Item 5: Fees & Compensation
MSP earns an asset-based management fee in accordance with each Fund’s limited partnership
agreement or similar subscription document. Management fees are typically paid quarterly in
advance and can be as high as 2% of net capital commitments during a Fund’s investment
period and thereafter, based on invested capital. MSP is also eligible to earn a performance-
based fee of 20% of recognized gains above a preferred return. MSP, in its sole discretion, may
waive or enter into a different fee structure, including reduced management and/or
performance-based fees with respect to the commitments of one or more investors including
with respect to affiliated persons of MSP.
Each Fund bears all of its own operating expenses, including, without limitation, (a)
organizational and offering expenses, including reasonable placement fees payable in respect of
each Fund to placement agents approved by MSP or its affiliates; (b) expenses of unaffiliated
service providers including custody, legal, prime brokerage, banking, tax, audit, administrators,
consultants, compliance, information technology providers, depositaries and accountants and
other similar outside advisors; (c) costs and expenses incurred in identifying, evaluating,
arranging, negotiating, structuring, trading, or settling any transaction contemplated for
investment by each Fund (regardless of whether such transaction is subsequently
consummated), including, without limitation, any travel, legal, tax and accounting expenses,
and the fees and expenses of third party providers providing data, deal sourcing and/or
acquisition due diligence and other support services, in connection therewith; (d) out-of-pocket
costs, fees and expenses of monitoring, holding, hedging, valuing or selling portfolio
investments, including record-keeping expenses; (e) out-of-pocket costs of reporting to Fund
investors, preparing tax returns and Schedule K-1s and of any meetings of investors, and of any
meeting of each Fund’s advisory committee; (f) any taxes, fees or other governmental charges
levied against each Fund or on its income or assets or in connection with its business or
operations; (g) costs and expenses of computer software specific to the affairs of each Fund; (h)
insurance; (i) costs of any audit, investigation, proceedings, litigation and threatened litigation;
(j) indemnification obligations; (k) liquidation expenses; (l) capital payments, interest and other
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expenses in respect of indebtedness for borrowed money; (m) extraordinary expenses including
fees and expenses associated with any tax or other audit, investigation, proceeding, regulatory
matter, settlement or review of the Fund; (n) costs and expenses related to each Fund’s
compliance with applicable laws including expenses relating to regulatory filings (or portions
thereof) that the Investment Manager, the General Partner or their respective affiliates are
required to make in connection therewith (including, if applicable, Form PF expenses); and (o)
all other reasonable costs and expenses properly chargeable to the activities of each Fund.
Each Fund will, when necessary and as permitted within each Fund’s governing documents, call
capital to pay for such expenses. MSP typically deducts fees from a Fund’s assets.