ITEM 5. FEES AND COMPENSATION
Public Funds
SCPEP charges an investment management fee based on the value of assets under
management of each investor in the Public Funds, ranging from 0% to 1% per annum.
Management fees will be charged quarterly in advance as of the first business day of each
quarter. If an investor in the Public Funds invests during a quarter or makes an additional
subscription during a quarter, the management fee will be charged as of the effective date of
the subscription based upon the value of the investment as of the applicable date and will be
prorated for the number of days remaining in the quarter. To the extent an investor in the
Public Funds elects to withdraw or is required to withdraw during a quarter, a pro rata portion
of the management fee paid in advance will be refunded, based on the number of days
remaining in the quarter.
Management fees may be modified or waived for investors in the Public Funds that are
members, principals, employees or affiliates of SCPEP, relatives of those persons and certain
other investors.
Management fees will be deducted from the Public Funds by the Public Funds’ administrator
pursuant to instructions from SCPEP, which is first calculated and confirmed by the Public
Funds’ administrator.
SCPEP or its affiliate, Social Capital PEP GP LLC, may also receive performance‐based
compensation, which is compensation that is based on a share of the net capital appreciation of
the assets of a client. The performance‐based compensation received from the Public Funds
generally will be 20% and will be subject to a loss carryforward and in certain circumstances, a
clawback provision. Performance‐based compensation generally will be allocated to the
recipient as of the end of each applicable incentive allocation period, which vary based on the
terms set forth in the Governing Documents. The Adviser’s performance‐based compensation
with respect to the Public Funds is calculated taking into account both realized and unrealized
gains.
The performance‐based compensation may be reduced or waived for investors in the Public
Funds that are members, principals, employees or affiliates of the Adviser, relatives of those
persons, and certain other investors.
Employees and principals of the Adviser that are invested in the Public Funds are not subject to
management fees or performance allocations.
More detailed information about the fees and allocations paid by investors in the Public Funds
may be found in the applicable Governing Documents.
Private Funds
SCP charges an investment management fee based on its anticipated operating budget, which
may include costs incurred in connection with activities, charitable contributions, private travel
and other expenses (the “Annual Budget”). SCP’s Annual Budget is reviewed and approved
annually by the advisory board of each Private Fund. As further described in the applicable
Governing Documents, the Annual Budget limits the investment management fees payable by a
Private Fund to no greater than 2% of committed capital per annum. Such fees are subject to
change on an annual basis based upon SCP’s Annual Budget and on criteria set forth in the
relevant Private Fund’s Governing Documents.
Management fees are charged quarterly in advance as of the first business day of each quarter
and prorated for any partial quarter based on the number of business days in such quarter.
The Principal Funds (as described in Item 6) may not be subject to Management Fees.
SCP directly deducts the investment management fee from the Private Funds.
Additionally, SCP, or its affiliates, are entitled to receive carried interest or similar profit
distributions (“Carried Interest”) from the Private Funds. Carried Interest is a performance‐
based profit allocation based on a share of the income and gains of the assets in each Private
Fund, which typically ranges from 15% to 30%.
Carried Interest allocations may be reduced or waived for investors in the Principals Funds.
More detailed information about the fees and Carried Interest paid by investors in the Private
Funds may be found in the applicable Governing Documents.
Funds Generally
In addition to paying investment management fees and, if applicable, performance‐based
compensation, the Funds will also be subject to other expenses such as directors' fees and
expenses, fees paid to a proxy agent, costs of independent appraisers, legal, accounting, tax
preparation and other tax related expenses (including preparation costs of financial statements,
tax returns and reports to shareholders), auditing, consulting and other professional expenses,
each Fund’s pro rata share of Fund‐related insurance costs (including the majority of directors
and officers insurance for the Adviser, errors and omissions insurance, fidelity insurance and
other similar policies), administration expenses (including administrator fees and expenses),
fees and expenses related to portfolio exposure and performance reporting systems, and risk
management and trade order management systems, research‐related expenses (including,
without limitation, research‐related travel expenses for investment personnel and fees and
expenses of investment advisers and independent consultants incurred in investigating and
evaluating investment opportunities), investment‐related expenses (i.e., expenses that, in the
Adviser’s discretion, are related to the investment of the Funds’ assets, whether or not such
investments are consummated) such as commissions, brokerage fees, interest on margin
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