ITEM 5: FEES AND COMPENSATION
Accounts generally pay monthly or quarterly asset-based management fees and incentive fees or
allocations to Monsoon Capital or the relevant GP, as applicable. Performance-based fees or
allocations (“incentive allocations”) and related conflicts of interest are described in greater detail
in Item 6.
Management fees will be pro-rated when Monsoon Capital provides services for less than a full
month and, if paid in advance, will be refunded. Incentive allocations are assessed periodically
in accordance with a Monsoon Fund’s Governing Documents or an Account’s governing
agreement and will also be assessed upon withdrawal of capital by an Investor or liquidation of
a Monsoon Fund, if such withdrawal or liquidation occurs on a date other than the standard
assessment date. Except with respect to private equity Accounts managed by Monsoon Capital,
incentive allocations are generally calculated and charged separately with respect to each capital
contribution or subscription made by an Investor without any “netting”, as described in a
Monsoon Fund’s Governing Documents. Private equity Accounts pay incentive allocations
pursuant to the distribution waterfall described in the relevant Monsoon Fund’s Governing
Documents.
Certain strategies or Monsoon Funds may impose fees or charges upon contributions or
withdrawals in certain circumstances to cover the costs of investing in or withdrawing from the
relevant funds. Such charges, which typically will not exceed 3% of the amount being contributed
or withdrawn, are payable to and benefit the Monsoon Fund and do not inure directly to the
benefit of Monsoon Capital or any GP (although such charges may have an effect on the size and
value of the Monsoon Fund which, in turn, affects Monsoon Capital’s management fee and its, or
a GP’s, incentive allocations). Monsoon Capital or the Monsoon Fund’s GP may waive, modify or
reduce such fees, in its sole discretion.
The particular fees applicable to Monsoon Funds and Accounts employing each strategy are
described below (and, in more detail, in the Monsoon Fund’s Governing Documents); however,
Investors should be aware that fees may change over time and that different fee schedules may
apply if Monsoon Capital adopts new investment strategies, establishes additional Monsoon
Funds in an existing strategy or opens Accounts for clients other than Monsoon Funds (e.g.,
separately managed accounts).
Additionally, specific fee arrangements applicable to any Investor or Account are subject to
negotiation and Monsoon Capital or a GP may waive or reduce management fees, in its discretion,
based on the nature of the strategy and services to be provided by Monsoon Capital, total market
value invested with Monsoon Capital, regulatory and reporting requirements, requested
customization, and any other relevant factor, including employment or familial relationships with
Monsoon Capital or the principals thereof. Thus, different Investors in the same Monsoon Fund
may pay different fees based on, among other things, waivers and investment dates.
In particular, Monsoon Capital expects to waive or reduce management fees and incentive
allocations for Investors who are employees or affiliates of Monsoon Capital and for cross-
investments by another Monsoon Capital Monsoon Fund. Additionally, the GP’s capital account
will not be subject to management fees or incentive allocations (though such incentive allocations
may be accomplished through transfers from relevant Investors’ capital accounts to the GP’s
capital account). Except as otherwise agreed, Monsoon Capital is not obligated to waive or reduce
fees for any other Investor when offering such waivers or reductions to a particular Investor.
Overview of Fees
The following is a brief overview of the fee structure of the Monsoon Fund. A more complete
description of the Monsoon Fund and its investment strategy appears in the Monsoon Fund’s
Governing Documents, which shall govern in the event of any inconsistency.
Real Estate Strategy
Each Investor pays a quarterly management fee, in advance, equal to one-quarter of 1.0% per
annum of all the Investor’s capital contributions and is assessed an incentive allocation equal to
a percentage between 20% and 25% of the net appreciation in the Investor’s capital account(s)
above an 8% Preferred Return, which percentage ratably increases within a stated range based
on the gross internal rate of return of the portfolio as a whole. The GP and/or Monsoon Capital
also has discretion to modify material terms for certain Investors and may impose sanctions if an
Investor defaults on its capital commitment.
Other Information With Respect to Fees
Responsibility for Additional Charges and Costs
Each Monsoon Fund typically pays its own operating expenses, separate and apart from the
advisory fee, or otherwise reimburses the GP, Monsoon Capital or such personnel or affiliates, for
these and other services as well as for certain organizational and offering expenses related to the
Monsoon Fund. Such services, and any expenses or reimbursements related thereto, will
generally be provided and described in accordance with the Monsoon Fund’s Governing
Documents. Similarly, each Account that is not a Monsoon Fund will pay its own operating
expenses to the extent any such expenses arise.
Operating expenses typically include custodial charges, brokerage fees or commissions and
related costs and expenses, taxes, duties and other governmental charges, transfer fees,
registration fees and other expenses and charges associated with the purchase, holding or sale of
assets, costs and charges associated with making deposits in connection with foreign exchange
transactions, withholding taxes payable and required to be withheld by issuers, their agents or
others, and audit, administrative and other expenses necessary or appropriate to the Monsoon
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