees applicable to the Registered Fund are set forth in detail in the Fund’s Prospectus.
A brief summary of such fees is provided below.
The Registered Fund currently offers two classes of shares: Class N Shares and Institutional Class
Shares (together, the “Share Classes”). The Registered Fund offers these two Share Classes so
investors can choose the class that best suits their individual investment needs. The main
differences between the Share Classes are ongoing fees, as further described below. In choosing
which class of shares to purchase, investors should consider which will be most beneficial to them,
given the amount of their purchase.
With respect to its investment advisory services provided to the Registered Fund, Moerus receives
a Management Fee in the amount of 0.95%, annually, computed based upon the average daily net
assets of the Class N Shares and Institutional Class Shares.
Investors and prospective investors should note that the Registered Fund also pays certain
expenses, which are further described in section C below.
Investors and prospective investors should refer to the Registered Fund’s Prospectus for more
specific information concerning the fees and expenses associated with an investment in the
Registered Fund.
With respect to its investment advisory services provided to the SMAs, Moerus receives an
advisory fee (“Advisory Fee(s)”) applicable to each SMA as set forth in detail in the investment
management agreement (“IMA”) associated with each individual account. There are no standard
Advisory Fees. The Advisory Fees charged to each account are negotiable and will typically vary
depending on a number of factors, including, but not limited to: the type of client; the amount of
client assets under management with Moerus; the investment term to which the client commits;
the types of restrictions the client plans to impose on Moerus’ discretionary investment authority
The Advisory Fees are typically charged quarterly in arrears.
B. Payment of Fees.
Fees and compensation paid to Moerus or the General Partner by the Private Fund or the Registered
Fund are generally deducted from the assets of such Client Account as discussed below:
1) Management Fees are generally deducted on a quarterly basis, for the Private Fund, and on
a monthly basis, for the Registered Fund.
2) Incentive Allocations, where applicable for the Private Fund, are generally deducted on an
annual basis.
Fees and compensation paid to Moerus by the SMAs are generally invoiced to each SMA by the
Adviser as discussed below:
1) Management Fees are generally invoiced on a quarterly basis to each SMA Client.
C. Additional Fees and Expenses.
The Adviser renders its services to its Clients at its own expense and will be responsible for its
overhead expenses, including: office rent; furniture and fixtures; stationery; secretarial/internal
administrative services; salaries and bonuses; entertainment expenses; employee insurance; and
payroll taxes.
With respect to the Private Fund, all other expenses are paid by such Private Fund and shall
include: (i) Private Fund legal, compliance, administration expense, audit, and accounting
expenses (including third party accounting services); (ii) organizational expenses (expenses under
(i) and (ii) shall be referred to as “Capped Expenses”); (iii) risk management expenses; (iv) Private
Fund-related insurance costs (including D&O and E&O insurance for the Adviser and the General
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