MSRESS III Manager LLC

Item 5 – Fees and Compensation
Fee rates are subject to negotiation and may be higher or lower than the fees charged to other
clients. The Adviser is not required to inform, or offer any similar arrangements to, any other client
or investor, except as agreed with each such person or as required by applicable law.
Management Fees
An affiliate of the Adviser is paid a quarterly management fee in arrears (the “Management Fee”)
ranging from 0.25% to 0.5% of the net asset value of the Fund in respect of each series of units of
the Fund as of the end of each fiscal quarter (i.e., an annual rate ranging from 1% to 2%). In 2018,
the Unaffiliated Limited Partners approved a reduction in Management Fees payable to the Adviser
by 20%, generally. In addition, an affiliate of the Adviser may have been paid management fees
based on the net asset value of each Co-Investment Fund as described more fully in the applicable
Co-Investment Fund’s offering documents. The management fees paid by Co-Investment Funds
varied based on the size of the applicable Co-Investment Fund, the nature and complexity of the
underlying investments and other factors but generally ranged from 0% to 2% of the applicable
Co-Investment Fund’s net asset value. The Management Fee and the management fees paid by the
Co-Investment Funds were generally paid directly by such entities to the General Partner (see also
“Co-Investments” below for additional information on the fees and expenses relating to co-
investments). No management fees are paid with respect to the Co-Investment Funds as they have
ceased operations. Notwithstanding the foregoing, as noted above in August 2021, the term of the
Fund ended and the Fund entered into liquidation. The General Partner and the Sub-Advisor’s
Management Fee ceased to be paid. The General Partner appointed the Sub-Advisor as liquidator
of the Fund and agreed to cause the Fund to pay the Sub-Advisor a liquidator fee substantially
equivalent to the Sub-Advisor’s portion of the Management Fee (the “Sub-Advisory Fee”)
commencing with its term as liquidator, all pursuant to the Unaffiliated Limited Partner approvals
obtained in 2018.
Incentive Allocation
An affiliate of the Adviser is also entitled to receive an annual incentive allocation (the “Incentive
Allocation”) equal to up to 25% of the increase in the net asset value of any series of units above
its prior high net asset value (the “Prior High NAV”). The Prior High NAV of a series of units
initially will be equal to the net asset value (“NAV”) of such series immediately following its
issuance and will generally be “reset” to equal its current NAV immediately following the date as
of which an Incentive Allocation has been made. In addition, the Fund includes specific entities
designed to admit only Morgan Stanley current and former employees (and certain other
permissible related investors) (each, an “Employee Fund”). With respect to each Employee Fund,
absent certain circumstances relating to the termination of employment of a Limited Partner with
Morgan Stanley, the Incentive Allocation is equal to 12.5%.

The Incentive Allocation was previously paid in the form of units that may be redeemed after a
two-year lock-up period. Effective March 1, 2013, the Fund ceased issuing units to the Adviser’s
affiliates in respect of any Incentive Allocation. Since then, any Incentive Allocation has been
paid in cash. No Incentive Allocation was due in 2023 nor is any expected for the remainder of the
Fund.
In addition, an affiliate of the Adviser may have received an incentive allocation, carried interest
or other performance-based compensation based on increases in NAV, distributions in excess of
capital contributions or another measure of profitability of a Co-Investment Fund. Any such
performance-based compensation paid to such affiliate in respect of a Co-Investment Fund may
have varied based on the size of the applicable Co-Investment Fund, the nature and complexity of
the underlying investments and other factors but generally ranged from 10% to 20% of the
appropriate measure of the applicable Co-Investment Fund’s performance as described more fully
in the applicable Co-Investment Fund’s offering documents. The Co-Investment Funds have
ceased operations and no incentive allocation, carried interest or other performance-based
compensation is paid with respect to the Co-Investment Funds.
The Adviser reserves the right, in its sole discretion, to reduce all or any portion of or, modify in
any way, the Management Fee or Incentive Allocation applicable to any Limited Partner as may
be agreed to by the Adviser and such Limited Partner
Placement Fees
Broker-dealer affiliates of the Adviser acted as placement agents in connection with the placement
of the Fund’s interests. To the extent these broker-dealers received fees in connection with such
placements, the placement fees were paid by the Adviser.
Referral Fees
Affiliates of the Adviser may have referred or introduced a counterparty to the Fund in respect of
certain transactions. Such affiliates may have received compensation (e.g., finder’s fee) from the
Fund as opposed to the counterparty.
Expenses
The Fund also bears certain out-of-pocket expenses incurred by the Adviser and/or its affiliates in
connection with the services provided to the Fund. The payment of such expenses by the Fund
does not represent a source of profit for the Adviser, but rather is a reimbursement of actual costs
initially paid by the Adviser (or its affiliates) and subsequently passed through to the Fund. The
most common expenses include (i) expenses incurred in connection with identifying, evaluating,
structuring and negotiating any potential Fund investment (including reverse break-up, termination
and other similar fees payable by the Fund, deposits and commitment fees) and the acquisition,
holding, sale, proposed sale or valuation of any Fund investments (including brokerage, custody
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Item 7 – Types of Clients
The Adviser provides portfolio management services to pooled investment vehicles. These pooled
investment vehicles are not subject to registration under the Investment Company Act of 1940, as
amended (the “Investment Company Act”). Generally, investors must have committed to invest a
minimum of $5 million, unless otherwise approved. In addition, with respect to the Employee
Funds, investors in those funds must generally have invested a minimum of $100,000, unless
otherwise approved.
In addition, Limited Partner interests in the Fund were able to be purchased only by certain eligible
investors who are “accredited investors” as defined in Regulation D under the Securities Act of
1933, as amended (the “Securities Act”), and “qualified purchasers” for purposes of Section
3(c)(7) of the Investment Company Act. In the case of the Employee Funds, interests were offered
and sold to investors who are “accredited investors” as defined in Regulation D of the Securities
Act and in accordance with the requirements of an exemptive order under the Investment Company
Act received by Morgan Stanley from the SEC in April 2000.