Item 5 Fees and Compensation
INVESTMENT SUPERVISORY SERVICES
INDIVIDUAL PORTFOLIO MANAGEMENT
Our annual fees for investment supervisory services are based upon a percentage of assets
under management.
Fees for investment supervisory services are billed quarterly, in arrears, at the end of each
calendar quarter, based upon the monthly average market value of such client’s account
assets during the preceding calendar quarter. Certain institutional separately managed
account clients may have individually negotiated fee calculation methodologies separate and
distinct from the aforementioned standard billing procedures. For third party platform and
institutional accounts, the Adviser typically invoices the client and/or custodian directly.
Alternative Investments
Adviser Affiliated Funds
See Fund Prospectus for Fees and Charges. Managed Account fees do not apply to funds
invested in Adviser Affiliated Funds.
Non-Affiliated Funds (Third Party)
Management or Advisory Fees charged by non-affiliated managers are separate and apart from
our Managed Account Fees on such managers. We aggregate the assets managed by third
party managers in calculating our Managed Account fee break points. Any rebates, fee
participation, or placement fees paid by the respective Managers to the Adviser shall credit or
offset the Managed Account fees.
Separately Managed Accounts
Fees for separately managed accounts may be negotiable under certain circumstances, as
described in the relevant client’s investment management agreement. Certain institutional
accounts may be charged a performance fee. Separately managed accounts comprised of
securities in the MLP and Energy Equity sectors will follow the Fee Schedule below.
Fee Schedule
First $25 Million 0.75%
Next $25 Million 0.70%
Next $25 Million 0.65%
Over $75 Million 0.65% flat on all assets
Over $100 Million 0.60% flat on all assets
Over $150 Million 0.50% flat on all assets
Sub-Advisory Relationships
Salient Capital Advisors, LLC has been engaged by unaffiliated registered investment
advisors to act as a sub-advisor and provide day-to-day management for unaffiliated private
funds. Investment advisors of unaffiliated private funds should refer to the applicable
confidential private placement memorandum for further information regarding how fees are
charged and collected. Such fees and payment arrangements are negotiable and will vary on
a case by case basis.
Direct Private Investment Programs
Fees for private investments that are placed directly with the issuer, including, but not limited
to, investments in private placements, private co-investments, private investment in public
equity (PIPE), and non-registered convertible preferred equity investments, are billed at an
annual rate of up to one percent (1.0%) of each client’s invested capital in the private
investments at the time of billing, calculated and payable quarterly in arrears. In addition,
clients will be billed a performance incentive fee up to 15%, subject to a hurdle rate and high
water mark. Such fees may be negotiable under certain circumstances, as described in the
relevant client’s investment management agreement.
Third Party Referral Arrangements
Evaluated by the Adviser on a case by case basis.
Limited Negotiability of Advisory Fees:
Although Salient Capital Advisors, LLC has established fee schedule(s), we retain the
discretion to negotiate alternative fees on a client-by-client basis. Client facts, circumstances
and needs will be considered in determining the fee schedule. These include the complexity
of the client, assets to be placed under management, anticipated future additional assets
expected to be placed under management, related accounts, portfolio style, account
composition and reports, and other relevant factors. The specific annual fee schedule will be
identified in the investment management agreement between the Adviser and each client.
The Adviser will not generally be required to provide notice to, or obtain the consent of, one
client when waiving, reducing or varying fees or modifying other contractual terms with any
other client. However, some clients may from time to time seek to negotiate most favored
nation (“MFN”) clauses in their investment management agreements with the Adviser. These
clauses often require the Adviser to notify the MFN client if the Adviser subsequently enters
into an investment management agreement with another client that offers more favorable
pricing or other contractual terms than those currently offered to the MFN client. The
applicability of an MFN clause will depend on the degree of similarity between clients,
including, but not limited to, the following considerations: type of client, scope of investment
discretion, reporting and other servicing requirements, amount of assets under management,
fee structure and the specific investment strategy and particular distinctions therein (and
therefore the relevant investment adviser) selected by each Client. The Adviser has sole
discretion over whether or not to grant any MFN clause in all circumstances.
We may group certain related client accounts for the purpose of achieving the minimum
account size requirements and determining the annualized fee.
Discounts, not generally available to our clients, are offered to family members and friends of
affiliated persons of our firm.
INVESTMENT MANAGEMENT SERVICES
POOLED INVESTMENT VEHICLES
Fees for the Salient MLP Total Return Fund, L.P. are calculated weekly and payable monthly
in arrears, in amounts equal to an applicable annual management fee rate multiplied by each
Limited Partner’s capital account balance. Such fees may be negotiable under certain
circumstances, as described in the Fund’s private placement memorandum. The annual
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