Item 5: Fees and Compensation
The Adviser receives an investment management fee based on the value of
the client’s assets under management. Currently, the Adviser’s clients are
organized in a “master-feeder” structure, consisting of two private funds that
are feeder funds into a master fund. The investment management fee is
calculated based on the aggregate assets under management of such
feeder funds attributable to fee paying investors (the “Aggregate AUM”) at
the end of each month in accordance with the following schedule:
Level of Aggregate AUM Investment Management
(USD) Fee
0-1.5 bn 1.5%
1.5-3 bn 1.0%
3 bn+ 0.5%
The investment management fee is paid to the Adviser as of the end of each
month and is prorated for periods less than a full month.
The investment management fee declines with the overall growth in
Aggregate AUM. Once Aggregate AUM reaches a size which results in a
reduction of the investment management fee, the fee charged to all
investors reduces. The investment management fee is calculated as a
money-weighted average and is attributed to each investor in proportion to
their holding in the fund.
The investment management fees are not negotiable.
The Adviser may also be paid a performance-based fee or allocation, which
is based on a share of capital gains on or capital appreciation of the assets of
a client. This compensation may be paid or allocated to the Adviser and
ranges from 15% to 20%, subject to a loss carryforward provision. Under
certain circumstances, the performance-based compensation is subject to a
hurdle rate.
The performance-based fees and allocations are not negotiable.
The Adviser, its partners and related entities, and their respective partners,
directors and employees may invest in the Adviser’s clients without being
subject to any investment management fees or performance-based
compensation.
Each client’s administrator calculates and arranges payment of the
investment management fees and, if applicable, performance-based fees to
the Adviser.
In addition, each client account will also pay its own expenses, including
expenses and costs (i) of all transactions carried out by it or on its behalf and
(ii) of the administration of the client account, including (a) all of the charges
and expenses of any legal and professional advisers, independent auditors,
administrators and custodians, (b) all brokers' commissions and any issue or
Theleme Partners LLP Form ADV Part 2A
transfer taxes or stamp duties chargeable in connection with its securities
transactions, (c) all expenses and costs relating to a specific investment or
assets, (d) all taxes and corporate fees payable to governments or agencies,
(e) all directors' fees (if any) and expenses, (f) all interest on borrowings,
including borrowings from the prime brokers, (g) all communication expenses
with respect to investor services and all expenses of meetings of investors and
of preparing, printing and distributing financial and other reports, proxy forms,
prospectuses and similar documents, (h) all of the costs of insurance in favour
of any directors, (i) all litigation and indemnification expenses and
extraordinary expenses not incurred in the ordinary course of business, and (j)
all other organizational and operating expenses. Each feeder fund will also
bear its pro rata share of the master fund’s expenses.
Theleme Partners LLP Form ADV Part 2A