Item 5 - Fees and Compensation
As an investment adviser to the Funds, as further described in the Offering Documents,
Ailanthus receives a management fee generally equal to an annual rate of 1.0% - 1.5%,
depending on the particular class of the Funds. The management fees are paid by the Master
Fund monthly in advance on the first day of each calendar month, depending upon the net
asset value of the Master Fund and each particular investment by an Investor in the Feeder
Funds. Management fees are generally pro-rated for partial periods. Once paid, management
fees are non-refundable.
The Firm or its affiliates may reduce, waive or calculate differently the management fee for
certain Investors, including but not limited to, members, employees and affiliates of Ailanthus.
Other Fees and Expenses
The Funds will pay, or reimburse the Firm and/or the General Partner for advancing, the
Funds’ operating expenses, including brokerage commissions, outsourced execution costs,
bank service fees, interest on loans and debit balances, borrowing charges on securities sold
short, custodial fees, fees for analytics and market data (including online news and quotation
Ailanthus Capital Management, LP Form ADV Part 2A
services, etc.), Bloomberg, research and due diligence fees and expenses, expenses related to
the offering of the shares (including fees and expenses of the Firm incurred in connection
with the European Alternative Investment Fund Managers Directive), administration
(including middle and back office services), audit and tax preparation expenses, blue sky filing
fees, investor reporting costs, legal, accounting, tax and professional fees (including related to
the Funds’ compliance with FATCA or similar laws enacted in other jurisdictions), any foreign
tax regime registrations, tax filings and associated annual fees and expenses, consulting fees,
fees of the Funds’ independent directors and members of the governance committees,
insurance costs, trustees’ fees, fees and expenses of the Firm incurred in connection with
preparing and filing reports relating to the Funds’ trading activities (including under investment
advisory or commodity pool operator laws), expenses and market data associated with an
order management system, portfolio management/accounting system or risk system, any
taxes applicable to the Funds on account of its operations and/or trades, other similar
expenses related to the Funds, and any and all expenses related to the management and
operation of the Funds, as well as the purchase, sale or transmittal of assets, as the Firm will
determine in its discretion. The Funds will also be responsible for their organizational fees
and expenses. In addition, the Funds will bear its pro rata share of the Master Fund’s expenses.
Except as provided above, the Firm and the General Partner will bear their own operating,
rent and similar overhead expenses, in addition to the salaries and benefits of their employees.
For a summary of our brokerage practices, please see Item 12 below.
Item 6 - Performance Fees and Side-by-Side Management
At the end of each fiscal year and upon withdrawal of an Investor from the Fund, the General
Partner will be entitled to receive an annual incentive allocation of 20% of the net profits
attributable to such Investor’s account, if any. The incentive allocation is charged in compliance
with Rule 205-3 of the Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Additional information regarding such compensation arrangements are set forth in the relevant
Offering Document.
The incentive allocation is subject to a “high water mark.” The “high water mark” feature
prevents Ailanthus from receiving a performance-based fee as to profits that simply restore
previous losses and is intended to ensure that each incentive allocation is based on the long-
term performance of the Funds.
The General Partner may waive or reduce the incentive allocation for certain Investors,
including but not limited to, members, employees and affiliates of Ailanthus.
Because all Fund assets are expected to be managed in the Master Fund, Ailanthus does not
expect to face any side-by-side conflict of interest issues, such as allocation decisions which
may be impacted by performance-based fee differentials. Ailanthus has developed and
implemented procedures that are designed to ensure that all clients are treated fairly and
equally, and to prevent conflicts from influencing the allocation of investment opportunities
among clients.
The terms of the performance-based fees and allocations may differ in the future among the
Funds or other accounts managed by Ailanthus. This may result in a conflict of interest when
Ailanthus allocates opportunities among such clients because there will be an incentive to
favor allocations to clients that have higher performance-based fees and allocations. To avoid
such conflict of interest, Ailanthus would generally follow documented procedures in allocating
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opportunities among its clients which would not take into account the performance-based
fees and allocations to which such clients are subject.